21  Notes to Consolidated Financial Statements (dollars in thousands, except per share data) - continued -  revolving credit of up to $95,000 through March 2003, and a $22,657 term loan. The term loan was reduced by $4,197 in 2002 with the proceeds from the sale of non-critical assets in December 2001. The term loan is payable in quarterly installments of $1,635, with a final installment of $10,285 in March 2003. Interest rates under the credit agreement effectively allow for borrowing at rates equal to LIBOR plus 2.75% to 3.50%. A commitment fee, of .50% per annum on the revolving credit line is payable on the average daily unused balance of the revolving credit facility. The effective annual interest rate on borrowings under the revolving credit and term loan agreement was 8.49% for 2001 and 7.67% for 2000. The average interest rate on debt outstanding under this agreement was 5.32% at December 29, 2001 and 9.14% at December 30, 2000. During 2001, the Company failed to comply with certain covenants under the agreement. The Company's lenders amended the agreement and waived compliance until December 31, 2002, at which time the Company will be required to replace the existing agreement or obtain additional waivers. The Company’s subordinated notes are unsecured, bear interest at 9.96% to 10.61% payable semi- annually, and are due in semi-annual installments of $2,381 which commenced February 1, 2000. The Company’s convertible subordinated debentures bear interest at 7% payable semi-annually, are due in 2012, and are convertible by the holder into shares of Common Stock of the Company at an effec- tive conversion price of $32.20 per share, subject to adjustment under certain circumstances. Mandatory sinking fund payments, which commenced May 15, 1998, will retire $2,500 principal amount of the debentures annually and approximately 70% of the debentures prior to maturity. The convertible debentures are subordinated in right of payment to all other indebtedness of the Company. On April 2, 1998, the Company completed an agreement with the Development Authority of Lafayette, Georgia (the "Authority") to borrow $7,000 from the Authority under a development bond issuance. Amounts received by the Company are secured by a letter of credit issued under the Company’s senior credit agreement in favor of the Authority. The value of the letter of credit reduces the Company’s availability under its revolving credit and term-loan facility. The proceeds were used to finance the purchase of real property and machinery and equipment at the Company’s facility in Lafayette, Georgia. Approximate maturities of long-term debt for each of the five years succeeding December 29, 2001 are $14,497 in 2002, $104,985 in 2003, $7,321 in 2004, $7,297 in 2005, $7,294 in 2006 and $26,852 thereafter. Interest payments for continuing and discontinued operations were $16,596 in 2001, $17,447 in 2000 and $14,095 in 1999. The Company’s long-term debt and credit agreements contain financial covenants relating to minimum net worth, the ratio of debt to capitalization and senior and total debt to earnings before interest, taxes, depreciation and amortization, payment of dividends and certain other financial ratios. The financial covenants under the Company’s debt arrangements currently do not permit the payment of dividends. As of December 29, 2001, the Company’s unused borrowing capacity under its credit arrangements was $21,983. THE DIXIE GROUP  / 2001 ANNUAL REPORT