UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1996
-----------------------------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 incorporation or organization)
(I.R.S. Employer Identification No.)
616 E. WALNUT AVENUE, DALTON, GEORGIA 30720
(Address of principal executive offices) (Zip Code)
(706) 278-3812
Registrant's telephone number, including area code
NOT APPLICABLE
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed 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 ______.
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: November 4, 1996 - 134,298,035 shares
<PAGE>
SHAW INDUSTRIES, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE NUMBERS
--------------------- ------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - September 28, 1996
and December 30, 1995 .......................................... 3-4
Condensed Consolidated Statements of Income and Retained
Earnings - For the Three Months Ended
September 28, 1996 and September 30, 1995 ...................... 5
Condensed Consolidated Statements of Income and Retained
Earnings - For the Nine Months Ended
September 28, 1996 and September 30, 1995 ..................... 6
Condensed Consolidated Statements of Cash Flows -
For the Nine Months Ended September 28, 1996
and September 30, 1995 ......................................... 7
Notes to Condensed Consolidated Financial Statements ........... 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations ............... 9-11
PART II - OTHER INFORMATION ........................................... 12
-----------------
SIGNATURES ............................................................ 13
<PAGE>
PART I - ITEM ONE - FINANCIAL INFORMATION
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS September 28, December 30,
1996 1995
---------------- ----------------
CURRENT ASSETS:
Cash and cash equivalents ................. $ 51,433 $ 31,453
---------------- ----------------
Accounts receivable, less
allowance for doubtful accounts and
discounts of $18,320 and $14,746 ........ 416,962 345,443
---------------- ----------------
Inventories -
Raw materials ........................... 225,541 232,693
Work-in-process ......................... 31,576 25,330
Finished goods .......................... 301,937 231,189
---------------- ----------------
........................................... 559,054 489,212
---------------- ----------------
Other current assets ...................... 67,831 36,403
---------------- ----------------
TOTAL CURRENT ASSETS ........ 1,095,280 902,511
---------------- ----------------
PROPERTY, PLANT AND EQUIPMENT,
at cost:
Land and land improvements ................ 28,568 27,173
Buildings and leasehold improvements ...... 293,945 269,715
Machinery and equipment ................... 967,538 914,126
Construction in progress .................. 31,747 22,986
---------------- ----------------
1,321,798 1,234,000
Less - Accumulated depreciation and
amortization ....................... (677,269) (602,010)
---------------- ----------------
644,529 631,990
---------------- ----------------
GOODWILL, net .............................. 175,940 104,280
---------------- ----------------
INVESTMENT IN JOINT VENTURE ................ 16,795 15,513
---------------- ----------------
OTHER ASSETS ............................... 12,613 8,489
---------------- ----------------
TOTAL ASSETS ................ $1,945,157 $1,662,783
================ ================
<PAGE>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
September 28, December 30,
1996 1995
---------------- ----------------
CURRENT LIABILITIES:
Notes payable ............................. $ 36,588 $ -
Current maturities of long-term debt ...... 17,748 5,305
Accounts payable .......................... 203,955 114,326
Accrued liabilities ....................... 177,377 141,435
---------------- ----------------
TOTAL CURRENT LIABILITIES ............ 435,668 261,066
---------------- ----------------
LONG-TERM DEBT, less current maturities .... 706,527 627,130
---------------- ----------------
DEFERRED INCOME TAXES ...................... 55,064 51,000
---------------- ----------------
OTHER LIABILITIES .......................... 16,008 13,398
---------------- ----------------
SHAREHOLDERS' INVESTMENT:
Common stock, no par, $1.11 stated value,
authorized 500,000,000 shares; issued and
outstanding: 137,054,909 at September 28,
1996 and 135,956,602 shares at December .. 152,132 150,913
30, 1995
Paid-in capital ........................... 115,940 101,718
Cumulative translation adjustment ......... 2,159 1,895
Retained earnings ......................... 461,659 455,663
---------------- ----------------
TOTAL SHAREHOLDERS' INVESTMENT ....... 731,890 710,189
---------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS'
INVESTMENT ......................... $1,945,157 $1,662,783
================ ================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS THREE MONTHS
ENDED ENDED
September 28, September 30,
1996 1995
----------------- -----------------
NET SALES .................................. $881,506 $748,364
COSTS AND EXPENSES:
Cost of sales ............................ 673,602 605,648
Selling, general and administrative ...... 154,843 93,304
Pre-opening expenses, retail operations .. 3,354 -
Nonrecurring charges ..................... - 2,607
Interest expense, net .................... 10,347 10,522
Other (income) expense, net .............. (1,003) (578)
----------------- -----------------
INCOME BEFORE INCOME TAXES ................. 40,363 36,861
PROVISION FOR INCOME TAXES ................. 17,049 15,196
----------------- -----------------
INCOME BEFORE EQUITY IN INCOME OF JOINT
VENTURE AND MINORITY INTEREST ............. 23,314 21,665
EQUITY IN INCOME OF JOINT VENTURE AND
MINORITY INTEREST ......................... 865 240
----------------- -----------------
NET INCOME ................................. $24,179 $ 21,905
================= =================
DIVIDENDS PAID PER COMMON SHARE ............ $ 0.075 $ 0.075
================= =================
EARNINGS PER COMMON SHARE:
Primary and fully diluted basis - ........ $0.18 $0.16
================= =================
RETAINED EARNINGS:
Beginning of period ...................... $447,753 $434,800
Add - net income ...................... 24,179 21,905
Deduct - dividends paid .................. (10,273) (10,175)
----------------- -----------------
End of period $461,659 $446,530
================= =================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS NINE MONTHS
ENDED ENDED
September 28, September 30,
1996 1995
----------------- -----------------
NET SALES .................................. $2,324,983 $2,163,240
COSTS AND EXPENSES:
Cost of sales ............................ 1,816,626 1,758,928
Selling, general and administrative ...... 372,099 289,787
Pre-opening expenses, retail operations .. 5,163 -
Nonrecurring charges ..................... 29,139 8,008
Interest expense, net .................... 30,046 32,358
Other (income), net ...................... (3,454) (1,442)
----------------- -----------------
INCOME BEFORE INCOME TAXES ................. 75,364 75,601
PROVISION FOR INCOME TAXES ................. 41,021 31,401
----------------- -----------------
INCOME BEFORE EQUITY IN INCOME OF JOINT
VENTURE, MINORITY INTEREST AND CUMULATIVE
EFFECT OF ACCOUNTING CHANGE ............... 34,343 44,200
EQUITY IN INCOME OF JOINT VENTURE AND
MINORITY INTEREST ......................... 2,351 855
----------------- -----------------
INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE ......................... 36,694 45,055
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET
OF TAX BENEFIT ............................ - (12,077)
----------------- -----------------
NET INCOME ................................. $36,694 $ 32,978
================= =================
DIVIDENDS PAID PER COMMON SHARE ............ $ 0.225 $ 0.225
================= =================
EARNINGS PER COMMON SHARE:
Primary and fully diluted basis -
Income before cumulative effect
of accounting change ................. $0.27 $0.33
Cumulative effect of accounting change,
net of tax benefit ................... - (0.09)
----------------- -----------------
Net income ............................. $0.27 $0.24
================= =================
RETAINED EARNINGS:
Beginning of period ...................... $455,663 $444,115
Add - net income ...................... 36,694 32,978
Deduct - dividends paid .................. (30,698) (30,563)
----------------- -----------------
End of period ............................ $461,659 $446,530
================= =================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS NINE MONTHS NINE MONTHS
(IN THOUSANDS) ENDED ENDED
September 28, September 30,
1996 1995
--------------- --------------
OPERATING ACTIVITIES:
Net income ..................................... $36,694 $32,978
--------------- --------------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization ................. 69,454 70,042
Provision for doubtful accounts ............... 8,154 5,740
Deferred income taxes ......................... 3,782 1,699
Nonrecurring charges .......................... 29,139 -
Cumulative effect of accounting change ........ - 12,077
Other, net .................................... (7,150) 533
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable ...................... (27,366) (53,557)
Inventories .............................. (2,187) (34,419)
Other current assets ..................... (24,626) 10,996
Accounts payable ......................... 35,020 29,820
Accrued liabilities ...................... 14,187 44,488
--------------- ---------------
Total adjustments ...................... 98,407 87,419
--------------- --------------
Net cash provided by operating activities ..... 135,101 120,397
--------------- --------------
INVESTING ACTIVITIES:
Additions to property, plant and equipment ...... (61,545) (53,948)
Acquisition of businesses, net of cash acquired . (67,552) (29,503)
Investment in joint venture ..................... - (3,500)
Deconsolidation of joint venture ................ - (3,828)
--------------- --------------
Net cash used in investing activities ......... (129,097) (90,779)
--------------- --------------
FINANCING ACTIVITIES:
Increase in long-term debt ...................... 66,649 28,161
Dividends paid .................................. (30,698) (30,563)
Purchase and retirement of common stock ......... (22,759) (20,590)
Proceeds from exercise of stock options ......... 784 1,904
--------------- --------------
Net cash provided by (used in)financing
activities ................................... 13,976 (21,088)
--------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS ........ 19,980 8,530
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . 31,453 34,365
--------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ....... $51,433 $42,895
=============== ==============
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------------
1. Basis of Presentation
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
not misleading. These financial statements should be read in conjunction
with the financial statements and related notes contained in the Company's
1995 Annual Report on Form 10-K. In the opinion of management, the
accompanying unaudited financial statements contain all adjustments
necessary to present fairly the Company's financial position, results of
operations and cash flows at the dates and for the periods presented.
Interim results of operations are not necessarily indicative of the
results to be expected for a full year. Certain prior period amounts have
been reclassified to conform with the current period presentation.
2. Inventories
The Company uses the last-in, first-out (LIFO) method of valuing
substantially all of its domestic inventories. If LIFO inventories were
valued at current costs, the inventories would have been $4,519,000 lower
at September 28, 1996 and $9,992,000 lower at December 30, 1995. The
Company's foreign inventories are valued at the lower of first-in,
first-out (FIFO) cost or market.
3. Acquisitions
In December 1995, the Company announced a new retail and contract
distribution strategy and during the first nine months of 1996 acquired
Bell-Mann, Inc., Carpetland USA, Inc., as well as several other retailers
and commercial carpet contractors for cash and common stock. In addition,
on July 3, 1996, the Company completed the acquisition of New York Carpet
World, Inc. for cash of $35.0 million and a promissory note of $35.0
million payable on January 15, 1997. The Company also entered into an
earnout agreement which provided for the additional payment of up to $30.0
million which was rescinded on October 31, 1996 and replaced by an
agreement which provides for the payment of $24.0 million by June 30,
1999. New York Carpet World, Inc. is headquartered in Southfield, Michigan
and is the largest retailer of carpet products in the United States with
approximately 200 stores located in 15 states. These acquisitions have
been recorded using the purchase method of accounting, and as a result,
the acquired operations have been included in the consolidated statements
of operations since their acquisition dates. As a result of these
acquisitions, goodwill of approximately $94.5 million was recorded and is
being amortized over 20 years.
4. Accounting Change
Effective January 1, 1995, the Company changed its method of
accounting for sample costs from expensing sample costs that exceed the
estimated net realizable value when shipped to expensing that portion of
sample costs as they are produced. This change was made in recognition of
an increasing number of samples placed with customers that do not result
in future sales and to better control the sample order process. The
cumulative effect of the change was to decrease 1995 net income by
$12,077,000, or $.09 per share, net of income tax benefit.
5. Nonrecurring Charges
During the first quarter of 1996, the Company recorded nonrecurring
charges of $29,139,000 ($26,519,000 after income taxes, or $.19 per share)
for the reduction of the carrying value of certain goodwill and property,
plant and equipment at the Company's international operations related to
the adoption of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and to provide for the disposal of certain
other assets at their estimated fair value. These asset write-downs will
reduce amortization and depreciation expense of the respective assets in
future periods.
<PAGE>
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
ITEM TWO-MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
GENERAL
The Company's business, as well as the U.S. 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 international operations are also impacted by the
economic climates in the markets in which they operate (primarily the United
Kingdom, Australia and Mexico).
In December 1995, the Company announced a new retail and contract
distribution strategy and during the first nine months of 1996 acquired
Bell-Mann, Inc., Carpetland USA, Inc., as well as several other retailers and
commercial carpet contractors for cash and common stock. During the third
quarter, the Company opened Shaw Carpet Showplace, Inc. residential retail
stores and now has approximately 30 stores open in California and 7 stores open
in Pittsburgh, Pennsylvania. In addition, on July 3, 1996, the Company completed
the acquisition of New York Carpet World, Inc. for cash of $35.0 million and a
promissory note of $35.0 million payable on January 15, 1997. The Company also
entered into an earnout agreement which provided for the additional payment of
up to $30.0 million which was rescinded on October 31, 1996 and replaced by an
agreement which provides for the payment of $24.0 million by June 30, 1999. New
York Carpet World, Inc. is headquartered in Southfield, Michigan and is the
largest retailer of carpet products in the United States with approximately 200
stores located in 15 states. The Company believes that, by combining the
resources of the manufacturer and retailer and developing a contract
distribution network, it can provide a full range of products and services to
more effectively meet the needs of the end-users of both residential and
commercial carpet products at significantly improved margins. These plans are
progressing according to the Company's expectations. The Company now has
approximately 300 retail and commercial contract locations. In addition, the
Company continues its efforts to develop an alignment program with dealers of
both residential and commercial carpet products to provide a collection of
services, benefits and programs that will encourage dealers to purchase more
from the Company. The Company now has approximately 1,200 aligned dealers.
LIQUIDITY AND CAPITAL RESOURCES
At September 28, 1996, the Company had working capital of $659.6 million,
an increase of $18.2 million, or 2.8 percent, over working capital of $641.4
million at December 30, 1995. Cash and cash equivalents increased $19.9 million
from $31.5 million at December 30, 1995 to $51.4 million at September 28, 1996.
Cash flow provided by operating activities was $135.1 million for the nine
months ended September 28, 1996 compared to $120.4 million in 1995. The increase
in operating cash flow was primarily due to smaller increases in accounts
receivable and inventories combined with a larger increase in accounts payable
than in the comparable period of the prior year. In addition, non-cash charges
of $29.1 million were recorded in 1996 related to the adoption of SFAS No. 121
and to provide for the disposal of certain other assets at their estimated fair
value, compared to non-cash charges of $12.1 million recorded in 1995 to reflect
a cumulative effect of an accounting change. Cash used in investing activities
for the 1996 period consisted of additions to property, plant and equipment of
$61.5 million and acquisitions of businesses of $67.6 million. Cash flow
provided by financing activities during 1996 was $14.0 million which includes an
increase in long-term debt of $66.7 million offset in part by payments of cash
dividends of $30.7 million and stock repurchases of $22.8 million.
Acquisitions of businesses during the nine month period ended September
28, 1996 resulted in increases in accounts receivable of $52.3 million,
inventories of $67.7 million, goodwill of $94.5 million, accounts payable of
$54.6 million and accrued liabilities of $21.8 million.
The Company has continued to maintain a strong working capital position.
Effective use of capital and the Company's ability to generate cash flow from
operations has enabled it to invest in technologies which reduce production
costs, generate operating margins that have historically exceeded industry
averages and to be a preeminent force in the carpet industry.
Capital expenditures for property, plant and equipment necessary to
maintain the Company's facilities in a modern state-of-the-art condition were
$61.5 million for the first nine months of 1996. Management anticipates total
capital expenditures and capitalized lease obligations of approximately $20.0
million during the remainder of 1996 in order 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. In addition,
management estimates capital expenditures of approximately $5.0 million during
the remainder of 1996 related to the continuing development of the retail and
contract distribution strategy.
<PAGE>
The Company's primary source of financing is an unsecured revolving credit
agreement with a banking syndicate which provides for borrowings of up to $620.0
million and expires in December 1999. Interest on borrowings under this facility
is currently based on LIBOR and approximated 6.2 percent at September 28, 1996
after giving effect to two interest rate swap agreements entered into on April
2, 1996 and August 6, 1996 which effectively fixed the interest rates on $100.0
million and $200.0 million of the outstanding borrowings at 6.16 percent and
6.26 percent, respectively. At September 28, 1996, borrowings outstanding under
this credit facility were $509.0 million. On September 13, 1996, the Company
entered into a multicurrency credit facility with a banking syndicate which
provides for borrowings of up to $125.0 million and expires in September 2001.
Interest on borrowings under this facility is based on LIBOR and approximated
6.2 percent at September 28, 1996. At September 28, 1996, borrowings outstanding
under this credit facility were $121.2 million. The Company also maintains a
revolving credit facility in Australia with $64.4 million outstanding at
September 28, 1996.
The Company believes that available borrowings under its existing credit
agreements, available cash and internally generated funds will be sufficient to
support its working capital, capital expenditures and debt service requirements
for the foreseeable future. In addition, the Company believes it could expand
its revolving credit and long-term bank facilities, if necessary.
RESULTS OF OPERATIONS
Three Months Ended September 28, 1996 Compared To Three Months Ended
September 30, 1995
Net sales increased $133.1 million, or 17.8 percent, to $881.5 million in
the third quarter of 1996. The increase was attributable to residential and
commercial retail acquisitions with net sales of $192.0 million, offset in part
by slight decreases in domestic and international manufacturing net sales and by
intercompany sales to acquired retail businesses which were eliminated in
consolidation. Gross margin as a percent of net sales increased to 23.6 percent
for the third quarter of 1996, compared to 19.1 percent in 1995. The increase in
the gross margin percentage was primarily due to higher margins for retail sales
offset in part by slight raw material price increases. Domestic wholesale and
manufacturing gross margins increased 1.3 percent, while international wholesale
and manufacturing gross margins increased 1.8 percent. These increases were
primarily a result of improving manufacturing efficiencies.
Selling, general and administrative expenses for the third quarter of 1996
were $154.8 million, or 17.6 percent of net sales, compared to $93.3 million, or
12.5 percent of net sales, in the comparable period of 1995. The increase of 5.1
percent as a percent of net sales was primarily due to increased advertising and
other selling expenses associated with the Company's continuing retail strategy.
Interest expense, net, decreased $0.2 million, or 1.7 percent, as a result of
lower average interest rates. The effective income tax rate for the third
quarter of 1996 increased to 42.2 percent from 41.2 percent for the third
quarter of 1995 primarily as a result of an increase in permanent tax items.
Nine Months Ended September 28, 1996 Compared To Nine Months Ended
September 30, 1995
Net sales increased $161.7 million, or 7.5 percent, to $2,325.0 million in
the first nine months of 1996. The increase was a result of improving market
conditions combined with residential and commercial retail acquisitions with net
sales of $278.0 million, offset in part by slight decreases in domestic and
international manufacturing net sales and by intercompany sales to acquired
retail businesses which were eliminated in consolidation. Gross margin as a
percent of net sales increased to 21.9 percent for the first nine months of
1996, compared to 18.7 percent in 1995. The increase in the gross margin
percentage was primarily due to higher margins for retail sales offset in part
by slight raw material price increases. Domestic wholesale and manufacturing
gross margins increased 1.6 percent, while international wholesale and
manufacturing gross margins increased 1.0 percent. These increases were
primarily a result of improving manufacturing efficiencies.
Selling, general and administrative expenses for the first nine months of
1996 were $372.1 million, or 16.0 percent of net sales, compared to $289.8
million, or 13.4 percent of net sales, in the comparable period of 1995. The
increase of 2.6 percent as a percent of net sales was primarily due to increased
discretionary expenses associated with the pursuit of new business combined with
increased advertising and other selling expenses associated with the Company's
continuing retail strategy. Interest expense, net, decreased $2.3 million, or
7.1 percent, as a result of lower average interest rates. During the first nine
months of 1996, the Company recorded a tax provision of $41.0 million on taxable
income of $75.4 million, net of a tax benefit of $2.6 million applicable to
nonrecurring charges of $29.1 million. The nonrecurring charges were recorded in
the first quarter of 1996 as a result of the adoption of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" to reflect the reduction of
the carrying value of certain goodwill and property, plant and equipment at the
Company's international operations, and a provision for the disposal of certain
other assets at their estimated fair value. Net earnings for the first nine
months, before nonrecurring charges, increased 26.5 percent, to $63.2 million,
or $.46 per share, from $50.0 million in 1995, or $.37 per share. After
reflecting the nonrecurring charges, the Company had net income for the first
nine months of 1996 of $36.7 million, or $.27 per share, compared to net income
of $33.0 million, or $.24 per share, for the first nine months of 1995.
<PAGE>
FOREIGN OPERATIONS
The Company's primary foreign operations are conducted through its United
Kingdom and Australian subsidiaries, where the functional currencies are British
pounds and Australian dollars, respectively. Fluctuations in the value of
foreign currencies create exposures which can impact the Company's operating
results. The Company may employ foreign currency forward exchange contracts
when, in the normal course of business, they are determined to effectively
manage and reduce such exposure. The Company does not enter into foreign
currency forward exchange contracts for speculative trading purposes. No foreign
exchange contracts existed at September 28, 1996.
FORWARD-LOOKING INFORMATION
This report contains various "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, which
represents the Company's expectations or beliefs concerning future events or
financial condition, including expected margins, anticipated capital
expenditures and capital lease obligations, liquidity and availability of
credit. The Company cautions that a number of important factors could,
individually or in the aggregate, cause actual results to differ materially from
the expectations and beliefs expressed in the forward-looking statements. Such
factors include: trends in consumer spending for durable goods, fluctuations in
interest rates, volume of new housing starts, foreign exchange rate
fluctuations, cost of raw materials and general economic conditions.
<PAGE>
PART II - OTHER INFORMATION
ITEM ONE - LEGAL PROCEEDINGS
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.
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. In December 1995, the
Company learned that it was one of six carpet companies named as additional
defendants in a pending antitrust suit filed in the United States District Court
in Rome, Georgia. The amended complaint alleges price-fixing regarding certain
types of carpet products in violation of Section 1 of the Sherman Act. The
Company believes that the suit is spurious and without merit, and that once
completed, it will not have a material adverse effect on the Company's financial
condition or results of operations.
In February 1996, a jury in Greensboro, North Carolina, returned a verdict
against the Company in litigation brought by four former employees of Salem
Carpet Mills, acquired by the Company in 1992, alleging age discrimination and
sex discrimination in employment decisions made with regard to such employees.
The judgement is being appealed by both parties. The Company believes that the
litigation will not have a material adverse effect on the Company's financial
condition or results of operations.
ITEM TWO - CHANGES IN SECURITIES
None
ITEM THREE - DEFAULTS UPON SENIOR SECURITIES
None
ITEM FOUR - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM FIVE - OTHER INFORMATION
None
ITEM SIX - EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
10(n)-Credit agreement and Guaranty dated September 13, 1996
between the Registrant (the "Guarantor"), Carpets International (UK) Plc (the
"Borrower"), The Banks, Nationsbank, N.A., London Branch (the "Agent") and
Nationsbanc Capital Markets International, Limited (the "Arranger"), regarding a
$125,000,000 multicurrency revolving credit facility.
10(o)-Fifth Amendment to Credit Agreement between
Registrant and Nationsbank of Georgia, National Association dated September 13,
1996.
11 - Statement re: Computation of Per Share Earnings
27 - Financial Data Schedule
(B) No reports on Form 8-K have been filed during the fiscal
quarter ended September 28, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
(The Registrant)
DATE: November 12, 1996 /s/ Robert E. Shaw
- -------------------------- -------------------
Robert E. Shaw
Chairman of the Board and Chief Executive
Officer
DATE: November 12, 1996 /s/ Kenneth G. Jackson
- ------------------------------ ----------------------
Kenneth G. Jackson
Vice President and Chief Financial Officer
(Principal Financial Officer)
CONFORMED COPY
EXHIBIT 10(n)
DATED 13th September 1996
CARPETS INTERNATIONAL (UK) PLC
as Borrower
- and -
SHAW INDUSTRIES, INC.
as Guarantor
- and -
THE BANKS
- and -
NATIONSBANK, N.A., LONDON BRANCH
as Agent
- and -
NATIONSBANC CAPITAL MARKETS INTERNATIONAL, LIMITED
as Arranger
CREDIT AGREEMENT
relating to a
multicurrency revolving credit facility of $125,000,000
WILDE SAPTE
1 Fleet Place
London EC4M 7WS
Tel. 0171 246 7000
Fax. 0171 246 7777
Ref. PXS/PCA/016891/BF185105.04
<PAGE>
TABLE OF CONTENTS
Clause Heading Page Number
1. DEFINITIONS AND INTERPRETATION...................................1
1.1 Definitions......................................................1
1.2 Headings........................................................16
1.3 Interpretation..................................................16
2. FACILITY........................................................17
2.1 Facility........................................................17
2.2 Obligations several.............................................17
2.3 Rights several..................................................17
3. PURPOSE.........................................................17
3.1 Purpose.........................................................17
3.2 No monitoring...................................................17
4. CONDITIONS PRECEDENT............................................17
5. DRAWDOWN........................................................18
5.1 Facility Period.................................................18
5.2 Conditions to each Advance......................................18
5.3 Drawdown Notice.................................................18
5.4 Limitations on Advances.........................................18
5.5 Notification to Banks...........................................19
5.6 Participations..................................................19
6. ALTERNATIVE CURRENCIES..........................................19
6.1 Requests for Alternative Currency...............................19
6.2 Availability....................................................19
6.3 Notification to Banks...........................................19
6.4 No Alternative Currency.........................................20
7. INTEREST........................................................20
7.1 Interest rate...................................................20
7.2 Margin..........................................................21
7.3 Interest Periods................................................21
7.4 Default interest................................................21
7.5 Calculation and payment of interest.............................22
7.6 Agent's determination...........................................22
8. REPAYMENT, PREPAYMENT AND CANCELLATION..........................22
8.1 Repayment.......................................................22
8.2 Prepayment......................................................23
8.3 Currency of repayment or prepayment.............................23
8.4 Cancellation....................................................23
8.5 Mandatory Prepayment............................................23
9. CHANGES IN CIRCUMSTANCES........................................23
9.1 Illegality......................................................23
9.2 Increased Costs.................................................24
9.3 Market disruption...............................................25
9.4 Mitigation......................................................26
9.5 Certificates....................................................27
10. PAYMENTS........................................................27
10.1 Place and time..................................................27
10.2 Funds...........................................................27
10.3 Distribution....................................................27
10.4 Business Days...................................................28
10.5 Currency........................................................28
10.6 Accounts as evidence............................................28
10.7 Partial payments................................................28
10.8 Set-off and counterclaim........................................28
10.9 Grossing-up.....................................................29
11. REPRESENTATIONS AND WARRANTIES..................................31
12. UNDERTAKINGS....................................................36
12.1 Information Undertakings........................................36
12.2 Positive Undertakings...........................................40
12.3 Negative Undertakings...........................................42
12.4 Financial Undertakings..........................................47
13. DEFAULT.........................................................48
13.1 Default.........................................................48
13.2 Acceleration....................................................50
14. SET-OFF.........................................................51
15. PRO RATA SHARING................................................51
15.1 Redistribution..................................................51
15.2 Legal proceedings...............................................51
15.3 Reversal of redistribution......................................51
15.4 Information.....................................................52
16. THE AGENT, THE ARRANGER AND THE BANKS...........................52
16.1 Appointment and duties..........................................52
16.2 Payments........................................................52
16.3 Default.........................................................53
16.4 Reliance........................................................53
16.5 Legal proceedings...............................................53
16.6 No liability....................................................53
16.7 Credit decisions................................................54
16.8 Information.....................................................54
16.9 Relationship with Banks.........................................54
16.10 Agent's position................................................55
16.11 Indemnity.......................................................55
16.12 Resignation.....................................................55
16.13 Change of office................................................56
17. FEES AND EXPENSES...............................................56
17.1 Expenses........................................................56
17.2 Arrangement and agency fees.....................................56
17.3 Facility fee....................................................56
17.4 Documentary Taxes indemnity.....................................57
17.5 VAT.............................................................57
17.6 Indemnity payments..............................................58
18. AMENDMENTS AND WAIVERS..........................................58
18.1 Majority Banks..................................................58
18.2 All Banks.......................................................58
18.3 No implied waivers; remedies cumulative.........................58
19. MISCELLANEOUS...................................................59
19.1 Severance.......................................................59
19.2 Counterparts....................................................59
19.3 Entire agreement................................................59
20. NOTICES.........................................................59
20.1 Method..........................................................59
20.2 Delivery........................................................59
20.3 Addresses.......................................................59
20.4 Deemed receipt..................................................60
20.5 Notices through Agent...........................................61
21. ASSIGNMENTS AND TRANSFERS.......................................61
21.1 Benefit of Agreement............................................61
21.2 Assignments and transfers by Borrower...........................61
21.3 Assignments by Banks............................................61
21.4 Transfers by Banks..............................................61
21.5 Consequences of transfer........................................62
21.6 Sub-Participation...............................................62
21.7 Disclosure of information.......................................63
22. INDEMNITIES.....................................................63
22.1 Breakage costs indemnity........................................63
22.2 Currency indemnity..............................................64
23. LAW AND JURISDICTION............................................64
23.1 Law.............................................................64
23.2 Jurisdiction....................................................64
23.3 Agent for service...............................................65
SCHEDULE 1 THE BANKS....................................................66
SCHEDULE 2 CONDITIONS PRECEDENT.........................................68
SCHEDULE 3 DRAWDOWN NOTICE..............................................70
SCHEDULE 4 THE GUARANTOR AND ITS MATERIAL SUBSIDIARIES AND AFFILIATES...71
SCHEDULE 5 MANDATORY LIQUID ASSET COSTS FORMULA.........................72
SCHEDULE 6 FORM OF TRANSFER CERTIFICATE.................................74
<PAGE>
- 87 -
THIS AGREEMENT is made on 13th September 1996
BY:
(1) CARPETS INTERNATIONAL (UK) PLC, a company incorporated in England and
Wales with registered number 924669 (the "Borrower");
(2) SHAW INDUSTRIES, INC., a corporation organised under the laws of the
State of Georgia (the "Guarantor")
(3) THE BANKS listed in Schedule 1;
(4) NATIONSBANK, N.A., LONDON BRANCH of New Broad Street House, 35 New
Broad Street, London EC2M 1NH as the Agent (as that term is more
particularly defined below); and
(5) NATIONSBANC CAPITAL MARKETS INTERNATIONAL, LIMITED as the Arranger
(the "Arranger").
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
"Accounts" means the audited consolidated accounts (including all
additional information and notes to the accounts) of the Borrower
together with the relevant directors' report and auditors' report.
"Advance" means an advance made or to be made to the Borrower under the
Facility or, as the case may be, the outstanding principal amount of
any such advance. "Affiliate" means any person (other than the Agent or
any Bank):
(a) directly or indirectly controlling, controlled by, or under
common control with the Guarantor;
(a) directly or indirectly owning or holding five per cent. or
more of any equity interest in the Guarantor; or
(b) five per cent. or more of whose voting stock or other equity
interest is directly or indirectly owned or held by the
Guarantor.
For the 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, N.A., London Branch in its capacity as agent
for the Banks and each successor Agent appointed from time to time
under Clause 16.12.
"Alternative Currency" means Sterling and any other currency which is
freely convertible into Dollars, freely transferable and readily
available in the London interbank market.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules and regulations and orders of all governmental bodies
of any relevant jurisdiction in which the Guarantor, the Borrower or
any other Subsidiary carries out or undertakes its business and all
orders and decrees of all courts, tribunals and arbitrators.
"Auditors" means Arthur Andersen & Co. or any other firm of chartered
accountants of internationally recognised standing that has been
previously approved by the Agent and appointed as auditors of the
Borrower.
"Available Commitment" means, in relation to a Bank, its Commitment
less its Participation in all outstanding Advances. For the purposes of
this definition, Advances shall be taken at their Original Dollar
Amount.
"Available Facility" means the aggregate of the Available Commitments
of the Banks.
"Banks" means the banks and financial institutions listed in Schedule
1, their respective successors in title and any Bank Transferee.
"Bank Transferee" has the meaning given to it in Clause 21.4.2.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks and foreign exchange markets are open for business in London and,
in relation to a transaction involving an Alternative Currency, in the
principal financial centre of that Alternative Currency.
"Business Unit" means the assets constituting the business or a
division of operating unit thereof of any person.
"Capitalised Lease Obligation" means Indebtedness represented by
obligations under a lease that is required to be capitalised for
financial reporting purposes in accordance with GAAP and the amount of
such Indebtedness shall be the capitalised amount of such obligations
"Cash Equivalents" means:
(a) securities issues, guaranteed or insured by the United
States or any of its agencies with maturities of not more
than one year from the date acquired;
(b) 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 recognised standing,
which has capital and unimpaired surplus in excess of
$500,000,000 and which bank or its holding company has a
short-term commercial paper rating of at least A-2 or the
equivalent by Standard & Poors Ratings Group, a division of
McGraw-Hill, Inc. or at least P-2 or the equivalent by
Moody's Investors Services, Inc.;
(c) reverse repurchase agreements with terms of not more than seven
days from the date acquired, for securities of the type
described in (a) above and entered into only with commercial
banks having the qualifications described in (b) above;
(d) 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
(e) investments in money market funds registered under the
Investment Company Act of 1940, which have net assets of at
least $500,000,000 and at least eighty five per cent. of whose
assets consist of securities and other obligations of the type
described in (a) to (d) above.
"Certified Copy" means, in relation to a document, a copy of that
document bearing the endorsement "Certified a true, complete and
accurate copy of the original, which has not been amended otherwise
than by a document, a Certified Copy of which is attached hereto",
which has been signed and dated by a duly authorised officer of the
relevant company and which complies with that endorsement.
"Change" means the introduction, implementation, repeal, withdrawal or
change in, or in the interpretation or application of, (a) any law,
regulation, practice or concession, or (b) any directive, requirement,
request or guidance (whether or not having the force of law) of the
European Community, any central bank or any other fiscal, monetary,
regulatory or other authority.
"Consolidated EBIT" means, with respect to the Guarantor and its
Subsidiaries for any period of computation thereof, the sum of (without
duplication):
(a) Consolidated Net Income (Loss) of the Guarantor and its
Subsidiaries for such period plus
(b) Consolidated Interest Expense of the Guarantor and its
Subsidiaries for such period plus
(c) Taxes on income accrued during such period.
"Consolidated EBITDA" means with respect to the Guarantor and its
Subsidiaries for any period of computation thereof, the sum of :
(a)Consolidated EBIT for such period plus
(b)amortisation expense for such period plus
(c)without duplication, depreciation expense for such period.
"Consolidated EBIT to Interest Ratio" means with respect to the
Guarantor and its Subsidiaries for each rolling Four-Quarter Period
ending on the date of the computation thereof, the ratio of
Consolidated EBIT for such Four-Quarter Period to Consolidated Interest
Expense for such Four-Quarter Period.
"Consolidated Funded Debt" means, on the date of any computation
thereof, with respect to the Guarantor and its Subsidiaries (determined
on a consolidated basis but without duplication in accordance with
GAAP):
(a) all Indebtedness for money borrowed of the Guarantor 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 Guarantor 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 Capitalised Lease
Obligation under which the Guarantor and/or its Subsidiaries
are obligated;
(d) all reimbursement obligations under any standby, trade or other
letters or credit or acceptances (whether or not drawings
thereunder have been then presented for payment) issued for the
account of the Guarantor or its Subsidiaries or under which the
Guarantor and its Subsidiaries are otherwise obligated; and
(e) all Indebtedness of the Guarantor and its Subsidiaries that is
such by virtue of clause (b) of the definition of Indebtedness,
but only to the extent that the obligations Guaranteed are
obligations that would constitute Consolidated Funded Debt
under subparagraphs (a) to (d) above.
"Consolidated Funded Debt to EBITDA Ratio" means, with respect to the
Guarantor and its Subsidiaries at the time of the computation thereof,
the ratio of the Consolidated Funded Debt of the Guarantor and its
Subsidiaries outstanding at such time to Consolidated EBITDA for the
Four Quarter Period ending on the date of the computation thereof.
"Consolidated Interest Expense" means, with respect to the Guarantor
and its Subsidiaries for any period of computation thereof, the total
interest expense (including, without limitation, interest expense
attributable to Capitalised Lease Obligations in accordance with GAAP)
of the Guarantor of its Subsidiaries on a consolidated basis and in any
event including:
(a)the amortisation of debt discounts; and
(b) amortisation 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 Guarantor
and its Subsidiaries for any period of computation thereof the net
income (or loss) of the Guarantor and its Subsidiaries on a
consolidated basis for such period (taken as a single accounting
period) determined in conformity with GAAP PROVIDED THAT the following
shall be excluding when determining Consolidated Net Income (Loss);
(a) the income (or loss) for such fiscal period of any person prior
to the date such person becomes a Subsidiary of the Guarantor
or is merged into or consolidated with the Guarantor or any of
its Subsidiaries or such person's assets are acquired by the
Guarantor or any of its Subsidiaries;
(b) any item of gain or loss resulting from sale, conversion or
other disposition of assets other than in the ordinary
course of business;
(c) net gains or losses on the acquisition, retirement, sale or
other disposition of capital stock and other securities of
the Guarantor and its Subsidiaries;
(d) net gains or losses on the collection of proceeds of life
insurance policies;
(e) any write-up of any asset; and
(f) any other net gains or losses of any 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 date of this Agreement due to revaluation of
assets).
"Consolidated Tangible Net Worth" means, as at the date of any
computation thereof:
(a) the Consolidated Net Worth of the Guarantor 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
unamortised debt discount and expense, unamortised research
and development expense, unamortised deferred charges,
patents, trademarks, service marks, trade names, copyrights,
unamortised 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.
"Commitment" means, in relation to a Bank, the amount set out opposite
its name in Schedule 1 or under the heading "Amount of Commitment
Transferred" in the schedule to its relevant Transfer Certificate, in
each case as reduced, cancelled or increased in accordance with this
Agreement.
"Default" means any event specified as such in Clause 13.1.
"Dollar Equivalent" means, in relation to an amount in an Alternative
Currency on the day on which the calculation falls to be made, the
amount of Dollars which could be purchased with that amount of the
Alternative Currency using the Agent's spot rate of exchange for the
purchase in the London foreign exchange market of Dollars with the
Alternative Currency at or about 11.00 a.m on the second Business Day
before that date.
"Dollars" and "$" mean the lawful currency for the time being of the
United States of America.
"Drawdown Date" means the date on which an Advance is made, or is
proposed to be made.
"Drawdown Notice" means a notice substantially in the form set out in
Schedule 3.
"Encumbrance" as applied to the property of any person means:
(a) any security interest, encumbrance, charge, hypothecation,
rights of set-off, mortgage, deed to secure debt, deed of
trust, pledge, lien, charge or lease constituting a Capitalised
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.
"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
Section 901 et seq; Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C Section 9601 et seq; National Environmental Policy Act
U.S.C Section 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.
"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 Guarantor or any Subsidiary under Section 414(b) or
(c) of the Internal Revenue Code. In addition, for the 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 Guarantor or any Subsidiary under Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code.
"Existing Consolidated Funded Debt" means the Consolidated Funded Debt
of the Guarantor and its Subsidiaries outstanding as of the date of
this Agreement and referred to in Clause 11.1.1(h)(i).
"Existing Encumbrances" means Encumbrances listed on or over the
property and assets of the Guarantor and its Subsidiaries in existence
as of the date of this Agreement and referred to in Clause
11.1.1(h)(i).
"Existing Letters of Credit" means the letters of credit issued by
NationsBank of Georgia, National Association for the account of the
Guarantor or its Subsidiaries prior to the date of this Agreement and
referred to in Clause 11.1.1(h)(i).
"Equipment Mortgage" means an Encumbrance on any item of equipment
acquired after the date of this Agreement PROVIDED THAT:
(a)Such Encumbrance 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 Encumbrance 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 then
$5,000,000.
"Facility" means the multicurrency revolving loan facility granted to
the Borrower under this Agreement.
"Facility Period" means the period starting on the date of this
Agreement and ending on the Final Maturity Date.
"Fees Letter" means the letter dated the same date as this Agreement
from the Agent and the Arranger to the Guarantor relating to certain
fees payable to the Arranger and the Agent by the Guarantor in relation
to this Agreement, being described on its face as the "Fees Letter".
"Final Maturity Date" means the fifth anniversary of the date of this
Agreement.
"Financial Year", in relation to a company, has the meaning given to
that expression in section 223 of the Companies Act 1985.
"Financing Documents" means this Agreement, the Parent Guarantee and
the Fees Letter.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Guarantor, taken together as one accounting period and,
unless set forth herein to the contrary, shall mean the previous four
fiscal quarters of the Guarantor and ending on the day of any
computation of any ratio contained herein.
"GAAP" means:
(a) in relation to a person, accounting principles, concepts,
bases and policies generally adopted and accepted in the
jurisdiction of its incorporation; and
(b) in the case of the Guarantor, 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 Accounts and statements and pronouncements of the
Financial Accounting Standards Board that are applicable to
the circumstances.
"Governmental Approvals" means all authorisations, consents, approvals,
licences 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.
"Guarantee" or "Guaranteed" as applied to any Indebtedness means and
includes:
(a) a guarantee (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 guarantee, the practical effect
of which is to assure the payment or performance (or payment of
damages in the event of non performance) 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 non performance) of or on account of any
part or all of such Indebtedness, or to assure the
owner of such Indebtedness against loss;
(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
letter 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 guarantee of any obligation or
indemnifying or holding harmless, in any way, such
person against any part or all of such Indebtedness.
"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 "TCLP"
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 Guarantor and its
Subsidiaries under any interest rate swap, hedging arrangement or
similar arrangement with respect to all or any part of the Facility.
"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 Capitalised 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 Guarantee of any obligation described in subparagraph (a)
above executed by such person or under which such person is
obligated.
"Information Memorandum" means the information memorandum dated August
1996 prepared by the Arranger relating to the Guarantor and its
Subsidiaries.
"Interest Period" means each period determined in accordance with
Clause 7.3 for the purpose of calculating interest on Advances or
overdue amounts.
"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 any 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 Guarantee 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.
"Lending Office" means, in relation to a Bank, the office set out under
its name in Schedule 1 or in the schedule to its relevant Transfer
Certificate, or such other office through which that Bank's Commitment
is maintained and through which its Participation is made and
maintained under this Agreement.
"LIBOR" means, in respect of an Advance or other sum in a particular
currency and in respect of a particular Interest Period:
(a) the rate of the offered quotation for deposits in that
currency for a period comparable to that Interest Period
which appears on the display designated as "Page 3750" or
"Page 3740", as appropriate, on the Telerate Service (or
such other page or service as may replace it for the purpose
of displaying London interbank offered rates of prime banks
for deposits in that currency) at or about 11.00 a.m. on the
second Business Day before the first day of that Interest
Period (or if that currency is Sterling, at or about 11.00
a.m. on the first day of that Interest Period); or
(b) if no such offered quotation appears on "Page 3750" or "Page
3740", as appropriate, on the Telerate Service, the
arithmetic mean (rounded upwards to the nearest whole
multiple of 1/16 of one per cent. of the rates per annum (as
quoted to the Agent at its request) at which each Reference
Bank was offering deposits in that currency in an amount
comparable with that Advance or other sum, as the case may
be, to leading banks in the London interbank market for a
period equal to that Interest Period at or about 11.00 a.m.
on the second Business Day before the first day of that
Interest Period (or if that currency is Sterling, at or
about 11.00 a.m. on the first day of that Interest Period).
"Loan" means, at any time, the aggregate of the Original Dollar Amount
of all Advances outstanding at such time.
"Margin" means the percentage rate set out below corresponding to the
Consolidated Funded Debt to EBITDA Ratio of the Guarantor in effect at
such time as determined and adjusted in accordance with Clause 7.2:
Consolidated Funded Debt to EBITDA Ratio Margin
%
Greater than 3.25 to 1.00 0.475
Less than or equal to 3.25 to 1.00 but 0.350
greater than 2.75 to 1.00
Less than or equal to 2.75 to 1.00 but 0.220
greater than 2.25 to 1.00
Less than or equal to 2.25 to 1.00 0.150
"Majority Banks" means a group of Banks whose Participations together
exceed 66 2/3 per cent. of the Loan or, at any time when no Advance is
outstanding, a group of Banks whose Commitments together exceed 66 2/3
per cent. of the Total Commitments. For the purposes of this
definition, the amount of participations in Advances in an Alternative
Currency shall be taken at their Original Dollar Amount.
"Mandatory Liquid Asset Costs" means, in relation to a Bank, the
additional cost to that Bank of compliance with the reserve asset ratio
from time to time required by the Bank of England, determined in
accordance with Schedule 5 and expressed as a rate per cent.
per annum.
"Material Adverse Change" means, with respect to any person, a material
adverse change in such persons 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 Banks and the Agent under the
Financing Documents or the ability of the Guarantor or Borrower
to perform its respective obligations under the Financing
Documents to which it is a party; or
(c) the legality, validity or enforceability of any Financing
Documents.
Unless otherwise set forth herein, any reference to a "Material Adverse
Effect" shall be a reference to the effect on the Guarantor and its
Subsidiaries taken as a whole.
"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 Guarantor or any ERISA Affiliate and which is covered by Title IV
of ERISA.
"Original Dollar Amount" means:
(a) in relation to an Advance denominated in Dollars, the amount
of that Advance; and
(b) in relation to an Advance denominated in an Alternative
Currency, the Dollar Equivalent of the amount of that
Advance calculated as at the Drawdown Date of that Advance,
provided that if all or part of that Advance is not made or is repaid
or prepaid, the "Original Dollar Amount" of that Advance shall be
correspondingly reduced.
"Parent Guarantee" means the guarantee (in the agreed form) governed by
the laws of the State of Georgia executed, or to be executed, by the
Guarantor in favour of the Agent on behalf of the Agent, the Arranger
and the Banks in relation to all amounts due under this Agreement.
"Participation" means, in relation to a Bank and an Advance or the
Loan, the part of that Advance or the Loan, as the case may be, made
available or to be made available by that Bank and thereafter the part
of that Advance or the Loan, as the case may be, owing to that Bank
from time to time.
"Party" means a party to this Agreement.
"PBGC" means the Pension Benefit Guarantee Corporation and any
successor agency.
"Permitted Encumbrances" means, as to any person:
(a) Encumbrances securing taxes, assessments and other charges
or levies imposed by any Governmental Authority (excluding
any Encumbrances imposed pursuant to any of the provisions
of ERISA) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labour, materials, supplies or
rentals incurred in the ordinary course of business which
are not required to be paid or discharged under Clause
12.2(c);
(b) Encumbrances 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) Encumbrances 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 Encumbrances;
(e) Equipment Mortgages and Encumbrances constituting Capitalised
Lease Obligations but only to the extent the Indebtedness
secured by such Encumbrances is permitted pursuant to paragraph
(d) of the definition of Permitted Indebtedness; and
(f) Encumbrances securing any Hedging Obligations owing to a
Bank.
"Permitted Indebtedness" means:
(a)Indebtedness outstanding under the Financing Documents;
(b) Existing Consolidated Funded Debt (including under the $600
Million Credit Agreement) and any extensions, renewals,
replacements or refinancing thereof PROVIDED THAT:
(i) the principal amount of any Consolidated Funded Debt
incurred by the Guarantor, 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
Majority Banks 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
Guarantor or such Subsidiary shall give the Agent
prior written notice of such increase;
(c) trade debt incurred by the Guarantor or any Subsidiary in
the ordinary course of trade;
(d) Indebtedness secured by Equipment Mortgages and Indebtedness
constituting Capitalised Lease Obligations PROVIDED THAT the
aggregate principal amount of such Indebtedness at any one time
outstanding and owing by the Guarantor and its Subsidiaries may
not exceed $50,000,000;
(e) Indebtedness owing to the Guarantor by its Subsidiaries;
(f) Consolidated Funded Debt incurred by the Guarantor after the
date of this Agreement that is not secured by any Encumbrance
up to an aggregate principal amount at any one time outstanding
equal to $10,000,000;
(g) Subordinated Debt of the Guarantor and its Subsidiaries;
(h) any Hedging Obligations;
(i) (i) Guarantees in existence at the date of this Agreement
(other than the Parent Guarantee) as disclosed to the Agent and
the Banks and (ii) Guarantees by the Borrower or the Guarantor
of any of the foregoing Indebtedness provided that such
Guaranteed Indebtedness is permitted hereunder; and
(j) Indebtedness in the form of Existing Letters of Credit
including those issued under the $600 Million Agreement.
"Plan" means an employee benefit or pension plan maintained for the
employees of the Guarantor 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 date of this Agreement.
"Potential Default" means an event or omission which, with the giving
of any notice, the lapse of time, the determination of materiality or
the satisfaction of any other condition, would be a Default.
"Qualifying Bank" means an institution which is a bank for the purposes
of section 349 of the Income and Corporation Taxes Act 1988.
"Reference Banks" means the principal London offices of NationsBank,
N.A., London Branch, Lloyds Bank Plc and Barclays Bank PLC or such
other bank or banks as may be agreed between the Agent (acting on the
instructions of the Majority Banks) and the Borrower.
"Reportable Event" has the meaning set forth in Section 403(b) of
ERISA, but shall not include a Reportable Event as to which the
provision of 30 days' notice to the PBGC is waived under applicable
regulations.
"Restricted Payment" means:
(a) any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock the Guarantor 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
Guarantor 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 the Guarantor or any of its
Subsidiaries now or hereafter outstanding.
"$600 Million Credit Agreement" means the credit agreement dated 30th
November 1994 entered into between the Guarantor, the lenders named
therein and NationsBank N.A. (South) (as successor to NationsBank of
Georgia, National Association) as agent and any extensions, renewals,
modifications, supplements, refinancings, replacements, and
substitutions thereof in whole or in part.
"Sterling" and "__" (THE SYMBOL FOR BRITISH STERLING APPEARS IN
QUOTATION MARKS IN THE AGREEMENT) means the lawful currency for the
time being of the United Kingdom.
"Solvent" means, when used with respect to any person, that:
(a) the fair value and the fair saleable 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);
(b) such person is able to pay its debts or other obligations in
the ordinary course as they fall due; and
(c) the person has capital not unreasonably small to carry on
its business in which it proposes to be engaged.
"Subordinated Debt" means Indebtedness of the Guarantor or any of its
Subsidiaries that is expressly subordinated in the right of payment and
otherwise all Advances and other amounts due to the Agent, Arranger and
the Banks hereunder in a manner satisfactory to the Majority Banks;
"Subsidiary" means
(a) a person of which an aggregate of 50 per cent. 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 of 50 per cent. or more of other voting or equity
interests in 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;
(b) any other person whose financial statements are consolidated
with the Guarantor in accordance with GAAP; and
(c) a subsidiary within the meaning of Section 736 of the
Companies Act 1985.
"Taxes" includes all present and future taxes, charges, imposts,
duties, levies, deductions, withholdings or fees of any kind
whatsoever, or any amount payable on account of or as security for any
of the foregoing, by whomsoever on whomsoever and wherever imposed,
levied, collected, withheld or assessed, together with any penalties,
additions, fines, surcharges or interest relating thereto; and "Tax"
and "Taxation" shall be construed accordingly.
"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 Sections 4042 of ERISA, or the appointment of a
trustee to administer any Plan;
(d) the withdrawal of the Guarantor, any Subsidiary or any ERISA
Affiliate 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 Guarantor, its Subsidiaries
or any ERISA Affiliate providing security as required by
Internal Revenue Code Section 5401(a)(29).
"Total Commitments" means the aggregate of the Commitments of the
Banks.
"Transaction Costs" with respect to a given transaction, means all
brokerage and investment banking fees, fees and expenses of appraisers
and accountants, legal fees and disbursements and other out-of-pocket
costs and expenses incurred, by the Guarantor or a Subsidiary (or
required to be paid by the Guarantor or a Subsidiary) in connection
with such transaction.
"Transfer Certificate" means a document substantially in the form set
out in Schedule 6.
"VAT" means value added tax as provided for in the Value Added Tax Act
1994 and legislation (or purported legislation and whether delegated or
otherwise) supplemental to that Act or in any primary or secondary
legislation promulgated by the European Community or any official body
or agency of the European Community and any tax similar or equivalent
to value added tax imposed by any country other than the United Kingdom
and any similar or turnover Tax replacing or introduced in addition to
any of the same.
1.2 Headings
The headings in this Agreement are for convenience only and shall be
ignored in construing this Agreement.
1.3 Interpretation
In this Agreement (unless otherwise provided):
(a) words importing the singular shall include the plural and
vice versa;
(b) references to Clauses and Schedules are to be construed as
references to the clauses of, and schedules to, this
Agreement;
(c) references to any Financing Document or any other document
shall be construed as references to that Financing Document or
that other document, as amended, varied, novated or
supplemented, as the case may be;
(d) references to any specific statute or statutory provision
are to those of the United Kingdom or the United States of
America and include any statute or statutory provision which
amends, extends, consolidates or replaces the same, or which
has been amended, extended, consolidated or replaced by the
same, and shall include any orders, regulations, instruments
or other subordinate legislation made under the relevant
statute;
(e) references to a document being "in the agreed form" means that
document the form and content of which has been approved by the
Agent and which has endorsed on it the words "in the agreed
form" and which is initialed by or on behalf of the Agent and
the Borrower;
(f) the words "including" and "in particular" shall be construed as
being by way of illustration or emphasis only and shall not be
construed as, nor shall they take effect as, limiting the
generality of any foregoing words;
(g) the words "other" and "otherwise" shall not be construed
ejusdem generis with any foregoing words where a wider
construction is possible;
(h) references to a "person" shall be construed so as to include
that person's assigns, transferees or successors in title and
shall be construed as including references to an individual,
firm, partnership, joint venture, company, corporation, trust,
unincorporated body of persons or any state or any agency of a
state;
(i) accounting terms, ratios and measurements shall be construed
so as to be consistent with GAAP in effect as at the date of
this Agreement; and
(j)references to time are to London time.
2. FACILITY
2.1 Facility
2.1.1 Subject to the terms of this Agreement, the Banks agree to make
available to the Borrower a multicurrency revolving credit facility in
the maximum principal amount of $125,000,000.
2.1.2 Notwithstanding any other term of this Agreement, no Bank shall be
obliged to lend more than its Commitment.
2.2 Obligations several
2.2.1 The obligations of each Bank under this Agreement are several.
2.2.2 The failure of a Bank to carry out its obligations under this Agreement
shall not relieve any other Party of any of its obligations under this
Agreement.
2.2.3 None of the Banks, nor the Agent nor the Arranger shall be responsible
for the obligations of any other Party under this Agreement.
2.3 Rights several
2.3.1 The rights of each Bank, and the Agent and the Arranger under this
Agreement are several. All amounts due, and obligations owed, to each
of them are separate and independent debts or, as the case may be,
obligations.
2.3.2 Each Bank and the Agent may, except as otherwise stated in this
Agreement, separately enforce its rights under this Agreement.
3. PURPOSE
3.1 Purpose
The Borrower shall use the proceeds of all Advances for its general
working capital and corporate purposes only including the refinancing
of existing Indebtedness of the Borrower and inter-company loans.
3.2 No monitoring
Neither the Agent, the Arranger nor any Bank shall be obliged to
investigate or monitor the use or application of the proceeds of the
Advances.
4. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement, none of the
Agent and the Banks shall be under any obligation to make the Facility
available to the Borrower unless the Agent has notified the Borrower
and the Banks that it has received all the documents listed in Schedule
2 (in form and content satisfactory to the Agent) on or prior to 30th
September 1996.
5. DRAWDOWN
5.1 Facility Period
Subject to the terms of this Agreement, Advances shall be made to the
Borrower at any time during the Facility Period when requested by means
of a Drawdown Notice in accordance with this Clause 5. At the close of
business on the last day of the Facility Period, the Commitment of each
Bank shall be automatically cancelled.
5.2 Conditions to each Advance
The obligation of each Bank to make available its Participation in an
Advance is subject to the conditions that on the date on which the
relevant Drawdown Notice is given and on the Drawdown Date:
(a) the representations and warranties in Clause 11 to be
repeated on those dates are correct and will be correct
immediately after the Advance is made; and
(b) no Default or Potential Default has occurred and is
continuing or would occur on the making of the Advance.
5.3 Drawdown Notice
5.3.1 Whenever the Borrower wishes to draw down under the Facility, it shall
give a duly completed Drawdown Notice to the Agent to be received not
later than 11.00 a.m. on the third Business Day before the Drawdown
Date (or in the case of an Advance to be denominated in Sterling, not
later than 11.00 a.m. on the first Business Day before the Drawdown
Date).
5.3.2 A Drawdown Notice shall be irrevocable and the Borrower shall be
obliged to borrow in accordance with its terms.
5.4 Limitations on Advances
The following limitations apply to Advances:
(a) the Drawdown Date of an Advance shall be a Business Day at
least one month before the Final Maturity Date;
(b) the Interest Period of an Advance shall end on or before the
Final Maturity Date;
(c) the principal amount of an Advance denominated in Dollars
shall be:
(i) a minimum amount of $5,000,000 and an integral
multiple of $2,500,000; or
(ii) the amount of the Available Facility;
(d) the principal amount of an Advance denominated in an
Alternative Currency shall be:
(i) greater than the equivalent of $5,000,000 (converted at
the Agent's relevant spot rate of exchange) and a round
amount in that currency agreed with the Agent; or
(ii) the equivalent of the amount of the Available
Facility (converted at the Agent's relevant spot
rate of exchange);
(e) no Advance shall be made if the making of that Advance would
result in the Original Dollar Amount of all Advances exceeding
the Total Commitments:
(f) no more than 5 Advances may be outstanding at any one time;
and
(g) in the case of an Advance denominated in an Alternative
Currency, Clause 6 shall be complied with.
5.5 Notification to Banks
The Agent shall promptly notify each Bank of the details of each
Drawdown Notice received by it.
5.6 Participations
Subject to the terms of this Agreement, each Bank acting through its
Lending Office shall make available to the Agent on the Drawdown Date
for an Advance an amount equal to its Participation in the amount and
currency specified in the Drawdown Notice (or, if in an Alternative
Currency, in the amount notified to it by the Agent) for that Advance.
A Bank shall participate in an Advance in the proportion borne by its
Available Commitment to the Available Facility on the Drawdown Date of
that Advance.
6. ALTERNATIVE CURRENCIES
6.1 Requests for Alternative Currency
Subject to Clause 6.2, the Borrower may request in a Drawdown Notice
that an Advance be denominated in an Alternative Currency.
6.2 Availability
The Borrower may not request that an Advance be denominated in an
Alternative Currency unless the Agent has (in consultation with the
Banks), following an enquiry of the Borrower, confirmed to the Borrower
that the Alternative Currency is available for drawing under this
Facility. Clauses 6.2, 6.3 and 6.4 shall not apply to any Advance
denominated in Sterling.
6.3 Notification to Banks
The Agent shall promptly notify each Bank of the currency and the
Original Dollar Amount of each Advance as soon as the same can be
calculated.
6.4 No Alternative Currency
6.4.1 If, no later than 4.00 p.m. on the third Business Day before the first
day of an Interest Period in relation to an Advance which it is
proposed to be denominated in an Alternative Currency, a Bank notifies
the Agent that:
(a) for whatever reason it is impracticable for that Bank to fund
its Participation in that Advance in the proposed Alternative
Currency in the ordinary course of business in the London
interbank market; or
(b) central bank or other governmental authorisation in the country
of the proposed Alternative Currency is required to permit its
use by that Bank for the making of that Advance and the
authorisation has not been obtained or is not in full force and
effect or is subject to unacceptable conditions; or
(c) the use of the proposed Alternative Currency is restricted or
prohibited by any request, directive, regulation or guideline
of any governmental body, agency, department or regulatory or
other authority (whether or not having the force of law) in
accordance with which that Bank is accustomed to act,
the Agent shall notify the Borrower and the Banks by 5.00 p.m. on the
same day.
6.4.2 Following a notification of the Borrower under Clause 6.4.1:
(a) the relevant Advance shall not be made if the Borrower notifies
the Agent by 9.00 a.m on the second Business Day before the
proposed Advance that the Advance should not be made; or
(b) if the Borrower fails to notify the Agent by 9.00 a.m as stated
in Clause 6.4.2(a) or if the Borrower notifies the Agent by
such time that it requires the Advance to be denominated in
Dollars, the relevant Advance shall be denominated in Dollars.
6.4.3 If the Advance is to be denominated in Dollars pursuant to Clause
6.4.2(b), the Agent shall notify the Banks of such fact by 10.30 a.m on
the second Business Day before the first day of the Interest Period in
relation to that Advance.
7. INTEREST
7.1 Interest rate
Interest shall accrue on each Advance from and including the relevant
Drawdown Date to but excluding the date the Advance is repaid at the
rate determined by the Agent to be the aggregate of:
(a) the Margin;
(b) LIBOR; and
(c) in the case of an Advance denominated in Sterling, the
Mandatory Liquid Asset Costs.
7.2 Margin
7.2.1 The Margin shall be determined by the Agent on a quarterly basis by way
of the financial statements referred to in Clause 7.2.2 commencing with
the fiscal quarter ending on 30th September 1996.
7.2.2 The Consolidated Funded Debt to EBITDA Ratio set out in each relative
compliance certificate required to be delivered to the Agent pursuant
to Clause 12.1.2(c) shall be used to determine the Margin unless the
Agent (acting reasonably) considers the calculation of such ratio in
the compliance certificate to be incorrect. In such case, the Agent
shall consult with the Guarantor to agree the Margin. The decision
of the Agent shall be conclusive and binding, save in the case of
manifest error.
7.2.3 Any adjustment to the Margin on an Advance shall be effective from the
first day of the Interest Period next following the Interest Period in
which the Agent receives the compliance certificate and the quarterly
(or annual) financial statements which are required to be delivered to
the Agent.
7.2.4 Notwithstanding the provisions of Clauses 7.2.1, 7.2.2 and 7.2.3, for
the period from the date of the first Advance hereunder to and
including 30th September 1996, the Margin on each Advance shall be 0.22
per cent. Thereafter, the Margin shall be adjusted from time to time as
set out above.
7.2.5 The Margin shall, at all times during which a Default is continuing,
be 2 per cent. above the Margin in effect at the time of such Default.
7.3 Interest Periods
7.3.1 The Borrower shall select an Interest Period for an Advance in the
relevant Drawdown Notice of 1, 2, 3 or 6 months' duration (or such
other Interest Period as the Agent, acting on the instructions of the
Majority Banks, may allow).
7.3.2 If an Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall instead end on the next
Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
7.3.3 If an Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which that Interest Period
is to end, it shall end on the last Business Day of that later calendar
month.
7.3.4 If an Interest Period would otherwise extend beyond the Final Maturity
Date, it shall be shortened so that it ends on the Final Maturity Date.
7.4 Default interest
7.4.1 If the Borrower fails to pay any amount payable under any Financing
Document on the due date, it shall pay default interest on the
overdue amount from the due date to the date of actual payment
calculated by reference to successive Interest Periods (each of such
duration as the Agent may select and the first beginning on the
relevant due date) at the rate per annum being the aggregate of (a) 2
per cent. per annum, (b) the Margin, (c) LIBOR and (d) (if
applicable) the Mandatory Liquid Asset Costs.
7.4.2 So long as the overdue amount remains unpaid, the default interest rate
shall be recalculated in accordance with the provisions of this Clause
7.4 on the last day of each such Interest Period and any unpaid
interest shall be compounded at the end of each Interest Period.
7.5 Calculation and payment of interest
7.5.1 At the beginning of each Interest Period, the Agent shall notify the
Banks and the Borrower of the duration of the Interest Period and the
rate and amount of interest payable for the Interest Period (but in the
case of any default interest calculated under Clause 7.4, any such
notification need not be made more frequently than weekly). Each
notification shall set out in reasonable detail the basis of
computation of the amount of interest payable.
7.5.2 Interest due from the Borrower under this Agreement shall:
(a) accrue from day to day at the rate calculated under this
Clause 7;
(b) except as otherwise provided in this Agreement, be paid by the
Borrower to the Agent (for the account of the Banks or the
Agent, as the case may be) in arrears on the last day of each
Interest Period, provided that for any Interest Period which is
for longer than 3 months, the Borrower shall pay interest 3
monthly in arrears during that Interest Period;
(c) be calculated on the basis of the actual number of days elapsed
and a 360 day year or, in the case of interest on an Advance
denominated in Sterling, a 365 day year (or, if different, such
number of days as is market practice for the relevant
currency); and
(d)be payable both before and after judgment.
7.6 Agent's determination
The determination by the Agent of any interest payable under this
Clause 7 shall be conclusive and binding on the Borrower in the absence
of manifest error.
8. REPAYMENT, PREPAYMENT AND CANCELLATION
8.1 Repayment
8.1.1 The Borrower shall repay each Advance in full on the last day of the
Interest Period for that Advance.
8.1.2 Subject to the terms of this Agreement, any amounts repaid under this
Agreement may be reborrowed.
8.1.3 If all or part of an existing Advance is to be repaid from the proceeds
of all or part of a new Advance denominated in the same currency as
such existing Advance the amount to be repaid by the Borrower to each
Bank shall be set off against the amount to be advanced by the relative
Bank in relation to the new Advance. The person to whom the smaller
amount is to be paid shall pay to the other party a sum equal to the
difference between the two amounts.
8.2 Prepayment
Subject to Clauses 9 and 10 the Borrower may not prepay any Advance
before the end of its Interest Period.
8.3 Currency of repayment or prepayment
Each repayment or prepayment of an Advance under this Agreement shall
be made in the currency in which that Advance was denominated
immediately prior to such repayment or prepayment.
8.4 Cancellation
8.4.1 The Borrower may, by the Borrower or the Guarantor giving the Agent not
less than 5 Business Days' prior notice, cancel all or part of the
Available Facility (but if in part, in a minimum amount of $5,000,000
and an integral multiple of $5,000,000).
8.4.2 Any notice of cancellation shall be irrevocable and shall specify the
date on which the cancellation shall take effect and the amount of the
cancellation. The Agent shall promptly notify the Banks of receipt of
any such notice.
8.4.3 The Borrower may not borrow any part of the Facility which has been
cancelled. Any cancellation shall reduce each Bank's Commitment
rateably.
8.4.4 The Borrower may not cancel all or part of the Facility except as
expressly provided in this Agreement.
8.5 Mandatory Prepayment
8.5.1 If the Agent determines at any time (whether on the instructions of a
Bank or not) that the outstanding aggregate principal amount of all
Advances denominated in an Alternative Currency (based on the Dollar
Equivalent of each such Advance at that time) exceeds 105 per cent.
of the Total Commitments less the outstanding aggregate amount of all
Advances denominated in Dollars then, the Borrower shall upon 5
Business Days written notice from the Agent, prepay in the relative
Alternative Currency all or part of an Advance or Advances (together
with any interest accrued thereon) to the extent that the aggregate
principal amount of all outstanding Advances denominated in an
Alternative Currency shall not exceed the Total Commitments less the
outstanding aggregate amount of all Advances denominated in Dollars.
8.5.2 The Agent shall not be obliged to make the calculation referred to in
Clause 8.5.1 unless instructed to do so by the Majority Banks.
9. CHANGES IN CIRCUMSTANCES
9.1 Illegality
If it is or becomes illegal for a Bank to maintain its Commitment or to
continue to make available or fund its Participation in any Advance,
then:
(a) that Bank shall notify the Agent and the Borrower; and
(b) (i) the Commitment of that Bank shall be cancelled
immediately; and
(ii) the Borrower shall prepay to the Agent (for the
account of that Bank) that Bank's Participation in
all Advances (together with accrued interest on the
amount prepaid and all other amounts owing to that
Bank under this Agreement) within 5 Business Days of
demand by that Bank (or, if permitted by the
relevant law, on the last day of the Interest Period
of the relevant Advances).
9.2 Increased Costs
9.2.1 If, after the date of this Agreement, a Change occurs which causes an
Increased Cost (as defined in Clause 9.2.3) to any Bank (or any company
of which any such Bank is a Subsidiary) then the Borrower shall pay (as
additional interest) to the Agent (for the account of that Bank) within
5 Business Days of demand all amounts which that Bank certifies to be
necessary to compensate such Bank for the Increased Cost.
9.2.2 Any demand made under Clause 9.2.1 shall be made by the relevant Bank
through the Agent and shall set out in reasonable detail so far as is
practicable the basis of computation of the Increased Cost.
9.2.3 In this Clause 9.2:
"Increased Cost" means any cost to, or reduction in the amount payable
to, or reduction in the return on capital or regulatory capital
achieved by, a Bank (or any company of which that Bank is a Subsidiary)
to the extent that it arises, directly or indirectly, as a result of
the Change and is attributable to the Commitment or Participation in
any Advance of that Bank or the funding of that Bank's Participation in
any Advance including:
(a) any Tax Liability (other than Tax on Overall Net Income)
incurred by that Bank;
(b) any changes in the basis or timing of Taxation of that Bank
in relation to its Commitment or Participation in any
Advance or to the funding of that Bank's Participation in
any Advance;
(c) the cost to that Bank (or any company of which that Bank is
a Subsidiary) of complying with, or the reduction in the
amount payable to or reduction in the return on capital or
regulatory capital achieved by that Bank (or any company of
which that Bank is a Subsidiary) as a result of complying
with, any capital adequacy or similar requirements howsoever
arising, including as a result of an increase in the amount
of capital to be allocated to the Facility or of a change to
the weighting of that Bank's Commitment or Participation in
any Advance; and
(d) the cost to that Bank of complying with any reserve, cash
ratio, special deposit or liquidity requirements (or any other
similar requirements).
"Tax Liability" means, in respect of any person:
(a) any liability or any increase in the liability of that
person to make any payment of or in respect of Tax;
(b) the loss of any relief, allowance, deduction or credit in
respect of Tax which would otherwise have been available to
that person;
(c) the setting off against income, profits or gains or against any
Tax liability of any relief, allowance, deduction or credit in
respect of Tax which would otherwise have been available to
that person; and
(d) the loss or setting off against any Tax liability of a right to
repayment of Tax which would otherwise have been available to
that person.
For the purposes of this definition of "Tax Liability", any question of
whether or not any relief, allowance, deduction, credit or right to
repayment of Tax has been lost or set off, and if so, the date on which
that loss or set-off took place, shall be conclusively determined by
the relevant person's auditors.
"Tax on Overall Net Income" means, in relation to a Bank, Tax (other
than Tax deducted or withheld from any payment) imposed on the net
profits of that Bank by the jurisdiction in which its Lending Office or
its head office is situated.
9.2.4 The Borrower shall not be obliged to make a payment in respect of an
Increased Cost under this Clause 9.2 if and to the extent that the
Increased Cost has been compensated for by the payment of Mandatory
Liquid Asset Costs or the operation of Clause 10.9.
9.2.5 If the Borrower is required to pay any amount to a Bank under this
Clause 9.2, then, without prejudice to that obligation and so long as
the circumstances giving rise to the relevant Increased Cost are
continuing and subject to the Borrower giving the Agent and that Bank
not less than 10 days' prior notice (which shall be irrevocable), the
Borrower may prepay all, but not part, of that Bank's Participation
in the Loan together with accrued interest on the amount prepaid.
Any such prepayment shall be subject to Clause 22.1. On any such
prepayment the Commitment of the relevant Bank shall be automatically
cancelled.
9.3 Market disruption
9.3.1 If, in relation to an Advance and a particular Interest Period:
(a) the Agent determines that, because of circumstances affecting
the London interbank market generally, reasonable and adequate
means do not exist for ascertaining LIBOR for that Advance for
that Interest Period; or
(b) the Agent has been notified by a group of Banks whose
Commitments together exceed 33 per cent. of the Total
Commitments that in their opinion:
(i) matching deposits may not be available to them in the
London interbank market in the ordinary course of
business to fund their Participations in that Advance
for that Interest Period; or
(ii) the cost to them of obtaining matching deposits in the
London interbank market would be in excess of LIBOR for
that Interest Period,
the Agent shall promptly notify the Borrower and the Banks of that
event (such notice being a "market disruption notice").
9.3.2 If a market disruption notice applies to a proposed Advance, that
Advance shall not be made. Instead, the Agent and the Borrower shall
immediately enter into negotiations for a period of not more than
30 days with a view to agreeing a substitute basis for calculating
the interest rate for the Advance or for funding the Advance (whether
in Dollars or another currency). Any substitute basis agreed by the
Agent (with the consent of all the Banks) and the Borrower shall take
effect in accordance with its terms and be binding on all the Parties.
9.3.3 If a market disruption notice applies to an outstanding Advance, then:
(a) the Agent and the Borrower shall immediately enter into
negotiations for a period of not more that 30 days with a view
to agreeing a substitute basis for calculating the rate of
interest for the Advance or for funding the Advance (whether in
Dollars or another currency);
(b) any substitute basis agreed under Clause 9.3.3(a) by the Agent
(with the consent of all the Banks) and the Borrower shall take
effect in accordance with its terms and be binding on all the
Parties;
(c) if no substitute basis is agreed under Clause 9.3.3(a),
then, subject to Clause 9.3.4, each Bank shall (through the
Agent) certify before the last day of the Interest Period to
which the market disruption notice relates a substitute
basis for maintaining its Participation in the Advance which
shall reflect the cost to the Bank of funding its
Participation in the Advance from whatever sources it
selects plus the Margin and (if applicable) Mandatory Liquid
Asset Costs; and
(d) each substitute basis so certified shall be binding on the
Borrower and the certifying Bank and treated as part of this
Agreement.
9.3.4 If no substitute basis is agreed under Clause 9.3.3(a), then, so long
as the circumstances giving rise to the market disruption notice
continue and subject to the Borrower giving the Agent and the Banks not
less than 10 days' prior notice (which shall be irrevocable), the
Borrower may prepay the Advance to which the market disruption notice
applies together with accrued interest on the amount prepaid. Any such
prepayment shall be subject to Clause 22.1.
9.4 Mitigation
9.4.1 If any circumstances arise in respect of any Bank which would, or upon
the giving of notice would, result in the operation of Clause 9.1, 9.2,
9.3 or 10.9 to the detriment of the Borrower, then that Bank shall:
(a) promptly upon becoming aware of those circumstances and
their results, notify the Agent and the Borrower; and
(b) in consultation with the Agent and Borrower, take reasonable
steps to mitigate the effects of those circumstances
(including changing its Lending Office or consulting with
the Borrower with a view to transferring some or all of its
rights and obligations under this Agreement to another bank
or other financial institution acceptable to the Borrower)
in a manner which will avoid the circumstances in question
and on terms acceptable to the Agent, the Borrower and that
Bank,
provided that no Bank shall be obliged to take any steps which in its
opinion would or might have an adverse effect on its business or
financial condition or the management of its Tax affairs or cause it to
incur any material costs or expenses.
9.4.2 Nothing in this Clause 9.4 shall limit, reduce, affect or otherwise
qualify the rights of any Bank or the obligations of the Borrower under
Clauses 9.1, 9.2, 9.3 and 10.9.
9.5 Certificates
The certificate or notification of the Agent or, as the case may be,
the relevant Bank as to any of the matters referred to in this Clause 9
shall be in reasonable detail and shall be conclusive and binding on
the Borrower save for any manifest error.
10. PAYMENTS
10.1 Place and time
All payments by the Borrower or a Bank under this Agreement shall be
made to the Agent to its account at such office or bank in the
principal financial centre of the relevant currency at such time as the
Agent may notify to the Borrower or the Banks for this purpose.
10.2 Funds
All payments to the Agent under this Agreement shall be made for value
on the due date in freely transferable and readily available funds.
10.3 Distribution
10.3.1 Each payment received by the Agent under this Agreement for another
Party shall, subject to Clauses 10.3.2 and 10.3.3, be made available by
the Agent to that Party by payment (on the date and in the currency and
funds of receipt) to its account with such office or bank in the
principal financial centre of the relevant currency as it may notify to
the Agent for this purpose by not less than 5 Business Days' prior
notice.
10.3.2 The Agent may apply any amount received by it for the Borrower in or
towards payment (on the date and in the currency and funds of receipt)
of any amount due from the Borrower under this Agreement or in or
towards the purchase of any amount of any currency to be so applied.
10.3.3 Where a sum is to be paid to the Agent under this Agreement for
another Party, the Agent is not obliged to pay that sum to that Party
until it has established that it has actually received that sum. The
Agent may, however, assume that the sum has been paid to it in
accordance with this Agreement, and, in reliance on that assumption,
make available to that Party a corresponding amount. If the sum has
not been made available but the Agent has paid a corresponding amount
to another Party, that Party shall immediately on demand by the Agent
refund the corresponding amount together with interest on that amount
from the date of payment to the date of receipt, calculated at a rate
determined by the Agent to reflect its cost of funds.
10.4 Business Days
If a payment under this Agreement is due on a day which is not a
Business Day, the due date for that payment shall instead be the next
Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
10.5 Currency
All payments by the Borrower in respect of an Advance, whether of
interest or principal, shall be made in the currency in which that
Advance was denominated immediately before the relevant payment. All
payments relating to costs, losses, expenses or Taxes shall be made in
the currency in which the relative costs, losses, expenses or Taxes
were incurred. Any other amount payable under this Agreement shall,
except as otherwise provided, be made in Dollars.
10.6 Accounts as evidence
Each Bank shall maintain in accordance with its usual practice an
account which shall, as between the Borrower and that Bank, be prima
facie evidence of the amounts from time to time advanced by, owing to,
paid and repaid to that Bank under this Agreement.
10.7 Partial payments
10.7.1 If the Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Borrower under this Agreement, the
Agent shall apply that payment towards the obligations of the Borrower
under this Agreement in the following order:
(a) first, in or towards payment of any unpaid costs and
expenses of the Agent under this Agreement;
(b) second, in or towards payment pro rata of any accrued
interest and accrued fees due but unpaid under this
Agreement;
(c) third, in or towards payment pro rata of any principal due
but unpaid under this Agreement; and
(d) fourth, in or towards payment pro rata of any other sum due
but unpaid under this Agreement.
10.7.2 The Agent shall, if so directed by all the Banks, vary the order set
out in Clauses 10.7.1(b) to (d).
10.7.3 Clauses 10.7.1 and 10.7.2 shall override any appropriation made by
the Borrower.
10.8 Set-off and counterclaim
All payments by the Borrower or the Guarantor under any Financing
Document shall be made without set-off or counterclaim.
10.9 Grossing-up
10.9.1 Subject to Clause 10.9.2, all sums payable to the Agent or any Bank
pursuant to or in connection with any Financing Document shall be paid
in full free and clear of all deductions or withholdings whatsoever
save only as may be required by law.
10.9.2 If any deduction or withholding is required by law in respect of any
payment due from the Borrower or the Guarantor to the Agent or any Bank
pursuant to or in connection with any Financing Document the Borrower
or, as the case may be, the Guarantor shall:
(a) ensure or procure that the deduction or withholding is made
and that it does not exceed the minimum legal requirement
therefor;
(b) pay, or procure the payment of, the full amount deducted or
withheld to the relevant Taxation or other authority in
accordance with the applicable law;
(c) increase the payment in respect of which the deduction or
withholding is required so that the net amount received by
the payee (which expression when used in this Clause 10.9.2
shall mean the Agent or any Bank) after the deduction or
withholding (and after taking account of any further
deduction or withholding which is required to be made as a
consequence of the increase) shall be equal to the amount
which the payee would have been entitled to receive in the
absence of any requirement to make any deduction or
withholding; and
(d) promptly deliver or procure the delivery to the relative
payee of receipts evidencing each deduction or withholding
which has been made.
10.9.3 If the Agent is obliged to make any deduction or withholding from any
payment to any Bank (an "agency payment") which represents an amount
or amounts received by the Agent from any obligor under any Financing
Document, the Borrower shall pay directly to that Bank such sum (an
"agency compensating sum") as will, after taking into account any
deduction or withholding which the Borrower is obliged to make from
the agency compensating sum, enable that Bank to receive, on the due
date for payment of the agency payment, an amount equal to the agency
payment which that Bank would have received in the absence of any
obligation to make any deduction or withholding.
10.9.4 Subject to Clause 10.9.5, the Borrower shall not be required to pay an
additional amount under this Clause 10.9 if the payment in respect of
which the deduction or withholding is required is a payment of interest
on a Participation in an Advance and:
(a) at the time that Participation was made, the Bank making that
Participation was not a Qualifying Bank otherwise than as a
consequence of a Change occurring after the date of this
Agreement (and the obligation to deduct or withhold would not
have arisen if that Participation had been made by a Qualifying
Bank); or
(b) at the time when the interest is paid, the Bank for whose
account it is paid is not beneficially entitled to it or,
being beneficially entitled to it, the Bank is not within
the charge to United Kingdom corporation tax as respects it
otherwise than as a consequence of a Change occurring after
the date of this Agreement (and the obligation to deduct or
withhold would not have arisen if the Bank had been
beneficially entitled to the interest and had been within
the charge to United Kingdom corporation tax as respects it).
10.9.5 The Borrower shall be required to pay an additional amount to a Bank
who would otherwise not be obliged to such additional amount under this
Clause 10.9 because of the provisions of Clause 10.9.4 (a "Convention
Bank") PROVIDED THAT the representations and warranties specified in
Clause 10.9.6 are true and correct and the undertakings specified in
Clause 10.9.6 are complied with by such Convention Bank.
10.9.6 Each Convention Bank represents, warrants and undertakes to the
Borrower that:
(a) it is acting as principal in relation to this Agreement and
not as agent for any party;
(b) for the purposes of Article II of the Convention between the
United Kingdom and the United States of America dated 31st
December 1975 as amended (S.I.1980/586) (the "Convention"):
(i) it is a resident of the United States (as defined in
Article 4 of the Convention);
(ii) it does not carry on business in the United Kingdom
through a permanent establishment (as defined in
Article 5 of the Convention) situated in the United
Kingdom;
(iii) it does not perform in the United Kingdom independent
personal services from a fixed base situated in the
United Kingdom;
(iv) it is not exempt from Tax on interest on Advances in
the United States; and
(v) subject as provided in this Clause 10.9.6, it will,
except as a result of any event beyond its control,
continue to comply with items (i), (ii) and (iv) above;
and
(c) it shall at the request of the Borrower promptly use all
reasonable endeavours to assist the Borrower in making such
claims and obtaining such consents as may be necessary or
advisable under the Convention or otherwise to enable the
Borrower to pay interest to such Convention Bank on the
Advances made by it without any withholding or deduction for or
on account of Tax.
Each Convention Bank shall be entitled at any time to represent,
warrant and undertake to the Borrower, in form and manner approved by
the Borrower (such approval not to be unreasonably withheld or
delayed), to the same effect, mutatis mutandis, as is represented by
the Banks (other than the Convention Banks) in Clause 10.9.4, and upon
the coming into full force and effect of such representation, warranty
and undertaking the representations, warranties and undertakings
contained in this Clause 10.9.6 shall cease to apply (without prejudice
to any right or claim which the Borrower may have in respect of any
previous breach of the provisions of this Clause 19.9.6)
10.9.7 If the Borrower or the Guarantor is required to make an increased
payment for the account of a Bank under Clause 10.9.2, then, without
prejudice to that obligation and so long as such requirement exists
and subject to the Borrower giving the Agent and that Bank not less
than 10 days' prior notice (which shall be irrevocable), the Borrower
may prepay all, but not part, of that Bank's Participation in the
Loan together with accrued interest on the amount prepaid. Any such
prepayment shall be subject to Clause 22.1. On any such prepayment
the Commitment of the relevant Bank shall be automatically cancelled.
11. REPRESENTATIONS AND WARRANTIES
11.1 Representations and Warranties
11.1.1 The Borrower and the Guarantor each represent and warrant to the Agent
and each Bank that:
(a) Organisation, Power and Qualification:
(i) it is a corporation, duly organised, 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
(ii) it is duly qualified and is in good standing and
authorised to do business in each jurisdiction in which
the character of its properties or the nature of its
business requires such qualification or authorisation
and where the failure to be so qualified or authorised
would have a Material Adverse Effect;
(b) Ownership Structure and Subsidiaries: Schedule 4 correctly
sets out the correct legal name and jurisdiction of the
Guarantor and each of its material Subsidiaries and
Affiliates;
(c) Authorisation: it has the right and power, and has taken
all necessary action to authorise, execute, deliver and
perform its obligations under the Financing Documents to
which it is a party in accordance with their respective
terms and to complete the transactions contemplated by those
documents;
(d) Binding Obligations: the Financing Documents to which the
Borrower and the Guarantor is a party have been duly
executed and delivered by them and each is a legal, valid
and binding obligation of it enforceable in accordance with
its respective terms;
(e) Compliance of Financing Documents with Laws: the execution,
delivery and performance of the Financing Documents to which
the Borrower or the Guarantor is a party in accordance with
their respective terms and the borrowings under this
Agreement 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 the
Guarantor;
(ii) conflict with, result in a breach of or constitute a
default under the memorandum or articles of
association of the Borrower or the articles of
incorporation or the bylaws of the Guarantor, or any
indenture, agreement or other instrument to which
the Borrower or the Guarantor 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
Encumbrance upon or with respect to any property now
owned or hereafter acquired by the Borrower or the
Guarantor other than in favour of the Agent for the
benefit of the Banks;
(f) Compliance with Law and Governmental Approvals: the
Guarantor, the Borrower and each other Subsidiary are in
compliance with each Governmental Approval applicable to it
and in compliance with all other Applicable Law relating to
it except for noncompliances which (and Governmental
Approvals the failure to possess which) would not (singly or
in aggregate) cause a Default or Potential Default or have a
Material Adverse Effect;
(g) Title to property: the Guarantor, the Borrower and its
Subsidiaries have good, marketable and legal title to, or a
valid leasehold interest in, its respective properties and
assets including, but not limited to, those reflected on the
consolidated balance sheet of the Guarantor as at 29th June
1996 except those which have been disposed of by any such
party subsequent to such date in the ordinary course of
trade;
(h) Indebtedness and Guarantees:
(i) the schedules titled Schedule 11.1.1(h)(i)(aa),
Schedule 11.1.1(h)(i)(bb) and Schedule
11.1.1(h)(i)(cc) respectively and delivered to the
Agent prior to the date of this Agreement give a
complete and correct listing of all (aa) Existing
Consolidated Funded Debt of the Guarantor and its
Subsidiaries, (bb) Guarantees of the Guarantor and
its Subsidiaries of any Indebtedness (other than the
Parent Guarantee) and (cc) all letters of credit and
acceptance facilities extended to the Guarantor
and/or any Subsidiary; and
(ii) 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 Indebtedness or Guarantee referred to in (i)
above;
(i) Litigation: except as disclosed in the schedule titled
Schedule 11.1.1(i) delivered to the Agent prior to the Date
of this Agreement, there are no actions, suits or
proceedings pending (nor, to the knowledge of the Borrower
or the Guarantor, 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 Guarantor or any Subsidiary 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 labour disputes in progress
or threatened relating to the Guarantor or any Subsidiary;
(j) Taxes:
(i) all federal, state and other tax returns of the
Guarantor and the Borrower and any Subsidiary
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 Guarantor and the Borrower, any Subsidiary
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
Clause 12.2(c);
(ii) none of the United States income tax returns of the
Guarantor or its Subsidiaries are under audit; and
(iii) all charges, accruals and reserves on the books of the
Guarantor and each of its Subsidiaries in respect of
any taxes or other governmental charges are in
accordance with GAAP;
(k) Financial Statements and Condition:
(i) all financial statements (being the 1995 Annual
Report of the Guarantor, the 10-Q's of the Guarantor
for 30th March 1996 and 29th June 1996 respectively
and the 10-K of the Guarantor for 30th December
1995) furnished to the Agent prior to and in
connection with this Agreement are complete and
correct and fairly present the consolidated
financial condition of the Guarantor and its
Subsidiaries as at the dates specified in such
statements and all are prepared in accordance with
GAAP;
(ii) the Guarantor nor any of its Subsidiaries has on the
date of this Agreement any material contingent
liabilities, liabilities for taxes, unusual or
long-term commitments or unrealised or forward
anticipated losses from any unfavourable
commitments, except as referred to or reflected or
provided for in the financial statements referred to
in sub-paragraph (i) above; and
(iii) since 29th June 1996, no Material Adverse Change has
occurred and each of the Guarantor, the Borrower and
the other Subsidiaries is Solvent;
(l) ERISA: each Plan, and, to the knowledge of the Guarantor,
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 date of this Agreement, no event or
condition has occurred and is continuing as to which the
Guarantor would be under an obligation to furnish a report
to the Banks under Clause 12.1.4.
(m) Absence of Defaults: neither the Guarantor, the Borrower or
any Subsidiary is in default under its constitutive
documents, and no event has occurred, which has not been
remedied, cured or waived:
(i) which constitutes a Default or a Potential 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 it under any
agreement (other than this Agreement) or judgment,
decree or order to which it is a party or by which
it or any of its properties may be bound where such
default would, individually or in the aggregate,
have a Material Adverse Effect;
(n) Environmental Laws:
(i) except as disclosed in the schedule titled Schedule
11.1.1(n)(i) delivered to the Agent prior to the date
of this Agreement, the Guarantor, the Borrower and its
other Subsidiaries are in compliance with all
Environmental Laws, the failure with which to comply
would have a Material Adverse Effect;
(ii) the Borrower or the Guarantor 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 and the
Guarantor and its Subsidiaries, 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, proceeding,
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 or the
Guarantor's knowledge, threatened, against the
Borrower, the Guarantor or its Subsidiaries relating
in any way to Environmental Laws;
(o) Use of Proceeds: all proceeds of the Advances will be used
only in accordance with Clause 3.1;
(p) Investment Company and Public Utility Holding Company:
neither the Guarantor nor any of the Subsidiaries 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 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 Financing Documents or to perform its obligations
hereunder or thereunder;
(q) Margin Stock: neither the Guarantor nor any Subsidiary 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";
(r) Affiliate Transactions: neither the Guarantor nor any
Subsidiary is a party to or bound by any agreement or
arrangement (whether oral or written) to which any Affiliate
of the Guarantor or any Subsidiary is a party except:
(i) in the ordinary course of and pursuant to the
reasonable requirements of the Guarantor's or such
Subsidiary's business; and
(ii) upon fair and reasonable terms no less favourable to
the Guarantor and such Subsidiary than it could obtain
in a comparable arm's-length transaction with an
unaffiliated person;
(s) No restriction on dividends and loans: neither the
Guarantor 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 Guarantor; and
(t) Accuracy and Completeness of Information:
(i) all written information, reports and other papers
and data furnished to the Agent or any Bank
(including in relation to the Information
Memorandum) by, or on behalf of or at the direction
of, the Borrower or any Subsidiary were (at the time
the same were so furnished) complete and accurate 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;
(ii) no fact is known to the Borrower or the Guarantor
which has had, or may in the future have (so far as
the Borrower or the Guarantor can reasonably
foresee), a Material Adverse Effect which has not
been set forth in the financial statements referred
to in Clause 11.1.1(k) or in the Information
Memorandum or in such information, reports or other
papers or data or otherwise disclosed in writing to
the Agent and the Banks prior to the date of this
Agreement; and
(iii) no document furnished, or written statement made, to
the Agent or any Bank in connection with the
negotiation, preparation or execution of this
Agreement or any of the other Financing Documents
contains or will contain any untrue statement of a
fact material to the creditworthiness of the
Borrower or the Guarantor or any Subsidiary or omits
or will omit to state a material fact necessary in
order to make the statements contained therein not
misleading.
11.1.2 All statements contained in any certificate, financial statement or
other instrument delivered by or on behalf of the Borrower or the
Guarantor to the Agent or any Bank pursuant to or in connection with
this Agreement or any of the other Financing Documents (including any
statement contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Borrower or Guarantor
prior to the date of this Agreement and delivered to the Agent or the
Banks in connection with closing the transactions contemplated
hereby) shall constitute representations and warranties made under
this Agreement.
11.2 Repetition
All representations and warranties made under this Agreement shall be
deemed to be repeated by the Borrower and the Guarantor on the date on
which each Drawdown Notice is given and on the first day of each
Interest Period for each Advance 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 under this
Agreement.
12. UNDERTAKINGS
12.1 Information Undertakings
12.1.1 Of the Borrower: The Borrower undertakes that during the Facility
Period it shall:
(a) Accounts: as soon as the same become available (and in any
event within 120 days after the end of each of its Financial
Years), deliver to the Agent in sufficient copies for all the
Banks the Accounts for the relevant Financial Year together
with a copy of the management letter (if any) addressed by the
Auditors to the directors of the Borrower; and
(b) Interim accounts: as soon as the same become available (and in
any event within 60 days after the end of the first half-year
of each of its Financial Years), deliver to the Agent in
sufficient copies for all the Banks its unaudited interim
accounts for that half-year.
12.1.2 Of the Guarantor: The Guarantor undertakes that during the Facility
Period it shall:
(a) Quarterly Financial Statements: as soon as the same become
available and in any event within 45 days after the close of
each of the first, second and third fiscal quarters of the
Guarantor, furnish to the Agent the consolidated and
consolidating balance sheets of the Guarantor 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 Guarantor 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
Guarantor (in his or her opinion) to present fairly, in
accordance with GAAP, the consolidated financial position of
the Guarantor and its Subsidiaries as at the date thereof
and the results of operations for such period (subject to
normal year-end audit adjustments);
(b) Year-End Statements: as soon as the same become available
and in any event within 90 days after the end of each fiscal
year of the Guarantor, furnish to the Agent the consolidated
and consolidating balance sheets of the Guarantor 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 Guarantor 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 Guarantor,
in his or her opinion, to present fairly, in accordance with
GAAP, the financial position of the Guarantor 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 recognised national standing
acceptable to the Agent and the Majority Banks whose
certificate shall be in scope and substance satisfactory to
the Agent and the Majority Banks and who shall have
authorised the Guarantor to deliver such financial
statements and certification thereof to the Agent and the
Banks pursuant to this Agreement: and
(c) Compliance Certificate: at the time the financial
statements are furnished pursuant to paragraphs (a) and (b),
in the case of the Guarantor's interim quarterly financial
statements, deliver to the Agent a certificate executed by
the chief financial officer or the treasurer in the agreed
form, or in the case of the audited annual financial
statements, a certificate executed by the independent public
accountants performing the audit of such statements, in each
case:
(i) setting out as at the end of such quarterly accounting
period or fiscal year, as the case may be, the
calculations required to establish the applicable
Margin and whether or not the Guarantor and when
appropriate its Subsidiaries were in compliance with
the undertakings contained in Clause 12.4; and
(ii) stating that, to the best of their knowledge,
information and belief, no Default or Potential
Default exists or, if such is not the case,
specifying such Default or Potential Default and its
nature, when it occurred and, in the case of the
certificate executed by the chief financial officer
or treasurer, whether it is continuing and the steps
being taken by the Guarantor with respect to such
event, condition or failure.
12.1.3 Notice of Litigation and Other Matters: each of the Borrower and the
Guarantor undertakes that during the Facility Period it shall
promptly notify the Agent of:
(a) to the extent it 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, the Guarantor or any Subsidiary or
any of their respective properties, assets or business
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, the Guarantor or any Subsidiary which has had or may
have Material Adverse Effect;
(c) the occurrence of any Default or Potential Default;
(d) any order, judgment or decree in excess of $5,000,000 having
been entered against the Guarantor, the Borrower or any other
Subsidiary 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 Guarantor, the Borrower or any other
Subsidiary, Affiliate or other person; or
(g) any strikes, slow downs, work stoppages or walkouts or other
labour disputes in progress or threatened relating to the
Guarantor, the Borrower or any other Subsidiary.
12.1.4 ERISA Reporting: The Guarantor shall deliver to the Agent and each Bank
at the Guarantor's expense, the following information at the times
specified below:
(a) within ten Business Days after the Guarantor, 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 Guarantor
describing such Termination Event and the action, if any,
which the Guarantor 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 Labour or PBGC with respect
thereto;
(b) within ten Business Days after the Guarantor, 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 Guarantor, describing such
transaction and the action which the Guarantor 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 the Agent
therefor, after the filing thereof with the Department of
Labour, 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 Section 3(35);
(d) within ten Business Days after the request by the Agent
therefor, after receipt by the Guarantor, any Subsidiary or any
ERISA Affiliate of each actuarial report for any Plan which is
a defined benefit as defined in Section 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 Guarantor, 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 Guarantor, any
Subsidiary or any ERISA Affiliate of the PBGC's intention to
terminate a Plan or to have a trustee appointed to administer a
Plan, copies of each such notice;
(g) within ten Business Days after receipt by the Guarantor any
Subsidiary or any ERISA Affiliate of any unfavourable
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;
(h) within ten Business Days after receipt by the Guarantor, 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 Guarantor, any
Subsidiary or any ERISA Affiliate fail to make a required
instalment 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 Guarantor, any
Subsidiary or any ERISA Affiliate knows (i) a Multiemployer
Plan has been terminated, (ii) the administrator or plan
sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (iii) 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 Clause 12.1.4, the Guarantor, any Subsidiary or
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, the Internal
Revenue Code, and all other Applicable Laws, and the regulations and
interpretations thereunder other than to the extent that the Guarantor
is in good faith contesting by appropriate proceedings the validity or
implication of any such provision, law, rule, regulation or
interpretation.
12.1.5 Other Reports: The Guarantor shall deliver to the Agent in
sufficient copies for the Banks:
(a) promptly upon the same becoming available, a copy of all
registration statements and other periodic or special reports
containing material information or developments regarding the
Guarantor and its Subsidiaries which the Guarantor 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
Guarantor generally, copies of all financial statements,
reports and proxy statements so mailed.
12.1.6 Other Information: The Borrower and the Guarantor shall deliver to the
Agent 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 Guarantor or its
Subsidiaries as any Bank or the Agent may reasonably request.
12.2 Positive Undertakings
Each of the Borrower and the Guarantor undertakes that during the
Facility Period it shall, and it shall procure that each of its
Subsidiaries shall:
(a) Preservation of Existence and Similar Matters: preserve and
maintain its respective existence, rights, franchises,
licences and privileges in the jurisdiction of its formation
and qualify and remain qualified and authorised to do
business in each jurisdiction in which the character of its
properties or the nature of its business requires such
qualification and authorisation and where the failure to be
so authorised and qualified would have a Material Adverse
Effect;
(b) 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;
(c) Pay Taxes and Claims: pay and discharge all Taxes and
governmental charges payable by or assessed upon it and all
lawful creditor claims prior to the date on which the same
become overdue unless, and only to the extent that, such
Taxes, charges and claims shall be contested in good faith
by appropriate proceedings, pending determination of which
payment may lawfully be withheld, and there shall be set
aside adequate reserves with respect to any such Taxes,
charges or claims so contested in accordance with GAAP;
(d) Insurance: maintain insurance cover with reputable
insurance companies in relation to its business and assets
of a type and in an amount as is usual for prudent companies
carrying on a business such as that carried on by it or as
may be required by Applicable Law;
(e) Maintenance of Property:
(i) 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 tangible
properties; and
(ii) maintain all of its properties used or useful in its
business in good working order and condition, ordinary
wear and tear excepted;
(f) Conduct of Business: at all times carry on its respective
businesses in the same fields as engaged in on the date of
this Agreement and not enter into any field of business not
otherwise engaged in as of the date of this Agreement or
otherwise reasonably related thereto;
(g) Authorisations: obtain, maintain and comply with the terms
of any authorisation, approval, licence and consent required:
(i) for the conduct of its business, trade and ordinary
activities; and
(ii) to enable it to perform its obligations under, or
for the validity, enforceability or admissibility in
evidence of, any Financing Document;
(h) Access:permit the Agent, the Banks and any person (being an
accountant, auditor, solicitor, valuer or other professional
adviser of the Agent or the Banks) authorised by the Agent
or the Banks to have, at all reasonable times during normal
business hours and on reasonable notice, access to the
property, premises and accounting books and records of the
Guarantor and any Subsidiary and to the officers of the
Guarantor and any Subsidiary;
(i) Ranking of obligations: ensure that its obligations under the
Financing Documents shall at all times rank at least pari passu
with all its other present and future unsecured and
unsubordinated Indebtedness except for any obligations which
are mandatorily preferred by law and not by contract;
(j) Use of Proceeds:
(i) use the proceeds of all Advances as specified in
Clause 3.1; and
(ii) 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; and
(k) Environmental Matters: except as described in Clause
11.1.1(k) comply in all respects with all Environmental Laws
the failure with which to comply would have a Material
Adverse Effect. If the Guarantor or any of its Subsidiaries
shall:
(i) receive notice that any violation of any
Environmental Law may have been committed or is
about to be committed by the Guarantor or any of its
Subsidiaries;
(ii) receive notice that any administrative or judicial
complaint or order has been filed or is about to be
filed against the Guarantor or any of its Subsidiaries
alleging violations of any Environmental Law or
requiring the Guarantor or any of its Subsidiaries to
take any action in connection with the release of
Hazardous Materials; or
(iii) receive any notice from a Governmental Authority or
private party alleging that the Guarantor or any of
its 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 Guarantor shall provide the Agent and each
Bank with a copy of such notice within 10 Business
Days after the receipt thereof by the Guarantor or
any of its Subsidiaries.
Within thirty days of the Borrower or the Guarantor learning of
the enactment or promulgation of any Environmental Law which
could have a Material Adverse Effect, it shall provide the
Agent with notice thereof. The Guarantor shall, and shall cause
its Subsidiaries to, promptly take all actions necessary to
prevent the imposition of any Encumbrance on any of their
respective properties arising out of or related to any
Environmental Laws.
12.3 Negative Undertakings
Each of the Borrower and the Guarantor undertakes that during the
Facility Period it shall not and it shall procure that none of its
Subsidiaries shall:
(a) Negative Pledge: create or permit to subsist any Encumbrance
over any of its revenues or assets other than Permitted
Encumbrances;
(b) Investment 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 Guarantor or any Subsidiary to be
outstanding other than:
(i) Investments in Subsidiaries in existence of the date
of this Agreement and disclosed in Schedule 4 and
created or acquired after the date of this Agreement
and, if the creation or acquisition of such
Subsidiary is in connection with the acquisition or
purchase of assets or share capital of another
person, such transaction is permitted by
subparagraph (vi) below;
(ii) Investments (other than in Subsidiaries) in existence
on the date of this Agreement in excess of $100,000 and
disclosed in the schedule titled Schedule 12.3(b)(ii)
delivered to the Agent prior to the date of this
Agreement;
(iii) Investments in Cash Equivalents;
(iv) Indebtedness owing to the Guarantor by its
Subsidiaries;
(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 Guarantor, 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 issued share capital
of another person so long as the following
conditions are satisfied: (A) that immediately prior
to, and immediately after, the completion of such
acquisition or purchase, no Default or Potential
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
Guarantor is currently engaged; and
(vii) other Investments in persons made by the Guarantor and
its Subsidiaries from time to time PROVIDED 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 Guarantor and its
Subsidiaries in such Investments shall not exceed
$50,000,000 in any fiscal year;
(c) Restricted Payments: declare or make, or permit any Subsidiary
to declare or make, any Restricted Payment PROVIDED THAT (A)
Subsidiaries may make Restricted Payments to the Guarantor and
(B) the Guarantor may make Restricted Payments in cash, subject
to the satisfaction of each of the following conditions on the
date of such Restricted Payment:
(i) no Default or Potential Default shall have occurred
and be continuing, and
(ii) the aggregate amount of Restricted Payments made
during the period commencing on 30th June 1996 to
and including the last day of the fiscal quarter
most recently ended prior to the date of such
Restricted Payment shall not exceed 50 per cent. of
the positive Consolidated Net Income (Loss), if any,
of the Guarantor and its Subsidiaries for such
period (treated for these purposes as a single
accounting period on a cumulative basis),
PROVIDED FURTHER THAT redemptions by the Guarantor of shares of
capital stock of the Guarantor that have been, or may be, made
or declared on or after the date of this Agreement up to an
aggregate amount of $200,000,000 less redemptions made since
1st January 1994 shall be excluded from the definition of the
term "Restricted Payment" when determining whether a given
Restricted Payment is permitted by this Clause 12.3(c);
(d) Merger, Consolidation, Sales of Assets and Other
Arrangements:
(i) enter into, or permit any Subsidiary to enter into,
any transaction of merger or consolidation;
(ii) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution) or permit any Subsidiary
to do any of the foregoing; or
(iii) 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 share capital of or other equity
interests in any of its Subsidiaries, whether owned
at or acquired after the date of this Agreement or
permit any Subsidiary to do any of the foregoing
PROVIDED THAT:
(A) Subsidiaries of the Guarantor may merge or
consolidate with other Subsidiaries of the
Guarantor;
(B) a Subsidiary may sell, transfer or dispose
of its assets to the Guarantor or another
Subsidiary of the Guarantor;
(C) the Guarantor or any Subsidiary may sell
inventory in the ordinary course of business;
(D) the Guarantor and its Subsidiaries may sell
property in transactions permitted under
subparagraph (f);
(E) the Guarantor and its Subsidiaries may,
during the Facility Period sell, transfer or
dispose of up to 20 per cent. (determined on
a consolidated basis) of the book value of
their respective assets (including the share
capital of any Subsidiaries) PROVIDED THAT
sales, transfers or dispositions of assets
already permitted by subparagraphs (B), (C)
and (D) shall not count against such 20 per
cent. test; and
(F) the Guarantor may merge or consolidate with
any other corporation, PROVIDED THAT:
(aa) the Guarantor shall be the
continuing or surviving corporation;
(bb) immediately prior to such merger or
consolidation and immediately after
such merger or consolidation and after
giving effect thereto, no Default or
Potential Default is or would be in
existence; and
(cc) the nature or scope of business
conducted by the person merging into
the Guarantor shall be similar to or
consistent with the nature or scope of
business conducted by the Guarantor,
as reasonably determined by the Agent
and the Majority Banks;
(e) Sale and Leaseback: 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 per cent. of
Consolidated Tangible Net Worth, as determined on the date
of the most recent sale and leaseback transaction;
(f) 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 Guarantor or with any officer,
director or employee of the Guarantor or any Subsidiary,
except:
(i) the transactions and agreements described in Clause
11.1.1(r) and any renewals, replacements or
extensions thereof;
(ii) that such persons may render services to the Guarantor
or its Subsidiaries for compensation at the same rates
generally paid by persons engaged in the same or
similar business for the same or similar services; and
(iii) in the ordinary course of and pursuant to the
reasonable requirements of the Guarantor's (or any
Subsidiary's) business consistent with past practice
of the Guarantor and its Subsidiaries and upon fair
and reasonable terms no less favourable to the
Guarantor (or any Subsidiary) than would be obtained
in a comparable arm's-length transaction with a
person not an Affiliate;
(g) 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 Guarantor and its Subsidiaries) if the
aggregate amount of all rents paid by the Guarantor and its
Subsidiaries under all such leases would exceed $35,000,000 in
any fiscal year;
(h) Plans: neither the Guarantor nor any Subsidiary of the
Guarantor shall:
(i) permit the occurrence of any Termination Event which
would result in a liability to any of the Guarantor
or the Borrower or ERISA Affiliate in excess of
$10,000,000;
(ii) 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 liabilities by
more than $10,000,000;
(iii) 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;
(iv) fail to make any contribution or payment to any
Multiemployer Plan which any of the Guarantor or the
Borrower 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;
(v) engage, or permit any of the Guarantor or the Borrower
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;
(vi) 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 of the Guarantor or
the Borrower or ERISA Affiliate or increase the
obligation of any of the Guarantor or the Borrower
or ERISA Affiliate to a Multiemployer Plan which
liability or increase, individually or together with
all similar liabilities and increases, is material
to any of the Guarantor or the Borrower or ERISA
Affiliate; or
(vii) fail, or permit any of the Guarantor or the Borrower or
ERISA Affiliate to fail, to establish, maintain and
operate each Plan in accordance in all material
respects with the provisions of ERISA, the Internal
Revenue Code and all other applicable laws and the
regulations and interpretations thereof;
(i) Fiscal Year: change the fiscal year end of the Guarantor
from 30th December and the Financial Year end of the
Borrower from 31st December;
(j) 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 Guarantor 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:
(i) increases the rate of interest accruing on such
Subordinated Debt;
(ii) increases the amount of any scheduled instalment of
principal or interest, or shortens the date on which
any such instalment or principal or interest becomes
due;
(iii) shortens the final maturity date of such
Subordinated Debt;
(iv) increases the principal amount of such Subordinated
Debt;
(v) 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 Guarantor or
such Subsidiary or which requires the Guarantor or such
Subsidiary to improve its financial performance;
(vi) provides for the payment of additional fees or the
increase in existing fees; or
(vii) otherwise would have a Material Adverse Effect; or
(k) Indebtedness: incur any Indebtedness other than Permitted
Indebtedness.
12.4 Financial Undertakings
12.4.1 The Guarantor undertakes to ensure that:
(a) EBIT to Interest Ratio: in respect of each fiscal quarter
of the Guarantor, the Consolidated EBIT to Interest Ratio
shall not be less than 3.00 to 1.00;
(b) Minimum Tangible Net Worth: as of the end of each fiscal
quarter of the Guarantor, its Consolidated Tangible Net
Worth shall not be less than the sum of:
(i) 90 per cent. of its Consolidated Tangible Net Worth
as of 29th June 1996 plus
(ii) 50 per cent. of the cumulative Consolidated Net
Income (Loss) of the Guarantor earned after 29th
June 1996 plus
(iii) the aggregate net proceeds received by the Guarantor
and its Subsidiaries from any sale or issuance of any
shares, interests, warrants, participations or other
equity instruments of the Guarantor or its Subsidiaries
occurring after 29th June 1996 minus
(iv) the aggregate amount of all cash and non-cash
consideration paid by the Guarantor and its
Subsidiaries in connection with any redemption or
retirement of any shares, interests, warrants,
participations or other equity instruments of the
Guarantor and its Subsidiaries occurring after 29th
June 1996,
it being understood that (x) any equity issuance net proceeds
received by, or redemption or retirement consideration paid to,
a Subsidiary from the Guarantor 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 the Guarantor 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 Guarantor and its Subsidiaries to redeem or
retire shares or other equity instruments shall continue to be
subject to Clause 12.3(c); and
(c) Funded Debt to EBITDA: at all times during the Facility
Period the Consolidated Funded Debt to EBITDA Ratio shall
not exceed 3.50 to 1.00.
12.4.2 The Borrower undertakes to ensure that it shall at all times have a
positive Consolidated Net Worth.
13. DEFAULT
13.1 Default
Each of the following shall be a Default:
(a) Non-payment: the Borrower does not pay on the due date any
amount payable by it under this Agreement at the place at
and in the currency and funds in which it is expressed to be
payable unless the failure to pay such amount is due solely
to administrative or technical delays in the transmission of
funds which are not the fault of the Borrower and such
amount is paid within 3 Business Days after its due date for
payment; or
(b) Other defaults: the Borrower or the Guarantor breaches any of
its obligations under any Financing Document (other than the
obligations referred to in Clause 13.1(a)) and, if that breach
is capable of remedy, it is not remedied within 30 days after
notice of that breach has been given by the Agent to the
Borrower; or
(c) Breach of representation or warranty: any representation,
warranty or statement made or deemed to be repeated by the
Borrower or the Guarantor under any Financing Document or in
any document delivered by or on behalf of the Borrower under or
in connection with any Financing Document is incorrect when
made or deemed to have been repeated; or
(d) Unlawfulness or repudiation: it is unlawful for the
Borrower or the Guarantor to perform or comply with, or the
Borrower or the Guarantor repudiates, any of its obligations
under any Financing Document; or
(e) Cross-default: any Indebtedness of the Borrower or the
Guarantor (including, for the avoidance of doubt but without
limitation, Indebtedness under the $600 Million Credit
Agreement):
(i) is not paid when due or within any applicable grace
period; or
(ii) is declared to be or otherwise becomes due and
payable prior to its specified maturity,
or any creditor or creditors of the Borrower or the Guarantor
become entitled to declare any Indebtedness due and payable
prior to its specified maturity and the aggregate amount of
such Indebtedness of the Borrower and the Guarantor exceeds
$20,000,000; or
(f) Attachment or distress: a creditor or encumbrancer attaches or
takes possession of, or a distress, execution, sequestration or
other process is levied or enforced upon or sued out against,
any of the revenues or assets of the Borrower or the Guarantor
(having a value of at least $10,000,000) and such process is
not discharged within 30 days; or
(g) Enforcement of security: any Encumbrance over any of the
revenues or assets of the Guarantor, the Borrower or any
other Subsidiary becomes enforceable; or
(h) Inability to pay debts: the Guarantor, the Borrower or any
other Subsidiary:
(i) suspends payment of its debts or is unable or admits
its inability to pay its debts as they fall due; or
(ii) begins negotiations with one or more of its
creditors with a view to the readjustment or
rescheduling of any of its Indebtedness; or
(iii) proposes or enters into any composition or other
arrangement for the benefit of its creditors
generally or any class of creditors; or
(i) Insolvency proceedings: any person takes any action or any
legal proceedings are started or other steps taken
(including the presentation of a petition) for:
(i) the Guarantor, the Borrower or any other Subsidiary
to be adjudicated or found insolvent; or
(ii) the winding-up or dissolution of the Guarantor, the
Borrower, or any other Subsidiary (other than in
connection with a solvent reconstruction, the terms
of which have been previously approved in writing by
the Majority Banks) other than a winding-up petition
which is proved to the satisfaction of the Majority
Banks to be frivolous or vexatious and which is, in
any event, discharged within 14 days of its
presentation or, if earlier, the date on which it is
advertised; or
(iii) the appointment of a trustee, receiver, administrative
receiver or similar officer in respect of the
Guarantor, the Borrower or any other Subsidiary or any
of its revenues or assets; or
(j) Adjudication or appointment: any adjudication, order or
appointment is made under or in relation to any of the
proceedings referred to in Clause 13.1(i); or
(k) Administration order: an application is made to the court
for an administration order under the Insolvency Act 1986
with respect to the Guarantor, the Borrower or any other
Subsidiary; or
(l) Analogous proceedings: any event occurs or proceeding is
taken with respect to the Guarantor, the Borrower or any
other Subsidiary in any jurisdiction to which it is subject
which has an effect equivalent or similar to any of the
events mentioned in Clauses 13.1(f), (h), (i), (j) or (k); or
(m) Cessation of business: the Guarantor, the Borrower or any
other Subsidiary suspends, ceases or threatens to suspend or
cease to carry on all or a substantial part of its business;
or
(n) Judgment: a final judgment or order for the payment of money
in excess of $10,000,000 in aggregate (exclusive of judgment
amounts to the extent covered by insurance where a claim has
been submitted and the insurer has not conceded liability in
respect of such judgment) or in excess of $25,000,000 in
aggregate (regardless of insurance coverage) or that has a
Material Adverse Effect shall be rendered by one or more
Governmental Authorities having jurisdiction and such
judgment or order shall continue for a period or 30 days
without being stayed or dismissed through appropriate
appellate proceedings; or
(o) Change of control and 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 1934, as amended, directly or
indirectly, capital stock or securities of the
Guarantor representing 20 per cent. or more of the
aggregate voting power of all classes of capital
stock and securities of the Guarantor entitled to
vote for the election of directors;
(ii) the Borrower ceases to be a wholly owned Subsidiary
of the Guarantor; or
(iii) during any twelve month period (commencing both before
and after the Agreement), individuals who at the
beginning of such period were directors of the
Guarantor shall cease for any reason (other than death
or mental or physical disability) to constitute a
majority of the board of directors of the Guarantor; or
(p) Default under Hedging Obligations: the failure of the
Guarantor or any Subsidiary to pay or perform when due any
Hedging Obligations and the continuance of such failure for
a period of 10 days after receipt of a notice of such
failure from the person to whom such Hedging Obligations are
owed; or
(q) Material Adverse Effect: any event or series of events
occur which, in the opinion of the Majority Banks, has or
could reasonably be expected to have a Material Adverse
Effect.
13.2 Acceleration
If a Default occurs and remains unremedied the Agent may, and shall if
so instructed by the Majority Banks, by notice to the Borrower:
(a) cancel the Facility and require the Borrower immediately to
repay the Loan together with accrued interest and all other
sums payable under this Agreement, whereupon they shall become
immediately due and payable; or
(b) place the Facility on demand, whereupon the Loan together with
accrued interest and all other sums payable under this
Agreement shall become repayable on demand made by the Agent on
the instructions of the Majority Banks.
Upon the service of any such notice by the Agent the Banks' obligations
under this Agreement shall be terminated and the Commitment of each
Bank shall be cancelled and reduced to zero.
14. SET-OFF
The Agent and each Bank may set off any matured obligation owed by the
Borrower under any Financing Document against any obligation (whether
or not matured) owed by the Agent or the relevant Bank to the Borrower,
regardless of the place of payment, booking branch or currency of
either obligation. If the obligations are in different currencies, the
Agent or the relevant Bank may convert either obligation at the spot
rate of exchange of the Agent or the relevant Bank, as the case may be,
for the purpose of the set-off.
15. PRO RATA SHARING
15.1 Redistribution
If any Bank (the "Sharing Bank") shall at any time obtain (whether by
way of voluntary or involuntary payment, right of set-off, or
otherwise) a proportion in respect of its Participation in any sum due
from the Borrower under this Agreement which is greater than the
proportion thereof obtained by the Bank or Banks obtaining the smallest
proportion of its or their Participation in such sum, including a nil
receipt, (the amount so obtained by the Sharing Bank which represents
such excess being called the "excess amount") then:
(a) the Sharing Bank shall immediately notify the Agent of the
excess amount;
(b) the Sharing Bank shall promptly pay to the Agent, for the
account of the Banks, an amount equal to the excess amount,
whereupon the Agent shall notify the Borrower of such amount
and its receipt by the Agent;
(c) the Agent shall treat such payment as if it were a payment
by the Borrower on account of sums owed to the Banks; and
(d) as between the Borrower and the Sharing Bank the excess amount
shall be treated as not having been paid, while as between the
Borrower and each Bank it shall be treated as having been paid
to the extent any moneys are received by such Bank.
15.2 Legal proceedings
Notwithstanding Clause 15.1, no Sharing Bank shall be obliged to share
any excess amount which it receives or recovers pursuant to legal
proceedings taken by it to recover any sums owing to it under this
Agreement with any other Bank which has a legal right to, but does not,
either join in such proceedings or commence and diligently pursue
separate proceedings to enforce its rights, unless the proceedings
instituted by the Sharing Bank are instituted by it without prior
notice having been given to such Bank through the Agent and an
opportunity to such Bank to join in such proceedings.
15.3 Reversal of redistribution
If any excess amount subsequently has to be wholly or partly refunded
to the Borrower by a Sharing Bank which has paid an amount equal to
that excess amount to the Agent under Clause 15.1, each Bank to which
any part of that amount was distributed shall on request from the
Sharing Bank repay to the Sharing Bank such Bank's pro rata share of
the amount which has to be so refunded by the Sharing Bank.
15.4 Information
Each Bank shall on request supply to the Agent such information as the
Agent may from time to time request for the purpose of this Clause 15.
16. THE AGENT, THE ARRANGER AND THE BANKS
16.1 Appointment and duties
16.1.1 Each Bank irrevocably appoints the Agent to act as its agent in
connection with this Agreement and the Parent Guarantee and irrevocably
authorises the Agent on its behalf to perform the duties and to
exercise the rights, powers and discretions that are specifically
delegated to it under or in connection with the Financing Documents
together with any other incidental rights, powers and discretions.
16.1.2 The Agent shall have no duties or responsibilities except those
expressly set out in the Financing Documents. As to any matters not
expressly provided for, the Agent shall act in accordance with the
instructions of the Majority Banks (but in the absence of any such
instructions shall not be obliged to act). Any such instructions, and
any action taken by the Agent in accordance with those instructions,
shall be binding upon all the Banks.
16.1.3 The Agent may:
(a) act in an agency, trustee, fiduciary or other capacity on
behalf of any other banks or financial institutions providing
facilities to the Guarantor, the Borrower or any other
Subsidiary or any Affiliate, as freely in all respects as if it
had not been appointed to act as agent for the Banks under this
Agreement and without regard to the effect on the Banks of
acting in such capacity; and
(b) subscribe for, hold, be beneficially entitled to or dispose of
shares or securities, or options or other rights to and
interests in shares or securities in the Guarantor, the
Borrower or any other Subsidiary or any Affiliate (in each
case, without liability to account).
16.1.4 For so long as NationsBank, N.A., London Branch is the Agent, the
Loans Agency Department of NationsBank, N.A., London Branch shall be
treated as a separate entity from any other division or department of
the Agent. In particular, if any of the Agent's divisions or
departments (including its Loans Agency Department) should act for
the Guarantor, the Borrower or any other Subsidiary in any capacity
(whether as bankers or otherwise) in relation to any other matter,
any information given by the Guarantor, the Borrower or any other
Subsidiary to any such division or department may be treated as
confidential and the Agent shall, as between itself and the Banks,
not be obliged to disclose the same to any Bank or any other person.
16.2 Payments
16.2.1 The Agent shall promptly account to the Lending Office of each Bank for
such Bank's due proportion of all sums received by the Agent for such
Bank's account, whether by way of repayment or prepayment of principal
or payment of interest, fees or otherwise.
16.2.2 The Agent shall maintain a memorandum account showing the principal
amount of each Advance outstanding under this Agreement and the amount
of each Bank's Participation in the Loan.
16.2.3 Each Bank confirms in favour of the Agent that, unless it notifies the
Agent to the contrary, it will be the beneficial owner of any interest
paid to it under this Agreement.
16.3 Default
The Agent shall not be obliged to monitor or enquire as to whether or
not a Default or Potential Default has occurred. The Agent shall be
entitled to assume that no Default or Potential Default has occurred
unless it receives express notice to the contrary from the Borrower or
any Bank describing the Default or Potential Default or unless it is
aware of a payment default under this Agreement, in which case it shall
promptly notify each Bank.
16.4 Reliance
The Agent may:
(a) rely on any communication or document believed by it to be
genuine and correct and to have been communicated or signed
by the person by whom it purports to be communicated or
signed; and
(b) engage, pay for and rely on the advice of any professional
advisers selected by it given in connection with the
Financing Documents or any of the matters contemplated by
the Financing Documents,
and shall not be liable to any Party for any of the consequences of
such reliance.
16.5 Legal proceedings
16.5.1 The Agent shall not be obliged to take or commence any legal action
or proceeding against the Borrower or any other person arising out of
or in connection with the Financing Documents until it shall have
been indemnified or secured to its satisfaction against all costs,
claims and expenses (including any costs award which may be made
against it as a result of any such legal action or proceeding not
being successful) which it may expend or incur in such legal action
or proceeding.
16.5.2 The Agent may refrain from doing anything which might in its opinion
constitute a breach of any law or any duty of secrecy or
confidentiality or be otherwise actionable at the suit of any person.
16.6 No liability
16.6.1 Neither the Arranger, the Agent nor any of its officers, employees or
agents shall be liable for any action taken or not taken by it or any
of them under or in connection with the Financing Documents unless
directly caused by its or their gross negligence or wilful misconduct.
16.6.2 The Arranger or the Agent shall not be responsible for any
statements, representations or warranties in the Financing Documents
or for any information supplied or provided to any Bank by the
Arranger or the Agent in respect of the Borrower or any other person
or for any other matter relating to the Financing Documents or for
the execution, genuineness, validity, legality, enforceability or
sufficiency of such documents or any of the other documents referred
to in the Financing Documents or for the recoverability of all or any
of the Advances or any of the other sums to become due and payable
under the Financing Documents.
16.7 Credit decisions
16.7.1 Each Bank:
(a) acknowledges that it has, independently and without reliance on
the Arranger or the Agent, made its own analysis of the
transaction contemplated by, and reached its own decision to
enter into, this Agreement and made its own investigation of
the financial condition and affairs and its own appraisal of
the creditworthiness of the Borrower, the Guarantor and any
other surety for the Borrower's obligations; and
(b) agrees that it shall continue to make its own independent
appraisal of the creditworthiness of the Borrower, the
Guarantor and any other surety for the Borrower's obligations.
16.7.2 Each Bank agrees that it shall, independently and without reliance on
the Arranger or the Agent, make its own decision to take or not take
action under the Financing Documents.
16.8 Information
16.8.1 The Agent shall provide the Banks with all information and copies of
all notices which by the terms of this Agreement are to be provided or
given to the Banks.
16.8.2 Save as specifically provided in this Agreement, the Agent shall not be
under any duty or obligation:
(a) either initially or on a continuing basis, to provide any Bank
with any credit information or other information with respect
to the financial condition of the Borrower or the Guarantor or
which is otherwise relevant to the Facility; or
(b) to request or obtain any certificate, document or information
from the Borrower or the Guarantor unless specifically
requested to do so by a Bank in accordance with this Agreement.
16.9 Relationship with Banks
16.9.1 In performing its functions and duties under this Agreement, the Agent
shall act solely as the agent for the Banks and save as expressly
provided in the Financing Documents shall not be deemed to be acting as
trustee for any Bank and shall not assume or be deemed to have assumed
any obligation as agent or trustee for, or any relationship of agency
or trust with, the Borrower or the Guarantor.
16.9.2 Neither the Arranger, the Agent nor any Bank shall be under any
liability or responsibility of any kind to the Borrower or the
Guarantor or any other Bank arising out of or in relation to any
failure or delay in performance or breach by the Borrower or any other
Bank of any of its or their respective obligations under the Financing
Documents.
16.10 Agent's position
16.10.1 With respect to its own Participation in the Loan (if any), the Agent
shall have the same rights and powers under and in respect of the
Financing Documents as any other Bank and may exercise those rights
and powers as though it were not also acting as agent for the Banks.
The Agent may, without liability to account, accept deposits from,
lend money to and generally engage in any kind of banking, finance or
trust business with or for the Borrower or the Guarantor as if it
were not the agent for the Banks under any Financing Documents.
16.10.2 The Agent may retain for its own use and benefit (and shall not be
liable to account to any Bank for all or any part of) any sums received
by it by way of agency or management or arrangement fees or by way of
reimbursement of expenses incurred by it.
16.11 Indemnity
Each Bank shall immediately on demand indemnify the Agent (to the
extent not reimbursed by the Borrower) rateably according to that
Bank's Participation in the Loan (or, if no Advance shall then be
outstanding, its Commitment) from and against all liabilities, losses
and expenses of any kind or nature whatsoever (except in respect of any
agency, management or other fee due to the Agent) which may be incurred
by the Agent in its capacity as agent or trustee for the Banks or in
any way relating to or arising out of the Financing Documents or any
action taken or omitted by the Agent in enforcing or preserving the
rights of the Banks or the Agent under the Financing Documents,
provided that no Bank shall be liable for any portion of such
liabilities, losses or expenses resulting from the Agent's gross
negligence or wilful misconduct.
16.12 Resignation
16.12.1 The Agent may resign by giving at least 60 days' notice to the Borrower
and each Bank. Upon receipt of a notice of resignation the Borrower and
the Majority Banks may appoint any bank or other financial institution
as successor Agent.
16.12.2 If no bank or other financial institution selected by the Borrower and
the Majority Banks shall have accepted such appointment within 20 days
after the Agent has given a notice of resignation then the Majority
Banks may, after consultation with the Borrower, appoint any bank or
other financial institution as successor Agent.
16.12.3 If no bank or other financial institution selected by the Majority
Banks shall have accepted such appointment within 40 days after the
Agent has given a notice of resignation then the resigning Agent may,
after consultation with the Borrower, appoint any bank or other
financial institution with an office in London as successor Agent.
16.12.4 The resignation of the Agent and the appointment of any successor Agent
shall both become effective only upon the successor Agent notifying the
retiring Agent, the Borrower and each Bank that it accepts its
appointment. On such notification:
(a) the resigning Agent shall be discharged from its obligations
and duties as Agent under the Financing Documents but it shall
continue to be able to rely on the provisions of this Clause 16
in respect of all matters relating to the period of its
appointment; and
(b) the successor Agent shall assume the role of Agent and shall
have all the rights, powers, discretions and duties which the
Agent has under the Financing Documents.
16.12.5 The resigning Agent shall make available to the successor Agent all
records and documents held by it as Agent, and shall co-operate with
the successor Agent to ensure an orderly transition.
16.13 Change of office
The Agent may at any time in its sole discretion by notice to the
Borrower and each Bank designate a different office in the United
Kingdom from which its duties as the Agent will be performed.
17. FEES AND EXPENSES
17.1 Expenses
The Borrower shall on demand pay all reasonable expenses incurred
(including legal, valuation and accounting fees), and any VAT on those
expenses:
(a) by the Agent or the Arranger in connection with the
negotiation, preparation and execution of the Financing
Documents and the other documents contemplated by the
Financing Documents;
(b) by the Agent or the Banks in connection with the granting of
any release, waiver or consent or in connection with any
amendment or variation of any Financing Document;
(c)by the Agent in connection with the syndication of the Facility;
and
(d) by the Agent or the Banks in enforcing, perfecting, protecting
or preserving (or attempting so to do) any of their rights, or
in suing for or recovering any sum due from the Borrower or any
other person under any Financing Document, or in investigating
any possible Default.
17.2 Arrangement and agency fees
The Borrower shall pay to the Arranger and the Agent arrangement and
agency fees in accordance with the terms of the Fees Letter. For the
avoidance of doubt, all liabilities and obligations of the Borrower
under the Fees Letter shall be deemed to be incurred under this
Agreement.
17.3 Facility fee
17.3.1 The Borrower agrees to pay to the Agent for the account of each Bank a
facility fee for the Facility Period on the Total Commitments. The
facility fee shall be calculated on a percentage per annum basis using
the percentage rates set out below corresponding to the Consolidated
Funded Debt to EBITDA Ratio in effect at such time:
Consolidated Funded Debt to EBITDA Ratio Fee
%
Greater than 3.25 to 1.00 0.15
Less than or equal to 3.25 to 1.00 but greater 0.15
than 2.75 to 1.00
Less than or equal to 2.75 to 1.00 0.10
17.3.2 The facility fee shall be determined on a quarterly basis commencing
with the fiscal quarter ending on 30th September 1996. The
Consolidated Funded Debt to EBITDA Ratio set out in each relative
compliance certificate required to be delivered to the Agent pursuant
to Clause 12.1.2(c) shall be used to determine the facility fee
unless the Agent (acting reasonably) considers the calculation of
such ratio in the compliance certificate to be incorrect. In such
case, the Agent shall consult with the Guarantor to agree the
facility fee. The decision of the Agent shall be conclusive and
binding, save in the case of manifest error.
17.3.3 Any adjustment to the facility fee shall be effective from the first
day of the fiscal quarter next following the fiscal quarter in which
the Agent receives the compliance certificate and quarterly (or annual)
financial statements which are required to be delivered to the Agent.
17.3.4 Notwithstanding the provisions of Clauses 17.3.1, 17.3.2 and 17.3.3,
for the period from the date of this Agreement to and including 30th
September 1996, the facility fee shall be 0.10 per cent. per annum.
Thereafter, the facility fee shall be adjusted from time to time as set
forth above.
17.3.5 The facility fee shall be payable in arrears on each 31st March, 30th
June, 30th September and 31st December in each year and on the Final
Maturity Date or on the date the Commitments are otherwise reduced to
zero and shall be calculated on the basis of a year of 360 days and the
actual number of days elapsed.
17.4 Documentary Taxes indemnity
All stamp, documentary, registration or other like duties or Taxes,
including any penalties, additions, fines, surcharges or interest
relating to those duties and Taxes, which are imposed or chargeable on
or in connection with any Financing Document shall be paid by the
Borrower. The Agent shall be entitled but not obliged to pay any such
duties or Taxes (whether or not they are its primary responsibility).
If the Agent does so the Borrower shall on demand indemnify the Agent
against those duties and Taxes and against any costs and expenses
incurred by the Agent in discharging them.
17.5 VAT
17.5.1 All payments made by the Borrower under the Financing Documents are
calculated without regard to VAT. If any such payment constitutes
the whole or any part of the consideration for a taxable or deemed
taxable supply (whether that supply is taxable pursuant to the
exercise of an option or otherwise) by the Agent or a Bank, the
amount of that payment shall be increased by an amount equal to the
amount of VAT which is chargeable in respect of the taxable supply in
question.
17.5.2 No payment or other consideration to be made or furnished to the
Borrower by the Agent or a Bank pursuant to or in connection with any
Financing Document or any transaction or document contemplated in any
Financing Document may be increased or added to by reference to (or as
a result of any increase in the rate of) any VAT which shall be or may
become chargeable in respect of any taxable supply.
17.6 Indemnity payments
Where in any Financing Document the Borrower has an obligation to
indemnify or reimburse the Agent or a Bank in respect of any loss or
payment, the calculation of the amount payable by way of indemnity or
reimbursement shall take account of the likely Tax treatment in the
hands of the Agent or the relevant Bank, as the case may be (as
determined by the relevant party's auditors) of the amount payable by
way of indemnity or reimbursement and of the loss or payment in respect
of which that amount is payable.
18. AMENDMENTS AND WAIVERS
18.1 Majority Banks
18.1.1 Subject to Clause 18.2, any term of any Financing Document may be
amended or waived with the written agreement of the Borrower, the
Guarantor, the Majority Banks and the Agent. The Agent may effect, on
behalf of the Majority Banks, an amendment or waiver to which the
Majority Banks have agreed.
18.1.2 The Agent shall promptly notify the Borrower and each Bank of any
amendment or waiver effected under Clause 18.1.1 and any such amendment
or waiver shall be binding on the Borrower, the Guarantor and each
Bank.
18.2 All Banks
Any amendment or waiver which relates to:
(a) the definition of "Majority Banks" in Clause 1.1;
(b) an extension of the date for, or a decrease in an amount or
a change in the currency of, any payment under any Financing
Document;
(c) an increase in a Bank's Commitment;
(d) a term of any Financing Document which expressly requires
the consent of each Bank;
(e) Clause 6, 7, 8 or 15 or this Clause 18; or
(f) the Parent Guarantee,
may not be effected without the written consent of the Banks.
18.3 No implied waivers; remedies cumulative
The rights of the Agent and each Bank under the Financing Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the
general law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
19. MISCELLANEOUS
19.1 Severance
If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not effect:
(a) the legality, validity or enforceability in that
jurisdiction of any other provision of this Agreement; or
(b) the legality, validity or enforceability in any other
jurisdiction of that or any other provision of this
Agreement.
19.2 Counterparts
This Agreement may be executed in any number of counterparts and this
shall have the same effect as if the signatures on the counterparts
were on a single copy of this Agreement.
19.3 Entire agreement
This Agreement in conjunction with the Fees Letter constitutes the
entire agreement between the Parties in relation to the Facility and
supersedes all previous proposals, agreements and other written and
oral communications in relation to the Facility.
20. NOTICES
20.1 Method
Each notice or other communication to be given under this Agreement
shall be given in writing in English and, unless otherwise provided,
shall be made by telex, fax or letter.
20.2 Delivery
Any notice or other communication to be given by one Party to another
under this Agreement shall (unless one Party has by 15 days' notice to
the other Party specified another address) be given to that other
Party, in the case of the Borrower and the Agent, at the respective
addresses given in Clause 20.3, and in the case of the Banks, at the
respective addresses given in Schedule 1 or, as the case may be, the
schedule to its relevant Transfer Certificate.
20.3 Addresses
The address and fax number of the Borrower, the Guarantor and Agent
are:
(A)the Borrower:
Carpets International (UK) PLC
Toftshaw Lane
Bradford
West Yorkshire
BD4 6QW
Attention: Archie W. Barfield
Fax: 0127 468 1408
(B)the Guarantor:
Shaw Industries, Inc.
616 East Walnut Avenue
Dalton
Georgia 30720
Attention: Kenneth G. Jackson
Fax: 001 706 275 1985
(C)the Agent:
NationsBank, N.A., London Branch
New Broad Street House
35 New Broad Street
London EC2M 1NH
Attention: Sofie Oscarsson
Fax: 0171 628 8692
20.4 Deemed receipt
20.4.1 Any notice or other communication given by the Agent shall be deemed to
have been received:
(a) if sent by fax, with a confirmed receipt of transmission
from the receiving machine, on the day on which transmitted;
(b) in the case of a written notice given by hand, on the day of
actual delivery; and
(c) if posted, on the second Business Day or, in the case of
airmail, the fifth Business Day following the day on which it
was despatched by first class mail postage prepaid or, as the
case may be, airmail postage prepaid,
provided that a notice given in accordance with the above but received
on a day which is not a Business Day or after normal business hours in
the place of receipt shall only be deemed to have been received on the
next Business Day.
20.4.2 Any notice or other communication given to the Agent shall be deemed to
have been given only on actual receipt.
20.5 Notices through Agent
Any notice or other communication from or to the Borrower or the
Guarantor under this Agreement shall be sent through the Agent.
21. ASSIGNMENTS AND TRANSFERS
21.1 Benefit of Agreement
This Agreement shall be binding upon and enure to the benefit of each
Party and its successors and assigns.
21.2 Assignments and transfers by Borrower
Neither the Borrower nor the Guarantor shall be entitled to assign or
transfer any of its rights or obligations under this Agreement.
21.3 Assignments by Banks
Any Bank may, following the approval of the Agent, the Borrower and the
Guarantor (which approval shall (i) not be unreasonably withheld or
delayed and (ii) shall not be required during the existence of a
Default), assign any of its rights and benefits under any Financing
Document to another bank or other financial institution PROVIDED THAT
such assignment relates to a Commitment or Participation of not less
than $10,000,000 (or such lesser amount as is equal to the entire
amount of the Commitment being assigned) and until the assignee has
confirmed to the Agent and the other Banks that it shall be under the
same obligations towards each of them as it would have been under if it
had been a party to this Agreement as a Bank, the Agent and the other
Banks shall not be obliged to recognise the assignee as having the
rights against each of them which it would have had if it had been such
a Party.
21.4 Transfers by Banks
21.4.1 Any Bank may, following the approval of the Agent, the Borrower and
the Guarantor (which approval shall (i) not be unreasonably withheld
or delayed and (ii) shall not be required during the existence of a
Default) transfer, in accordance with this Clause 21.4, any of its
rights and obligations under any Financing Document PROVIDED THAT
such transfer relates to a Commitment or Participation of not less
than $10,000,000 (or such lesser amount as is equal to the entire
amount of the Commitment being transferred).
21.4.2 If any Bank (the "Existing Bank") wishes to transfer all or any part of
its Commitment or Participation in the Facility to another bank or
other financial institution (the "Bank Transferee"), such transfer may
be effected by way of a novation by the delivery to, and the execution
by, the Agent of a duly completed Transfer Certificate.
21.4.3 On the date specified in the Transfer Certificate:
(a) to the extent that in the Transfer Certificate the Existing
Bank seeks to transfer its Commitment or Participation in
the Loan, the Borrower, the Guarantor and the Existing Bank
shall each be released from further obligations to each
other under this Agreement and their respective rights
against each other shall be cancelled (such rights and
obligations being referred to in this Clause 21.4.3 as
"Discharged Rights and Obligations");
(b) the Borrower, the Guarantor and the Bank Transferee shall each
assume obligations towards each other and/or acquire rights
against each other which differ from the Discharged Rights and
Obligations only insofar as the Borrower, the Guarantor and the
Bank Transferee have assumed and/or acquired the same in place
of the Borrower, the Guarantor and the Existing Bank; and
(c) each of the Parties and the Bank Transferee shall acquire the
same rights and assume the same obligations among themselves as
they would have acquired and assumed had the Bank Transferee
been a party under this Agreement as a Bank with the rights
and/or the obligations acquired or assumed by it as a result of
the transfer.
21.4.4 The Agent shall promptly complete a Transfer Certificate on request
by an Existing Bank and upon payment by the Bank Transferee of a fee
of $2,500 to the Agent (for the avoidance of doubt this fee shall be
payable if the relative transfer is to either a Bank already party to
this Agreement or to a new bank or financial institution). The
Borrower, the Guarantor, the Arranger and each Bank irrevocably
authorise the Agent to execute any duly completed Transfer
Certificate on its behalf provided that such authorisation does not
extend to the execution of a Transfer Certificate on behalf of either
the Existing Bank or the Bank Transferee named in the Transfer
Certificate.
21.4.5 The Agent shall promptly notify the Borrower of the receipt and
execution on its and the Guarantor's behalf by the Agent of any
Transfer Certificate.
21.5 Consequences of transfer
The Borrower shall be under no obligation to pay any greater amount
under this Agreement following an assignment or transfer by a Bank of
any of its rights or obligations pursuant to this Clause 21 if, in the
circumstances existing at the time of such assignment or transfer, such
greater amount would not have been payable but for the assignment or
transfer.
21.6 Sub-Participation
21.6.1 Each Bank may sub-participate (without the consent of any other Party)
to one or more parties (each a "Sub-Participant") all or a portion of
its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment) PROVIDED THAT:
(a) such Bank's obligations under this Agreement (including,
without limitation, its Commitment hereunder) shall remain
unchanged;
(b) such Bank shall remain solely responsible to the other
Parties for the performance of such obligations;
(c) the other Parties shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and
obligations under this Agreement;
(d) such sub-participation shall not be in an amount less than
$10,000,000 (unless it is to a Sub-Participant that is an
Affiliate of the Bank); and
(e) in no event shall a sub-participating Bank agree with the
Sub-Participant to take or refrain from taking any action under
this Agreement or under any other Financing Document except
that such Bank may agree with the Sub-Participant that it will
not, without the consent of the Sub-Participant agree to:
(i) increase or extend the term, or extend the time or
waive any requirement for the reduction or
termination of such Bank's Commitment;
(ii) extend the date fixed for the payment of principal or
interest on the Loan or any portion of any fee payable
to the Sub-Participant under this Agreement;
(iii) reduce the amount of any such payment of principal;
(iv) reduce the rate at which interest is payable on
Advances, or any fee under this Agreement payable to
the Sub-Participant, to a level below the rate at which
the Sub-Participant is entitled to receive such
interest or fee; or
(v) alter the rights or obligations of the Borrower to
prepay Advances.
21.6.2 The sub-participating Bank shall notify the Agent and the Borrower of
any sub-participation hereunder except when such Sub-Participant that
is an Affiliate of the sub-participating Bank.
21.7 Disclosure of information
The Agent and each Bank may disclose to each other, to their
professional advisers and to any actual or potential assignee,
transferee or sub-participant any information which the Agent or that
Bank has acquired under or in connection with any Financing Document.
22. INDEMNITIES
22.1 Breakage costs indemnity
The Borrower shall indemnify each Bank on demand against any loss or
expense (including any loss of Margin or any other loss or expense on
account of funds borrowed, contracted for or utilised to fund any
amount payable under this Agreement, any amount repaid or prepaid under
this Agreement or any Advance) which that Bank has sustained or
incurred as a consequence of:
(a) an Advance not being made following the service of a Drawdown
Notice (except as a result of the failure of that Bank to
comply with its obligations under this Agreement);
(b) the operation of Clause 6.4;
(c) the failure of the Borrower to make payment on the due date
of any sum due under this Agreement;
(d) the occurrence of any Default or the operation of
Clause 13.2; or
(e) any repayment of an Advance otherwise than on the last day
of the Interest Period in relation to that Advance.
22.2 Currency indemnity
22.2.1 Any payment made to or for the account of or received by the Agent or
any Bank in respect of any moneys or liabilities due, arising or
incurred by the Borrower to the Agent or any Bank in a currency (the
"Currency of Payment") other than the currency in which the payment
should have been made under this Agreement (the "Currency of
Obligation") in whatever circumstances (including as a result of a
judgment against the Borrower) and for whatever reason shall
constitute a discharge to the Borrower only to the extent of the
Currency of Obligation amount which the Agent or that Bank, as the
case may be, is able on the date of receipt of such payment (or if
such date of receipt is not a Business Day, on the next succeeding
Business Day) to purchase with the Currency of Payment amount at its
spot rate of exchange (as conclusively determined by the Agent or
that Bank) in the London foreign exchange market.
22.2.2 If the amount of the Currency of Obligation which the Agent or that
Bank is so able to purchase falls short of the amount originally due
to the Agent or that Bank, as the case may be, under this Agreement,
then the Borrower shall immediately on demand indemnify the Agent or
that Bank, as the case may be, against any loss or damage arising as
a result of that shortfall by paying to the Agent or that Bank, as
the case may be, that amount in the Currency of Obligation certified
by the Agent or that Bank, as the case may be, as necessary so to
indemnify it.
22.2.3 The indemnity in this Clause 22.2 shall constitute a separate and
independent obligation from the other obligations contained in this
Agreement, shall give rise to a separate and independent cause of
action, shall apply irrespective of any indulgence granted from time to
time and shall continue in full force and effect notwithstanding any
judgment or order for a liquidated sum or sums in respect of amounts
due under this Agreement or under any such judgment or order.
22.2.4 The certificate of the Agent or the relevant Bank as to the amount of
any loss or damage sustained or incurred by it shall be conclusive and
binding on the Borrower in the absence of manifest error.
23. LAW AND JURISDICTION
23.1 Law
This Agreement is governed by and shall be construed in accordance with
English law.
23.2 Jurisdiction
23.2.1 The Parties agree that the courts of England shall have jurisdiction
to settle any disputes which may arise in connection with any
Financing Document and that any judgment or order of an English court
in connection with any Financing Document is conclusive and binding
on them and may be enforced against them in the courts of any other
jurisdiction. This Clause 23.2.1 is for the benefit of the Agent and
each Bank only and shall not limit the right of the Agent and each
Bank to bring proceedings against the Borrower or the Guarantor in
connection with any Financing Document in any other court of
competent jurisdiction (including, without limitation, the Federal
Court of the Northern District of Georgia or any state court located
in Fulton County, Georgia in the United States of America) or
concurrently in more than one jurisdiction.
23.2.2 The Borrower and the Guarantor each:
(a) waives any objections which it may have to the English courts
on the grounds of venue or forum non conveniens or any similar
grounds as regards proceedings in connection with any Financing
Document; and
(b) consents to service of process by mail or in any other
manner permitted by the relevant law.
23.3 Agent for service
The Guarantor shall at all times maintain an agent for service of
process in England. That agent shall be the Borrower at the address set
out Clause 20.3(A). Any writ, summons, judgment or other notice of
legal process shall be sufficiently served on the Guarantor if
delivered to that agent at its address for the time being. The
Guarantor shall not revoke the authority of that agent. If for any
reason any such agent no longer serves as agent of the Guarantor to
receive service of process, the Guarantor shall promptly appoint
another such agent and immediately advise the Agent of that
appointment.
IN WITNESS whereof the Parties have caused this Agreement to be duly executed on
the date set out above.
<PAGE>
SCHEDULE 1
THE BANKS
Bank and Lending Office Address for Notices Commitment
NationsBank, N.A., For Credit Matters: $50,000,000
London Branch
New Broad Street House New Broad Street House
35 New Broad Street 35 New Broad Street
London EC2M 1NH London EC2M 1NH
Attn: John Humphreys
Fax: 0171 588 9150
Tel: 0171 282 2466
For Operations Matters:
New Broad Street House
35 New Broad Street
London EC2M 1NH
Attn: Sofie Oscarsson
Fax: 0171 628 8892
Tel: 0171 860 3742
Lloyds Bank Plc For Credit Matters: $25,000,000
St George's House
PO Box 787 St George's House
6-8 Eastcheap PO Box 787
London EC3M 1LL 6-8 Eastcheap
London EC3M 1LL
Attn: Nigel Robinson
Fax: 0171 418 3220
Tel: 0171 418 3522
For Operations Matters:
Loans Administration
Bank House
Wine Street
Bristol BS1 2AN
Attn: Ted Roylance
Fax: 0117 923 3367
Tel: 0117 923 3346
SunTrust Bank, Atlanta For Credit Matters: $20,000,000
25 Park Place
Mail Code 126 25 Park Place
Atlanta, GA 30303 Mail Code 126
Atlanta, GA 30303
Attn: Brad Staples
Fax: 001 404 588 8833
Tel: 001 404 230 5099
For Operations Matters:
25 Park Place
Mail Code 126
Atlanta, GA 30303
Attn: Jennifer Flores
Fax: 001 404 588 8123
Tel: 001 404 827 6348
Wachovia Bank of Georgia, For Credit Matters: $30,000,000
N.A.
191 Peachtree Street N.E. 191 Peachtree Street N.E.
Atlanta, GA 30303 Atlanta, GA 30303-1757
Attn: Stuart Bondurant
Fax: 001 404 332 6920
Tel: 001 404 332 5755
For Operations Matters:
191 Peachtree Street N.E.
Atlanta, GA 30303-1757
Attn: R. Hix
Fax: 001 404 332 6920
Tel: 001 404 332 6559
<PAGE>
SCHEDULE 2
CONDITIONS PRECEDENT
1. A Certified Copy of:
(a) the certificate of incorporation (and any relevant
certificate of incorporation on change of name) of the
Borrower; and
(b) the memorandum and articles of association of the Borrower.
2. A Certified Copy of:
(a) a certificate of existence or other good standing
certificate issued by the Secretary of State of Georgia in
relation to the Guarantor;
(b) certificates of incumbency with respect to each of the
officers of the Guarantor who are authorised officers of the
Guarantor as referred to in paragraph 3 below; and
(c) the articles of incorporation and by-laws of the Guarantor.
3. A Certified Copy of the board minutes and resolutions of each of the
Borrower approving and authorising the execution, delivery and
performance of this Agreement and the Guarantor and the other
Financing Documents to which each is a party on the terms and
conditions of those documents and authorising a person or persons to
sign or otherwise attest the due execution of those documents and any
other documents to be executed or delivered by the Borrower or the
Guarantor pursuant to those documents together with a certificate of
a duly authorised officer of the Borrower or, as the case may be, the
Guarantor setting out the names and signatures of the persons
authorised to sign such documents on behalf of the Borrower or, as
the case may be, the Guarantor.
4. Certified Copies of all consents, licences, approvals or authorisations
of any governmental or other authority, bureau or agency required by
the Borrower and/or the Guarantor in connection with the execution,
delivery, performance, validity or enforceability of the Financing
Documents or any document to be delivered under the Financing
Documents.
5. A certificate executed by the chief executive officer, chief
financial officer or treasurer of the Guarantor stating that:
(a) on such date, and after giving effect to the transactions
contemplated under the Financing Documents, no Default or
Potential Default has occurred and is continuing;
(b) no material adverse change in the financial condition or
operations of the business of the Guarantor or any of its
Subsidiaries or the projected cash flow of the Guarantor or
any of its Subsidiaries has occurred;
(c) the representations and warranties set out in Clause 11 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 of the Guarantor and the Borrower is in
compliance with all the terms and provisions set out in this
Agreement on its part to be observed and performed.
6. The Fees Letter duly executed by the Guarantor together with the fees
payable under it on the execution of this Agreement.
7. A letter addressed by the Borrower to the Agent in which it agrees to
act as the Guarantor's agent for service of process in England for
the purposes of this Agreement.
8. An opinion (in the agreed form) of Bennie M Laughter, Vice President
and General Counsel of the Guarantor addressed to the Arranger, the
Agent and the Banks relating to the entry into and execution by the
Guarantor of the Financing Documents to which it is a party.
<PAGE>
SCHEDULE 3
DRAWDOWN NOTICE
To: NationsBank, N.A., London Branch
New Broad Street House
35 New Broad Street
London EC2M 1NH
From: Carpets International (UK) PLC
*[date]
Dear Sirs,
$125,000,000 Credit Agreement dated ** September 1996 (the "Credit
Agreement")
Terms defined in the Credit Agreement have the same meaning in this notice.
We request an Advance to be drawn down under the Credit Agreement as follows:
1. Amount and currency of Advance:
2. Drawdown Date:
3. Duration of Interest Period:
4. Payment instructions:
(if applicable)
We confirm that today and on the Drawdown Date:
(a) the representations and warranties in Clause 11 to be repeated are
and will be correct; and
(b) no Default or Potential Default has occurred and is continuing or
will occur on the making of the Advance.
SIGNED
For and on behalf of
CARPETS INTERNATIONAL (UK) PLC
<PAGE>
SCHEDULE 4
THE GUARANTOR AND ITS MATERIAL SUBSIDIARIES
AND AFFILIATES
Name Jurisdiction of incorporation
Shaw Industries, Inc. Georgia
Carpets International (UK) PLC United Kingdom
Shaw Industries (Australia) Pty, Australia
Ltd.
Terza, S.A. de C.V. Mexico (50% owned)
Shaw Carpet Showplace, Inc. Georgia
Shaw Retail Properties, Inc. Georgia
Carpetland USA, Inc. Indiana
New York Carpet World, Inc. Michigan
Shaw Contract Flooring Services, Georgia
Inc.
Shaw Contract Properties, Inc. Georgia
CarpetSmart, Inc. Georgia
Shaw Installation Services, Inc. Georgia
Shaw Financial Services, Inc. Minnesota
SHX Leasing, Inc. Tennessee
Shaw Transport, Inc. Georgia
<PAGE>
SCHEDULE 5
MANDATORY LIQUID ASSET COSTS FORMULA
1. The additional rate relative to any Advance denominated in Sterling is,
subject as provided below, the percentage rate arrived at by applying
the following formula:
BY + L(Y-X) + S(Y-Z) % per annum
100 - (B+S)
Where:
B = The percentage of the Agent's eligible liabilities then
required to be held on a non-interest-bearing deposit account
with the Bank of England pursuant to the cash ratio
requirements of the Bank of England.
Y = The rate at which Sterling deposits in an amount comparable
with the Advance are offered by the Agent to leading banks in
the London interbank market at or about 11.00 a.m. on the
commencement of the relevant Interest Period for a period
comparable to the Interest Period.
L = The average percentage of eligible liabilities which the
Bank of England from time to time requires the Agent to
maintain as secured money with members of the London
Discount Market Association and/or as secured call money
with those money brokers and gilt-edged market-makers
recognised by the Bank of England. Such percentage shall
(in the absence of any other figure being appropriate) be
conclusively presumed to be 5 per cent.
X = The rate at which secured Sterling deposits in an amount
comparable to the Advance may be placed by the Agent with
members of the London Discount Market Association and/or as
secured call money with money brokers and gilt-edged
market-makers at or about 11.00 a.m. on the commencement of the
relevant Interest Period for a period comparable to the
Interest Period.
S = The percentage of the Agent's eligible liabilities then
required to be placed as a special deposit with the Bank of
England.
Z = The percentage interest rate per annum allowed by the Bank of
England on special deposits.
For the purposes of this paragraph "eligible liabilities" and "special
deposits" shall bear the meanings ascribed to them from time to time by
the Bank of England.
2. In the application of the above formula, B, Y, L, X, S and Z shall be
included in this formula as figures and not as percentages, e.g. if B
= 0.5 per cent. and Y = 15 per cent., BY shall be calculated as 0.5 x
15 and not as 0.5 per cent. x 15 per cent.
3. The additional rate computed by the Agent in accordance with this
Schedule 5 shall, if not already such a multiple, be rounded upwards
to the nearest whole multiple of 1/16 per cent. per annum.
4. Where the relevant Interest Period is of 3 months' duration or less,
the calculation of the additional rate shall be made by the Agent on
the commencement of the relevant Interest Period. Where the relevant
Interest Period is longer than 3 months the calculation shall be made
on commencement of the Interest Period for the first 3 months of the
Interest Period and shall then be recalculated each 3 months in
respect of the next 3 month period or, if applicable, the balance of
the Interest Period.
5. In the event of a change in circumstances (including the imposition of
alternative or additional official requirements) which renders the
above formula inapplicable to any Bank, the Agent shall notify the
Borrower of the manner in which the additional rate shall thereafter be
determined which shall reflect the additional costs following such
change incurred by any one or all of the Banks at such time and from
time to time.
<PAGE>
SCHEDULE 6
FORM OF TRANSFER CERTIFICATE
TRANSFER CERTIFICATE
To: The Agent
and the other parties to the Credit Agreement (as defined below)
This transfer certificate ("Transfer Certificate") relates to a credit agreement
dated ** September 1996 and made between (1) Carpets International (UK) PLC, (2)
Shaw Industries, Inc., (3) certain banks, (4) NationsBank, N.A., London Branch
as agent and (5) NationsBanc Capital Markets International, Limited as arranger
in respect of a multicurrency revolving credit facility (the "Credit Agreement",
which term shall include any amendments or supplements to it).
Terms defined and references construed in the Credit Agreement shall have the
same meanings and construction in this Transfer Certificate.
1. *[insert full name of Existing Bank] (the "Existing Bank"):
(a) confirms that to the extent that details appear in the schedule
to this Transfer Certificate under the headings "Existing
Bank's Commitment" and "Participation in the Loan", those
details accurately summarise its Commitment and its
Participation in the Loan all or part of which is to be
transferred; and
(b) requests *[insert full name of Bank Transferee] (the "Bank
Transferee") to accept and procure, in accordance with Clause
21 of the Credit Agreement, the substitution of the Existing
Bank by the Bank Transferee in respect of the amount specified
in the schedule to this Transfer Certificate of its Commitment
and its Participation in the Loan by signing this Transfer
Certificate.
2. The Bank Transferee requests each of the Borrower, the Guarantor, the
Banks, the Arranger and the Agent to accept this executed Transfer
Certificate as being delivered under and for the purposes of Clause 21
of the Credit Agreement so as to take effect in accordance with the
provisions of that Clause on *[insert date of transfer].
3. The Bank Transferee:
[(a) represents and warrants that as at the date of this Transfer
Certificate it is a Qualifying Bank;]
(b) confirms that it has received a copy of the Credit Agreement
together with such other documents and information as it has
requested in connection with this transaction;
(c) confirms that it has not relied and will not rely on the
Existing Bank to check or enquire on its behalf into the
legality, validity, effectiveness, adequacy, accuracy or
completeness of any such documents or information;
(d) agrees that it has not relied and will not rely on the
Arranger, the Agent, the Existing Bank or any other Bank to
assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or
nature of the Borrower or the Guarantor; and
(e) confirms that its Lending Office is in **.
4. The Bank Transferee undertakes with the Existing Bank and each of the
other parties to the Credit Agreement that it will perform, in
accordance with its terms, all those obligations which, by the terms of
the Credit Agreement, will be assumed by it upon delivery of the
executed copy of this Transfer Certificate to the Agent.
5. On execution of this Transfer Certificate by the Agent on their behalf,
the Borrower, the Guarantor, the Arranger and the Banks accept the Bank
Transferee as a party to the Credit Agreement in substitution for the
Existing Bank with respect to all those rights and/or obligations
which, by the terms of the Credit Agreement, will be assumed by the
Bank Transferee after delivery of the executed copy of this Transfer
Certificate to the Agent.
6. None of the Existing Bank, the other Banks, the Arranger and the
Agent:
(a) makes any representation or warranty or assumes any
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of the Credit
Agreement; or
(b) assumes any responsibility for the financial condition of
the Borrower or the Guarantor or any other party to the
Credit Agreement or any other document or for the
performance and observance by the Borrower or the Guarantor
or any other party to the Credit Agreement or any other
document of its or their obligations and any and all
conditions and warranties, whether express or implied by law
or otherwise, are excluded.
7. The Bank Transferee confirms that its Lending Office and address for
notices for the purposes of the Credit Agreement are as set out in
the schedule to this Transfer Certificate.
8. The Existing Bank gives notice to the Bank Transferee (and the Bank
Transferee acknowledges and agrees with the Existing Bank) that the
Existing Bank is under no obligation to re-purchase (or in any other
manner to assume, undertake or discharge any obligation or liability in
relation to) the transferred Commitment and Participation at any time
after this Transfer Certificate shall have taken effect.
9. Following the date upon which this Transfer Certificate shall have
taken effect, without limiting the terms of this Transfer
Certificate, each of the Bank Transferee and the Existing Bank
acknowledges and confirms to the other that, in relation to the
relative Commitment and Participation (or part thereof), variations,
amendments or alterations to any of the terms of the Credit Agreement
arising in connection with any renegotiation or rescheduling of the
obligations under the Credit Agreement shall apply to and be binding
on the Bank Transferee alone.
10. This Transfer Certificate is governed by and shall be construed in
accordance with English law.
<PAGE>
THE SCHEDULE
Existing Bank's Commitment Amount of Commitment Transferred
Existing Bank's Participation in the Amount of Participation Transferred
Loan
*[insert full name of Bank Transferee]
Lending Office Address for notices
* *[address]
Attention:
Fax:
<PAGE>
*[Bank Transferee]
By: ...........................................................
(Duly Authorised)
*[Existing Bank]
By: ...........................................................
(Duly Authorised)
The Agent on behalf of itself and all other parties to the Credit Agreement
By: ...........................................................
(Duly Authorised)
Dated:
<PAGE>
The Borrower
SIGNED by WILLIAM C. LUSK )
JR., Director )
for and on behalf of )
CARPETS INTERNATIONAL (UK) )
PLC in the presence of: )
Director WILLIAM C. LUSK JR.
Secretary B. M. LAUGHTER
The Guarantor
SIGNED by KENNETH G. )
JACKSON, Vice President )
for and on behalf of )
SHAW INDUSTRIES, INC. in )
the presence of:
Vice President KENNETH G. JACKSON
Secretary B. M. LAUGHTER
The Agent
SIGNED by )
LEONARD SEELIG ) LEONARD SEELIG
for and on behalf of )
NATIONSBANK, N.A., LONDON )
BRANCH )
The Arranger
SIGNED by )
MARTIN CROCKER ) MARTIN CROCKER
for and on behalf of )
NATIONSBANC CAPITAL MARKETS )
INTERNATIONAL, LIMITED )
The Banks
SIGNED by )
LEONARD SEELIG ) LEONARD SEELIG
for and on behalf of )
NATIONSBANK, N.A., LONDON )
BRANCH )
SIGNED by )
R D C DAKIN ) RICHARD DAKIN
for and on behalf of ) Manager
LLOYDS BANK Plc ) Corporate Banking
SIGNED by )
BRADLEY J STAPLES and ) BRADLEY J STAPLES
WES C. BURTON ) Bank Officer
for and on behalf of )
SUNTRUST BANK, ATLANTA WES C. BURTON
Vice President
SIGNED by )
JULIE B. EDWARDS ) JULIE B. EDWARDS
Vice President ) Vice President
for and on behalf of )
WACHOVIA BANK OF GEORGIA, )
N.A. )
GUARANTY
THIS GUARANTY dated as of September 13, 1996 is executed and delivered by
SHAW INDUSTRIES, INC., a corporation organized under the laws of the State of
Georgia (together with its successors and assigns, the "Guarantor") in favor of
NATIONSBANK, N.A., LONDON BRANCH, as Agent (the "Agent"), the Arranger (as
defined below) and each of the Banks that is now or hereafter a party to that
certain Credit Agreement of even date herewith (as the same may be amended,
modified or supplemented from time to time, the "Credit Agreement") by and among
Carpets International (UK) PLC (together with its successors and assigns, the
"Borrower"), the Guarantor, the Banks from time to time a party thereto and
NationsBanc Capital Markets International, Limited, as Arranger (the "Arranger";
the Agent, each Bank and the Arranger each referred to herein as a "Guaranteed
Party" and collectively as the "Guaranteed Parties").
WHEREAS, pursuant to, and on the terms and conditions set forth in, the
Credit Agreement, the Banks and the Agent are making available a $125,000,000
multicurrency revolving credit facility to the Borrower;
WHEREAS, it is a condition precedent to the availability of such facility
to the Borrower that the Guarantor guaranty the obligations of the Borrower
under such facility;
WHEREAS, the Borrower is a wholly-owned subsidiary of the Guarantor and,
as such, the Guarantor will benefit from the availability of such facility to
the Borrower and is therefore willing to guaranty the obligations of the
Borrower thereunder.
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 absolutely, irrevocably and
unconditionally guarantees to the Guaranteed Parties the due and punctual
payment and performance when due, whether at stated maturity, by acceleration,
mandatory prepayment or otherwise, of the following (the following collectively
referred to as the "Guaranteed Obligations"): (a) all indebtedness (including
all principal, accrued interest, fees and premium, if any), and all other
obligations and liabilities, whether actual or contingent and of whatever
nature, now or hereafter owing by the Borrower to any Guaranteed Party incurred
under or pursuant to the Credit Agreement or any document or instrument executed
and delivered by the Borrower (or by any Subsidiary of the Borrower or by any
other person or entity) in connection therewith and (b) any and all extensions,
renewals, modifications, amendments or substitutions of the foregoing.
Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a
guaranty of payment and not of collection. Accordingly, no Guaranteed Party
shall be obligated or required before enforcing this Guaranty against the
Guarantor: (a) to pursue any right or remedy such Guaranteed Party may have
against the Borrower or any other guarantor of the Guaranteed Obligations or
commence any suit or other proceeding against the Borrower or any other
guarantor of the Guaranteed Obligations in any court or other tribunal; (b) to
make any claim in a liquidation, insolvency, receivership or bankruptcy or other
analogous proceeding of the Borrower or any other guarantor of the Guaranteed
Obligations; or (c) to make demand of the Borrower or any other guarantor of the
Guaranteed Obligations or to enforce or seek to enforce or realize upon any
collateral security held by such Guaranteed Party which may secure any of the
Guaranteed Obligations. In this connection, the Guarantor hereby waives the
right of the Guarantor to require any Guaranteed Party to take action against
the Borrower as provided in Official Code of Georgia Annotated Section 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 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 or any other document or instrument
evidencing any Guaranteed Obligations, or (iv) any renewal, extension, addition,
or supplement to, or deletion from, or any other action or inaction under or in
respect of, the Credit Agreement 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 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, or
any invalidity or unenforceability relating to or against the Borrower, or any
other guarantor of any of the Guaranteed Obligations (an "Other Guarantor"), for
any reason related to the Credit Agreement or any other documents, instruments
or agreements relating to the Guaranteed Obligations (collectively, the "Loan
Documents"), or any guaranty executed by an other Guarantor (an "Other
Guaranty"), or the lack of legal existence of the Borrower or any Other
Guarantor, or any provision of applicable law or regulation purporting to
prohibit to make illegal the payment by the Borrower or any Other Guarantor of
the principal of or interest on any Advance or Loan or any other amount payable
by the Borrower under the Credit Agreement or any other Loan Documents or by any
Other Guarantor under any Other Guaranty, or the performance of any other
obligation or undertaking of the Borrower under the Credit Agreement or any
other Loan Documents or by any Other Guarantor under any Other Guaranty or
otherwise making any of the Guaranteed Obligations irrecoverable from the
Borrower or an Other Guarantor for any reason;
(c) any furnishing to any Guaranteed Party 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 Borrower or
any other person or entity obligated under any Guaranteed Obligation, or any
action taken with respect to this Guaranty by any trustee or receiver, or by any
court, in any such proceeding;
(f) any release, invalidity, 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 or
entity with respect to the liabilities of the Borrower to any Guaranteed Party,
regardless of what liabilities of the Borrower remain unpaid, or the existence
of any claim, setoff or other rights which the Guarantor may have at any time
against the Borrower or any Other Guarantor or any Guaranteed Party or any other
person, whether in connection herewith or any unrelated transactions, provided
that nothing herein shall prevent the assertion of any such claim by separate
suit or compulsory counterclaim;
(h) any defect, limitation, lack of authority or insufficiency in the
borrowing powers of the Borrower or in the exercise thereof;
(i) any seizure or nationalization of assets of the Borrower by any
governmental or quasi-governmental authority or agency or any intervention,
interference or suspension of the business operations of the Borrower by any
governmental or quasi-governmental agency or authority;
(j) 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;
(k) any other act or omission to act or delay of any kind by the Borrower,
any Other Guarantor, any Guaranteed Parties or any other person or any other
circumstance whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of the Guarantor's obligations
hereunder;
(l) any law, regulation, order, decree or directive (whether or not having
the force of law) or any interpretation thereof, now or hereafter in effect in
any jurisdiction, that purports to modify any of the terms of or rights of any
Bank with respect to any Guaranteed Obligation or under the Credit Agreement or
any other Loan Document or this Guaranty, including without limitation any law,
regulation, order, decree or directive or interpretation thereof that purports
to require or permit the satisfaction of any Guaranteed Obligation other than
strictly in accordance with the terms of the Credit Agreement or any other Loan
Document (such as by the tender of a currency other than the relevant Alternate
Currency) or that restricts the procurement of the Alternate Currency by the
Borrower or the Guarantor, or any agreement, whether or not signed by or on
behalf of any Bank, in connection with the restructuring or rescheduling of
public or private obligations in the Borrower's country, whether or not such
agreement is stated to cause or permit the discharge of the Guaranteed
Obligations in the relevant Alternate Currency in strict accordance with the
Credit Agreement or other Loan Documents; or
(m) any change in the corporate existence, structure or ownership of
the Borrower or any Other Guarantor.
Section 4. Action with Respect to Guaranteed Obligations. A 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 document evidencing any Guaranteed Obligations;
(c) sell, exchange, release or otherwise deal with all, or any part, of any
collateral securing any of the Guaranteed Obligations; (d) release any person or
entity 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 or entity (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 the
Agent shall elect.
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 Guaranteed Obligations. If a Guaranteed
Party or the holder of any of the Guaranteed Obligations is prevented under any
applicable law, rule or regulation or otherwise from demanding or accelerating
payment thereof by reason of any automatic stay, governmental intervention,
seizure of assets, any order or writ issued by any governmental agency or
authority or otherwise, such 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 such
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 such Guaranteed Party or any of its property, or (b) any
settlement or compromise of any such claim effected by such Guaranteed Party
with any such claimant (including the Borrower or a receiver or trustee in any
bankruptcy or insolvency proceeding of the Borrower or its assets 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 or any other
instrument evidencing any liability of the Borrower, and the Guarantor shall be
and remain liable to such Guaranteed Party for the amounts so repaid or
recovered to the same extent as if such amount had never originally been paid to
such Guaranteed Party.
Section 8. Waiver of Subrogation. Until the full, final and indefeasible
payment in full in cash of all Guaranteed Obligations, the Guarantor shall not
assert any claim or cause of action the Guarantor may have against the Borrower
or any other person or entity arising by reason of any payment by the Guarantor
to any 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 any other person or entity.
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
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 Guaranteed Parties of the full amount payable hereunder had such deduction
or withholding not occurred or been required.
Section 10. Set-off. The Guarantor hereby authorizes each Guaranteed
Party, and each affiliate of each Guaranteed Party, at any time after the
occurrence of a Default, 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
any Guaranteed Party, or any affiliate of any Guaranteed Party, to the
Guarantor) or other indebtedness owing by such Guaranteed Party, or affiliate of
such Guaranteed Party, to the Guarantor, to the then outstanding Guaranteed
Obligations then due and payable. Each Guaranteed Party, or affiliate of such
Guaranteed Party, may exercise this right of setoff whether or not such
Guaranteed Party, or affiliate of such Guaranteed Party, has made demand for, or
accelerated, any Guaranteed Obligations. The rights of each Guaranteed Party,
and each affiliate of each Guaranteed Party 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 such Guaranteed
Party, or affiliate of such Guaranteed Party, 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 each Guaranteed Party 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 Guaranteed Obligations ("Senior Claims").
If a Potential Default under the Credit Agreement shall occur, then,
unless and until such Potential 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 in cash before any direct or indirect payment or
distribution (in cash, property, securities by setoff or otherwise) shall be
made to the Guarantor on account of or in any manner in respect of any Junior
Claim. "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 or insolvency laws of
any applicable jurisdiction; or any involuntary case is commenced against the
Borrower or the Guarantor; or a custodian, administrator, trustee, receiver or
administrative receiver 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,
winding up, 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 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.
Section 12. Automatic Acceleration in Certain Events. Upon the occurrence
of a Proceeding (as defined above) which also constitutes a Default under 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 any Guaranteed Party, and regardless of whether payment of the
Guaranteed Obligations by the Borrower has then been accelerated. In addition,
if a Proceeding shall 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 any Guaranteed Party,
and regardless of whether payment of the Guaranteed Obligations by the Borrower
has then been accelerated.
Section 13. 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 no Guaranteed Party
shall have any duty to advise the Guarantor of information known to it or any of
them regarding such circumstances or risks.
Section 14. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
Section 15. JURISDICTION/JURY TRIAL WAIVER/OTHER MATTERS.
(a) EACH GUARANTEED PARTY 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, BY ACCEPTANCE HEREOF, EACH GUARANTEED PARTY
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 BY ACCEPTANCE HEREOF, EACH GUARANTEED
PARTY, 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 THE GUARANTEED
PARTIES PERTAINING DIRECTLY OR INDIRECTLY TO THIS GUARANTY OR TO ANY MATTER
ARISING HEREFROM. THE GUARANTOR AND, BY ACCEPTANCE HEREOF, EACH GUARANTEED
PARTY, EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR PROCEEDING COMMENCED IN SUCH COURT. THE GUARANTOR AND, BY ACCEPTANCE
HEREOF, EACH GUARANTEED PARTY, 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.
(c) THE GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY SUMMONS AND
COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN, AND AGREES THAT SERVICE OF
SUCH SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS MAY BE MADE BY UNITED
STATES MAIL, POSTAGE PREPAID ADDRESSED TO THE GUARANTOR AT THE ADDRESS SET FORTH
BELOW ITS SIGNATURE HERETO. SHOULD THE GUARANTOR FAIL TO APPEAR OR ANSWER ANY
SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THIRTY DAYS AFTER THE
MAILING THEREOF, IT SHALL BE DEEMED IN DEFAULT AN ORDER AND/OR JUDGMENT MAY BE
ENTERED AGAINST IT AS PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS.
(d) THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE BRINGING OF ANY ACTION BY ANY GUARANTEED PARTY OR THE ENFORCEMENT
BY ANY GUARANTEED PARTY OF ANY JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER
APPROPRIATE JURISDICTION (INCLUDING, WITHOUT LIMITATION, THE COURTS OF ENGLAND).
(e) 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.
Section 16. Loan Accounts. The Agent shall 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 except in the
case of 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 17. Waiver of Remedies. No delay or failure on the part of a
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 a Guaranteed Party of any such right or remedy
shall preclude other or further exercise thereof or the exercise of any other
such right or remedy.
Section 18. Waiver of Exemptions. To the fullest extent permitted by law,
the Guarantor hereby waives and agrees not to claim any and all homestead and
other exemptions allowed by the Constitution or laws of the United States of
America, the State of Georgia or any other state or district of the United
States of America.
Section 19. Successors and Assigns. Each reference herein to a Guaranteed
Party shall be deemed to include such 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 and the Borrower shall be deemed to include the
Guarantor's and the Borrower's executors, administrators, successors and
assigns, upon whom, in the case of the Guarantor, this Guaranty also shall be
binding. A Guaranteed Party may assign, transfer or sell any Guaranteed
Obligation, or grant or sell participation in any Guaranteed Obligations, in
accordance with the terms of the Credit Agreement. The Guarantor hereby consents
to the delivery by a Guaranteed Party to any actual or proposed 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 and the extension of the financial accommodations
extended pursuant thereto.
Section 21. Amendments. This Guaranty may not be amended except in
writing signed by the Agent on behalf of the Banks, the Arranger and the
Guarantor.
Section 22. Payments/Expenses. All payments made by the Guarantor pursuant
to this Guaranty shall be made in immediately available funds in the currency or
currencies in which such Guaranteed Obligations are then denominated, to the
main office of NationsBank, N.A. (South), an affiliate of the Agent, at 600
Peachtree Street, 21st Floor, Atlanta, Georgia 30308, not later than 11:00 a.m.,
Atlanta, Georgia time, on the date one Business Day after demand therefor, to
the extent any demand is so required. If the Guarantor is unable for any reason
to effect payment in a relevant Alternative Currency as required by this
Guaranty or if the Guarantor shall default in the payment in such Alternative
Currency, each Guaranteed Party may, through the Agent, require such payment to
be made in Dollars in the Dollar Equivalent amount of such payment. In any case
in which the Guarantor shall make such payment in Dollars, the Guarantor agrees
to hold the Banks harmless from any loss incurred by the Banks arising from any
change in the value of Dollars in relation to such Alternative Currency between
the date such payment became due and the date of payment thereof. The Guarantor
shall pay, on demand, all costs and expenses incurred by any Guaranteed Party in
the collection and enforcement of this Guaranty including the fees and
disbursements of counsel to such Guaranteed Party actually incurred by such
Guaranteed Party if collection is sought by or through an attorney.
Section 23. Judgment Currency. If for the purpose of obtaining judgment in
any court or enforcing any such judgment it is necessary to convert any amount
due in any Alternative Currency into any other currency, the rate of exchange
used shall be the Agent's spot rate of exchange for the purchase in the London
foreign exchange market of the Alternative Currency with such other currency on
the Business Day following receipt of any payment in a currency other than the
relevant Alternative Currency. The obligation of the Guarantor in respect of any
amount due from it hereunder shall, notwithstanding any judgment or order for a
liquidated sum or sums in respect of amounts due hereunder or under any judgment
or order in any other currency or otherwise be discharged only to the extent
that on the Business Day following receipt by this Agent of any payment in a
currency other than the relevant Alternative Currency, the Agent is able (in
accordance with normal banking procedures) to purchase the relevant Alternative
Currency with such other currency. If the amount of the relevant Alternative
Currency that the Agent is able to purchase with such other currency is less
than the amount due in the relevant Alternative Currency, notwithstanding any
judgment or order, the Guarantor shall indemnify the Guaranteed Parties for the
shortfall.
Section 24. 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 25. 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 26. Headings. Section headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.
Section 27. Review of Credit Agreement. 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 Financing Documents referred to therein and to discuss the same and this
Guaranty with its counsel.
Section 28. Defined Terms. Terms used herein and not defined herein
shall have their respective defined meanings as set forth in the Credit
Agreement.
Section 29. Counterparts. This Guaranty may be executed in any number
of counterparts each of which, when taken together, shall constitute one and
the same agreement.
[Signatures contained on following page]
<PAGE>
IN WITNESS WHEREOF, the Guarantor has duly executed and delivered this
Guaranty as of the date and year first written above.
SHAW INDUSTRIES, INC.
By:________________________________
Title:_______________________
ATTEST:
By:________________________________
Title:_______________________
Address for Notices:
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
<PAGE>
[Acceptance to Shaw Guaranty dated as of September 13, 1996]
Accepted and Agreed:
NATIONSBANK, N.A., LONDON
BRANCH, as Agent for itself and on
behalf of the Banks and individually as a Bank
By:______________________________
Title:______________________
NATIONSBANC CAPITAL MARKETS
INTERNATIONAL, LIMITED
By:______________________________
Title:_____________________
LLOYDS BANK Plc
By:______________________________
Title:_____________________
SUNTRUST BANK, ATLANTA
By:______________________________
Title:_____________________
By:______________________________
Title:_____________________
<PAGE>
[Acceptance to Shaw Guaranty dated as of September 13, 1996]
WACHOVIA BANK OF GEORGIA, N.A.
By:______________________________
Title:_____________________
[Footnote Continued From Previous Page]
[Footnote Continued On Next Page]
-6-
5THAMEND.DOC
EXHIBIT 10(o) - FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT dated as of September 13, 1996 by
and among SHAW INDUSTRIES, INC., a corporation organized under the laws of the
State of Georgia (the "Borrower"), the Lenders appearing on the signature pages
hereof (the "Lenders") and NATIONSBANK, N.A. (SOUTH), as Agent (the "Agent").
WHEREAS, the Borrower, the Lenders and the Agent entered into that certain
Credit Agreement dated as of November 30, 1994, as amended by that certain First
Amendment to Credit Agreement dated as of February 28, 1995, as further amended
by that certain Second Amendment to Credit Agreement dated as of May 3, 1995, as
further amended by that certain Third Amendment to Credit Agreement dated as of
September 30, 1995 and as further amended by a Fourth Amendment to Credit
Agreement dated as of December 30, 1995 (as so amended, the "Credit Agreement"),
pursuant to which the Lenders made certain financial accommodations available to
the Borrower;
WHEREAS, the Borrower has requested that the Lenders and the Agent amend
the Credit Agreement on the terms and conditions set forth herein; and
WHEREAS, the Lenders and the Agent are willing to so amend the Credit
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties hereto
agree as follows:
Section 1. Specific Amendment to Credit Agreement. The Credit
Agreement is hereby amended as follows:
(a) Pursuant to Section 2.16 of the Credit Agreement, the Borrower
has requested, and the Agent and each Lender, by executing this Fifth
Amendment, have agreed to, the extension of the then current Termination
Date from December 31, 1998 to December 31, 1999. Accordingly, the
Termination Date is hereby so extended and each party hereto hereby waives
any further rights to give or receive any further notice or right to
consider or consent to such extension as may be provided for in Section
2.16.
(b) The pricing grid set forth in the definition of "Applicable
Margin" is hereby amended by deleting the existing grid in its entirety
and substituting in lieu thereof the following:
-----------------------------------------------------------------------
Consolidated Funded Applicable Margin Applicable
Debt/EBITDA Ratio for Base Rate Loans Margin for LIBOR
Loans
-----------------------------------------------------------------------
Greater than 3.25 to 1.00 0% 0.475%
-----------------------------------------------------------------------
---------------------------------- ------------------
Less than or equal to 3.25 to
1.00 but greater than 2.75 to 0% 0.350%
1.00
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Less than or equal to 2.75 to
1.00 but greater than 2.25 to 0% 0.220%
1.00
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Less than or equal to 2.25 to 0% 0.150%
1.00
-----------------------------------------------------------------------
(c) The facility fee grid set forth in Section 3.07 of the Credit
Agreement is hereby amended by deleting the existing grid in its entirety
and substituting in lieu thereof the following:
-----------------------------------------------------------------------
Consolidated Funded Debt/EBITDA Ratio Facility Fee
Percentage
-----------------------
------------------------------------------------
Greater than 2.75 to 1.00 0.15%
-----------------------------------------------------------------------
-----------------------
Less than or equal to 2.75 to 1.00 0.10%
-----------------------------------------------------------------------
(d) Section 8.01(b) of the Credit Agreement is hereby amended by
deleting each reference to "July 2, 1994" contained therein and
substituting in lieu thereof a reference to "June 29, 1996".
(e) Section 8.01(c) of the Credit Agreement is hereby amended by
deleting such Section in its entirety and substituting in lieu thereof the
following:
"(c) Funded Debt to EBITDA Ratio. Permit, as of the
end of each fiscal quarter of the Borrower, the Funded
Debt/EBITDA Ratio to be greater than 3.50 to 1.00."
(f) Section 8.02 of the Credit Agreement is hereby amended by
inserting the following subparagraph at the end thereof as an additional
permitted Indebtedness:
"(l) (i) the incurrence by Carpets International (UK) PLC, a
company incorporated in England and Wales and a wholly-owned
Subsidiary of the Borrower ("Carpets"), of a $125,000,000
multicurrency revolving credit facility under and pursuant to that
certain Credit Agreement dated on or about September 13, 1996 by and
among Carpets, the Borrower, the Banks from time to time a party
thereto, NationsBank, N.A. London Branch, as Agent of NationsBanc
Capital Markets International, Limited, as Arranger, as the same may
be amended, supplemented or modified from time to time (the "UK
Credit Agreement") and (ii) the full, absolute and unconditional
Guaranty by the Borrower of the indebtedness and obligations of
Carpets under the UK Credit Agreement and the other documents and
instruments executed and delivered by Carpets in connection
therewith."
Section 2. Effectiveness of Amendment. This Fifth Amendment, and the
amendment effected hereby, shall not be effective until the following conditions
precedent to effectiveness shall be satisfied (or waived by all of the Lenders):
(a) this Fifth Amendment shall be executed and delivered by the
Borrower, the Agent and all of the Lenders; and
(b) the Agent shall have received a certificate from the Senior Vice
President of Finance or the Treasurer of the Borrower certifying that, after
giving effect to the amendment contemplated hereby, no Default or Event of
Default under the Credit Agreement exists.
Section 3. Reaffirmation of Representations and Warranties.
(a) In order to induce the Agent and the Lenders to enter into this Fifth
Amendment, the Borrower hereby reaffirms each of the representations and
warranties of the Borrower contained in the Credit Agreement as of the date
hereof except for either: (i) the occurrence of any event that would render such
representations or warranties untrue, but that is expressly permitted by the
terms of the Credit Agreement or which would not cause an Event of Default under
the Credit Agreement or (ii) the occurrence of any event that would render such
representations or warranties untrue but that previously has been disclosed in
writing to the Lenders.
(b) After giving effect to the amendment and the waiver set forth herein,
the Borrower represents and warrants to the Agent and the Lenders that no
Default or Event of Default has occurred and is continuing under the Credit
Agreement.
(c) The execution, delivery and performance of this Fifth Amendment by the
Borrower does not require the consent of any other Person under any document,
instrument or agreement to which the Borrower is a party or under which the
Borrower is bound.
Section 4. References to the Credit Agreement. Each reference to the
Credit Agreement in any of the Loan Documents shall be deemed to be a reference
to the Credit Agreement, as amended by this Fifth Amendment, and as the same may
be further amended, restated, supplemented or otherwise modified from time to
time in accordance with Section 11.07 of the Credit Agreement.
Section 5. Benefits. This Fifth Amendment shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
Section 6. GOVERNING LAW. THIS FIFTH AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 7. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement shall remain in full force and effect
without amendment or modification, express or implied.
Section 8. Counterparts. This Fifth Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and
shall be binding upon all parties, their successors and assigns.
Section 9. Definitions. All capitalized terms which are used herein
and not otherwise defined herein shall have the meanings given such terms as
set forth in the Credit Agreement.
[Signatures Contained on Following Page]
<PAGE>
[Signature Page to Fifth Amendment to Credit Agreement dated
as of September 13, 1996 with Shaw Industries, Inc.]
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to
Credit Agreement to be executed under seal by their duly authorized officers as
of the date first above written.
THE BORROWER:
SHAW INDUSTRIES, INC.
By:______________________________
Title:______________________
THE AGENT:
NATIONSBANK, N.A. (SOUTH), as Agent
By:______________________________
Title:______________________
[Signatures Continued on Next Page]
<PAGE>
[Signature Page to Fifth Amendment to Credit Agreement dated
as of September 13, 1996 with Shaw Industries, Inc.]
THE LENDERS:
NATIONSBANK, N.A. (SOUTH)
By:______________________________
Title:_____________________
SUNTRUST BANK, ATLANTA
By:______________________________
Title:______________________
By:______________________________
Title:______________________
WACHOVIA BANK OF GEORGIA, N.A.
By:_______________________________
Title:______________________
EXHIBIT 11.0
SHAW INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (1)
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------ -----------------------------
Sept. 28, 1996 Sept. 30, 1995 Sept. 28, 1996 Sept. 30, 1995
PRIMARY:
<S> <C> <C> <C> <C>
Weighted average common shares outstanding ........................ 136,717 135,817 136,220 135,860
Additional shares assuming exercise of stock options .............. 456 574 191 529
------- ------- ------- -------
Weighted average common and common equivalent shares outstanding .. 137,173 136,391 136,411 136,389
======= ======= ======= =======
Income before accounting change ................................... $24,179 $21,905 $36,694 $45,055
Cumulative effect of accounting change, net of tax benefit ........ 0 0 0 (12,077)
------- ------- ------- -------
Net income ........................................................ $24,179 $21,905 $36,694 $32,978
======= ======= ======= =======
Earnings per common share before accounting change ................ $0.18 $0.16 $0.27 $0.33
Cumulative effect of accounting change ............................ 0.00 0.00 0.00 (0.09)
------- ------- ------- -------
Net income ........................................................ $0.18 $0.16 $0.27 $0.24
======= ======= ======= =======
FULLY DILUTED:
Weighted average common shares outstanding ........................ 136,717 135,817 136,220 135,860
Additional shares assuming exercise of stock options (2) ......... 456 574 191 529
------- ------- ------- -------
Weighted average common and common equivalent shares outstanding .. 137,173 136,391 136,411 136,389
======= ======= ======= =======
Income before accounting change ................................... $24,179 $21,905 $36,694 $45,055
Cumulative effect of accounting change, net of tax benefit ........ 0 0 0 (12,077)
------- ------- ------- -------
Net income ........................................................ $24,179 $21,905 $36,694 $32,978
======= ======= ======= =======
Earnings per common share before accounting change ................ $0.18 $0.16 $0.27 $0.33
Cumulative effect of accounting change ............................ 0.00 0.00 0.00 (0.09)
------- ------- ------- -------
Net income ........................................................ $0.18 $0.16 $0.27 $0.24
======= ======= ======= =======
(1) All numbers of shares in this exhibit are weighted on the basis of the
number of days the shares were outstanding or assumed to be outstanding during
each period.
(2) Based on the treasury stock method using the higher of the average or
period-end market price.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANICAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS OF SHAW INDUSTRIES, INC. AND SUBSIDIARIES
AS OF SEPTEMBER 28, 1996 AND THE RELATED CONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 28, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> SEP-28-1996
<CASH> 51,433,000
<SECURITIES> 0
<RECEIVABLES> 435,282,000
<ALLOWANCES> 18,320,000
<INVENTORY> 559,054,000
<CURRENT-ASSETS> 1,095,280,000
<PP&E> 1,321,798,000
<DEPRECIATION> 677,269,000
<TOTAL-ASSETS> 1,945,157,000
<CURRENT-LIABILITIES> 435,668,000
<BONDS> 0
<COMMON> 152,132,000
0
0
<OTHER-SE> 579,758,000
<TOTAL-LIABILITY-AND-EQUITY> 1,945,157,000
<SALES> 2,324,983,000
<TOTAL-REVENUES> 2,324,983,000
<CGS> 1,816,626,000
<TOTAL-COSTS> 1,816,626,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,154,000
<INTEREST-EXPENSE> 30,046,000
<INCOME-PRETAX> 75,364,000
<INCOME-TAX> 41,021,000
<INCOME-CONTINUING> 34,343,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,694,000
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
