Exhibit 10.1.4
CONFORMED COPY
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APPLIED EXTRUSION TECHNOLOGIES, INC.
CREDIT AGREEMENT
Dated as of April 7, 1994
and Amended and Restated as of
September 20, 2002
JPMORGAN CHASE BANK
as Administrative Agent
LASALLE BUSINESS CREDIT, INC.
as Collateral Monitor
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X.X. XXXXXX SECURITIES INC.
as Sole Bookrunner and Sole Lead Arranger
TABLE OF CONTENTS
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Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms.............................................. 1
1.02 Accounting Terms and Determinations ............................... 19
1.03 Types of Loans .................................................... 20
Section 2. Working Capital Commitments
2.01 Loans ............................................................. 20
2.02 Letters of Credit ................................................. 20
2.03 Reductions of Working Capital Commitments ......................... 22
2.04 Fees .............................................................. 23
2.05 Lending Offices ................................................... 24
2.06 Several Obligations ............................................... 24
2.07 Evidence of Debt .................................................. 24
2.08 Use of Proceeds ................................................... 25
Section 3. Borrowings, Conversions and Prepayments
3.01 Borrowings ........................................................ 25
3.02 Prepayments and Conversions ....................................... 25
Section 4. Payments of Principal and Interest
4.01 Repayment of Loans ................................................ 27
4.02 Interest .......................................................... 27
Section 5. Payments; Pro Rata Treatment; Computations; Etc
5.01 Payments .......................................................... 29
5.02 Pro Rata Treatment ................................................ 29
5.03 Computations ...................................................... 30
5.04 Minimum and Maximum Amounts; Types ................................ 30
5.05 Certain Notices ................................................... 30
5.06 Non-Receipt of Funds by the Administrative Agent .................. 31
5.07 Sharing of Payments, Etc .......................................... 32
5.08 Taxes ............................................................. 33
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Section 6. Yield Protection and Illegality
6.01 Additional Costs ............................................................. 34
6.02 Limitation on Types of Loans ................................................. 36
6.03 Illegality ................................................................... 37
6.04 Substitute Base Rate Loans ................................................... 37
6.05 Compensation ................................................................. 37
6.06 Additional Costs in Respect of Letters of Credit ............................. 38
6.07 Capital Adequacy ............................................................. 38
Section 7. Conditions Precedent to all Loans and Letters of Credit
7.01 Loans and Letters of Credit .................................................. 38
Section 8. Representations and Warranties
8.01 Corporate Existence .......................................................... 39
8.02 Information .................................................................. 39
8.03 Litigation ................................................................... 40
8.04 No Breach .................................................................... 40
8.05 Corporate Action ............................................................. 41
8.06 Approvals .................................................................... 41
8.07 Regulations U and X .......................................................... 41
8.08 ERISA ........................................................................ 41
8.09 Taxes ........................................................................ 42
8.10 Subsidiaries; Agreements ..................................................... 42
8.11 Investment Company Act ....................................................... 42
8.12 Public Utility Holding Company Act ........................................... 42
8.13 Ownership and Use of Properties .............................................. 42
8.14 Environmental Matters ........................................................ 43
Section 9. Covenants
9.01 Information .................................................................. 46
9.02 Taxes and Claims ............................................................. 50
9.03 Insurance .................................................................... 51
9.04 Maintenance of Existence; Conduct of Business ................................ 52
9.05 Maintenance of and Access to Properties ...................................... 52
9.06 Compliance with Applicable Laws .............................................. 52
9.07 Litigation ................................................................... 52
9.08 Indebtedness ................................................................. 53
9.09 Fixed Charge Ratio ........................................................... 53
9.10 Interest Coverage Ratio ...................................................... 53
9.11 Leverage Ratios .............................................................. 54
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9.12 Mergers, Asset Dispositions, Acquisitions, Etc ............... 54
9.13 Liens ........................................................ 56
9.14 Investments .................................................. 56
9.15 Restricted Payments .......................................... 57
9.16 Transactions with Affiliates ................................. 57
9.17 Lines of Businesses .......................................... 57
9.18 Capital Expenditures ......................................... 58
9.19 Modification of Other Agreements ............................. 58
9.20 Bank Accounts; Cash and Liquid Investments ................... 59
9.21 Environmental Matters ........................................ 59
9.22 Senior Notes ................................................. 60
9.23 Certain Obligations Respecting Guaranties and Collateral ..... 60
Section 10. Defaults
10.01 Events of Default ............................................ 61
10.02 Collateral Account ........................................... 64
Section 11. The Administrative Agent
11.01 Appointment, Powers and Immunities ........................... 64
11.02 Reliance by Administrative Agent ............................. 65
11.03 Defaults ..................................................... 65
11.04 Rights as a Lender ........................................... 66
11.05 Indemnification .............................................. 66
11.06 Non-Reliance on Administrative Agent and Other Lenders ....... 66
11.07 Failure to Act ............................................... 67
11.08 Resignation or Removal of Administrative Agent ............... 67
11.09 Collateral Sub-Agents ........................................ 68
Section 12. Miscellaneous
12.01 Waiver ....................................................... 68
12.02 Notices ...................................................... 68
12.03 Expenses, Etc. ............................................... 68
12.04 Indemnification .............................................. 69
12.05 Amendments, Etc .............................................. 69
12.06 Successors and Assigns ....................................... 70
12.07 Confidentiality .............................................. 72
12.08 Survival ..................................................... 72
12.09 Captions ..................................................... 72
12.10 Counterparts; Integration .................................... 72
12.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL ................................................ 72
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Section 13. Conditions Precedent to Effectiveness
13.01 Effectiveness....................................................... 73
Schedules
SCHEDULE I - Assigned Agreements
SCHEDULE II - Security Documents
SCHEDULE III - [intentionally deleted]
SCHEDULE IV - Special Account Debtors
SCHEDULE V - Investments
SCHEDULE VI - Agreements; Liens
SCHEDULE VII - Environmental Matters
SCHEDULE VIII - Insurance
Exhibits
EXHIBIT A - Form of Assignment and Assumption
EXHIBIT B - Form of Working Capital Note
EXHIBIT C - Form of Borrowing Base Certificate
EXHIBIT D - Forms of Opinions of Counsel to the Company
EXHIBIT E - Form of Opinion of Special Counsel to the Administrative Agent
EXHIBIT F - Form of Company Security Agreement
EXHIBIT G - Form of Company Pledge Agreement
EXHIBIT H - Form of Subsidiary Guaranty
EXHIBIT I - Form of Guarantor Acknowledgment
CREDIT AGREEMENT
AGREEMENT dated as of April 7, 1994 and amended and restated as of
September 20, 2002 among: APPLIED EXTRUSION TECHNOLOGIES, INC., a corporation
duly organized and validly existing under the laws of the State of
Delaware (together with its successors, the "Company"); each of the lenders
which is or which may from time to time become a signatory hereto (individually,
together with its successors, a "Lender" and, collectively, together with their
respective successors, the "Lenders"); and JPMORGAN CHASE BANK, as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Administrative Agent").
WHEREAS, the Company is a party to a Credit Agreement (as heretofore
amended, the "Original Agreement") dated as of April 7, 1994, together with each
of the Lenders and JPMorgan Chase Bank, as administrative agent for the Lenders;
WHEREAS, the parties hereto desire to further amend the Original Agreement
to make certain changes thereto; and
WHEREAS, in order to set forth in one document, for the convenience of the
parties, the text of the Original Agreement as heretofore amended and as amended
by the amendments to be made upon the effectiveness hereof, the Original
Agreement as heretofore amended will, upon satisfaction of the conditions set
forth in Section 13.01 hereof, be amended and restated to read in full as set
forth herein;
The parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms shall have
the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
"Acquisition Documents" shall mean the Purchase Agreement, including the
exhibits and schedules thereto, and all agreements, documents and instruments
executed and delivered pursuant to or in connection with any of the foregoing.
"AEP Assets" shall mean the assets relating to the oriented polypropylene
films business of AEP Industries Inc. ("AEP") purchased pursuant to the Asset
Purchase Agreement dated as of March 4, 1999 between the Company and AEP.
"Affiliate" shall mean, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person and, if such Person is an individual, any member of the immediate
family (including parents, siblings, spouse, children, stepchildren, nephews,
nieces and grandchildren) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), provided that, in any event, any Person which owns
directly or indirectly more than 5% of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
more than 5% of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to control
such corporation or other Person.
"Amended Agreement" shall mean this Credit Agreement dated as of April 7,
1994 and amended and restated as of September 20, 2002 among the Company, the
Lenders and the Administrative Agent.
"Applicable Lending Office" shall mean, for each Lender and for each Type
of Loan or Letter of Credit, the Lending Office of such Lender (or of an
Affiliate of such Lender) designated for such Type of Loan or Letter of Credit
below its name on the signature pages hereof or such other office of such Lender
(or of an Affiliate of such Lender) as such Lender may from time to time specify
to the Administrative Agent and the Company as the office by which its Loans of
such Type or such Letters of Credit are to be made and/or issued and maintained.
"Applicable Leverage Ratio" shall mean, for any day, the ratio, as at the
end of the most recently ended fiscal quarter of the Company for which the
Company has delivered to the Administrative Agent and the Lenders the financial
statements required to be delivered by the Company pursuant to Section 9.01(a)
or 9.01(b), as the case may be, of Funded Indebtedness as at the end of the four
fiscal quarters then ended to Cash Flow for such four fiscal quarters; provided
that if the Company shall not have timely delivered any such financial
statements, and the Majority Lenders shall not have agreed otherwise, the
Applicable Leverage Ratio for each day from and including the day on which such
financial statements are required to be delivered to but excluding the day on
which such financial statements are delivered shall be deemed to be greater than
6.00:1.
"Applicable Margin" shall mean, for any day, with respect to any Base Rate
Loan or Eurodollar Loan, or with respect to any letter of credit fee payable
hereunder, as the case may be, the applicable rate per annum set forth below
under
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the caption "Base Rate Margin", "Eurodollar Margin" or "Letter of Credit Fee
Rate", as the case may be, based upon the Applicable Leverage Ratio on such day:
===============================================================================
Base Rate Eurodollar Letter of Credit
Applicable Leverage Ratio: Margin Margin Fee Rate
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***5.00 to 1 1.25% 2.50% 2.50%
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**5.00 to 1 and ***5.75 to 1 1.50% 2.75% 2.75%
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**5.75 to 1 and ***6.00 to 1 1.75% 3.00% 3.00%
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**6.00 to 1 2.25% 3.50% 3.50%
================================================================================
** denotes greater than
*** denotes less than or equal to
"Appraisers" shall mean Kostner Industries, X.X. Xxxxxx & Co. and Xxxxxxx &
Wakefield of Pennsylvania, Inc., or one or more other independent property
appraisers acceptable to the Administrative Agent from time to time.
"Assessment Rate" means, for any day, the annual assessment rate in effect
on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (as any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in dollars at the offices of such
member in the United States; provided that if, as a result of any change in any
law, rule or regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall
be determined by the Administrative Agent to be representative of the cost of
such insurance to the Lenders.
"Assignment and Assumption" means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 12.06) and accepted by the Administrative Agent, in the form
of Exhibit A hereto or any other form approved by the Administrative Agent.
"Assigned Agreements" shall mean, collectively, the agreements listed on
Schedule I hereto, as each such agreement shall, subject to Section 9.19 hereof,
be modified and supplemented and in effect from time to time.
"Available PP&E Amount" shall mean, as at any date of determination
thereof, the sum of (x) 50% of Eligible Machinery and Equipment plus (y) 50% of
Eligible Real Property, in each case determined as provided in the respective
definition thereof; it being agreed that as of September 20, 2002 the Available
PP&E Amount is $20,000,000.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as now or
hereafter in effect, or any successor statute.
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"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Base Rate" shall mean, with respect to any Base Rate Loan for any day, the
rate per annum equal to the higher as of such day of (i) the Federal Funds Rate
plus 1/2 of 1%, (ii) the Prime Rate or (iii) the Base CD Rate plus 1%. Any
change in the Base Rate due to a change in the Federal Funds Rate, the Prime
Rate or the Base CD Rate shall be effective from and including the effective
date of such change in the Federal Funds Rate, the Prime Rate or the Base Rate,
respectively.
"Base Rate Loans" shall mean Loans which bear interest at a rate based upon
the Base Rate.
"Basic Documents" shall mean the Financing Documents, the Assigned
Agreements, the Indenture, the Senior Notes and any other agreement governing or
providing for the issuance of the Senior Notes.
"Borrowing Base" shall mean, as at any date, the amount of the Borrowing
Base as of the date of the Borrowing Base Certificate then most recently
delivered pursuant to Section 9.01(c) (the "Borrowing Base Date"), determined by
calculating the sum of (i) 85% of the aggregate amount of Eligible Receivables
at the Borrowing Base Date plus (ii) 50% of the aggregate amount of Eligible
Inventory at the Borrowing Base Date plus (iii) the Available PP&E Amount as at
the Borrowing Base Date; provided that (x) the amount determined pursuant to
clause (ii) shall at no time exceed 50% of the Borrowing Base and (y) the amount
determined pursuant to clause (iii) shall at no time exceed the Maximum PP&E
Amount. As used in this definition, "Maximum PP&E Amount" shall mean
$20,000,000.
"Borrowing Base Certificate" shall mean a certificate, duly executed by a
Senior Officer, appropriately completed and in substantially the form of Exhibit
C hereto.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in New York City and, if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, a conversion of or into, or an Interest Period for, a Eurodollar Loan or a
notice by the Company with respect to any such borrowing, payment, prepayment,
conversion or Interest Period, which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Capital Expenditures" shall mean expenditures in respect of fixed or
capital assets by the Company or any of its Subsidiaries, including the capital
portion of lease payments made in respect of Capital Lease Obligations, but
excluding (i) expenditures for the restoration or replacement of fixed assets to
the extent financed by the proceeds of any Property/Business Interruption
Insurance
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Policy and (ii) expenditures to the extent financed with proceeds from the
disposition of assets made pursuant to and in accordance with Section 9.12(ii).
For purposes of Sections 9.09 and 9.18, Capital Expenditures shall be calculated
without giving effect to the deemed acquisition of the Xxxxxxxxx Lease solely as
a result of its amendment or refinancing in accordance with Section 9.12(viii).
"Capital Lease Obligations" shall mean, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Flow" shall mean, for any period, (i) the sum (without duplication),
determined on a consolidated basis for the Company and its Subsidiaries, of (x)
operating profit of the Company and its Subsidiaries (calculated before
provision for income taxes, interest expense, extraordinary and non-recurring
items and income attributable to equity in affiliates) for such period plus (y)
depreciation, amortization, provision for doubtful accounts and other non-cash
items (to the extent deducted in determining operating profit) for such period
minus (ii) proceeds received during such period (to the extent included in
determining operating profit) of any Property Insurance Policy and writeoffs of
accounts receivable. For purposes of Sections 9.09, 9.10 and 9.11, Cash Flow
shall be calculated without giving effect to (x) up to $3,400,000 in shutdown
costs and up to $9,000,000 in restructuring charges, in each case to the extent
recorded in the fiscal quarter of the Company ended September 30, 2002 and
described in a certificate delivered by the Company to the Lenders, and (y) any
gain or loss recorded as the result of any sale-leaseback transaction occurring
on or after the Effective Date.
"Cash Taxes" shall mean, for any period, income taxes paid in cash during
such period.
"Closing Date" shall mean the date of the initial Loans under the Original
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Collateral Monitor" shall mean LaSalle Business Credit, Inc., in its
capacity as collateral monitor for the Lenders, and its successors in such
capacity (including any successor designated by the Majority Lenders).
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
5
common control which, together with the Company, are treated as a single
employer under Section 414 of the Code.
"Xxxxxxxxx Assets" shall mean the property described in the equipment
schedules to the Xxxxxxxxx Lease.
"Xxxxxxxxx Lease" shall mean the Equipment Lease Agreement dated as of
December 29, 1997 by and between LaSalle National Leasing Corporation and its
successors and assigns and the Company, as such agreement may be amended or
refinanced in accordance with Section 9.12(viii).
"Default" shall mean an Event of Default or an event which with notice or
lapse of time or both would, unless cured or waived, become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Effective Date" has the meaning specified in Section 13.01.
"Eligible Inventory" shall mean, as at any date of determination thereof,
the value (determined at the lower of cost or market on an average cost basis)
of all Inventory owned by (and in the possession or under the control of) the
Company or any Subsidiary Guarantor and located in a jurisdiction in the United
States of America or Canada as to which appropriate Uniform Commercial Code
financing statements (or, in the case of Inventory located in Canada, comparable
filings) have been filed naming the Company or such Subsidiary Guarantor, as the
case may be, as "debtor" and the Administrative Agent as "secured party";
provided that Eligible Inventory shall not include any of the following: (a)
catalogs and other promotional materials of any kind; (b) work in process; (c)
any returned items not eligible for resale; (d) any damaged, defective or
recalled items not eligible for resale; (e) prototypes or salesmen's samples;
(g) any items of Inventory which have been consigned to the Company or a
Subsidiary Guarantor or as to which a Person claims a Lien other than a
Permitted Lien (as defined in the Security Documents); (h) any items of
Inventory which have been consigned by the Company or a Subsidiary Guarantor to
a consignee; (i) packing and shipping materials; (j) Inventory located on
premises leased by the Company or a Subsidiary Guarantor from a landlord or
warehouseman from which the Administrative Agent has not received a landlord's
or warehouseman's waiver on terms satisfactory to the Collateral Monitor, or
with respect to which the Company or such Subsidiary Guarantor has not entered
into arrangements reasonably satisfactory to the Collateral Monitor to evidence
payment of amounts owed to such landlord or warehouseman (provided that the
amount of Eligible Inventory with respect to which such arrangements not
involving a waiver have been made (which is expected to include Inventory at
each warehouse where less than $1,000,000 in Inventory is located) shall not
exceed $5,000,000); and (k)
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Inventory which in the reasonable judgment of the Majority Lenders is considered
to be not merchantable.
"Eligible Machinery and Equipment" shall mean, as at any date of
determination thereof, the orderly liquidation value (as most recently
determined by the Appraiser pursuant to Section 7.01(r) or 9.01(e)(ii) of the
Original Agreement or Section 9.01(e)(ii)), or, if more recent, the net book
value (as determined by the Company pursuant to Section 13.01(h)), of all
machinery and equipment owned by (and in the possession of) the Company or any
Subsidiary Guarantor and located in a jurisdiction in the United States of
America or Quebec as to which appropriate Uniform Commercial Code financing
statements (or, in the case of machinery or equipment located in Quebec,
comparable filings in Quebec) have been filed naming the Company or such
Subsidiary Guarantor, as the case may be, as "debtor" and the Administrative
Agent a "secured party"; provided that Eligible Machinery and Equipment shall
not include any of the following: (a) any items of machinery and equipment as to
which any Person claims a Lien other than a Permitted Lien (as defined in the
Security Documents); (b) any items of machinery and equipment which are damaged
or defective; and (c) machinery and equipment located on premises leased by the
Company or a Subsidiary Guarantor from a landlord from which the Administrative
Agent has not received a landlord's waiver on terms satisfactory to the
Collateral Monitor.
"Eligible Real Property" shall mean, as at any date of determination
thereof, the fair market value (as most recently determined by the Appraisers
pursuant to Section 7.01(r) or 9.01(e) (ii) of the Original Agreement or Section
9.01(e)(ii)) of all real property owned by (and in the possession of) the
Company or any Subsidiary Guarantor and located in a jurisdiction in the United
States of America or Quebec as to which surveys and title reports acceptable to
the Majority Lenders have been received and appropriate mortgages (or, in the
case of real property located in Quebec, deeds of hypothecation) have been filed
and recorded naming the Company or such Subsidiary Guarantor, as the case may
be, as "mortgagor" (or, in the case of real property located in Quebec,
"grantor") and the Administrative Agent as "mortgagee" (or, in the case of real
property located in Quebec, "creditor").
"Eligible Receivables" shall mean, as at any date of determination thereof,
the aggregate of all Receivables at said date due to the Company or a Subsidiary
Guarantor other than the following (determined without duplication):
(a) all Receivables which, at the date of the original issuance of the
respective invoice therefor, were payable more than 60 days after such
date,
(b) any Receivable due from an account debtor whose principal place of
business is located outside the United States of America or Canada,
7
(c) any Receivable due from (i) an Affiliate of the Company or (ii) an
account debtor which is the subject of bankruptcy, insolvency or similar
proceedings or which the Majority Lenders (through the Administrative
Agent) have notified the Company does not have a satisfactory credit
standing (as determined in the sole discretion of the Majority Lenders),
(d) any Receivable which remains unpaid for more than 60 days after
the date set forth for payment in the invoice originally issued therefor,
(e) all Receivables due from any account debtor if more than 50% of
the aggregate amount of the Receivables due from such account debtor are
otherwise excluded from the definition of "Eligible Receivables",
(f) any Receivable as to which there is any unresolved dispute with,
or claim or defense by, the respective account debtor (but only to the
extent of such dispute, claim or defense),
(g) any Receivable due from an account debtor that is the United
States of America or any department, agency or instrumentality thereof,
unless the Company has complied with the Federal Assignment of Claims Act
of 1940,
(h) any Receivable evidenced by an instrument (as defined in Article 9
of the Uniform Commercial Code) not in the possession of the Administrative
Agent and any other Receivable in which the Administrative Agent does not
have a perfected first priority security interest,
(i) except as otherwise provided in Schedule IV hereto, as such
schedule may be modified from time to time by the Administrative Agent with
the consent of the Majority Lenders, if the Receivables due from any
account debtor exceed an amount equal to 20% of the aggregate of all
Receivables at said date, an amount of such Receivables equal to such
excess, and
(j) any Receivable with respect to which goods are placed on
consignment, guaranteed sale, xxxx-and-hold, repurchase or return, or other
terms by reason of which payment by the account debtor may be conditional.
"Environmental Laws" shall mean any and all applicable federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, injunctions, permits, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment or the effect of the environment on human health or to
emissions,
8
discharges or release of pollutants, contaminants, wastes or other hazardous
substances into the environment, including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, wastes or other hazardous substances or
the clean-up or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities in connection with
or relating to the business, assets, presently or previously owned or leased
property, activities (including, without limitation, off-site disposal) or
operations of the Company and each Subsidiary, whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which arise under or
relate to matters covered by Environmental Laws (including, without limitation,
any matter disclosed or required to be disclosed in Schedule VII hereto).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar Loans,
the rate per annum appearing on Page 3750 of the Dow Xxxxx Market Service (or
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such service, as determined by the
Administrative Agent from time for purposes of providing quotations of interest
rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m. London time on the day two Business Days prior to the
first day of the Interest Period for such Loans as the rate for dollar deposits
with a maturity comparable to such Interest Period. If such rate is not
available at such time for any reason, then the Eurodollar Base Rate for such
Loans for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m. London time on
the day two Business Days prior to the first day of the Interest Period for such
Loans.
"Eurodollar Loans" shall mean Loans the interest on which is determined on
the basis of rates referred to in the definition of "Eurodollar Base Rate" in
this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loans, a rate per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) determined by the
Administrative Agent to be equal to (i) the Eurodollar Base Rate for such Loans
for the Interest Period for such Loans multiplied by (ii) the Statutory Reserve
Rate for such Interest Period.
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"Event of Default" shall have the meaning assigned to such term in Section
10.01 hereof.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average of the rate quotations
for such day for such transactions received by the Administrative Agent from
three Federal Funds brokers of recognized standing selected by it.
"Financing Documents" shall mean this Agreement, the Subsidiary Guaranty,
the Guarantor Acknowledgment, the Notes and the Security Documents.
"Funded Indebtedness" shall mean Indebtedness which matures more than one
year after the incurrence thereof or is extendible, renewable or refundable, at
the option of the obligor, to a date more than one year after the incurrence
thereof (including the current portion thereof). For purposes of Section 9.11,
Funded Indebtedness shall be calculated net of Indebtedness to the Government of
Canada permitted by Section 9.08(vii) and Indebtedness attributable to the
Xxxxxxxxx Lease if amended or refinanced in accordance with Section 9.12(viii).
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States consistently applied.
"Guarantor Acknowledgment" shall mean the Guarantor Acknowledgment dated as
of the Effective Date, substantially in the form of Exhibit I hereto.
"Guaranty" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise, other
than agreements to purchase goods at an arm's length price in the ordinary
course of business) or (ii) entered into for the purpose of assuring in any
other manner the holder of such Indebtedness of the payment thereof or to
protect such holder against loss in respect thereof (in whole or in part),
provided that the term
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Guaranty shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" shall mean any pollutants, contaminants, wastes or
other toxic, radioactive, caustic or otherwise hazardous substances, including
petroleum, its derivatives, by-products and other hydrocarbons, or any substance
having constituent elements displaying any of the foregoing characteristics,
regulated under Environmental Laws.
"Indebtedness" shall mean, as to any Person (determined without
duplication): (i) indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
or acquisition price of property or services, other than accounts payable (other
than for borrowed money) incurred in the ordinary course of business; (ii)
obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for the
account of such Person (whether or not such obligations are contingent); (iii)
Capital Lease Obligations of such Person; (iv) obligations of such Person to
redeem or otherwise retire shares of capital stock of such Person; (v) all
obligations of such Person under or in respect of currency exchange contracts
and Interest Rate Protection Obligations; and (vi) indebtedness of others of the
type described in clause (i), (ii), (iii), (iv) or (v) above secured by a Lien
on the property of such Person, whether or not the respective obligation so
secured has been assumed by such Person; and (vii) indebtedness of others of the
type described in clause (i), (ii), (iii), (iv) or (v) above Guaranteed by such
Person.
"Indenture" shall mean the Indenture dated as of June 19, 2001 between the
Company and Xxxxx Fargo Bank Minnesota, N.A., as Trustee, as such agreement
shall, subject to Section 9.19 hereof, be modified and supplemented and in
effect from time to time.
"Interest Expense" shall mean, for any period, the sum (determined without
duplication) of the aggregate amount of interest accruing during such period on
Indebtedness of the Company and its Subsidiaries (on a consolidated basis),
including the interest portion of payments under Capital Lease Obligations and
any capitalized interest, and excluding amortization of debt discount and
expense. For purposes of Sections 9.09 and 9.10, Interest Expense shall be
calculated net of interest expense attributable to the Xxxxxxxxx Lease if
amended or refinanced in accordance with Section 9.12(viii).
"Interest Period" shall mean, with respect to any Eurodollar Loans, the
period commencing on the date such Loans are made or converted from Base Rate
Loans or the last day of the next preceding Interest Period with respect to such
Loans and ending on the numerically corresponding day in the first, third or
sixth calendar month thereafter, as the Company may select as provided in
Section 5.05
11
hereof, except that each such Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may end after the last day
of the Working Capital Availability Period; (ii) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and (iii)
notwithstanding clause (i) above, no Interest Period shall have a duration of
less than one month and, if the Interest Period therefor would otherwise be a
shorter period, such Loans shall not be available hereunder.
"Interest Rate Protection Obligations" shall mean the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"IRB Letter of Credit" shall mean one or more Letters of Credit securing
the Company's obligations in respect of outstanding City of Salem, Massachusetts
Flexible Mode Industrial Development Revenue Bonds (Applied Extrusion
Technologies, Inc. Issue), in form and substance satisfactory to JPMorgan Chase.
"Inventory" shall mean inventory (as defined in Article 9 of the Uniform
Commercial Code) to the extent comprised of readily marketable materials,
products or goods of a type manufactured or consumed by the Company or any
Subsidiary Guarantor in the ordinary course of business as presently conducted.
"Investments" shall have the meaning assigned to such term in Section 9.14
hereof.
"JPMorgan Chase" shall mean JPMorgan Chase Bank and its successors.
"Letter of Credit" shall have the meaning assigned to such term in Section
2.02(a) hereof.
"Letter of Credit Liabilities" shall mean, at any time and in respect of
any Letter of Credit, the sum of (i) the amount available for drawings under
such Letter of Credit plus (ii) the aggregate unpaid amount of all Reimbursement
Obligations at the time due and payable in respect of previous drawings made
under such Letter of Credit.
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"Lien" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Company and each of its Subsidiaries
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
"Liquid Investments" shall mean (i) certificates of deposit maturing within
180 days of the acquisition thereof denominated in Dollars and issued by (X) a
Lender or (Y) a bank or trust company having combined capital and surplus of at
least $500,000,000 and which has (or which is a Subsidiary of a bank holding
company which has) publicly traded debt securities rated AA or higher by
Standard & Poor's Corporation or Aa-2 or higher by Xxxxx'x Investors Service,
Inc.; (ii) obligations issued or guaranteed by the United States of America,
with maturities not more than 180 days after the date of issue; and (iii)
commercial paper with maturities of not more than 90 days and a published rating
of not less than A-1 from Standard & Poor's Corporation or P-1 from Xxxxx'x
Investors Service, Inc.
"Loans" shall mean the loans provided for by Section 2.01 hereof.
"Majority Lenders" shall mean, at any time while no Loans or Letter of
Credit Liabilities are outstanding, Lenders having at least 51% of the aggregate
amount of the Working Capital Commitments and, at any time while any Loans or
Letter of Credit Liabilities are outstanding, Lenders holding at least 51% of
the outstanding aggregate principal amount of the Loans and Letter of Credit
Liabilities (including, without limitation, participations in the Letters of
Credit).
"Material Adverse Effect" means (i) a material adverse effect on the
condition (financial or otherwise), results of operations, properties, assets,
liabilities (including, without limitation, tax and ERISA liabilities and
Environmental Liabilities), business, operations, capitalization, stockholders'
equity, licenses, franchises or prospects of the Company and its Subsidiaries,
taken as a whole; (ii) a material adverse effect on the ability of any the
Company or any Subsidiary to perform its obligations under each Basic Document
to which it is a party; or (iii) a material adverse effect on the rights and
remedies of the Administrative Agent and the Lenders under the Financing
Documents.
"Mortgages" shall mean, collectively, the mortgages, deeds of trust, deeds
of hypothecation, leasehold mortgages, leasehold deeds of trust and similar
instruments listed on Schedule II, each in form and substance satisfactory to
the Administrative Agent, executed by the respective mortgagors in favor of the
Administrative Agent for the benefit of the Lenders.
"Multiemployer Plan" shall mean at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which the Company
13
or any member of the Controlled Group is then making or accruing an obligation
to make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a
member of the Controlled Group during such five year period.
"Net Cash Proceeds" shall mean, in each case as set forth in reasonable
detail in a certificate of a Senior Officer delivered to the Administrative
Agent: (a) with respect to the disposition of any asset by the Company or any of
its Subsidiaries, the excess, if any, of (i) the cash received (including any
cash payments received by way of deferred payment pursuant to, or monetization
of, a note or installment receivable or otherwise, but only as and when
received) in connection with such disposition over (ii) the sum of (A) the
amount of any Indebtedness which is secured by such asset and which is required
to be repaid in connection with the disposition thereof, plus (B) the reasonable
out-of-pocket expenses incurred by the Company or such Subsidiary, as the case
may be, in connection with such disposition, plus (C) provision for taxes,
including income taxes, attributable to the disposition of such asset; (b) with
respect to the incurrence of Indebtedness of the Company or any of its
Subsidiaries, the gross proceeds received from such incurrence less all
reasonable out-of-pocket expenses, discounts and commissions and other fees and
expenses incurred or to be incurred and all federal, state, local and foreign
taxes assessed or to be assessed in connection with the closing of such
transaction; (c) with respect to the receipt by the Company or the
Administrative Agent of any payment under a Property Insurance Policy or
pursuant to any condemnation award, the aggregate amount of any such payment
made to the Company or the Administrative Agent less any income tax liability of
the Company relating to such payment and all legal expenses incurred in
connection with the recovery or collection thereof; and (d) with respect to the
termination of any Plan, the excess, if any, of (i) the amounts received by the
Company or any Subsidiary in connection with such termination over (ii) the
amount of taxes payable by such Person in connection therewith.
"Notes" shall have the meaning assigned to such term in Section 2.07
hereof.
"Offering Materials" shall mean the projections and other information
prepared in connection with the transactions contemplated by this Amended
Agreement and provided to the Lenders in May, 2002, July, 2002, August, 2002 and
September, 2002.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, a corporation, a company, a voluntary
association, a partnership, a trust, an unincorporated organization or a
government or any agency, instrumentality or political subdivision thereof.
14
"Plan" shall mean an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained or contributed to, by the Company or any member of the Controlled
Group for employees of the Company or any member of the Controlled Group or (ii)
has at any time within the preceding five years been maintained, or contributed
to, by the Company or any Person which was at such time a member of the
Controlled Group for employees of any Person which was at such time a member of
the Controlled Group.
"Plants" shall mean the facilities of the Company located in Terre Haute,
Indiana; Xxxxxxxxx, Virginia; and Varennes, Quebec, Canada.
"Post-Default Rate" shall mean, in respect of any principal of any Loan,
any Reimbursement Obligation or any other amount payable by the Company under
this Agreement or any Security Document which is not paid when due (whether at
stated maturity, by acceleration or otherwise), a rate per annum during the
period commencing on the due date until such amount is paid in full equal to the
sum of 2% plus the higher of (i) the Base Rate as in effect from time to time
plus the Applicable Margin for Base Rate Loans and (ii) in the case of any Loan,
the rate of interest (if any) otherwise applicable to such Loan.
"Prime Rate" shall mean the rate of interest from time to time announced by
JPMorgan Chase at its New York City principal office as its prime commercial
lending rate. Each change in the interest rate provided for herein resulting
from a change in the Prime Rate shall take effect at the time of such change in
the Prime Rate.
"Property Insurance Policy" shall mean insurance (x) against loss or damage
covering all tangible real and personal property and improvements of the Company
and its Subsidiaries, by reason of any Peril (as defined below) and (y) covering
any construction or repair of improvements, for the total value of the work
performed and equipment, supplies and material furnished against any Peril. For
purposes of this definition, the term "Peril" shall mean, collectively, (i)
fire, lighting, flood, windstorm, hail, explosion, riot and civil commotion,
vandalism and malicious mischief, damage from aircraft, vehicles and smoke and
(ii) all other perils covered by the "all-risk" endorsement then in use in the
States in which the Plants are located.
"Purchase Agreement" shall mean the Sale and Purchase Agreement dated as of
March 8, 1994 between the Company and Hercules Incorporated, a Delaware
corporation, as such agreement shall, subject to Section 9.19 hereof, be
modified and supplemented and in effect from time to time.
"QPF Acquisition" shall mean the acquisition by the Company of assets
relating to the oriented polypropylene business of QPF, LLC, including without
15
limitation tangible personal property (such as inventories, machinery and
equipment) and intellectual property, pursuant to the Asset Purchase Agreement
dated as of May 3, 2001 among the Company, QPF, LLC and Hood Companies, Inc., as
amended by Amendment No. 1 dated as of June 12, 2001 and Amendment No. 2 dated
as of December 20, 2001.
"Quarterly Dates" shall mean the last Business Day of each March, June,
September and December.
"Quebec" shall mean the Province of Quebec, Canada.
"Receivable" shall mean, as at any date of determination thereof, the
unpaid portion of the obligation, as stated in U.S. Dollars on the respective
invoice, of a customer of the Company or any Subsidiary Guarantor in respect of
Inventory purchased and shipped or services rendered, net of any credits,
rebates or offsets owed to the respective customer and, to the extent reflected
in such invoice, also net of any commissions payable to third parties which are
billed in addition to the xxxx for such Inventory.
"Regulated Activity" shall mean any generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Substance.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" shall mean, with respect to any Lender, any change on
or after the date of this Amended Agreement in United States federal, state or
foreign laws or regulations (including Regulation D) or the adoption or making
on or after such date of any interpretations, directives or requests applying to
a class of lenders including such Lender of or under any United States federal
or state, or any foreign, laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Reimbursement Obligations" shall mean as at any date, the obligations of
the Company then outstanding under Section 2.02(e) hereof to reimburse JPMorgan
Chase in respect of Letters of Credit.
"Release" shall mean any discharge, emission or release, including a
"Release" as defined in CERCLA at 42 U.S.C. Section 9601(22). The term
"Released" shall have a corresponding meaning.
"Remaining Availability Condition" shall exist on any day on or after a
date when the amount by which the Borrowing Base exceeds the Working Capital
Obligations (the "Remaining Availability Amount") is less than or equal to
16
$4,500,000; provided that if on any date subsequent to such date either (x) the
Remaining Availability Amount set forth in a Borrowing Base Certificate
calculated as of the last day of a calendar month and delivered subsequent to
such date equals or exceeds $7,500,000 or (y) the Remaining Availability Amount
has equaled or exceeded $5,000,000 in every Borrowing Base Certificate
(including at least two Borrowing Base Certificates calculated as of the last
day of a calendar month) delivered to the Administrative Agent and the Lenders
during a period of two consecutive months, then the Remaining Availability
Condition shall terminate and shall only recur if the Remaining Availability
Amount again ceases to exceed $4,500,000.
"Restricted Payment" shall mean dividends (in cash, property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for the purchase,
redemption, retirement or other acquisition of, any shares of any class of
capital stock of the Company, or the exchange or conversion of any shares of any
class of capital stock of the Company for or into any obligations of or shares
of any other class of capital stock of the Company or any other property, but
excluding dividends payable solely in, or exchanges or conversions for or into,
shares of capital stock of the Company of the same or a junior class; provided
that payments to the Company or a Wholly-Owned Subsidiary shall not constitute
Restricted Payments.
"Security Documents" shall mean, collectively, the Mortgages and the other
agreements listed on Schedule II hereto; and, from and after the execution and
delivery thereof, shall include any supplemental mortgage or security document
required pursuant to Section 9.18 hereof.
"Senior Notes" shall mean the Company's 103/4% Senior Notes Due 2011 issued
pursuant to the Indenture, as such Senior Notes shall, subject to Section 9.19
hereof, be modified and supplemented and in effect from time to time.
"Senior Officer" shall mean the chief executive officer, chief operating
officer, chief financial officer, treasurer or vice president of finance of the
Company.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board of Governors of the Federal Reserve System to which the
Administrative Agent is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Eurodollar Rate,
for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). Such reserve percentages shall include
17
those imposed pursuant to Regulation D. Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Subsidiary" shall mean, with respect to any Person, any corporation of
which at least a majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more of the Subsidiaries
of such Person or by such Person and one or more of the Subsidiaries of such
Person.
"Subsidiary Guarantor" shall mean each of the following Subsidiaries of the
Company: Applied Extrusion Technologies (Canada), Inc., a Delaware corporation,
and each other Subsidiary of the Company that from time to time becomes a party
to the Subsidiary Guaranty or otherwise guarantees the obligations of the
Company hereunder pursuant to Section 9.23.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty dated as of the
Closing Date, in substantially the form of Exhibit H hereto, as said agreement
shall be modified and supplemented and in effect from time to time.
"Three-Month Secondary CD Rate" means, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day is not a Business Day, the next preceding Business Day) by
the Board of Governors of the Federal Reserve System through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15 (519) during the week following such day) or, if such
rate is not so reported on such day or such next preceding Business Day, the
average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day is not a Business
Day, on the next preceding Business Day) by the Administrative Agent from three
negotiable certificate of deposit dealers of recognized standing selected by it.
"Type" shall have the meaning assigned to such term in Section 1.03 hereof.
"Unfunded Liabilities" shall mean, with respect to any Plan, at any time,
the amount (if any) by which (i) the value of all benefits liabilities under
such
18
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such benefits under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of the Company or any member of the
Controlled Group to the PBGC or any other Person under Title IV of ERISA.
"Wholly-Owned Subsidiary" shall mean a Subsidiary of the Company all of
whose outstanding shares of capital stock (except directors' qualifying shares)
are directly or indirectly owned by the Company.
"Working Capital Availability Period" shall mean the period from and
including the date hereof to but not including September 30, 2004.
"Working Capital Commitment" shall mean, as to any Lender, the obligation
of such Lender to make Loans and incur Letter of Credit Liabilities in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount set forth opposite such Lender's name on the signature pages hereof
under the caption "Working Capital Commitment" (as the same may be reduced from
time to time pursuant to Section 2.03 hereof).
"Working Capital Commitment Percentage" shall mean, as to any Lender, the
percentage equivalent of a fraction the numerator of which is the Working
Capital Commitment of such Lender and the denominator of which is the aggregate
amount of the Working Capital Commitments of all Lenders.
"Working Capital Notes" shall mean the promissory notes of the Company
evidencing the Loans, substantially in the form of Exhibit B hereto.
"Working Capital Obligations" shall mean, as at any date of determination
thereof, the sum of the following (determined without duplication): (i) the
aggregate principal amount of Loans outstanding hereunder plus (ii) the
aggregate amount of the Letter of Credit Liabilities hereunder.
1.02 Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP;
provided that if any change in GAAP in itself materially affects the calculation
of any financial covenant in Section 9, the Company may by notice to the
Administrative Agent, or the Administrative Agent (at the request of the
Majority Lenders) may by notice to the Company, require that such covenant
thereafter be calculated in accordance with GAAP as in effect, and applied by
the Company, immediately before such change in GAAP occurs. If such notice is
given, the compliance
19
certificates delivered pursuant to Section 9.01 after such change occurs shall
be accompanied by reconciliations of the difference between the calculation set
forth therein and a calculation made in accordance with GAAP as in effect from
time to time after such change occurs. To enable the ready determination of
compliance with the covenants set forth in Section 9 hereof, the Company will
not change from September 30 in each year the date on which its fiscal year
ends, nor from December 31, March 31, and June 30 the dates on which the first
three fiscal quarters in each fiscal year end.
1.03 Types of Loans. Loans hereunder are distinguished by "Type". The
"Type" of a Loan refers to the determination whether such Loan is a Eurodollar
Loan or a Base Rate Loan.
Section 2. Working Capital Commitments.
2.01 Loans. Each Lender severally agrees, on the terms and subject to
the conditions of this Agreement, from time to time during the Working Capital
Availability Period, to make Loans to the Company in an aggregate principal
amount at any one time outstanding which, together with an amount equal to its
Working Capital Commitment Percentage of all Letter of Credit Liabilities at
such time in respect of Letters of Credit, shall not exceed its Working Capital
Commitment, as reduced from time to time pursuant to Section 2.03 hereof. The
aggregate amount of all Working Capital Obligations shall not at any time exceed
the lesser of (i) the aggregate of the Working Capital Commitments as reduced
from time to time pursuant to Section 2.03 hereof and (ii) the Borrowing Base.
2.02 Letters of Credit. (a) Subject to the terms and conditions hereof,
the Working Capital Commitments may, in addition to the Loans provided for in
Section 2.01 hereof, be utilized, upon the request of the Company, by the
issuance of letters of credit by JPMorgan Chase for so long as it is
Administrative Agent hereunder if the Company shall so request in the notice
referred to in Section 2.02(b) (such letters of credit issued by JPMorgan Chase
being hereinafter referred to as the "Letters of Credit"). Upon the date of
issuance of a Letter of Credit, JPMorgan Chase shall be deemed, without further
action by any party hereto, to have sold to each Lender, and each Lender shall
be deemed, without further action by any party hereto, to have purchased from
JPMorgan Chase, a participation to the extent of such Lender's Working Capital
Commitment Percentage in such Letter of Credit and the related Letter of Credit
Liabilities. The aggregate amount of all Working Capital Obligations shall not
at any time exceed the lesser of (i) the aggregate of the Working Capital
Commitments as reduced from time to time pursuant to Section 2.03 hereof and
(ii) the Borrowing Base. The aggregate amount of all Letter of Credit
Liabilities shall not at any time exceed an amount equal to the lesser of (i)
the aggregate amount of the Working Capital Commitments as reduced from time to
time pursuant to Section 2.03 hereof and (ii) the sum of (x) $10,000,000 plus
(y) the aggregate amount of Letter of Credit Liabilities in respect of the IRB
Letter of Credit; provided that the
20
aggregate amount of Letter of Credit Liabilities in respect of the IRB Letter of
Credit shall not at any time exceed $6,106,463.
(b) The Company shall give the Administrative Agent at least three
Business Days' irrevocable prior notice (effective upon receipt) specifying the
date a Letter of Credit is to be issued and describing the proposed terms of
such Letter of Credit and the nature of the transactions proposed to be
supported thereby. Upon receipt of such notice the Administrative Agent shall
promptly notify each Lender of the contents thereof and of such Lender's Working
Capital Commitment Percentage of the amount of such proposed Letter of Credit.
(c) On each day during the period commencing with the issuance by
JPMorgan Chase of any Letter of Credit and until such Letter of Credit shall
have expired or been terminated, the Working Capital Commitment of each Lender
shall be deemed to be utilized for all purposes hereof in an amount equal to
such Lender's Working Capital Commitment Percentage of the amount then available
for drawings under such Letter of Credit.
(d) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment or other drawing under such Letter of Credit, the
Administrative Agent shall promptly notify the Company and each Lender as to the
amount to be paid as a result of such demand or drawing and the respective
payment date. If at any time JPMorgan Chase shall make a payment to a
beneficiary of a Letter of Credit in respect of a drawing or in respect of an
acceptance created in connection with a drawing under such Letter of Credit,
each Lender will pay to JPMorgan Chase, immediately upon JPMorgan Chase's demand
at any time during the period commencing after such payment until reimbursement
therefor in full by the Company, an amount equal to such Lender's Working
Capital Commitment Percentage of such payment, together with interest on such
amount for each day from the date of JPMorgan Chase's demand for such payment
(or, if such demand is made after 11:00 a.m. (New York City time) on such date,
from the next succeeding Business Day) to the date of payment by such Lender of
such amount at a rate of interest per annum equal to the Federal Funds Rate for
such period.
(e) The Company shall be irrevocably and unconditionally obligated
forthwith to reimburse JPMorgan Chase for any amounts paid by JPMorgan Chase
upon any drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind. JPMorgan Chase will pay to each Lender
such Lender's Working Capital Commitment Percentage of all amounts received from
the Company for application in payment, in whole or in part, of the
Reimbursement Obligation in respect of any Letter of Credit, but only to the
extent such Lender has made payment to JPMorgan Chase in respect of such Letter
of Credit pursuant to clause (d) above.
21
(f) The issuance by JPMorgan Chase of each Letter of Credit shall, in
addition to the conditions precedent set forth in Section 7 hereof, be subject
to the conditions precedent such Letter of Credit shall be in such form, and
shall contain such terms and support such transactions, as shall be reasonably
satisfactory to JPMorgan Chase, and that the Company shall have executed and
delivered such other instruments and agreements relating to such Letter of
Credit as JPMorgan Chase shall have reasonably requested. No Letter of Credit
shall have a term extending beyond the earlier of (i) one year from the date of
issuance and (ii) seven Business Days prior to the last day of the Working
Capital Availability Period.
(g) The Company hereby indemnifies and holds harmless each Lender and
the Administrative Agent (which for purposes of this Section 2.02(g) shall
include a reference to JPMorgan Chase acting in its individual capacity
hereunder as issuer of Letters of Credit) from and against any and all claims
and damages, losses, liabilities, costs or expenses which such Lender or the
Administrative Agent may incur (or which may be claimed against such Lender or
the Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or failure to pay
under any Letter of Credit, including, without limitation, any claims, damages,
losses, liabilities, costs or expenses which the Administrative Agent may incur
by reason of or in connection with the failure of any other Lender to fulfill or
comply with its obligations to the Administrative Agent hereunder (but nothing
herein contained shall affect any rights the Company may have against such
defaulting Lender); provided that the Company shall not be required to indemnify
any Lender or the Administrative Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
(i) the willful misconduct or gross negligence of such Lender or the
Administrative Agent in determining whether a request presented under any Letter
of Credit complied with the terms of such Letter of Credit or (ii) such Lender's
failure to pay under any Letter of Credit after the presentation to it of a
request strictly complying with the terms and conditions of the Letter of
Credit. Nothing in this Section 2.02(g) is intended to limit the obligations of
the Company under any other provision of this Agreement.
2.03 Reductions of Working Capital Commitments.
(a) Mandatory. (i) The Working Capital Commitments shall terminate on
the last day of the Working Capital Availability Period.
(ii) In addition, the Working Capital Commitments shall be reduced in
the amount and on the date of each prepayment applied to the Loans (or to
provide cover for Letter of Credit Liabilities) pursuant to paragraph (2), (3),
(4) or (5) of Section 3.02(b)(i).
22
(b) Optional. The Company shall have the right to terminate or reduce
the Working Capital Commitments at any time or from time to time, provided that:
(i) the Company shall give notice of each such termination or reduction to the
Administrative Agent as provided in Section 5.05 hereof and (ii) each partial
reduction shall be in an aggregate amount at least equal to $2,000,000 or any
larger multiple of $1,000,000.
(c) No Reinstatement. Working Capital Commitments once terminated or
reduced may not be reinstated.
2.04 Fees.
(a) Commitment Fees. The Company shall pay to the Administrative Agent
for the account of each Lender commitment fees, at a rate per annum equal to the
Commitment Fee Rate, on the daily average unused amount of such Lender's Working
Capital Commitments, for the period from the Closing Date to and including the
earlier of the date the Working Capital Commitments are terminated or the last
day of the Working Capital Availability Period. Accrued commitment fees shall be
payable on the Quarterly Dates and on the earlier of the date all Working
Capital Commitments are terminated or the last day of the Working Capital
Availability Period. For purposes of this Section 2.04(a), the "Commitment Fee
Rate" shall be 0.75% unless the aggregate outstanding amount of the Working
Capital Obligations on any day exceeds 1/3 of the Working Capital Commitments,
in which case the Commitment Fee Rate for such day shall be 0.50%.
(b) Letter of Credit Fees.
(i) The Company shall pay to the Administrative Agent
for the account of each Lender, ratably in accordance with its
Working Capital Commitment Percentage, a letter of credit fee
at the Applicable Margin, in each case on the daily aggregate
amount available for drawings under such Letter of Credit.
Fees under this subsection (b)(i) shall accrue for each day
from and after the issuance of the initial Letter of Credit,
and accrued fees shall be payable on each Quarterly Date and
on the earlier of the date the Working Capital Commitments are
terminated or the last day of the Working Capital Availability
Period and, if later, on the first day thereafter on which no
Letters of Credit are outstanding.
(ii) The Company shall pay to JPMorgan Chase, for its
own account, such documentary, processing charges and
administrative fees with respect to all Letters of Credit in
such amounts and at such times as may be notified to the
Company by JPMorgan Chase, in accordance with the customary
practices of JPMorgan Chase.
23
(c) Other Fees. The Company shall pay to the Administrative Agent on
the Effective Date and to JPMorgan Chase on such other dates as have been
heretofore mutually agreed other fees in the amounts heretofore mutually agreed.
The Company shall pay to each of the Administrative Agent and the Collateral
Monitor on each anniversary of the Closing Date, so long as any of the Working
Capital Commitments are in effect and until payment in full of all Loans
hereunder, the termination of all Letters of Credit and payment in full of all
Letter of Credit Liabilities, all interest thereon and all other amounts payable
hereunder, an annual administrative agency fee and an annual collateral
monitoring fee, respectively, in the amounts heretofore mutually agreed.
2.05 Lending Offices. The Loans of each Type made by each Lender shall
be made and maintained at such Lender's Applicable Lending Office for Loans of
such Type.
2.06 Several Obligations. The failure of any Lender to make any Loan to
be made by it on the date specified therefor shall not relieve any other Lender
of its obligation to make its Loan on such date, but neither the Administrative
Agent nor any Lender shall be responsible for the failure of any other Lender to
make a Loan to be made by such other Lender.
2.07 Evidence of Debt. (a) Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
the Company to such Lender resulting from each Loan made by such Lender,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(b) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Company to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender's share thereof.
(c) The entries made in the accounts maintained pursuant to paragraph
(a) or (b) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Company to repay
the Loans in accordance with the terms of this Agreement.
(d) Any Lender may request that Loans made by it be evidenced by a
single Working Capital Note of the Company (each a "Note") in substantially the
form of Exhibit B hereto, payable to the order of such Lender in a principal
amount equal to such Lender's Working Capital Commitment as originally in effect
and otherwise duly completed. In such event, the Company shall prepare,
24
execute and deliver a Note to such Lender. Each Lender is hereby authorized by
the Company to endorse on the schedule (or a continuation thereof) attached to
each Note of such Lender, to the extent applicable, the date, amount and Type
of, and the Interest Period (if any) for, each Loan made by such Lender to the
Company hereunder, and the date and amount of each payment or prepayment of
principal of such Loan received by such Lender, provided that any failure by
such Lender to make any such endorsement or any error in such endorsement shall
not affect the obligations of the Company under such Note or hereunder in
respect of such Loan.
2.08 Use of Proceeds. The proceeds of the Loans made on or after the
Effective Date shall be used by the Company for working capital and other
general corporate purposes.
Section 3. Borrowings, Conversions and Prepayments.
3.01 Borrowings. The Company shall give the Administrative Agent notice
of each borrowing to be made hereunder as provided in Section 5.05 hereof. Not
later than 11:00 a.m. (or, in the case of Base Rate Loans, 1:00 p.m.) New York
time on the date specified for each such borrowing hereunder, each Lender shall
make available the amount of the Loan to be made by it on such date to the
Administrative Agent, at the account of the Administrative Agent most recently
designated by it for such purpose, in immediately available funds, for the
account of the Company. The amount so received by the Administrative Agent
shall, subject to the terms and conditions of this Agreement, be made available
to the Company by depositing the same, in immediately available funds, in an
account designated by the Company maintained with the Administrative Agent in a
location designated by the Administrative Agent.
3.02 Prepayments and Conversions.
(a) Optional Prepayments and Conversions. The Company shall have the
right to prepay Loans or to convert Loans of one Type into Loans of the other
Type, at any time or from time to time, provided that: (i) the Company shall
give the Administrative Agent notice of each such prepayment or conversion as
provided in Section 5.05 hereof, and (ii) the prepayment or conversion of any
Eurodollar Loan shall be subject to Section 6.05 hereof.
(b) Mandatory Prepayments and Cover. (i) Events Requiring Prepayment
and Cover.
(1) Borrowing Base and Working Capital Commitment
Amount. The Company shall from time to time prepay the Loans
(or provide cover for Letter of Credit Liabilities as provided
below) in such amounts as shall be necessary so that at all
times the aggregate outstanding amount of the Working Capital
Obligations
25
shall be less than or equal to the lesser of (i) the
Working Capital Commitments and (ii) the Borrowing Base.
(2) Insurance Proceeds and Condemnation Awards.
Promptly following the receipt thereof by the Company or any
of its Subsidiaries, the Company shall deposit with the
Administrative Agent in the Collateral Account maintained by
the Company pursuant to the Security Documents an amount of
cash or Liquid Investments equal to the aggregate Net Cash
Proceeds of any payment made to the Company or any of its
Subsidiaries (i) under any Property Insurance Policy or (ii)
pursuant to any condemnation award. With respect to any such
payment or award, so long as no Default has occurred and is
continuing, the aggregate amount of such Net Cash Proceeds
which the Company or such Subsidiary has expended or committed
to expend for the restoration or replacement of the asset in
respect of which such payment or award was made shall be
released by the Administrative Agent to the Company upon
request (specifying in reasonable detail the use of the
released funds) to pay for such restoration or replacement;
provided that in the event that within 270 days of receipt of
such payment the Company or such Subsidiary shall not have
expended or committed to expend an equivalent amount for the
restoration or replacement of the asset in respect of which
such payment was made, the excess of the amount of such
payment over the amount of such expenditures and commitments
shall be applied to prepay the Loans (or provide cover for
Letter of Credit Liabilities as provided below) on such 270th
day.
(3) Incurrence of Indebtedness. The Company shall
prepay the Loans (or provide cover for Letter of Credit
Liabilities as provided below) in the amount of and on the
date of each receipt by the Company or any of its Subsidiaries
of Net Cash Proceeds from the incurrence of any Funded
Indebtedness not otherwise permitted under Section 9.08 to
which the Majority Lenders have consented.
(4) Asset Dispositions. The Company shall prepay the
Loans (or provide cover for Letter of Credit Liabilities as
provided below) in the amount of and on the date of each
receipt by the Company or any of its Subsidiaries of the Net
Cash Proceeds of any disposition by such Person of any assets
not otherwise permitted under Section 9.12 to which the
Majority Lenders have consented.
(5) Reversion of Pension Plans. The Company shall
prepay the Loans (or provide cover for Letter of Credit
Liabilities
26
as provided below) in the amount of and on the date of each
receipt by the Company or any of its Subsidiaries of Net Cash
Proceeds from the termination of a Plan.
(ii) Prepayment and Cover of Working Capital Obligations. If the
Company shall be required pursuant to paragraphs (1) through (5) of clause
(b)(i) above to prepay any Loans or provide cover for any Letter of Credit
Liabilities, the Company shall, until the Loans have been paid in full, first
prepay the principal of such Loans and then, following such payment in full,
provide cover for the relevant Letter of Credit Liabilities. Cover for Letter of
Credit Liabilities shall be effected by paying all Reimbursement Obligations
then due and payable and then paying to the Administrative Agent immediately
available funds, to be held by the Administrative Agent in the Collateral
Account maintained by the Company pursuant to the Security Documents, in an
amount equal to the required prepayment, which amount shall be retained by the
Administrative Agent in such Collateral Account and applied to pay any
Reimbursement Obligations which become due until such time as the Letters of
Credit shall have been terminated and all of the Letter of Credit Liabilities
paid in full.
Section 4. Payments of Principal and Interest.
4.01 Repayment of Loans. The Loans shall mature on the last day of the
Working Capital Availability Period.
4.02 Interest. The Company will pay to the Administrative Agent for the
account of each Lender interest on the unpaid principal amount of each Loan made
by such Lender for the period commencing on the date of such Loan to but
excluding the date such Loan shall be paid in full, at the following rates per
annum:
(a) if such Loan is a Base Rate Loan, the Base Rate plus the
Applicable Margin; and
(b) if such Loan is a Eurodollar Loan, the Eurodollar Rate
plus the Applicable Margin.
Notwithstanding any of the foregoing, the Company will pay to the Administrative
Agent for the account of each Lender interest at the applicable Post-Default
Rate on the principal of any Loan made by such Lender, on any Reimbursement
Obligation and on any other amount payable by the Company hereunder to or for
the account of such Lender (but, if such amount is interest, only to the extent
legally enforceable), which shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise), for the period commencing on the
due date thereof until the same is paid in full.
27
Accrued interest on each Loan shall be payable (i) if such Loan is a
Base Rate Loan, on each Quarterly Date, (ii) if such Loan is a Eurodollar Loan,
on the last day of the Interest Period for such Loan (and, if such Interest
Period exceeds three months' duration, quarterly, commencing on the first
quarterly anniversary of the first day of such Interest Period), and (iii) in
any event, upon the payment, prepayment or conversion thereof, but only on the
principal so paid or prepaid or converted; provided that interest payable at the
Post-Default Rate shall be payable from time to time on demand of the
Administrative Agent or the Majority Lenders. Promptly after the determination
of any interest rate provided for herein or any change therein, the
Administrative Agent shall notify the Lenders and the Company thereof.
Notwithstanding the foregoing provisions of this Section 4.02, if at
any time the rate of interest set forth above on any Loan of or other obligation
payable to any Lender (the "Stated Rate") exceeds the maximum non-usurious
interest rate permissible for such Lender to charge commercial borrowers under
applicable law (the "Maximum Rate" for such Lender), the rate of interest
charged on such Loan of or other obligation payable to such Lender hereunder
shall be limited to the Maximum Rate for such Lender.
If the Stated Rate for any Loan of a Lender that has theretofore been
subject to the preceding paragraph at any time is less than the Maximum Rate for
such Lender, the principal amount of such Loan shall bear interest at the
Maximum Rate for such Lender until the total amount of interest paid to such
Lender or accrued on its Loans hereunder equals the amount of interest which
would have been paid to such Lender or accrued on such Lender's Loans hereunder
if the Stated Rate had at all times been in effect.
If, upon payment in full of all amounts payable hereunder, the total
amount of interest paid to any Lender or accrued on such Lender's Loans under
the terms of this Agreement is less than the total amount of interest which
would have been paid to such Lender or accrued on such Lender's Loans if the
Stated Rate had, at all times, been in effect, then the Company shall, to the
extent permitted by applicable law, pay to the Administrative Agent for the
account of such Lender an amount equal to the difference between (a) the lesser
of (i) the amount of interest which would have accrued on such Lender's Loans if
the Maximum Rate for such Lender had at all times been in effect or (ii) the
amount of interest which would have accrued on such Lender's Loans if the Stated
Rate had at all times been in effect and (b) the amount of interest actually
paid to such Lender or accrued on its Loans under this Agreement.
If any Lender ever receives, collects or applies as interest any sum in
excess of the Maximum Rate for such Lender, such excess amount shall be applied
to the reduction of the principal balance of its Loans or to other amounts
(other than interest) payable hereunder, and if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to the Company.
28
Section 5. Payments; Pro Rata Treatment; Computations; Etc.
5.01 Payments. Except to the extent otherwise provided herein, all
payments of principal, interest, Reimbursement Obligations and other amounts to
be made by the Company hereunder and under the Notes shall be made in Dollars,
in immediately available funds, to the Administrative Agent at the office most
recently designated by the Administrative Agent for such purpose, not later than
12:00 Noon New York time on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day). The Administrative Agent, or any
Lender for whose account any such payment is made, may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the Company with the Administrative
Agent or such Lender, as the case may be. The Company shall, at the time of
making each payment hereunder or under any Note, specify to the Administrative
Agent the Loans or other amounts payable by the Company hereunder to which such
payment is to be applied (and in the event that it fails to so specify, or if an
Event of Default has occurred and is continuing, the Administrative Agent may
apply such payment as it may elect in its sole discretion to amounts then due,
but subject to the other terms and conditions of this Agreement, including,
without limitation, Section 5.02 hereof; provided that the Administrative Agent
shall apply such payment first to outstanding Base Rate Loans and then to
outstanding Eurodollar Loans). Each payment received by the Administrative Agent
hereunder or under any Note for the account of a Lender shall be paid promptly
to such Lender, in immediately available funds, for the account of such Lender's
Applicable Lending Office. If the due date of any payment hereunder or under any
Note would otherwise fall on a day which is not a Business Day such date shall
be extended to the next succeeding Business Day and interest shall be payable
for any principal so extended for the period of such extension.
5.02 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing from the Lenders under Section 2.01 hereof shall be
made from the Lenders, each payment of commitment fees and letter of credit fees
under Section 2.04 hereof shall be made for the account of the Lenders, and each
termination or reduction of the Working Capital Commitments under Section 2.03
hereof shall be applied to the Working Capital Commitments of the Lenders, pro
rata according to the Lenders' respective Working Capital Commitment
Percentages; (b) each payment by the Company of principal of or interest on
Loans of a particular Type (other than payments in respect of Loans of
individual Lenders provided for by Section 6 hereof) shall be made to the
Administrative Agent for the account of the Lenders pro rata in accordance with
the respective unpaid principal amounts of such Loans held by the Lenders; (c)
each conversion of Loans of a particular Type (other than conversions of Loans
of individual Lenders pursuant to Section 6.04 hereof) shall be made pro rata
among the Lenders in accordance with the respective principal amounts of such
Loans held by the Lenders; and (d) the Lenders (other than JPMorgan Chase) shall
purchase
29
from JPMorgan Chase participations in the Letters of Credit to the extent of
their respective Working Capital Commitment Percentages.
5.03 Computations. Interest based on the Prime Rate hereunder shall be
computed on the basis of 365 days (or 366 days in a leap year) and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable. All other interest and fees shall be computed on the
basis of a year of 360 days and actual days elapsed (including the first day
but, except in the case of letter of credit fees, excluding the last day)
occurring in the period for which payable.
5.04 Minimum and Maximum Amounts; Types. Except for prepayments made
pursuant to Section 3.02(b) hereof, each borrowing, conversion and prepayment of
principal of Loans shall be in an aggregate principal amount equal to (a) in the
case of Eurodollar Loans, $3,000,000 or any larger multiple of $1,000,000 and
(b) in the case of Base Rate Loans, $1,000,000 or any larger multiple thereof,
except that any borrowing may be in the aggregate amount of the unused portion
of the Working Capital Commitments (borrowings, conversions or prepayments of
Loans of different Types or, in the case of Eurodollar Loans, having different
Interest Periods, at the same time hereunder to be deemed separate borrowings,
conversions and prepayments for purposes of the foregoing, one for each Type or
Interest Period). Notwithstanding anything to the contrary contained in this
Agreement there shall not be, at any one time, more than eight Interest Periods
in effect with respect to Eurodollar Loans.
5.05 Certain Notices. Notices to the Administrative Agent of
terminations or reductions of Working Capital Commitments, of borrowings,
conversions and prepayments of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the
Administrative Agent not later than 12:00 noon (or, in the case of borrowings or
prepayments of Base Rate Loans, 10:00 a.m.) New York time on the number of
Business Days prior to the date of the relevant termination, reduction,
borrowing, conversion and/or prepayment specified below:
30
Number of
Business
Notice Days Prior
------ ----------
Termination or reduction of
Working Capital Commitments 3
Borrowing or prepayment of Base
Rate Loans 0
Borrowing of conversion of or into,
or duration of Interest Period
for, Eurodollar Loans 3
Prepayments of Eurodollar Loans 1
Each notice of termination or reduction shall specify the amount of the
Working Capital Commitments to be terminated or reduced. Each notice of
borrowing, conversion or prepayment shall specify the amount, Type of the Loans
to be borrowed, converted or prepaid (subject to Sections 3.02(a) and 5.04
hereof), the date of borrowing, conversion or prepayment (which shall be a
Business Day) and, in the case of Eurodollar Loans, the duration of the Interest
Period therefor (subject to the definition of Interest Period). Each such notice
of duration of an Interest Period shall specify the Loans to which such Interest
Period is to relate. The Administrative Agent shall promptly notify the Lenders
of the contents of each such notice. In the event that the Company fails to
select the duration of any Interest Period for any Eurodollar Loans within the
time period and otherwise as provided in this Section 5.05, such Loans (if
outstanding as Eurodollar Loans) will be automatically converted into Base Rate
Loans on the last day of the then current Interest Period for such Loans or (if
outstanding as Base Rate Loans) will remain as, or (if not then outstanding)
will be made as, Base Rate Loans.
5.06 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or the Company (the
"Payor") prior to the date on which such Lender is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder (or
the payment of any amount by such Lender to reimburse JPMorgan Chase for a
drawing under any Letter of Credit) or the Company is to make a payment to the
Administrative Agent for the account of one or more of the Lenders, as the case
may be (such payment being herein called the "Required Payment"), which notice
shall be effective upon receipt, that the Payor does not intend to make the
Required Payment to the Administrative Agent, the Administrative Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient on such date and, if the Payor has not in fact made the
31
Required Payment to the Administrative Agent, the recipient of such payment (or,
if such recipient is the beneficiary of a Letter of Credit, the Company and, if
the Company fails to pay the amount thereof to the Administrative Agent
forthwith upon demand, the Lenders ratably in proportion to their respective
Working Capital Percentages) shall, on demand, pay to the Administrative Agent
the amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent receives such
amount at a rate per annum equal to the Federal Funds Rate for such period.
5.07 Sharing of Payments, Etc. The Company agrees that, in addition to
(and without limitation of) any right of set-off, bankers' lien or counterclaim
a Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it for the account of the Company at any of its offices,
in Dollars or in any other currency, against any principal of or interest on any
of such Lender's Loans to the Company hereunder, or any Reimbursement Obligation
or other obligation of the Company hereunder, which is not paid when due
(regardless of whether such balances are then due to the Company), in which case
it shall promptly notify the Company and the Administrative Agent thereof,
provided that such Lender's failure to give such notice shall not affect the
validity thereof. If a Lender shall obtain payment of any principal of or
interest on any Loan made by it under this Agreement, or on any Reimbursement
Obligation or other obligation then due to such Lender hereunder, through the
exercise of any right of set-off, banker's lien, counterclaim or similar right,
or otherwise, it shall promptly purchase from the other Lenders participations
in the Loans made, or Reimbursement Obligations or other obligations held, by
the other Lenders in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Lenders shall share the
benefit of such payment (net of any expenses which may be incurred by such
Lender in obtaining or preserving such benefit) pro rata in accordance with the
unpaid principal and interest on the Loans and Reimbursement Obligations or
other obligations then due to each of them. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored.
The Company agrees, to the fullest extent it may effectively do so under
applicable law, that any Person purchasing a participation in the Loans made, or
Reimbursement Obligations or other obligations held, by another Person, whether
or not acquired pursuant to the foregoing arrangements, may exercise all rights
of set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans and
Reimbursement Obligations or other obligations in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Company.
32
5.08 Taxes. (a) Any and all payments by the Company hereunder shall be
made, in accordance with Section 5.01, free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Administrative Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Lender or the Administrative Agent (as the case may be) is organized or any
political subdivision thereof and, in the case of each Lender, taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction of such
Lender's Applicable Lending Office or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Company shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, (i) except as provided in
subsection (h) below, the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.08), such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company shall
make such deductions and (iii) the Company shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, any
Letter of Credit or any other Basic Document or other document referred to
herein or therein (hereinafter referred to as "Other Taxes").
(c) The Company will indemnify each Lender and the Administrative Agent
for the full amount of Taxes or Other Taxes (including related penalties,
interest and expenses resulting from the Company's failure to pay Taxes or Other
Taxes in accordance with this Section 5.08) imposed by any jurisdiction on
amounts payable under this Section 5.08 paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date such Lender or
the Administrative Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Company
will furnish to the Administrative Agent, at its address referred to in Section
12.02, the original or a certified copy of a receipt evidencing payment thereof.
(e) If any Lender subsequently receives from a taxing authority a
refund of any Tax previously paid by the Company and for which the Company has
33
indemnified the Lender pursuant to this Section 5.08 or if the Lender takes a
credit for such Tax against taxes otherwise owing by it to the jurisdiction to
which the Company paid the Tax, such Lender shall within 30 days after receipt
of such refund, and to the extent permitted by applicable law, pay to the
Company the net amount of any such recovery after deducting taxes and expenses
attributable thereto.
(f) Not later than the Closing Date or, in the case of any bank or
financial institution that became or becomes a Lender after the Closing Date
pursuant to Section 12.06, the date of the instrument of assignment pursuant to
which such bank or financial institution became a Lender, and annually
thereafter or at such other times as the Administrative Agent or the Company may
request, each Lender organized under the laws of a jurisdiction outside the
United States has provided or shall provide the Administrative Agent and the
Company with duly completed copies of Form W-8 BEN or Form W-8ECI or any
successor form prescribed by the Internal Revenue Service of the United States
certifying as to such Lender's status as exempt from United States withholding
taxes with respect to all payments to be made to such Lender hereunder or other
documents satisfactory to the Company and the Administrative Agent indicating
that all payments to be made to such Lender hereunder are not subject to such
taxes (an "Exemption Certificate"). In the case of payments to or for any Lender
organized under the laws of a jurisdiction outside the United States, unless the
Administrative Agent has received an Exemption Certificate from such Lender, the
Administrative Agent may withhold taxes from such payments at the applicable
statutory rate and the Company shall not be liable therefor under this Section
5.08.
(g) If the Company is required to pay additional amounts to any Lender
pursuant to this Section 5.08, such Lender shall use reasonable efforts to
designate a different Applicable Lending Office if such designation will
thereafter avoid the need for any additional payments under this Section 5.08
and will not, in the sole judgment of such Lender, be otherwise disadvantageous
to such Lender.
(h) If a Lender organized under the laws of a jurisdiction outside the
United States has not delivered an Exemption Certificate to the Company on or
before the Closing Date or, in the case of any bank or financial institution
that became or becomes a Lender after the Closing Date pursuant to Section
12.06, the date of the instrument of assignment pursuant to which such bank or
financial institution became a Lender, then the Company shall not have any
obligation to indemnify such Lender for Taxes (including related penalties,
interest and expenses) imposed by the United States or any political subdivision
thereof pursuant to Section 5.08(a) and (c) hereof.
Section 6. Yield Protection and Illegality.
6.01 Additional Costs.
34
(a) The Company shall pay to the Administrative Agent for the account of
each Lender from time to time such amounts as such Lender may determine to be
necessary to compensate it for any costs incurred by such Lender which such
Lender determines are attributable to its making or maintaining of any
Eurodollar Loans hereunder or its obligation to make any of such Loans
hereunder, or any reduction in any amount receivable by such Lender hereunder in
respect of any of such Loans or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"), in
each case resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or its Notes in respect of any of such Loans
(other than changes which affect taxes measured by or imposed on the
overall net income of such Lender or of its Applicable Lending Office for
any of such Loans by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office and other than Taxes and
Other Taxes); or
(ii) imposes or modifies any reserve, special deposit, insurance
assessment or similar requirements relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, such Lender
(including any of such Loans or any deposits referred to in the definition
of "Eurodollar Base Rate" in Section 1.01 hereof but excluding, with
respect to any such Eurodollar Loan, any reserve requirements reflected in
the applicable Eurodollar Rate); or
(iii) imposes any other condition affecting this Agreement (or any of
such extensions of credit or liabilities).
Each Lender will notify the Company through the Administrative Agent of any
event occurring after the date of this Agreement which will entitle such Lender
to compensation pursuant to this Section 6.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such compensation,
and (if so requested by the Company through the Administrative Agent) will
designate a different Applicable Lending Office for the Eurodollar Loans of such
Lender if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender (provided that such Lender shall have no
obligation to so designate an Applicable Lending Office located in the United
States of America). Each Lender will furnish the Company with a statement
setting forth the basis and amount of each request by such Lender for
compensation under this Section 6.01(a). If any Lender requests compensation
from the Company under this Section 6.01(a), the Company may, by notice to such
Lender through the Administrative Agent, suspend the obligation of such Lender
to make additional Eurodollar Loans to the Company until the Regulatory
35
Change giving rise to such request ceases to be in effect (in which case the
provisions of Section 6.04 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 6.01, in the event that, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender which includes Eurodollar
Loans or (ii) becomes subject generally to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Lender so
elects by notice to the Company (with a copy to the Administrative Agent), the
obligation of such Lender to make or continue, or to convert Base Rate Loans
into, Eurodollar Loans hereunder shall be suspended until the date such Lender
withdraws such notice or such Regulatory Change ceases to be in effect (in which
case the provisions of Section 6.04 hereof shall be applicable).
(c) Determinations and allocations by any Lender for purposes of this
Section 6.01 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans, and of the additional amounts required to
compensate such Lender in respect of any Additional Costs, shall be conclusive
absent manifest error.
6.02 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, prior to the commencement of any Interest Period with
respect to any Eurodollar Loans:
(a) the Administrative Agent determines (which determination shall be
conclusive) that adequate and reasonable means do not exist for
ascertaining the Eurodollar Base Rate for such Interest Period; or
(b) the Majority Lenders determine (which determination shall be
conclusive) and notify the Administrative Agent that the Eurodollar Base
Rate will not adequately and fairly reflect the cost to such Lenders of
making or maintaining such Loans for such Interest Period;
then the Administrative Agent shall promptly notify the Company and each Lender
thereof, and so long as such condition remains in effect, the Lenders shall be
under no obligation to make Eurodollar Loans or to convert Base Rate Loans into
Eurodollar Loans and the Company shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or convert such Loans into Base Rate Loans in accordance with Section 3.02
hereof.
36
6.03 Illegality. Notwithstanding any other provision of this Agreement to
the contrary, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
hereunder, or (b) maintain Eurodollar Loans hereunder, then such Lender shall
promptly notify the Company thereof through the Administrative Agent and such
Lender's obligation to make Eurodollar Loans hereunder shall be suspended until
such time as such Lender may again make and maintain Eurodollar Loans (in which
case the provisions of Section 6.04 hereof shall be applicable).
6.04 Substitute Base Rate Loans. If the obligation of any Lender to make
Eurodollar Loans shall be suspended pursuant to Section 6.01, 6.02 or 6.03
hereof, all Loans which would otherwise be made by such Lender as Eurodollar
Loans shall be made instead as Base Rate Loans (and, if an event referred to in
Section 6.01(b) or 6.03 hereof has occurred and such Lender so requests by
notice to the Company with a copy to the Administrative Agent, each Eurodollar
Loan of such Lender then outstanding shall be automatically converted into a
Base Rate Loan on the date specified by such Lender in such notice) and, to the
extent that Eurodollar Loans are so made as (or converted into) Base Rate Loans,
all payments of principal which would otherwise be applied to such Eurodollar
Loans shall be applied instead to such Base Rate Loans.
6.05 Compensation. The Company shall pay to the Administrative Agent for
the account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan made by
such Lender on a date earlier than the last day of an Interest Period for
such Loan; or
(b) any failure by the Company to borrow a Eurodollar Loan to be made
by such Lender on the date for such borrowing specified in the relevant
notice of borrowing under Section 5.05 hereof;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the principal
amount so paid, prepaid or converted or not borrowed for the period from the
date of such payment, prepayment or conversion or failure to borrow to the last
day of the Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan which would have commenced on the date
of such failure to borrow) at the applicable rate of interest for such Loan
provided for herein over (ii) the interest component (as reasonably determined
by such Lender) of the amount (as reasonably determined by such Lender) such
Lender would have bid in the London interbank market for Dollar deposits of
leading banks in amounts comparable to such principal amount and maturities
comparable to such period.
37
6.06 Additional Costs in Respect of Letters of Credit. If as a result of
any Regulatory Change there shall be imposed, modified or deemed applicable any
tax, reserve, special deposit or similar requirement against or with respect to
or measured by reference to Letters of Credit issued or to be issued hereunder
or participations therein, and the result shall be to increase the cost to any
Lender of issuing or maintaining any Letter of Credit or any participation
therein, or reduce any amount receivable by any Lender hereunder in respect of
any Letter of Credit (which increase in cost, or reduction in amount receivable,
shall be the result of such Lender's reasonable allocation of the aggregate of
such increases or reductions resulting from such event), then, upon demand by
such Lender, the Company agrees to pay to such Lender, from time to time as
specified by such Lender, such additional amounts as shall be sufficient to
compensate such Lender for such increased costs or reductions in amount. A
statement as to such increased costs or reductions in amount incurred by such
Lender shall be submitted by such Lender to the Company and shall be conclusive
as to the amount thereof absent manifest error.
6.07 Capital Adequacy. If any Lender shall determine that the adoption or
implementation of any applicable law, rule, regulation or treaty regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its Applicable Lending Office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Lender or any Person controlling
such Lender (a "Parent") as a consequence of its obligations hereunder to a
level below that which such Lender (or its Parent) could have achieved but for
such adoption, change or compliance (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 15 days after demand by such Lender (with a copy
to the Administrative Agent), the Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
A statement of any Lender claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive absent manifest error. In determining such amount, such Lender may
use any reasonable averaging and attribution methods.
Section 7. Conditions Precedent to all Loans and Letters of Credit.
7.01 Loans and Letters of Credit. The obligation of each Lender to make any
Loan to be made by it hereunder, or to issue any Letter of Credit hereunder, is
subject to the conditions precedent that, as of the date of such Loan or such
issuance, and before and after giving effect thereto:
(a) no Default shall have occurred and be continuing; and
38
(b) the representations and warranties made by each of the Company and
its Subsidiaries in each Basic Document to which it is a party shall be
true (or, in the case of Basic Documents which are not Financing Documents,
true in all material respects) on and as of the date of the making of such
Loan or such issuance, with the same force and effect as if made on and as
of such date.
Each notice of borrowing by the Company hereunder, or request for issuance
of a Letter of Credit, shall constitute a certification by the Company to the
effect set forth in the preceding sentence (both as of the date of such notice
and as of the date of such borrowing or issuance).
Section 8. Representations and Warranties. The Company represents and
warrants to the Lenders and the Administrative Agent as follows:
8.01 Corporate Existence. Each of the Company and its Subsidiaries: (a) is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; (b) has all requisite corporate
power, and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except in the case of such licenses, authorizations,
consents and approvals, where the failure to obtain them would not have a
Material Adverse Effect; and (c) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
8.02 Information. (a) Each of the Offering Materials and the projections
referred to in Section 13.01(g) hereof (the "Company Projections") did not as of
the date thereof and will not as of the Effective Date contain any untrue
statement of a material fact or assumption or omit to state a material fact or
assumption necessary in order to make the statements contained therein not
misleading; provided that (i) although the management of the Company believed as
of the Effective Date that the Company Projections and the other projections
contained in the Offering Materials are reasonable, the Company makes no
representation as to their attainability, and (ii) it is understood that the
Offering Materials are not intended to, and do not, contain all the information
that would be contained in a prospectus prepared in accordance with the
requirements of the Securities Act of 1933, as amended.
(b) Without limiting the generality of paragraph (a):
(i) The audited consolidated balance sheets of the Company and its
Subsidiary as of September 30, 2001 and the related consolidated statements
of operations, stockholders' equity and cash flows for the year then ended
(the "Company Audited Statements"), have been prepared in accordance with
generally accepted accounting principles as in effect on
39
December 31, 2001 consistently applied. The Company Audited Statements
fairly present the financial position of the Company and its Subsidiary
at September 30, 2001 and the results of their operations and cash
flows for the year then ended in conformity with generally accepted
accounting principles.
(ii) The consolidated balance sheets of the Company and its
Subsidiary as of June 30, 2002 and the related consolidated statements
of operations, stockholders' equity and cash flows for the nine months
then ended have been prepared in accordance with generally accepted
accounting principles for interim financial information as in effect on
August 15, 2002, and fairly present, in all material respects, the
financial position of the Company and its Subsidiary as of June 30,
2002 and the results of their operations and cash flows for the nine
months then ended.
(iii) The Company and its Subsidiaries did not on the date of
the balance sheets referred to in clauses (i) and (ii) above, and will
not on the Effective Date, have any material contingent liabilities,
material liabilities for taxes, unusual and material forward or
long-term commitments or material unrealized or anticipated losses from
any unfavorable commitments, except as referred to or reflected or
provided for in said balance sheets.
(c) The Company has disclosed to the Lenders in writing in or pursuant
to this Agreement and in the Offering Materials any and all facts (other than
general economic and industry conditions) which have or pose a material risk of
having a Material Adverse Effect.
(d) Since September 30, 2001 no event has occurred and no condition has
come into existence which has had, or is reasonably likely to have, a Material
Adverse Effect.
8.03 Litigation. There are no legal or arbitral proceedings or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries in which there is a reasonable possibility of
an adverse decision which could have a Material Adverse Effect.
8.04 No Breach. None of the execution and delivery of the Basic
Documents, the consummation of the transactions therein contemplated, or
compliance with the terms and provisions thereof did or will conflict with or
result in a breach of, or require any consent under, the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any Basic Document or other
material agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which
40
it is bound or to which it is subject, or constitute a default under any such
agreement or instrument, or (except for the Liens created pursuant to the
Security Documents) result in the creation or imposition of any Lien upon any of
the revenues or assets of the Company or any of its Subsidiaries pursuant to the
terms of any such agreement or instrument.
8.05 Corporate Action. Each of the Company and its Subsidiaries has all
necessary corporate power and authority to execute, deliver and perform its
obligations under the Basic Documents to which it is a party; the execution,
delivery and performance by the Company and its Subsidiaries of the Basic
Documents to which they are parties have been duly authorized by all necessary
corporate action; and this Agreement has been duly and validly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company and, on the Effective Date, each of the other Basic Documents to
which the Company or any of its Subsidiaries is a party will constitute its
legal, valid and binding obligation, in each case enforceable in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or moratorium or other similar laws relating to the
enforcement of creditors' rights generally and by general equitable principles.
8.06 Approvals. Each of the Company and its Subsidiaries has obtained all
authorizations, approvals and consents of, and has made all filings and
registrations with, any governmental or regulatory authority or agency and any
third party necessary for the execution, delivery or performance by it of any
Basic Document to which it is a party, or for the validity or enforceability
thereof, except for filings and recordings of the Liens created pursuant to, or
permitted by, the Security Documents.
8.07 Regulations U and X. Neither the Company nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U or X of the Board of Governors of the
Federal Reserve System) and no part of the proceeds of any Loan hereunder will
be used to purchase or carry any such margin stock.
8.08 ERISA. The Company and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan. No such Person has (i) sought a waiver of the minimum funding
standard under Section 412 of the Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan, or made any
amendment to any Plan, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Code or (iii)
incurred any liability under Title IV of ERISA (other than a liability to the
PBGC for premiums under Section 4007 of ERISA).
41
8.09 Taxes. Each of the Company and its Subsidiaries has filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by it and has paid all taxes due pursuant to such returns
or pursuant to any assessment received by it, except to the extent the same may
be contested as permitted by Section 9.02 hereof. There are no material tax
disputes or contests pending as of the Effective Date. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Company, adequate.
8.10 Subsidiaries; Agreements. (a) Schedule V hereto is a complete and
correct list, as of the Effective Date, of all Subsidiaries of the Company and
of all Investments held by the Company or any of its Subsidiaries in any joint
venture or other Person. Except for the Liens created by the Security Documents,
the Company owns, free and clear of Liens, all outstanding shares of its
Subsidiaries and all such shares are validly issued, fully paid and
non-assessable and the Company (or the respective Subsidiary of the Company)
also owns, free and clear of Liens, all such Investments.
(b) Schedule VI hereto is a complete and correct list of all credit
agreements, indentures, capitalized leases, obligations in respect of letters of
credit, guaranties, joint venture agreements, and other material instruments in
effect as of the Effective Date providing for, evidencing, securing or otherwise
relating to any Indebtedness or lease obligations of the Company or any of its
Subsidiaries, and such list correctly sets forth the names of the debtor or
lessee and creditor or lessor with respect to the Indebtedness or lease
obligations outstanding or to be outstanding and the property subject to any
Lien securing such Indebtedness or lease obligation, all as of the Effective
Date. The Company has heretofore delivered to the Administrative Agent a
complete and correct copy of all such credit agreements, indentures, capitalized
leases, letter of credit obligations, guaranties, joint venture agreements and
other material instruments, including any modifications or supplements thereto,
as in effect on the Effective Date.
8.11 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company, within the
meaning of said Act.
8.12 Public Utility Holding Company Act. Neither the Company nor any of its
Subsidiaries is a "holding company", or an "affiliate" of a "holding company" or
a "subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
8.13 Ownership and Use of Properties. Each of the Company and its
Subsidiaries will have on the Effective Date and at all times thereafter, legal
title
42
or ownership of, or the right to use pursuant to enforceable and valid
agreements or arrangements, all tangible property, both real and personal and
all franchises, licenses, copyrights, patents and know-how which is material to
the operation of its business as proposed to be conducted.
8.14 Environmental Matters. (a) The Company and each of its Subsidiaries
have obtained all permits, certificates, licenses, approvals, registrations and
other authorizations which are required under all applicable Environmental Laws,
except to the extent failure to have any such permit, certificate, license,
approval, registration or authorization would not have a Material Adverse
Effect. The Company and each of its Subsidiaries are in compliance with the
terms and conditions of all such permits, certificates, licenses, approvals,
registrations and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any notice or demand letter from any regulatory authority issued,
entered, promulgated or approved thereunder, except to the extent failure to
comply would not have a Material Adverse Effect.
(b) In addition, (x) except as described in Schedule VII or (y) to the
extent that the liabilities that would result from the matters (excluding
matters described in Schedule VII) referred to in Sections 8.14(b)(i), (ii),
(iii), (iv), (v)(B), (vi), (vii) and (viii) would not exceed $250,000
individually or $750,000 in the aggregate,
(i) During the last four years, no written notice, notification,
demand, request for information, citation, summons or order has been
issued, no complaint has been filed, no penalty has been assessed and, to
the best knowledge of the Company, no investigation or review is pending or
threatened by any governmental entity or other Person with respect to (1)
any alleged failure by the Company or any of its Subsidiaries to have any
environmental permit, certificate, license, approval, registration or
authorization required in connection with the conduct of the business of
the Company or any of its Subsidiaries, (2) any alleged failure by the
Company or any of its Subsidiaries to comply with the terms and conditions
of any such permit, certificate, license, approval, registration or
authorization or of any other limitation, restriction, condition, standard,
prohibition, requirement, obligation, schedule or timetable contained in
any applicable Environmental Law, (3) any Regulated Activity or (4) any
Release of any Hazardous Substance;
(ii) Neither the Company nor its Subsidiaries nor the businesses
conducted by such Persons nor, to the best knowledge of the Company or any
of its Subsidiaries, any other Person, other than in compliance with
applicable Environmental Laws, has disposed of or placed, held, located or
otherwise handled, any Hazardous Substance on, under or at any property now
or previously owned, operated or leased by the Company or any of its
43
Subsidiaries, and none of such properties has been used (whether by the
Company or any of its Subsidiaries or, to the best knowledge of the Company
or any of its Subsidiaries, by any other Person) as a dump site or storage
(whether permanent or temporary) site for any Hazardous Substance; and
(1) no polychlorinated biphenyls (PCBs), radioactive material,
urea formaldehyde or lead is or has been present at any property now or
previously owned, operated or leased by the Company or any of its
Subsidiaries except in compliance with applicable Environmental Laws;
(2) no asbestos is or has been present in airborne form in
concentrations in violation of Environmental Laws or in friable form at
any property now or previously owned, operated or leased by the Company
or any of its Subsidiaries;
(3) there are no underground storage tanks, active or
abandoned, which have been used to store or which otherwise contain or
have contained any Hazardous Substance at any property now or
previously owned, operated or leased by the Company or any of its
Subsidiaries; and
(4) except in accordance with the terms of any permit relating
to or required by Environmental Laws held by the Company or any of its
Subsidiaries, no Hazardous Substance has been Released in a reportable
quantity or is present in a threshold planning quantity (except as a
commercial product), where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under any
property now or previously owned, operated or leased by the Company or
any of its Subsidiaries.
(iii) To the best knowledge of the Company, none of the
Company, any of its Subsidiaries, or any of the businesses conducted by
such Persons has transported or arranged for the transportation
(directly or indirectly) of any Hazardous Substance except as a
commercial product to any location which is listed or proposed for
listing on the National Priorities List promulgated pursuant to CERCLA
("NPL"), or the Comprehensive Environmental Response, Compensation and
Liability Information System ("CERCLIS") or on any similar federal,
state, foreign or local list or which is the subject of federal, state,
foreign or local enforcement actions or other investigations which may
lead to claims against the Company or any of its Subsidiaries for
clean-up costs, remedial work, damages to natural resources or for
personal
44
injury claims, including, but not limited to, claims under CERCLA;
(iv) All oral or written notifications of a Release of a
Hazardous Substance required to be filed under any applicable
Environmental Law have been filed by or on behalf of the Company
and its Subsidiaries;
(v) No property now or previously owned, operated or
leased by the Company or any of its Subsidiaries is listed or, to
the best knowledge of the Company or any of its Subsidiaries,
proposed for listing, on (A) the NPL or (B) on CERCLIS or any
similar federal, state, foreign or local list of sites requiring
investigation or clean-up which may lead to claims for clean-up
costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under CERCLA;
(vi) No Hazardous Substance generated by the Company or
any of its Subsidiaries has been stored (except as a commercial
product), recycled, treated or Released, except in compliance with
applicable Environmental Laws or disposed of by the Company or any
of its Subsidiaries at any location;
(vii) There are no Liens arising under or pursuant to any
applicable Environmental Laws on property owned, operated or leased
by the Company or any of its Subsidiaries, and, to the best
knowledge of the Company, no actions by any governmental entity
have been taken or are in process which could subject any of such
properties to such Liens, and no notice or restriction relating to
the presence of any Hazardous Substance at any such property is
required to be placed in any deed to such property; and
(viii) There are no existing liabilities or potential
liabilities of the Company or any Subsidiary identified in any
environmental investigations, studies, audits, tests, reviews or
other analyses conducted by or which are in the possession of the
Company or any of its Subsidiaries in relation to any property or
facility now or previously owned, operated or leased by the Company
or any Subsidiary which are not disclosed in the reports described
in Section 7.01(p) of the Original Agreement or disclosed in
Schedule VII. The Company conducts and has conducted all such
environmental investigations, studies, audits, tests, reviews or
other analyses in relation to all properties and facilities now or
previously owned, operated or leased by the Company or any of its
Subsidiaries which are required under applicable Environmental
45
Laws and maintains such records and reports for the time periods
prescribed under applicable Environmental Laws.
(c) For purposes of this Section, representations given with respect to
the Company and its Subsidiaries shall be deemed given also with respect to any
matters which could result in Environmental Liabilities, to the extent successor
liability could be imposed under applicable Environmental Laws on the Company or
any of its Subsidiaries.
Section 9. Covenants. The Company agrees that, so long as any of the
Working Capital Commitments are in effect and until payment in full of all Loans
hereunder, the termination of all Letters of Credit and payment in full of all
Letter of Credit Liabilities, all interest thereon and all other amounts payable
under the Financing Documents, unless the Majority Lenders shall agree otherwise
as contemplated by Section 12.05 hereof:
9.01 Information. The Company shall deliver to each of the Lenders:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, consolidated (and, if the
Company's Subsidiaries, if aggregated and considered as a single
subsidiary, would meet the definition of a "significant subsidiary"
contained as of the date hereof in Regulation S-X of the Securities and
Exchange Commission, consolidating) statements of income, retained
earnings and cash flow of the Company and its Subsidiaries for such
year and the related consolidated (and, if required, consolidating)
balance sheet as at the end of such year, setting forth in each case in
comparative form the corresponding figures (if any) for the preceding
fiscal year, and accompanied, in the case of said consolidated
financial statements, by an opinion thereon of Deloitte & Touche LLP or
other independent certified public accountants of recognized national
standing, which opinion shall state that said consolidated financial
statements fairly present in all material respects the consolidated
financial condition and results of operations of the Company and its
Subsidiaries as at the end of, and for, such fiscal year, and a
standard letter from such accountants stating that, in performing the
auditing procedures necessary for their above-described opinion (but
without any special or additional procedures for that purpose), nothing
came to their attention that caused them to believe, except as
specifically stated, that (i) the Company was not in compliance with
any of the terms, covenants, provisions or conditions of this Agreement
and (ii) the Company's calculation of the Receivables and Inventory
included in the Borrowing Base as of the end of such fiscal year was
not fairly stated, in all material respects, in relation to the
financial statements from which such information was derived;
46
(b) as soon as available and in any event within 30 days after
the end of each monthly accounting period of the Company (and as soon
as available and in any event within 45 days after the end of each
fiscal quarter of the Company other than the last fiscal quarter in
each fiscal year) consolidated statements of income, retained earnings
and cash flow of the Company and its Subsidiaries, in each case in a
form satisfactory to the Administrative Agent, for such monthly
accounting period and such fiscal quarter and for the portion of the
fiscal year ended at the end of such monthly accounting period (and
such fiscal quarter), and the related consolidated balance sheet as at
the end of such monthly accounting period (and such fiscal quarter),
setting forth in each case in comparative form the corresponding
figures from the Company's operating budget for such fiscal year, and
accompanied, in each case, by (i) a statement of net sales, sales
volume, gross margin and operating profit by product group, (ii) a
certificate of a Senior Officer, which certificate shall state that
said consolidated financial statements fairly present in all material
respects the consolidated financial condition and results of operations
of the Company in accordance with GAAP (except for the absence of
footnotes, other than in the case of financial statements delivered as
at the end of and for a fiscal quarter, which shall contain footnotes
of the type required by the Securities and Exchange Commission to be
included in quarterly reports on Form 10-Q), consistently applied, as
at the end of, and for, such period (subject to normal year-end audit
adjustments) and, in the case of quarterly financial statements, also
accompanied by, in form and detail reasonably satisfactory to the
Collateral Monitor, (iii) a reconciliation, of the Inventory and
Receivables figures set forth in such financial statements as at the
end of such fiscal quarter to the Borrowing Base Certificate previously
delivered as at said date pursuant to clause (c) below and (iv) a
summary of aging of receivables and a summary of aging of accounts
payable;
(c) as soon as available and in any event within (i) ten
Business Days after the last day of each calendar month, (ii) if either
(A) the most recently delivered Borrowing Base did not show that the
Borrowing Base equaled or exceeded 150% of the Working Capital
Commitments and the Majority Lenders have so requested or (B) a
Remaining Availability Condition has occurred and is continuing, five
Business Days after the last day of each week (other than a week in
which a calendar month ends), and (iii) five Business Days after
receipt of a request therefor (which may be given from time to time
after the occurrence and during the continuation of a Default) from the
Majority Lenders, a Borrowing Base Certificate as at such day or the
date of such request, as the case may be; provided that, in the case of
any Borrowing Base Certificate to be delivered pursuant to the
foregoing clause (ii) or (iii), Eligible Inventory shall be calculated
based on the amount of Eligible Inventory as of the date of the
Borrowing Base Certificate most recently delivered pursuant to clause
(i), adjusted to
47
reflect the Company's best estimate of changes in Eligible Inventory
since the date of such Borrowing Base Certificate;
(d)(i) within 30 days after the beginning of each fiscal year
of the Company, a copy of the operating budget, including, without
limitation, projection of the anticipated cash flow, of the Company and
its Subsidiaries, divisions and product group for such fiscal year and
each fiscal quarter included in such fiscal year, such budget to be
accompanied by a certificate of a Senior Officer specifying the
assumptions on which such budget was prepared, stating that such
officer has no reason to question the reasonableness of any material
assumptions on which such budget was prepared and providing such other
details as the Administrative Agent may reasonably request, and (ii) as
soon as available and in any event within 45 days after the end of each
of the first three fiscal quarters of the Company in each fiscal year,
a projection for each of the remaining fiscal quarters in such fiscal
year of the anticipated consolidated cash flow of the Company and its
Subsidiaries and the related balance sheets;
(e)(i) if requested by the Collateral Monitor or the Majority
Lenders (to the extent practicable, to be coordinated with the
preparation of the financial statements delivered pursuant to Section
9.01(a)), a report of the Collateral Monitor or another independent
collateral auditor (which may be, or be affiliated with, one of the
Lenders) with respect to the Receivables and Inventory components
included in the Borrowing Base, which report shall indicate that, based
upon a review by such auditor of the Receivables (including
verification with respect to the amount, aging, identity and credit of
the respective account debtors and the billing practices of the Company
conducted in a manner comparable to that employed by the Company's
independent certified public accountants in connection with audits of
the annual financial statements of the Company) and Inventory
(including verification as to the value, location and respective
types), the information set forth in the Borrowing Base Certificate
most recently delivered is accurate and complete in all material
respects and (ii) if requested by the Administrative Agent or the
Majority Lenders because it or they believe that the values used to
determine the Available PP&E Amount may have changed materially since
the date of the most recent valuation report, a valuation report
prepared by the Appraisers of the plant, property and equipment assets
of the Company and its Subsidiaries, which report shall include the
orderly liquidation value of the machinery and equipment of the Company
and its Subsidiaries and the fair market value of the real property of
the Company and its Subsidiaries; provided that the Company shall pay
the cost of no more than two Receivables and Inventory reports and one
plant, property and equipment report in each fiscal year of the Company
unless an Event of Default has occurred and is continuing, in which
case the Company shall
48
pay the cost of up to three additional Receivables and Inventory
reports and one additional plant, property and equipment report in each
fiscal year;
(f) promptly upon (i) the mailing thereof to the shareholders or
creditors of the Company generally, copies of all financial statements,
reports and proxy statements so mailed or (ii) the delivery thereof to
the holders of or trustee for the Senior Notes, copies of all documents
or notices required to be delivered to such Persons pursuant to the
Indenture;
(g) promptly upon the filing thereof, copies of all registration
statements (other than any registration statements on Form S-8 or its
equivalent) and any reports which the Company shall have filed with the
Securities and Exchange Commission;
(h) if and when the Company or any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with respect
to any Plan which might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable
event, a copy of the notice of such reportable event given or required
to be given to the PBGC, (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate or appoint a trustee
to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Code, a
copy of such application; (v) gives notice of intent to terminate any
Plan under Section 4041(c) of ERISA, a copy of such notice and other
information filed with the PBGC; (vi) gives notice of withdrawal from
any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or makes any amendment to any Plan which has
resulted or could result in the imposition of a Lien or the posting of
a bond or other security, a certificate of a Senior Officer setting
forth details as to such occurrence and action, if any, which the
Company or member of the Controlled Group is required or proposes to
take;
(i) promptly following the delivery thereof to the Company or to
the Board of Directors or management of the Company, a copy of any
management letter or written report by independent public accountants
with respect to the financial condition, operations, business or
prospects of the Company;
49
(j) promptly after management of the Company knows that any
Default has occurred and is continuing, a notice of such Default,
describing the same in reasonable detail;
(k) once during each fiscal year of the Company, if requested
by the Administrative Agent or the Majority Lenders because it or they
believe that current liabilities and potential sources of future
liabilities may have increased materially since the date of the most
recent such report or update, an update prepared by an independent
engineer satisfactory to the Administrative Agent of the reports
delivered pursuant to Section 7.01(p) of the Original Agreement,
reporting any material changes in the estimate of current liabilities
and assessment of potential sources of future liabilities contained
therein;
(l) once during each fiscal year, if requested by the
Collateral Monitor, a list in form satisfactory to the Collateral
Monitor, of the names and addresses of all account debtors of the
Company and its Subsidiaries with accounts aggregating at least
$10,000; and
(m) from time to time such other information regarding the
financial condition, operations, prospects or business of the Company
as the Administrative Agent or any Lender through the Administrative
Agent may reasonably request.
The Company will furnish to each Lender, at the time it furnishes each
set of financial statements pursuant to paragraph (a) or (b) above, a
certificate of a Senior Officer (i) to the effect that, to the best of his
knowledge after due inquiry, no Default has occurred and is continuing (or, if
any Default has occurred and is continuing, describing the same in reasonable
detail) and (ii) setting forth in reasonable detail the computations necessary
to determine whether it was in compliance with Sections 9.08, 9.10 to 9.15,
inclusive, and 9.18 and 9.20 hereof as of the end of the respective monthly
accounting period, fiscal quarter or fiscal year.
9.02 Taxes and Claims. The Company will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any property belonging to it (including with respect
to the Mortgages on such properties), prior to the date on which penalties
attach thereto, and all lawful claims which, if unpaid, might become a Lien upon
the property of the Company or such Subsidiary, provided that neither the
Company nor such Subsidiary shall be required to pay any such tax, assessment,
charge, levy or claim the payment of which is being contested in good faith and
by proper proceedings if (x) it maintains adequate reserves with respect
thereto, (y) such contest, proceedings and reserves have been described in a
certificate of a Senior Officer delivered to the Lenders and (z) foreclosure or
realization upon any Lien on the property of the
50
Company or such Subsidiary has not occurred and does not appear to be
imminent.
9.03 Insurance. The Company will maintain, and will cause each
of its Subsidiaries to maintain, insurance in responsible companies in
such amounts and against such risks as is usually carried by owners of
similar businesses and properties in the same general areas in which
the Company and its Subsidiaries operate, provided that in any event
the Company shall maintain insurance not less favorable than set forth
in Schedule VIII.
Such insurance shall be written by financially responsible
companies selected by the Company, having an A.M. Best rating of "A-"
or better and in a financial size category of XV or larger, or by other
companies acceptable to the Majority Lenders, and (other than workers'
compensation) shall name the Administrative Agent as loss payee and/or
as additional insured, as its interests may appear. Each policy
referred to in this Section 9.03 shall include effective waivers by the
insurer of all claims for insurance premiums against the Administrative
Agent or any Lender, provide that all insurance proceeds in excess of
$250,000 per claim which would otherwise be payable to the Company or
any Subsidiary of the Company under any of the policies referred to in
this Section 9.03 shall be adjusted with and payable to the
Administrative Agent (for deposit in the Collateral Account maintained
pursuant to the Security Documents and application in accordance with
Section 3.02(b)(2)), provide that it will not be cancelled or reduced
or amended except after not less than 30 days' written notice to the
Administrative Agent and provide that the interests of the
Administrative Agent and the Lenders shall not be invalidated by any
act or negligence of the Company or any Person having an interest in
the Plants nor by occupancy or use of the Plants for purposes more
hazardous than permitted by such policy nor by any foreclosure or other
proceedings relating to the Plants. The Company will advise the
Administrative Agent promptly of any policy cancellation, reduction or
amendment.
On the Closing Date the Company delivered to the
Administrative Agent certificates of insurance satisfactory to the
Administrative Agent evidencing the existence of all insurance required
to be maintained by the Company hereunder and showing the termination
or expiry date of such insurance. Thereafter, not later than five
Business Days prior to the termination or expiry date of any such
insurance the Company has delivered and shall deliver to the
Administrative Agent certificates of insurance evidencing that such
insurance has been renewed or replaced, subject only to the payment of
premiums as they become due. The Company shall not obtain or carry
separate insurance concurrent in form or contributing in the event of
loss with that required by this Section unless the Administrative Agent
is named as loss payee and insured therein, with loss payable as
provided herein. The Company will immediately notify the Administrative
Agent whenever any such separate insurance is obtained and shall
deliver to the Administrative Agent the certificates evidencing the
same.
51
If, in the opinion of the Company, any of the insurance which it is
required to maintain pursuant to this Section is not available on commercially
reasonable terms, the Company shall so notify the Administrative Agent and the
Lenders and, with the consent of the Majority Lenders, may elect not to purchase
such insurance; provided that if the Company shall not have received notice of
disapproval from the Majority Lenders within 20 days of receipt by the Lenders
of such notice from the Company, the Lenders shall be deemed to have consented,
for the purposes of this Section, to the election not to purchase such
insurance.
9.04 Maintenance of Existence; Conduct of Business. The Company will
preserve and maintain, and will cause each of its Subsidiaries to preserve and
maintain, its corporate existence and all material rights, privileges and
franchises necessary or desirable in the normal conduct of its business, and
will conduct its business in a regular manner; provided that nothing herein
shall prevent the merger and dissolution of any Subsidiary of the Company into
the Company or a Wholly-Owned Subsidiary so long as the Company or such
Wholly-Owned Subsidiary is the surviving corporation.
9.05 Maintenance of and Access to Properties. The Company will keep,
and will cause each of its Subsidiaries to keep, all of its properties necessary
in its business in good working order and condition (having regard to the
condition of such properties at the time such properties were acquired by the
Company or such Subsidiary), ordinary wear and tear excepted, and proper books
of record and account in which entries shall be made in conformity with GAAP of
all dealings and transactions in relation to its business activities, and will
permit representatives of the Lenders to inspect such properties and, upon
reasonable notice and at reasonable times, to examine and make extracts and
copies from the books and records of the Company and any such Subsidiary.
9.06 Compliance with Applicable Laws. The Company will comply, and will
cause each of its Subsidiaries to comply, with the requirements of all
applicable laws, rules, regulations and orders of any governmental body or
regulatory authority (including, without limitation, all Environmental Laws), a
breach of which would have a Material Adverse Effect, except where contested in
good faith and by proper proceedings.
9.07 Litigation. The Company will promptly give to the Administrative
Agent (which shall promptly notify each Lender) notice in writing of (i) all
judgments against it or any of its Subsidiaries which individually exceed
$250,000 or in the aggregate exceed $500,000 and (ii) all litigation and of all
proceedings of which it is aware before any courts, arbitrators or governmental
or regulatory agencies affecting the Company or any of its Subsidiaries except
litigation or proceedings which, if adversely determined, would not in the
reasonable opinion of the Company have a Material Adverse Effect.
52
9.08 Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, create, incur or suffer to exist any
Indebtedness except: (i) Indebtedness to the Lenders under the
Financing Documents, (ii) Indebtedness outstanding on the Effective
Date and identified in Schedule VI hereto and any renewals, extensions
or refinancings of Indebtedness in Part B of such Schedule, provided
that such renewals, extensions or refinancings shall not increase the
amount of such Indebtedness or of the collateral securing it, (iii)
Indebtedness of any Subsidiary Guarantor to the Company in an aggregate
principal amount at any time outstanding not to exceed $10,000,000, so
long as such Indebtedness is evidenced by a note satisfactory to the
Administrative Agent, (iv) Indebtedness secured by Liens permitted by
clause (ii) of Section 9.13, (v) Indebtedness under or in respect of
currency exchange contracts or Interest Rate Protection Obligations
incurred in the ordinary course of business, (vi) other Indebtedness of
the Company in an aggregate principal amount at any time outstanding
not to exceed $1,000,000, (vii) Indebtedness of the Company to the
Government of Canada in an aggregate principal amount at any time
outstanding not to exceed $1,500,000, provided that (x) such
Indebtedness is unsecured and contains no covenant or event of default
the effect of which is to impose a restriction, limitation or
obligation in favor of the lender not imposed in favor of the Lenders
hereunder and (y) payments with respect to the principal thereof or
interest thereon are not required prior to the fourth anniversary of
the date of incurrence thereof, (viii) the Senior Notes, (ix)
Indebtedness of the Company or any Wholly-Owned Subsidiary to any
Wholly-Owned Subsidiary and Guaranties by any Wholly-Owned Subsidiary
of any Indebtedness otherwise permitted by this Section and (x)
Indebtedness attributable to the Xxxxxxxxx Lease if amended or
refinanced in accordance with Section 9.12(viii).
9.09 Fixed Charge Ratio. The Company will not permit the
ratio, calculated as at the end of each fiscal quarter for the four
fiscal quarters then ended, of (i) Cash Flow for such period to (ii)
the sum of Capital Expenditures, Interest Expense and Cash Taxes for
such period to be less than the ratio set forth below for the period in
which such fiscal quarter ends:
Period Ratio
July 1, 2003 through December 31, 2003 1.00:1
January 1, 2004 and thereafter 1.05:1
9.10 Interest Coverage Ratio. The Company will not permit the
ratio, calculated as at the end of each fiscal quarter for the four
fiscal quarters then ended, of Cash Flow for such period to Interest
Expense for such period to be less than the ratio set forth below for
the period in which such fiscal quarter ends:
Period Ratio
July 1, 2002 through December 31, 2002 1.25:1
53
January 1, 2003 through March 31, 2003 1.35:1
April 1, 2003 through June 30, 2003 1.45:1
July 1, 2003 through September 30, 2003 1.60.1
October 1, 2003 through December 31, 2003 1.70:1
January 1, 2004 through March 31, 2004 1.75:1
April 1, 2004 and thereafter 2.00:1
9.11 Leverage Ratios. (a) The Company will not permit the
ratio, calculated as at the end of each fiscal quarter for the four
fiscal quarters then ended, of (i) Funded Indebtedness as at the end of
such period to (ii) Cash Flow for such period to be greater than the
ratio set forth below for the period in which such fiscal quarter ends:
Period Ratio
July 1, 2002 through September 30, 2002 7:35:1
October 1, 2002 through December 31, 2002 7.25:1
January 1, 2003 through March 31, 2003 6.70:1
April 1, 2003 through June 30, 2003 6.40:1
July 1, 2003 through September 30, 2003 5.50:1
October 1, 2003 through December 31, 2003 5.25:1
January 1, 2004 through March 31, 2004 5.00:1
April 1, 2004 and thereafter 4.75:1
(b) The Company will not permit the ratio on any date of (i)
Working Capital Obligations on such date to (ii) Cash Flow, calculated
as the Relevant Quarter End for the four fiscal quarters then ended, to
exceed 2.5:1. For purposes of this Section 9.11(b), "Relevant Quarter
End" shall mean the end of the most recently ended fiscal quarter for
which financial statements have been delivered pursuant to Section
9.01(a) or (b).
9.12 Mergers, Asset Dispositions, Acquisitions, Etc. Except as
expressly permitted by Section 9.04, the Company will not, and will not
permit any of its Subsidiaries to, be a party to any merger or
consolidation, or sell, lease, assign, transfer or otherwise dispose of
any assets, or acquire assets from any Person, except the following:
(i) dispositions of inventory in the ordinary course of
business;
54
(ii) dispositions of worn out or obsolete tools, machinery or
equipment no longer used or useful in the business of the Company and
its Subsidiaries, provided that the proceeds of such dispositions are
applied to purchase replacement tools, machinery or equipment within 60
days of such dispositions;
(iii) acquisitions of assets (other than fixed or capital
assets) in the ordinary course of business and expenditures in respect
of fixed or capital assets to the extent permitted under Section 9.18
hereof;
(iv) acquisitions of Investments permitted under Section 9.14
hereof;
(v) acquisitions of any assets by the Company for
consideration, which taken together with all consideration paid for
assets acquired pursuant to this clause (v) after the Effective Date,
shall not exceed the sum of $5,000,000; provided that (1) such assets
are used in the same line or lines of businesses as the businesses
conducted by the Company or any Subsidiary on the Effective Date; (2)
before and after giving effect to the consummation of the acquisition
of such assets, (a) no Default shall have occurred and be continuing
and (b) the sum of the Company's cash on hand and the aggregate unused
amount of the Working Capital Commitments which the Company would be
permitted to use pursuant to Section 2.01(ii) shall equal or exceed
$10,000,000; (3) the Company shall have delivered to each of the
Lenders not less than 30 days prior to the date of the acquisition of
such assets (a) a certificate demonstrating the Company's compliance
with its obligations under Sections 9.09, 9.10 and 9.11, in each case
determined on a pro forma basis after giving effect to the consummation
of the acquisition of such assets, (b) a pro forma consolidated
statement of cash flow of the Company and its Subsidiaries for the
twelve months then most recently ended, after giving effect to the
consummation of the acquisition of such assets, which statement of cash
flow shall show cash flow not less than the cash flow set forth in the
consolidated statement of cash flow most recently delivered prior to
such date pursuant to Section 9.01(a) or (b), and (c) such information
as the Administrative Agent and each Lender shall have reasonably
requested concerning such acquisition, including information relating
to actual or potential environmental liabilities in respect of such
assets; and (4) the Majority Lenders shall not have disapproved such
acquisition on the basis of such environmental liabilities within 15
days of receipt of such information referred to in clause (3)(c) above;
(vi) dispositions of any asset having a fair market value not
exceeding $250,000;
55
(vii) dispositions of assets not otherwise permitted pursuant
to this Section for cash proceeds in an amount not less than the fair
market value of the assets being disposed of (determined in good faith
by the Board of Directors); provided that such cash proceeds, taken
together with all other cash proceeds received for assets disposed of
pursuant to this clause (vii), and net of the amount of such proceeds
used to replace the assets disposed of, shall not exceed $10,000,000 in
the aggregate;
(viii) (x) the deemed acquisition or sale of the Xxxxxxxxx
Assets as a result of the amendment or refinancing of the Xxxxxxxxx
Lease so that the obligations thereunder constitute Capital Lease
Obligations, provided that (x) the Majority Lenders shall have
consented to such amendment or refinancing, and (y) such amendment or
refinancing shall not change the date or amount of any payments due
under the Xxxxxxxxx Lease; and
(ix) dispositions of machinery and equipment acquired in the
QPF Acquisition.
9.13 Liens. The Company will not, and will not permit any of its
Subsidiaries to, create or suffer to exist any Lien upon any property or assets,
now owned or hereafter acquired, securing any Indebtedness or other obligation,
except: (i) the Liens created pursuant to the Security Documents and other Liens
existing on the Effective Date and listed in Schedule VI hereto; (ii) Liens
(including Capital Leases) existing on other assets at the date of acquisition
thereof or which attach to such assets concurrently with or within 90 days after
the acquisition thereof, securing Indebtedness incurred to finance the
acquisition thereof in an aggregate principal amount at any time outstanding not
exceeding $2,000,000; (iii) other Liens arising in the ordinary course of the
business of the Company or such Subsidiary which are not incurred in connection
with the borrowing of money or the obtaining of advances or credit and which do
not materially detract from the value of its property or assets or materially
impair the use thereof in the operation of its business; and (iv) the Permitted
Encumbrances referred to in the Mortgages.
9.14 Investments. The Company will not, and will not permit any of its
Subsidiaries to, make or permit to remain outstanding any advances, loans or
other extensions of credit or capital contributions (other than prepaid expenses
in the ordinary course of business) to (by means of transfers of property or
assets or otherwise), or purchase or own any stocks, bonds, notes, debentures or
other securities of, any Person (all such transactions being herein called
"Investments"), except: (i) accounts permitted pursuant to Section 9.20; (ii)
Liquid Investments in the name and under the control of a Lender or the
Administrative Agent (or a collateral sub-agent for the Administrative Agent) as
contemplated by the Security Documents; (iii) subject to Section 9.16 hereof,
Investments in accounts and notes receivable acquired in the ordinary course of
business as presently conducted; (iv) loans by the Company and its Subsidiaries
to employees in the ordinary course of
56
business in an aggregate principal amount at any time outstanding not exceeding
$1,000,000 and Investments in employee pension plans; (v) Investments existing
on the Closing Date in Wholly-Owned Subsidiaries and additional Investments in
Subsidiaries, so long as such Investments are made with cash and are in amounts
reasonably needed to support the operations of such Subsidiaries, in an
aggregate amount (on a cost basis, net of repayments by such Subsidiaries of
such Investments) not to exceed $10,000,000 at any one time outstanding; (vi)
Investments consisting of acquisitions permitted by Section 9.12(v); (vii)
Investments in Applied Extrusion Technologies (Canada), Inc. consisting of (x)
either the cash required to purchase the AEP Assets or the contribution of AEP
Assets and (y) the cash required to move AEP Assets; and (viii) Investments by
Wholly-Owned Subsidiaries consisting of loans or advances or transfers of
property or assets to the Company or another Wholly-Owned Subsidiary.
9.15 Restricted Payments. The Company will not, and will not permit any
of its Subsidiaries to, declare or make any Restricted Payment, except that so
long as no Default has occurred and is continuing the Company may make payments
to repurchase or redeem and retire common stock of the Company owned by
employees of the Company or any of its Subsidiaries upon termination of
employment (including death or disability) of such employees in an aggregate
amount not to exceed $1,000,000 in any fiscal year of the Company.
9.16 Transactions with Affiliates. Except as expressly permitted by
this Agreement, the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly: (i) make any Investment in an Affiliate
of the Company; (ii) transfer, sell, lease, assign or otherwise dispose of any
assets to an Affiliate of the Company; (iii) merge into or consolidate with or
purchase or acquire assets from an Affiliate of the Company; or (iv) enter into
any other transaction directly or indirectly with or for the benefit of an
Affiliate of the Company (including, without limitation, Guaranties and
assumptions of obligations of an Affiliate of the Company); provided that (a)
any Affiliate of the Company who is an individual may serve as a director,
officer or employee of the Company and receive reasonable compensation or
indemnification in connection with his or her services in such capacity; (b) the
Company or a Subsidiary of the Company may enter into any transaction with an
Affiliate of the Company providing for the leasing of property, the rendering or
receipt of services or the purchase or sale of inventory and other assets in the
ordinary course of business if the monetary or business consideration arising
therefrom would be substantially as advantageous to the Company or such
Subsidiary as the monetary or business consideration which would obtain in a
comparable arm's length transaction with a Person not an Affiliate of the
Company.
9.17 Lines of Businesses. Neither the Company nor any of its
Subsidiaries shall engage to any substantial extent in any line or lines of
business activity other than the businesses conducted by it on the Effective
Date and the
57
Melt Blown business (consisting of equipment to be constructed for the
manufacture of filtration products through a plastic extrusion process).
9.18 Capital Expenditures; Additional Property. The Company will not
permit the aggregate amount of Capital Expenditures made in any period referred
to below to exceed the sum of:
(i) (w) for the fiscal quarter ending September 30, 2002,
$6,500,000; (x) for the fiscal year ending September 30, 2003,
$18,000,000; and (y) for the fiscal year ending September 30, 2004,
$18,000,000; plus
(ii) for the fiscal year ending September 30, 2004, 75% of the
excess (if any) of the amount of Capital Expenditures for the
immediately preceding fiscal year specified pursuant to clause (i)
above over the amount of Capital Expenditures actually made during such
fiscal year pursuant to such clause (i) (without including any
carryover amount from any prior fiscal year); provided that the Company
shall be in compliance with its obligations under Section 9.11 hereof
at the time Capital Expenditures are made pursuant to this clause (ii).
If any property acquired or constructed by the Company after the date
hereof is not subject to the Lien of the Security Documents, the Company will
execute and deliver such mortgages and other security documents as may be
necessary, or as the Administrative Agent may request, to subject such property
to such a Lien.
9.19 Modification of Other Agreements. The Company will not, and will
not permit any of its Subsidiaries to, consent to any modification, supplement
or waiver of any of the provisions of any of the Assigned Agreements in any
respect to the extent such modification, supplement or waiver would impair
materially the benefit to the Company or such Subsidiary of such Assigned
Agreement, it being understood that any modification, supplement or waiver of
any Assigned Agreement which adversely affects the amount or timing of any
payment by or to the Company or any of its Subsidiaries thereunder shall be
deemed to impair materially the benefit thereof to the Company for purposes
hereof, without the prior written consent of the Administrative Agent (with the
approval of the Majority Lenders). The Company will not request or consent to
any modification, supplement or waiver of any of the provisions of any
Acquisition Document or amend or modify its certificate of incorporation or
by-laws or the Indenture, the Senior Notes or any other document governing the
Senior Notes (or any renewal, extension or refinancing thereof) or, so long as
the IRB Letter of Credit is outstanding, any document governing obligations
secured by the IRB Letter of Credit, without the prior written consent of the
Administrative Agent (with the approval of the Majority Lenders); provided that
if the Company shall not have received notice of disapproval from the Majority
Lenders within 20 days of
58
receipt by the Lenders of notice from the Company of a proposed modification,
supplement, waiver or amendment, the Lenders shall be deemed to have consented
thereto.
9.20 Bank Accounts; Cash and Liquid Investments. (a) Neither the
Company nor any of its Subsidiaries will maintain any accounts with any bank or
other financial institution having outstanding daily collected balances at any
one time exceeding $2,000,000 in the aggregate except (i) the Collateral Account
referred to in the Security Documents, (ii) any accounts maintained with
Lenders, (iii) any accounts with respect to which a letter substantially in the
form of the lockbox letter set forth in the Security Documents has been executed
in favor of the Administrative Agent, and (iv) any accounts maintained solely to
meet payroll disbursements with respect to employees of the Company or its
Subsidiaries, which accounts shall contain amounts not in excess of two weeks'
estimated payroll disbursements.
(b) The aggregate amount of cash and Liquid Investments of the Company
and its Subsidiaries shall not exceed $5,000,000 at the close of business on any
day when Loans are outstanding, it being understood that cash and Liquid
Investments of the Company held in rabbi trusts pursuant to the Company's
Amended and Restated Executive Deferred Compensation Plan dated August 14, 2001
and the Amended and Restated 1999 Supplemental Executive Retirement Plan dated
August 10, 2001 shall not be counted for purposes of the $5,000,000 limitation
set forth in this Section 9.20(b).
9.21 Environmental Matters. The Company will promptly give to the
Lenders notice in writing of any complaint, order, citation, notice or other
written communication from any Person with respect to, or if the Company becomes
aware after due inquiry of, (i) the existence or alleged existence of a
violation of any applicable Environmental Law or Environmental Liability at,
upon, under or within any property now or previously owned, leased, operated or
used by the Company or any of its Subsidiaries or any part thereof, or due to
the operations or activities of the Company, any Subsidiary or any other Person
on or in connection with such property or any part thereof (including receipt by
the Company or any Subsidiary of any notice of the happening of any event
involving the Release or cleanup of any Hazardous Substance), (ii) any Release
on such property or any part thereof in a quantity that is reportable under any
applicable Environmental Law, (iii) the commencement of any cleanup pursuant to
or in accordance with any applicable Environmental Law of any Hazardous
Substances on or about such property or any part thereof and (iv) any pending or
threatened proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law, in each of cases (i),
(ii), (iii) and (iv), (x) which could reasonably be expected to result in
liability or expenses in excess of $250,000 or (y) which individually or in the
aggregate could have a Material Adverse Effect.
59
9.22 Senior Notes. The Company shall not, and shall not permit any of
its Subsidiaries to, purchase, redeem, retire or otherwise acquire for value,
deposit any monies with any Person with respect to, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, any Senior Notes other than regularly scheduled payments of
interest in respect thereof required pursuant to the Senior Notes and the
Indenture.
9.23 Certain Obligations Respecting Guaranties and Collateral. (a) The
Company shall notify the Administrative Agent immediately if it knows, or has
reason to know, that any application or registration relating to any Copyright,
Patent or Trademark that is material to the business of the Company or any of
its Subsidiaries may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the institution of,
or any such determination or development in, any proceeding in the United States
Copyright Office, the United States Patent and Trademark Office, or any court)
regarding the Company's ownership of any Copyright, Patent or Trademark that is
material to the business of the Company or any of its Subsidiaries, its right to
register or patent the same, or to keep and maintain the same. In the event that
any right to Copyright, Copyright License, Patent, Patent License, Trademark or
Trademark License that is material to the business of the Company or any of its
Subsidiaries is infringed, misappropriated or diluted by a third party, the
Company shall notify the Administrative Agent promptly after it learns thereof
and shall promptly xxx for infringement, misappropriation or dilution or take
such other action as is appropriate to recover any and all damages for such
infringement, misappropriation or dilution, and take such other actions as the
Company shall reasonably deem appropriate under the circumstances to protect
such Copyright, Copyright License, Patent, Patent License, Trademark or
Trademark License; provided that the Company shall not be obligated to take any
action if, in its reasonable business judgment, the cost of such action exceeds
the benefit to be derived therefrom. Capitalized terms not otherwise defined in
this subsection (a) shall have the meanings ascribed to them in the Security
Documents.
(b) The Majority Lenders shall have the right from time to time to
require the Company, pursuant to a written request from the Administrative
Agent, to cause any domestic Subsidiary of the Company as may be specified in
such request to become a party to the Subsidiary Guaranty or to execute and
deliver such other guaranties, in form and substance satisfactory to the
Majority Lenders, guaranteeing payment of the Company's obligations hereunder
and to provide, or to cause such Subsidiary to provide, Liens upon such assets
as may be specified in such request to secure the obligations of the Company and
such Subsidiary hereunder and under the Subsidiary Guaranty or such other
guaranties. Any such request shall be made by the Majority Lenders in the good
faith exercise of their discretion. Within 30 days after any such request, the
Company shall, and shall cause such Subsidiary of the Company to, (i) execute
and deliver to the Administrative Agent such number of copies as the
Administrative Agent may specify of documents creating such guaranties and Liens
and (ii) do all other
60
things which may be necessary or which the Administrative Agent may reasonably
request in order to confer upon and confirm to the Lenders the benefits of such
security. Within 45 days after a request for security pursuant hereto, the
Company shall, and shall cause such Subsidiary of the Company to, deliver such
legal opinions, certificates, evidences of corporate action or other documents
as the Administrative Agent may reasonably request, all in form and substance
satisfactory to the Administrative Agent, relating to the satisfaction of the
Company's obligations under this Section.
Section 10. Defaults.
10.01 Events of Default. If one or more of the following events (herein
called "Events of Default") shall occur and be continuing:
(a) default in the payment of (i) the principal of any Loan or
any Reimbursement Obligation when due or of (ii) interest or any other
amount payable under the Financing Documents within three Business Days
after the due date thereof; or
(b) the Company or any of its Subsidiaries shall default in
the payment when due of any principal of or interest on Indebtedness
having an aggregate outstanding principal amount of at least $1,000,000
(other than the Loans); or any event or condition shall occur which
results in the acceleration of the maturity of any such Indebtedness or
enables (or, with the giving of notice or lapse of time or both, would
enable) the holder of any such Indebtedness or any Person acting on
such holder's behalf to accelerate the maturity thereof; or
(c) any representation or warranty made or deemed made by the
Company or any of its Subsidiaries in any Financing Document or in any
certificate furnished to any Lender or the Administrative Agent
pursuant to the provisions of any Financing Document, shall prove to
have been false or misleading in any material respect as of the time
made or furnished; or
(d) (i) the Company shall default in the performance of any of
its obligations under clauses (c) or (j) of Section 9.01, or Section
9.03 or Sections 9.08 through 9.22 hereof; (ii) any Subsidiary
Guarantor shall default in the performance of any of its obligations
under the Subsidiary Guaranty; or (iii) the Company or any Subsidiary
Guarantor shall default in the performance of any of its other
obligations in any Basic Document, and such default described in this
subclause (iii) shall continue unremedied for a period of 30 days after
notice thereof to the Company by the Administrative Agent or the
Majority Lenders (through the Administrative Agent); or
61
(e) the Company or any of its Subsidiaries shall admit in
writing its inability to, or be generally unable to, pay its debts as
such debts become due; or
(f) the Company or any of its Subsidiaries shall (i) apply for
or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or acquiesce in writing
to, any petition filed against it in an involuntary case under the
Bankruptcy Code, or (vi) take any corporate or partnership action for
the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application or consent of the Company or any of its Subsidiaries in any
court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such Person or of all or any
substantial part of its assets, or (iii) similar relief in respect of
such Person under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 days;
or an order for relief against such Person shall be entered in an
involuntary case under the Bankruptcy Code; or
(h) a final judgment or judgments for the payment of money
shall be rendered by a court or courts against the Company or any of
its Subsidiaries in excess of $250,000 in the aggregate, and the same
shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured,
within 10 days from the date of entry thereof, or the Company or such
Subsidiary shall not, within said period of 10 days, or such longer
period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during
such appeal; or
(i) the Company or any member of the Controlled Group shall
fail to pay when due an amount or amounts aggregating in excess of
$250,000 which it shall have become liable under Title IV of ERISA; or
notice of intent to terminate a Plan or Plans having aggregate Unfunded
Liabilities in excess of $250,000 shall be filed under Title IV of
ERISA by the Company or any member of the Controlled Group, any plan
administrator
62
or any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
to cause a trustee to be appointed to administer, any such Plan or
Plans; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans
must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could
cause the Company or one or more members of the Controlled Group to
incur a current payment obligation in excess of $250,000; or
(j) any of the Assigned Agreements shall be terminated prior
to the end of its stated term, or shall cease to be in full force and
effect prior to the end of its stated term, for whatever reason,
without the prior consent of the Majority Lenders; or
(k) (i) as a result of one or more transactions after the date
of this Agreement, any "person" or "group" of persons (other than Xxxx
Xxxxxx, his lineal descendants or trusts established by Xxxx Xxxxxx for
his lineal descendants) shall have "beneficial ownership" (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended, and the applicable rules and regulations thereunder)
of 30% or more of the outstanding common stock of the Company; or (ii)
without limiting the generality of the foregoing, during any period of
12 consecutive months, commencing after the date of this Agreement,
individuals who at the beginning of such 12-month period were directors
of the Company shall cease for any reason to constitute a majority of
the board of directors of the Company; or (iii) Xxxx Xxxxxx, his lineal
descendants and trusts established by Xxxx Xxxxxx for his lineal
descendants shall have "beneficial ownership" of 40% or more of the
outstanding common stock of the Company; or
(l) (i) any Security Document or the Subsidiary Guaranty shall
cease, for any reason, to be in full force and effect or any party
thereto (other than the Lenders) shall so assert in writing; or (ii)
any Security Document shall cease to be effective to xxxxx x Xxxx on
the collateral described therein with the priority purported to be
created thereby.
THEREUPON: the Administrative Agent may (and, if directed by the
Majority Lenders, shall) (a) declare the Working Capital Commitments terminated
(whereupon the Working Capital Commitments shall be terminated) and/or (b)
terminate any Letter of Credit providing for such termination by sending a
notice of termination as provided therein (and/or, in the case of the IRB Letter
of Credit, notify the trustee for the bonds secured by the IRB Letter of Credit
of such Event of Default and direct the trustee to declare an event of default
with respect to and
63
accelerate such bonds, draw under the IRB Letter of Credit and exercise remedies
under the bond documents, and/or by notice to the Company, the trustee and
remarketing agent for such bonds, terminate the liquidity period therefor)
and/or (c) declare the principal amount then outstanding of and the accrued
interest on the Loans and Reimbursement Obligations and commitment fees, letter
of credit fees and all other amounts payable hereunder and under the Notes to be
forthwith due and payable, whereupon such amounts shall be and become
immediately due and payable, without notice (including, without limitation,
notice of intent to accelerate), presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the Company
and/or (d) exercise any or all rights and remedies authorized or provided for in
the Security Documents or under applicable law; provided that in the case of the
occurrence of an Event of Default with respect to the Company referred to in
clause (f) or (g) of this Section 10.01, the Working Capital Commitments shall
be automatically terminated and the principal amount then outstanding of and the
accrued interest on the Loans and Reimbursement Obligations and commitment fees,
letter of credit fees and all other amounts payable hereunder and under the
Notes shall be and become automatically and immediately due and payable, without
notice (including, without limitation, notice of intent to accelerate),
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company.
10.02 Collateral Account. The Company hereby agrees, in addition to the
provisions of Section 10.01 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the
Administrative Agent or the Majority Lenders, pay (and, in the case of any Event
of Default with respect to the Company referred to in clause (f) or (g) of
Section 10.01 hereof, forthwith, without any demand or the taking of any other
action by the Lenders, it shall automatically be obligated to pay) to the
Administrative Agent an amount in immediately available funds equal to the then
aggregate amount available for drawings under all Letters of Credit issued for
the account of the Company, which funds shall be held by the Administrative
Agent in the Collateral Account maintained by the Company pursuant to the
Security Documents, and be subject to investment and withdrawal only as provided
therein.
Section 11. The Administrative Agent.
11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the Letters of Credit and the other Basic Documents with
such powers as are specifically delegated to the Administrative Agent by the
terms hereof and thereof, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this Section
11 shall include reference to its affiliates and its and its affiliates'
officers, directors, employees and agents and to JPMorgan Chase acting in its
individual capacity hereunder as issuer of Letters of Credit): (a) shall have no
duties or
64
responsibilities except those expressly set forth in this Agreement, the Letters
of Credit and the other Basic Documents, and shall not by reason of this
Agreement, the Letters of Credit or any other Basic Document be a trustee for
any Lender; (b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, the
Letters of Credit or any other Basic Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement, the Letters of Credit or any other Basic Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Letters of Credit or any other Basic Document or any other
document referred to or provided for herein or therein or for any failure by the
Company or any of its Subsidiaries or any other Person to perform any of its
obligations hereunder or thereunder; (c) shall not be required to initiate or
conduct any litigation or collection proceedings hereunder or under any other
Basic Document except to the extent requested by the Majority Lenders, and (d)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or under the Letters of Credit, any other Basic Document or any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or willful
misconduct. The Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Without in any way
limiting any of the foregoing, each Lender acknowledges that the Administrative
Agent shall have no greater responsibility in the operation of Letters of Credit
than is specified in the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500 (or any
replacement or revision thereof in effect from time to time).
11.02 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Administrative Agent.
As to any matters not expressly provided for by this Agreement, the Letters of
Credit or any other Basic Document, the Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Majority Lenders and
such instructions of the Majority Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.
11.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or Reimbursement Obligations) unless the
Administrative Agent has received notice from a Lender or the Company specifying
such Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the
65
Administrative Agent shall give prompt notice thereof to the Lenders (and shall
give each Lender prompt notice of each such non-payment). The Administrative
Agent shall (subject to Section 11.07 hereof) take such action with respect to
such Default as shall be directed by the Majority Lenders, provided that, unless
and until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interests of the Lenders.
11.04 Rights as a Lender. With respect to its Working Capital
Commitments and the Loans made and Letter of Credit Liabilities held by it,
JPMorgan Chase in its capacity as a Lender hereunder shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Administrative Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Administrative Agent
in its individual capacity. The Administrative Agent may (without having to
account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with the
Company (and any of its Affiliates) as if it were not acting as the
Administrative Agent, and the Administrative Agent may accept fees and other
consideration from the Company (in addition to the agency fees and arrangement
fees heretofore agreed to between the Company, the Administrative Agent for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
11.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 2.02(g), 12.03
or 12.04 hereof, but without limiting the obligations of the Company under said
Sections 2.02(g), 12.03 and 12.04), ratably in accordance with their respective
Working Capital Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement, the Letters of Credit or any other Basic Document or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Company is obligated to pay under Sections 2.02(g),
12.03 and 12.04 hereof but excluding, unless a Default has occurred and is
continuing, normal administrative costs and expenses incident to the performance
of its agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
11.06 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
66
information as it has deemed appropriate, made its own credit analysis of the
Company and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement, the Letters of Credit or any of the other
Basic Documents. The Administrative Agent shall not be required to keep itself
informed as to the performance or observance by the Company (other than
maintaining records of payments by the Company to it) or any other Person of
this Agreement or any of the other Basic Documents or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Company or any other Person. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, under the Letters of Credit or the other
Basic Documents, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Company or any
other Person (or any of their affiliates) which may come into the possession of
the Administrative Agent.
11.07 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, under the Letters of Credit and under the other
Basic Documents, the Administrative Agent shall in all cases be fully justified
in failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction by the Lenders of their indemnification
obligations under Section 11.05 hereof against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
11.08 Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Company and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent reasonably acceptable to the Company. If no
successor Administrative Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Administrative Agent (the "Notice Date"), then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent reasonably acceptable to the Company. Any
successor Administrative Agent shall be (i) a Lender or (ii) if no Lender has
accepted such appointment within 40 days after the Notice Date, a bank which has
an office in New York, New York with a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
67
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Section 11 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Administrative Agent.
11.09 Collateral Sub-Agents. Each Lender by its execution and delivery
of this Agreement agrees, as contemplated by the Security Documents, that, in
the event it shall hold any Liquid Investments referred to therein, such Liquid
Investments shall be held in the name and under the control of such Lender and
such Lender shall hold such Liquid Investments as a collateral sub-agent for the
Administrative Agent thereunder.
Section 12. Miscellaneous.
12.01 Waiver. No failure on the part of the Administrative Agent or any
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under any Basic Document shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege thereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The remedies provided in
the Basic Documents are cumulative and not exclusive of any remedies provided by
law.
12.02 Notices. All notices and other communications provided for herein
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made by telex, telegraph, telecopy,
cable or other writing and telexed, telecopied, telegraphed, cabled, mailed or
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof; or, as to any party, at such other
address as shall be designated by such party in a notice to the Company and the
Administrative Agent given in accordance with this Section 12.02. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telex or telecopier, delivered to the
telegraph or cable office or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
12.03 Expenses, Etc. The Company agrees to pay or reimburse each of the
Lenders and the Administrative Agent for paying: (a) the reasonable fees and
expenses of Xxxxx Xxxx & Xxxxxxxx, special counsel to the Administrative Agent,
and special local counsel to the Administrative Agent in the States in which the
Mortgages are recorded in connection with (i) the preparation, execution and
delivery of this Agreement (including the Exhibits hereto) and the Security
Documents and the making of the Loans and issuance of Letters of Credit
hereunder and (ii) any modification, supplement or waiver of any of the terms of
this Agreement, the Letters of Credit or any other Basic Document; (b) if an
Event
68
of Default occurs, all costs and expenses of each of the Lenders and the
Administrative Agent (including reasonable counsels' fees) incurred as a result
of such Event of Default and collection, enforcement, bankruptcy, insolvency and
other proceedings resulting therefrom; (c) all costs, expenses, taxes,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any lien or security interest
contemplated by this Agreement, any Security Document or any document referred
to herein or therein; and (d) all costs, expenses and other charges in respect
of title insurance procured with respect to the Liens created pursuant to the
Mortgages.
12.04 Indemnification. The Company shall indemnify the Administrative
Agent, the Lenders and each affiliate thereof and their respective directors,
officers, employees, attorneys and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims or damages to which any of them
may become subject, insofar as such losses, liabilities, claims or damages arise
out of or result from (i) any actual or proposed use by the Company of the
proceeds of any extension of credit (whether a Loan or a Letter of Credit) by
any Lender hereunder or breach by the Company of this Agreement or any other
Basic Document, (ii) any Environmental Liabilities, (iii) any accident, injury
to or death of Persons or loss of or damage to property occurring in, on or
about any of the Plants or on any sidewalks, curbs, property or parking areas
adjoining the Plants, (iv) the performance of any labor or services or the
furnishing of any materials or other property in respect of any of the Plants,
or (v) any investigation, litigation or other proceeding (including any
threatened investigation or proceeding) relating to the foregoing, whether or
not the indemnified Person is a party thereto, and the Company shall reimburse
the Administrative Agent and each Lender, and each affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any
expenses (including legal fees and fees of engineers, environmental consultants
and similar technical personnel) incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities, claims,
damages or expenses incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified or as a result of a successful suit
by the Company seeking to enforce its rights against such Person under the
Financing Documents.
12.05 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or the Notes or any other Financing Document, nor any consent to any
departure by the Company therefrom, shall in any event be effective unless the
same shall be agreed or consented to by the Majority Lenders and the Company,
and each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, that no amendment,
waiver or consent shall, unless in writing and signed by all the Lenders, do any
of the following: (i) increase any Working Capital Commitment of any of the
Lenders or subject the Lenders to any additional obligations; (ii) reduce the
principal of, or interest on, any Loan, Reimbursement Obligation or fees
hereunder; (iii) postpone any date fixed for any payment of principal of, or
69
interest on, any Loan, Reimbursement Obligation or fee hereunder pursuant to
Sections 2.02, 2.04, 4.01 or 4.02 hereof; (iv) change the percentage of any of
the Working Capital Commitments or of the aggregate unpaid principal amount of
any of the Loans and Letter of Credit Liabilities, or the number of Lenders,
which shall be required for the Lenders or any of them to take any action under
this Agreement; (v) change any provision contained in Sections 2.08, 6, 12.03 or
12.04 hereof or this Section 12.05 or Section 12.08 hereof; or (vi) release all
or a substantial portion of the security for the obligations of the Company
under this Agreement or any Note. Notwithstanding anything in this Section 12.05
to the contrary, no amendment, waiver or consent shall be made with respect to
Section 11 without the consent of the Administrative Agent.
12.06 Successors and Assigns. (a) This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that the Company may not assign its rights or obligations
hereunder or under the Notes without the prior written consent of all of the
Lenders. Each Lender may assign any Loan or Loans or Letter of Credit
Liabilities or all or any part of its Working Capital Commitments (i) to any
affiliate thereof, (ii) to any other Lender, or (iii) with the consent of the
Administrative Agent, which consent shall not be unreasonably withheld, to any
other bank or financial institution or fund; provided that any assignment shall
not be less than $2,000,000 or, if less, shall constitute an assignment of all
of such Lender's Working Capital Commitments, Loans and Letter of Credit
Liabilities. Upon execution by the assignor and the assignee of an instrument
pursuant to which the assignee assumes such rights and obligations, payment by
such assignee to such assignor of an amount equal to the purchase price agreed
between such assignor and such assignee and delivery to the Administrative Agent
and the Company of an executed copy of such instrument together with payment by
such assignee to the Administrative Agent of a processing fee of $2,500, such
assignee shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights and benefits as it would have if it were a Lender
hereunder and the assignor shall be, to the extent of such assignment (unless
otherwise provided therein) released from its obligations under this Agreement.
Upon the consummation of such assignment, the Company shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor and the
assignee. If such assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the date of the
applicable instrument of assumption, deliver to the Company and the
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 5.08(f).
Each Lender may (without the consent of any other party to this Agreement) sell
participations in all or any part of any Loan or Loans made or Letter of Credit
Liabilities held by it to another bank or other entity, in which event the
participant shall not have any rights under this Agreement (except as provided
in the next succeeding sentence hereof), or in the case of a Loan, such Lender's
Note (the participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by
70
such Lender in favor of the participant relating thereto, which agreement shall
not give the participant the right to consent to any modification, amendment or
waiver other than one described in clause (i), (ii), (iii) or (vi) of Section
12.05 hereof). The Company agrees that each participant shall be entitled to the
benefits of Sections 5.07 and 6 with respect to its participation; provided that
no participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such participant had no such transfer occurred. Each Lender may furnish any
information concerning the Company and its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees and participants) which have agreed in writing to be bound
by the provisions of Section 12.07 hereof. The Administrative Agent and the
Company may, for all purposes of this Agreement, treat any Lender as the holder
of any Note drawn to its order (and owner of the Loans evidenced thereby) until
written notice of assignment or other transfer shall have been received by them
from such Lender. Notwithstanding anything to the contrary, any Lender may at
any time assign all or any portion of its rights under this Agreement, its Notes
and the other Financing Documents to a Federal Reserve Bank. No such assignment
shall release the transferor Lender from its obligations under the Financing
Documents.
(b) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC") of such Granting Lender, identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Company, the option
to provide to the Company all or any part of any Loan that such Granting Lender
would otherwise be obligated to make to the Company, provided that (i) nothing
herein shall constitute a commitment to make any Loan by any SPC and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by the Granting Lender. Each party hereto agrees that no SPC
shall be liable for any payment under this Agreement for which a Lender would
otherwise be liable, for so long as, and to the extent, the related Granting
Lender makes such payment. In furtherance of the foregoing, each party hereto
hereby agrees that, prior to the date that is one year and one day after the
payment in full of all outstanding senior indebtedness of any SPC, it will not
institute against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceedings under the laws of the United States or any State thereof.
In addition, notwithstanding anything to the contrary contained in this Section
12.06 any SPC may (i) with notice to, but without the prior written consent of,
the Company or the Administrative Agent and without paying any processing fee
therefor, assign all or portion of its interests in any Loans to its Granting
Lender or to any financial institutions (if consented to by the Company and the
Administrative Agent)
71
providing liquidity and/or credit facilities to or for the account of such SPC
to fund the Loans made by such SPC or to support the securities (if any) issued
by such SPC to fund such Loans and (ii) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of a surety, guarantee or credit or liquidity
enhancement to such SPC.
12.07 Confidentiality. Each Lender agrees to exercise all reasonable
efforts to keep confidential any information delivered or made available by the
Company to it which is clearly indicated to be confidential information;
provided that nothing herein shall prevent any Lender from disclosing such
information (i) to any other Lender, (ii) to its officers, directors, employees,
agents, attorneys and accountants who have a need to know such information in
accordance with customary banking practices and who receive such information
having been made aware of the restrictions set forth in this Section, (iii) upon
the order of any court or administrative agency, (iv) upon the request or demand
of any regulatory agency or authority having jurisdiction over such Lender, (v)
which has been publicly disclosed, (vi) to the extent reasonably required in
connection with any litigation to which the Administrative Agent, any Lender,
the Company or their respective affiliates may be a party, (vii) to the extent
reasonably required in connection with the exercise of any remedy hereunder,
(viii) to such Lender's legal counsel and independent auditors, and (ix) to any
actual or proposed participant or assignee of all or part of its rights
hereunder which has agreed in writing to be bound by the provisions of this
Section 12.07.
12.08 Survival. The obligations of the Company under Sections 2.02(g),
5.08, 6.01, 6.05, 6.06, 6.07, 12.03 and 12.04 hereof and the obligations of the
Lenders under Section 11.05 shall survive the repayment of the Loans and
Reimbursement Obligations and the termination of the Working Capital Commitments
and the Letters of Credit.
12.09 Captions. The table of contents and the captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
12.10 Counterparts; Integration. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral and written, relating to the subject matter
hereof (except to the extent specific reference is made to any such agreement in
Section 2.04 hereof).
12.11 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT AND THE NOTES SHALL BE
72
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE
COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 13. Conditions Precedent to Effectiveness.
13.01 Effectiveness. This Amended Agreement shall become effective on
the date (the "Effective Date") on which all of the following conditions
precedent shall have been fulfilled to the satisfaction of the Administrative
Agent:
(a) Corporate Action. The Administrative Agent shall have
received certified copies of the certificate of incorporation and
by-laws of the Company and each Subsidiary Guarantor and of all
corporate action taken by the Company and such Subsidiary Guarantor
authorizing the execution, delivery and performance of, in the case of
the Company, this Amended Agreement, and in the case of each Subsidiary
Guarantor, the Guarantor Acknowledgment (including, without limitation,
a certificate of the Company and such Subsidiary Guarantor setting
forth the resolutions of its Board of Directors authorizing the
transactions contemplated thereby).
(b) Incumbency. The Company and each Subsidiary Guarantor
shall have delivered to the Administrative Agent a certificate in
respect of the name and signature of each of the officers (i) who is
authorized to sign on its behalf, in the case of the Company, this
Amended Agreement, and in the case of each Subsidiary Guarantor, the
Guarantor Acknowledgment and (ii) who will, until replaced by another
officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices
and other communications in connection with the Basic Documents. The
Administrative Agent and
73
each Lender may conclusively rely on such certificates until it
receives notice in writing from the Company to the contrary.
(c) [Intentionally deleted.]
(d) Fees and Expenses. The Company shall have paid to the
Administrative Agent, for its account and for the account of the
Lenders, fees in the amounts previously agreed upon among the Company
and the Administrative Agent; and shall have in addition paid to the
Administrative Agent all amounts payable under Section 12.03 hereof on
or before the Effective Date.
(e) Opinions of Counsel to the Company. The Administrative
Agent shall have received opinions of Xxxx Xxxxx, General Counsel and
Secretary of the Company, and Ropes & Xxxx, Massachusetts counsel to
the Company, together substantially to the effect of Exhibit D hereto
and covering such other matters relating to the transactions
contemplated hereby as the Majority Lenders may reasonably request.
(f) Opinion of Special Counsel to the Administrative Agent.
The Administrative Agent shall have received an opinion of Xxxxx Xxxx &
Xxxxxxxx, substantially in the form of Exhibit E hereto, with such
changes as are satisfactory to the Administrative Agent, and covering
such other matters relating to the transactions contemplated hereby as
the Majority Lenders may reasonably request.
(g) Projections. Each of the Lenders shall have received a
copy of, and shall be satisfied with, projections of the financial
condition, income and cash flow of the Company and its Subsidiaries for
the fiscal years 2002 through 2006 prepared by management of the
Company.
(h) Machinery and Equipment Certificate. The Lenders shall
have received a certificate of a Senior Officer satisfactory to the
Administrative Agent setting forth the net book value of all material
machinery and equipment of the Company and its Subsidiaries acquired
since June 19, 2001 that is operational on the Effective Date.
(i) Counterparts. The Administrative Agent shall have received
counterparts of this Amended Agreement and the Guarantor Acknowledgment
executed and delivered by or on behalf of each of the parties thereto
(or, in the case of any Lender as to which the Administrative Agent
shall not have received such a counterpart, the Administrative Agent
shall have received evidence satisfactory to it of the execution and
delivery by such Lender of a counterpart of this Amended Agreement).
74
(j) Other Documents. The Administrative Agent shall have received
such other documents relating to the transactions contemplated hereby
(including, without limitation, additional collateral documentation and
certificates of officers of the Company) as the Administrative Agent
may reasonably request.
On the Effective Date the Original Agreement will be automatically
amended and restated in its entirety to read as set forth herein. On and after
the Effective Date (i) the rights and obligations of the parties hereto shall be
governed by this Amended Agreement; provided that rights and obligations of the
parties hereto with respect to the period prior to the Effective Date shall
continue to be governed by the provisions of the Original Agreement as in effect
prior to the Effective Date, and (ii) each reference to "the date hereof" shall
mean "the Effective Date". From and including the Effective Date, (i) the
Working Capital Commitment of each Lender shall be the amount set forth opposite
the name of such Lender on the signature pages hereof, as such amount may be
reduced from time to time pursuant to Section 2.03 hereof, and (ii) each of
Fleet National Bank and Wachovia Bank, National Association (x) shall be
released from its obligations (and shall have no rights other than the right to
any payment due to it) under the Original Agreement and (y) shall have no rights
or obligations under this Amended Agreement.
75
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
APPLIED EXTRUSION TECHNOLOGIES,
INC.
By: /s/ Xxxx X. Xxxxx
------------------------------------
Title: Vice President and Treasurer
Address for Notices:
Applied Extrusion Technologies, Inc.
Three Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telecopy Number: 000-000-0000
Copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
Telecopy Number: 000-000-0000
76
Working Capital JPMORGAN CHASE BANK
Commitment:
$14,000,000
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Title: Managing Director
77
Working Capital LASALLE BUSINESS CREDIT, INC.
Commitment:
$13,000,000
By: /s/ Xxxxxxxx X. Xxxxxx
--------------------------------
Title: Assistant Vice President
78
Working Capital PNC BANK, N.A.
Commitment:
$13,000,000
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------
Title: Vice President
79
Working Capital PROVIDENT BANK
Commitment:
$10,000,000
By: /s/ Xxxx X. Xxxxxxxxxxxxx
--------------------------------
Title: Vice President
80
Total Working Capital Commitments
$50,000,000
JPMORGAN CHASE BANK,
as Administrative Agent
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Title: Managing Director
Address for Notices:
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Loan & Agency Services
Telecopy Number: (000) 000-0000
Copies to:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Telecopy Number: (212) 270-7939
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxxxx
Telecopy Number: (000) 000-0000
81
Each of the undersigned acknowledges and agrees to the last sentence of
Section 13.01 above.
FLEET NATIONAL BANK
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Title: Assistant Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Title: Director
82
SCHEDULE I
ASSIGNED AGREEMENTS
1. Sale and Purchase Agreement between Hercules Incorporated and Applied
Extrusion Technologies, Inc., dated as of March 8, 1994.
2. Asset Purchase Agreement dated as of May 3, 2001 among Applied Extrusion
Technologies, Inc., QPF, LLC and Hood Companies, Inc. and each ancillary
agreement (including, without limitation, the Inventory Note and Inventory
Security Agreement) referred to therein.
SCHEDULE II
Security Documents
Title Insurance
Mortgage/Deed of Trust Amount
Mortgage, Assignment of Leases and Rents, Security $13,900,000 (increased
Agreement and Financing Statement dated as of September 25, 2002 from
April 6, 1994 between the Company and the $8,375,000) (Lawyers
Administrative Agent, relating to U.S. Highway Title Insurance
41N, Terre Haute, Indiana, recorded April 7, 1994 Corporation Policy #
in Mortgage Record May P-20, Page 1528 in the 000-00-000000, as
records of Recorder's Office of Vigo County, endorsed January 28,
Indiana, as amended by (1) Amendment No. 1 to 1998, May 15, 2000,
Mortgage, Assignment of Leases and Rents, Security January 22, 2001 and
Agreement and Financing Statement dated as of September 25, 2002)
January 29, 1998, recorded with Vigo County
Recorder on February 9, 1998 in Mortgage Record
and T-20, Page 543, (2) Amendment No. 2 to
Mortgage, Assignment of Leases and Rents, Security
Agreement and Financing Statement dated as of
April 12, 2000, recorded with Vigo County Recorder
on May 1, 2000 in Mortgage Record V-20, Page
12027, (3) Amendment No. 3 to Mortgage, Assignment
of Leases and Rents Security Agreement and
Financing Statement dated as of December 15, 2000,
recorded with Vigo County Recorder on December 27,
2000 in Mortgage Record V-20, Page 42480, and (4)
Amendment No. 4 to Mortgage, Assignment of Leases
and Rents, Security Agreement and Financing
Statement dated as of September 20 2002, recorded
with Vigo County Recorder on September 25, 2002 as
Instrument No. 200227076.
Mortgage/Deed of Trust Title Insurance Amount
Deed of Trust, Assignment of Leases and $5,875,000
Rents, Security Agreement and Financing (Lawyers Title Insurance Corporation
Statement dated as of April 6, 1994 Policy # 000-00-000000, as endorsed
between the Company and the February 17, 1998, June 26, 2000,
Administrative Agent, relating to Xxxxxx January 22, 2001 and September 00,
Xxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxx, 2002)
Virginia, recorded in Deed Book 337,
Page 589 in the Clerk's Office of
Circuit Court for County of Allegheny,
Commonwealth of Virginia, as amended by
(1) Amendment No. 1 to Deed of Trust,
Assignment of Leases and Rents, Security
Agreement and Financing Statement dated
as of January 29, 1998, recorded with
Clerk's Office of the Circuit Court of
Allegheny County on February 17, 1998 in
Deed Book 383, Page 1447, (2) Amendment
No. 2 to Deed of Trust, Assignment of
Leases and Rents, Security Agreement and
Financing Statement, dated as of April
12, 2000, recorded with Clerk's Office
of the Circuit Court of Allegheny County
on June 3, 2000 in Deed Book 418, Page
105, (3) Amendment No. 3 to Deed of
Trust, Assignment of Leases and Rents,
Security Agreement and Financing
Statement, dated as of December 15,
2000, recorded with Clerk's Office of
the Circuit Court of Allegheny County on
December 29, 2000 in Deed Book 426, Page
258, and (4) Amendment No. 4 to Deed of
Trust, Assignment of Leases and Rents,
Security Agreement and Financing
Statement, dated as of September 20,
2002, recorded with Clerk's Office of
the Circuit Court of Allegheny County on
September 27, 2002 as Instrument No.
020003161.
2
Mortgage/Deed of Trust Title Insurance Amount
Deed of Movable and Immovable Hypothec $1,603,913
dated April 7, 1994 between Applied (First America Title Insurance
Extrusion Technologies (Canada) Inc. and Company Policy # PQL00000002, as
the Administrative Agent, relating to endorsed on February 17, 1998)
0000 Xxxxxx xx xx Xxxxxxxx, Xxxxxxxx,
Xxxxxx, registered April 15, 1994 as
Instrument No. 272411, as amended by a
Supplemental Deed of Movable and
Immovable Hypothec dated January 29,
1998, registered February 17, 1998 as
Instrument No. 300760, as extended on
August 1, 2002 to July 31, 2012.
Other Security Documents
1. Company Security Agreement dated as of April 7, 1994 between the Company and
the Administrative Agent, substantially in the form of Exhibit F to the
Credit Agreement (the "Company Security Agreement").
2. Company Pledge Agreement dated as of April 7, 1994 between the Company and
the Administrative Agent, substantially in the form of Exhibit G to the
Credit Agreement.
3. Patent Security Agreement dated as of April 7, 1994 between the Company and
the Administrative Agent in the form attached as Exhibit B to the Company
Security Agreement.
4. Trademark Security Agreement dated as of April 7, 1994 between the Company
and the Administrative Agent in the form attached as Exhibit C to the
Company Security Agreement.
3
SCHEDULE III
[intentionally deleted]
SCHEDULE IV
Special Account Debtors
Receivables due from each of the following account debtors may be included in
Eligible Receivables without regard to the limitation imposed by clause (i) of
the definition of Eligible Receivables:
None.
The Administrative Agent (with the consent of the Majority Lenders) may notify
the Company from time to time of additions to or deletions from this Schedule or
of the maximum percentage of the aggregate of all Receivables for which the
account debtors (if any) set forth above are approved.
SCHEDULE V
Investments
Subsidiaries of Applied Extrusion Technologies, Inc.
1. Applied Extrusion Technologies (Canada), Inc.
2. Applied Extrusion Technologies, Limited
SCHEDULE VI
Credit Agreements, Letters of Credit, Liens, etc.
The Company's obligations under the City of Salem, Massachusetts Flexible Mode
Industrial Development Revenue Bonds in the original principal amount of
$6,500,000.
SCHEDULE VII
Environmental Matters
1. Asbestos is present throughout the facilities located in Covington,
Virginia ("Xxxxxxxxx") and Terre Haute, Indiana ("Terre Haute").
2. An open AST issue at Covington exists in regard to an abandoned, removed
AST formerly used for "used machine lubrications" where ground
contamination was detected and corrected. All DEQ notifications are in
order.
3. The Xxxxxxxxx facility has three wastewater lagoons which are permitted by
the VPDES. Phase II testing at and near the site of the lagoons indicates
that there may be levels of 1,1-dichloroethene and heptachlor epoxide
exceeding levels of state regulatory concern. This is monitored each time a
permit is renewed. No EPA or DEQ monitoring or correction action has been
mandated.
4. The Xxxxxxxxx facility is listed on CERCLIS with the notation "no further
action". The Company is aware that two disposal sites used in connection
with the Xxxxxxxxx facility, Cyanokem, in Detroit, Michigan and Chem Met
Services in Wyandotte, Michigan are listed on the Michigan State Priority
List.
5. There is a former on-site solid waste disposal area at Xxxxxxxxx (not
including the area to be retained by Hercules, Inc. known as the Hercules
Industrial Landfill) located near the wastewater lagoon. Results of testing
conducted at or near this area are described in no. 4 above.
6. Approximately 2,400 gallons of no. 2 fuel oil were released as a result of
the overfill of an aboveground fuel oil storage tank at Terre Haute.
7. The facility located in Varennes, Quebec has conducted training at a "fire
practice area" where small amounts of gasoline, no. 2 fuel oil and kerosene
were ignited. It is possible that some of the petroleum compounds were
spilled and/or spread on the soils in the area.
8. The Company has received an information request with respect to the Solvent
Recovery Services of New England Site in Southington, Connecticut. A
predecessor entity has assumed responsibility for that notice.
9. Covington air permit is pending Virginia DEQ approval. Terre Haute water
and air permits are pending IDEM action.
10. Terre Haute's pH levels have exceeded the pH parameters of its NPDES permit
at times.
11. Written Notices have been received by:
a. Terre Haute for exceeding drinking water lead and copper levels.
(corrective action implemented and plan submitted to IDEM for approval).
Awaiting IDEM feedback/approval of plan.
x. Xxxxxxxxx has received one "Warning Letter" from DEQ for not inspecting
an abandoned A.S.T. (tank removed as corrective action), and not having
two AST level gages at loading station for the 2 fuel oil tanks. (2 tank
gages were installed).
c. "Warning Letters" received from DEQ for missing data on V.P.D.E.S. DMR
reports. Warning letter is the most minimal method of formal
communication from DEQ. All corrections to data submitted. No pending
action.
x. Xxxxxxxxx has received "Warning Letters" for vegetation control on lab
methods under VPDES permit. Corrective actions taken. No pending
actions.
12. There are two underground fuel oil storage tanks at Terre Haute that have
been "environmentally cleaned" and abandoned in place. Formal IDEM closure
conducted.
13. Threshold planning quantities of hazardous substances exist at Terre Haute
and Xxxxxxxxx such as VDC, sulfuric acid, MMA, etc. All are used for raw
materials to processes.
2
SCHEDULE VIII
Insurance
Type: Property
Insurer: FM Global Insurance Company
Effective Date: 10/1/01 - 10/1/02
$702,961,000 Blanket
$100,000,000 Earthquake (Annual Aggregate)
$100,000,000 Flood (Annual Aggregate)
Note #1: Additional sublimits apply. Refer to policy forms.
Note #2: Coverage includes U.S. and Canada
Note #3: Coverage includes Business Interruption and Boiler and
Machinery coverages
--------------------------------------------------------------------------------
Type: Workers' Compensation
Insurer: Travelers Insurance Company
Effective Date: 8/1/01 - 10/1/02
Statutory Benefits (Workers' Compensation)
$500,000 (Employer's Liability)
--------------------------------------------------------------------------------
Type: Comprehensive General Liability (including
premises and operations liability as well as products
and completed operations liability coverage,
including Canada operations)
Insurer: Travelers Insurance Company
Effective Date: 8/1/01 - 10/1/02
Limit: $1,000,000 Each Occurrence
$2,000,000 Products/Completed Operations Aggregate
$2,000,000 General Aggregate
--------------------------------------------------------------------------------
Type: Automobile Liability
Insurer: Travelers Insurance Company
Effective Date: 8/1/01 - 10/1/02
Limit: $1,000,000 each occurrence; includes Canada
(Combined Single Limit)
--------------------------------------------------------------------------------
Type: Comprehensive Crime Coverage
Insurer: National Union Fire Insurance Company
Effective Date: 10/1/01 - 10/1/02
Limit: $3,000,000 single loss limit
--------------------------------------------------------------------------------
Type: Ocean Cargo and Inland Marine
Insurer: American Home Assurance Company
Effective Date: 10/1/01 - 10/1/02
Limit: $1,000,000 limit per shipment; covers shipments in
transit, worldwide coverage
--------------------------------------------------------------------------------
Type: Foreign Liability
Insurer: The Insurance Company of The State of Pennsylvania
Effective Date: 10/1/01 - 10/1/02
$1,000,000 CSL Commercial General Liability
including Products Liability for occurrences emanating
from Foreign Operations
$1,000,000 CSL Automobile DIC/Excess Liability
Foreign Voluntary Workers' Compensation
$1,000,000 Employer's Liability
$100,000 Repatriation Expense
--------------------------------------------------------------------------------
Type: Umbrella/Excess Liability
Insurer: Fireman's Fund Insurance Company
Effective Date: 10/1/01 - 10/1/02
Limit: $50,000,000
2
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ________ __, ____ among [NAME OF ASSIGNOR] (the
"Assignor") and [NAME OF ASSIGNEE] (the "Assignee").
WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates
to the Credit Agreement dated as of April 7, 1994 and amended and restated as of
September 20, 2002 (as further amended from time to time, the "Credit
Agreement") among Applied Extrusion Technologies, Inc. (the "Borrower"), the
Lenders party thereto and JPMorgan Chase Bank, as Administrative Agent;
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Credit Agreement in respect of [a portion of] its
Loans Working Capital Commitment thereunder in an amount equal to $__________[,
together with a corresponding portion of each of its outstanding Loans and its
Letter of Credit Liabilities] (the "Assigned Amount"), and the Assignee proposes
to accept such assignment and assume the corresponding obligations of the
Assignor under the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms not otherwise defined herein
have the respective meanings set forth in the Credit Agreement.
Section 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount. Upon the execution and
delivery hereof by the Assignor and the Assignee [and the execution of the
consent attached hereto by the Administrative Agent]/1/ and the payment of the
amounts specified in Section 3 required to be paid on the date hereof, (i) the
Assignee shall, to the extent of the Assigned Amount, have the rights and
obligations of a Lender under the Credit Agreement and (ii) except as otherwise
provided in the Credit Agreement, the Assignor shall, to the extent of the
Assigned Amount, relinquish its rights and be released from its obligations
under the Credit Agreement. The assignment provided for herein shall be without
recourse to the Assignor.
Section 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date
-------------------------
/1/ Delete if consent is not required.
hereof in Federal funds the amount heretofore agreed between them./2/ Fees
accrued before the date hereof with respect to amounts assigned to the Assignee
hereunder are for the account of the Assignor and such fees accruing on and
after the date hereof with respect to such amounts are for the account of the
Assignee. Each of the Assignor and the Assignee agrees that if it receives any
amount under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to the
extent of such other party's interest therein and promptly pay the same to such
other party.
[Section 4. Consent of the Administrative Agent. This Agreement is
conditioned upon the consent of the Administrative Agent pursuant to Section
12.06 of the Credit Agreement.]/3/
Section 5. No Reliance on Assignor. The Assignor makes no representation or
warranty in connection with, and shall have no responsibility with respect to,
the solvency, financial condition or statements of the Borrower, or the validity
and enforceability of the Borrower's obligations under the Credit Agreement or
any promissory note. The Assignee acknowledges that it has, independently and
without reliance on the Assignor, and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and will continue to be responsible for making its own
independent appraisal of the business, affairs and financial condition of the
Borrower.
Section 6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
Section 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
-----------------------
/2/ Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
/3/ Delete if consent is not required.
2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By: _______________________________
Name:
Title:
[NAME OF ASSIGNEE]
By: _______________________________
Name:
Title:
The undersigned consents to the foregoing assignment. /4/
JPMORGAN CHASE BANK,
as Administrative Agent
By: _______________________________
Name:
Title:
---------------------------
/4/ Delete signature block if consent is not required.
0
XXXXXXX X
XXXXXXXXXX XXXX
Xxx Xxxx, Xxx Xxxx
_________ __, ____
FOR VALUE RECEIVED, Applied Extrusion Technologies, Inc., a Delaware
corporation, (together with its successors, the "Company"), hereby promises to
pay to ___________________ (the "Lender"), or order, at the principal office of
JPMorgan Chase Bank at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, the
aggregate unpaid principal amount of the Loans made by the Lender to the Company
under the Credit Agreement referred to below, in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
The Lender is hereby authorized by the Company to endorse on the schedule
(or a continuation thereof) attached to this Note, the date and amount of each
Loan made by the Lender to the Company under the Credit Agreement, and the date
and amount of each payment or prepayment of principal of such Loan received by
the Lender, provided that any failure by the Lender to make any such endorsement
or any error in such endorsement shall not affect the obligations of the Company
under the Credit Agreement or under this Note in respect of such Loan.
This Note is one of the Notes referred to in the Credit Agreement (as
modified and supplemented and in effect from time to time, the "Credit
Agreement") dated as of April 7, 1994 and amended and restated as of September
20, 2002 among the Company, the lenders named therein (including the Lender) and
JPMorgan Chase Bank, as Administrative Agent, and evidences Loans made by the
Lender thereunder. Capitalized terms used in this Note have the respective
meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of Loans upon the
terms and conditions specified therein.
Pursuant to the Subsidiary Guaranty dated as of April 7, 1994 and the
Guarantor Acknowledgment dated as of September 20, 2002, each by Applied
Extrusion Technologies (Canada), Inc. (the "Subsidiary Guarantor") in favor of
the Administrative
Agent and the Lenders, payment of principal and interest on this Note is
unconditionally guaranteed by the Subsidiary Guarantor.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By: _______________________________
Name:
Title:
2
SCHEDULE
This Note evidences Loans made under the within-described Credit Agreement to
the Company in the principal amounts set forth below, which Loans were made on
the dates set forth below, subject to the payments and prepayments of principal
set forth below:
Date of
Date Made Principal Payment or Amount Paid Balance
Amount of Loan Prepayment or Prepaid Outstanding
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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--------------------------------------------------------------------------------
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EXHIBIT C
BORROWING BASE CERTIFICATE
Reference is made to the Credit Agreement dated as of April 7, 1994 and
amended and restated as of September 20, 2002 (as modified and supplemented and
in effect from time to time, the "Credit Agreement") among Applied Extrusion
Technologies, Inc., a Delaware corporation (the "Company"), the lenders named
therein and JPMorgan Chase Bank, as Administrative Agent. Terms defined in the
Credit Agreement are used herein as defined therein.
Pursuant to Section 9.01(c) of the Credit Agreement, the undersigned,
through an authorized officer of the Company, hereby certifies that, to the best
of its knowledge, attached hereto as Annex 1 is, in all material respects, a
true and accurate calculation of the Borrowing Base as at the monthly accounting
period ended _____________, ____ determined in accordance with the requirements
of the Credit Agreement, together with an inventory schedule and a summary by
client of aging of receivables.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly
executed as of the __ day of ____________, ____.
Applied Extrusion Technologies, Inc.
_________________________________
By:
Title:
ANNEX 1
Borrowing Base Certificate
(all numbers in thousands
unless otherwise indicated)
********************************************************************************
Gross Receivables -- beginning balance
period ended __________, 200_ ________
Rebates, credits and offsets ________
Commissions payable to third parties ________
Net Receivables -- beginning balance
period ended __________, 200_ ________
Plus: total sales for period ________
Less: total cash receipts for period ________
total credits for period
(returns and allowances) ________
total increase (decrease) in
offsets for period ________
total other adjustments
for period (+/-) (details
attached) including rebates
and credits ________
Net Receivables -- ending balance
period ended ________, 200_ ________
Less: ineligible Receivables at period end
(determined pursuant to definition
of Eligible Receivables in Credit
Agreement, without duplication):
Receivables due more than 60 days from
invoice date ________
Receivables due from an account debtor whose
principal place of business is located outside
the United States of America and Canada ________
Receivables due from (i) an Affiliate
of the Company or (ii) bankrupt or
insolvent account debtors or account debtors
with unsatisfactory credit standing (as
determined by the Majority Lenders) ________
Receivables remaining unpaid over 60
days from original due date ______
Receivables from account debtors if more than
50% of all Receivables from such account
debtor are otherwise excluded as Eligible
Receivables ______
Receivables subject to dispute ______
Receivables due from any account debtor
that is the United States of America or
any department, or instrumentality thereof,
unless the Federal Assignment of Claims Act
has been complied with ______
Receivables (i) evidenced by instruments
not in the possession of the Administrative
Agent or (ii) in which the Administrative
Agent does not have a perfected
first priority security interest ______
Receivables from any account debtor to
the extent they exceed 20% of the
aggregate of all Receivables, except
as otherwise provided in Schedule IV ______
Total Ineligible Receivables ______
Total Eligible Receivables ______
********************************************************************************
Inventory at lower of cost or market
(using average cost)
owned by the Company and located
in a jurisdiction in the United States
and Canada covered by appropriate filings: ______
Beginning period Inventory balance
___________, 200_ ______
Ending period Inventory balance
___________, 200_ ______
Less: ineligible Inventory at period end
determined pursuant to definition
of Eligible Inventory in Credit
Agreement): ______
2
Inventory determined by Majority
Lenders to be unmarketable ______
Total Eligible Inventory ______
********************************************************************************
[Total Eligible Machinery and Equipment
(Machinery and equipment
as most recently determined by
Appraisers pursuant to Section 9.01(e)(ii)
of the Credit Agreement owned by the
Company or any Subsidiary Guarantor
and located in the United States or
Quebec covered by appropriate
filings) ______
Total Eligible Real Property
(Real Property as most recently determined
by Appraisers pursuant to Section 9.01(e)(ii)
of the Credit Agreement owned by
the Company or any Subsidiary Guarantor
and located in the United States or
Quebec with appropriate surveys,
title reports, and filings and
recordings) ______
********************************************************************************
50% of Eligible Machinery and Equipment ______
Plus: 50% of Eligible Real Property ______]/1/
Available PP&E Amount $20,000,000*
********************************************************************************
Borrowing Base:
85% of Eligible Receivables ______
Plus: 50% of Eligible Inventory
(not in excess of 50% of the
Borrowing Base) ______
Plus: Available PP&E Amount
(not in excess of 50% of the Borrowing Base) ______
Borrowing Base: ______
-------------------------------
* Use $20,000,000 unless a lower value is required based upon a valuation
report requested pursuant to Section 9.01(e)(ii), in which case bracketed text
should be included.
3
********************************************************************************
Loans Balance
Period beginning ________, 200_ ______
advances for period ______
reductions for period ______
other adjustments (+/-) ______
Loans Balance
Period ending ___________, 200_ ______
Total outstandings ______
Availability (overadvance) ______
********************************************************************************
4
Inventory Schedule
******************************************************************
Unit
Cost
Quantity Cents/
Units Unit Value Eligible
----- ---- ----- --------
Finished Product
Inventory
---------
Location/Product
Total fin. prod. inv.
Raw Material Inventory
----------------------
Location/product
Total raw materials inv.
All inventory set forth above was produced in compliance with the
requirements of the Fair Labor Standards Act, as amended.
Summary By Client of Aging of Receivables
[attached]
EXHIBIT D
OPINION OF COUNSEL
FOR THE COMPANY
September 20, 2002
To the Lenders and
the Administrative Agent
Referred to Below
c/o JPMorgan Chase Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
We have acted as counsel for Applied Extrusion Technologies, Inc., a
Delaware corporation (the "Company"), in connection with the transactions
contemplated by the Credit Agreement dated as of April 7, 1994 (the "Original
Agreement") and amended and restated as of September 20, 2002 (as so amended and
restated, the "Amended Agreement") among the Company, the lenders listed on the
signature pages thereof and JPMorgan Chase Bank, as Administrative Agent. This
opinion is delivered pursuant to Section 13.01(e) of the Amended Agreement.
Terms defined in the Amended Agreement, including in the schedules and exhibits
thereto, and not otherwise defined herein are used herein as defined in the
Amended Agreement, including in such schedules and exhibits.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion. As to questions of fact not independently verified by us, we have
relied, to the extent we deemed appropriate, upon representations and
certificates of officers of the Company, public officials and other appropriate
persons and on the representations as to matters of fact (not constituting
conclusions of law) set forth in the Amended Agreement.
The opinions expressed herein are limited to matters governed by the
internal laws of The Commonwealth of Massachusetts, the General Corporation Law
of the State of Delaware (the "DGCL") and the federal law of the United States
of America. We call your attention to the fact that each of the Amended
Agreement, the Pledge Agreement, the Security Agreement and the Subsidiary
Guaranty provide that they are to be construed in accordance with and governed
by the laws of the State of New York (the Pledge Agreement, the Security
Agreement, the Subsidiary Guaranty, the Mortgages and the Guarantor
Acknowledgment are collectively referred to herein as the "Security Documents").
We are of the opinion that a Massachusetts court or a
federal court sitting in Massachusetts would, under conflict of laws principles
observed by the courts of Massachusetts, give effect to such provision. For
purposes of rendering the opinions expressed in paragraphs 4, 5 and 8 below, and
for purposes of rendering the opinions with respect to the Indenture in
paragraphs 2 and 3 below, we have assumed that New York law is in all respects
identical to Massachusetts law.
Upon the basis of the foregoing, we are of the opinion that:
1. Each of the Company and Applied Extrusion Technologies (Canada), Inc.
(the "Subsidiary Guarantor") is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power required to carry on its business as now conducted
as described in the Company's annual report on Form 10-K for the fiscal year
ended September 30, 2001 filed with the Securities and Exchange Commission.
2. The execution and delivery by the Company of the Amended Agreement and
the Notes and the performance by the Company of its obligations thereunder and
under the Pledge Agreement, the Security Agreement (the Pledge Agreement and the
Security Agreement, together with the Amended Agreement and the Notes, the
"Company Documents") and the Mortgages to which it is a party (i) are within the
Company's corporate powers and have been duly authorized by all necessary
corporate action, (ii) require no action by or in respect of, or filing with,
any governmental body, agency or official (except as contemplated by the
Security Documents) and (iii) do not contravene, or constitute a default under,
any provision of (a) Massachusetts or Federal law or regulation or of the DGCL,
(b) the certificate of incorporation or by-laws of the Company or (c) the
Indenture dated as of June 14, 2001, as in effect on the date hereof (the
"Indenture"), between the Company and Xxxxx Fargo Bank Minnesota, National
Association, Trustee, relating to the Company's 103/4% Senior Notes due 2011.
3. The execution and delivery by the Subsidiary Guarantor of the Guarantor
Acknowledgment and the performance by the Subsidiary Guarantor of its
obligations thereunder and under the Subsidiary Guaranty (the Subsidiary
Guaranty, together with the Guarantor Acknowledgment, the "Guarantor Documents",
and the Guarantor Documents together with the Company Documents, the "Credit
Documents") and the Mortgage to which it is a party (i) are within the
Subsidiary Guarantor's corporate powers and have been duly authorized by all
necessary corporate action, (ii) require no action by or in respect of, or
filing with, any governmental body, agency or official (except as contemplated
by the Security Documents), and (iii) do not contravene, or constitute a default
under, any provision of (a) Massachusetts or federal law or regulation or of the
DGCL, (b) the certificate of incorporation or by-laws of the Subsidiary
Guarantor or (c) the Indenture.
4. Subject to the qualifications appearing after the numbered paragraphs
hereof, the Company Documents constitute legal, valid and binding obligations of
the Company, in each case enforceable against the Company in accordance with
their terms.
2
5. Subject to the qualifications appearing after the numbered paragraphs
hereof, the Guarantor Documents constitute legal, valid and binding obligations
of the Subsidiary Guarantor, enforceable against the Subsidiary Guarantor in
accordance with their terms.
6. Neither the Company nor the Subsidiary Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and, to our knowledge, is not, directly or indirectly, controlled by or acting
on behalf of any Person which is an "investment company", within the meaning of
said Act.
7. Neither the Company nor the Subsidiary Guarantor is a "holding company",
or, to our knowledge, an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
8. The security interests created by the Security Agreement and the Pledge
Agreement secure the Secured Obligations (as defined in each of the Security
Agreement and the Pledge Agreement) in respect of all future Loans made by the
Lenders to, and all obligations with respect to Letters of Credit incurred by,
the Company under the Amended Agreement whether or not at the time such Loans
are made or obligations incurred an Event of Default or other event not within
the control of the Lenders has relieved or may relieve the Lenders from their
obligations to make such Loans or to perform under Letters of Credit.
Our opinion that the Credit Documents to which the Company or the
Subsidiary Guarantor are party constitute the legal, valid and binding
obligations of such of the foregoing Persons as are party thereto, enforceable
against each such Person in accordance with their terms, is subject to (i)
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application affecting the rights and remedies of creditors and secured
parties and (ii) general principles of equity, regardless of whether applied in
proceedings in equity or at law.
The opinions expressed herein do not purport to cover, and we express no
opinion with respect to, the applicability of Section 548 of the federal
Bankruptcy Code or any comparable provision of state law.
The opinions expressed herein are subject to the qualification that the
enforceability of provisions in the Credit Documents providing for
indemnification or contribution may be limited by public policy considerations.
In addition, we express no opinion as to (i) the extent to which broadly
worded waivers may be enforced, (ii) the enforceability of any provision of the
Credit Documents which purports to grant the right of setoff to a purchaser of a
participation in the loans outstanding thereunder or which provides for interest
on interest or automatic compounding interest, or (iii) the extent to which
provisions providing for conclusive presumptions or determinations,
non-effectiveness of oral modifications, arbitration, submission to
jurisdiction, waiver of or consent to service of process and venue or waiver of
offset or defenses will be enforced.
3
In addition, certain provisions contained in the Security Documents,
including the grant of powers of attorney thereunder, may be unenforceable in
whole or in part but the inclusion of such provisions in the Security Documents
does not affect the validity of any of the other provisions thereof, and the
remaining provisions of the Security Documents are sufficient for the practical
realization of the benefits intended to be provided thereby.
We further express no opinion as to the existence of, or as to the title of
any Person who has granted a security interest in any collateral under the
Security Agreements (the "Collateral") to, any item of Collateral or as to the
priority or the perfection of any security interest in the Collateral. For
purposes of paragraph 8 above, we express no opinion with respect to security
interests of goods to the extent that a security interest is limited by Section
9-336 of Massachusetts Uniform Commercial Code or Article 9 of the Delaware
Uniform Commercial Code.
This opinion is solely for the benefit of the Lenders and the
Administrative Agent in connection with the transactions provided for in or
contemplated by the Amended Agreement. It may not be otherwise distributed or
relied upon by any Person or quoted or reproduced, in whole or in part, in any
other document or filed with any government agency without our prior written
consent except that a copy of this opinion may be delivered to any participant
or assignee under the Amended Agreement.
Very truly yours,
Ropes & Xxxx
4
EXHIBIT E
OPINION OF COUNSEL
TO THE ADMINISTRATIVE AGENT
September 20, 2002
To the Lenders
and the Administrative Agent
Referred to Below
c/o JPMorgan Chase Bank,
as Administrative Agent
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of April 7, 1994 and amended and restated as of
September 20, 2002 among Applied Extrusion Technologies, Inc. a Delaware
corporation (the "Company"), the lenders listed on the signature pages thereof
(the "Lenders") and JPMorgan Chase Bank, as administrative agent (the
"Administrative Agent"), and have acted as special counsel for the
Administrative Agent for the purpose of rendering this opinion pursuant to
Section 13.01(f) of the Credit Agreement. Terms defined in the Credit Agreement,
including the schedules and exhibits thereto, and not otherwise defined herein
are used herein as therein defined in the Credit Agreement, including schedules
and exhibits.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate and partnership records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that, assuming that
the execution, delivery and performance by the Company of the Credit Agreement
are within the Company's corporate powers and have been duly authorized by all
necessary corporate action, the Credit Agreement constitutes a valid and binding
agreement of the Company.
In giving the foregoing opinion, we express no opinion as to (1) the effect
of Section 548 of the Bankruptcy Code or comparable provisions of other
applicable law on the conclusions expressed above; (2) the effect (if any) of
any law of any jurisdiction (except the State of New York) in which any Lender
is located which limits the rate of interest that such Lender may charge or
collect; or (3) whether provisions of the Basic Documents which permit the
Administrative Agent, the Majority Lenders or any Lender to take action or make
determinations or to require payments under indemnity and similar provisions may
be subject to a requirement that such action be taken or such determinations be
made on a reasonable basis and in
To the Lenders and the
Administrative Agent 2 September 20, 2002
good faith and that any action or omission to act in respect of which any such
payment is so required be reasonable and in good faith.
We are members of the bar of the State of New York and we do not herein
express any opinion as to any matters governed by any laws other than the laws
of the State of New York.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by or furnished to any other person without our prior written consent.
Very truly yours,
2
EXHIBIT F
COMPANY
SECURITY AGREEMENT
AGREEMENT dated as of April 7, 1994 between APPLIED EXTRUSION
TECHNOLOGIES, INC., a Delaware corporation (with its successors, the "Company"),
and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as administrative agent
(with its successors in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Company, certain lenders (the "Lenders") and the
Administrative Agent are parties to a Credit Agreement dated as of April 7, 1994
(as the same may be amended and in effect from time to time, the "Credit
Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit (by making loans and issuing letters of credit) to be made
by the Lenders to the Company;
WHEREAS, in order to induce the Lenders and the Administrative Agent to
enter into the Credit Agreement, the Company has agreed to grant a continuing
security interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Credit Agreement, including, without limitation, its
obligations under the notes issued pursuant to the Credit Agreement and its
reimbursement obligations with respect to letters of credit issued pursuant
thereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions
Terms defined in the Credit Agreement and not otherwise defined herein
have, as used herein, the respective meanings provided for therein. The
following additional terms, as used herein, have the following respective
meanings:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Company and shall also mean and include all accounts
receivable, contract rights, book debts, notes, drafts and other obligations or
indebtedness owing to the Company arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services by it
(including, without limitation, any such obligation which might be characterized
as an account, contract right or general intangible under the Uniform Commercial
Code in effect in any jurisdiction) and all of the Company's rights in, to and
under all purchase orders for goods, services or other property, and all of the
Company's rights to any goods, services or other property represented by any of
the foregoing (including returned or repossessed goods and unpaid sellers'
rights of rescission, replevin, reclamation and
rights to stoppage in transit) and all monies due to or to become due to the
Company under all contracts for the sale, lease or exchange of goods or other
property and/or the performance of services by it (whether or not yet earned by
performance on the part of the Company), in each case whether now in existence
or hereafter arising or acquired including, without limitation, the right to
receive the proceeds of said purchase orders and contracts and all collateral
security and guarantees of any kind given by any Person with respect to any of
the foregoing.
"Collateral" has the meaning set forth in Section 3(A).
"Collateral Account" has the meaning set forth in Section 5(A).
"Copyright License" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right to use, copy, reproduce, distribute, prepare derivative
works, display or publish any records or other materials on which a Copyright is
in existence or may come into existence.
"Copyrights" means all the following: (i) all copyrights under the laws
of the United States or any other country (whether or not the underlying works
of authorship have been published), all registrations and recordings thereof,
all intellectual property rights to works of authorship (whether or not
published), and all applications for copyrights under the laws of the United
States or any other country, including, without limitation, registrations,
recordings and applications in the United States Copyright Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, (ii) all reissues, renewals and
extensions thereof, (iii) all claims for, and rights to xxx for, past or future
infringements of any of the foregoing, and (iv) all income, royalties, damages
and payments now or hereafter due or payable with respect to any of the
foregoing, including, without limitation, damages and payments for past or
future infringements thereof.
"Copyright Security Agreement" means a Copyright Security Agreement
executed and delivered by the Company in favor of the Administrative Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit D
hereto, as the same may be amended from time to time.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing goods, now owned or hereafter
acquired, by the Company.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by the Company, including, without limitation, all motor
vehicles, trucks, trailers and Rolling Stock.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) now owned or hereafter acquired by the Company, to the extent valid and
enforceable provisions contained therein do not prohibit the assignment thereof,
including, without limitation, (i) all right, title and interest of the Company
under the Assigned
2
Agreements, (ii) all obligations or indebtedness owing to the Company (other
than Accounts) from whatever source arising, (iii) all Copyright Licenses,
Copyrights, Patent Licenses, Patents, Trademark Licenses, Trademarks, rights in
intellectual property, goodwill, trade names, service marks, trade secrets,
permits and licenses, (iv) all rights or claims in respect of refunds for taxes
paid and (v) all rights in respect of any pension plan or similar arrangement
maintained for employees of any member of the Controlled Group.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC) evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts, including (but not limited to) promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by the Company.
"Inventory" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by the Company, wherever located, and shall also mean and
include, without limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any, commingled therewith or added thereto.
"Leased Rolling Stock" has the meaning set forth in Section 3(A).
"Patent License" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right with respect to any Patent or any invention now or
hereafter in existence, whether patentable or not, whether a patent or
application for patent is in existence on such invention or not, and whether a
patent or application for patent on such invention may come into existence,
including, without limitation, the agreements identified in Schedule 1 to
Exhibit B hereto.
"Patents" means all the following: (i) all letters patent and design
letters patent of the United States or any other country and all applications
for letters patent and design letters patent of the United States or any other
country, including, without limitation, applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof,
including, without limitation, those described in Schedule 1 to Exhibit B
hereto, (ii) all reissues, divisions, continuations, continuations-in-part,
renewals and extensions thereof, (iii) all claims for, and rights to xxx for,
past or future infringements of any of the foregoing and (iv) all income,
royalties, damages and payments now or hereafter due or payable with respect to
any of the foregoing, including, without limitation, damages and payments for
past or future infringements thereof.
"Patent Security Agreement" means the Patent Security Agreement
executed and delivered by the Company in favor of the Administrative Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit B
hereto, as the same may be amended from time to time.
3
"Perfection Certificate" means a certificate substantially in the form
of Exhibit A hereto, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Administrative
Agent, and duly executed by the chief financial officer of the Company.
"Permitted Liens" means the Security Interests and the other Liens on
the Collateral permitted to be created, assumed or to exist pursuant to Section
9.13 of the Credit Agreement.
"Proceeds" means all proceeds of, and all other profits, products,
rentals or receipts, in whatever form, arising from the collection, sale, lease,
exchange, assignment, licensing or other disposition of, or other realization
upon, collateral, including, without limitation, all claims of the Company
against third parties for loss of, damage to or destruction of, or for proceeds
payable under, or unearned premiums with respect to, policies of insurance in
respect of, any collateral, and any condemnation or requisition payments with
respect to any collateral, in each case whether now existing or hereafter
arising.
"Rolling Stock" means all railcars, barges and other water carrier
equipment, and all accessions, appurtenances and parts installed on and
additions thereto, and replacements thereof, now owned or hereafter acquired by
the Company.
"Rolling Stock Leases" has the meaning set forth in Section 3(A).
"Rolling Stock Revenues" means any monies, revenues, payments or
credits now owned or hereafter acquired by the Company which are generated by or
attributable to the Rolling Stock or Leased Rolling Stock, including, without
limitation, railcar hire payments, mileage allowances, per diem mileage
payments, empty mileage allowances, mileage credits and excess mileage credits,
in each case whether now existing or hereafter arising.
"Secured Obligations" means the obligations secured under this
Agreement, including (a) all principal of and interest (including, without
limitation, any interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company, whether or not allowed or allowable as a claim in
any such case, proceeding or other action) on any Loan to the Company under, or
any Note issued by the Company pursuant to, or any Reimbursement Obligation of
the Company under, the Credit Agreement; (b) all other amounts payable by the
Company under the Credit Agreement; (c) all other amounts payable by the Company
hereunder or under any other Security Document; and (d) any renewals or
extensions of any of the foregoing.
"Secured Parties" means (i) the Lenders and (ii) the Administrative
Agent.
"Security Interests" means the security interests granted pursuant to
Section 3, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
4
"Trademark License" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right to use any Trademark, including, without limitation, the
agreements identified on Schedule 1 to Exhibit C hereto.
"Trademarks" means all of the following: (i) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos, brand names, trade dress, prints and
labels on which any of the foregoing have appeared or appear, package and other
designs, and any other source or business identifiers, and general intangibles
of like nature, and the rights in any of the foregoing which arise under
applicable law, (ii) the goodwill of the business symbolized thereby or
associated with each of them, (iii) all registrations and applications in
connection therewith, including, without limitation, registrations and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country or
any political subdivision thereof, including, without limitation, those
described in Schedule 1 to Exhibit C hereto, (iv) all reissues, extensions and
renewals thereof, (v) all claims for, and rights to xxx for, past or future
infringements of any of the foregoing and (vi) all income, royalties, damages
and payments now or hereafter due or payable with respect to any of the
foregoing, including, without limitation, damages and payments for past or
future infringements thereof.
"Trademark Security Agreement" means the Trademark Security Agreement
executed and delivered by the Company in favor of the Administrative Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit C
hereto, as the same may be amended from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection.
SECTION 2. Representations and Warranties
The Company represents and warrants as follows:
(A) The Company has good and marketable title to all of the Collateral,
free and clear of any Liens other than the Permitted Liens.
(B) The Company has not performed any acts which might prevent the
Administrative Agent from enforcing any of the terms of this Agreement or which
would limit the Administrative Agent in any such enforcement. Other than
financing statements or other similar or equivalent documents or instruments
with respect to the Security Interests and Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file or of record in
any jurisdiction in which such filing or
5
recording would be effective to perfect a Lien on such Collateral. No Collateral
is in the possession of any Person (other than the Company) asserting any claim
thereto or security interest therein, except that the Administrative Agent or
its designee may have possession of Collateral as contemplated hereby, other
than Collateral being repaired by third parties in the ordinary course of
business, Inventory in transit and Inventory held by warehousemen.
(C) Not later than the date of the first borrowing under the Credit
Agreement, the Company shall deliver the Perfection Certificate to the
Administrative Agent. The information set forth therein shall be correct and
complete. Not later than 60 days following the date of the first borrowing, the
Company shall furnish to the Administrative Agent file search reports from each
filing office set forth in Schedule 7 to the Perfection Certificate or other
evidence satisfactory to the Majority Lenders acting through the Administrative
Agent confirming the filing information set forth in such Schedule.
(D) The Security Interests constitute valid security interests under
the UCC securing the Secured Obligations. When UCC financing statements in the
form specified in the Perfection Certificate have been filed in the offices
specified in the Perfection Certificate, and this Agreement and any amendments
hereto in appropriate form have been filed in the office of the Secretary of the
Interstate Commerce Commission, with respect to any Rolling Stock, Leased
Rolling Stock or Rolling Stock Leases, the Security Interests shall constitute
perfected security interests in the Collateral (except Inventory in transit) to
the extent that a security interest therein may be perfected by filing pursuant
to the UCC and the Interstate Commerce Act, prior to all other Liens and rights
of others therein except for the Permitted Liens. When the Patent Security
Agreement and the Trademark Security Agreement have been filed with the United
States Patent and Trademark Office, the Security Interests shall constitute
perfected security interests in all right, title and interest of the Company in
Patents and Trademarks, prior to all other Liens and rights of others therein
except for the Permitted Liens. When a Copyright Security Agreement has been
filed with the United States Copyright Office, the Security Interests shall
constitute perfected security interests in all right, title and interest of the
Company in Copyrights, prior to all other Liens and rights of others therein
except for the Permitted Liens.
(E) The Inventory and Equipment are insured in accordance with the
requirements of the Credit Agreement.
(F) All Inventory has or will have been produced in compliance with the
applicable requirements of the Fair Labor Standards Act, as amended.
SECTION 3. The Security Interests
(A) In order to secure the full and punctual payment of the Secured
Obligations in accordance with the terms thereof, and to secure the performance
of all of the obligations of the Company hereunder and under the Credit
Agreement, the Company hereby hypothecates, assigns by way of security,
transfers and grants to the Administrative Agent for the ratable benefit of the
Secured Parties a continuing security interest in and to all right, title and
interest of the Company in and to the
6
following property, whether now owned or existing or hereafter acquired or
arising and regardless of where located (all being collectively referred to as
the "Collateral"):
(1) Accounts;
(2) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) The Collateral Account, all cash deposited therein from
time to time, the Liquid Investments made pursuant to Section 5(D) and
other monies and property of any kind of the Company in the possession
or under the control of the Administrative Agent;
(8) All books and records (including, without limitation,
customer lists, marketing information, credit files, price lists,
operating records, vendor and supplier price lists, sales literature,
computer programs, disks, printouts and other computer materials and
records, whether maintained by the Company or any servicing agency) of
the Company pertaining to any of the Collateral;
(9) All right, title, claims and benefits now owned or
hereafter acquired by the Company in and to any railcar leases,
subleases, rental agreements and car hire contracts in which the
Company shall at any time have any interest, and any right, title,
claim and benefits of the Company now owned or hereafter acquired in
and to any management agreement concerning all such leases and
agreements (collectively, "Rolling Stock Leases"); and all right, title
and interest of the Company in the railcars and equipment provided
pursuant to any Rolling Stock Leases ("Leased Rolling Stock"); in each
case, including, without limitation, all rights of the Company to
receive and apply any Rolling Stock Revenues attributable to any Leased
Rolling Stock or pursuant to any Rolling Stock Leases; and
(10) All Proceeds of, attachments or accessions to, or
substitutions for, all or any of the Collateral described in Clauses 1
through 10 hereof.
(B) The Security Interests are granted as security only and shall not
subject the Administrative Agent or any other Secured Party to, or transfer or
in any way affect or modify, any obligation or liability of the Company with
respect to any of the Collateral or any transaction in connection therewith.
7
SECTION 4. Further Assurances; Covenants
(A) (I) The Company will not change (i) the location of its chief
executive office or its chief place of business or (ii) the locations where it
keeps or holds any Collateral (other than Inventory and Rolling Stock in
transit) or records relating thereto from the applicable location described in
the Perfection Certificate unless it shall have given the Administrative Agent
notice thereof and taken all steps reasonably requested by the Administrative
Agent to perfect the Security Interests contemplated hereby with respect to the
new location in question (including without limitation an opinion of counsel, if
so requested). The Company shall not in any event change the location of any
Collateral if such change would cause the Security Interests in such Collateral
to lapse or cease to be perfected.
(II) The Company will not change its name, identity or corporate
structure in any manner unless it shall have given the Administrative Agent
prior notice thereof and taken all steps reasonably requested by the
Administrative Agent to perfect the Security Interests contemplated hereby in
connection with such change (including without limitation an opinion of counsel,
if so requested).
(B) The Company will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including, without
limitation, any filings with the United States Patent and Trademark Office, any
filings with the United States Copyright Office, any filings with the Interstate
Commerce Commission, any filings of financing or continuation statements under
the UCC and any filings in, or agreements governed by the laws of, any foreign
jurisdictions) that from time to time may be necessary or desirable, or that the
Administrative Agent may request, in order to create, preserve, upgrade in rank
(to the extent required hereby), perfect, confirm or validate the Security
Interests or to enable the Administrative Agent and the other Secured Parties to
obtain the full benefits of this Agreement, or to enable the Administrative
Agent to exercise and enforce, or facilitate the exercise and enforcement of,
any of its rights, powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by law, the Company hereby authorizes the
Administrative Agent to execute and file financing statements or continuation
statements without the Company's signature appearing thereon. The Company agrees
that a carbon, photographic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. The Company shall
pay the costs of, or incidental to, any recording or filing of any financing or
continuation statements concerning the Collateral.
(C) If any Collateral is at any time in the possession or control of
any warehouseman, bailee or any of the Company's agents or processors, the
Company shall, upon the request of the Administrative Agent acting on the
instructions of the Majority Lenders, notify such warehouseman, bailee, agent or
processor of the Security Interests created hereby and instruct such Person to
hold all such Collateral for the Administrative Agent's account subject to the
Administrative Agent's instructions.
8
(D) The Company shall keep full and accurate books and records relating
to the Collateral, and stamp or otherwise xxxx such books and records in such
manner as the Majority Lenders may reasonably request in order to reflect the
Security Interests.
(E) The Company will immediately deliver and pledge each Instrument to
the Administrative Agent, appropriately endorsed to the Administrative Agent,
provided that so long as no Event of Default shall have occurred and be
continuing, the Company may retain for collection in the ordinary course any
Instruments (other than checks and drafts constituting payments in respect of
Accounts, as to which the provisions of Section 5(B) shall apply) received by it
in the ordinary course of business and the Administrative Agent shall, promptly
upon request of the Company, make appropriate arrangements for making any other
Instrument pledged by the Company available to it for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent deemed
appropriate to the Administrative Agent, against trust receipt or like
document).
(F) The Company shall use its best efforts, subject to reasonable
business practices, to collect from its account debtors, as and when due, any
and all amounts owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be collected in
accordance with lawful collection procedures) and to apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Account. Unless an Event of Default has occurred and is continuing and
the Administrative Agent is exercising its rights hereunder to collect Accounts,
the Company may allow in the ordinary course of business as adjustments to
amounts owing under its Accounts (i) an extension or renewal of the time or
times of payment, or settlement for less than the total unpaid balance, which
the Company finds appropriate in accordance with sound business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise, all
in accordance with the Company's ordinary course of business consistent with its
historical collection practices. The costs and expenses (including, without
limitation, attorney's fees) of collection, whether incurred by the Company or
the Administrative Agent, shall be borne by the Company.
(G) Upon the occurrence and during the continuance of any Event of
Default, upon the request of the Majority Lenders acting through the
Administrative Agent, the Company will promptly notify (and the Company hereby
authorizes the Administrative Agent so to notify) each account debtor in respect
of any Account or Instrument that such Collateral has been assigned to the
Administrative Agent hereunder, and that any payments due or to become due in
respect of such Collateral are to be made directly to the Administrative Agent
or its designee.
(H) The Company shall, (i) as soon as practicable after the date
hereof, in the case of Equipment now owned constituting goods in which a
security interest is perfected by a notation on the certificate of title or
similar evidence of the ownership of such goods, and (ii) within 10 days of
acquiring any other similar Equipment, in each case, (a) having a value in
excess of $50,000 or (b) having a value in excess of $25,000, if the aggregate
of all such items owned by the Company at any time is greater than $100,000,
deliver to the Administrative Agent any and all certificates of
9
title, applications for title or similar evidence of ownership of such Equipment
and shall cause the Administrative Agent to be named as lienholder on any such
certificate of title or other evidence of ownership; provided that the foregoing
shall not apply to up to three automobiles owned by the Company unless the
Administrative Agent otherwise so requests. The Company shall not permit any
such items to become a fixture to real estate other than real estate described
in the Mortgages.
(I) The Company shall as soon as practicable after the date hereof, at
its own cost and expense, cause to be plainly, distinctly, permanently and
conspicuously placed, fastened or painted upon each side of each item of Rolling
Stock a legend bearing such words as the Administrative Agent may request
indicating the Lien over and security interest in such Rolling Stock created
hereby in letters not less than one inch in height. The Company may permit the
Rolling Stock to be operated within the United States, but shall not permit the
Rolling Stock to be operated outside the boundaries of the continental United
States.
(J) Without the prior written consent of the Majority Lenders, the
Company will not (a) sell, lease, exchange, assign or otherwise dispose of, or
grant any option with respect to, any Collateral except, subject to the rights
of the Administrative Agent and the Lenders hereunder if an Event of Default
shall have occurred and be continuing, as permitted under Section 9.12 of the
Credit Agreement and, in the case of any such disposition, the Security
Interests created hereby in such item (but not in any Proceeds arising from such
sale or exchange) shall cease immediately without any further action on the part
of the Administrative Agent; or (b) create, incur or suffer to exist any Lien
with respect to any Collateral, except for the Permitted Liens.
(K) The Company will maintain insurance in accordance with Section 9.03
of the Credit Agreement.
(L) The Company will, promptly upon request, provide to the
Administrative Agent all information and evidence it may reasonably request
concerning the Collateral, and in particular the Accounts, to enable the
Administrative Agent to enforce the provisions of this Agreement.
(M) If the Company shall, either itself or through any agent, employee
or licensee, file an application for the registration of any Copyright with the
United States Copyright Office or any Patent or Trademark with the United States
Patent and Trademark Office, or with any similar office or agency in any other
country or any political subdivision thereof, not less than 30 days thereafter
it shall inform the Administrative Agent, and, upon request of the
Administrative Agent, execute and deliver any and all agreements, instruments,
documents and papers the Administrative Agent may request to evidence the
Security Interests in such Copyright, Patent or Trademark and the goodwill and
general intangibles of the Company relating thereto or represented thereby, and
the Company hereby constitutes the Administrative Agent its attorney-in-fact to
execute and file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, shall be irrevocable until the Secured Obligations are paid in full.
10
(N) If the Administrative Agent shall so request, based on its
determination that changed circumstances warrant such a request, the Company
shall, at its cost and expense, cause to be delivered to the Secured Parties an
opinion of counsel satisfactory to the Administrative Agent as to such matters
relating to the transactions contemplated hereby as the Majority Lenders may
reasonably request.
SECTION 5. Collateral Account
(A) There is hereby established with the Administrative Agent a cash
collateral account (the "Collateral Account") in the name and under the control
of the Administrative Agent into which there shall be deposited from time to
time the cash proceeds of the Collateral required to be delivered to the
Administrative Agent pursuant to subsection (B) of this Section 5 or any other
provision of this Agreement, any other Security Document or the Credit
Agreement. Any income received by the Administrative Agent with respect to the
balance from time to time standing to the credit of the Collateral Account,
including any interest or capital gains on Liquid Investments, shall remain, or
be deposited, in the Collateral Account. All right, title and interest in and to
the cash amounts on deposit from time to time in the Collateral Account together
with any Liquid Investments from time to time made pursuant to subsection (D) of
this Section shall vest in the Administrative Agent, shall constitute part of
the Collateral hereunder and shall not constitute payment of the Secured
Obligations until applied thereto as hereinafter provided.
(B) The Company shall instruct all account debtors and other Persons
obligated in respect of all Accounts to make all payments in respect of such
Accounts either (i) directly to the Administrative Agent (by instructing that
such payments be remitted to a post office box which shall be in the name and
under the control of the Administrative Agent) or (ii) to one or more other
banks in any state (other than Louisiana) in the United States (each a "Lockbox
Bank") (by instructing that such payments be remitted to a post office box which
shall be in the name and under the control of such Lockbox Bank) for deposit
into an account in the name and under the control of such Lockbox Bank (a
"Lockbox Account") under a Lockbox Letter substantially in the form of Exhibit G
hereto duly executed by the Company and such Lockbox Bank or under other
arrangements, in form and substance satisfactory to the Administrative Agent,
pursuant to which the Company shall have irrevocably instructed such Lockbox
Bank (and such Lockbox Bank shall have agreed) to remit all proceeds of such
payments directly to the Administrative Agent for deposit into the Collateral
Account or as the Administrative Agent may otherwise instruct such Lockbox Bank;
provided that on or prior to the 60th day after the Closing Date, account
debtors and other Persons obligated in respect of such Accounts shall be
permitted to make all payments in respect of such Accounts to one or more other
banks for deposit in an account in the name and control of Hercules
Incorporated, such payments to be remitted by Hercules Incorporated to the
Company. Unless and until an Event of Default shall have occurred and be
continuing, the Administrative Agent shall instruct such Lockbox Bank to remit
such proceeds to the Company or as the Company may otherwise so instruct such
Lockbox Bank. All such payments made to the Administrative Agent shall be
deposited in the Collateral Account. In addition to the foregoing, the Company
agrees that if the proceeds of any Collateral hereunder (including the payments
made in respect of Accounts) shall be received by
11
it, the Company shall as promptly as possible deposit such proceeds into a
Lockbox Account. Until so deposited, all such proceeds shall be held in trust by
the Company for and as the property of the Administrative Agent and the Secured
Parties and shall not be commingled with any other funds or property of the
Company.
(C) The balance from time to time standing to the credit of the
Collateral Account shall, except (i) upon the occurrence and continuation of an
Event of Default or (ii) as provided by Section 3.02(b)(i)(2) of the Credit
Agreement, be distributed to the Company upon the order of the Company. If
immediately available cash on deposit in the Collateral Account is not
sufficient to make any distribution to the Company referred to in the previous
sentence of this Section 5(C), the Administrative Agent shall liquidate as
promptly as practicable Liquid Investments as required to obtain sufficient cash
to make such distribution and, notwithstanding any other provision of this
Section 5, such distribution shall not be made until such liquidation has taken
place. Upon the occurrence and continuation of an Event of Default, the
Administrative Agent shall, if so instructed by the Majority Lenders, apply or
cause to be applied (subject to collection) any or all of the balance from time
to time standing to the credit of the Collateral Account in the manner specified
in Section 9.
(D) Amounts on deposit in the Collateral Account shall be invested and
re-invested from time to time in such Liquid Investments as the Company shall
determine, which Liquid Investments shall be held in the name and be under the
control of the Administrative Agent, provided that, if an Event of Default has
occurred and is continuing, the Administrative Agent shall, if instructed by the
Majority Lenders, liquidate any such Liquid Investments and apply or cause to be
applied the proceeds thereof to the payment of the Secured Obligations in the
manner specified in Section 9. For this purpose, (i) each Liquid Investment
shall mature within 30 days after it is acquired by the Administrative Agent and
(ii) in order to provide the Administrative Agent, for the benefit of the
Secured Parties, with a perfected security interest therein, each Liquid
Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Administrative Agent,
which (together with any appropriate instruments of transfer) are
delivered to, and held by, the Administrative Agent or an agent thereof
(which shall not be the Company or any of its Affiliates) in the State
of New York; or
(ii) in book-entry form and issued by the United States and subject
to pledge under applicable state law and Treasury regulations and as to
which (in the opinion of counsel to the Administrative Agent)
appropriate measures shall have been taken for perfection of the
Security Interests.
SECTION 6. General Authority
The Company hereby irrevocably appoints the Administrative Agent its
true and lawful attorney, with full power of substitution, in the name of the
Company, the Administrative Agent, the Secured Parties or otherwise, for the
sole use and benefit of the Administrative Agent and the other Secured Parties,
but at the Company's expense, to the extent permitted by law to exercise, at any
time and from time to time
12
while an Event of Default has occurred and is continuing, all or any of the
following powers with respect to all or any of the Collateral:
(i) to demand, xxx for, collect, receive and give acquittance for
any and all monies due or to become due thereon or by virtue thereof,
including without limitation the endorsement of the Company's name on
any checks, notes, acceptances, money orders, drafts or other forms of
payment,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually as if
the Administrative Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
provided that the Administrative Agent shall give the Company not less than ten
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market. The Company agrees that such notice constitutes "reasonable
notification" within the meaning of Section 9-504(3) of the UCC.
SECTION 7. Remedies upon Event of Default
(A) If any Event of Default has occurred and is continuing, the
Administrative Agent may exercise on behalf of the Secured Parties all rights of
a secured party under the UCC (to the extent permitted by law, whether or not in
effect in the jurisdiction where such rights are exercised) and, in addition,
the Administrative Agent may, without being required to give any notice, except
as herein provided or as may be required by mandatory provisions of law, (i)
withdraw all cash and Liquid Investments in the Collateral Account and apply
such monies, Liquid Investments and other cash, if any, then held by it as
Collateral as specified in Section 9 and (ii) if there shall be no such monies,
Liquid Investments or cash or if such monies, Liquid Investments or cash shall
be insufficient to pay all the Secured Obligations in full, sell the Collateral
or any part thereof at public or private sale, for cash, upon credit or for
future delivery, and at such price or prices as the Administrative Agent may
deem satisfactory so long as the sale is conducted in a commercially reasonable
manner. The Administrative Agent or any other Secured Party may be the purchaser
of any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations, at any
private sale) and thereafter hold the same, absolutely, free from any right or
claim of whatsoever kind. The Company will execute and deliver such documents
and take such other action as the Administrative Agent deems necessary or
advisable in order that any such sale may be made in compliance with law. Upon
any such sale the Administrative Agent shall have the right to deliver, assign
and transfer to the purchaser thereof the Collateral so sold.
13
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely, free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Company which may be waived, and the
Company, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 6 shall (1) in case of a public sale, state the time and place fixed for
such sale, and (2) in the case of a private sale, state the day after which such
sale may be consummated. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as the
Administrative Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may determine. The Administrative Agent shall not be
obligated to make any such sale pursuant to any such notice. The Administrative
Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Administrative Agent until the selling price is paid by the
purchaser thereof, but the Administrative Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Administrative Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(B) For the purpose of enforcing any and all rights and remedies under
this Agreement the Administrative Agent may (i) require the Company to, and the
Company agrees that it will, at its expense and upon the request of the
Administrative Agent, forthwith assemble all or any part of the Collateral as
directed by the Administrative Agent and make it available at a place designated
by the Administrative Agent which is, in its opinion, reasonably convenient to
the Administrative Agent and the Company, whether at the premises of the Company
or otherwise, (ii) to the extent permitted by applicable law, enter, with or
without process of law and without breach of the peace, any premise where any of
the Collateral is or may be located, and without charge or liability to it seize
and remove such Collateral from such premises, (iii) have access to and use the
Company's books and records relating to the Collateral and (iv) prior to the
disposition of the Collateral, store or transfer it without charge in or by
means of any storage or transportation facility owned or leased by the Company,
process, repair or recondition it or otherwise prepare it for disposition in any
manner and to the extent the Administrative Agent deems appropriate and, in
connection with such preparation and disposition, use without charge any
copyright, trademark, trade name, patent or technical process used by the
Company.
(C) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing,
14
(i) the Administrative Agent may license, or sublicense,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Copyrights, Patents or Trademarks included in
the Collateral throughout the world for such term or terms, on such
conditions and in such manner as the Administrative Agent shall in its
sole discretion determine;
(ii) the Administrative Agent may (without assuming any
obligations or liability thereunder), at any time and from time to
time, in its sole discretion, enforce (and shall have the exclusive
right to enforce) against any licensee or sublicensee all rights and
remedies of the Company in, to and under any Copyright Licenses, Patent
Licenses or Trademark Licenses and take or refrain from taking any
action under any thereof, and the Company hereby releases the
Administrative Agent and each of the other Secured Parties from, and
agrees to hold the Administrative Agent and each of the other Secured
Parties free and harmless from and against any claims and expenses
arising out of, any lawful action so taken or omitted to be taken with
respect thereto; and
(iii) upon request by the Administrative Agent, the Company
will execute and deliver to the Administrative Agent a power of
attorney, in form and substance satisfactory to the Administrative
Agent, for the implementation of any lease, assignment, license,
sublicense, grant of option, sale or other disposition of a Copyright,
Patent or Trademark or any action related thereto. In the event of any
such disposition pursuant to this Section, the Company shall supply its
know-how and expertise relating to the manufacture and sale of the
products bearing Trademarks or the products or services made or
rendered in connection with Patents, and its customer lists and other
records relating to such Patents or Trademarks and to the distribution
of said products, to the Administrative Agent.
SECTION 8. Limitation on Duty of Administrative Agent in
Respect of Collateral
Beyond the exercise of reasonable care in the custody thereof, the
Administrative Agent shall have no duty as to any Collateral in its possession
or control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Administrative Agent in good
faith.
SECTION 9. Application of Proceeds
(A) Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral
15
and any cash held in the Collateral Account shall be applied by the
Administrative Agent in the following order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to the
Administrative Agent and its agents and counsel, and all
expenses, liabilities and advances incurred or made by the
Administrative Agent in connection therewith, and any other
unreimbursed expenses for which the Administrative Agent or
any other Secured Party is to be reimbursed pursuant to
Section 12.03 of the Credit Agreement or Section 13 hereof
and unpaid fees owing to the Administrative Agent under the
Credit Agreement;
second, to the ratable payment of accrued but unpaid
interest on the Secured Obligations;
third, to the ratable payment of unpaid principal of
the Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been
paid in full; and
finally, to payment to the Company or its successors or
assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining from such proceeds.
(B) The Administrative Agent may make distributions hereunder in cash or in
kind or, on a ratable basis, in any combination thereof. The Administrative
Agent shall invest all amounts to be applied to Letter of Credit Liabilities in
Liquid Investments selected by it and hold such amount in trust for application
to future drawings under the Letters of Credit notified to it by the issuing
Lenders in the order in which such drawings are made. If the Administrative
Agent holds any amounts which were distributable in respect of Letter of Credit
Liabilities after the Letters of Credit have expired and all amounts payable
with respect thereto have been paid, such amounts shall be applied in the order
set forth in subsection (A) above.
(C) In making the determinations and allocations required by this Section,
the Administrative Agent shall have no liability to any of the Lenders for
actions taken in reliance on information supplied by the Lenders as to the
amounts of the Secured Obligations held by them. All distributions made by the
Administrative Agent pursuant to this Section shall be final and the
Administrative Agent shall have no duty to inquire as to the application by the
Lenders of any amount distributed to them. However, if at any time the
Administrative Agent determines that an allocation or distribution previously
made pursuant to this Section was based on a mistake of fact (including, without
limiting the generality of the foregoing, mistakes based on an assumption that
principal or interest has been paid by payments which are subsequently recovered
from the recipient thereof through the operation of any bankruptcy,
reorganization, insolvency or other laws or otherwise), the Administrative Agent
may in its discretion, but shall not be obligated to, adjust subsequent
16
allocations and distributions hereunder so that, on a cumulative basis, the
Secured Parties receive the distributions to which they would have been entitled
if such mistake of fact had not been made.
SECTION 10. Assigned Agreements
The Company hereby irrevocably authorizes and empowers the Administrative
Agent for and on behalf of the Secured Parties, in the Administrative Agent's
sole discretion, if an Event of Default has occurred and is continuing, to
assert, either directly or on behalf of the Company any claims the Company may
have, from time to time, against any other party to the Assigned Agreements or
to otherwise exercise any right or remedy of the Company under the Assigned
Agreements (including, without limitation, the right to enforce directly against
any party to an Assigned Agreement all of the Company's rights thereunder, to
make all demands and give all notices and make all requests required or
permitted to be made by the Company under the Assigned Agreements) as the
Administrative Agent may deem proper. The Company hereby irrevocably makes,
constitutes and appoints the Administrative Agent (and all officers, employees
or agents designated by the Administrative Agent) as the Company's true and
lawful attorney-in-fact for the purpose of enabling the Administrative Agent, to
assert and collect such claims and to exercise such rights and remedies. The
Company shall keep the Administrative Agent informed of all material
circumstances bearing upon the right, title and interest of the Company under
the Assigned Agreements.
SECTION 11. Concerning the Administrative Agent
The provisions of Section 11 of the Credit Agreement shall inure to the
benefit of the Administrative Agent in respect of this Agreement and shall be
binding upon the parties to the Credit Agreement in such respect. In furtherance
and not in derogation of the rights, privileges and immunities of the
Administrative Agent therein set forth:
(A) The Administrative Agent is authorized to take all such action as is
provided to be taken by it as Administrative Agent hereunder and all other
action reasonably incidental thereto. As to any matters not expressly provided
for herein (including, without limitation, the timing and methods of realization
upon the Collateral) the Administrative Agent shall act or refrain from acting
in accordance with written instructions from the Majority Lenders or, in the
absence of such instructions, in accordance with its discretion.
(B) The Administrative Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Administrative Agent shall have no duty to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement by the Company.
SECTION 12. Appointment of Co-Administrative Agents
17
At any time or times, in order to comply with any legal requirement in any
jurisdiction, the Administrative Agent may appoint another bank or trust company
or one or more other persons, either to act as co-agent or co-agents, jointly
with the Administrative Agent, or to act as separate agent or agents on behalf
of the Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Administrative
Agent, include provisions for the protection of such co-agent or separate agent
similar to the provisions of Section 11).
SECTION 13. Expenses
In the event that the Company fails to comply with the provisions of the
Credit Agreement or this Agreement, such that the value of any Collateral or the
validity, perfection, rank or value of any Security Interest is thereby
diminished or potentially diminished or put at risk, the Administrative Agent if
requested by the Majority Lenders may, but shall not be required to, effect such
compliance on behalf of the Company, and the Company shall reimburse the
Administrative Agent for the costs thereof on demand. All insurance expenses and
all expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining and shipping the Collateral, any and all excise, property,
sales, and use taxes imposed by any state, federal, or local authority on any of
the Collateral, or in respect of periodic appraisals and inspections of the
Collateral to the extent the same may reasonably be requested by the Majority
Lenders acting through the Administrative Agent from time to time, or in respect
of the sale or other disposition thereof, shall be borne and paid by the
Company; and if the Company fails to promptly pay any portion thereof when due,
except, if no Event of Default has occurred and is continuing, with respect to
taxes which are being contested as permitted by Section 9.02 of the Credit
Agreement, the Administrative Agent or any other Secured Party may, at its
option, but shall not be required to, pay the same and charge the Company's
account therefor, and the Company agrees to reimburse the Administrative Agent
or such Secured Party therefor on demand. All sums so paid or incurred by the
Administrative Agent or any other Secured Party for any of the foregoing and any
and all other sums for which the Company may become liable hereunder and all
costs and expenses (including attorneys' fees, legal expenses and court costs)
reasonably incurred by the Administrative Agent or any other Secured Party in
enforcing or protecting the Security Interests or any of their rights or
remedies under this Agreement, shall, together with interest thereon for each
day until paid at the Post-Default Rate for such day, be additional Secured
Obligations hereunder.
SECTION 14. Termination of Security Interests; Release of Collateral
Upon the repayment in full of all Secured Obligations and the termination
of the Commitments and Letters of Credit under the Credit Agreement, the
Security Interests shall terminate and all rights to the Collateral shall revert
to the Company. At any time and from time to time prior to such termination of
the Security Interests, the Administrative Agent may release all or any part of
the Collateral with the prior consent of the Majority Lenders; provided that if
any such release would constitute a release of all or substantially all of the
security for the obligations of the Company under the Credit Agreement or under
any Note, such release will require the consent
18
of all the Lenders. Upon any such termination of the Security Interests or
release of Collateral, the Administrative Agent will, at the expense of the
Company, execute and deliver to the Company such documents as the Company shall
reasonably request to evidence the termination of the Security Interests or the
release of such Collateral, as the case may be.
SECTION 15. Notices
All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with Section 12.02 of the Credit
Agreement.
SECTION 16. Waivers, Non-Exclusive Remedies
No failure on the part of the Administrative Agent to exercise, and no
delay in exercising and no course of dealing with respect to, any right under
the Credit Agreement or this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise by the Administrative Agent of any right
under the Credit Agreement or this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The rights in this
Agreement and the Credit Agreement are cumulative and are not exclusive of any
other remedies provided by law.
SECTION 17. Successors and Assigns
This Agreement is for the benefit of the Administrative Agent and the other
Secured Parties and their successors and assigns, and in the event of an
assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the Company and its
successors and assigns and the rights of the Company hereunder shall inure to
the benefit of the Company's successors and permitted assigns.
SECTION 18. Changes in Writing
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by the Company and
the Administrative Agent with the consent of the Majority Lenders (or, in the
case of Section 14 or this Section, the Lenders).
SECTION 19. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF
ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW
19
YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF THE COMPANY AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 20. Severability
If any provision hereof is invalid and unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Administrative Agent and the other Secured
Parties in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
SECTION 21. Counterparts
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
APPLIED EXTRUSION TECHNOLOGIES,
INC.
By_____________________________
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By_____________________________
Title:
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
I, Xxxxxx XxXxxxx, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY, that Xxxxx X. Xxxxxxx, Chief Financial Officer and
Treasurer of APPLIED EXTRUSION TECHNOLOGIES, INC., personally known to me to be
the same person whose name is subscribed to the foregoing instrument as such
Chief Financial Officer and Treasurer, appeared before me this day in person and
acknowledged that he signed, executed and delivered the said instrument as his
own free and voluntary act and as the free and voluntary act of said Company,
for the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this 6th day of April, 1994.
[Seal]
__________________________________
Signature of notary public
My Commission expires 0-0-00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
I, Xxxxxx XxXxxxx, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY, that Xxxxxxx X. Xxxxxx, Managing Director of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), personally known to me to be the
same person whose name is subscribed to the foregoing instrument as such
Managing Director, appeared before me this day in person and acknowledged that
he signed, executed and delivered the said instrument as his own free and
voluntary act and as the free and voluntary act of said Company, for the uses
and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this 6th day of April, 1994.
[Seal]
__________________________________
Signature of notary public
My Commission expires 7-1-95
EXHIBIT A
to
COMPANY SECURITY
AGREEMENT
PERFECTION CERTIFICATE
The undersigned, the chief executive officer of Applied Extrusion
Technologies, Inc. a Delaware corporation (the "Company"), hereby certifies with
reference to the Company Security Agreement dated as of April __, 1994, between
the Company and The Chase Manhattan Bank (National Association), as
Administrative Agent (terms defined therein being used herein as therein
defined), to the Administrative Agent and each Lender as follows:
1. Names. (a) The exact corporate name of the Company as it appears in its
certificate of incorporation is as follows:
(b) Set forth below is each other corporate name the Company has had since
its organization, together with the date of the relevant change:
(c) Except as set forth in Schedule 1, the Company has not changed its
identity or corporate structure in any way within the past five years.
[Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature or
jurisdiction of corporate organization. If any such change has occurred, include
in Schedule 1 the information required by paragraphs 1, 2 and 3 of this
certificate as to each acquiree or constituent party to a merger or
consolidation.]
(d) The following is a list of all other names (including trade
names or similar appellations) used by the Company or any of its divisions or
other business units at any time during the past five years:
2. Current Locations. (a) The chief executive office of the Company is
located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the locations where the Company maintains any
books or records relating to any Accounts:
Mailing
Name Address County State
---- ------- ------ -----
(c) The following are all the places of business of the Company not
identified above:
Mailing
Name Address County State
---- ------- ------ -----
(d) The following are all the locations where the Company maintains any
Inventory not identified above:
Mailing
Name Address County State
---- ------- ------ -----
(e) The following are the names and addresses of all Persons other than the
Company which have possession of any of the Company's Inventory:
Mailing
Name Address County State
---- ------- ------ -----
3. Prior Locations. (a) Set forth below is the information required by
subparagraphs (a), (b) and (c) of paragraph 2 with respect to each location or
place of business maintained by the Company at any time during the past five
years:
(b) Set forth below is the information required by subparagraphs (d) and
(e) of paragraph 2 with respect to each location or bailee where or with whom
Inventory has been lodged at any time during the past four months:
4. Unusual Transactions. [Except as set forth in Schedule 4,] all Accounts
have been originated by the Company and all Inventory and Equipment has been
acquired by the Company in the ordinary course of its business.
5. File Search Reports. Attached hereto as Schedule 5(A) is a true copy of
a file search report from the Uniform Commercial Code filing officer in each
jurisdiction identified in paragraph 2 or 3 above with respect to each name set
forth in
2
paragraph 1 above. Attached hereto as Schedule 5(B) is a true copy of each
financing statement or other filing identified in such file search reports.
6. UCC Filings. A duly signed financing statement on Form UCC-1 in
substantially the form of Schedule 6(A) hereto has been duly filed in the
Uniform Commercial Code filing office in each jurisdiction identified in
paragraph 2 hereof. Attached hereto as Schedule 6(B) is a true copy of each such
filing duly acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a schedule setting
forth filing information with respect to the filings described in paragraph 6
above.
8. Filing Fees. All filing fees and taxes payable in connection with the
filings described in paragraph 6 above have been paid.
IN WITNESS WHEREOF, I have hereunto set my hands this __ day of
__________, 199_.
____________________________
Title:
3
SCHEDULE 6(A)
Description of Collateral
All accounts, chattel paper, contract rights, general intangibles, inventory,
equipment and documents, now owned or hereafter acquired, wherever located, and
all proceeds thereof.
4
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File Number Date of Filing/2/
------ -------------- ----------- --------------
------------------
/2/Indicate lapse date, if other than fifth anniversary.
5
EXHIBIT B
to
COMPANY SECURITY
AGREEMENT
PATENT SECURITY AGREEMENT
(PATENTS, PATENT APPLICATIONS AND PATENT LICENSES)
WHEREAS, Applied Extrusion Technologies, Inc., a Delaware corporation
(herein referred to as "Grantor") owns the Patents (as defined in the Security
Agreement referred to below) (including design patents and applications for
patents) listed on Schedule 1 annexed hereto, and is a party to the Patent
Licenses (as defined in the Security Agreement referred to below) identified in
Schedule 1 annexed hereto;
WHEREAS, Grantor, certain lenders and The Chase Manhattan Bank
(National Association), as administrative agent, are parties to a Credit
Agreement of even date herewith (as the same may be amended and in effect from
time to time among said parties and such lenders (the "Lenders") as may from
time to time be parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Company Security Agreement of
even date herewith (as said Agreement may be amended and in effect from time to
time, the "Security Agreement") between Grantor and The Chase Manhattan Bank
(National Association), as administrative agent for the secured parties referred
to therein (in such capacity, together with its successors in such capacity,
"Grantee"), Grantor has granted to Grantee for the benefit of such secured
parties a continuing security interest in substantially all the assets of
Grantor, including all right, title and interest of Grantor in, to and under the
Patent Collateral (as defined herein) whether now owned or existing or hereafter
acquired or arising, to secure the Secured Obligations (as defined in the
Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Patent Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Patent (including each design patent and patent
application), including, without limitation, each Patent (including
each design patent and patent application) referred to in Schedule 1
annexed hereto;
(ii) each Patent License, including, without limitation, each
Patent License identified in Schedule 1 annexed hereto; and
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any
claim by Grantor against third parties for past, present or future
infringement of any Patent (including any design patent), including,
without limitation, any Patent referred to in Schedule 1 annexed hereto
(including, without limitation, any such Patent issuing from any
application referred to in Schedule 1 annexed hereto), and all rights
and benefits of Grantor under any Patent License, including, without
limitation, any Patent License identified in Schedule 1 annexed hereto.
Grantor hereby irrevocably constitutes and appoints Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of Grantor or
in its name, from time to time, in Grantee's discretion, so long as any Event of
Default (as defined in the Credit Agreement) has occurred and is continuing, to
take with respect to the Patent Collateral any and all appropriate action which
Grantor might take with respect to the Patent Collateral and to execute any and
all documents and instruments which may be necessary or desirable to carry out
the terms of this Patent Security Agreement and to accomplish the purposes
hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or dispose
of, or grant any rights with respect to, or mortgage or otherwise encumber, any
of the foregoing Patent Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor does
hereby further acknowledge and affirm that the rights and remedies of Grantee
with respect to the security interest in the Patent Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.
IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement
to be duly executed by its officer thereunto duly authorized as of the ____ day
of April, 1994.
APPLIED EXTRUSION TECHNOLOGIES,
INC.
By:_____________________________
Title:
Acknowledged:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:________________________
Title:
0
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
I, ______________________, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of APPLIED EXTRUSION TECHNOLOGIES, INC., personally known to me
to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
19__.
[Seal]
_________________________________
Signature of notary public
My Commission expires ___________
3
Schedule 1
to Patent
Security Agreement
PATENTS
A. U.S. Patents and Design Patents
I.D. No. Patent No. Issue Date Title
B. U.S. Patent Applications
Serial No. Date Filed Title
C. Foreign Patents
I.D. No. Patent No. Issue Date Title
EXCLUSIVE PATENT LICENSES
Name of Parties Date of Subject
Agreement Licensor/Licensee Agreement Matter
4
EXHIBIT C
to
COMPANY SECURITY
AGREEMENT
TRADEMARK SECURITY AGREEMENT
(TRADEMARKS, TRADEMARK REGISTRATIONS, TRADEMARK
APPLICATIONS AND TRADEMARK LICENSES)
WHEREAS, Applied Extrusion Technologies, Inc., a Delaware corporation
(herein referred to as "Grantor"), owns the Trademarks (as defined in the
Security Agreement referred to below) listed on Schedule 1 annexed hereto, and
is a party to the Trademark Licenses (as defined in the Security Agreement
referred to below) identified in Schedule 1 annexed hereto;
WHEREAS, Grantor, certain lenders and The Chase Manhattan Bank (National
Association), as administrative agent, are parties to a Credit Agreement of even
date herewith (as the same may be amended and in effect from time to time among
said parties and such lenders (the "Lenders") as may from time to time be
parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Company Security Agreement of even
date herewith (as said Agreement may be amended and in effect from time to time,
the "Security Agreement") between Grantor and The Chase Manhattan Bank (National
Association), as administrative agent for the secured parties referred to
therein (in such capacity, together with its successors in such capacity,
"Grantee"), Grantor has granted to Grantee for the benefit of such secured
parties a security interest in substantially all the assets of Grantor,
including all right, title and interest of Grantor in, to and under the
Trademark Collateral (as defined herein), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined in
the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Trademark Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Trademark, including, without limitation, each
Trademark application referred to in Schedule 1 annexed hereto, and
all of the goodwill of the business connected with the use of, or
symbolized by, each such Trademark;
(ii) each Trademark License, including, without limitation, each
Trademark License identified in Schedule 1 annexed hereto, and all of
the goodwill of the business connected with the use of, or symbolized
by, each Trademark licensed pursuant thereto; and
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by
Grantor against third parties for past, present or future unfair
competition with, or violation of intellectual property rights in
connection with or injury to, or infringement or dilution of, any
Trademark, including, without limitation, any Trademark referred to in
Schedule 1 hereto, and all rights and benefits of Grantor under any
Trademark License, including, without limitation, any Trademark
License identified in Schedule 1 hereto, or for injury to the goodwill
associated with any of the foregoing.
Grantor hereby irrevocably constitutes and appoints Grantee and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of Grantor or in its
name, from time to time, in Grantee's discretion, so long as any Event of
Default (as defined in the Credit Agreement) has occurred and is continuing, to
take with respect to the Trademark Collateral any and all appropriate action
which Grantor might take with respect to the Trademark Collateral and to execute
any and all documents and instruments which may be necessary or desirable to
carry out the terms of this Trademark Security Agreement and to accomplish the
purposes hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or dispose
of, or grant any rights with respect to, or mortgage or otherwise encumber, any
of the foregoing Trademark Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor does
hereby further acknowledge and affirm that the rights and remedies of Grantee
with respect to the security interest in the Trademark Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.
2
IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to
be duly executed by its officer thereunto duly authorized as of the ____ day of
April __, 1994.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By:____________________________________
Title:
Acknowledged:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: ________________________
Title:
0
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
I, ______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of APPLIED EXTRUSION TECHNOLOGIES, INC., personally known to me
to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
19__.
[Seal]
___________________________________
Signature of notary public
My Commission expires __________
4
Schedule 1
to Trademark
Security Agreement
U.S. TRADEMARKS AND TRADEMARK REGISTRATIONS
A. U.S. Trademarks and Trademark Registrations
Reg. No. Reg. Date
-------- ---------
Xxxx
----
B. U.S. Trademark Applications
Serial No. Date Filed Xxxx
---------- ---------- ----
EXCLUSIVE TRADEMARK LICENSES
Name of Parties Date of Subject
Agreement Licensor/Licensee Agreement Matter
--------- ----------------- --------- ------
5
EXHIBIT D
to
COMPANY SECURITY
AGREEMENT
COPYRIGHT SECURITY AGREEMENT
(COPYRIGHTS, COPYRIGHT REGISTRATIONS, COPYRIGHT
APPLICATIONS AND COPYRIGHT LICENSES)
WHEREAS, Applied Extrusion Technologies, Inc., a Delaware corporation
(herein referred to as "Grantor") owns the Copyrights (as defined in the
Security Agreement referred to below) listed on Schedule 1 annexed hereto, and
is a party to the Copyright Licenses (as defined in the Security Agreement
referred to below) identified in Schedule 1 annexed hereto;
WHEREAS, Grantor, certain lenders and The Chase Manhattan Bank (National
Association), as administrative agent, are parties to a Credit Agreement of even
date herewith (as the same may be amended and in effect from time to time among
said parties and such lenders (the "Lenders") as may from time to time be
parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Company Security Agreement of even
date herewith (as said Agreement may be amended and in effect from time to time,
the "Security Agreement") between Grantor and The Chase Manhattan Bank (National
Association), as administrative agent for the secured parties referred to
therein (in such capacity, together with its successors in such capacity, the
"Grantee"), Grantor has granted to Grantee for the benefit of such secured
parties a security interest in substantially all the assets of the Grantor,
including all right, title and interest of Grantor in, to and under the
Copyright Collateral (as defined herein), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined in
the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Copyright Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Copyright, including, without limitation, each
Copyright referred to in Schedule 1 annexed hereto;
(ii) each Copyright License, including, without limitation, each
Copyright License identified in Schedule 1 annexed hereto; and
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by
Grantor against third parties for past, present or future infringement
of any Copyright, including, without limitation, any Copyright
referred to in Schedule 1 annexed hereto, and all rights and benefits
of Grantor under any Copyright License, including, without limitation,
any Copyright License identified in Schedule 1 annexed hereto.
Grantor hereby irrevocably constitutes and appoints Grantee and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of Grantor or in its
name, from time to time, in Grantee's discretion, so long as any Event of
Default (as defined in the Credit Agreement) has occurred and is continuing, to
take with respect to the Copyright Collateral any and all appropriate action
which Grantor might take with respect to the Copyright Collateral and to execute
any and all documents and instruments which may be necessary or desirable to
carry out the terms of this Copyright Security Agreement and to accomplish the
purposes hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or dispose
of, or grant any rights with respect to, or mortgage or otherwise encumber, any
of the foregoing Copyright Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor does
hereby further acknowledge and affirm that the rights and remedies of Grantee
with respect to the security interest in the Copyright Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.
2
IN WITNESS WHEREOF, Grantor has caused this Copyright Security Agreement to
be duly executed by its officer thereunto duly authorized as of the ____ day of
April __, 1994.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By:_______________________________
Title:
Acknowledged:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:_____________________
Title:
0
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
I, ______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of APPLIED EXTRUSION TECHNOLOGIES, INC., personally known to me
to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
19__.
[Seal]
___________
Signature of notary public
My Commission expires __________
4
Schedule 1
to Copyright
Security Agreement
COPYRIGHTS AND COPYRIGHT REGISTRATION
Registration No. Reg. Date Title
---------------- --------- -----
COPYRIGHT APPLICATIONS
Serial No. Date Filed Title
---------- ---------- -----
COPYRIGHT LICENSES
Name of Parties Date of Subject
Agreement Licensor/Licensee Agreement Matter
--------- ----------------- --------- ------
5
EXHIBIT E
to
COMPANY SECURITY
AGREEMENT
ROLLING STOCK
Rolling Stock AAR
[Xxxxxx] Cars Designation
------------- -----------
AAR
[Tank] Cars Designation
----------- -----------
ROLLING STOCK LEASES AND LEASED ROLLING STOCK
Agreement and AAR
Cars Designation
---- -----------
EXHIBIT F
to
COMPANY SECURITY
AGREEMENT
OPINION OF
COUNSEL FOR THE COMPANY
* * * *
The Security Agreement creates and constitutes as security for the
Secured Obligations (as defined in the Security Agreement and including any
future obligations which are Secured Obligations), in favor of the
Administrative Agent for the ratable benefit of the Secured Parties, a valid
security interest in all right, title and interest of the Company in the
Collateral and all right, title and interest of the Company in the Collateral
Accounts. The security interests of the Administrative Agent in all right, title
and interest of the Company in the Collateral created by the Security Agreement
constitute perfected security interests under the Uniform Commercial Code, as in
effect in the State of _______ ("UCC"), the Interstate Commerce Act ("ICA"), the
United States Copyright Act ("CA"), the United States Patent Act ("PA") and the
United States Trademark Act ("TA"), to the extent that a security interest
therein may be perfected under the UCC, the ICA, the CA, the PA or the TA.
Insofar as the priority thereof is governed by the UCC, the priority of the
security interests created by the Security Agreement in the Collateral in which
the Company has rights on the date hereof will be the same with respect to Loans
made or deemed made or Letters of Credit issued pursuant to the Credit Agreement
after the date hereof as with respect to any such Loans made, Letters of Credit
issued or obligations incurred on the date hereof, except to the extent that any
priority may be affected by any security interest, lien or other encumbrance
imposed by law in favor of any government or governmental authority or agency.
Unless otherwise specifically defined herein, each term defined herein has the
meaning assigned to such term in the Security Agreement.
With respect to the enforceability of the Security Documents, we
express no opinion as to the availability of specific performance. Moreover, our
opinion with respect to the enforceability of the Security Documents is subject
to the further qualification that certain remedial provisions thereof may be
limited by the law of the State of _______ and applicable law of the United
States of America, but such laws do not, in our opinion, make the remedies
afforded thereby inadequate for the practical realization of the benefits of the
security intended to be provided thereby.
EXHIBIT G
to
COMPANY SECURITY
AGREEMENT
[FORM OF LOCKBOX LETTER]
___________, 199_
[Name and Address of Bank]
Re: Applied Extrusion Technologies, Inc.
Gentlemen:
We hereby notify you that effective _____________, 199_, we have
transferred exclusive ownership and control of our [lock-box] account[s] No[s].
_________________ (the "Account[s]") maintained with you to The Chase Manhattan
Bank (National Association) as Administrative Agent (the "Administrative
Agent").
We also hereby notify you that the Administrative Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Account[s], including, without limitation, the right to
specify when payments are to be made out of or in connection with the
Account[s].
By its acknowledgment below, the Administrative Agent hereby instructs you
that until such time as it specifies otherwise, all payments to be made by you
out of or in connection with the Account[s] shall be made as Applied Extrusion
Technologies, Inc. may direct.
All funds deposited into the Account[s] will not be subject to deductions,
set-off, banker's lien or any other right in favor of any other person than the
Administrative Agent, except that you may set-off against the Account[s] (i) the
face amount of any check deposited in and credited to such Account[s] which is
subsequently returned for any reason and (ii) the amount of any accrued but
unpaid reasonable and customary cash management fees. Your compensation for
providing the services contemplated herein shall be as mutually agreed between
you and us from time to time and we will continue to pay such compensation.
Please confirm your acknowledgment of and agreement to the foregoing
instructions by signing in the space provided below.
Very truly yours,
APPLIED EXTRUSION TECHNOLOGIES, INC.
By___________________________
Title:
Acknowledged and agreed
to as of this ____ day of
________, 199_.
[BANK]
By_________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By_________________________
Title:
2
EXHIBIT G
COMPANY PLEDGE AGREEMENT
AGREEMENT dated as of April 7, 1994 between APPLIED EXTRUSION TECHNOLOGIES,
INC., a Delaware corporation (with its successors, the "Company"), and THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION), as administrative agent (with its
successors in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Company, certain lenders (the "Lenders") and the
Administrative Agent are parties to a Credit Agreement dated as of April 7, 1994
(as the same may be amended and in effect from time to time, the "Credit
Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit (by making loans and issuing letters of credit) to be made
by the Lenders to the Company;
WHEREAS, in order to induce the Lenders and the Administrative Agent to
enter into the Credit Agreement, the Company has agreed to grant a continuing
security interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Credit Agreement, including, without limitation, its
obligations under the notes issued pursuant to the Credit Agreement and its
reimbursement obligations with respect to letters of credit issued pursuant
thereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions
Terms defined in the Credit Agreement and not otherwise defined herein
have, as used herein, the respective meanings provided for therein. The
following additional terms, as used herein, have the following respective
meanings:
"Collateral" has the meaning assigned to such term in Section 3(A).
"Collateral Account" has the meaning set forth in the Security Agreement.
"Issuer" means the issuers listed in Schedule A hereto.
"Pledged Instruments" means (i) the intercompany notes, if any, listed on
Schedule B hereto and (ii) any instrument required to be pledged to the
Administrative Agent pursuant to Section 3(B).
"Pledged Securities" means the Pledged Instruments and the Pledged Stock.
"Pledged Stock" means (i) the shares of stock of each Issuer set forth on
Schedule A hereto and (ii) any other capital stock required to be pledged to the
Administrative Agent pursuant to Section 3(B).
"Secured Obligations" means the obligations secured under this Agreement,
including (a) all principal of and interest (including, without limitation, any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such case, proceeding or
other action) on any Loan to the Company under, or any Note issued by the
Company pursuant to, or any Reimbursement Obligation of the Company under, the
Credit Agreement; (b) all other amounts payable by the Company under the Credit
Agreement; (c) all other amounts payable by the Company hereunder or under any
other Security Document; and (d) any renewals or extensions of any of the
foregoing.
"Secured Parties" means (i) the Lenders and (ii) the Administrative Agent.
"Security Agreement" means the Company Security Agreement dated as of April
7, 1994 between the Company and the Administrative Agent, as the same may be
modified and supplemented and in effect from time to time.
"Security Interests" means the security interests in the Collateral granted
hereunder securing the Secured Obligations.
Unless otherwise defined herein, or unless the context otherwise requires,
all terms used herein which are defined in the New York Uniform Commercial Code
as in effect on the date hereof shall have the meanings therein stated.
SECTION 2. Representations and Warranties
The Company represents and warrants as follows:
(A) Title to Pledged Securities. The Company owns all of the Pledged
Securities, free and clear of any Liens other than the Security Interests. The
Pledged Stock includes all of the issued and outstanding capital stock of each
Issuer. All of the Pledged Stock has been duly authorized and validly issued,
and is fully paid and non-assessable, and is subject to no options to purchase
or similar rights of any Person. The Company is not and will not become a party
to or otherwise bound by any agreement, other than this Agreement, which
restricts in any manner the rights of any present or future holder of any of the
Pledged Securities with respect thereto.
(B) Validity, Perfection and Priority of Security Interests. Upon the
delivery of the Pledged Instruments and the certificates representing the
Pledged Stock to the Administrative Agent in accordance with Section 4 hereof,
the Administrative Agent will have valid and perfected security interests in the
Collateral subject to no prior Lien. No registration, recordation or filing with
any governmental body, agency or official is required in connection with the
execution or delivery of this Agreement or necessary for the validity or
enforceability hereof or for the perfection or enforcement of the Security
Interests. Neither the Company nor any of its Subsidiaries has
2
performed or will perform any acts which might prevent the Administrative Agent
from enforcing any of the terms and conditions of this Agreement or which would
limit the Administrative Agent in any such enforcement.
(C) UCC Filing Locations. The chief executive office of the Company is
located at the address specified below its name on the signature pages hereof.
Under the Uniform Commercial Code as in effect in the State in which such office
is located, no local filing is required to perfect a security interest in
collateral consisting of general intangibles.
(D) Applied Extrusion Technologies (UK), Limited does not own or hold
assets with a fair market value in excess of $50,000 and has not had operating
profit for any previous fiscal year in excess of $50,000.
SECTION 3. The Security Interests
In order to secure the full and punctual payment of the Secured Obligations
in accordance with the terms thereof, and to secure the performance of all the
obligations of the Company hereunder and under the Credit Agreement:
(A) The Company hereby assigns and pledges to and with the Administrative
Agent for the benefit of the Secured Parties and grants to the Administrative
Agent for the benefit of the Secured Parties security interests in the Pledged
Securities, and all of its rights and privileges with respect thereto, and all
proceeds, income and profits thereon, and all interest, dividends and other
payments and distributions with respect thereto (the "Collateral").
Contemporaneously with the execution and delivery hereof, the Company is
delivering the certificates representing the Pledged Instruments and the
certificates representing the Pledged Stock in pledge hereunder.
(B) In the event that any Issuer at any time issues any additional or
substitute shares of capital stock of any class or any note, or owes any other
Indebtedness to the Company evidenced by an instrument, the Company will
immediately pledge and deposit with the Administrative Agent certificates
representing all such shares and such note or an instrument evidencing such
other Indebtedness as additional security for the Secured Obligations. All such
shares, notes and instruments constitute Pledged Securities and are subject to
all provisions of this Agreement.
(C) The Security Interests are granted as security only and shall not
subject the Administrative Agent or any other Secured Party to, or transfer or
in any way affect or modify, any obligation or liability of the Company or any
of its Subsidiaries with respect to any of the Collateral or any transaction in
connection therewith.
SECTION 4. Delivery of Pledged Securities
All Pledged Instruments delivered to the Administrative Agent by the
Company pursuant hereto shall be endorsed in suitable form for transfer by
endorsement and delivery by the Administrative Agent, and accompanied by any
required transfer tax stamps, all in form and substance satisfactory to the
Administrative Agent. All certificates representing Pledged Stock delivered to
the
3
Administrative Agent by the Company pursuant hereto shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, with signatures appropriately guaranteed,
and accompanied by any required transfer tax stamps, all in form and substance
satisfactory to the Administrative Agent.
SECTION 5. Filing; Further Assurances
(A) The Company agrees that it will, at its expense and in such manner and
form as the Administrative Agent may require, execute, deliver, file and record
any financing statement, specific assignment or other paper and take any other
action that the Administrative Agent may determine to be necessary or desirable
in order to create, preserve, perfect or validate any Security Interest or to
enable the Administrative Agent to exercise and enforce its rights hereunder
with respect to any of the Collateral. To the extent permitted by applicable
law, the Company hereby authorizes the Administrative Agent to execute and file,
in the name of the Company or otherwise, Uniform Commercial Code financing
statements (which may be carbon, photographic or other reproductions of this
Agreement or of a financing statement relating to this Agreement) which the
Administrative Agent in its sole discretion may deem necessary or appropriate to
further perfect the Security Interests.
(B) The Company agrees that it will not change (i) its name, identity or
corporate structure in any manner or (ii) the location of its chief executive
office unless it shall have given the Administrative Agent not more than four
months' nor less than 10 days' prior notice thereof.
SECTION 6. Record Ownership of Pledged Stock.
The Administrative Agent may at any time or from time to time during the
continuance of an Event of Default, in its sole discretion, cause any or all of
the Pledged Stock to be transferred of record into the name of the
Administrative Agent or its nominee. The Company will promptly give to the
Administrative Agent copies of any notices or other communications received by
it with respect to Pledged Stock registered in the name of the Company and the
Administrative Agent will promptly give to the Company copies of any notices and
communications received by the Administrative Agent with respect to Pledged
Stock registered in the name of the Administrative Agent or its nominee.
SECTION 7. Right to Receive Distributions on Collateral.
The Administrative Agent shall have the right to receive all dividends,
interest and other payments and distributions made upon or with respect to the
Collateral ("Collateral Distributions") other than cash dividends ("Cash
Dividends") and, during the continuance of any Event of Default, to receive Cash
Dividends and to retain all Collateral Distributions, in each case as Collateral
hereunder, and the Company shall take all such action as the Administrative
Agent may deem necessary or appropriate to give effect to such right. All
Collateral Distributions which are received by the Company shall be received in
trust for the benefit of the Administrative Agent and the other Secured Parties
and, if the Administrative Agent so directs during the
4
continuance of an Event of Default, shall be segregated from other funds of the
Company and shall, forthwith upon demand by the Administrative Agent during the
continuance of an Event of Default, be paid over to the Administrative Agent as
Collateral in the same form as received (with any necessary endorsement, without
recourse). After all Events of Default have been cured, the Administrative
Agent's right to retain Collateral Distributions under this Section 7 shall
cease.
SECTION 8. Right to Vote Pledged Stock.
Unless an Event of Default shall have occurred and be continuing, the
Company shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Pledged Stock, and the
Administrative Agent shall, upon receiving a written request from the Company
accompanied by a certificate signed by its principal financial officer stating
that no Event of Default has occurred and is continuing, deliver to the Company
or as specified in such request such proxies, powers of attorney, consents,
ratifications and waivers in respect of any of the Pledged Stock which is
registered in the name of the Administrative Agent or its nominee as shall be
specified in such request and be in form and substance satisfactory to the
Administrative Agent.
If an Event of Default shall have occurred and be continuing, the
Administrative Agent shall have the right to the extent permitted by law, and
the Company shall take all such action as may be necessary or appropriate to
give effect to such right, to vote and to give consents, ratifications and
waivers, and take any other action with respect to any or all of the Pledged
Stock with the same force and effect as if the Administrative Agent were the
absolute and sole owner thereof.
SECTION 9. General Authority
The Company hereby irrevocably appoints the Administrative Agent its true
and lawful attorney, with full power of substitution, in the name of the
Company, the Administrative Agent, the Secured Parties or otherwise, for the
sole use and benefit of the Administrative Agent and the other Secured Parties,
but at the expense of the Company, to the extent permitted by law to exercise,
at any time and from time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect to all or any of the
Collateral:
(i) to demand, xxx for, collect, receive and give acquittance
for any and all monies due or to become due upon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually as if
the Administrative Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
5
provided that the Administrative Agent shall give the Company not less than ten
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral except any Collateral which threatens to
decline speedily in value or is of a type customarily sold on a recognized
market. The Administrative Agent and the Company agree that such notice
constitutes "reasonable notification" within the meaning of Section 9-504(3) of
the Uniform Commercial Code.
SECTION 10. Remedies upon Event of Default
If any Event of Default shall have occurred and be continuing, the
Administrative Agent may exercise on behalf of the Secured Parties all the
rights of a secured party under the Uniform Commercial Code (to the extent
permitted by law, whether or not in effect in the jurisdiction where such rights
are exercised) and, in addition, the Administrative Agent may, without being
required to give any notice, except as herein provided or as may be required by
law, (i) apply the cash, if any, then held by it as Collateral as specified in
Section 13 and (ii) if there shall be no such cash or if such cash shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral or
any part thereof at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, and at such
price or prices as the Administrative Agent may deem satisfactory. The
Administrative Agent or any other Secured Party may be the purchaser of any or
all of the Collateral so sold at any public sale (or, if the Collateral is of a
type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations, at any private sale)
and thereafter hold the same, absolutely, free from any right or claim of
whatsoever kind.
The Administrative Agent is authorized, in connection with any such sale,
if it deems it advisable so to do, (i) to restrict the prospective bidders on or
purchasers of any of the Pledged Securities to a limited number of sophisticated
investors who will represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution or sale of any of
such Pledged Securities, (ii) to cause to be placed on any or all of the Pledged
Instruments and on certificates for any or all of the Pledged Stock or on any
other securities pledged hereunder a legend to the effect that such security has
not been registered under the Securities Act of 1933 and may not be disposed of
in violation of the provisions of said Act, and (iii) to impose such other
limitations or conditions in connection with any such sale as the Administrative
Agent deems necessary or advisable in order to comply with said Act or any other
law. The Company covenants and agrees that it will execute and deliver such
documents and take such other action as the Administrative Agent deems necessary
or advisable in order that any such sale may be made in compliance with law.
Upon any such sale the Administrative Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the Collateral so sold absolutely and free
from any claim or right of whatsoever kind, including any equity or right of
redemption of the Company which may be waived, and the Company, to the extent
permitted by law, hereby specifically WAIVES all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
adopted. The notice (if any) of such sale required by Section 9 shall (1) in
case of a public sale, state the time and place fixed for such sale, (2) in case
of sale at a broker's board or on a securities exchange,
6
state the board or exchange at which such sale is to be made and the day on
which the Collateral, or the portion thereof so being sold, will first be
offered for sale at such board or exchange, and (3) in the case of a private
sale, state the day after which such sale may be consummated. Any such public
sale shall be held at such time or times within ordinary business hours and at
such place or places as the Administrative Agent may fix in the notice of such
sale. At any such sale the Collateral may be sold in one lot as an entirety or
in separate parcels, as the Administrative Agent may determine. The
Administrative Agent shall not be obligated to make any such sale pursuant to
any such notice. The Administrative Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Administrative Agent
until the selling price is paid by the purchaser thereof, but the Administrative
Agent shall not incur any liability in case of the failure of such purchaser to
take up and pay for the Collateral so sold and, in case of any such failure,
such Collateral may again be sold upon like notice. The Administrative Agent,
instead of exercising the power of sale herein conferred upon it, may proceed by
a suit or suits at law or in equity to foreclose the Security Interests and sell
the Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
SECTION 11. Expenses The Company agrees that it will forthwith upon demand
pay to the Administrative Agent:
(i) the amount of any taxes which the Administrative Agent may
have been required to pay by reason of the Security Interests or to
free any of the Collateral from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses, including
the fees and disbursements of counsel and of any other experts
employed to evaluate, protect or realize the value of the Collateral,
which the Administrative Agent may incur in connection with (w) the
administration or enforcement of this Agreement, including such
expenses as are incurred to preserve the value of the Collateral and
the validity, perfection, rank and value of any Security Interest, (x)
the collection, sale or other disposition of any of the Collateral,
(y) the exercise by the Administrative Agent of any of the rights
conferred upon it hereunder or (z) any Default or Event of Default.
Any such amount not paid on demand shall bear interest for each day until
paid at the Post-Default Rate for such day.
SECTION 12. Limitation on Duty of Administrative Agent in Respect of
Collateral.
Beyond the exercise of reasonable care in the custody thereof, th
Administrative Agent shall have no duty as to any Collateral in its possession
or control or in the possession or control of any agent or bailee or any income
thereon or
7
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which it accords its own property, and shall not be liable or responsible for
any loss or damage to any of the Collateral, or for any diminution in the value
thereof, by reason of the act or omission of any agent or bailee selected by the
Administrative Agent in good faith.
SECTION 13. Application of Proceeds
(A) Upon the occurrence and during the continuance of an Event of Default,
the proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held shall be applied by the Administrative Agent in the
following order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to the Administrative
Agent and its agents and counsel, and all expenses, liabilities and
advances incurred or made by the Administrative Agent in connection
therewith, and any other unreimbursed expenses for which the
Administrative Agent or any other Secured Party is to be reimbursed
pursuant to Section 12.03 of the Credit Agreement or Section 11 hereof
and unpaid fees owing to the Administrative Agent under the Credit
Agreement;
second, to the ratable payment of accrued but unpaid interest on
the Secured Obligations;
third, to the ratable payment of unpaid principal of the Secured
Obligations;
fourth, to the ratable payment of all other Secured Obligations,
until all Secured Obligations shall have been paid in full; and
finally, to payment to the Company or its successors or assigns,
or as a court of competent jurisdiction may direct, of any surplus
then remaining from such proceeds.
(B) The Administrative Agent may make distributions hereunder in cash or in
kind or, on a ratable basis, in any combination thereof. The Administrative
Agent shall invest all amounts to be applied to Letter of Credit Liabilities in
Liquid Investments selected by it and hold such amount in trust for application
to future drawings under the Letters of Credit notified to it by the issuing
Lenders in the order in which such drawings are made. If the Administrative
Agent holds any amounts which were distributable in respect of Letter of Credit
Liabilities after the Letters of Credit have expired and all amounts payable
with respect thereto have been paid, such amounts shall be applied in the order
set forth in subsection (A) above.
8
(C) In making the determinations and allocations required by this Section,
the Administrative Agent shall have no liability to any of the Lenders for
actions taken in reliance on information supplied by the Lenders as to the
amounts of the Secured Obligations held by them. All distributions made by the
Administrative Agent pursuant to this Section shall be final and the
Administrative Agent shall have no duty to inquire as to the application by the
Lenders of any amount distributed to them. However, if at any time the
Administrative Agent determines that an allocation or distribution previously
made pursuant to this Section was based on a mistake of fact (including, without
limiting the generality of the foregoing, mistakes based on an assumption that
principal or interest has been paid by payments which are subsequently recovered
from the recipient thereof through the operation of any bankruptcy,
reorganization, insolvency or other laws or otherwise), the Administrative Agent
may in its discretion, but shall not be obligated to, adjust subsequent
allocations and distributions hereunder so that, on a cumulative basis, the
Secured Parties receive the distributions to which they would have been entitled
if such mistake of fact had not been made.
SECTION 14. Concerning the Administrative Agent
The provisions of Section 11 of the Credit Agreement shall inure to the
benefit of the Administrative Agent in respect of this Agreement and shall be
binding upon the parties to the Credit Agreement in such respect. In furtherance
and not in derogation of the rights, privileges and immunities of the
Administrative Agent therein set forth:
(A) The Administrative Agent is authorized to take all such action as is
provided to be taken by it as Administrative Agent hereunder and all other
action reasonably incidental thereto. As to any matters not expressly provided
for herein (including, without limitation, the timing and methods of realization
upon the Collateral), the Administrative Agent shall act or refrain from acting
in accordance with written instructions from the Majority Lenders or, in the
absence of such instructions, in accordance with its discretion.
(B) The Administrative Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Administrative Agent shall have no duty to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement by the Company.
SECTION 15. Appointment of Co-Administrative Agents
At any time or times, in order to comply with any legal requirement in any
jurisdiction, the Administrative Agent may appoint another bank or trust company
or one or more other persons, either to act as co-administrative agent or
co-administrative agents, jointly with the Administrative Agent, or to act as
separate administrative agent or administrative agents on behalf of the Lenders
with such
9
power and authority as may be necessary for the effectual operation of the
provisions hereof and may be specified in the instrument of appointment (which
may, in the discretion of the Administrative Agent, include provisions for the
protection of such co-administrative agent or separate administrative agent
similar to the provisions of Section 14).
SECTION 16. Termination of Security Interests; Release of Collateral
Upon the repayment in full of all Secured Obligations and the termination
of the Commitments and Letters of Credit under the Credit Agreement, the
Security Interests shall terminate and all rights to the Collateral shall revert
to the Company. At any time and from time to time prior to such termination of
the Security Interests, the Administrative Agent may release all or any part of
the Collateral with the prior consent of the Majority Lenders; provided that if
any such release would constitute a release of all or substantially all of the
security for the obligations of the Company under the Credit Agreement or under
any Note, such release will require the consent of all the Lenders. Upon any
such termination of the Security Interests or release of Collateral, the
Administrative Agent will, at the expense of the Company, execute and deliver to
the Company such documents as the Company shall reasonably request to evidence
the termination of the Security Interests or the release of such Collateral, as
the case may be.
SECTION 17. Notices
All notices, communications and distributions hereunder shall be given in
accordance with Section 12.02 of the Credit Agreement.
SECTION 18. Waivers, Non-Exclusive Remedies
No failure on the part of the Administrative Agent to exercise, and no
delay in exercising and no course of dealing with respect to, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise by the Administrative Agent of any right under the Credit
Agreement or this Agreement preclude any other or further exercise thereof or
the exercise of any other right. The rights in this Agreement and the Credit
Agreement are cumulative and are not exclusive of any other remedies provided by
law.
SECTION 19. Successors and Assigns
This Agreement is for the benefit of the Administrative Agent and the other
Secured Parties and their successors and assigns, and in the event of an
assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the Company and its
successors and assigns and the rights of the Company hereunder shall inure to
the benefit of the Company's successors and permitted assigns.
SECTION 20. Changes in Writing
10
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by the Company and
the Administrative Agent with the consent of the Majority Lenders (or, in the
case of Section 16 and this Section, the Lenders).
SECTION 21. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF
ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE COMPANY AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 22. Severability
If any provision hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Administrative Agent and the Lenders in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 23. Counterparts
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By_______________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By_______________________
Title:
12
EXHIBIT H
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY dated as of April __, 1994 of Applied Extrusion
Technologies (Canada), Inc., a Delaware corporation (the "Guarantor") in favor
of The Chase Manhattan Bank (National Association), as administrative agent (the
"Administrative Agent").
W I T N E S S E T H :
WHEREAS, Applied Extrusion Technologies, Inc., a Delaware corporation (the
"Company"), certain lenders (the "Lenders") and the Administrative Agent, have
entered into a Credit Agreement dated as of April __, 1994 (as the same may be
amended and in effect from time to time, the "Credit Agreement"), providing,
subject to the terms and conditions thereof, for extensions of credit (by making
loans and issuing letters of credit) to be made by the Lenders to the Company;
WHEREAS, the Company owns all of the outstanding shares of capital stock of
the Guarantor;
WHEREAS, it is a condition to the borrowing of the initial loans under the
Credit Agreement that the Guarantor executes and delivers a Subsidiary Guaranty
whereby the Guarantor shall guarantee the payment when due of all principal,
interest and other amounts that shall be at any time payable by the Company
under the Credit Agreement, the Security Documents; and
WHEREAS, in order to induce the Lenders and the Administrative Agent to
enter into the Credit Agreement, the Guarantor is willing to guarantee the
obligations of the Company under the Credit Agreement and the Security
Documents;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor agrees as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2. Representations and Warranties. The Guarantor represents that:
(a) The Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (ii) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals necessary to
own its assets and carry on
its business as now being or as proposed to be conducted, except in the
case of such licenses, authorizations, consents and approvals, where the
failure to obtain them would not have a material adverse effect on its
condition (financial or otherwise), assets, nature of assets, liabilities
(including without limitation, tax, ERISA and Environmental Liabilities) or
prospects; and (iii) is qualified to do business in all jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary and where failure so to qualify would have a material adverse
effect on its condition (financial or otherwise), assets, nature of assets,
liabilities (including, without limitation, tax, ERISA and environmental
liabilities) or prospects.
(b) The Guarantor has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Subsidiary
Guaranty; the execution, delivery and performance by the Guarantor of this
Subsidiary Guaranty has been duly authorized by all necessary corporate
action; and this Subsidiary Guaranty has been duly and validly executed and
delivered by the Guarantor and constitutes the legal, valid and binding
obligation of the Guarantor, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or moratorium or other similar laws relating to
the enforcement of creditors' rights generally and by general equitable
principles.
(c) Neither the execution and delivery by the Guarantor of the Basic
Documents to which it is party nor compliance with the terms and provisions
thereof by the Guarantor will conflict with or result in a breach of, or
require any consent under, the certificate of incorporation or by-laws of
the Guarantor or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or
any Basic Document or other material agreement or instrument to which the
Guarantor is a party or by which it is bound or to which it is subject, or
constitute a default under any such agreement or instrument, or (except for
the Liens created pursuant to, or permitted by, the Security Documents)
result in the creation or imposition of any Lien upon any of the revenues
or assets of the Guarantor pursuant to the terms of any such agreement or
instrument.
(d) There are no legal or arbitral proceedings or any proceedings by
or before any governmental or regulatory authority or agency, now pending
or, to the knowledge of the Guarantor, threatened against or affecting the
Guarantor in which there is a reasonable possibility of an adverse decision
which could have a material adverse effect on its condition (financial or
otherwise), assets, nature of assets, liabilities (including, without
limitation, tax, ERISA and Environmental Liabilities) or prospects.
(e) The Guarantor has obtained all authorizations, approvals and
consents of, and has made all filings and registrations with, any
governmental or regulatory authority or agency and any third party
necessary for the consummation of the Acquisition and the execution,
delivery or performance by it of any Basic Document to which it is a party,
or for the validity or
2
enforceability thereof, except for filing and recordings of the Liens
created pursuant to, or permitted by, the Security Documents.
SECTION 3. The Guaranty. The Guarantor hereby unconditionally guarantees
the full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the principal of and interest on each Note issued by the Company
pursuant to, and each Reimbursement Obligation of the Company under, the Credit
Agreement, and the full and punctual payment of all other amounts payable by the
Company under the Credit Agreement and the Security Documents. Upon failure by
the Company to pay punctually any such amount, the Guarantor agrees that it
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in the Credit Agreement or the relevant Security Document, as
the case may be.
SECTION 4. Guaranty Unconditional. The obligations of the Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under the Credit
Agreement, any Note or any Security Document, or any obligation of the
Guarantor hereunder or under any Security Document, by operation of law or
otherwise;
(ii) any modification or amendment of or supplement to the Credit
Agreement, any Note or any Security Document;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Company under the Credit
Agreement, any Note or any Security Document or any obligation of the
Guarantor hereunder or under any Security Document;
(iv) any change in the corporate existence, structure or ownership of
the Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in the Credit
Agreement, any Note of any Security Document;
(v) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Company, the Administrative
Agent, any Lender 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;
(vi) any invalidity or unenforceability relating to or against the
Company for any reason of the Credit Agreement, any Note or any Security
Document, or any provision of applicable law or regulation purporting to
prohibit the payment by the Company of the principal of or interest on any
Note or any other amount payable by the Company under the Credit Agreement
or any Security Document; or
3
(vii) any other act or omission to act or delay of any kind by the
Company, the Guarantor, the Administrative Agent, any Lender 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.
SECTION 5. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. The Guarantor's obligations hereunder shall remain in full force
and effect until the principal of and interest on the Notes and all other
amounts payable by the Company under the Credit Agreement and the Security
Documents shall have been paid in full and the Commitments and Letters of Credit
under the Credit Agreement shall have terminated or expired. If at any time any
payment of the principal of or interest on any Note or any other amount payable
by the Company under the Credit Agreement or any Security Document is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made at such time.
SECTION 6. Waiver by the Guarantor. The Guarantor waives acceptance
hereof, presentment, demand, protest and, to the fullest extent permitted by
law, any notice not provided for herein, as well as any requirement that at any
time any action be taken by any Person against the Company, the Guarantor
hereunder, or any other Person.
SECTION 7. Waiver of Subrogation. The Guarantor hereby irrevocably waives
any right or claim of exoneration, reimbursement, subrogation, contribution or
indemnity and any other similar right or claim arising out of any payment by the
Guarantor hereunder.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment
of any amount payable by the Company under the Credit Agreement or any Note is
stayed upon the insolvency, bankruptcy or reorganization of the Company, all
such amounts otherwise subject to acceleration under the terms of the Credit
Agreement shall nonetheless be payable by the Guarantor hereunder forthwith on
demand by the Administrative Agent made at the request of the Majority Lenders.
SECTION 9. Limitation on Guarantor's Obligations. The obligations of the
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code or any applicable provisions of
comparable state law. The obligations of the Guarantor hereunder shall rank pari
passu.
SECTION 10. Notices. All notices, requests and other communications to any
party hereunder shall be given or made by telex, telegraph, telecopy, cable or
other writing and telexed, telecopied, telegraphed, cabled, mailed or delivered
to the intended recipient at its address or telex or facsimile transmission
number set forth on the signature page hereof or such other address or telex or
telecopy number as such party may hereafter specify for the purpose by notice to
the Administrative Agent.
4
Except as otherwise provided in this Subsidiary Guaranty, all such
communications shall be deemed to have been duly given when transmitted by telex
or telecopier, delivered to the telegraph or cable office or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
SECTION 11. No Waivers. No failure or delay by the Administrative Agent or
any Lender in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided in this Subsidiary Guaranty, the
Credit Agreement and the Security Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 12. Successors and Assigns. This Subsidiary Guaranty is for the
benefit of the Administrative Agent and the Lenders and their respective
successors and assigns and in the event of an assignment of the Loans or other
amounts payable under the Credit Agreement or the Security Documents, the rights
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Subsidiary Guaranty shall be binding
upon the Guarantor and its successors and assigns.
SECTION 13. Changes in Writing. Neither this Subsidiary Guaranty nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Guarantor and the Administrative Agent with the
consent of the Majority Lenders.
SECTION 14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS SUBSIDIARY GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
SUBSIDIARY GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE GUARANTOR HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
5
IN WITNESS WHEREOF, the party hereto has caused this Subsidiary Guaranty to
be duly executed by its officer thereunto duly authorized as of the day and year
first above written.
APPLIED EXTRUSION TECHNOLOGIES
(CANADA), INC.
By: _________________________
Title:
Address for Notices:
Address:
Attention:
Copy to:
Telex Number:
Telecopy Number:
6
EXHIBIT I
SUBSIDIARY GUARANTOR ACKNOWLEDGMENT AND CONSENT
Dated as of September 20, 2002
Reference is made to the Credit Agreement dated as of April 7, 1994, as
amended and restated as of September 20, 2002 (the "Amended and Restated Credit
Agreement"), among Applied Extrusion Technologies, Inc. (the "Company") the
lenders party thereto and JPMorgan Chase Bank, as Administrative Agent. The
undersigned, a wholly owned subsidiary of the Company, as Guarantor under the
Subsidiary Guaranty dated as of April 7, 1994 (the "Subsidiary Guaranty"), and
as a Grantor under the Deed of Movable and Immovable Hypothec dated as of April
7, 1994 (the "Hypothec"), in each case in favor of the Administrative Agent for
the benefit of the Lenders (as defined in the Amended and Restated Credit
Agreement), hereby:
(a) consents to the Amended and Restated Credit Agreement, including
without limitation the incurrence by the Company of additional Loans
contemplated thereby; and
(b) hereby confirms and agrees that (i) each of the Subsidiary Guaranty
and the Hypothec, is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects except
that, upon the effectiveness of, and on and after the date of, the
Amended and Restated Credit Agreement, each reference in each of the
Subsidiary Guaranty and the Hypothec to the Credit Agreement shall
mean and be a reference to the Amended and Restated Credit Agreement
and (ii) the Hypothec and all of the Collateral described therein, do,
and shall continue to, secure the payment of all of the Secured
Obligations (as defined therein).
APPLIED EXTRUSION TECHNOLOGIES
(CANADA), INC.
By ____________________________________
Name:
Title:
