EXHIBIT 10.1
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CREDIT AGREEMENT
Dated as of October 3, 2003
among
APPLIED EXTRUSION TECHNOLOGIES, INC.
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO
FROM TIME TO TIME,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
GECC CAPITAL MARKETS GROUP, INC.
as Lead Arranger
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Table of Contents
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1. AMOUNT AND TERMS OF CREDIT..............................................................................1
1.1 Credit Facilities..............................................................................1
1.2 Letters of Credit..............................................................................7
1.3 Prepayments....................................................................................7
1.4 Use of Proceeds...............................................................................10
1.5 Interest and Applicable Margins...............................................................10
1.6 Eligible Accounts.............................................................................13
1.7 Eligible Inventory............................................................................15
1.8 Cash Management Systems.......................................................................17
1.9 Fees..........................................................................................17
1.10 Receipt of Payments...........................................................................18
1.11 Application and Allocation of Payments........................................................18
1.12 Loan Account and Accounting...................................................................20
1.13 Indemnity.....................................................................................20
1.14 Access........................................................................................21
1.15 Taxes.........................................................................................22
1.16 Capital Adequacy; Increased Costs; Illegality.................................................23
1.17 Single Loan...................................................................................25
2. CONDITIONS PRECEDENT...................................................................................25
2.1 Conditions to the Initial Loans...............................................................25
2.2 Further Conditions to Each Loan...............................................................26
2.3 Further Conditions to Each Export-Related Advance.............................................27
3. REPRESENTATIONS AND WARRANTIES.........................................................................28
3.1 Corporate Existence; Compliance with Law......................................................28
3.2 Executive Offices, Collateral Locations, FEIN.................................................28
3.3 Corporate Power, Authorization, Enforceable Obligations.......................................28
3.4 Financial Statements and Projections..........................................................29
3.5 Material Adverse Effect.......................................................................30
3.6 Ownership of Property; Liens..................................................................30
3.7 Labor Matters.................................................................................30
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Table of Contents
(continued)
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3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.....................31
3.9 Government Regulation.........................................................................31
3.10 Margin Regulations............................................................................31
3.11 Taxes.........................................................................................32
3.12 ERISA and Canadian Plans......................................................................33
3.13 No Litigation.................................................................................34
3.14 Brokers.......................................................................................34
3.15 Intellectual Property.........................................................................34
3.16 Full Disclosure...............................................................................34
3.17 Environmental Matters.........................................................................34
3.18 Insurance.....................................................................................35
3.19 Deposit and Disbursement Accounts.............................................................35
3.20 Government Contracts..........................................................................36
3.21 Customer and Trade Relations..................................................................36
3.22 Agreements and Other Documents................................................................36
3.23 Solvency......................................................................................37
3.24 Senior Notes..................................................................................37
4. FINANCIAL STATEMENTS AND INFORMATION...................................................................38
4.1 Reports and Notices...........................................................................38
4.2 Communication with Accountants................................................................38
5. AFFIRMATIVE COVENANTS..................................................................................38
5.1 Maintenance of Existence and Conduct of Business..............................................38
5.2 Payment of Charges............................................................................38
5.3 Books and Records.............................................................................39
5.4 Insurance; Damage to or Destruction of Collateral.............................................39
5.5 Compliance with Laws..........................................................................40
5.6 [Intentionally Omitted].......................................................................41
5.7 Intellectual Property.........................................................................41
5.8 Environmental Matters.........................................................................41
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Table of Contents
(continued)
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5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases.........42
5.10 ERISA.........................................................................................43
5.11 Further Assurances............................................................................44
6. NEGATIVE COVENANTS.....................................................................................44
6.1 Mergers, Subsidiaries, Etc....................................................................44
6.2 Investments; Loans and Advances...............................................................44
6.3 Indebtedness..................................................................................44
6.4 Employee Loans and Affiliate Transactions.....................................................45
6.5 Capital Structure and Business................................................................46
6.6 Guaranteed Indebtedness.......................................................................46
6.7 Liens.........................................................................................46
6.8 Sale of Stock and Assets......................................................................47
6.9 ERISA.........................................................................................47
6.10 Financial Covenants...........................................................................47
6.11 Hazardous Materials...........................................................................47
6.12 Sale-Leasebacks...............................................................................48
6.13 Cancellation of Indebtedness..................................................................48
6.14 Restricted Payments; Employee Benefit Plan Contributions......................................48
6.15 Change of Corporate Name or Location; Change of Fiscal Year...................................48
6.16 No Impairment of Intercompany Transfers.......................................................49
6.17 No Speculative Transactions...................................................................49
6.18 Changes Relating to Material Contracts........................................................49
6.19 Credit Parties Other than Borrower............................................................49
7. TERM...................................................................................................49
7.1 Termination...................................................................................49
7.2 Survival of Obligations Upon Termination of Financing Arrangements............................49
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES.................................................................50
8.1 Events of Default.............................................................................50
8.2 Remedies......................................................................................52
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Table of Contents
(continued)
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8.3 Waivers by Credit Parties.....................................................................53
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT....................................................53
9.1 Assignment and Participations.................................................................53
9.2 Appointment of Agent..........................................................................56
9.3 Agent's Reliance, Etc.........................................................................57
9.4 GE Capital and Affiliates.....................................................................57
9.5 Lender Credit Decision........................................................................57
9.6 Indemnification...............................................................................58
9.7 Successor Agent...............................................................................58
9.8 Setoff and Sharing of Payments................................................................59
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert......................59
10. SUCCESSORS AND ASSIGNS.................................................................................61
10.1 Successors and Assigns........................................................................62
11. MISCELLANEOUS..........................................................................................62
11.1 Complete Agreement; Modification of Agreement.................................................62
11.2 Amendments and Waivers........................................................................62
11.3 Fees and Expenses.............................................................................64
11.4 No Waiver.....................................................................................65
11.5 Remedies......................................................................................66
11.6 Severability..................................................................................66
11.7 Conflict of Terms.............................................................................66
11.8 Confidentiality...............................................................................66
11.9 GOVERNING LAW.................................................................................67
11.10 Notices.......................................................................................67
11.11 Section Titles................................................................................68
11.12 Counterparts..................................................................................68
11.13 WAIVER OF JURY TRIAL..........................................................................68
11.14 Press Releases and Related Matters............................................................68
11.15 Reinstatement.................................................................................69
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Table of Contents
(continued)
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11.16 Advice of Counsel.............................................................................69
11.17 Judgment Currency............................................................................69
11.18 Subordination.................................................................................70
11.19 No Strict Construction........................................................................71
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INDEX OF APPENDICES
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections --
Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A -
Commitments definition) Commitments as of Closing Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii)(A) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.1(d)(i) - Form of Notice of Export-Related Advance
Exhibit 1.1(d)(ii) - Form of Export-Related Loan Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit A-1 - Master Standby Agreement
Exhibit A-2 - Master Documentary Agreement
Schedule 1.1 - Agent's Representatives
Disclosure Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 - Executive Offices, Collateral Locations,
FEIN
Disclosure Schedule 3.4(a) - Financial Statements
Disclosure Schedule 3.4(b) - Projections
Disclosure Schedule 3.6 - Ownership of Properties; Real Estate and
Leases; Purchase Options and similar rights
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock; Indebtedness
Disclosure Schedule 3.8(a) - Former Subsidiaries
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.12(c) - Canadian Plans
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Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.17 - Hazardous Materials
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.20 - Customer Trade Relations
Disclosure Schedule 3.22 - Material Agreements
Disclosure Schedule 3.22(b) - Customers and Clients
Disclosure Schedule 3.22(c) - Suppliers and Vendors
Disclosure Schedule 5.1 - Trade Names
Disclosure Schedule 5.9 Excluded Locations
Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.4(a) - Transactions with Affiliates
Disclosure Schedule 6.7 - Existing Liens
Disclosure Schedule 6.8(d) - Streamwood, Illinois Equipment
Disclosure Schedule 6.8(e) - ▇▇▇▇▇▇▇▇▇, Virginia Property
Disclosure Schedule 6.8(f) - Terre Haute, Indiana Property
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This CREDIT AGREEMENT (this "Agreement"), dated as of October 3, 2003
among APPLIED EXTRUSION TECHNOLOGIES, INC., a Delaware corporation (the
"Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL
CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"),
for itself, as Lender, and as Agent for Lenders, the other Lenders signatory
hereto from time to time and GECC CAPITAL MARKETS GROUP, INC., as Lead Arranger
("GECMG").
RECITALS
WHEREAS, Borrower has requested that Lenders extend revolving and term
credit facilities to Borrower of up to One Hundred Million Dollars
($100,000,000) in the aggregate for the purpose of refinancing certain
indebtedness of Borrower and to provide (a) working capital financing for
Borrower, (b) funds for other general corporate purposes of Borrower and (c)
funds for other purposes permitted hereunder; and for these purposes, Lenders
are willing to make certain loans and other extensions of credit to Borrower of
up to such amount upon the terms and conditions set forth herein;
WHEREAS, Borrower has agreed to secure all of its obligations under
the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon all of its existing and after-acquired
personal and real property (other than leasehold interests in real property and
the owned real estate in ▇▇▇▇▇▇▇▇▇, Virginia, in each case, held as of the
Closing Date);
WHEREAS, Applied Extrusion Technologies (Canada) Inc., a Delaware
corporation ("AET Canada"), is willing to guarantee all of the obligations of
Borrower to Agent and Lenders under the Loan Documents and to grant a security
interest in all of its assets in favor of Agent to secure such guaranty; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) (A) Subject to the terms and conditions hereof, each
Revolving Lender agrees to make available to Borrower from time to time until
the Commitment Termination Date its Pro Rata Share of advances (each, a
"Revolving Credit Advance"). The
Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any
time exceed its separate Revolving Loan Commitment (less its Pro Rata Share of
the Export-Related Loan Participations). The obligations of each Revolving
Lender hereunder shall be several and not joint. Until the Commitment
Termination Date, Borrower may borrow, repay and reborrow under this Section
1.1(a)(i)(A); provided that the amount of any Revolving Credit Advance to be
made at any time shall not exceed Borrowing Availability at such time. Borrowing
Availability may be reduced by Reserves imposed by Agent in its reasonable
credit judgment.
(B) Each Revolving Credit Advance shall be made on notice by Borrower
to one of the representatives of Agent identified in Schedule 1.1 at the address
specified therein. Any such notice must be given no later than (1) 11:00 a.m.
(New York time) on the Business Day of the proposed Revolving Credit Advance, in
the case of an Index Rate Loan, or (2) 11:00 a.m. (New York time) on the date
which is 3 Business Days prior to the proposed Revolving Credit Advance, in the
case of a LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance")
must be given in writing (by telecopy or overnight courier) substantially in the
form of Exhibit 1.1(a)(i), and shall include the information required in such
Exhibit and such other information as may be required by Agent. If Borrower
desires to have the Revolving Credit Advances bear interest by reference to a
LIBOR Rate, Borrower must comply with Section 1.5(e).
(ii) Except as provided in Section 1.12, Borrower shall execute and
deliver to each Revolving Lender a note to evidence the Revolving Loan
Commitment of that Revolving Lender. Each note shall be in the principal amount
of the Revolving Loan Commitment of the applicable Revolving Lender, dated the
Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each a
"Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving Note
shall represent the obligation of Borrower to pay the amount of the applicable
Revolving Lender's Revolving Loan Commitment or, if less, such Revolving
Lender's Pro Rata Share of the aggregate unpaid principal amount of all
Revolving Credit Advances to Borrower together with interest thereon as
prescribed in Section 1.5. The entire unpaid balance of the aggregate Revolving
Loan and all other non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date.
(iii) Anything in this Agreement to the contrary notwithstanding, at
the request of Borrower, Agent in its discretion may (but shall have absolutely
no obligation to), make Revolving Credit Advances to Borrower on behalf of
Revolving Lenders in amounts that cause the outstanding balance of the aggregate
Revolving Loan to exceed the Borrowing Base (less the Swing Line Loan) (any such
excess Revolving Credit Advances are herein referred to collectively as
"Overadvances"); provided that (A) no such event or occurrence shall cause or
constitute a waiver of Agent's, Swing Line Lender's or Revolving Lenders' right
to refuse to make any further Overadvances, Swing Line Advances or Revolving
Credit Advances, or incur any Letter of Credit Obligations, as the case may be,
at any time that an Overadvance exists, and (B) no Overadvance shall result in a
Default or Event of Default based on Borrower's failure to comply with Section
1.3(b)(i) for so long as Agent permits such Overadvance to be outstanding, but
solely with respect to the amount of such Overadvance. In addition, Overadvances
may be made even if the conditions to lending set forth in Section 2 have not
been met. All Overadvances shall constitute Index Rate Loans, shall bear
interest at the Default Rate and shall
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be payable on demand. Except as otherwise provided in Section 1.11(b), the
authority of Agent to make Overadvances is limited to an aggregate amount not to
exceed $1,000,000 at any time and shall not cause the aggregate Revolving Loan
to exceed the Maximum Amount less the principal amount of the Swing Line Loan
and the Export-Related Loan.
(b) Term Loan.
(i) Subject to the terms and conditions hereof, each Term
Lender agrees to make a term loan (collectively, the "Term Loan") on the Closing
Date to Borrower in the amount of the applicable Term Lender's Term Loan
Commitment. The obligations of each Term Lender hereunder shall be several and
not joint. Each such Term Loan shall be evidenced by a promissory note
substantially in the form of Exhibit 1.1(b) (each a "Term Note" and collectively
the "Term Notes"), and, except as provided in Section 1.12, Borrower shall
execute and deliver the Term Note to the applicable Term Lender. Each Term Note
shall represent the obligation of Borrower to pay the applicable Term Lender's
Term Loan Commitment, together with interest thereon as prescribed in Section
1.5.
(ii) Borrower shall repay the Term Loan in twenty (20)
consecutive quarterly installments of $1,562,500 each on the last day of March,
June, September and December of each year, commencing December 31, 2003,
together with a final installment due on October 3, 2008 in the amount of
$18,750,000 or, if different, the remaining principal balance of the Term Loan.
(iii) Notwithstanding Section 1.1(b)(ii), the aggregate
outstanding principal balance of the Term Loan shall be due and payable in full
in immediately available funds on the Commitment Termination Date, if not sooner
paid in full. No payment with respect to the Term Loan may be reborrowed.
(iv) Each payment of principal with respect to the Term Loan
shall be paid to Agent for the ratable benefit of each Term Lender making a Term
Loan, ratably in proportion to each such Term Lender's respective Term Loan
Commitment.
(c) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's
receipt of any Notice of Revolving Credit Advance. Subject to the terms and
conditions hereof, the Swing Line Lender may, in its discretion, make available
from time to time until the Commitment Termination Date advances (each, a "Swing
Line Advance") in accordance with any such notice. The provisions of this
Section 1.1(c) shall not relieve Revolving Lenders of their obligations to make
Revolving Credit Advances under Section 1.1(a); provided that if the Swing Line
Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line
Advance shall be in lieu of any Revolving Credit Advance that otherwise may be
made by Revolving Credit Lenders pursuant to such notice. The aggregate amount
of Swing Line Advances outstanding shall not exceed at any time the lesser
("Swing Line Availability") of (A) the Swing Line Commitment, (B) the Maximum
Amount less the sum of the outstanding balance of the Revolving Loan and the
Export-Related Loan at such time and (C) the Borrowing Base less the aggregate
outstanding balance of the Revolving Loan (except for Overadvances) at such
time. Until the Commitment
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Termination Date, Borrower may from time to time borrow, repay and reborrow
under this Section 1.1(c). Each Swing Line Advance shall be made pursuant to a
Notice of Revolving Credit Advance delivered to Agent by Borrower in accordance
with Section 1.1(a). Any such notice must be given no later than 11:00 a.m. (New
York time) on the Business Day of the proposed Swing Line Advance. Unless the
Swing Line Lender has received at least one Business Day's prior written notice
from Requisite Revolving Lenders instructing it not to make a Swing Line
Advance, the Swing Line Lender shall, notwithstanding the failure of any
condition precedent set forth in Sections 2.2, be entitled to fund that Swing
Line Advance, and to have each Revolving Lender make Revolving Credit Advances
in accordance with Section 1.1(c)(iii) or purchase participating interests in
accordance with Section 1.1(c)(iv). Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan shall constitute an
Index Rate Loan. Swing Line Lender, subject to the terms hereof, shall make the
requested Swing Line Advance to Borrower not later than 3:00 p.m. (New York
time) on the requested funding date. Borrower shall repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.
(ii) Borrower shall execute and deliver to the Swing Line Lender
a promissory note to evidence the Swing Line Commitment. Such note shall be in
the principal amount of the Swing Line Commitment of the Swing Line Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(c)(ii) (the
"Swing Line Note"). The Swing Line Note shall represent the obligation of
Borrower to pay the amount of the Swing Line Commitment or, if less, the
aggregate unpaid principal amount of all Swing Line Advances made to Borrower
together with interest thereon as prescribed in Section 1.5. The entire unpaid
balance of the Swing Line Loan and all other noncontingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.
(iii) The Swing Line Lender, at any time and from time to time in
its sole and absolute discretion, but not less frequently than weekly and upon
any demand by Agent to Borrower to repay the Swing Line Loan, shall on behalf of
Borrower (and Borrower hereby irrevocably authorizes the Swing Line Lender to so
act on its behalf) request each Revolving Lender (including the Swing Line
Lender) to make a Revolving Credit Advance to Borrower (which shall be an Index
Rate Loan) in an amount equal to that Revolving Lender's Pro Rata Share of the
principal amount of Borrower's Swing Line Loan (the "Refunded Swing Line Loan")
outstanding on the date such notice is given. Unless any of the events described
in Sections 8.1(h) or 8.1(i) has occurred (in which event the procedures of
Section 1.1(c)(iv) shall apply) and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Credit
Advance are then satisfied, each Revolving Lender shall disburse directly to
Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the Swing
Line Lender prior to 3:00 p.m. (New York time) in immediately available funds on
the Business Day next succeeding the date that notice is given. The proceeds of
those Revolving Credit Advances shall be immediately paid to the Swing Line
Lender and applied to repay the Refunded Swing Line Loan of Borrower.
(iv) If, prior to refunding a Swing Line Loan with a Revolving
Credit Advance pursuant to Section 1.1(c)(iii), one of the events described in
Sections 8.1(h) or 8.1(i) has occurred, then, subject to the provisions of
Section 1.1(c)(v) below, each Revolving Lender
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shall, on the date such Revolving Credit Advance was to have been made for the
benefit of Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan to Borrower in an amount equal to
its Pro Rata Share of such Swing Line Loan. Upon request, each Revolving Lender
shall promptly transfer to the Swing Line Lender, in immediately available
funds, the amount of its participation interest.
(v) Each Revolving Lender's obligation to make Revolving Credit
Advances in accordance with Section 1.1(c)(iii) and to purchase participation
interests in accordance with Section 1.1(c)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Swing Line Lender, Borrower or any other Person for
any reason whatsoever; (B) the occurrence or continuance of any Default or Event
of Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
If any Revolving Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to Sections 1.1(c)(iii) or
1.1(c)(iv), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender, together with interest
thereon for each day from the date of non-payment until such amount is paid in
full at the Federal Funds Rate for the first two Business Days and at the Index
Rate thereafter.
(d) Export-Related Loan.
(i) Subject to the terms and conditions hereof, the
Export-Related Loan Lender agrees to make available to Borrower from time to
time until the Commitment Termination Date export-related advances (each, an
"Export-Related Advance") in accordance with any such notice. Until the
Commitment Termination Date, Borrower may from time to time borrow, repay and
reborrow under this Section 1.1(d)(i); provided, that (A) the amount of any
Export-Related Advance to be made at any time shall not exceed Export-Related
Borrowing Availability at such time, and (B) the aggregate amount of
Export-Related Advances outstanding shall not exceed at any the Maximum Amount
less the outstanding balances of the Revolving Loan (except for Overadvances)
and the Swing Line Loan at such time. Export-Related Borrowing Availability may
be further reduced by Reserves imposed by Agent in its reasonable credit
judgment. Each Export-Related Advance shall be made on notice by Borrower to one
of the representatives of Agent identified in Schedule 1.1 at the address
specified therein. Any such notice must be given no later than (1) 11:00 a.m.
(New York time) on the Business Day of the proposed Export-Related Advance, in
the case of an Index Rate Loan, or (2) 11:00 a.m. (New York time) on the date
which is 3 Business Days prior to the proposed Export-Related Advance, in the
case of a LIBOR Loan. Each such notice (a "Notice of Export-Related Advance")
must be given in writing (by telecopy or overnight courier) substantially in the
form of Exhibit 1.1(d)(i), and shall include the information required in such
Exhibit and such other information as may be required by Agent. If Borrower
desires to have the Export-Related Advances bear interest by reference to a
LIBOR Rate, Borrower must comply with Section 1.5(e). Agent shall notify the
Export-Related Loan Lender upon Agent's receipt of any Notice of Export-Related
Advance which requests an Export-Related Advance. Unless the Export-Related Loan
Lender has received at least one Business Day's prior written notice from
Requisite Revolving Lenders instructing it not to make a Export-Related Advance,
the Export-Related Loan Lender shall,
5
notwithstanding the failure of any condition precedent set forth in Sections
2.2, be entitled to fund that Export-Related Advance, and to have each Revolving
Lender purchase participating interests in accordance with Section 1.1(d)(iii).
The Export-Related Loan Lender, subject to the terms hereof, shall make the
requested Export-Related Advance to Borrower not later than 3:00 p.m. (New York
time) on the requested funding date.
(ii) Borrower shall execute and deliver to the Export-Related
Loan Lender a promissory note to evidence the Export-Related Loan Commitment.
Such note shall be in the principal amount of the Export-Related Loan Commitment
of the Export-Related Loan Lender, dated the Closing Date and substantially in
the form of Exhibit 1.1(d)(ii) (the "Export-Related Loan Note"). The
Export-Related Loan Note shall represent the obligation of Borrower to pay the
amount of the Export-Related Loan Commitment or, if less, the aggregate unpaid
principal amount of all Export-Related Advances made to Borrower together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the
Export-Related Loan and all other noncontingent Obligations shall be immediately
due and payable in full in immediately available funds on the Commitment
Termination Date if not sooner paid in full.
(iii) Immediately upon the making of any Export-Related Advance
by the Export-Related Loan Lender, each Revolving Lender (including the
Export-Related Loan Lender) shall be deemed to have irrevocably and
unconditionally purchased from the Export-Related Loan Lender an undivided
interest and participation in such Export-Related Advance in an amount equal to
its Pro Rata Share of the principal amount of such Export-Related Advance (each
an "Export-Related Loan Participation" and collectively the "Export-Related Loan
Participations"). Each Revolving Lender shall fund its participation in such
Export-Related Advance in the same manner as provided in the Agreement with
respect to Revolving Credit Advances, regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Credit
Advance are then satisfied, and as set forth in this Section 1.3(d). The
Export-Related Loan Lender, at any time and from time to time in its sole and
absolute discretion, but not less frequently than weekly, shall request each
Revolving Lender (including the Export-Related Loan Lender) to fund its
participation in outstanding Export-Related Advances which have not been
previously funded in an amount equal to its Pro Rata Share of the principal
amount of such Export-Related Advances (a "Funded Export-Related Loan
Participation"), regardless of whether the conditions precedent set forth in
this Agreement to the making of a Revolving Credit Advance are then satisfied.
Each Revolving Lender shall disburse directly to the Agent such amount prior to
3:00 p.m. (New York time) in immediately available funds on the Business Day
next succeeding the date that notice is given, and the Agent shall be
immediately pay such amount to the Export-Related Loan Lender.
(iv) Each Revolving Lender's obligation to purchase
participation interests in accordance with Section 1.1(d)(iii) shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Export-Related Loan Lender, Borrower or any other
Person for any reason whatsoever; (B) the occurrence or continuance of any
Default or Event of Default; (C) any inability of Borrower to satisfy the
conditions precedent to borrowing set forth in this Agreement at any time or (D)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. If any Revolving Lender does not make available to Agent
the amount required pursuant to Sections 1.1(d)(iii) the Export-
6
Related Loan Lender shall be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal Funds Rate for the
first two Business Days and at the Index Rate thereafter.
(v) Any principal or interest received by the Agent in respect
of any Export-Related Advance shall be promptly paid by the Agent to the
Revolving Lenders which have a Funded Export-Related Loan Participation in such
Export-Related Advance in an amount equal to its Pro Rata Share of such
principal or interest (and to the Export-Related Loan Lender with respect to any
such Export-Related Advance as to which a Funded Export-Related Loan
Participation does not exist).
(e) Reliance on Notices. Agent shall be entitled to rely upon, and
shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Export-Related Advance, Notice of Conversion/Continuation or
similar notice believed by Agent to be genuine. Agent may assume that each
Person executing and delivering any notice in accordance herewith was duly
authorized, unless the responsible individual acting thereon for Agent has
actual knowledge to the contrary.
1.2 Letters of Credit. Subject to and in accordance with the terms
and conditions contained herein and in Annex B, Borrower shall have the right to
request, and Revolving Lenders agree to incur, or purchase participations in,
Letter of Credit Obligations in respect of Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments; Reductions in Revolving Loan Commitments.
Borrower may at any time on at least 10 days' prior written notice to Agent (i)
voluntarily prepay all or part of the Term Loan and/or (ii) permanently reduce
(but not terminate) the Revolving Loan Commitment; provided that (A) any such
prepayments or reductions of the Term Loan shall be in a minimum amount of
$1,000,000 and integral multiples of $250,000 in excess of such amount and any
such prepayments or reductions of the Revolver Loan Commitment shall be in a
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of
such amount, (B) the Revolving Loan Commitment shall not be reduced to an amount
less than the greater of (x) $30,000,000 and (y) the amount of the Revolving
Loan then outstanding, and (C) after giving effect to such reductions, Borrower
shall comply with Section 1.3(b)(i). In addition, Borrower may at any time on at
least 10 days' prior written notice to Agent terminate the Revolving Loan
Commitment; provided that upon such termination, all Loans and other Obligations
shall be immediately due and payable in full and all Letter of Credit
Obligations shall be cash collateralized or otherwise satisfied in accordance
with Annex B hereto. Any voluntary prepayment and any reduction or termination
of the Revolving Loan Commitment must be accompanied by payment of the Fee
required by Section 1.9(c), if any, plus the payment of any LIBOR funding
breakage costs in accordance with Section 1.13(b). Upon any termination of the
Revolving Loan Commitment, Borrower's right to request Revolving Credit
Advances, or request that Letter of Credit Obligations be incurred on its
behalf, or request Swing Line Advances or Export-Related Advances, shall
simultaneously be permanently terminated, and upon any such reduction of the
Revolving Loan Commitment, Borrower's right to request
7
Revolving Credit Advances, or request that Letter of Credit Obligations be
incurred on its behalf, or request Swing Line Advances, shall simultaneously be
permanently reduced; provided that a permanent reduction of the Revolving Loan
Commitment shall not require a corresponding pro rata reduction in the L/C
Sublimit and/or the Export-Related Loan Commitment. Each notice of partial
prepayment shall designate the Loans or other Obligations to which such
prepayment is to be applied; provided that any partial prepayments of the Term
Loan made by or on behalf of Borrower shall be applied to prepay the scheduled
installments of Borrower's Term Loan in inverse order of maturity.
(b) Mandatory Prepayments.
(i) If on any day the aggregate outstanding balances of the
Revolving Loan, the Swing Line Loan and the Export-Related Loan exceed the
Maximum Amount, Borrower shall on such day repay the aggregate outstanding
Revolving Loan to the extent required to eliminate such excess. If any such
excess remains after repayment in full of the aggregate outstanding Revolving
Loan, Borrower shall provide cash collateral for the Letter of Credit
Obligations in the manner set forth in Annex B to the extent required to
eliminate such excess. If on any day the aggregate outstanding balances of the
Revolving Loan and the Swing Line Loan exceed the Borrowing Base. Borrower shall
on such day repay the aggregate outstanding Revolving Credit Advances to the
extent required to eliminate such excess; provided, that solely for purposes of
this sentence, any reduction in the Borrowing Base due to the establishment or
modification of Reserves (other than pursuant to Section 5.4(a)), or the
adjustment of any criteria in Section 1.6 or 1.7, or the establishment of any
new criteria for, or adjustment of advance rates with respect to, Eligible
Accounts or Eligible Inventory, shall be effective on the second Business Day
after receipt by Borrower of notice from the Agent of such reduction. If any
such excess remains after repayment in full of the aggregate outstanding
Revolving Credit Advances, Borrower shall provide cash collateral for the Letter
of Credit Obligations in the manner set forth in Annex B to the extent required
to eliminate such excess. If on any day the outstanding balance of the
Export-Related Loan exceeds the lesser of (A) the Export-Related Loan Commitment
and (B) the Export-Related Borrowing Base, Borrower shall on such day repay the
aggregate outstanding Export-Related Advances to the extent required to
eliminate such excess. Notwithstanding the foregoing, any Overadvance made
pursuant to Section 1.1(a)(iii) shall be repaid only on demand.
(ii) On the date of receipt by any Credit Party of proceeds of
any asset disposition (excluding proceeds of asset dispositions permitted by
Section 6.8 (a), (d) and (f), and proceeds of asset dispositions permitted by
Section 6.8(c) in an aggregate amount not exceeding $300,000 in any Fiscal Year)
or any sale of Stock of any Subsidiary of any Credit Party, Borrower shall
prepay the Loans in an amount equal to all such proceeds, net of (A) commissions
and other reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrower in connection therewith
(in each case, paid to non-Affiliates), (B) transfer taxes, (C) amounts payable
to holders of senior Liens (to the extent such Liens constitute Permitted
Encumbrances hereunder), if any, and (D) an appropriate reserve for income taxes
in accordance with GAAP in connection therewith. Any such prepayment shall be
applied in accordance with Section 1.3(c).
8
(iii) If any Credit Party issues Stock (other than proceeds in an
aggregate amount not exceeding $1,000,000 received upon issuance or sale of
Stock to directors, management or employees of any Credit Party under any
employment or similar agreement or stock option, stock purchase or benefit plan)
or any debt securities (other then Indebtedness permitted under Section 6.3), no
later than the Business Day following the date of receipt of the proceeds
thereof, Borrower shall prepay the Loans in an amount equal to the product of
(x) 75% multiplied by (y) all such proceeds, net of underwriting discounts and
commissions and other reasonable costs, fees and expenses paid to non-Affiliates
in connection therewith. Any such prepayment shall be applied in accordance with
Section 1.3(c).
(c) Application of Certain Mandatory Prepayments. Any prepayments made
by Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii) above shall be applied
as follows: first, to prepay the scheduled principal installments of the Term
Loan in inverse order of maturity, until paid in full; second, to the principal
balance of the Swing Line Loan outstanding until the same has been repaid in
full; third, to the principal balance of Revolving Credit Advances outstanding
until the same has been paid in full; fourth, to the principal balance of
Export-Related Advances outstanding until the same has been paid in full; and
fifth, to any Letter of Credit Obligations to provide cash collateral therefor
in the manner set forth in Annex B, until all such Letter of Credit Obligations
have been fully cash collateralized in the manner set forth in Annex B. None of
the Revolving Loan Commitment, the Export-Related Loan Commitment nor the Swing
Line Commitment shall be permanently reduced by the amount of any such
prepayments.
(d) Application of Prepayments from Insurance and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with
Section 5.4(c) and the Mortgage(s), respectively, shall be applied as follows:
insurance proceeds from casualties or losses to Inventory shall be applied,
first, to the Swing Line Loan, second, to Revolving Credit Advances, third, to
Export-Related Advances, fourth, to the Term Loan; and insurance or condemnation
proceeds from casualties or losses to Equipment, Fixtures and Real Estate shall
be applied first, to prepay the scheduled principal installments of the Term
Loan in inverse order of maturity, until paid in full; second, to the principal
balance of the Swing Line Loan outstanding until the same has been repaid in
full; third, to the principal balance of Revolving Credit Advances outstanding
until the same has been paid in full; fourth, to the principal balance of
Export-Related Advances outstanding until the same has been paid in full; and
fifth, to any Letter of Credit Obligations to provide cash collateral therefor
in the manner set forth in Annex B, until all such Letter of Credit Obligations
have been fully cash collateralized in the manner set forth in Annex B. Neither
the Revolving Loan Commitment, the Export-Related Loan Commitment nor the Swing
Line Loan Commitment shall be permanently reduced by the amount of any such
prepayments.
(e) To the extent consistent with Sections 1.3(c) and (d), amounts to
be applied pursuant to Sections 1.3(b) and (d) to the prepayment of Loans shall
be applied, as applicable, first to prepay outstanding Index Rate Loans. Any
amounts remaining after each such application shall, at the option of Borrower,
be applied to prepay LIBOR Loans, and/or shall be deposited in the Prepayment
Account (as defined below). The Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Term Loans which are
LIBOR Loans and (ii) allocable to Revolving Loans to prepay Revolving Loans
which are LIBOR Loans in each case on the last day of their respective LIBOR
Periods (or, at the
9
direction of Borrower, on any earlier date) until all outstanding Term Loans or
Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been fully applied. For
purposes of this Agreement, the term "Prepayment Account" shall mean a cash
collateral account maintained at a bank or financial institution acceptable to
Agent. The Prepayment Account shall be in the name of Borrower and shall be
pledged to, and subject to the control of, Agent, for the benefit of Agent and
Lenders, in manner satisfactory to Agent. Borrower hereby pledges and grants to
Agent, on behalf of itself and Lenders, a security interest in all funds held in
the Prepayment Account from time to time and all proceeds thereof, as security
for the payment of all Obligations, whether or not then due. The Agreement,
including this Section 1.3(e), shall constitute a security agreement under
applicable law. After the occurrence of and during the continuance of an Event
of Default, Agent may apply funds then held in the Prepayment Account to the
payment, in such order as Agent may elect, of any Obligations then due and
payable. Neither Borrower nor any Person claiming on behalf of or through
Borrower shall have any right to withdraw any of the funds held in the
Prepayment Account, except as provided above in this Section 1.3(e). Interest
earned on deposits in the Prepayment Account shall be for the account of Agent.
(f) No Implied Consent. Nothing in this Section 1.3 shall be construed
to constitute Agent's or any Lender's consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Term
Loan, the Revolving Loan, the Export-Related Loan and the Swing Line Advances
solely for the Refinancing (and to pay any related transaction expenses), for
the financing of Borrower's ordinary working capital and general corporate needs
and for the repurchase of Senior Notes in accordance with and subject to the
terms of Section 6.14. Disclosure Schedule (1.4) contains a description of
Borrower's sources and uses of funds as of the Closing Date, including Loans and
Letter of Credit Obligations to be made or incurred on that date, and a funds
flow memorandum detailing how funds from each source are to be transferred to
particular uses.
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable benefit of
Lenders in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates: (i)
with respect to the Revolving Credit Advances, the Index Rate plus the
Applicable Revolver Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based
on the aggregate Revolving Credit Advances outstanding from time to time; (ii)
with respect to the Export-Related Advances, the Index Rate plus the Applicable
Revolver Index Margin per annum or, at the election of Borrower, the applicable
LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum, based on the
aggregate Export-Related Advances outstanding from time to time; (iii) with
respect to the Term Loan, the Index Rate plus the Applicable Term Loan Index
Margin per annum or, at the election of Borrower, the applicable LIBOR Rate plus
the Applicable Term Loan LIBOR Margin per annum; and (iv) with respect to the
Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per
annum.
10
The Applicable Margins are as follows:
Applicable Revolver Index Margin 1.25%
Applicable Revolver LIBOR Margin 2.75%
Applicable Term Loan Index Margin 2.25%
Applicable Term Loan LIBOR Margin 3.75%
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year (other than
interest on Index Rate Loans, which shall be on the basis of a 365-day year), in
each case for the actual number of days occurring in the period for which such
interest and Fees are payable. The Index Rate is a floating rate determined for
each day. Each determination by Agent of an interest rate and Fees hereunder
shall be final, binding and conclusive on Borrower, absent manifest error.
(d) So long as an Event of Default has occurred and is continuing
under Section 8.1(a), (h) or (i) or so long as any other Event of Default has
occurred and is continuing and at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to
Borrower, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percentage points (2%) per annum above the rates
of interest or the rate of such Fees otherwise applicable hereunder ("Default
Rate"), and all outstanding Obligations shall bear interest at the Default Rate
applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the initial date of such Event of Default (or,
with respect to any Event of Default under Section 8.1(d), from the earlier of
(i) the initial date any Credit Party has knowledge of the occurrence of such
Event of Default and (ii) the date the Borrower receives notice of such Event of
Default from the Agent or any Lender) until that Event of Default is cured or
waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in Section 2.2,
Borrower shall have the option to (i) request that any Revolving Credit Advance
be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding
Loans (other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans,
(iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.13(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan
upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after the last day
of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans
having the same proposed LIBOR Period to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $2,000,000 and integral
multiples of $500,000 in excess of such amount. Any such election must be made
by 11:00 a.m. (New York time) on the 3rd Business Day prior to (1) the date of
any proposed Advance which
11
is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with
respect to any LIBOR Loans to be continued as such, or (3) the date on which
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower in such election. If no election is received with
respect to a LIBOR Loan by 11:00 a.m. (New York time) on the 3rd Business Day
prior to the end of the LIBOR Period with respect thereto (or if a Default or an
Event of Default has occurred and is continuing or if the additional conditions
precedent set forth in Section 2.2 shall not have been satisfied), that LIBOR
Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period.
Borrower must make such election by notice to Agent in writing, by telecopy or
overnight courier. In the case of any conversion or continuation, such election
must be made pursuant to a written notice (a "Notice of
Conversion/Continuation") in the form of Exhibit 1.5(e).
(f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final order that the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
(g) If any provision of this Agreement or any of the other Loan
Documents would obligate Borrower to make any payment of interest or other
amount payable to the Agent or any Lender in an amount or calculated at a rate
which would be prohibited by law or would result in a receipt by the Agent or
any Lender of interest at a criminal rate (as such terms are construed under the
Criminal Code (Canada)) then, notwithstanding such provision, such amount or
rate shall be deemed to have been adjusted with retroactive effect to the
maximum amount or rate of interest, as the case may be, as would not be so
prohibited by law or so result in a receipt by the Agent or any Lender of
interest at a criminal rate, such adjustment to be effected, to the extent
necessary, as follows: (1) firstly, by reducing the amount or rate of interest
required to be paid to the Agent or any Lender under the Notes; and (2)
thereafter, by reducing any fees, commissions, premiums and other amounts
required to be paid to the Agent or any Lender which
12
would constitute interest for purposes of Section 347 of the Criminal Code
(Canada). Notwithstanding the foregoing, and after giving effect to all
adjustments contemplated thereby, if the Agent or any Lender shall have received
an amount in excess of the maximum permitted by that section of the Criminal
Code (Canada), then the Borrower shall be entitled, by notice in writing to the
Agent or such Lender, as applicable, to obtain reimbursement from the Agent or
such Lender, as applicable, in an amount equal to such excess, and pending such
reimbursement, such amount shall be deemed to be an amount payable by the Agent
or such Lender to the Borrower. Any amount or rate of interest referred to in
this Section 1.5 shall be determined in accordance with generally accepted
actuarial practices and principles as an effective annual rate of interest over
the term that any Loan remains outstanding on the assumption that any charges,
fees or expenses that fall within the meaning of "interest" (as defined in the
Criminal Code (Canada)) shall, if they relate to a specific period of time, be
pro-rated over that period of time and otherwise be pro-rated over the period
from the Closing Date to the Termination Date and, in the event of a dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries appointed by the
Agent shall be conclusive for the purposes of such determination.
For purposes of disclosure pursuant to the Interest Act (Canada), the
annual rates of interest or fees to which the rates of interest or fees provided
in this Agreement and the other Loan Documents (and stated herein or therein, as
applicable, to be computed on the basis of a 360 day year or any other period of
time less than a calendar year) are equivalent are the rates so determined
multiplied by the actual number of days in the applicable calendar year and
divided by 360 or such other period of time, respectively
1.6 Eligible Accounts. All of the Accounts (other than Export-Related
Accounts) owned by Borrower and AET Canada and reflected in the most recent
Borrowing Base Certificate delivered by Borrower to Agent shall be "Eligible
Accounts" for purposes of this Agreement, except any Account to which any of the
exclusionary criteria set forth below applies. Agent shall have the right (upon
prior or contemporaneous notice to Borrower) to establish, modify or eliminate
Reserves against Eligible Accounts from time to time in its reasonable credit
judgment. In addition, Agent reserves the right (upon prior or contemporaneous
notice to Borrower), at any time and from time to time after the Closing Date,
to adjust any of the criteria set forth below, to establish new criteria and to
adjust advance rates with respect to Eligible Accounts, in its reasonable credit
judgment. Eligible Accounts shall not include any Account of Borrower or AET
Canada:
(a) that does not arise from the sale of goods or the performance of
services by such Credit Party in the ordinary course of its business;
(b) (i) upon which such Credit Party's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) as to which such Credit Party is not able to bring suit or otherwise
enforce its remedies against the Account Debtor through judicial process or
(iii) if the Account represents a progress billing consisting of an invoice for
goods sold or used or services rendered pursuant to a contract under which the
Account Debtor's obligation to pay that invoice is subject to such Credit
Party's completion of further performance under such contract or is subject to
the equitable lien of a surety bond issuer;
13
(c) in the event that any defense, counterclaim, setoff or dispute is
asserted as to such Account other than as provided in clause (j);
(d) that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably acceptable to Agent
in form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Credit Party or (ii) is subject to
any Prior Claim, right, claim, security interest or other interest of any other
Person, other than Liens in favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other employee
or Affiliate of any Credit Party;
(h) that is the obligation of an Account Debtor that is (i) the United
States government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof (ii) the Canadian
government (Her Majesty the Queen in Right of Canada) or a political subdivision
thereof, or any province, territory, municipality or department, agency or
instrumentality thereof, unless Agent, in its sole discretion, has agreed to the
contrary in writing and Borrower, if necessary or desirable, has complied with
respect to such obligation with the Federal Assignment of Claims Act of 1940,
the Financial Administration Act (Canada) or any applicable provincial or state,
county or municipal law restricting assignment thereof;
(i) that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the province of Newfoundland, the Northwest
Territories and the Territory of Nunavit) unless payment thereof is assured by a
letter of credit assigned and delivered to Agent, reasonably satisfactory to
Agent as to form, amount and issuer;
(j) to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to Borrower or
any Subsidiary thereof but only to the extent of the potential offset;
(k) that arises with respect to goods that are delivered on a
▇▇▇▇-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is not eligible for any of the following reasons:
(i) the Account is not paid within the earlier of: 60 days
following its due date or 90 days following its original invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails to
pay its debts generally as they come due; or
14
(iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal, state
or foreign (including any provincial) receivership, insolvency relief or other
law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under
the other criteria set forth in this Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself and Lenders,
is not a first priority perfected Lien;
(o) as to which any of the representations or warranties in Section
4(f) of the Security Agreement are untrue;
(p) to the extent such Account is evidenced by a judgment, Instrument
or Chattel Paper;
(q) to the extent such Account exceeds any credit limit established by
Agent, in its reasonable credit judgment;
(r) to the extent that such Account, together with all other Accounts
owing by such Account Debtor and its Affiliates as of any date of determination,
exceed 15% of all Eligible Accounts (unless otherwise agreed to by Agent), it
being agreed that any such excess above 15% shall be excluded;
(s) that is payable in any currency other than Dollars or Canadian
Dollars; or
(t) that is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.6A Eligible Export-Related Accounts. All of the Export-Related
Accounts of Borrower reflected in the most recent Borrowing Base Certificate
delivered by Borrower to Agent shall be "Eligible Export-Related Accounts" for
purposes of this Agreement, except any Account to which any of the exclusionary
criteria set forth below apply. Agent shall have the right (upon prior or
contemporaneous notice to Borrower) to establish, modify or eliminate Reserves
against Eligible Export-Related Accounts from time to time in its reasonable
credit judgment. In addition, Agent reserves the right (upon prior or
contemporaneous notice to Borrower), at any time and from time to time after the
Closing Date, to adjust any of the criteria set forth below, to establish new
criteria and to adjust advance rates with respect to Eligible Export-Related
Accounts, in its reasonable credit judgment. Eligible Export-Related Accounts
shall not include any Export-Related Account of Borrower that does not satisfy
the criteria set forth in the definition of "Eligible Export-Related Account
Receivable" contained in the Ex-Im Borrower Agreement.
1.7 Eligible Inventory. All of the Inventory owned by the Borrower
and AET Canada and reflected in the most recent Borrowing Base Certificate
delivered by Borrower to Agent shall be "Eligible Inventory" for purposes of
this Agreement, except any Inventory to which any of the exclusionary criteria
set forth below applies. Agent shall have the right (upon prior or
contemporaneous notice to Borrower) to establish, modify or eliminate Reserves
against
15
Eligible Inventory from time to time in its reasonable credit judgment. In
addition, Agent reserves the right (upon prior or contemporaneous notice to
Borrower), at any time and from time to time after the Closing Date, to adjust
any of the criteria set forth below, to establish new criteria and to adjust
advance rates with respect to Eligible Inventory, in its reasonable credit
judgment. Eligible Inventory shall not include any Inventory of Borrower or AET
Canada that:
(a) is not owned by such Credit Party free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Credit Party's performance with respect to that Inventory), except the
Liens in favor of Agent, on behalf of itself and Lenders, and Permitted
Encumbrances in favor of landlords and bailees to the extent permitted in
Section 5.9 hereof (subject to Reserves established by Agent in accordance with
Section 5.9 hereof);
(b) (i) is not located on premises owned, leased or rented by such
Credit Party and set forth in Disclosure Schedule (3.2), or (ii) is stored at a
leased location, unless either (x) a reasonably satisfactory landlord waiver has
been delivered to Agent, or (y) Reserves reasonably satisfactory to Agent have
been established with respect thereto or (iii) is stored with a processor,
▇▇▇▇▇▇ or toll converter, warehouseman or other bailee, unless either (x) a
reasonably satisfactory, acknowledged bailee letter has been received by Agent,
or (y) Reserves reasonably satisfactory to Agent have been established with
respect thereto, or (iv) is located at an owned location subject to a mortgage
in favor of a lender other than Agent unless a reasonably satisfactory mortgagee
waiver has been delivered to Agent, or (v) is located at any site if the
aggregate book value of Inventory at any such location is less than $50,000;
(c) is placed on consignment, unless (i) a reasonably satisfactory
consignment agreement among the Borrower, the Agent and the consignee has been
delivered to Agent, (ii) the Borrower's and Agent's interest in the consigned
inventory is fully perfected under the Code by the filing of appropriate
financing statements or other action required by Agent, (iii) prior to delivery
of such consigned Inventory to the consignee any Person holding a security
interest in Goods of such consignee has been properly notified of the Borrower's
and Agent's interest in the consigned Inventory in accordance with section
9-324(b) of the Code, and (iv) such Inventory is located in the United States at
a location of the consignee satisfactory to the Agent and as to which the
requirements of Section 1.7(b) have been satisfied;
(d) is in transit (other than Inventory of Borrower or AET Canada
which is in transit in the ordinary course of business within or between the
United States and Canada between locations owned by the Borrower or AET Canada
or with respect to which Agent has received a satisfactory landlord waiver or
bailee letter, as applicable;
(e) is covered by a negotiable document of title, unless such document
has been delivered to Agent with all necessary endorsements, free and clear of
all Liens except those in favor of Agent and Lenders;
(f) is excess, obsolete, unsalable, shopworn, damaged or unfit for
sale;
(g) consists of display items or packing or shipping materials,
manufacturing supplies, work-in-process Inventory or replacement parts;
16
(h) consists of goods which have been returned by the buyer unless
such Inventory is not excess, obsolete, unsalable, shopworn, damaged or unfit
for sale;
(i) is not of a type held for sale in the ordinary course of such
Credit Party's business;
(j) is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders, subject to Permitted Encumbrances;
(k) as to which any of the representations or warranties in Section
4(g) of the Security Agreement are untrue;
(l) consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance reasonably acceptable to
Agent; or
(n) is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.8 Cash Management Systems. On or prior to the Closing Date, Borrower
and the other Credit Parties will establish and will maintain until the
Termination Date, the cash management systems described in Annex C (the "Cash
Management Systems").
1.9 Fees.
(a) Borrower shall pay to GE Capital, individually, the Fees specified
in that certain fee letter of even date herewith among Borrower and GE Capital
(the "GE Capital Fee Letter"), at the times specified for payment therein.
(b) As additional compensation for the Revolving Lenders, Borrower
shall pay to Agent, for the ratable benefit of such Lenders, in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, a Fee for Borrower's non-use of available funds
in an amount equal to one half of one percent (0.50%) per annum (calculated on
the basis of a 360 day year for actual days elapsed) multiplied by the
difference between (x) the Maximum Amount (as it may be reduced from time to
time) and (y) the average for the period of the daily closing balances of the
aggregate Revolving Loan, the Export-Related Loan and the Swing Line Loan
outstanding during the period for which such Fee is due.
(c) If Borrower pays after acceleration or prepays all or any portion
of the Term Loan or prepays the Revolving Loan and reduces or terminates the
Revolving Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations, or if any of the Commitments
are otherwise terminated, Borrower shall pay to Agent, for the benefit of
Lenders as liquidated damages and compensation for the costs of being prepared
to make funds available hereunder an amount equal to the Applicable Percentage
(as defined below) multiplied by the sum of (i) the principal amount of the Term
Loan paid after acceleration or prepaid, and (ii) the amount of the reduction of
the Revolving Loan Commitment. As used herein, the term "Applicable Percentage"
shall mean (x) two percent (2.0%), in the case
17
of a prepayment on or prior to the first anniversary of the Closing Date, (y)
one percent (1.0%), in the case of a prepayment after the first anniversary of
the Closing Date but on or prior to the second anniversary thereof, and (z) one
half of one percent (0.50%), in the case of a prepayment after the second
anniversary of the Closing Date but on or prior to the third anniversary
thereof. The Credit Parties agree that the Applicable Percentages are a
reasonable calculation of Lenders' lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early termination
of the Commitments. Notwithstanding the foregoing, no prepayment fee shall be
payable by Borrower upon a mandatory prepayment made pursuant to Sections
1.3(b)(ii), 1.3(d) or 1.16(c); provided that Borrower does not permanently
reduce or terminate the Revolving Loan Commitment upon any such prepayment and,
in the case of prepayments made pursuant to Section 1.3(b)(ii), the transaction
giving rise to the applicable prepayment is expressly permitted under Section 6.
(d) Borrower shall pay to Agent, for the ratable benefit of Revolving
Lenders, the Letter of Credit Fee as provided in Annex B.
1.10 Receipt of Payments. Borrower shall make each payment of
principal of and interest on the Term Loan under this Agreement not later than
2:00 p.m. (New York time) on the day when due in immediately available funds in
Dollars to the Term Loan Payment Account. Borrower shall make each payment
(other than payments of principal of and interest on the Term Loan) under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and determining Borrowing Availability and Export-Related
Borrowing Availability as of any date, all payments shall be deemed received on
the first Business Day following the Business Day on which immediately available
funds therefor are received in the Collection Account or the Term Loan Payment
Account, as applicable, prior to 2:00 p.m. New York time. Payments received
after 2:00 p.m. (New York time) on any Business Day or on a day that is not a
Business Day shall be deemed to have been received on the following Business
Day.
1.11 Application and Allocation of Payments.
(a) So long as no Default or Event of Default has occurred and is
continuing, (i) payments consisting of proceeds of Accounts (other than
Export-Related Accounts) received in the ordinary course of business shall be
applied, first, to the Swing Line Loan, second, the Revolving Credit Advances,
and third, to the Export-Related Advances, (ii) payments consisting of proceeds
of Export-Related Accounts received in the ordinary course of business shall be
applied, first, to the Export-Related Advances, second, to the Swing Line Loan,
and third, to the Revolving Credit Advances; (iii) payments matching specific
scheduled payments then due shall be applied to those scheduled payments; (iv)
voluntary prepayments shall be applied as determined by Borrower, subject to the
provisions of Section 1.3(a); and (v) mandatory prepayments shall be applied as
set forth in Sections 1.3(c) and 1.3(d). All payments and prepayments applied to
a particular Loan shall be applied ratably to the portion thereof held by each
Lender as determined by its Pro Rata Share. As to any other payment, and as to
all payments made when a Default or Event of Default has occurred and is
continuing or following the Commitment Termination Date, Borrower hereby
irrevocably waives the right to direct the application of any and all payments
received from or on behalf of Borrower, and Borrower hereby irrevocably agrees
that Agent shall have the continuing exclusive right to apply any and
18
all such payments against the Obligations of Borrower as Agent may deem
advisable notwithstanding any previous entry by Agent in the Loan Account or any
other books and records. In the absence of a specific determination by Agent
with respect thereto and except as provided in Section 1.11(b), payments shall
be applied to amounts then due and payable in the following order: (1) to Fees
and Agent's expenses reimbursable hereunder; (2) to interest on the Swing Line
Loan; (3) to principal payments on the Swing Line Loan; (4) to interest on the
other Loans, ratably in proportion to the interest accrued as to each Loan; (5)
to principal payments on the other Loans and to provide cash collateral for
Letter of Credit Obligations in the manner described in Annex B, ratably to the
aggregate, combined principal balance of the other Loans and outstanding Letter
of Credit Obligations; and (6) to all other Obligations, including expenses of
Lenders to the extent reimbursable under Section 11.3.
(b) The Lenders hereby agree that so long as any of the Loans have
been declared to be immediately due and payable, all proceeds of the Collateral
shall be applied first to Fees and Agent's expenses reimbursable hereunder; and
(i) with respect to proceeds of Term Loan Priority Collateral, second to
interest on the Term Loan, third to principal payments on the Term Loan, fourth
to all other Obligations of the Term Lenders, including expenses of Term Lenders
to the extent reimbursable under Section 11.3, fifth to interest on the Swing
Line Loan, sixth to principal payments on the Swing Line Loan, seventh to
interest on the other Loans, ratably in proportion to the interest accrued as to
each Loan, eighth to principal payments on the other Loans and to provide cash
collateral for Letter of Credit Obligations in the manner described in Annex B,
ratably to the aggregate, combined principal balance of the other Loans and
outstanding Letter of Credit Obligations, ninth to all other Obligations of the
Revolving Lenders, including expenses of Revolving Lenders to the extent
reimbursable under Section 11.3 and (ii) (A) with respect to proceeds of
Revolving Loan Priority Collateral which constitutes Export-Related Accounts,
second to interest on the Export-Related Loan, third to principal payments on
the Export-Related Loan, fourth to interest on the Swing Line Loan, fifth to
principal payments on the Swing Line Loan, sixth to interest on the Revolving
Loan, seventh to principal payments on the Revolving Loan and to provide cash
collateral for Letter of Credit Obligations in the manner described in Annex B,
eighth to all other Obligations of the Revolving Lenders, including expenses of
Revolving Lenders to the extent reimbursable under Section 11.3, ninth to
interest on the Term Loan, tenth to principal payments on the Term Loan,
eleventh to all other Obligations of the Term Lenders, including expenses of
Term Lenders to the extent reimbursable under Section 11.3; and (B) with respect
to proceeds of Revolving Loan Priority Collateral (other than Export-Related
Accounts), second to interest on the Revolving Loan, third to principal payments
on the Revolving Loan, fourth to interest on the Swing Line Loan, fifth to
principal payments on the Swing Line Loan, sixth to interest on the
Export-Related Loan, seventh to principal payments on the Export-Related Loan
and to provide cash collateral for Letter of Credit Obligations in the manner
described in Annex B, eighth to all other Obligations of the Revolving Lenders,
including expenses of Revolving Lenders to the extent reimbursable under Section
11.3, ninth to interest on the Term Loan, tenth to principal payments on the
Term Loan, eleventh to all other Obligations of the Term Lenders, including
expenses of Term Lenders to the extent reimbursable under Section 11.3. The
provisions of this clause (b) is for the benefit of the Lenders and Borrower
shall have no rights with respect hereto.
(c) Agent is authorized to (and at its sole election may) charge to
the Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges,
19
costs (including insurance premiums in accordance with Section 5.4(a)), interest
and other Obligations (but not principal on the Revolving Loan), owing by
Borrower under this Agreement or any of the other Loan Documents if and to the
extent Borrower fails to pay promptly any such amounts as and when due, even if
the amount of such charges would exceed Borrowing Availability at such time.
1.12 Loan Account and Accounting. Agent shall maintain a loan account
(the "Loan Account") on its books to record: all Advances and the Term Loan, all
payments made by Borrower, and all other debits and credits as provided in this
Agreement with respect to the Loans or any other Obligations. All entries in the
Loan Account shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. The balance in the Loan Account, as
recorded on Agent's most recent printout or other written statement, shall,
absent manifest error, be presumptive evidence of the amounts due and owing to
Agent and Lenders by Borrower; provided that any failure to so record or any
error in so recording shall not limit or otherwise affect Borrower's duty to pay
the Obligations. Agent shall render to Borrower a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account as to Borrower for the immediately preceding month. Unless Borrower
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within 30 days after the date thereof,
each and every such accounting shall (absent manifest error) be deemed final,
binding and conclusive on Borrower in all respects as to all matters reflected
therein. Only those items expressly objected to in such notice shall be deemed
to be disputed by Borrower. Notwithstanding any provision herein contained to
the contrary, any Lender may elect (which election may be revoked) to dispense
with the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.
1.13 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other out-of-pocket costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or asserted
against or incurred by any such Indemnified Person as the result of credit
having been extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities, and any and all reasonable out-of-pocket legal costs
and expenses arising out of or incurred in connection with disputes between or
among any parties to any of the Loan Documents (collectively, "Indemnified
Liabilities"); provided, that no such Credit Party shall be liable for any
indemnification to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from that
Indemnified Person's gross negligence or willful misconduct. NO INDEMNIFIED
PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT,
ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING
20
CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing of, or shall
request a termination of, any borrowing of, conversion into or continuation of,
LIBOR Loans after Borrower has given notice requesting the same in accordance
herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan
after Borrower has given a notice thereof in accordance herewith, then Borrower
shall indemnify and hold harmless each Lender from and against all losses, costs
and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.13(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within 10 Business Days of receipt thereof, specifying the basis for such
objection in detail.
1.14 Access. Each Credit Party that is a party hereto shall, during
normal business hours, from time to time upon one Business Day's prior notice as
frequently as Agent reasonably determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (b) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from any Credit Party's books and
records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or
Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, Borrower shall provide Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
to Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records that Agent may reasonably request.
Each Credit Party shall deliver any
21
document or instrument necessary for Agent, as it may from time to time
reasonably request, to obtain records from any service bureau or other Person
that maintains records for such Credit Party, and shall maintain duplicate
records or supporting documentation on media, including computer tapes and discs
owned by such Credit Party. Agent will give Lenders at least 5 days' prior
written notice of regularly scheduled audits. Representatives of other Lenders
may, at their own cost and expense) accompany Agent's representatives on
regularly scheduled audits at no charge to Borrower.
1.15 Taxes.
(a) Any and all payments by Borrower or any other Credit Party
hereunder or under the Notes or any other Loan Document shall be made, in
accordance with this Section 1.15, free and clear of and without deduction for
any and all present or future Taxes. If Borrower or any other Credit Party shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes or any other Loan Document, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.15) Agent or Lenders, as applicable, receive an amount
equal to the sum they would have received had no such deductions been made, (ii)
Borrower or such other Credit Party shall make such deductions, and (iii)
Borrower or such other Credit Party shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within 30
days after the date of any payment of Taxes, Borrower or such other Credit Party
shall furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof. Except as set forth in Section 1.15(e), Agent and Lenders shall
not be obligated to return or refund any amounts received pursuant to this
Section.
(b) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and, within 10 days of demand therefor, pay Agent and each
Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "Foreign Lender") as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax under
an applicable statute or tax treaty shall provide to Borrower and Agent prior to
becoming a party to this Agreement a properly completed and executed IRS Form
W-8ECI or Form W-8BEN or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Lender's entitlement to a complete exemption from U.S. withholding taxes (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender. In addition, each Foreign Lender shall deliver
such forms upon the obsolescence or invalidity of any form previously delivered
by such Foreign Lender. Notwithstanding any other provision of this Section
1.15(c), a Foreign Lender shall not be required to deliver any form pursuant to
this Section 1.15(c) (other than the
22
form required to be delivered pursuant to the first sentence of this clause)
that such Foreign Lender is not legally able to deliver.
(d) The Borrower shall not be required to indemnify any Foreign
Lender, or to pay any additional amounts to any Foreign Lender, in respect of
United States federal, state or local withholding Tax pursuant to paragraph (a)
or (b) above to the extent that (i) the obligation to withhold amounts with
respect to United States federal, state or local withholding Tax existed on the
date such Foreign Lender became a party to this Agreement (or, in the case of a
transferee, on the effective date of the Assignment Agreement pursuant to which
such transferee becomes a Lender) or, with respect to payments to a new lending
office, the date such Foreign Lender designated such new lending office;
provided, however, that this clause (i) shall not apply to any Lender that
becomes a Lender or new lending office that becomes a new lending office as a
result of an assignment or designation made at the request of the Borrower; and
provided, further, that this clause (i) shall not apply to the extent that the
indemnity payment or additional amounts any Lender, the Agent or any Lender
through a new lending office would be entitled to receive (without regard to
this clause (i)) do not exceed the indemnity payment or additional amounts that
the person making the assignment or transfer to such Lender, the Agent or such
Lender making the designation of such new lending office would have been
entitled to receive in the absence of such assignment, transfer or designation
or (ii) the obligation to pay such additional amounts or such indemnity payments
would not have arisen but for a failure by such Foreign Lender to comply with
the provisions of 1.15(c) above.
(e) If any of Agent or any Lender, as applicable, determines, in its
sole discretion, that it has received a refund of any Taxes as to which it has
been indemnified by the Borrower or a Credit Party or with respect to which the
Borrower or a Credit Party has paid additional amounts pursuant to this Section
1.15, it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower or Credit
Party under this Section 1.15 with respect to the Taxes giving rise to such
refund), net of all Charges imposed on such refund, out-of-pocket expenses of
such Agent or Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund).
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate in
reasonable detail as to the amount of that reduction and showing the basis of
the computation thereof submitted by such Lender to Borrower and to Agent shall,
absent manifest error, be final, conclusive and binding for all purposes.
23
(b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate in reasonable detail as to the amount of such increased cost,
submitted to Borrower and to Agent by such Lender, shall be conclusive and
binding on Borrower for all purposes, absent manifest error. Each Lender agrees
that, as promptly as practicable after it becomes aware of any circumstances
referred to above which would result in any such increased cost, the affected
Lender shall, to the extent not inconsistent with such Lender's internal
policies of general application, use reasonable commercial efforts to change its
lending office or otherwise minimize costs and expenses incurred by it and
payable to it by Borrower pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing by Borrower to such Lender,
together with interest accrued thereon, unless Borrower, within 5 Business Days
after the delivery of such notice and demand, converts all LIBOR Loans into
Index Rate Loans.
(d) Within 15 days after receipt by Borrower of written notice and
demand from any Lender (an "Affected Lender") for payment of additional amounts
or increased costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b), or of
its inability to fund as provided in Section 1.16(c), Borrower may, at its
option, notify Agent and such Affected Lender of its intention to replace the
Affected Lender. So long as no Default or Event of Default has occurred and is
continuing, Borrower, with the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee), may
obtain, at Borrower's expense, a replacement Lender ("Replacement Lender") for
the Affected Lender. If Borrower obtain a Replacement Lender within 90 days
following notice of their intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender for an amount equal
to the principal balance of all Loans held by the Affected Lender and all
accrued interest and Fees with respect thereto through the date of such sale;
provided, that Borrower shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if
the Affected Lender rescinds its demand for increased costs or additional
amounts within 15 days following its receipt of Borrower's notice of intention
to replace such Affected Lender. Furthermore, if Borrower give a notice of
intention to replace and do not so replace
24
such Affected Lender within 90 days thereafter, Borrower's rights under this
Section 1.16(d) shall terminate and Borrower shall promptly pay all increased
costs or additional amounts demanded by such Affected Lender pursuant to
Sections 1.15(a), 1.16(a) and 1.16(b).
1.17 Single Loan. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
make any Loan or incur any Letter of Credit Obligations on the Closing Date, or
to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to
Agent, or waived in writing by Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, each other
Credit Party, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance reasonably satisfactory to Agent.
(b) Repayment of Prior Lender Obligations; Satisfaction of Outstanding
L/Cs. (i) Agent shall have received fully executed originals of pay-off letters
or other satisfaction agreements reasonably satisfactory to Agent confirming
that all of the Prior Lender Obligations have been paid in full or will be
repaid in full from the proceeds of the Term Loan and the initial Revolving
Credit Advance and all Liens upon any of the property of Borrower or any of its
Subsidiaries in favor of any Prior Lender with respect to the Prior Lender
Obligations shall be terminated by the applicable Prior Lender immediately upon
such payment; and (ii) all letters of credit issued or guaranteed by any Prior
Lender shall have been cash collateralized or supported by a Letter of Credit
issued pursuant to Annex B, as mutually agreed upon by Agent, Borrower and such
Prior Lender.
(c) Approvals. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions or (ii) an officer's certificate in
form and substance reasonably satisfactory to Agent affirming that no such
consents or approvals are required.
(d) Opening Availability. The Eligible Accounts and Eligible Inventory
supporting the initial Revolving Credit Advance and the initial Letter of Credit
Obligations incurred and the amount of the Reserves to be established on the
Closing Date shall be sufficient in value, as determined by Agent, to provide
Borrower with Borrowing Availability, after giving effect to the initial
Revolving Credit Advance made to Borrower, the incurrence of any initial Letter
of Credit Obligations and the consummation of the Related Transactions (on a pro
forma
25
basis, with trade payables being paid currently, and expenses and liabilities
being paid in the ordinary course of business and without acceleration of sales)
of at least $13,000,000.
(e) Payment of Fees. Borrower shall have paid the Fees required to be
paid on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all out-of-pocket fees, costs and expenses of closing
(including all reasonable attorneys' fees) presented as of the Closing Date.
(f) Capital Structure; Other Indebtedness. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion.
(g) Due Diligence. Agent shall have completed its business and legal
due diligence, including a roll forward of its previous Collateral audit, with
results reasonably satisfactory to Agent.
(h) Minimum EBITDA. Borrower shall have EBITDA for the twelve month
period ending August 31, 2003 of not less than $35,000,000.
(i) Consummation of Related Transactions. Agent shall have received
fully executed copies of the Related Transactions Documents, each of which shall
be in form and substance reasonably satisfactory to Agent and its counsel. The
Related Transactions shall have been consummated in accordance with the terms of
the Related Transactions Documents.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:
(a) any representation or warranty by any Credit Party contained
herein or in any other Loan Document is untrue or incorrect as of such date,
except to the extent that such representation or warranty expressly relates to
an earlier date and except for changes therein expressly permitted or expressly
contemplated by this Agreement, and Agent or Requisite Revolving Lenders (or
Requisite Term Lenders, with respect to the making of any Term Loan or the
conversion or continuation of any Term Loan as a LIBOR Loan) have determined not
to make such Advance, convert or continue any Loan as LIBOR Loan or incur such
Letter of Credit Obligation as a result of the fact that such warranty or
representation is untrue or incorrect;
(b) any event or circumstance having a Material Adverse Effect has
occurred since the date hereof as determined by the Requisite Revolving Lenders
and Agent or Requisite Revolving Lenders (or Requisite Term Lenders, with
respect to the making of any Term Loan or the conversion or continuation of any
Term Loan as a LIBOR Loan) have determined not to make such Advance, convert or
continue any Loan as a LIBOR Loan or incur such Letter of Credit Obligation as a
result of the fact that such event or circumstance has occurred;
(c) any Default or Event of Default has occurred and is continuing or
would result after giving effect to any Advance (or the incurrence of any Letter
of Credit Obligation), and Agent or Requisite Revolving Lenders (or Requisite
Term Lenders, with respect to the
26
making of any Term Loan or the conversion or continuation of any Term Loan as a
LIBOR Loan) shall have determined not to make any Advance, convert or continue
any Loan as a LIBOR Loan or incur any Letter of Credit Obligation as a result of
that Default or Event of Default; or
(d) after giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the Maximum Amount less the then
outstanding principal amount of the Swing Line Loan and the Export-Related Loan,
(ii) the outstanding principal amount of the aggregate Revolving Credit Advances
would exceed the Borrowing Base less the then outstanding principal amount of
the Swing Line Loan, or (iii) the outstanding principal amount of the
Export-Related Loan would exceed the lesser of the Export-Related Borrowing
Availability and the Export-Related Loan Commitment.
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrower that the conditions
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.
2.3 Further Conditions to Each Export-Related Advance. Except as
otherwise expressly provided herein, no Lender shall be obligated to fund any
Export-Related Advance, if, as of the date thereof:
(a) Agent has not received satisfactory evidence that Borrower has
obtained all consents and approvals from Ex-Im Bank;
(b) Agent has not received duly executed copies of all Ex-Im Bank
Documents, each in form and substance satisfactory to Agent and signed by each
party thereto;
(c) Borrower has not duly executed any necessary application forms
required by Ex-Im Bank;
(d) any Ex-Im Bank Document is not in full force and effect; or
(e) with respect to any Export-Related Advance requested after the
date of any scheduled termination of any Ex-Im Bank Guarantee, Agent has not
received written notice at least 90 days prior to such scheduled termination (or
such lesser time as may be agreed to by Agent) that the Ex-Im Bank Guarantee has
been renewed.
The request and acceptance by Borrower of the proceeds of any Export-Related
Advance as of the date thereof, (i) a representation and warranty by Borrower
that the conditions in this Section 2.3 have been satisfied and (ii) a
reaffirmation by Borrower of the granting and continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents. 3.
3. REPRESENTATIONS AND WARRANTIES
27
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is
a corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or liabilities in
excess of $250,000; (c) has the requisite power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct, except where the failure to
have such licenses, permits, consents or approvals, make such filings or give
such notices, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect; (e) is in compliance with its charter and
bylaws or partnership or operating agreement, as applicable; and (f) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable provisions of law,
except where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing
Date, the current location of each Credit Party's chief executive office and the
processor, ▇▇▇▇▇▇ or toll converter locations, warehouses, consignment, and
other premises at which any Collateral is located are set forth in Disclosure
Schedule (3.2). In addition, Disclosure Schedule (3.2) lists the federal
employer identification number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any applicable law or
regulation, or any applicable order or decree of any court of competent
jurisdiction or Governmental Authority; (e) do not conflict with or result in
the breach or termination of, constitute a default under or accelerate or permit
the acceleration of any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which such Person is a party
or by which such Person or any of its property is bound; (f) do not result in
the creation or imposition of any Lien upon any of the property of such Person
other than those in favor of Agent, on behalf of itself and Lenders, pursuant to
the Loan Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in Section
2.1(c), all of which will have been duly obtained, made or complied with prior
to the Closing
28
Date. Each of the Loan Documents shall be duly executed and delivered by each
Credit Party that is a party thereto and each such Loan Document shall
constitute a legal, valid and binding obligation of such Credit Party
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws relative to or affecting the
enforcement of creditors' rights generally in effect from time to time and by
general principles of equity.
3.4 Financial Statements and Projections. Except for the Projections,
all Financial Statements concerning Borrower and its Subsidiaries that are
referred to below have been prepared in accordance with GAAP consistently
applied throughout the periods covered (except as disclosed therein and except,
with respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the financial position of the Persons covered thereby as at the dates thereof
and the results of their operations and cash flows for the periods then ended.
(a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule (3.4(a)) have been delivered on the date hereof:
(i) The audited consolidated sheets at September 30, 2001 and
2002 and the related statements of income and cash flows of Borrower and its
Subsidiaries for the Fiscal Years then ended, certified by Deloitte and Touche,
LLP.
(ii) The unaudited balance sheet at June 30, 2003 and the related
statement(s) of income and cash flows of Borrower and its Subsidiaries for the
nine-month period then ended.
(iii) The unaudited balance sheet at August 31, 2003 and the
related statement(s) of income and cash flows of Borrower and its Subsidiaries
for the eleven-month period then ended.
(b) Projections. The Projections delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(b)) have been prepared by Borrower
in light of the past operations of its businesses, but including future payments
of known contingent liabilities, and reflect projections for the three-year
period beginning on October 1, 2003 on a month-by-month basis for the first year
and on a year-by-year basis thereafter. The Projections are based upon estimates
and assumptions stated therein, all of which Borrower believes to be reasonable
and fair in light of current conditions and current facts known to Borrower and,
as of the Closing Date, reflect Borrower's good faith and reasonable estimates
of the future financial performance of Borrower and of the other information
projected therein for the period set forth therein, it being understood by the
Lenders that such Projections relate to future events and not to present facts,
and that actual results during the period covered therein may differ from such
Projections by a material amount.
3.5 Material Adverse Effect. Between September 30, 2002 and the
Closing Date: (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected
29
to have a Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon
any Credit Party's assets and no law or regulation applicable to any Credit
Party has been adopted that has had or could reasonably be expected to have a
Material Adverse Effect, and (c) no Credit Party is in default and to Borrower's
knowledge no third party is in default under any material contract, lease or
other agreement or instrument, that alone or in the aggregate could reasonably
be expected to have a Material Adverse Effect. Between September 30, 2002 and
the Closing Date no event has occurred, that alone or together with other
events, could reasonably be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of terms thereof reasonably satisfactory to Agent have been
delivered to Agent. Disclosure Schedule (3.6) further describes any Real Estate
with respect to which any Credit Party is a lessor, sublessor or assignor as of
the Closing Date. Each Credit Party also has good and marketable title to, or
valid leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party's right, title and
interest in and to all such Real Estate and other properties and assets.
Disclosure Schedule (3.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate. As of
the Closing Date, no portion of any Credit Party's Real Estate has suffered any
material damage by fire or other casualty loss that has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently occupied and
used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply in all material respects with the Fair Labor
Standards Act and each other federal, state, local or foreign law applicable to
such matters; (c) all payments due from any Credit Party for employee health and
welfare insurance have been paid or accrued as a liability on the books of such
Credit Party; (d) except as set forth in Disclosure Schedule (3.7), no Credit
Party is a party to or bound by any collective bargaining agreement, management
agreement, consulting agreement, employment agreement, bonus, restricted stock,
stock option, or stock appreciation plan or agreement or any similar plan,
agreement or arrangement (and true and complete copies of any agreements
described on Disclosure Schedule (3.7) have been delivered to Agent); (e) there
is no organizing activity involving any Credit Party pending or, to any Credit
Party's knowledge,
30
threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Subsidiary of Borrower
is owned by the Borrower in the amounts set forth in Disclosure Schedule (3.8).
Except as set forth in Disclosure Schedule (3.8), there are no outstanding
rights to purchase, options, warrants or similar rights or agreements pursuant
to which any Credit Party may be required to issue, sell, repurchase or redeem
any of its Stock or other equity securities or any Stock or other equity
securities of its Subsidiaries. All outstanding Indebtedness and Guaranteed
Indebtedness of each Credit Party as of the Closing Date (except for the
Obligations) is described in Section 6.3 (including Disclosure Schedule (6.3)).
As of the Closing Date, AET Limited is an inactive Subsidiary and does not have
any assets (other than the bank account referred to in Annex C and cash on
deposit therein in an amount not exceeding $150,000) or any Indebtedness or
Guaranteed Indebtedness and does not conduct any business or operations. Except
as set forth in Disclosure Schedule (3.8(a)), Applied Extrusion Technologies
Holdings, Inc., Applied Extrusion Technologies Australia Holdings, Inc., Applied
Extrusion Technologies, Belgium, Inc., and Applied Extrusion Technologies,
Scotland, Inc., (collectively, the "Former Subsidiaries") each a corporation
organized in Delaware and prior to the date hereof merged into Borrower, did not
own any assets. At the time of the applicable merger of each Former Subsidiary
into Borrower, such Former Subsidiary did not have any liabilities or other
obligations to any Person.
3.9 Government Regulation. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations on behalf of
Borrower, the application of the proceeds thereof and repayment thereof and the
consummation of the Related Transactions will not violate any provision of any
such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the
31
proceeds of the Loans or other extensions of credit under this Agreement will be
used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All income tax returns and all other material
property tax returns, reports and statements, including information returns,
required by any Governmental Authority ("Tax Returns") to be filed by any Credit
Party have been filed with the appropriate Governmental Authority; all such Tax
Returns are true, correct and complete in all material respects; and all Charges
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof (or any such fine, penalty,
interest, late charge or loss has been paid), excluding Charges or other amounts
being contested in accordance with Section 5.2(b). There are no Liens for
Charges (other than for current Charges not yet due and payable or being
contested in good faith in accordance with Section 5.2(b)) upon the assets of
any Credit Party. No adjustment relating to such Tax Returns has been proposed
formally or informally by any Governmental Authority and, to the knowledge of
each Credit Party, no basis exists for any such adjustment. Proper and accurate
amounts have been withheld by each Credit Party from its respective employees,
independent contractors, creditors, members, partners and other third parties
for all periods in full and complete compliance with all applicable federal,
state, local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of
the Closing Date those taxable years for which any Credit Party's tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority, and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as indicated on Disclosure
Schedule (3.11), as of the Closing Date all, Charges that have been claimed,
proposed, asserted or assessed against any Credit Party (or with respect to any
of their assets) have been fully paid or finally settled or are being contested
in good faith in accordance with Section 5.2(b). Except as described in
Disclosure Schedule (3.11), as of the Closing Date, no Credit Party has executed
or filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Charges. None of the Credit Parties and their respective
predecessors are liable for any Charges: (a) under any agreement (including any
tax sharing agreements) or (b) to each Credit Party's knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which would have a Material Adverse Effect.
3.12 ERISA and Canadian Plans.
(a) Disclosure Schedule (3.12) lists (i) all ERISA Affiliates
and (ii) all Plans and separately identifies all Pension Plans, including Title
IV Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree
Welfare Plans. As of the Closing Date, copies of all such listed Plans, together
with a copy of the latest IRS/DOL 5500-series form for each
32
such Plan, have been delivered to Agent. Except with respect to Multiemployer
Plans, each Qualified Plan has been determined by the IRS to qualify under
Section 401 of the IRC, the trusts created thereunder have been determined to be
exempt from tax under the provisions of Section 501 of the IRC, and nothing has
occurred that would cause the loss of such qualification or tax-exempt status.
Each Plan is in compliance with the applicable provisions of ERISA and the IRC,
including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104-23. Neither any
Credit Party nor ERISA Affiliate has failed to make any contribution or pay any
amount due as required by either Section 412 of the IRC or Section 302 of ERISA
or the terms of any such Plan. Neither any Credit Party nor ERISA Affiliate has
engaged in a "prohibited transaction," as defined in Section 406 of ERISA and
Section 4975 of the IRC, in connection with any Plan, that would subject any
Credit Party to a material tax on prohibited transactions imposed by Section
502(i) of ERISA or Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at
any time within the last five years) with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such
time); (vi) except in the case of any ESOP, Stock of all Credit Parties and
their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair
market value of the assets of any Plan measured on the basis of fair market
value as of the latest valuation date of any Plan; and (vii) no liability under
any Title IV Plan has been satisfied with the purchase of a contract from an
insurance company that is not rated AAA by the Standard & Poor's Corporation or
an equivalent rating by another nationally recognized rating agency
(c) Disclosure Schedule 3.12(c) sets forth all Canadian Benefit
Plans (other than, for greater certainty, universal plans created by and to
which any Credit Party is obligated to contribute by statute) and Canadian
Pension Plans adopted by each Credit Party. The Canadian Pension Plans are duly
registered under the ITA and all other applicable laws which require
registration and no event has occurred which is reasonably likely to cause the
loss of such registered status. All material obligations of each Credit Party
(including fiduciary, funding, investment and administration obligations)
required to be performed in connection with the Canadian Pension Plans and the
funding agreements therefor have been performed in a timely fashion. There have
been no improper withdrawals or applications of the assets of the Canadian
Pension Plans or the Canadian Benefit Plans. There are no outstanding disputes
concerning the assets of the Canadian Pension Plans or the Canadian Benefit
Plans. Each of the Canadian Pension Plans is fully funded on a solvency basis
(using actuarial methods and assumptions
33
which are consistent with the valuations last filed with the applicable
Governmental Bodies and which are consistent with generally accepted actuarial
principles).
3.13 No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened against any Credit Party, before any Governmental Authority or
before any arbitrator or panel of arbitrators (collectively, "Litigation"), (a)
that challenges any Credit Party's right or power to enter into or perform any
of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken thereunder,
or (b) that has a reasonable risk of being determined adversely to any Credit
Party and that , if so determined, could be reasonably be expected to have a
Material Adverse Effect. Except as set forth on Disclosure Schedule (3.13), as
of the Closing Date there is no Litigation pending or, to any Credit Party's
knowledge, threatened, that seeks damages in excess of $100,000 or injunctive
relief against, or alleges criminal misconduct of, any Credit Party.
3.14 Brokers. No broker or finder brought about the obtaining,
making or closing of the Loans or the Related Transactions, and no Credit Party
or Affiliate thereof has any obligation to any Person in respect of any finder's
or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit
Party owns or has rights to use all Intellectual Property necessary to continue
to conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15). Each Credit Party conducts its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect. Except as set forth in Disclosure Schedule
(3.15), as of the Closing Date, no Credit Party is aware of any infringement
claim by any other Person with respect to any Intellectual Property.
3.16 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other written reports from time to time
delivered hereunder or any written statement furnished by or on behalf of any
Credit Party to Agent or any Lender pursuant to the terms of this Agreement
contains or will contain when made any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. The Liens granted to Agent, on behalf of itself and
Lenders, pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances.
3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of
the Closing Date: (i) the Real Estate is free of contamination from, or presence
of, any Hazardous Material except for such contamination that would not
adversely impact the value or marketability of such Real Estate and that would
not result in Environmental Liabilities that could reasonably be expected to
exceed $100,000; (ii) no Credit Party has caused or suffered to occur any
Release of Hazardous
34
Materials on, at, in, under, above, to, from or about any of its Real Estate and
that could reasonably be expected to result in Environmental Liabilities in
excess of $100,000; (iii) the Credit Parties are and have been in compliance
with all Environmental Laws, except for such noncompliance that would not result
in Environmental Liabilities which could reasonably be expected to exceed
$100,000; (iv) the Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the operations of their
respective businesses as presently conducted or as proposed to be conducted,
except where the failure to so obtain or comply with such Environmental Permits
would not result in Environmental Liabilities that could reasonably be expected
to exceed $100,000, and all such Environmental Permits are valid, uncontested
and in good standing; (v) no Credit Party is involved in operations or knows of
any facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any Environmental Liabilities of such
Credit Party which could reasonably be expected to exceed $100,000, and no
Credit Party has permitted any current or former tenant or occupant of the Real
Estate to engage in any such operations; (vi) there is no Litigation arising
under or related to any Environmental Laws, Environmental Permits or Hazardous
Material that seeks damages, penalties, fines, costs or expenses in excess of
$100,000 or injunctive relief against, that orders characterization or
rehabilitative work, or that alleges criminal misconduct by, any Credit Party;
(vii) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes or other Environmental Law, and to the knowledge of the
Credit Parties, there are no facts, circumstances or conditions that may result
in any Credit Party being identified as a "potentially responsible party" under
CERCLA or analogous state statutes or other Environmental Laws; and (viii) as of
the Closing Date, the Credit Parties have provided to Agent copies of all
existing environmental reports, studies, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities, in each
case relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent
is not now, and to Credit Party's knowledge, has not ever been, in control of
any of the Real Estate or any Credit Party's affairs.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule
(3.19) lists all banks and other financial institutions at which any Credit
Party maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. Except as set forth in Disclosure
Schedule (3.20), as of the Closing Date, no Credit Party is a party to any
contract or agreement with any Governmental Authority and no Credit Party's
Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section
3727) or any similar state or local law.
35
3.21 Customer and Trade Relations. Except as set forth in
Disclosure Schedule (3.21), as of the Closing Date, there exists no actual or,
to the knowledge of any Credit Party, threatened termination or cancellation of,
or any material adverse modification or change in: the business relationship of
any Credit Party with any customer or group of customers whose purchases during
the preceding 12 months caused them to be ranked among the ten largest customers
of such Credit Party; or the business relationship of any Credit Party with any
supplier material to its operations.
3.22 Agreements and Other Documents.
(a) As of the Closing Date, each Credit Party has provided to
Agent or its counsel, on behalf of Lenders, accurate and complete copies (or
summaries) of all of the following agreements or documents to which it is
subject and each of which is listed in Disclosure Schedule (3.22): rebate
agreements with end users who annually purchase $15,000,000 or more of products
sold by any Credit Party or whose purchases account for 5% or more of the total
annual sales volume of the Credit Parties; supply agreements and purchase
agreements not terminable by such Credit Party within 60 days following written
notice issued by such Credit Party and involving transactions in excess of
$1,000,000 per annum; leases of Equipment having a remaining term of one year or
longer and requiring aggregate rental and other payments in excess of $500,000
per annum; licenses and permits held by the Credit Parties, the absence of which
could be reasonably likely to have a Material Adverse Effect; instruments and
documents evidencing any Indebtedness or Guaranteed Indebtedness of such Credit
Party and any Lien granted by such Credit Party with respect thereto; and
instruments and agreements evidencing the issuance of any equity securities,
warrants, rights or options to purchase equity securities of such Credit Party.
(b) Set forth in Disclosure Schedule (3.22(b)) is a list, as of
the Closing Date of the ten largest customers and clients of the Credit Parties,
taken as a whole as measured by gross revenues of the Credit Parties generated
by such customers and clients, for the two years ended as of September 30, 2001
and 2002. Except as disclosed in Disclosure Schedule 3.22(b), as of the Closing
Date, no significant customer or client (or group of related customers or
clients which in the aggregate is significant) of the Credit Parties, taken as a
whole, has given them notice or, to the knowledge of the Credit Parties, has
taken any other action which has given any Credit Party any reason to believe
that such customer or client (or group of related customers or clients) will
materially reduce the amount of its purchases or materially adversely change the
price or terms of such purchases. For such purposes, a customer or client (or
group of related customers or clients) shall be deemed "significant" if such
customer or client (or group of related customers or clients) has accounted for
more than 5% of the total gross revenues of the Credit Parties (taken as a
whole) during the past Fiscal Year.
(c) Set forth in Disclosure Schedule 3.22(c) is a list, as of
the Closing Date, of the ten largest suppliers and vendors of the Credit
Parties, taken as a whole, as measured by the cost of purchases made by the
Credit Parties for the two years ended as of September 30, 2001 and 2002. Except
as disclosed in Disclosure Schedule 3.22(c), as of the Closing Date, no
significant supplier or vendor (or group of related suppliers or vendors which
in the aggregate is significant) of the Credit Parties, taken as a whole, has
given them notice or, to the knowledge of the Credit Parties, has taken any
other action which has given any Credit Party any reason to
36
believe that such supplier or vendor (or group of related suppliers or vendors)
will cease to supply or materially restrict the amount supplied or materially
adversely change its price or terms to any Credit Party of any products or
services. For such purposes, a supplier or vendor (or group of related suppliers
or vendors) shall be deemed "significant" if such supplier or vendor (or group
of related suppliers or vendors) has accounted for more than 5% of such total
cost of purchases of the Credit Parties (taken as a whole) during the past
Fiscal Year.
3.23 Solvency. Both before and after giving effect to (a) the
Loans and Letter of Credit Obligations to be made or incurred on the Closing
Date or such other date as Loans and Letter of Credit Obligations requested
hereunder are made or incurred, (b) the disbursement of the proceeds of such
Loans pursuant to the instructions of Borrower; (c) the Refinancing and the
consummation of the other Related Transactions; and (d) the payment and accrual
of all transaction costs in connection with the foregoing, each Credit Party is
and will be Solvent.
3.24 Senior Notes. As of the Closing Date, Borrower has
delivered to Agent a complete and correct copy of the Senior Note Documents
(including all schedules and exhibits thereto and all amendments, supplements or
modifications, as in effect on the Closing Date. No Default or Event of Default
under and as defined in the Senior Note Indenture has occurred and is
continuing. The execution, delivery and performance by the Credit Parties of the
Loan Documents do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of any
payment or performance required by the Senior Note Documents. Without limiting
the foregoing, (i) each borrowing of a Loan or incurrence of Letter of Credit
Obligations or other Obligations pursuant to the Loan Documents constitutes
"Permitted Indebtedness" under clauses (i), (vii) or (x) of the definition
"Permitted Indebtedness" in Section 101 of the Senior Note Indenture, (ii) the
Liens pursuant to the Loan Documents in favor of the Agent securing the
Obligations constitute "Permitted Liens" under clause (d) of the definition
"Permitted Liens" in Section 101 of the Senior Note Indenture, (iii) on the
Closing Date after giving effect to the Related Transactions, this Agreement
constitutes the "Bank Credit Agreement" as defined in Section 101 of the Senior
Note Indenture and no other agreement, indenture or other document or instrument
constitutes the "Bank Credit Agreement" as defined in Section 101 of the Senior
Note Indenture, (iv) the Guaranties are permitted under Section 1017 of the
Senior Note Indenture, and (v) the provisions of Section 6 of this Agreement do
not violate the provisions of Section 1018 of the Senior Note Indenture. The
request and acceptance by Borrower of the proceeds of any Advance or the
incurrence of any Letter of Credit Obligations or other Obligations pursuant to
the Loan Documents shall be deemed to constitute, as of the date thereof, a
representation and warranty by Borrower that as of such date and after giving
effect thereto Borrower is not in default or breach of Sections 1010 or 1014 of
the Senior Note Indenture.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees
that from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the Financial Statements,
notices, Projections and other information at the times, to the Persons and in
the manner set forth in Annex E.
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(b) Each Credit Party executing this Agreement hereby agrees
that, from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the various Collateral
Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b) at
the times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party executing
this Agreement authorizes Agent to communicate directly with its independent
certified public accountants, including Deloitte and Touche, LLP (after such
prior notice to Borrower and provided Borrower may participate in any such
communications), and authorizes and, at Agent's request, shall instruct those
accountants and advisors to disclose and make available to Agent and each Lender
any and all Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party (including copies of any
issued management letters) with respect to the business, financial condition and
other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each
Credit Party shall: do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its material rights
and franchises; continue to conduct its business substantially as now conducted
or as otherwise permitted hereunder; at all times, in the exercise of its
reasonable business judgment, maintain, preserve and protect all of its assets
and properties used or useful in the conduct of its business, and keep the same
in good repair, working order and condition in all material respects (taking
into consideration ordinary wear and tear) and from time to time make, or cause
to be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and transact business only in such
corporate and trade names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
storage or rental charges payable to warehousemen or bailees, in each case,
before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (other
than payments to warehousemen and/or bailees) that is superior to any of the
Liens securing the Obligations and such contest is maintained and prosecuted
continuously and
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with diligence and operates to suspend collection or enforcement of such
Charges; (iii) none of the Collateral becomes subject to forfeiture or loss as a
result of such contest; (iv) such Credit Party shall promptly pay or discharge
such contested Charges, Taxes or claims and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Agent evidence reasonably
acceptable to Agent of such compliance, payment or discharge, if such contest is
terminated or discontinued adversely to such Credit Party or the conditions set
forth in this Section 5.2(b) are no longer met; and (v) Agent has not advised
Borrower in writing that Agent reasonably believes that nonpayment or
nondischarge thereof could have or result in a Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep adequate
books and records with respect to its business activities in which proper
entries, reflecting in all material respects all financial transactions, are
made in accordance with GAAP and on a basis consistent with the Financial
Statements attached as Disclosure Schedule (3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule (3.18) as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Agent. Such policies of insurance (or the loss payable
and additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable in its reasonable
judgment. Agent shall have no obligation to obtain insurance for any Credit
Party or pay any premiums therefor. By doing so, Agent shall not be deemed to
have waived any Default or Event of Default arising from any Credit Party's
failure to maintain such insurance or pay any premiums therefor. All sums so
disbursed, including reasonable attorneys' fees, court costs and other charges
related thereto, shall be payable on demand by Borrower to Agent and shall be
additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any
Credit Party's risk profile (including any change in the product mix maintained
by any Credit Party or any laws affecting the potential liability of such Credit
Party) to require additional forms and limits of insurance to, in Agent's
reasonable opinion, adequately protect both Agent's and Lender's interests in
all or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its industry.
If reasonably requested by Agent, each Credit Party shall deliver to Agent from
time to time a report of a reputable insurance broker, reasonably satisfactory
to Agent, with respect to its insurance policies.
(c) Each Credit Party (other than AET Limited) shall deliver to
Agent, in form and substance reasonably satisfactory to Agent, endorsements to
(i) all "All Risk" and business interruption insurance naming Agent, on behalf
of itself and Lenders, as loss payee, and (ii) all general liability and other
liability policies naming Agent, on behalf of itself and Lenders, as additional
insured. Each Credit Party irrevocably makes, constitutes and appoints Agent
(and
39
all officers, employees or agents designated by Agent), so long as any Event of
Default has occurred and is continuing, as such Credit Party's true and lawful
agent and attorney-in-fact for the purpose of making, settling and adjusting
claims under such "All Risk" policies of insurance, endorsing the name of such
Credit Party on any check or other item of payment for the proceeds of such "All
Risk" policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance. After deducting from such proceeds the expenses, if any,
incurred by Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in accordance
with Section 1.3(d), or permit or require the applicable Credit Party to use
such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss, damage or
destruction. Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a Material Adverse
Effect and such insurance proceeds do not exceed $2,000,000 in the aggregate,
Agent shall permit the applicable Credit Party to replace, restore, repair or
rebuild the property; provided that if such Credit Party shall not have
completed such replacement, restoration, repair or rebuilding within 360 days of
such casualty or entered into binding agreements within 180 days of such
casualty to complete, such replacement, restoration, repair or rebuilding within
360 days of such casualty, Agent may apply such insurance proceeds to the
Obligations in accordance with Section 1.3(d). All insurance proceeds that are
to be made available to any Credit Party to replace, repair, restore or rebuild
the Collateral shall be applied by Agent to reduce the outstanding principal
balance of the Revolving Loan (which application shall not result in a permanent
reduction of the Revolving Loan Commitment) and upon such application, Agent
shall establish a Reserve against the Borrowing Base in an amount equal to the
amount of such proceeds so applied. Thereafter, such funds shall be made
available to Borrower to provide funds to replace, repair, restore or rebuild
the Collateral as follows: (i) Borrower shall request a Revolving Credit Advance
be made to Borrower in the amount requested to be released; (ii) so long as the
conditions set forth in Section 2.2 have been met, Revolving Lenders shall make
such Revolving Credit Advance; and (iii) in the case of insurance proceeds
applied against the Revolving Loan, the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Revolving Credit
Advance. To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds shall be applied in accordance with Section
1.3(d).
5.5 Compliance with Laws. Each Credit Party shall comply with
all federal, state, provincial, regional, municipal, local and foreign laws and
regulations applicable to it, including those relating to ERISA and labor
matters and Environmental Laws and Environmental Permits, except to the extent
that the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.6 [Intentionally Omitted].
5.7 Intellectual Property. Each Credit Party will conduct its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect. Within 120
days following the Closing Date each Credit Party executing
40
this Agreement agrees that it shall and shall cause each other Credit Party to,
at such Credit Party's expense and upon request of Agent, duly execute and
deliver, or cause to be duly executed and delivered, to Agent such further
instruments and do and cause to be done such further acts (including by
effecting all necessary registrations and filings) as may be necessary or proper
in the reasonable opinion of Agent to ensure that the Credit Parties'
Intellectual Property is properly registered (including in foreign
jurisdictions) in such Credit Party's name and Agent's security interest therein
is properly created and granted and fully perfected under applicable law.
5.8 Environmental Matters. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, recovery, recycling,
disposal, transportation or Release of any Hazardous Material on, at, in, under,
above, to, from or about any of its Real Estate and shall at all times after
January 30, 2004 employ a qualified environmental manager to have primary
responsibility for compliance with the provisions of this Section 5.8; (c)
notify Agent promptly after such Credit Party becomes aware of any violation of
Environmental Laws or Environmental Permits or any Release on, at, in, under,
above, to, from or about any Real Estate that is reasonably likely to result in
Environmental Liabilities in excess of $100,000; and (d) promptly forward to
Agent a copy of any order, notice, request for information or any communication
or report received by such Credit Party in connection with any such violation or
Release or any other matter relating to any Environmental Laws or Environmental
Permits that could reasonably be expected to result in Environmental Liabilities
in excess of $100,000, in each case whether or not the Environmental Protection
Agency or any Governmental Authority has taken or threatened any action in
connection with any such violation, Release or other matter. If Agent at any
time has a reasonable basis to believe that there may be a violation of any
Environmental Laws or Environmental Permits by any Credit Party or any
Environmental Liability arising thereunder, or a Release of Hazardous Materials
on, at, in, under, above, to, from or about any of its Real Estate, that, in
each case, could reasonably be expected to have a Material Adverse Effect, then
each Credit Party shall, upon Agent's written request (i) cause the performance
of such environmental audits including subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrower's
expense, as Agent may from time to time reasonably request, which shall be
conducted by reputable environmental consulting firms reasonably acceptable to
Agent and shall be in form and substance reasonably acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real Estate for
the purpose of conducting such environmental audits and testing as Agent deems
appropriate, including subsurface sampling of soil and groundwater. Borrower
shall reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. Except for the locations set forth in Disclosure Schedule
(5.9) as of the Closing Date, each Credit Party shall obtain a landlord's
agreement, mortgagee agreement or bailee letter, as applicable, from the lessor
of each leased property, mortgagee of owned property
41
or bailee with respect to any warehouse, processor, ▇▇▇▇▇▇ or toll converter
facility or other location where Collateral is stored or located as of the
Closing Date, which agreement or letter shall contain a waiver or subordination
of all Liens or claims that the landlord, mortgagee or bailee may assert against
the Collateral at that location, and shall otherwise be reasonably satisfactory
in form and substance to Agent. Within 30 days after the Closing Date, Borrower
shall obtain a landlord's agreement from the lessor of each of its leased
properties located in Naperville, Illinois and Newport, Delaware, which
agreement shall contain a waiver or subordination of all Liens or claims that
the landlord may assert against the Collateral at that location, and shall
otherwise be reasonably satisfactory in form and substance to Agent. With
respect to such locations set forth in Disclosure Schedule (5.9) as of the
Closing Date, so long as Agent has not received a satisfactory landlord or
mortgagee agreement or bailee letter, Borrower's Eligible Inventory at that
location shall, unless otherwise determined by Agent in its discretion, be
excluded from the Borrowing Base. After the Closing Date, no real property shall
be leased by any Credit Party (nor shall the Credit Parties conduct any business
or activities or store any material property at its leased locations in
Norcross, Georgia and Peabody, Massachusetts), without the prior written consent
of Agent (which consent, in Agent's reasonable credit judgment, may be
conditioned upon the exclusion from the Borrowing Base of Eligible Inventory at
that location or the establishment of Reserves acceptable to Agent) or, unless
and until a reasonably satisfactory landlord agreement shall first have been
obtained with respect to such location. After the Closing Date, no Inventory
shall be shipped to or located at any third party warehouse location for which
reasonably satisfactory bailee letters have not been obtained if the aggregate
amount of all such Inventory held at all such third party warehouse locations at
any time would exceed $250,000, without the prior written consent of Agent
(which consent, in Agent's reasonable credit judgment, may be conditioned upon
the exclusion from the Borrowing Base of Eligible Inventory at that location or
the establishment of Reserves acceptable to Agent). After the Closing Date, no
Inventory shall be shipped to a processor, ▇▇▇▇▇▇ or toll converter if the
aggregate amount of all such Inventory held by such processor, ▇▇▇▇▇▇ or toll
converter at any time would exceed $500,000 without the prior written consent of
Agent (which consent, in Agent's reasonable credit judgment, may be conditioned
upon the exclusion from the Borrowing Base of Eligible Inventory at that
location or the establishment of Reserves acceptable to Agent) or, unless and
until a reasonably satisfactory bailee letter shall first have been obtained
with respect to such location. Each Credit Party shall timely and fully pay and
perform in all material respects its obligations under all leases and other
agreements with respect to each leased location or public warehouse where any
Collateral is or may be located. To the extent otherwise permitted hereunder, if
any Credit Party proposes to acquire after the Closing Date a fee ownership
interest in Real Estate or a leasehold interest in the Terre Haute Property
pursuant to the Terre Haute Lease or any other material leasehold interest in
Real Estate, it shall first provide to Agent a Mortgage granting Agent a first
priority Lien on such Real Estate, together with environmental audits and
studies, mortgage title insurance commitment, real property survey, local
counsel opinion(s), and, if required by Agent, supplemental casualty insurance
and flood insurance, and, with respect to all of Borrowers' leasehold interests,
agreements from their landlords satisfactory to Agent and an acceptable
non-disturbance agreement from the landlords' fee mortgagees, and such other
documents, instruments or agreements reasonably requested by Agent, in each
case, in form and substance reasonably satisfactory to Agent.
5.10 ERISA.
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(a) Each Credit Party shall comply in all material respects with the
applicable provisions of ERISA and the IRC, except to the extent such failure to
company, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Affect. Each Credit Party shall furnish to the Agent
written notice as soon as possible, and in any event within 10 Business Days
after any Credit Party knows or has reason to know, of: (a) a material increase
in the benefits of any existing Plan, the establishment of any new Plan, or the
commencement of contributions to any Plan; or (b) an ERISA Event, together with
a statement of an officer setting forth the details of such ERISA Event and
action which the Credit Parties propose to take with respect thereto. The Credit
Parties shall furnish to the Agent, within 30 Business Days after the filing
thereof with the Department Of Labor, IRS or PBGC, copies of each annual report
(From 5500 series) filed for each Plan. The Credit Parties shall furnish to the
Agent, within 30 days after receipt by any Credit Party or ERISA Affiliate,
copies of each actuarial report for each Title IV Plan or Multiemployer Plan and
each annual report for any Multiemployer Plan.
(b) For each existing Canadian Pension Plan, each Credit Party shall
ensure that such plan retains its registered status under and is administered in
a timely manner in all respects in accordance with the applicable pension plan
text, funding agreement, the ITA and all other applicable laws.
(c) For each Canadian Pension Plan hereafter adopted by any Credit
Party which is required to be registered under the ITA or any other applicable
laws, that Credit Party shall use its best efforts to seek and receive
confirmation in writing from the applicable Governmental Authority to the effect
that such plan is unconditionally registered under the ITA and such other
applicable laws.
(d) For each existing Canadian Pension Plan and Canadian Benefit Plan
hereafter adopted, each Credit Party shall in a timely fashion perform in all
material respects all obligations (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with such
plan and the funding media therefor.
(e) Each Credit Party shall deliver to the Agent if requested by the
Agent promptly after the filing thereof by any Credit Party with any applicable
Governmental Authority, copies of each annual and other return, report or
valuation with respect to each Canadian Pension Plan; promptly after receipt
thereof, a copy of any direction, order, notice, ruling or opinion that any
Credit Party may receive from any applicable Governmental Authority with respect
to any Canadian Pension Plan; and notification within 30 days of any increases
having a cost to such Credit Party in excess of $100,000 per annum, in the
benefits of any existing Canadian Pension Plan or Canadian Benefit Plan, or the
establishment of any new Canadian Pension Plan or Canadian benefit Plan, or the
commencement of contributions to any such plan to which any Credit Party was not
previously contributing.
5.11 Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.
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5.12 Terre Haute Property. Borrower shall deliver to Agent, Agent's
counsel and Chicago Title Insurance Company (i) within twenty five (25) days
after the Closing Date, a draft current as-built ALTA survey for the Mortgaged
Property located in Terre Haute, Indiana which satisfies the survey requirements
provided by Agent to Borrower and within five (5) Business Days of receipt
thereof Agent shall provide to Borrower any comments on such draft survey, and
(ii) within thirty five (35) days after the Closing Date, a final current
as-built ALTA survey for such Mortgaged Property which satisfies the survey
requirements provided by Agent to Borrower and is otherwise reasonably
satisfactory to Agent and is certified to Agent and Chicago Title Insurance
Company in accordance with the survey certification previously provided by
Agent's counsel to Borrower. Within forty five (45) days after the Closing Date,
Borrower shall cause Chicago Title Insurance Company to deliver to Agent and
Agent's counsel an updated title insurance policy for such Mortgaged Property,
deleting any survey exceptions and containing all applicable endorsements
reasonably required by Agent in order to reflect such survey (including an
acceptable survey-same as- endorsement, zoning endorsement and an ALTA 9
endorsement) and otherwise reasonably satisfactory to Agent. If such updated
title insurance policy includes any exceptions or encumbrances not included in
the title insurance policy delivered to Agent on the Closing Date (other than
minor irregularities in title which do not impair the use, value, or
marketability of such Mortgaged Property), the Borrower at its expense shall
within forty five (45) days of receipt of such updated title insurance policy
take such action as the Agent may require in its discretion to cause such
exceptions or encumbrances to be removed from such updated title insurance
policy. At all times prior to the date on which all of the foregoing provisions
of this Section 5.12 have been satisfied, Borrower shall have Borrowing
Availability of at least (i) $9,000,000 for any date on or prior to June 30,
2004, and (ii) $4,000,000 for any date after June 30, 2004.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any Person.
6.2 Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that: (a) Borrower and AET Canada may hold
investments comprised of notes payable, or stock or other securities issued by
Account Debtors to Borrower or AET Canada, as applicable pursuant to negotiated
agreements with respect to settlement of such Account Debtor's Accounts (which
are not Eligible Accounts) in the ordinary course of business, so long as the
aggregate amount of such Accounts so settled by Borrower and AET Canada do not
exceed $1,000,000 in any Fiscal Year; and (b) each Credit Party may maintain its
existing investments in its Subsidiaries as of the Closing Date; and (c) so long
as no Default or Event of Default has occurred and is continuing AET Canada may,
with respect to any amounts permitted to remain on deposit in the AET Canada
Account as set forth in
44
Annex C, make investments, subject to Control Letters in favor of Agent for the
benefit of Lenders or otherwise subject to a first priority perfected security
interest in favor of Agent for the benefit of Lenders, in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc., (iii)
certificates of deposit maturing no more than one year from the date of creation
thereof issued by commercial banks incorporated under the laws of the United
States of America, each having combined capital, surplus and undivided profits
of not less than $300,000,000 and having a senior unsecured rating of "A" or
better by a nationally recognized rating agency (an "A Rated Bank"), (iv) time
deposits maturing no more than 30 days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above.
6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to exist
any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security interests and Capital Leases permitted in Section
6.7(c), (ii) the Loans and the other Obligations, (iii) unfunded pension fund
and other employee benefit plan obligations and liabilities to the extent they
are permitted to remain unfunded under applicable law, (iv) the Senior Notes,
(v) existing Indebtedness described in Disclosure Schedule (6.3) and
refinancings thereof or amendments or modifications thereto that do not have the
effect of increasing the principal amount thereof or changing the amortization
thereof (other than to extend the same) and that are otherwise on terms and
conditions no less favorable (taken as a whole) to any Credit Party, Agent or
any Lender, as reasonably determined by Agent, than the terms of the
Indebtedness being refinanced, amended or modified, (vi) Indebtedness consisting
of intercompany loans and advances made by Borrower to AET Canada and by AET
Canada to Borrower; provided, that: (A) each such Credit Party shall have
executed and delivered to each other such Credit Party, on the Closing Date, a
demand note (the "Intercompany Note") to evidence any such intercompany
Indebtedness owing at any time by each such Credit Party to such other Credit
Party which Intercompany Note shall be in form and substance reasonably
satisfactory to Agent and shall be pledged and delivered to Agent pursuant to
the applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (B) each such Credit Party shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (C) the obligations of each such Credit Party under the
Intercompany Notes shall be subordinated to its Obligations hereunder in a
manner reasonably satisfactory to Agent; (D) at the time any such intercompany
loan or advance is made and after giving effect thereto, each such Credit Party
shall be Solvent; (E) no Default or Event of Default would occur and be
continuing after giving effect to any such proposed intercompany loan; and (F)
with respect to intercompany loans and advances made by Borrower to AET Canada,
(1) Borrower shall have Borrowing Availability of at least $5,000,000 after
giving effect to any such loan or advance and (2) the aggregate amount of all
Indebtedness, together with all intercompany payables, owing by AET Canada to
Borrower shall not exceed $80,000,000 at any one time outstanding; (vii)
unsecured Indebtedness of AET Canada to the Government of Canada in an aggregate
principal amount not exceeding $2,000,000 at any one time outstanding, provided
that (x) such Indebtedness is unsecured and contains no covenant or event of
default the effect of which is
45
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; and (viii) Indebtedness permitted
under Section 6.17.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Sections 6.8(b) or (c); (iii) Indebtedness permitted by Section 6.3(a)(v)
upon any refinancing thereof in accordance with Section 6.3(a)(v); (iv) the
Senior Notes to the extent permitted in Section 6.14; and (v) as otherwise
permitted in Section 6.14.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as set forth on Disclosure Schedule 6.4(a) and except as
expressly permitted in this Section 6 with respect to Affiliates, no Credit
Party shall enter into or be a party to any transaction with any other Credit
Party or any Affiliate thereof except in the ordinary course of and pursuant to
the reasonable requirements of such Credit Party's business and upon fair and
reasonable terms that are no less favorable to such Credit Party than would be
obtained in a comparable arm's length transaction with a Person not an Affiliate
of such Credit Party. In addition, if any such transaction or series of related
transactions involves payments in excess of $1,000,000 in the aggregate, the
terms of these transactions must be disclosed in advance to Agent and Lenders.
All such transactions existing as of the date hereof are described in Disclosure
Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to its
respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $250,000 to any employee and up to a maximum of
$1,000,000 in the aggregate at any one time outstanding.
6.5 Capital Structure and Business. No Credit Party shall (a) make
any changes in any of its business objectives, purposes or operations that could
in any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described in
Disclosure Schedule (3.8), including the issuance or sale of any shares of
Stock, warrants or other securities convertible into Stock or any revision of
the terms of its outstanding Stock; provided that Borrower may issue or sell
shares of its Stock for cash so long as (i) the proceeds thereof are applied in
prepayment of the Obligations as required by Section 1.3(b)(iii), and (ii) no
Change of Control occurs after giving effect thereto, or (c) amend its charter
or bylaws in a manner that would adversely affect Agent or Lenders or such
Credit Party's duty or ability to repay the Obligations. No Credit Party shall
engage in any business other than the businesses currently engaged in by it and
those reasonably related thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items
46
of payment for deposit to the general account of any Credit Party, and (b) for
Guaranteed Indebtedness incurred for the benefit of any other Credit Party if
the primary Indebtedness or other obligation (other than Indebtedness permitted
under Sections 6.3(a)(vi) and (vii)) is expressly permitted by this Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7) securing the Indebtedness described on Disclosure
Schedule (6.3) and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of any such Liens; provided that the principal
amount of the Indebtedness so secured is not increased and the Lien does not
attach to any other property; and (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of purchase money Indebtedness
and Capital Lease Obligations of not more than $2,000,000 outstanding at any one
time for all such Liens (provided that such Liens attach only to the assets
subject to such purchase money debt and such Indebtedness is incurred within 20
days following such purchase and does not exceed 100% of the purchase price of
the subject assets). In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other action, that would
prohibit the creation of a Lien on any of its properties or other assets in
favor of Agent, on behalf of itself and Lenders, as additional collateral for
the Obligations, except operating leases, purchase money Indebtedness, Capital
Leases or Licenses which prohibit Liens upon the assets that are subject
thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of its Accounts, other than (a) the sale of
Inventory in the ordinary course of business and the transfer of inventory in
the ordinary course of business between Borrower and AET Canada; (b) the sale,
transfer, conveyance or other disposition by a Credit Party of Equipment or
Fixtures that are obsolete or no longer used or useful in such Credit Party's
business and having a book value not exceeding $1,000,000 in any single
transaction or $2,000,000 in the aggregate in any Fiscal Year; (c) other
Equipment and Fixtures having a value not exceeding $1,000,000 in any single
transaction or $2,000,000 in the aggregate in any Fiscal Year; (d) so long as no
Default or Event of Default has occurred and is continuing or would result after
giving effect to thereto, the sale of the Equipment listed on Disclosure
Schedule 6.8(d) located in Streamwood, Illinois; (e) so long as no Default or
Event of Default has occurred and is continuing or would result after giving
effect to thereto, the sale of the land described on Disclosure Schedule 6.8(e)
located in Covington, Virginia for a cash at fair market value; (f) the Terre
Haute Sale/Leaseback; provided, (i) no Default or Event of Default has occurred
and is continuing or would result after giving effect to thereto, and (ii)
Borrower executes and delivers to Agent a Mortgage with respect to Borrower's
leasehold interest in the Terre Haute Property pursuant to the Terre Haute Lease
and otherwise complies with the requirements of Section 5.9 with respect
thereto; and (g) the making and repayment of intercompany loans and advances
permitted under Section 6.3(a)(vi). With respect to any disposition of assets or
other properties permitted pursuant to
47
clauses (b), (c), (d), (e) and (f) above, subject to Section 1.3(b), Agent
agrees on reasonable prior written notice to release its Lien on such assets or
other properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrower, at Borrower's expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Borrower.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrower shall not breach or fail to comply
with any of the Financial Covenants.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets, other than the Terre Haute Sale/Leaseback.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments; Employee Benefit Plan Contributions. No
Credit Party shall make any Restricted Payment, except (a) intercompany loans
and advances between Credit Parties to the extent permitted by Section 6.3 and
any payments in respect thereof; (b) dividends and distributions by Subsidiaries
of Borrower paid to Borrower, (c) employee loans permitted under Section 6.4(b);
(d) payments of principal and interest of Intercompany Notes issued in
accordance with Section 6.3; (e) repurchase or redemption of Borrower Stock from
employees upon termination of employment, death, disability or otherwise in an
aggregate amount after the Closing Date not exceeding $500,000; (f) scheduled
payments of interest on the Senior Notes, provided, that no Default or Event of
Default has occurred and is continuing or would result after giving effect to
any such Restricted Payment pursuant to this clauses (f); (g) redemptions,
repurchases or other prepayments of principal on the Senior Notes, provided,
that with respect to this clause (g) (i) no Default or Event of Default has
occurred and is continuing or would result after giving effect to any such
Restricted Payment, (ii) Borrower shall have Borrowing Availability of at least
$20,000,000 after giving effect to any such Restricted Payment, (iii) the timing
of such Restricted Payments shall be set at dates that permit the delivery of
Financial Statements necessary to determine current compliance with the
Financial
48
Covenants prior to each such payment, (iv) the maximum aggregate amount of such
Restricted Payments made after the Closing Date shall not exceed $6,000,000, and
(v) Borrower and its Subsidiaries shall have on a consolidated bases for the
most recent twelve month period then ended a Fixed Charge Coverage Ratio of not
less than 1.1 on a pro forma basis, after giving effect to any such Restricted
Payment (as if such Restricted Payment were a Fixed Charge for purposes of
calculating such ratio). No Credit Party shall make any payments or other
contributions to any grantor trusts (also known as rabbi trusts) associated with
any Nonqualified Benefit Plans (or directly to participants in such Plans) to
the extent the amount of such payment or other contribution would exceed the
expense that such Credit Party recognizes with respect to a Nonqualified Benefit
Plan or Plans and deducts as a current expense in determining net income of such
Credit Party in accordance with GAAP for the period in which such payment or
other contribution is made; provided that nothing in this sentence shall prevent
an existing grantor trust associated with one or more Nonqualified Plans from
making benefit payments to beneficiaries in accordance with the terms of such
trust, as in effect on the Closing Date.
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its name as it appears in official filings in the
state of its incorporation or other organization, (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations (other than third party converter or processor locations) at which
Collateral is held or stored, or the location of its records concerning the
Collateral, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its state of incorporation
or other organization, or (e) change its state of incorporation or organization,
in each case, without at least 30 days prior written notice to Agent and after
Agent's written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in favor
of Agent, on behalf of Lenders, in any Collateral, has been completed or taken,
and provided that any such new location shall be in the continental United
States. No Credit Party shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.
6.17 No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Changes Relating to Material Contracts. No Credit Party shall
change or amend the terms of the Senior Note Documents (other than immaterial
amendments and waivers consented to by the Agent). No Credit Party shall change
or amend the terms of any early payment provisions of any Nonqualified Benefit
Plans without the prior written consent of the Agent.
49
6.19 Credit Parties Other than Borrower. AET Limited shall not engage
in any trade or business, or own any assets (other than, for a period of 120
days following the Closing Date, the bank account referred to in Annex C and
cash on deposit therein in an amount not exceeding $150,000 at any time) or
incur any Indebtedness or Guaranteed Indebtedness (other than the Obligations).
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated, or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the
provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within 10 days following Agent's demand for such reimbursement or payment of
expenses.
(b) Any Credit Party fails or neglects to perform, keep or observe
any of the provisions of Sections 1.4, 1.8, 5.12, 5.4(a) or 6, or any of the
provisions set forth in Annexes C or G, respectively.
(c) Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for 5 days or more.
50
(d) Any Credit Party or any Guarantor fails or neglects to perform,
keep or observe any other provision of this Agreement or of any of the other
Loan Documents (other than any provision embodied in or covered by any other
clause of this Section 8.1) and the same shall remain unremedied for 30 days or
more.
(e) A default or breach occurs under any other agreement, document or
instrument to which any Credit Party or any Guarantor is a party that is not
cured within any applicable grace period therefor, and such default or breach
(i) involves the failure to make any payment when due in respect of any
Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any
Credit Party or any Guarantor in excess of $500,000 in aggregate principal
amount (including (x) undrawn committed or available amounts and (y) amounts
owing to all creditors under any combined or syndicated credit arrangements), or
(ii) causes, or permits any holder of such Indebtedness or Guaranteed
Indebtedness or a trustee to cause, Indebtedness or Guaranteed Indebtedness or a
portion thereof in excess of $500,000 in the aggregate to become due prior to
its stated maturity or prior to its regularly scheduled dates of payment, or
cash collateral in respect thereof to be demanded, in each case, regardless of
whether such default is waived, or such right is exercised, by such holder or
trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect (other than inadvertent, immaterial errors
not exceeding $100,000 in the aggregate in any Borrowing Base Certificate), or
any representation or warranty herein or in any Loan Document is untrue or
incorrect in any material respect when made or any representation or warranty in
any written statement, report, financial statement or certificate (other than a
Borrowing Base Certificate) made or delivered to Agent or any Lender by any
Credit Party or any Guarantor is untrue or incorrect in any material respect as
of the date when made or deemed made.
(g) Assets of any Credit Party or any Guarantor with a fair market
value of $250,000 or more are attached, seized, levied upon or subjected to a
writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors of any Credit Party
or any Guarantor and such condition continues for 30 days or more.
(h) A case or proceeding is commenced against any Credit Party or any
Guarantor seeking a decree or order in respect of such Credit Party or Guarantor
(i) under the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian, receiver, interim
receiver, receiver and manager, liquidator, assignee, trustee or sequestrator
(or similar official) for such Credit Party or Guarantor or for any substantial
part of any such Credit Party's or Guarantor's assets, or (iii) ordering the
winding-up or liquidation of the affairs of such Credit Party or Guarantor, and
such case or proceeding shall remain undismissed or unstayed for 60 days or more
or a decree or order granting the relief sought in such case or proceeding shall
be entered by a court of competent jurisdiction.
(i) Any Credit Party or any Guarantor (i) files a petition seeking
relief under the Bankruptcy Code, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consents to or fails to contest in
a timely and appropriate manner the institution of proceedings thereunder or the
filing of any such petition or the appointment of or taking possession by a
custodian, receiver, interim receiver, receiver and manager, liquidator,
assignee,
51
trustee or sequestrator (or similar official) for such Credit Party or
Guarantor or for any substantial part of any such Credit Party's or Guarantor's
assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any
action in furtherance of any of the foregoing; or (v) admits in writing its
inability to, or is generally unable to, pay its debts as such debts become due.
(j) A final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate at any time are outstanding against one or more of
the Credit Parties and the same are not, within 30 days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such
judgments are not discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws relative to or affecting the
enforcement of creditors' rights generally in effect from time to time and by
general principles of equity) or any Credit Party or any Guarantor shall
challenge the enforceability of any Loan Document or shall assert in writing, or
engage in any action or inaction based on any such assertion, that any provision
of any of the Loan Documents has ceased to be or otherwise is not valid, binding
and enforceable in accordance with its terms, or any Lien created under any Loan
Document ceases to be a valid and perfected first priority Lien (except as
otherwise permitted herein or therein) in any of the Collateral purported to be
covered thereby, other than Collateral having a fair market value of less than
$100,000 in the aggregate.
(l) Any Change of Control occurs.
(m) Any event occurs, whether or not insured or insurable, as a result
of which revenue-producing activities cease or are substantially curtailed at
any facility of any Credit Party generating more than 7.5% of Borrower's
consolidated revenues for the Fiscal Year preceding such event and such
cessation or curtailment continues for more than 20 days.
(n) (i) The Ex-Im Bank Guarantee is terminated (other than as a result
of the scheduled maturity of the Ex-Im Bank Guarantee) or any material provision
of the Ex-Im Bank Guarantee for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or Ex-Im Bank shall challenge the
enforceability of the Ex-Im Bank Guarantee or shall assert in writing, or engage
in any action or inaction based on any such assertion, that any provision of the
Ex-Im Bank Guarantee has ceased to be or otherwise is not valid, binding and
enforceable in accordance with its terms) and (ii) any Export Related Advances
remain outstanding as of 5:00 p.m. (New York time) on the first Business Day
following any event referred to in the foregoing clause (i).
(o) Any Event of Default under and as defined in any Mortgage shall
occur and be continuing.
8.2 Remedies.
(a) If any Default or Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Revolving Lenders shall),
without notice, suspend the Revolving Loan facility with respect to additional
Advances and/or the incurrence of
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additional Letter of Credit Obligations, whereupon any additional Advances and
additional Letter of Credit Obligations shall be made or incurred in Agent's
sole discretion (or in the sole discretion of the Requisite Revolving Lenders,
if such suspension occurred at their direction) so long as such Default or Event
of Default is continuing. If any Default or Event of Default has occurred and is
continuing, Agent may (i) (and at the written request of Requisite Revolving
Lenders shall), without notice except as otherwise expressly provided herein,
increase the rate of interest applicable to the Revolving Loans and the Letter
of Credit Fees to the Default Rate and (ii) (and at the written request of
Requisite Term Lenders shall), without notice except as otherwise expressly
provided herein, increase the rate of interest applicable to the Term Loans to
the Default Rate.
(b) If any Event of Default has occurred and is continuing, (i) Agent
may (and at the written request of the Requisite Revolving Lenders shall),
without notice terminate the Revolving Loan facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations; and (ii)
Agent may (and at the written request of the Requisite Lenders (or at the
request of the Requisite Term Lenders or Requisite Revolving Lenders as provided
in clause (c)(i) below) shall), (x) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash
collateralized as provided in Annex B, all without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by Borrower and
each other Credit Party; and/or (y) exercise any rights and remedies provided to
Agent under the Loan Documents or at law or equity, including all remedies
provided under the Code; provided, that upon the occurrence of an Event of
Default specified in Sections 8.1(h) or (i), the Revolving Loan facility shall
be immediately terminated and all of the Obligations, including the aggregate
Revolving Loan, shall become immediately due and payable without declaration,
notice or demand by any Person.
(c) Notwithstanding anything herein or in the other Loan Documents to
the contrary, Agent and Lenders hereby agree that, (i) at any time after the
occurrence of any Event of Default which is continuing, (x) Requisite Term
Lenders (without consent of any Revolving Lender and without regard to the vote
of the Requisite Lenders) shall be permitted to declare the Term Loan to be
forthwith due and payable and (y) Requisite Revolving Lenders (without consent
of any Term Lender and without regard to the vote of the Requisite Lenders)
shall be permitted to declare the Revolving Loan and the Export-Related Loan to
be forthwith due and payable and require that the Letter of Credit Obligations
be cash collateralized as provided in Annex B, and (ii) if any of the Loans
become or are declared to be immediately due and payable in accordance with this
Section 8.2, (x) Requisite Term Lenders (without consent of any Revolving Lender
and without regard to the vote of the Requisite Lenders) shall have the
exclusive right to (and to direct the Agent to) enforce rights and remedies with
respect to the Term Loan Priority Collateral pursuant to the Loan Documents and
no Revolving Lender shall take any Collateral Enforcement Action and (y)
Requisite Revolving Lenders (without consent of any Term Lender and without
regard to the vote of the Requisite Lenders) shall have the exclusive right to
(and to direct the Agent to) enforce rights and remedies with respect to the
Revolving Loan Priority Collateral pursuant to the Loan Documents and no Term
Lender shall take any Collateral Enforcement Action.
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8.3 Waivers by Credit Parties. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard,
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the Collateral or
any bond or security that might be required by any court prior to allowing Agent
to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sell participations in, at any time or
times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement (an "Assignment Agreement") substantially
in the form attached hereto as Exhibit 9.1(a) and otherwise in form and
substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) after giving effect to any such partial assignment, the assignee
Lender shall have Commitments in an amount at least equal to $5,000,000 and the
assigning Lender shall have retained Commitments in an amount at least equal to
$10,000,000; (iv) include a payment to Agent of an assignment fee of $3,500; and
(v) so long as no Event of Default has occurred and is continuing, require the
consent of Borrower, which shall not be unreasonably withheld or delayed. In the
case of an assignment by a Lender under this Section 9.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as all other Lenders hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitments or
assigned portion thereof from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment shall give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Loans
hereunder shall be several and not joint and shall be limited to such Lender's
Pro Rata Share of the applicable Commitment. In the event Agent or any Lender
assigns or otherwise transfers all or any part of the Obligations, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes, if any, being
assigned, which shall be cancelled upon return. Notwithstanding the foregoing
provisions of this Section 9.1(a), any Lender may at any time pledge the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank, and any Lender that is an
investment fund may assign the Obligations held by it and such Lender's rights
under this Agreement and the other
54
Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.13,
1.15, 1.16 and 9.8, Borrower acknowledges and agrees that a participation shall
give rise to a direct obligation of Borrower to the participant and the
participant shall be considered to be a "Lender" provided that no participant
shall be entitled to receive any greater amount pursuant to Sections 1.13, 1.15
and 1.16 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. Except as set forth in the
preceding sentence no Borrower or Credit Party shall have any obligation or duty
to any participant. Neither Agent nor any Lender (other than the Lender selling
a participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall,
as between Borrower and that Lender, or Agent and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
or negotiation of, or granting of participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist Agent to
sell assignments or participations under this Section 9.1 as reasonably required
to enable the assigning or selling Lender to effect any such assignment or
participation, including the execution and delivery of any and all agreements,
notes and other documents and instruments as shall be requested and, if
requested by Agent, the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by them
and all other information provided by them and included in such materials,
except that any Projections delivered by Borrower shall only be certified by
Borrower as having been prepared by Borrower in compliance with the
representations contained in Section 3.4(b).
(e) Any Lender may furnish any information concerning Credit Parties
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
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(f) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender"), may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing by the Granting Lender to Agent and
Borrower, the option to provide to Borrower all or any part of any Loans that
such Granting Lender would otherwise be obligated to make to Borrower pursuant
to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan; 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 such
Granting Lender. No SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). Any SPC may (i) with notice to, but without the prior written
consent of, Borrower and Agent assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions (consented to by
Borrower and Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of 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 any surety,
guarantee or credit or liquidity enhancement to such SPC. This Section 9.1(g)
may not be amended without the prior written consent of each Granting Lender,
all or any of whose Loans are being funded by an SPC at the time of such
amendment. For the avoidance of doubt, the Granting Lender shall for all
purposes, including without limitation, the approval of any amendment or waiver
of any provision of any Loan Document or the obligation to pay any amount
otherwise payable by the Granting Lender under the Loan Documents, continue to
be the Lender of record hereunder.
(g) So long as no Event of Default has occurred and is continuing, no
Lender shall assign or sell participations in any portion of its Loans or
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 1.16(a), increased
costs under Section 1.16(b), an inability to fund LIBOR Loans under Section
1.16(c), or withholding taxes in accordance with Section 1.15(a).
9.2 Appointment of Agent. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Except as expressly set forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not
be liable for failure to disclose, any information relating to any Credit Party
or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or
56
representatives shall be liable to any Lender for any action taken or omitted to
be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages caused by its or their own gross
negligence or willful misconduct. The Agent is authorized to hold any Collateral
on behalf of the Lenders and to execute in their name any Loan Document. For
greater certainty, the Agent is authorized to act as representative (fonde de
pouvoir) of the Lenders (notwithstanding that the Agent is also a Lender) for
the purposes of any hypothec granted by any Credit Party pursuant to article
2692 of the Civil Code of Quebec to secure debentures or similar instruments
issued for the benefit of the Lenders pursuant to the Quebec Hypothec.
If Agent shall request instructions from Requisite Lenders, Requisite
Revolving Lenders, Requisite Term Lenders or all affected Lenders with respect
to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent shall be entitled to refrain
from such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, Requisite Revolving Lenders, Requisite Term
Lenders or all affected Lenders, as the case may be, and Agent shall not incur
liability to any Person by reason of so refraining. Agent shall be fully
justified in failing or refusing to take any action hereunder or under any other
Loan Document (a) if such action would, in the opinion of Agent, be contrary to
law or the terms of this Agreement or any other Loan Document, (b) if such
action would, in the opinion of Agent, expose Agent to Environmental Liabilities
or (c) if Agent shall not first be indemnified to its satisfaction against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document in
accordance with the instructions of Requisite Lenders, Requisite Revolving
Lenders, Requisite Term Lenders or all affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any
57
notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon 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
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever, including Environmental Liability that may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising out of
this Agreement or any other Loan Document or any action taken or omitted to be
taken by Agent in connection therewith; provided, that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or willful misconduct. Without limiting the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for its ratable share
of any out-of-pocket expenses (including reasonable counsel and consultants'
fees) incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Credit Parties.
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9.7 Successor Agent. Agent may resign at any time by giving not less
than 30 days' prior written notice thereof to Lenders and Borrower. Upon any
such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent, with, so long as no Event of Default has occurred and is
continuing, the consent of Borrower, which shall not be unreasonably withheld or
delayed. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within 30 days after the
resigning Agent's giving notice of resignation, then the resigning Agent may, on
behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a
Lender is willing to accept such appointment, or otherwise shall be a commercial
bank or financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized under
the laws of the United States of America or of any State thereof and has a
combined capital and surplus of at least $300,000,000. If no successor Agent has
been appointed pursuant to the foregoing, within 30 days after the date such
notice of resignation was given by the resigning Agent, such resignation shall
become effective and the Requisite Lenders shall thereafter perform all the
duties of Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above. Any successor Agent appointed by
Requisite Lenders hereunder shall be subject to the approval of Borrower, such
approval not to be unreasonably withheld or delayed; provided that such approval
shall not be required if a Default or an Event of Default has occurred and is
continuing. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was acting
as Agent under this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to offset and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of Borrower or any Guarantor (regardless of whether such balances are then due
to Borrower or Guarantor) and any other properties or assets at any time held or
owing by that Lender or that holder to or for the credit or for the account of
Borrower or any Guarantor against and on account of any of the Obligations that
are not paid when due. Any Lender exercising a right of setoff or otherwise
receiving any payment on account of the Obligations in excess of its Pro Rata
Share thereof shall purchase for cash (and the other Lenders or holders shall
sell) such participations in each such other Lender's or holder's Pro Rata Share
of the Obligations as would be necessary to cause such Lender to share the
amount so offset or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares (other than offset rights
exercised by any Lender with respect to Sections 1.13, 1.15 or 1.16). Each
Lender's obligation under this Section 9.8 shall be in addition to and not in
limitation of its obligations to purchase a participation in an amount equal to
its Pro Rata Share of the Swing Line Loans under
59
Section 1.1(c) and to purchase a participation in an amount equal to its Pro
Rata Share (based on Revolving Loan Commitments) of the Export-Related Loan
under Section 1.1(d). Each Credit Party that is a Borrower or Guarantor agrees,
to the fullest extent permitted by law, that (a) any Lender may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in the
Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers' lien, counterclaim or similar rights with respect
to such participation as fully as if such Lender or holder were a direct holder
of the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of offset, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or participate in the Swing
Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(c). If the
Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00
p.m. (New York time) on the date such Notice of Revolving Advance is received,
by telecopy, telephone or other similar form of transmission. Each Revolving
Lender shall make the amount of such Lender's Pro Rata Share of such Revolving
Credit Advance available to Agent in same day funds by wire transfer to Agent's
account as set forth in Annex H not later than 2:00 p.m. (New York time) on the
requested funding date, in the case of an Index Rate Loan, and not later than
11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR
Loan. After receipt of such wire transfers (or, in the Agent's sole discretion,
before receipt of such wire transfers), subject to the terms hereof, Agent shall
make the requested Revolving Credit Advance to Borrower not later than 3:00 p.m.
(New York time) on the requested funding date. All payments by each Revolving
Lender shall be made without setoff, counterclaim or deduction of any kind.
(ii) On the 2nd Business Day of each calendar week or more
frequently at Agent's election (each, a "Settlement Date"), Agent shall advise
each Lender by telephone, or telecopy of the amount of such Lender's Pro Rata
Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender has funded all
payments or Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Settlement Date, Agent shall pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrower since
the previous Settlement Date for the benefit of such Lender on the Loans held by
it. To the extent that any Lender (a "Non-Funding Lender") has failed to fund
all such payments and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short-fall
against that Non-Funding Lender's Pro Rata Share of all payments received from
Borrower. Such payments
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shall be made by wire transfer to such Lender's account (as specified
by such Lender in Annex H or the applicable Assignment Agreement) not later than
2:00 p.m. (New York time) on the next Business Day following each Settlement
Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that
each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower and Borrower shall immediately repay such amount to Agent.
Nothing in this Section 9.9(b) or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on behalf of any
Revolving Lender or to relieve any Revolving Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Borrower may
have against any Revolving Lender as a result of any default by such Revolving
Lender hereunder. To the extent that Agent advances funds to Borrower on behalf
of any Revolving Lender and is not reimbursed therefor on the same Business Day
as such Advance is made, Agent shall be entitled to retain for its account all
interest accrued on such Advance until reimbursed by the applicable Revolving
Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to make
any Revolving Credit Advance or any payment required by it hereunder or to
purchase any participation in any Swing Line Loan or Export-Related Loan to be
made or purchased by it on the date specified therefor shall not relieve any
other Lender (each such other Revolving Lender, an "Other Lender") of its
obligations to make such Advance or purchase such participation on such date,
but neither any Other Lender nor Agent shall be responsible for the failure of
any Non-Funding Lender to make an Advance, purchase a participation or make any
other payment required hereunder. Notwithstanding anything set forth herein to
the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a "Lender" or a
"Revolving Lender" (or be included in the calculation of "Requisite Lenders",
"Requisite Revolving Lenders" or "Requisite Term Lenders" hereunder) for any
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voting or consent rights under or with respect to any Loan Document. At
Borrower's request, Agent or a Person reasonably acceptable to Agent shall have
the right with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender
agrees that it shall, at Agent's request, sell and assign to Agent or such
Person, all of the Commitments of that Non-Funding Lender for an amount equal to
the principal balance of all Loans held by such Non-Funding Lender and all
accrued interest and fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Dissemination of Information. Agent shall use reasonable efforts
to provide Lenders with any notice of Default or Event of Default received by
Agent from, or delivered by Agent to, any Credit Party, with notice of any Event
of Default of which Agent has actually become aware and with notice of any
action taken by Agent following any Event of Default; provided, that Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent's gross negligence or willful misconduct.
Lenders acknowledge that Borrower are required to provide Financial Statements
and Collateral Reports to Lenders in accordance with Annexes E and F hereto and
agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of Agent or Requisite Lenders.
9.10 Acknowledgements Regarding Collateral Bonds. For greater
certainty, and without limiting the powers of the Agent hereunder or under any
of the other Loan Documents, it is hereby acknowledged and agreed that each of
the Credit Parties may issue and pledge to the Agent, as security for any of its
indebtedness and liabilities under any of the Loan Documents, bonds or
debentures (any such bond or debenture so issued and pledged, individually, a
"Collateral Bond" and, collectively, the "Collateral Bonds") secured by a
hypothec charging any and all of their property and assets and granted pursuant
to the laws of the Province of Quebec to a fonde de pouvoir (holder of the power
of attorney) of the holder(s) of the related Collateral Bonds. In that respect,
each Lender acknowledges and agrees that the Agent shall hold each of the
Collateral Bonds so issued to it in pledge for its benefit and for the benefit
of each of the Lenders, and to the full extent necessary, each Lender, acting in
the aforesaid manner, hereby appoints the Agent for such purposes. Each assignee
of any Lender shall be deemed to have confirmed and ratified the constitution of
the Agent to act in the manner set out in this Section 9.10 upon becoming a
Lender under this Agreement. Notwithstanding the provisions of Section 32 of An
Act Respecting the Special Powers of Legal Persons (Quebec), the fonde de
pouvoir (person holding the power of attorney) of the holder(s) of any of the
Collateral Bonds in whose favor a hypothec securing any such Collateral Bond is
granted may (but need not) be the Agent to whom such Collateral Bond has been
issued and pledged. Each Lender (by accepting the benefits of each Loan
Document) acknowledges that each Collateral
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Bond constitutes a title of indebtedness, as such term is used in Article 2692
of the Civil Code of Quebec, as amended.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, or fee letter
(other than the GE Capital Fee Letter and other than terms under any commitment
letter which expressly survive the execution of this Agreement) or
confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent and Borrower, and by Requisite Lenders, Requisite
Revolving Lenders, Requisite Term Lenders or all affected Lenders, as
applicable. Except as set forth in clauses (b) and (c) below, all such
amendments, modifications, terminations or waivers requiring the consent of any
Lenders shall require the written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that waives compliance with the
conditions precedent set forth in Section 2.2 to the making of any Revolving
Credit Advance, the incurrence of any Letter of Credit Obligations or the
continuation or conversion of any Loan as a LIBOR Loan shall be effective unless
the same shall be in writing and signed by Agent, Requisite Revolving Lenders
(or with respect to the making of any Term Loan or the continuation or
conversion of a
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Term Loan as a LIBOR Loan, the Requisite Term Lenders) and Borrower.
Notwithstanding anything contained in this Agreement to the contrary, no waiver
or consent with respect to any Default or any Event of Default shall be
effective for purposes of the conditions precedent to the making of Term Loans,
Revolving Credit Advances or the incurrence of Letter of Credit Obligations set
forth in Section 2.2 unless the same shall be in writing and signed by Agent,
Requisite Term Lenders or Requisite Revolving Lenders, as applicable, and
Borrower.
(c) No amendment, modification, termination or waiver shall, unless
in writing and signed by Agent and each Lender directly affected thereby: (i)
increase the principal amount of any Lender's Commitment, which action shall be
deemed only to affect those Lenders whose Commitments are increased and may be
approved by Requisite Lenders, including those Lenders whose Commitments are
increased, provided that, notwithstanding the foregoing, (x) the principal
amount of the Revolving Loan Commitments may be increased (and additional
Revolving Credit Advances made) by up to $5,000,000 with the approval of the
Requisite Revolving Lenders, including the Revolving Lenders whose Revolving
Loan Commitments are increased, and (y) the principal amount of the Term Loan
Commitments may be increased (and additional Term Loans made) by up to
$5,000,000 with the approval of the Requisite Term Lenders, including the Term
Lenders whose Term Loan Commitments are increased; (ii) reduce the principal of,
rate of interest on or Fees payable with respect to any Loan or Letter of Credit
Obligations of any affected Lender; (iii) extend any scheduled payment date
(other than payment dates of mandatory prepayments under Section
1.3(b)(ii)-(iv)) or final maturity date of the principal amount of any Loan of
any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment
of interest or Fees as to any affected Lender; (v) release all or substantially
all of the Collateral (which action shall be deemed to directly affect all
Lenders); (vi) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans that shall be required for Lenders or any
of them to take any action hereunder; and (vii) amend or waive this Section 11.2
or the definitions of the terms "Requisite Lenders", "Requisite Revolving
Lenders" or "Requisite Term Lenders" insofar as such definitions affect the
substance of this Section 11.2. Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent or L/C Issuer
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent or L/C Issuer, as the case may be, in addition to
Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose consent is
required is not
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obtained (any such Lender whose consent is not obtained as described in this
clause (i) and in clauses (ii), and (iii) below being referred to as a
"Non-Consenting Lender"),
(ii) requiring the consent of Requisite Term Lenders (including
any vote of the Required Lenders), the consent of Term Lenders holding 51% or
more of the outstanding principal amount of the Term Loan is obtained, but the
consent of Requisite Term Lenders is not obtained, or
(iii) requiring the consent of Requisite Revolving Lenders
(including any vote of the Required Lenders), the consent of Revolving Lenders
holding 51% or more of the aggregate Revolving Loan Commitments is obtained, but
the consent of Requisite Revolving Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request,
Agent or a Person reasonably acceptable to Agent shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non-Consenting Lenders for an amount equal to the
principal balance of all Loans held by the Non-Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments, and so long as no suits, actions, proceedings or claims are pending
or threatened against any Indemnified Person asserting any damages, losses or
liabilities that are Indemnified Liabilities, Agent shall deliver to Borrower
termination statements, mortgage releases and other documents necessary or
appropriate to evidence the termination of the Liens securing payment of the
Obligations.
11.3 Fees and Expenses. Borrower shall reimburse Agent (and, with
respect to clauses (c) and (d) below, all Lenders) for all out-of-pocket fees,
costs and expenses, including the reasonable fees, costs and expenses of
counsel, consultants, auditors or other advisors (including environmental and
management consultants and appraisers), incurred in connection with the
negotiation and preparation of the Loan Documents and incurred in connection
with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of any Loan (including a wire transfer fee of
$25 per wire transfer);
(b) any amendment, modification or waiver of, consent with respect
to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the syndication and administration of the
Loans made pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
65
connection with a case commenced by or against any or all of the Borrower or any
other Person that may be obligated to Agent by virtue of the Loan Documents;
including any such litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring of the Loans during the
pendency of one or more Events of Default; provided that in the case of
reimbursement of counsel for Lenders other than Agent, such reimbursement shall
be limited to one counsel for all such Lenders; provided, further, that no
Person shall be entitled to reimbursement under this clause (c) in respect of
any litigation, contest, dispute, suit, proceeding or action to the extent any
of the foregoing results from such Person's gross negligence or willful
misconduct;
(d) any attempt to enforce any remedies of Agent against any or all
of the Credit Parties or any other Person that may be obligated to Agent or any
Lender by virtue of any of the Loan Documents, including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default; provided, that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and
(f) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrower to Agent. Without limiting the
generality of the foregoing, such out-of-pocket fees expenses, costs, charges
and fees may include: fees, costs and expenses of accountants, environmental
consultants and advisors, appraisers, investment bankers, management and other
consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan
66
Documents and no Default or Event of Default by any Credit Party shall be deemed
to have been suspended or waived by Agent or any Lender, unless such waiver or
suspension is by an instrument in writing signed by an officer of or other
authorized employee of Agent and the applicable required Lenders, and directed
to Borrower specifying such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all information provided to them by the Credit Parties for a
period of 2 years following receipt thereof, except that Agent and any Lender
may disclose such information (a) to Persons employed or engaged by Agent or
such Lender; (b) to any bona fide assignee or participant or potential assignee
or participant that has agreed to comply with the covenant contained in this
Section 11.8 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in clause (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by Agent or such Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of Agent's or such Lender's counsel, is required
by law; (e) in connection with the exercise of any right or remedy under the
Loan Documents or in connection with any Litigation to which Agent or such
Lender is a party; or (f) which is information already in its possession prior
to delivery in accordance herewith or which is available to the public other
than as a result of the failure of Agent or any Lender to comply with the
covenant contained in this Section 11.8, or which otherwise ceases to be
confidential through no fault of Agent or any Lender.
Notwithstanding anything to the contrary set forth herein or in any
other agreement to which the parties hereto are parties or by which they are
bound, the obligations of confidentiality contained herein and therein, as they
relate to the transactions contemplated by the Credit Agreement and the other
loan documents (the "Transaction"), shall not apply to the federal tax structure
or federal tax treatment of the Transaction, and each party hereto (and any
employee, representative, agent of any party hereto) may disclose to any and all
persons, without
67
limitation of any kind, the federal tax structure and federal tax treatment of
the Transaction. The preceding sentence is intended to cause the Transaction to
be treated as not having been offered under conditions of confidentiality for
purposes of Section 1.6011-4(b)(3) (or any successor provision) of the Treasury
Regulations promulgated under Section 6011 of the Internal Revenue Code of 1986,
as amended, and shall be construed in a manner consistent with such purpose. In
addition, each party hereto acknowledges that it has no proprietary or exclusive
rights to the federal tax structure of the Transaction or any federal tax matter
or federal tax idea related to the Transaction.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH PARTY HERETO
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE PARTIES HERETO PERTAINING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED,
THAT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇; PROVIDED FURTHER,
THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH PARTY HERETO EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH PARTY HEREBY WAIVES ANY OBJECTION THAT
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS
SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR 3 DAYS
AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication
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shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered: (a) upon the earlier of actual receipt and 3 Business Days after
deposit in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid; (b) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 11.10); (c) 1 Business
Day after deposit with a reputable overnight courier with all charges prepaid or
(d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or facsimile
number indicated in Annex I or to such other address (or facsimile number) as
may be substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person
(other than Borrower or Agent) designated in Annex I to receive copies shall in
no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases and Related Matters. Each Credit Party executing
this Agreement agrees that neither it nor its Subsidiaries will in the future
issue any press releases or other public disclosure using the name of GE Capital
or its affiliates without at least 2 Business Days' prior notice to GE Capital
and without the prior written consent of GE Capital unless (and only to the
extent that) such Credit Party or Subsidiary is required to do so under law and
then, in any event, such Credit Party or Subsidiary will consult with GE Capital
before issuing such press
69
release or other public disclosure (other than disclosure of the fact that GE
Capital is the Agent under this Agreement and the filing of Loan Documents with
the Securities and Exchange Commission, in each case, to the extent required
under applicable law). Each Credit Party consents to the publication by Agent or
any Lender of a tombstone or similar advertising material relating to the
financing transactions contemplated by this Agreement. Agent or such Lender
shall provide a draft of any such tombstone or similar advertising material to
each Credit Party for review and comment prior to the publication thereof. Agent
reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Borrower for liquidation or reorganization, should Borrower become insolvent or
make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 Judgment Currency.
(a) If, for the purpose of obtaining or enforcing judgment against
any Credit Party in any court in any jurisdiction, it becomes necessary to
convert into any other currency (such other currency being hereinafter in this
Section 11.17 referred to as the "Judgment Currency") an amount due under any
Loan Document in any currency (the "Obligation Currency") other than the
Judgment Currency, the conversion shall be made at the rate of exchange
prevailing on the Business Day immediately preceding (a) the date of actual
payment of the amount due, in the case of any proceeding in the courts of the
Province of Quebec or in the courts of any other jurisdiction that will give
effect to such conversion being made on such date, or (b) the date on which the
judgment is given, in the case of any proceeding in the courts of any other
jurisdiction (the applicable date as of which such conversion is made pursuant
to this Section 11.17 being hereinafter in this Section 11.17 referred to as the
"Judgment Conversion Date").
(b) If, in the case of any proceeding in the court of any
jurisdiction referred to in Section 11.17 (a), there is a change in the rate of
exchange prevailing between the Judgment Conversion Date and the date of actual
receipt of the amount due in immediately available funds, the applicable Credit
Party shall pay such additional amount (if any, but in any event not a lesser
amount) as may be necessary to ensure that the amount actually received in the
Judgment
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Currency, when converted at the rate of exchange prevailing on the date
of payment, will produce the amount of the Obligation Currency which could have
been purchased with the amount of the Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment
Conversion Date. Any amount due from a Credit Party under the Section 11.17(b)
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of any of the Loan
Documents.
(c) The term "rate of exchange" in this Section 11.17 means the
rate of exchange at which the Agent would, on the relevant date at or about
11:00 a.m. (New York time), be prepared to sell the Obligation Currency against
the Judgment Currency.
11.18 Subordination.
(a) Each Credit Party executing this Agreement covenants and
agrees that the payment of all indebtedness, principal, interest (including
interest which accrues after the commencement of any case or proceeding in
bankruptcy, or for the reorganization of any Credit Party), fees, charges,
expenses, attorneys' fees and any other sum, obligation or liability owing by
any other Credit Party to such Credit Party, including any intercompany trade
payables or royalty or licensing fees (collectively, the "Intercompany
Obligations"), is subordinated, to the extent and in the manner provided in this
Section 11.18, to the prior payment in full of all Obligations (herein, the
"Senior Obligations") and that the subordination is for the benefit of the Agent
and Lenders, and Agent may enforce such provisions directly.
(b) Each Credit Party executing this Agreement hereby (i)
authorizes Agent to demand specific performance of the terms of this Section
11.18, whether or not any other Credit Party shall have complied with any of the
provisions hereof applicable to it, at any time when such Credit Party shall
have failed to comply with any provisions of this Section 11.18 which are
applicable to it and (ii) irrevocably waives any defense based on the adequacy
of a remedy at law, which might be asserted as a bar to such remedy of specific
performance.
(c) Upon any distribution of assets of any Credit Party in any
dissolution, winding up, liquidation or reorganization (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(i) The Agent and Lenders shall first be entitled to
receive payment in full in cash of the Senior Obligations before any Credit
Party is entitled to receive any payment on account of the Intercompany
Obligations.
(ii) Any payment or distribution of assets of any Credit
Party of any kind or character, whether in cash, property or securities, to
which any other Credit Party would be entitled except for the provisions of this
Section 11.18(c), shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution directly to the Agent, to the extent
necessary to make payment in full of all Senior Obligations remaining unpaid
after giving effect to any concurrent payment or distribution or provisions
therefor to the Agent and Lenders.
(iii) In the event that notwithstanding the foregoing
provisions of this Section 11.18(c), any payment or distribution of assets of
any Credit Party of any kind or character, whether in cash, property or
securities, shall be received by any other Credit Party on
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account of the Intercompany Obligations before all Senior Obligations are paid
in full, such payment or distribution shall be received and held in trust for
and shall be paid over to the Agent for application to the payment of the Senior
Obligations until all of the Senior Obligations shall have been paid in full,
after giving effect to any concurrent payment or distribution or provision
therefor to the Agent and Lenders.
(d) No right of the Agent and Lenders or any other present or
future holders of any Senior Obligations to enforce the subordination provisions
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of any Credit Party or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by any Credit Party
with the terms hereof, regardless of any knowledge thereof which any such holder
may have or be otherwise charged with.
(e) The Intercompany Obligations shall also be subordinated in
right of payment to the Senior Notes (and the Credit Parties' obligations under
the Senior Note Documents) to the same extent, mutatis, mutandis as the Senior
Obligations hereunder.
11.19 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of
the date first written above.
BORROWER
APPLIED EXTRUSION TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Duly Authorized Signatory
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
------------------------------------
Duly Authorized Signatory
The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as Borrower.
APPLIED EXTRUSION TECHNOLOGIES CANADA
INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
APPLIED EXTRUSION TECHNOLOGIES LIMITED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings, and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
"Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"Accounting Changes" has the meaning ascribed thereto in Annex G.
"Accounts" means all "accounts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper, or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all health care insurance receivables and (f) all
collateral security of any kind, given by any Account Debtor or any other Person
with respect to any of the foregoing.
"Advance" means any Revolving Credit Advance, Export-Related
Advance or Swing Line Advance, as the context may require.
"AET Canada" has the meaning ascribed thereto in the Recitals to
the Agreement.
"AET Limited" means Applied Extrusion Technologies Limited, a
company organized under the laws of the United Kingdom.
"Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower,
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the immediate family members, spouses and lineal descendants of individuals who
are Affiliates of Borrower. For the purposes of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that the term "Affiliate" shall specifically exclude Agent and each Lender.
"Agent" means GE Capital in its capacity as Agent for Lenders or
its successor appointed pursuant to Section 9.7.
"Agreement" means the Credit Agreement by and among Borrower, the
other Credit Parties party thereto, GE Capital, as Agent and Lender and the
other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Appendices" has the meaning ascribed to it in the recitals to
the Agreement.
"Applicable Margins" means collectively the Applicable Revolver
Index Margin, the Applicable Term Loan Index Margin, the Applicable Revolver
LIBOR Margin and the Applicable Term Loan LIBOR Margin.
"Applicable Revolver Index Margin" means the per annum interest
rate margin from time to time in effect and payable in addition to the Index
Rate applicable to the Revolving Loan, as determined by reference to Section
1.5(a).
"Applicable Revolver LIBOR Margin" means the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a).
"Applicable Term Loan Index Margin" means the per annum interest
rate from time to time in effect and payable in addition to the Index Rate
applicable to the Term Loan, as determined by reference to Section 1.5(a).
"Applicable Term Loan LIBOR Margin" means the per annum interest
rate from time to time in effect and payable in addition to the LIBOR Rate
applicable to the Term Loan, as determined by reference to Section 1.5(a).
"Assignment Agreement" has the meaning ascribed to it in Section
9.1(a).
"Bankruptcy Code" means the provisions of Title 11 of the United
States Code, 11 U.S.C. 101 (S)(S) et seq.
"Blocked Accounts" has the meaning ascribed to it in Annex C.
"Borrower" has the meaning ascribed thereto in the preamble to
the Agreement.
"Borrowing Availability" means as of any date of determination
the lesser of (i) the Maximum Amount less the sum of the aggregate Revolving
Loan, the Export-Related
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Loan and Swing Line Loan then outstanding; and (ii) the Borrowing Base less the
sum of the aggregate Revolving Loan and Swing Line Loan then outstanding,
provided that an Overadvance in accordance with Section 1.1(a)(iii) may cause
the Revolving Loan and the Swing Line Loan to exceed the Borrowing Base by the
amount of such permitted Overadvance.
"Borrowing Base" means, as of any date of determination by Agent,
from time to time, an amount equal to the sum at such time of:
(a) 85% of the book value of Borrower's and AET Canada's
Eligible Accounts; and
(b) the lesser of (i) 60% of the book value of Borrower's and
AET Canada's Eligible Inventory valued at the lower of average cost or market or
(ii) 85% of the appraised net orderly liquidation value of Borrower's and AET
Canada's Eligible Inventory;
in each case, less any Reserves established by Agent at such time in its
reasonable credit judgment upon prior or contemporaneous notice to Borrower.
"Borrowing Base Certificate" means any certificate to be executed
and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" means any day that is not a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in the State of New
York and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.
"Canadian Benefit Plans" shall mean all material employee benefit
plans of any nature or kind whatsoever that are not Canadian Pension Plans and
are maintained or contributed to by any Credit Party having employees in Canada.
"Canadian Collateral Documents" means the Quebec Hypothec and the
AET Canada Blocked Account Agreement and any other document relating thereto.
"Canadian Pension Plans" shall mean each plan which is considered
to be a pension plan for the purposes of any applicable pension benefits
standards statute and/or regulation in Canada established, maintained or
contributed to by any Credit Party for its employees or former employees.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto that have a useful life of
more than one year and that are required to be capitalized under GAAP (excluding
any capitalized Interest Expense and excluding expenditures made with proceeds
of any casualty or condemnation in accordance with Section 5.4(c)).
"Capital Lease" means, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP,
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would be required to be classified and accounted for as a capital lease on a
balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Collateral Account" has the meaning ascribed to it Annex B.
"Cash Equivalents" has the meaning ascribed to it in Annex B.
"Cash Management Systems" has the meaning ascribed to it in
Section 1.8.
"Change of Control" means any of the following: (a) any person or
group of persons (within the meaning of the Securities Exchange Act of 1934,)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934,) of 25% or more of the issued and outstanding shares of
capital Stock of Borrower having the right to vote for the election of directors
of Borrower under ordinary circumstances; (b) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Borrower (together with any new directors
whose election by the board of directors of Borrower or whose nomination for
election by the Stockholders of Borrower was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office; (c) Borrower ceases to
own and control all of the economic and voting rights associated with all of the
outstanding capital Stock of any of its Subsidiaries; or (d) the occurrence of a
Change of Control under and as defined in the Senior Note Indenture.
"Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party.
"Closing Date" means October 3, 2003.
"Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.
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"Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided, that
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" means the property covered by the Security
Agreement, the Mortgages and the other Collateral Documents and any other
property, real or personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations.
"Collateral Documents" means the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Intellectual Property Security
Agreement, the Canadian Collateral Documents and all similar agreements entered
into guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
"Collateral Enforcement Action" means (a) with respect to any
Revolving Lender, any action by any Revolving Lender to (i) exercise or seek to
exercise any rights or exercise any remedies with respect to any Term Loan
Priority Collateral, (ii) institute any action or proceeding with respect to
such rights or remedies, including any action of foreclosure or (iii) contest,
protest or object to any foreclosure proceeding, postpetition financing, use of
cash collateral or action brought by the Agent or any Term Lender or to any
other exercise by the Agent or any Term Lender of any rights and remedies under
any Loan Documents with respect to the Term Loan Priority Collateral or (b) with
respect to any Term Lender, any action by any Term Lender to (i) exercise or
seek to exercise any rights or exercise any remedies with respect to any
Revolving Loan Priority Collateral, (ii) institute any action or proceeding with
respect to such rights or remedies, including any action of foreclosure or (iii)
contest, protest or object to any foreclosure proceeding, postpetition
financing, use of cash collateral or action brought by the Agent or any
Revolving Lender or to any other exercise by the Agent or any Revolving Lender
of any rights and remedies under any Loan Documents with respect to the
Revolving Loan Priority Collateral.
"Collateral Reports" means the reports with respect to the
Collateral referred to in Annex F.
"Collection Account" means that certain account of Agent, account
number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Deutsche Bank Trust Company Americas
in New York, New York ABA No. 021 001 033, or such other account as may be
specified in writing by Agent as the "Collection Account."
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"Commitment Termination Date" means the earliest of (a) October
3, 2008, (b) the date of termination of Lenders' obligations to make Advances
and to incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of all Commitments to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment (including without duplication the Swing Line
Lender's Swing Line Commitment as a subset of its Revolving Loan Commitment),
and Term Loan Commitment as set forth on Annex J to the Agreement or in the most
recent Assignment Agreement executed by such Lender, (b) as to all Lenders, the
aggregate of all Lenders' Revolving Loan Commitments (including without
duplication the Swing Line Lender's Swing Line Commitment as a subset of its
Revolving Loan Commitment) and Term Loan Commitments, which aggregate commitment
shall be on One Hundred Million Dollars ($100,000,000) on the Closing Date, and
(c) the Export-Related Loan Lender's Export-Related Loan Commitment, as to each
of clauses (a), (b) and (c), as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in Annex
E.
"Concentration Account" has the meaning ascribed to it in Annex
C.
"Contracts" means all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and (i)
the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearing house, as
applicable, with respect to commodity accounts and commodity contracts held by
any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of Agent, on behalf of
itself and Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of Agent without further consent by the
affected Credit Party.
"Copyright License" means any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
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"Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Party Pledge Agreement" means the Pledge Agreement of even
date herewith executed by each of the Credit Parties in favor of Agent, on
behalf of itself and Lenders, pledging all Stock of its Subsidiaries, if any,
and all Intercompany Notes owing to or held by it.
"Credit Parties" means Borrower, AET Canada and each other Subsidiary
of Borrower.
"Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section 1.5(d).
"Deposit Accounts" means all "deposit accounts" as such term is
defined in the Code, now or hereafter held in the name of any Credit Party.
"Disbursement Accounts" has the meaning ascribed to it in Annex C.
"Disclosure Schedules" means the Schedules prepared by Borrower and
denominated as Disclosure Schedules (1.4) through (6.7) in the Index to the
Agreement.
"Documents" means all "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"EBITDA" means, for any fiscal period, the sum (determined on a
consolidated basis for the Borrower and its Subsidiaries) of (a) the net income
of the Borrower and its Subsidiaries for such period computed in accordance with
GAAP, plus (b) Interest Expense for such period as reported on the Borrower's
consolidated financial statements for such period, plus (c) the income tax
expense of the Borrower and its Subsidiaries for such period as reported on the
Borrower's consolidated financial statements for such period, plus (d) the
amount reported on the Borrower's consolidated financial statements as the
depreciation of the assets of the Borrower and its Subsidiaries for such period
computed in accordance with GAAP, plus (e) the amount reported on the Borrower's
consolidated financial statements as the amortization of intangibles assets of
the Borrower and its Subsidiaries for such period computed in accordance with
GAAP, plus (f) the amount reported on the Borrower's consolidated financial
statements as the write-down of intangible assets of the Borrower and its
Subsidiaries that consist of goodwill for such period computed in accordance
with GAAP, and plus (g) all cash and non-cash extraordinary
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expenses and losses of the Borrower and its Subsidiaries for such period
computed in accordance with GAAP, minus (h) all cash and non-cash extraordinary
income and gains of the Borrower and its Subsidiaries for such period, in each
case as such item is used in the computation of net income of the Borrower and
its Subsidiaries for such period.
"Eligible Accounts" has the meaning ascribed to it in Section 1.6.
"Eligible Export-Related Accounts" has the meaning ascribed to it in
Section 1.6A of the Agreement.
"Eligible Inventory" has the meaning ascribed to it in Section 1.7.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards, policies,
guidelines, directives and regulations, now or hereafter in effect, and any
applicable judicial or administrative interpretation thereof, including any
applicable judicial or administrative order, consent decree, order or judgment,
imposing liability or standards of conduct for or relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C.(S)(S)9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C(S)(S) 5101 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.(S)(S)136 et seq.);
the Solid Waste Disposal Act (42 U.S.C.(S)(S) 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C.(S)(S)2601 et seq.); the Clean Air Act (42
U.S.C.(S)(S)7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C.(S)(S)1251 et seq.); the Occupational Safety and Health Act (29
U.S.C.(S)(S)651 et seq.); and the Safe Drinking Water Act (42 U.S.C.(S)(S)
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, provincial, regional, municipal, local and foreign counterparts
or equivalents and any transfer of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, characterization,
rehabilitation, remedial and removal costs, investigation and feasibility study
costs, capital costs, operation and maintenance costs, losses, damages, punitive
damages, property damages, natural resource damages, consequential damages,
treble damages, costs and expenses (including all reasonable fees, disbursements
and expenses of counsel, experts and consultants), fines, penalties, sanctions,
charges, debts and interest incurred as a result of or related to any claim,
suit, action, investigation, proceeding or demand by any Person, whether based
in contract, tort, implied or express warranty, strict liability, criminal or
civil statute or common law, including any arising under or related to any
Environmental Laws, Environmental Permits, or in connection with any Release or
threatened Release or presence of a Hazardous Material whether on, at, in,
under, from or about or in the vicinity of any real or personal property.
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"Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any trade
or business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i)
the revocation or threatened revocation of a Qualified Plan's qualification or
tax exempt status; or (j) the termination of a Plan described in Section 4064 of
ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section 8.1.
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"Ex-Im Bank" shall mean the Export-Import Bank of the United States.
"Ex-Im Bank Borrower Agreement" means any Borrower Agreement executed
by Borrower in favor of Ex-Im Bank and Lender.
"Ex-Im Bank Documents" shall mean the Ex-Im Bank Guaranty, any Loan
Authorization Agreement between Agent and Ex-Im Bank and the Ex-Im Bank Borrower
Agreement.
"Ex-Im Bank Guarantee" shall mean any Guarantee executed by Ex-Im Bank
in favor of GE Capital in form and substance satisfactory to, Agent, together
with all amendments, modifications and supplements thereto.
"Export-Related Accounts" shall mean those Accounts of Borrower that
are an obligation of an Account Debtor located in a foreign country (other than
Canada) which arise from the sale of goods or services which are intended for
export pursuant to written export orders or contracts for the purchase by the
Account Debtor of such goods or services.
"Export-Related Advance" has the meaning ascribed to it in Section
1.1(d).
"Export-Related Borrowing Availability" means as of the date of
determination the lesser of (i) the Export-Related Loan Commitment and (ii) the
Export-Related Borrowing Base, in each case, less the aggregate Export-Related
Loan then outstanding.
"Export-Related Borrowing Base" means, as of any date of determination
by Agent, from time to time, an amount equal to 90% of the book value of
Borrower's Eligible Export-Related Accounts at such time, less any Reserves
established by Agent at such time with respect to the Export-Related Borrowing
Base.
"Export-Related Loan Lender" means GE Capital.
"Export-Related Loan" means, at any time, the aggregate amount of
Export-Related Advances outstanding to Borrower.
"Export-Related Loan Commitment" means Five Million Dollars
($5,000,000).
"Export-Related Loan Note" has the meaning ascribed to it in Section
1.1(d)(ii).
"Export-Related Loan Participation" and "Export-Related Loan
Participations" has the meaning ascribed to it in Section 1.1(d)(iii).
"Export-Related Revolving Loan Reserve" means a reserve established by
Agent against the Borrowing Base in an amount equal to ten percent (10%) of the
amount of the Export-Related Loan.
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C.(S)201 et seq.
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"Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, 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, and (b) if no
such rate is so published on the 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 Agent from three Federal Funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fees" means any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth in Annex
G.
"Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrower delivered in
accordance with Section 3.4 and Annex E.
"Fiscal Month" means any of the monthly accounting periods of
Borrower.
"Fiscal Quarter" means any of the quarterly accounting periods of
Borrower, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means any of the annual accounting periods of Borrower
ending on September 30 of each year.
"Fixed Charges" means, with respect to any Person for any fiscal
period, (a) the aggregate of all Interest Expense paid or payable in cash during
such period plus (b) scheduled payments of principal with respect to
Indebtedness during such period, plus (c) all Taxes, paid or payable in cash
during such period.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any fiscal period, the ratio of (a) EBITDA minus Capital Expenditures to (b)
Fixed Charges.
"Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
"Funded Debt" means, with respect to any Person, without duplication,
all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person's sole
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at
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the option of the debtor, and also including, in the case of Borrower, the Loans
and, without duplication, Guaranteed Indebtedness consisting of guaranties of
Funded Debt of other Persons.
"Funded Export-Related Loan Participation" has the meaning ascribed to
it in Section 1.1(d)(iii).
"GAAP" means generally accepted accounting principles in the United
States of America consistently applied, as such term is further defined in Annex
G to the Agreement.
"GE Capital" means General Electric Capital Corporation, a Delaware
corporation.
"GE Capital Fee Letter" means that certain letter, dated as of the
date hereof, between GE Capital and Borrower with respect to certain Fees to be
paid from time to time by Borrower to GE Capital.
"General Intangibles" means all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefore
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Governmental Authority" means any nation or government, any state or
province or other political subdivision thereof, and any agency, tribunal,
commission, department or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
A-12
"Guaranteed Indebtedness" means as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, each Subsidiary Guaranty and any
other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantors" means each Subsidiary of Borrower (other than AET
Limited) and each other Person, if any, that executes a guaranty or other
similar agreement in favor of Agent, for itself and the ratable benefit of
Lenders, in connection with the transactions contemplated by the Agreement and
the other Loan Documents.
"Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "residual hazardous
material," "hazardous substance," "extremely hazardous waste," "restricted
hazardous waste," "pollutant," "contaminant," "hazardous constituent," "special
waste," "toxic substance" or other similar term or phrase under any
Environmental Laws, or (b) petroleum or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls (PCB's), or any radioactive substance.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred 6 months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than 6 months from the due
date unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and surety
bonds, whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of
A-13
such property), (e) all Capital Lease Obligations and the present value
(discounted at the Index Rate as in effect on the Closing Date) of future rental
payments under all synthetic leases, (f) all net liabilities of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all net
liabilities of such Person under any foreign exchange contract, currency swap
agreement, interest rate swap, cap or collar agreement or other similar
agreement or arrangement designed to alter the risks of that Person arising from
fluctuations in currency values or interest rates, in each case whether
contingent or matured, (h) all Indebtedness referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property or other assets
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (i) the Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in Section
1.13.
"Indemnified Person" has the meaning ascribed to in Section 1.13.
"Index Rate" means, for any day, a floating rate equal to the higher
of (i) the rate publicly quoted from time to time by The Wall Street Journal in
the Money Rate section as the "Prime Rate" (or, if The Wall Street Journal
ceases quoting a base rate of the type described, the highest per annum rate of
interest published by the Federal Reserve Board in Federal Reserve statistical
release H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan
rate or its equivalent), and (ii) the Federal Funds Rate plus 50 basis points
per annum. Each change in any interest rate provided for in the Agreement based
upon the Index Rate shall take effect at the time of such change in the Index
Rate.
"Index Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Index Rate.
"Industrial Revenue Bonds" means The City of Salem, Massachusetts
Flexible Mode Industrial Development Revenue Bonds in the original principal
amount of $6,500,000.
"Insolvency Law" shall mean any of the Bankruptcy and Insolvency Act
(Canada), the Companies' creditors Arrangement Act (Canada) and titles 7 and 11
of the United States Code entitled "Bankruptcy," each as now and hereafter in
effect, any successors to such statutes and any other applicable insolvency or
other similar law of any jurisdiction.
"Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"ITA" shall mean the Income Tax Act (Canada), as the same may, from
time to time, be in effect.
A-14
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Intellectual Property Security Agreements" means the Intellectual
Property Security Agreements made in favor of Agent, on behalf of itself and
Lenders, by each applicable Credit Party.
"Intercompany Notes" has the meaning ascribed to it in Section 6.3.
"Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including,
interest expense with respect to any Funded Debt of such Person and interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided that,
in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest that has then accrued under the Agreement.
"Inventory" means all "inventory," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located, and
in any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.
"Investment Property" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986 and all regulations
promulgated thereunder.
"IRS" means the Internal Revenue Service.
A-15
"L/C Issuer" has the meaning ascribed to it in Annex B.
"L/C Sublimit" has the meaning ascribed to it in Annex B.
"Lenders" means GE Capital, the other Lenders named on the signature
pages of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations, such term shall include any assignee of such
Lender.
"Letter of Credit Fee" has the meaning ascribed to it in Annex B.
"Letter of Credit Obligations" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Letters of Credit by Agent or another L/C Issuer or the purchase of
a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable at such time or at any time thereafter by Agent or Lenders
thereupon or pursuant thereto.
"Letters of Credit" means documentary or standby letters of credit
issued for the account of Borrower by any L/C Issuer, and bankers' acceptances
issued by Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.
"Letter-of-Credit Rights" means "letter-of-credit rights" as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.
"LIBOR Business Day" means a Business Day on which banks in the City
of London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two or three months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.5(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
to carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end 2 LIBOR Business Days prior to such date;
A-15
(c) any LIBOR Period that begins on the last LIBOR Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower shall use reasonable efforts to select LIBOR Periods
so as not to require a payment or prepayment of any LIBOR Loan during a
LIBOR Period for such Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be no
more than 7 separate LIBOR Loans in existence at any one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is 2 LIBOR Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board that are
required to be maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate
News Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower.
"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
"Loan Account" has the meaning ascribed to it in Section 1.12.
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"Loan Documents" means the Agreement, the Notes, the Collateral
Documents, the Master Standby Agreement, the Master Documentary Agreement, and
all other agreements, instruments, documents and certificates identified in the
Closing Checklist executed and delivered to, or in favor of, Agent or any
Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby
(including the terms of any commitment letter which expressly survive the
execution of this Agreement). Any reference in the Agreement or any other Loan
Document to a Loan Document shall include all appendices, exhibits or schedules
thereto, and all amendments, restatements, supplements or other modifications
thereto, and shall refer to the Agreement or such Loan Document as the same may
be in effect at any and all times such reference becomes operative.
"Loans" means the Revolving Loan, the Swing Line Loan, the
Export-Related Loan and the Term Loan.
"Lock Boxes" has the meaning ascribed to it in Annex C.
"Margin Stock" has the meaning ascribed to in Section 3.10.
"Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit dated as of the Closing Date among Borrower, as
Applicant(s), and GE Capital attached as Exhibit A-1 hereto.
"Master Standby Agreement" means the Master Agreement for Standby
Letters of Credit dated as of the Closing Date among Borrower, as Applicant(s),
and GE Capital, as issuer attached as Exhibit A-2 hereto.
"Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
the Credit Parties considered as a whole, (b) any Credit Party's ability to pay
any of the Loans or any of the other Obligations in accordance with the terms of
the Agreement, (c) the Collateral (taken as a whole) or Agent's Liens, on behalf
of itself and Lenders, on the Collateral (taken as a whole) or the priority of
such Liens, or (d) Agent's or any Lender's rights and remedies under the
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, any event or occurrence adverse to one or more Credit Parties which
results or could reasonably be expected to result in costs and/or liabilities or
loss of revenues, individually or in the aggregate, to any Credit Party in any
30-day period in excess of the lesser of $ 10,000,000 and 20% of the lesser of
the Maximum Amount and the Borrowing Base at any date of determination shall
constitute a Material Adverse Effect.
"Maximum Amount" means, as of any date of determination, an amount
equal to the Revolving Loan Commitment of all Lenders as of that date.
"Mortgaged Properties" has the meaning assigned to it in Annex D.
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"Mortgages" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent on behalf
of itself and Lenders with respect to the Mortgaged Properties or other Real
Estate pursuant to Section 5.9, all in form and substance reasonably
satisfactory to Agent.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Nonqualified Benefit Plans" means, collectively, Borrower's
Supplemental Executive Retirement Plan, Executive Deferred Compensation Plan,
1999 Deferred Compensation Plan Trust, and any other Plan described in Section
201(2) of ERISA.
"Notes" means, collectively, the Revolving Notes, the
Export-Related Loan Note, Swing Line Notes and the Term Notes.
"Notice of Conversion/Continuation" has the meaning ascribed to it
in Section 1.5(e).
"Notice of Export-Related Advance" has the meaning ascribed to it
in Section 1.1(d).
"Notice of Revolving Credit Advance" has the meaning ascribed to
it in Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, accrued and unpaid
interest (including all interest that accrues after the commencement of any case
or proceeding by or against any Credit Party in bankruptcy, whether or not
allowed in such case or proceeding), Fees, Charges, expenses, attorneys' fees
and any other sum chargeable to any Credit Party under the Agreement or any of
the other Loan Documents.
"Overadvance" has the meaning ascribed to it in Section
1.1(a)(iii).
"Patent License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
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"Patent Security Agreements" means the Patent Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party.
"Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or of any other country, all registrations and recordings thereof, and
all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of ERISA.
"Permitted Encumbrances" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with Section 5.2(b); (b)
pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) workers', mechanics' or similar liens arising
in the ordinary course of business which attach only to Equipment, Fixtures
and/or Real Estate and which are either inchoate and unperfected or payment of
which is being contested in accordance with Section 5.2(b); (e) carriers',
warehousemen's, suppliers', custom's brokers', or other similar possessory liens
arising in the ordinary course of business and securing liabilities in an
outstanding aggregate amount not in excess of $100,000 at any time, so long as
such Liens attach only to Inventory; (f) deposits securing, or in lieu of,
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (g) any attachment or judgment lien not constituting an Event of Default
under Section 8.1(j); (h) zoning restrictions, servitudes, easements, licenses,
or other restrictions on the use of any Real Estate or other minor
irregularities in title (including leasehold title) thereto, including, those
matters set forth on the title insurance policies insuring the Mortgages, so
long as the same do not materially impair the use, value, or marketability of
such Real Estate; (i) Liens arising from precautionary UCC-1 financing statement
filings regarding operating leases entered into by the Credit Parties in the
ordinary course of business; (j) presently existing or hereafter created Liens
in favor of Agent, on behalf of Lenders; and (k) Liens expressly permitted under
clauses (b) and (c) of Section 6.7 of the Agreement.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other entity
or government (whether federal, state, county, city, municipal, local, foreign,
or otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" means, at any time, an "employee benefit plan", as defined
in Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation
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to contribute to or has maintained, contributed to or had an obligation to
contribute to at any time within the past 7 years on behalf of participants who
are or were employed by any Credit Party or ERISA Affiliate.
"Pledge Agreements" means, collectively, the Credit Party Pledge
Agreement and any pledge agreements entered into after the Closing Date by any
Credit Party (as required by the Agreement or any other Loan Document).
"Principal Financial Officer" means at any time the chief
financial officer, treasurer or other officer of Borrower then primarily
responsible for the Borrower's finance and treasury matters.
"Prior Claims" means all Liens created by applicable law (in
contrast with Liens voluntarily granted) which rank or are capable of ranking
prior to or pari passu with Agent's and Lenders' security interest (or the
applicable equivalent thereof) against all or part of the Collateral, including
for amounts owing for wages employee deductions, goods and services taxes, sales
taxes, employer health taxes, municipal taxes, workers' compensation, pension
fund obligations and overdue rents.
"Prior Lenders" means each of (i) LaSalle National Leasing
Corporation, Banc of America Leasing & Capital, LLC, The CIT Group / Equipment
Finance Inc., Fifth Third Leasing Company, First Union Commercial Corporation,
Key Equipment Finance, and PNC Leasing, LLC, (ii) GE Capital, (iii) the trustee
for the holders of the Industrial Revenue Bonds, and (iv) ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank,
in each case, as a creditor and/or as agent or trustee for creditors under the
applicable Prior Lender Obligations.
"Prior Lender Obligations" means, individually and collectively as
applicable, the obligations under each of (i) those certain leases each dated
December 29, 1997 between each of LaSalle National Leasing Corporation, Banc of
America Leasing & Capital, LLC, The CIT Group / Equipment Finance Inc., Fifth
Third Leasing Company, First Union Commercial Corporation, Key Equipment
Finance, and PNC Leasing, LLC and Borrower, (ii) that certain lease dated March
27, 2002 between GE Capital and Borrower, (iii) the Borrower's obligations in
respect of its Industrial Revenue Bonds, and (iv) the Borrower's existing
revolving credit facility with ▇▇ ▇▇▇▇▇▇ Chase Bank.
"Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the
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Collateral including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral, (e) all amounts collected on, or distributed on account
of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Stock, and (f) any
and all other amounts, rights to payment or other property acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all rights
arising out of Collateral.
"Pro Forma" means the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as of August 31, 2003 after giving pro forma
effect to the Related Transactions.
"Projections" means Borrower's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary or division-by-division basis, if applicable, and otherwise
consistent with the historical Financial Statements of Borrower, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means with respect to all matters relating to any
Lender, (a) with respect to the Revolving Loan and the Export Related Loan
Participation, the percentage obtained by dividing (i) the Revolving Loan
Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of
all Lenders, (b) with respect to the Term Loan(s), the percentage obtained by
dividing (i) the Term Loan Commitment of that Lender by (ii) the aggregate Term
Loan Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to Section 9.1, (c) with respect to all Loans,
the percentage obtained by dividing (i) the aggregate Commitments of that Lender
by (ii) the aggregate Commitments of all Lenders, and (d) with respect to all
Loans on and after the Commitment Termination Date, the percentage obtained by
dividing (i) the aggregate outstanding principal balance of the Loans held by
that Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Assignee" means (a) any Lender, any Affiliate of any
Lender and, with respect to any Lender that is an investment fund that invests
in commercial loans, any other investment fund that invests in commercial loans
and that is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from ▇▇▇▇▇'▇ at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that no
Person determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee, and no Person or
Affiliate of such Person (other than a Person that
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is already a Lender) holding Subordinated Debt or Stock issued by any Credit
Party shall be a Qualified Assignee.
"Quebec Hypothec" means (i) the Deed of Movable and Immovable
Hypothec dated the Closing Date granted by AET Canada in favor of the Agent,
(ii) the Collateral Mortgage Demand Bond issued thereunder in the principal
amount of CDN$200,000,000 made by AET Canada and registered in the name of the
Agent, and (iii) the Bond Pledge Agreement dated the Closing Date granted by AET
Canada in favor of the Agent.
"Real Estate" has the meaning ascribed to it in Section 3.6.
"Refinancing" means the repayment in full by Borrower of the Prior
Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" has the meaning ascribed to it in
Section 1.1(c)(iii).
"Related Transactions" means the initial borrowing under the
Revolving Loan and the Term Loan on the Closing Date, the Refinancing, the
payment of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents and all
other agreements or instruments executed in connection with the Related
Transactions.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Requisite Lenders" means (a) the Requisite Revolving Lenders and
(b) the Requisite Term Lenders.
"Requisite Revolving Lenders" means Lenders having (a) more than
51% of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving
Loan Commitments have been terminated, more than 51% of the aggregate
outstanding amount of the Revolving Loan.
"Requisite Term Lenders" means Lenders having more than 66 2/3% of
the aggregate outstanding amount of the Term Loan.
"Reserves" means (a) reserves established by Agent from time to
time against Eligible Inventory pursuant to Section 5.9, (b) reserves
established pursuant to Section 5.4(c), (c) the Export-Related Loan Reserve, and
(d) such other reserves against Eligible Accounts, Eligible Export-Related
Accounts, Eligible Inventory, Borrowing Availability or Export-Related Borrowing
Availability of Borrower that Agent may, in its reasonable credit judgment and
upon prior or contemporaneous notice to Borrower, establish from time to time.
A-23
"Restricted Payment" means, with respect to any Credit Party (a)
the declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt or the Senior Notes; (d)
any payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire Stock
of such Credit Party now or hereafter outstanding; (e) any payment of a claim
for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Credit Party other than payment of compensation in the ordinary course of
business to Stockholders who are employees of such Person; and (g) any payment
of management fees (or other fees of a similar nature) by such Credit Party to
any Stockholder of such Credit Party or its Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a)(i).
"Revolving Lenders" means, as of any date of determination,
Lenders having a Revolving Loan Commitment.
"Revolving Loan" means, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to Borrower plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" means (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances, incur
Letter of Credit Obligations or purchase Export-Related Loan Participations as
set forth on Annex J to the Agreement or in the most recent Assignment Agreement
executed by such Lender and (b) as to all Lenders, the aggregate commitment of
all Lenders to make Revolving Credit Advances, incur Letter of Credit
Obligations, or purchase Export-Related Loan Participations which aggregate
commitment shall be Fifty Million Dollars ($50,000,000) on the Closing Date, as
such amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
A-24
"Revolving Loan Priority Collateral" means any Collateral
consisting of Accounts or Inventory or any Proceeds thereof.
"Revolving Note" has the meaning ascribed to it in Section
1.1(a)(ii)(A).
"Security Agreement" means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto.
"Senior Note Documents" means the Senior Notes, the Senior Note
Indenture, any Guarantee (as defined in the Senior Note Indenture) and the
Registration Rights Agreement (as defined in the Senior Note Indenture).
"Senior Note Indenture" means the Senior Note Indenture, dated,
June 19, 2001 made by the Borrower and AET Canada in favor of ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, as trustee.
"Senior Notes" means those certain 10 3/4% Senior Notes due 2011
and 10 3/4% Series B Senior Notes due 2001 issued by Borrower pursuant to the
Senior Note Indenture.
"Software" means all "software" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall
be computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder of
Stock of such Person.
A-25
"Subordinated Debt" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, 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 legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty of even date
herewith executed by each Subsidiary of Borrower (other than AET Limited) in
favor of Agent, on behalf of itself and Lenders.
"Supporting Obligations" means all "supporting obligations" as
such term is defined in the Code, including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Swing Line Advance" has the meaning ascribed to it in Section
1.1(c)(i).
"Swing Line Availability" has the meaning ascribed to it in
Section 1.1(c)(i).
"Swing Line Commitment" means, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Advances as set forth on
Annex J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" means GE Capital.
"Swing Line Loan" means, as the context may require, at any time,
the aggregate amount of Swing Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning ascribed to it in Section
1.1(c)(ii).
"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding franchise or
other taxes imposed on or measured by the net income of Agent or a Lender by the
jurisdictions under the laws of which Agent and Lenders are organized or conduct
business or any political subdivision thereof.
A-26
"Termination Date" means the date on which (a) the Loans have
been indefeasibly repaid in full, (b) all other Obligations under the Agreement
and the other Loan Documents have been completely discharged (other than
indemnification Obligations and so long as no suits, actions, proceedings or
claims are pending or threatened against any Indemnified Person asserting any
damages, losses or liabilities that are Indemnified Liabilities), (c) all Letter
of Credit Obligations have been cash collateralized, canceled or backed by
standby letters of credit in accordance with Annex B, and (d) none of Borrower
shall have any further right to borrow any monies under the Agreement.
"Term Lenders" means those Lenders having Term Loan Commitments.
"Term Loan" has the meaning assigned to it in Section 1.1(b)(i).
"Term Loan Commitment" means (a) as to any Lender with a Term
Loan Commitment, the commitment of such Lender to make its Pro Rata Share of the
Term Loan as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender, and (b) as to all Lenders with a
Term Loan Commitment, the aggregate commitment of all Lenders to make the Term
Loan, which aggregate commitment shall be Fifty Million Dollars ($50,000,000) on
the Closing Date. After advancing the Term Loan, each reference to a Lender's
Term Loan Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan.
"Term Loan Payment Account" means that certain account of Agent,
account number ▇▇-▇▇▇-▇▇▇ in the name of Agent at Deutsche Bank Trust Company
Americas in New York, New York ABA No. 021 001 033, Reference: Applied Extrusion
Technologies, Attn: ▇. ▇▇▇▇▇▇▇▇▇, or such other account as may be specified in
writing by Agent as the "Term Loan Payment Account."
"Term Loan Priority Collateral" means all Collateral other than
Revolving Loan Priority Collateral.
"Term Note" has the meaning assigned to it in Section 1.1(b)(i).
"Terre Haute Sale/Leaseback" means collectively, (i) the sale of
the vacant parcel of land located described on Disclosure Schedule 6.8(f) owned
by Borrower located in Terre Haute, Indiana (the "Terre Haute Property"), for
nominal consideration, and (ii) on or prior to the date of such sale, the
execution and delivery of a lease and other documents reasonably satisfactory in
form and substance to the Agent providing for the (a) the construction of a
warehouse on the Terre Haute Property by the purchaser of such property, and (b)
the leaseback (the "Terre Haute Lease") by Borrower from the purchaser of such
warehouse and property on terms and conditions reasonably satisfactory to Agent
(including, that purchaser execute a landlord waiver and consent and that the
landlords' fee mortgagees execute non-disturbance agreements, in each case, in
form and substance satisfactory to Agent).
"Title IV Plan" means a Pension Plan (other than a Multiemployer
Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains,
A-27
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Trademark License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter
existing or adopted or acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of 5 years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Welfare Plan" means a Plan described in Section 3(i) of ERISA.
Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective
A-28
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that a member of management or officer or member of the
board of directors of such Credit Party has actual knowledge or awareness of a
particular fact or circumstance or a member of management or officer or director
of such Credit Party, if it had exercised reasonable diligence, would have known
or been aware of such fact or circumstance.
With respect to the amount of any obligation or liability
denominated in a currency other than Dollars, for purposes of making
calculations or determinations under the Loan Documents on any date, the amount
of such obligation or liability shall be measured in Dollars by converting such
amount in such other currency to Dollars at the conversion rate quoted on the
applicable Reuters Monitor Screen or other service selected by the Agent on such
date or, if such date is not a Business Day, on the Business Day immediately
preceding such date of determination, or at such other rate as may have been
agreed in writing between the Borrower and the Agent.
A-29
ANNEX B (Section 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the
Agreement, Agent and Revolving Lenders agree to incur, from time to time prior
to the Commitment Termination Date, upon the request of Borrower and for
Borrower's account, Letter of Credit Obligations by causing Letters of Credit to
be issued by GE Capital or a Subsidiary thereof or a bank or other legally
authorized Person selected by or acceptable to Agent in its sole discretion
(each, an "L/C Issuer") for Borrower's account and guaranteed by Agent;
provided, that if the L/C Issuer is a Revolving Lender, then such Letters of
Credit shall not be guaranteed by Agent but rather each Revolving Lender shall,
subject to the terms and conditions hereinafter set forth, purchase (or be
deemed to have purchased) risk participations in all such Letters of Credit
issued with the written consent of Agent, as more fully described in paragraph
(b)(ii) below. The aggregate amount of all such Letter of Credit Obligations
shall not at any time exceed the least of (i) Ten Million Dollars ($10,000,000)
(the "L/C Sublimit") and (ii) the Maximum Amount less the aggregate outstanding
principal balance of the Revolving Credit Advances, the Export-Related Loan and
the Swing Line Loan, and (iii) the Borrowing Base less the aggregate outstanding
principal balance of the Revolving Credit Advances and the Swing Line Loan. No
such Letter of Credit shall have an expiry date that is more than one year
following the date of issuance thereof, unless otherwise determined by the
Agent, in its sole discretion, and neither Agent nor Revolving Lenders shall be
under any obligation to incur Letter of Credit Obligations in respect of, or
purchase risk participations in, any Letter of Credit having an expiry date that
is later than the Commitment Termination Date.
(b) (i) Advances Automatic; Participations. In the event that
Agent or any Revolving Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance to Borrower under Section 1.1(a) of the
Agreement regardless of whether a Default or Event of Default has occurred and
is continuing and notwithstanding Borrower's failure to satisfy the conditions
precedent set forth in Section 2, and each Revolving Lender shall be obligated
to pay its Pro Rata Share thereof in accordance with the Agreement. The failure
of any Revolving Lender to make available to Agent for Agent's own account its
Pro Rata Share of any such Revolving Credit Advance or payment by Agent under or
in respect of a Letter of Credit shall not relieve any other Revolving Lender of
its obligation hereunder to make available to Agent its Pro Rata Share thereof,
but no Revolving Lender shall be responsible for the failure of any other
Revolving Lender to make available such other Revolving Lender's Pro Rata Share
of any such payment.
(ii) If it shall be illegal or unlawful for Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Sections 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
or if the L/C Issuer is a Revolving Lender, then (A)
B-1
immediately and without further action whatsoever, each Revolving Lender shall
be deemed to have irrevocably and unconditionally purchased from Agent (or such
L/C Issuer, as the case may be) an undivided interest and participation equal to
such Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments)
of the Letter of Credit Obligations in respect of all Letters of Credit then
outstanding and (B) thereafter, immediately upon issuance of any Letter of
Credit, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an
undivided interest and participation in such Revolving Lender's Pro Rata Share
(based on the Revolving Loan Commitments) of the Letter of Credit Obligations
with respect to such Letter of Credit on the date of such issuance. Each
Revolving Lender shall fund its participation in all payments or disbursements
made under the Letters of Credit in the same manner as provided in the Agreement
with respect to Revolving Credit Advances.
(c) Cash Collateral.
(i) If Borrower is required to provide cash collateral for any
Letter of Credit Obligations pursuant to the Agreement prior to the Commitment
Termination Date, Borrower will pay to Agent for the ratable benefit of itself
and Revolving Lenders cash or cash equivalents acceptable to Agent ("Cash
Equivalents") in an amount equal to 105% of the maximum amount then available to
be drawn under each applicable Letter of Credit outstanding for the benefit of
Borrower. Such funds or Cash Equivalents shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") maintained at a bank or
financial institution acceptable to Agent. The Cash Collateral Account shall be
in the name of Borrower and shall be pledged to, and subject to the control of,
Agent, for the benefit of Agent and Lenders, in a manner satisfactory to Agent.
Borrower hereby pledges and grants to Agent, on behalf of itself and Lenders, a
security interest in all such funds and Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the Letter of Credit Obligations
and other Obligations, whether or not then due. The Agreement, including this
Annex B, shall constitute a security agreement under applicable law.
(ii) If any Letter of Credit Obligations, whether or not then
due and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrower shall either (A) provide cash collateral therefor in
the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guaranty of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like tenor
and duration (plus 30 additional days) as, and in an amount equal to 105% of,
the aggregate maximum amount then available to be drawn under, the Letters of
Credit to which such outstanding Letter of Credit Obligations relate and shall
be issued by a Person, and shall be subject to such terms and conditions, as are
be satisfactory to Agent in its sole discretion.
(iii) From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable
B-2
by Borrower to Agent and Lenders with respect to such Letter of Credit
Obligations of Borrower and, upon the satisfaction in full of all Letter of
Credit Obligations of Borrower, to any other Obligations of Borrower then due
and payable.
(iv) Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Agent and Lenders in respect thereof, any funds remaining
in the Cash Collateral Account shall be applied to other Obligations then due
and owing and upon payment in full of such Obligations, any remaining amount
shall be paid to Borrower or as otherwise required by law. Interest earned on
deposits in the Cash Collateral Account shall be for the account of Agent.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (i) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and (ii)
for each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "Letter of Credit Fee") in an amount equal to two and
three quarters percent (2.75%) per annum multiplied by the maximum amount
available from time to time to be drawn under the applicable Letter of Credit.
Such fee shall be paid to Agent for the benefit of the Revolving Lenders in
arrears, on the first day of each month and on the Commitment Termination Date.
In addition, Borrower shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
shall give Agent at least 2 Business Days' prior written notice requesting the
incurrence of any Letter of Credit Obligation. The notice shall be accompanied
by the form of the Letter of Credit (which shall be acceptable to the L/C
Issuer) and a completed Application for Standby Letter of Credit or Application
for Documentary Letter of Credit (as applicable) in the form customarily used by
the L/C Issuer. Notwithstanding anything contained herein to the contrary,
Letter of Credit applications by Borrower and approvals by Agent and the L/C
Issuer may be made and transmitted pursuant to electronic codes and security
measures mutually agreed upon and established by and among Borrower, Agent and
the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to reimburse
Agent and Revolving Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrower and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following:
B-3
(i) any lack of validity or enforceability of any Letter of
Credit or the Agreement or the other Loan Documents or any other
agreement;
(ii) the existence of any claim, setoff, defense or other right
that Borrower or any of its Affiliates or any Lender may at any time
have against a beneficiary or any transferee of any Letter of Credit
(or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection
with the Agreement, the Letter of Credit, the transactions
contemplated herein or therein or any unrelated transaction (including
any underlying transaction between Borrower or any of its Affiliates
and the beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided in
paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of
Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of
such Letter of Credit or such guaranty;
(v) any other circumstance or event whatsoever, that is similar
to any of the foregoing; or
(vi) the fact that a Default or an Event of Default has occurred
and is continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in the
Agreement, Borrower hereby agree to pay and to protect, indemnify, and save
harmless Agent and each Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs of internal counsel) that Agent or any
Lender may incur or be subject to as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of
Agent or any Lender seeking indemnification or of any L/C Issuer to honor a
demand for payment under any Letter of Credit or guaranty thereof as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority, in each case other than
to the extent solely as a result of the gross negligence or willful misconduct
of Agent or such Lender (as finally determined by a court of competent
jurisdiction).
(ii) As between Agent and any Lender and Borrower, Borrower
assume all risks of the acts and omissions of, or misuse of any Letter of Credit
by beneficiaries, of any Letter of Credit. In furtherance and not in limitation
of the foregoing, to the fullest extent permitted by law, neither Agent nor any
Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in
B-4
connection with the application for and issuance of any Letter of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, that may prove to be invalid or ineffective for any reason;
(C) failure of the beneficiary of any Letter of Credit to comply fully with
conditions required in order to demand payment under such Letter of Credit;
provided, that in the case of any payment by Agent under any Letter of Credit or
guaranty thereof, Agent shall be liable to the extent such payment was made
solely as a result of its gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction) in determining that the demand
for payment under such Letter of Credit or guaranty thereof complies on its face
with any applicable requirements for a demand for payment under such Letter of
Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they may be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of any
document required in order to make a payment under any Letter of Credit or
guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of
any drawing under any Letter of Credit or guaranty thereof; and (H) any
consequences arising from causes beyond the control of Agent or any Lender. None
of the above shall affect, impair, or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrower in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between or among Borrower and such L/C
Issuer, including any Application For Standby Letter of Credit or Documentary
Letter of Credit, the Master Documentary Agreement and the Master Standby
Agreement entered into with Agent.
B-5
ANNEX C (Section 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Each Borrower shall, and shall cause its Subsidiaries to, establish
and maintain the Cash Management Systems described below:
On or before the Closing Date and until the Termination Date, Borrower
and AET Canada shall (i) establish lock boxes ("Lock Boxes") or at Agent's
discretion, blocked accounts ("Blocked Accounts") at one or more of the banks
set forth in Disclosure Schedule (3.19), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, (ii) deposit and cause its Subsidiaries to
deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) ("Collections") into one or more Blocked Accounts in Borrower's name or any
such Subsidiary's name and at a bank identified in Disclosure Schedule (3.19)
(each, a "Relationship Bank"). At all times when any Export-Related Advance is
outstanding, Borrower shall (i) take all such reasonable steps to ensure that
all Account Debtors with respect to Export-Related Accounts forward payment
directly to a separate Lock Box established solely for receipt of Export-Related
Accounts, and (ii) deposit and cause its Subsidiaries to deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all Collections with respect to Export-Related
Accounts (whether or not otherwise delivered to a Lock Box) into a separate
Blocked Account established solely for receipt of such Collections (the
"Export-Related Blocked Account", in Borrower's name and at a Relationship Bank
identified in Disclosure Schedule (3.19) as the "Export-Related Blocked
Account". In the event either Borrower or AET Canada establishes more than one
Blocked Account for its Collections, Borrower shall establish a concentration
account in its name, which account may be a Blocked Account referred to in
clause (a)(i) above (the "Concentration Account"), at the bank designated as the
Concentration Account bank for Borrower in Disclosure Schedule (3.19) (the
"Concentration Account Bank"), which bank shall be reasonably satisfactory to
Agent.
(b) Each of Borrower and AET Canada may maintain, in its name,
accounts (each a "Disbursement Account" and collectively, the "Disbursement
Accounts") at banks reasonably acceptable to Agent which shall be used by such
Credit Parties for payments and disbursements. Borrower's Disbursement Account
(Account No. ▇▇▇▇▇▇▇▇▇▇ with PNC Bank, National Association) shall be used by
Agent, from time to time, to deposit proceeds of Revolving Credit Advances,
Export-Related Advances and Swing Line Advances made to Borrower pursuant to
Section 1.1 for use by Borrower solely in accordance with the provisions of
Section 1.4.
(c) On or before the Closing Date (or such later date as Agent shall
consent to in writing), the Concentration Account Bank, each bank where a
Disbursement Account is
C-1
maintained and all other Relationship Banks, shall have entered into tri-party
blocked account agreements with Agent, for the benefit of itself and Lenders,
and Borrower and Subsidiaries thereof, as applicable, in form and substance
reasonably acceptable to Agent, which shall become operative on or prior to the
Closing Date. Each such blocked account agreement shall provide, among other
things, that (i) all Collections deposited in account and proceeds thereof
deposited in the applicable Blocked Account or Concentration Account are held by
such bank as agent or bailee-in-possession for Agent, on behalf of itself and
Lenders, (ii) the bank executing such agreement has no rights of setoff or
recoupment or any other claim against such account, as the case may be, other
than for payment of its service fees and other charges directly related to the
administration of such account and for returned checks or other items of
payment, and (iii) from and after the Closing Date (A) with respect to the banks
at which a Blocked Account of Borrower is maintained, such bank agrees to
forward immediately all amounts in each such Blocked Account (other than the
Export-Related Blocked Account) to Borrower's Concentration Account Bank and to
commence the process of daily sweeps from such Blocked Account (other than the
Export-Related Blocked Account) into the Concentration Account (or if no
Concentration Account has been established directly to the Collection Account),
(B) with respect to the Blocked Account established at Royal Bank of Canada
bearing Account Number ▇▇▇-▇▇▇-▇ (the "AET Canada Account"), such bank agrees
that at any time following three business days after Agent delivers an
activation notice thereunder (which activation notice may be given by Agent at
any time at which a Default or Event of Default has occurred and is continuing),
to forward immediately all amounts in the AET Canada Account and, to the extent
requested by Agent, the Disbursement Accounts of AET Canada to a Blocked Account
of Borrower (or, if established, the Concentration Account) or to such other
account designated by Agent, and (C) with respect to each Concentration Account
Bank and the Export-Related Account Bank, such bank agrees to immediately
forward all amounts received in the Concentration Account or the Export-Related
Blocked Account, respectively, to the Collection Account through daily sweeps
from such Concentration Account or Export-Related Blocked Account, as
applicable, into the Collection Account. Borrower and AET Canada shall transfer
or cause to be transferred prior to the end of each business day from the AET
Canada Account and/or the Disbursement Accounts of AET Canada the aggregate
balance in (or held for the benefit of) AET Canada in the AET Canada Account and
such Disbursement Accounts in excess of CDN$3,000,000 to a Blocked Account of
Borrower (or, if established, the Concentration Account).
(d) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace any Concentration
Account or any Disbursement Account; provided, that (i) Agent shall have
consented in writing in advance to the opening of such account or Lock Box with
the relevant bank and (ii) prior to the time of the opening of such account or
Lock Box, Borrower or its Subsidiaries, as applicable, and such bank shall have
executed and delivered to Agent a tri-party blocked account agreement, in form
and substance reasonably satisfactory to Agent. Borrower shall close any of
their accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days following notice
from Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts or Lock Boxes
C-2
of the bank holding such accounts or Agent's liability under any tri-party
blocked account agreement with such bank is no longer acceptable in Agent's
reasonable judgment.
(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the
Concentration Accounts shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 and shall be applied (and
allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Borrower shall and shall cause its Subsidiaries, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
payable to or for the benefit of Borrower or any of its Subsidiaries, and (ii)
within 1 Business Day after receipt by Borrower, any Subsidiary or any such
Related Person of any checks, cash or other items of payment, deposit the same
into a Blocked Account of Borrower or Subsidiary, as applicable (and with
respect to any payments in respect of Export-Related Accounts, the
Export-Related Blocked Account). Borrower, each Subsidiary and each Related
Person thereof acknowledges and agrees that all cash, checks or other items of
payment constituting proceeds of Collateral are part of the Collateral. All
proceeds of the sale or other disposition of any Collateral, shall be deposited
directly into the applicable Blocked Accounts.
(h) Borrower shall not and shall not permit or cause its Subsidiaries
to establish or permit to exist any bank accounts other than (i) the Blocked
Accounts, the Concentration Accounts, and the Disbursement Accounts, and (ii)
the other Accounts listed on Disclosure Schedule (3.19) provided that as the
close of business for any two consecutive Business Days amounts on deposit in
such Accounts shall not exceed the following: (A) all Accounts of AET Limited-
$150,000, (B) the Borrower's Account at First Virginia Bank-$300,000, (C) the
Borrower's Account at Old National Bank-$600,000, (D) all other Disbursement
Accounts of the Borrower-$300,000, (E) Borrower's government account with
▇▇▇▇▇▇▇ ▇▇▇▇▇-$75,000, (F) Borrower's account at JPMorgan Chase Bank holding
$150,000 as cash collateral for the outstanding letter of credit no. PG634548
issued by JPMorgan Chase Bank and (G) Borrower's inactive account with UBS
(#05520 21)-$0. Borrower shall not, and shall not cause or permit any Subsidiary
thereof to accumulate or maintain cash in Disbursement Accounts or payroll
accounts as of any date of determination in excess of checks outstanding against
such accounts as of that date and amounts necessary to meet minimum balance
requirements.
C-3
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form and substance
satisfactory to Agent.
B. Revolving Notes, Export-Related Loan Note, Swing Line Notes and
Term Notes. Duly executed originals of the Revolving Notes, Export-Related Loan
Note, Swing Line Notes and Term Notes for each applicable Lender, dated the
Closing Date.
C. Security Agreement. Duly executed originals of the Security
Agreement, dated the Closing Date, and all instruments, documents and agreements
executed pursuant thereto.
D. Insurance. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements,
as requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings.
(a) Evidence satisfactory to Agent that Agent (for the benefit of
itself and Lenders) has a valid and perfected first priority security interest
in the Collateral, including (i) such documents duly executed by each Credit
Party (including financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to the perfection of
Liens) as Agent may request in order to perfect its security interests in the
Collateral and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together with copies
of such financing statements, none of which shall cover the Collateral, except
for those relating to the Prior Lender Obligations (all of which shall be
terminated on the Closing Date).
(b) Evidence satisfactory to Agent, including copies, of all UCC-1
and other financing statements filed in favor of any Credit Party with respect
to each location, if any, at which Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by Borrower, (ii) all securities
intermediaries with respect to all securities accounts and securities
entitlements of Borrower, and (iii) all futures commission agents and
D-1
clearing houses with respect to all commodities contracts and commodities
accounts held by Borrower.
F. Payoff Letter; Termination Statements. Copies of duly executed
payoff letters or other agreements, in form and substance reasonably
satisfactory to Agent, by and between the parties to the Prior Lenders' loan
documents evidencing repayment in full of all Prior Lender Obligations, together
with (a) UCC-3 or other appropriate termination statements, in form and
substance satisfactory to Agent, manually signed by the applicable Prior Lender
releasing all liens of such Prior Lender upon any of the personal property of
each Credit Party, and (b) termination of all blocked account agreements, bank
agency agreements or other similar agreements or arrangements or arrangements in
favor of each Prior Lender or relating to the Prior Lender Obligations.
G. Intellectual Property Security Agreements. Duly executed originals
of Intellectual Property Security Agreement, dated the Closing Date and signed
by each Credit Party which owns Trademarks, Copyrights and/or Patents, as
applicable, all in form and substance reasonably satisfactory to Agent, together
with all instruments, documents and agreements executed pursuant thereto.
H. [Intentionally Omitted]
I. Subsidiary Guaranties. Guaranties executed by and each direct and
indirect Subsidiary of Borrower in favor of Agent, for the benefit of Lenders.
J. Initial Borrowing Base Certificate. Duly executed originals of an
initial Borrowing Base Certificate from Borrower, dated the Closing Date,
reflecting information concerning Eligible Accounts, Eligible Inventory and
Eligible Export-Related Accounts of Borrower and, as applicable, AET Canada as
of a date acceptable to Agent.
K. Initial Notice of Revolving Credit Advance. Duly executed originals
of a Notice of Revolving Credit Advance, dated the Closing Date, with respect to
the initial Revolving Credit Advance to be requested by Borrower on the Closing
Date.
L. Letter of Direction. Duly executed originals of a letter of
direction from Borrower addressed to Agent, on behalf of itself and Lenders,
with respect to the disbursement on the Closing Date of the proceeds of the Term
Loan and the initial Revolving Credit Advance.
M. Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex C, together with copies
of duly executed tri-party blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Annex C.
N. Charter and Good Standing. For each Credit Party, such Person's (a)
charter and all amendments thereto, (b) good standing certificates in its state
of incorporation and (c) good standing certificates and certificates of
qualification to conduct business in each
D-2
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, each dated a recent date prior to the
Closing Date and certified by the applicable Secretary of State or other
authorized Governmental Authority.
O. Bylaws and Resolutions. For each Credit Party, (a) such Person's
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors, approving and authorizing the execution, delivery
and performance of the Loan Documents to which such Person is a party and the
transactions to be consummated in connection therewith, each certified as of the
Closing Date by such Person's corporate secretary or an assistant secretary as
being in full force and effect without any modification or amendment.
P. Incumbency Certificates. For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
Q. Opinions of Counsel. Duly executed originals of opinions of Ropes &
▇▇▇▇ LLP, ▇▇▇▇▇▇▇▇▇, Goeller, Modesitt, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP and ▇▇▇▇▇▇
▇▇▇▇▇▇▇, counsel for the Credit Parties, together with any other local counsel
opinions reasonably requested by Agent, each in form and substance reasonably
satisfactory to Agent and its counsel, dated the Closing Date.
R. Pledge Agreements. Duly executed originals of each of the Pledge
Agreements accompanied by (as applicable) (a) share certificates representing
all of the outstanding Stock being pledged pursuant to such Pledge Agreement and
stock powers for such share certificates executed in blank and (b) the original
Intercompany Notes and other instruments evidencing Indebtedness being pledged
pursuant to such Pledge Agreement, duly endorsed in blank.
S. Accountants' Letters. A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agent and Lenders in accordance with
Section 4.2.
T. Solvency Certificate. The Credit Parties shall deliver to Agent for
the benefit of Lenders a solvency certificate from Borrower's Principal
Financial Officer, reasonably satisfactory in form and substance to Agent.
U. Fee Letter. Duly executed originals of the GE Capital Fee Letter.
V. Officer's Certificate. Agent shall have received duly executed
originals of a certificate of the President and Principal Financial Officer of
Borrower, dated the Closing Date, stating that, since September 30, 2002 (a) no
event or condition has occurred or is existing which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect; (b)
there has been no material adverse change in the industry in which any Credit
Party operates; (c) no Litigation has been commenced which, if successful, would
have a Material Adverse Effect or could challenge any of the transactions
contemplated by the Agreement and the other Loan Documents; (d) there have been
no Restricted Payments made by any Credit
D-3
Party; and (e) there has been no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of the Credit Parties, taken as a
whole.
W. Waivers. Agent, on behalf of Lenders, shall have received landlord
waivers and consents, bailee letters and mortgagee agreements in form and
substance reasonably satisfactory to Agent, in each case as required pursuant to
Section 5.9.
X. Mortgages. Mortgages covering the properties located in Terre
Haute, Indiana and Varennes Canada (the "Mortgaged Properties") together with:
(a) title insurance policies, current as-built surveys, zoning letters and
certificates of occupancy, in each case reasonably satisfactory in form and
substance to Agent, in its sole discretion; (b) evidence that counterparts of
the Mortgages have been recorded in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable first
priority lien (subject to Permitted Encumbrances) on each Mortgaged Property in
favor of Agent for the benefit of itself and Lenders (or in favor of such other
trustee as may be required or desired under local law); and (c) an opinion of
counsel in each state in which any Mortgaged Property is located in form and
substance and from counsel reasonably satisfactory to Agent.
Y. Subordination and Intercreditor Agreements. Agent and Lenders
shall have received any and all subordination and/or intercreditor agreements,
all in form and substance reasonably satisfactory to Agent, in its sole
discretion, as Agent shall have deemed necessary or appropriate with respect to
any Indebtedness of any Credit Party.
Z. Environmental Reports. Agent shall have received Phase I
Environmental Site Assessment Reports, consistent with American Society for
Testing and Materials (ASTM) Standard E 1527-94 and applicable state
requirements, on all of the Mortgaged Properties, dated no more than 6 months
prior to the Closing Date, prepared by environmental engineers reasonably
satisfactory to Agent, all in form and substance reasonably satisfactory to
Agent, in its sole discretion; and Agent shall have further received such
environmental review and audit reports, including Phase II reports, with respect
to the Real Estate of any Credit Party as Agent shall have requested, and Agent
shall be satisfied, in its sole discretion, with the contents of all such
environmental reports. Agent shall have received letters executed by the
environmental firms preparing such environmental reports, in form and substance
reasonably satisfactory to Agent, authorizing Agent and Lenders to rely on such
reports.
AA. Appraisals. Agent shall have received appraisals as to all
Equipment and as to each parcel of Real Estate owned by each Credit Party, each
of which shall be in form and substance reasonably satisfactory to Agent.
BB. Audited Financials; Financial Condition. Agent shall have received
the Financial Statements, Projections and other materials set forth in Section
3.4, certified by Borrower's Principal Financial Officer, in each case in form
and substance reasonably satisfactory to Agent (including, without limitation,
that the EBITDA for the twelve month period ending August 31, 2003 is not less
than $35,000,000), and Agent shall be satisfied, in its sole discretion, with
all of the foregoing. Agent shall have further received a certificate of the
President and/or the Principal Financial Officer of Borrower, based on such Pro
Forma and
D-4
Projections, to the effect that (a) Borrower will be Solvent upon the
consummation of the transactions contemplated herein; (b) the Pro Forma fairly
presents the financial condition of Borrower as of the date thereof after giving
effect to the transactions contemplated by the Loan Documents; and (c) the
Projections are based upon estimates and assumptions stated therein, all of
which Borrower believes to be reasonable and fair in light of current conditions
and current facts known to Borrower and, as of the Closing Date, reflect such
Borrower's good faith and reasonable estimates of its future financial
performance and of the other information projected therein for the period set
forth therein.
CC. Master Standby Agreement. A Master Agreement for Standby Letters
of Credit among Borrower and GE Capital.
DD. Master Documentary Agreement. A Master Agreement for Documentary
Letters of Credit among Borrower and GE Capital.
EE. Other Documents. Such other certificates, documents and agreements
respecting any Credit Party as Agent may, in its sole discretion, request.
D-5
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to Agent (with
sufficient copies for each Lender) and Agent shall forward to each Lender, as
indicated, the following:
(a) Monthly Financials. To Agent, within 30 days after the end of each
Fiscal Month, financial information regarding Borrower and its Subsidiaries,
certified by the Principal Financial Officer of Borrower, consisting of
consolidated (i) unaudited balance sheets as of the close of such Fiscal Month
and the related statements of income and cash flows for that portion of the
Fiscal Year ending as of the close of such Fiscal Month; (ii) unaudited
statements of income and cash flows for such Fiscal Month, setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments); and (iii) a
summary of the outstanding balance of all Intercompany Notes as of the last day
of that Fiscal Month. Such financial information shall be accompanied by the
certification of the Principal Financial Officer of Borrower that (1) such
financial information presents fairly in all material respects in accordance
with GAAP (subject to normal year-end adjustments) the financial position and
results of operations of Borrower and its Subsidiaries, on a consolidated basis,
in each case as at the end of such Fiscal Month and for that portion of the
Fiscal Year then ended and (2) any other information presented is true, correct
and complete in all material respects and that to his knowledge there was no
Default or Event of Default in existence as of such time or, if a Default or
Event of Default has occurred and is continuing, describing the nature thereof
and all efforts undertaken to cure such Default or Event of Default.
(b) Quarterly Financials. To Agent, within 45 days after the end of
each Fiscal Quarter, consolidated financial information regarding Borrower and
its Subsidiaries, certified by the Principal Financial Officer of Borrower,
including (i) unaudited balance sheets as of the close of such Fiscal Quarter
(including a balance sheet for each Credit Party) and the related statements of
income and cash flow for that portion of the Fiscal Year ending as of the close
of such Fiscal Quarter and (ii) unaudited statements of income and cash flows
for such Fiscal Quarter, in each case setting forth in comparative form the
figures for the corresponding period in the prior year and the figures contained
in the Projections for such Fiscal Year, all prepared in accordance with GAAP
(subject to normal year-end adjustments). Such financial information shall be
accompanied by (A) a statement in reasonable detail (each, a "Compliance
Certificate" showing the calculations used in determining compliance with each
of the Financial Covenants that is tested on a quarterly basis and (B) the
certification of the Principal Financial Officer of Borrower that (i) such
financial information presents fairly in all material respects in accordance
with GAAP (subject to normal year-end adjustments) the financial position,
results of operations and statements of cash flows of Borrower and its
Subsidiaries, on a consolidated basis, as at the end of such Fiscal Quarter and
for that portion of the Fiscal Year then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of
E-1
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default. In addition,
Borrower shall deliver to Agent, within 45 days after the end of each Fiscal
Quarter, a management discussion and analysis that includes a comparison to
budget for that Fiscal Quarter and a comparison of performance for that Fiscal
Quarter to the corresponding period in the prior year.
(c) Operating Plan. To Agent, as soon as available, but not later than
30 days prior to the beginning of each Fiscal Year, an annual operating plan for
Borrower for such Fiscal Year, on a consolidated and consolidating basis,
prepared in good faith and delivered to the Board of Directors of Borrower and
as soon as available but not later than December 31 of each Fiscal Year, an
annual operating plan for Borrower, on a consolidated and consolidating basis
approved by the Board of Directors of Borrower, for such Fiscal Year, which, in
each case, (i) includes a statement of all of the material assumptions on which
such plan is based, (ii) includes monthly balance sheets, income statements and
statements of cash flows for the following year and (iii) integrates sales,
gross profits, operating expenses, operating profit, cash flow projections and
Borrowing Availability and Export-Related Borrowing Availability projections,
all prepared on the same basis and in similar detail as that on which operating
results are reported (and in the case of cash flow projections, representing
management's good faith estimates of future financial performance based on
historical performance), and including plans for personnel, Capital Expenditures
and facilities.
(d) Annual Audited Financials. To Agent, within 90 days after the end
of each Fiscal Year, audited Financial Statements for Borrower and its
Subsidiaries on a consolidated basis, consisting of balance sheets and
statements of income and retained earnings and cash flows, setting forth in
comparative form in each case the figures for the previous Fiscal Year, which
Financial Statements shall be prepared in accordance with GAAP and certified
without qualification, by Deloitte and Touche, LLP or another independent
certified public accounting firm of national standing or otherwise reasonably
acceptable to Agent. Such Financial Statements shall be accompanied by (i) a
statement prepared by the Principal Financial Officer in reasonable detail
showing the calculations used in determining compliance with each of the
Financial Covenants, (ii) a report from such accounting firm to the effect that,
in connection with their audit examination, nothing has come to their attention
to cause them to believe that a Default or Event of Default has occurred (or
specifying those Defaults and Events of Default that they became aware of), it
being understood that such audit examination extended only to accounting matters
and that no special investigation was made with respect to the existence of
Defaults or Events of Default, (iii) the annual letters to such accountants in
connection with their audit examination detailing contingent liabilities and
material litigation matters, and (iv) the certification of the President or
Principal Financial Officer of Borrower that all such Financial Statements
present fairly in all material respects in accordance with GAAP the financial
position, results of operations and statements of cash flows of Borrower and its
Subsidiaries on a consolidated basis, as at the end of such Fiscal Year and for
the period then ended, and that to his knowledge there was no Default or Event
of Default in existence as of such time or, if a Default or Event of Default has
occurred and is continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default.
E-2
(e) Management Letters. To Agent, within 5 Business Days after receipt
thereof by any Credit Party, copies of all management letters, exception reports
or similar letters or reports received by such Credit Party from its independent
certified public accountants.
(f) Default Notices. To Agent, as soon as practicable, and in any
event within 5 Business Days after an executive officer of Borrower has actual
knowledge of the existence of any Default, Event of Default or other event that
has had a Material Adverse Effect, telephonic or telecopied notice specifying
the nature of such Default or Event of Default or other event, including the
anticipated effect thereof, which notice, if given telephonically, shall be
promptly confirmed in writing on the next Business Day.
(g) SEC Filings and Press Releases. To Agent, promptly upon their
becoming available, copies of: (i) all Financial Statements, reports, notices
and proxy statements made publicly available by any Credit Party to its security
holders; (ii) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by any Credit Party with any securities exchange
or with the Securities and Exchange Commission or any governmental or private
regulatory authority; and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material changes or
developments in the business of any such Person.
(h) Senior Note Documents and Equity Notices. To Agent, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to the Senior Note Documents or Stock of such Person,
and, within 2 Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any Senior Note Document,
notice of such event of default.
(i) Supplemental Schedules. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), supplements to each Disclosure Schedule hereto, or any representation
herein or in any other Loan Document, with respect to any matter hereafter
arising that, if existing or occurring at the date of this Agreement, would have
been required to be set forth or described in such Disclosure Schedule or as an
exception to such representation or that is necessary to correct any information
in such Disclosure Schedule or representation which has been rendered inaccurate
thereby (and, in the case of any supplements to any Disclosure Schedule, such
Disclosure Schedule shall be appropriately marked to show the changes made
therein); provided that (a) no such supplement to any such Disclosure Schedule
or representation shall amend, supplement or otherwise modify the term
"Disclosure Schedule" as used herein or any representation with respect thereto,
or be or be deemed a waiver of any Default or Event of Default resulting from
the matters disclosed therein, except as consented to by Agent and Requisite
Lenders in writing, and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.
(j) Litigation. To Agent in writing, promptly upon obtaining knowledge
thereof, notice of any Litigation commenced or threatened in writing against any
Credit Party that (i) seeks damages in excess of $100,000, (ii) seeks injunctive
relief, (iii) is asserted or
E-3
instituted against any Plan, its fiduciaries or its assets or against any Credit
Party or ERISA Affiliate in connection with any Plan, (iv) alleges criminal
misconduct by any Credit Party, (v) alleges the violation of any law regarding,
or seeks remedies in connection with, any Environmental Liabilities or (vi)
involves any product recall.
(k) Insurance Notices. To Agent, disclosure of losses or casualties
required by Section 5.4.
(l) Lease Default Notices. To Agent, within 2 Business Days after
receipt thereof, copies of (i) any and all default notices received under or
with respect to any leased location or public warehouse where Collateral is
located, and (ii) such other notices or documents as Agent may reasonably
request.
(m) Lease Amendments. To Agent, within 2 Business Days after receipt
thereof, copies of all material amendments to any real estate leases.
(n) Other Documents. To Agent and Lenders, such other financial and
other information respecting any Credit Party's business or financial condition
as Agent or any Lender shall from time to time reasonably request.
E-4
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in any event no less frequently
than 10 Business Days after the end of each Fiscal Month (together with a copy
of all or any part of the following reports requested by any Lender in writing
after the Closing Date), each of the following reports, each of which shall be
prepared by Borrower as of the last day of the immediately preceding Fiscal
Month or the date 2 days prior to the date of any such request:
(i) a Borrowing Base Certificate with respect to Borrower and
AET Canada, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
(ii) with respect to Borrower and AET Canada, a summary of
Inventory by location and type with a supporting perpetual Inventory
report, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
and
(iii) with respect to Borrower and AET Canada, a monthly trial
balance showing Accounts outstanding aged by due date as follows: 1 to 30
days past due, 31 to 60 days past due, 61 to 90 days and 91 days or more
past due, accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion.
(b) To Agent, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E:
(i) a reconciliation of the Accounts trial balance of Borrower
to Borrower's most recent Borrowing Base Certificate, general ledger and
monthly Financial Statements delivered pursuant to Annex E, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(ii) a reconciliation of the perpetual inventory by location of
Borrower to Borrower's most recent Borrowing Base Certificate, general
ledger and monthly Financial Statements delivered pursuant to Annex E, in
each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion; and
(iii) a reconciliation of the outstanding Loans as set forth in
the monthly Loan Account statement provided by Agent to Borrower's general
ledger and monthly Financial Statements delivered pursuant to Annex E, in
each case accompanied
F-1
such supporting detail and documentation as shall be requested by Agent in
its reasonable discretion;
(d) To Agent, at the time of delivery of each of the quarterly
Financial Statements delivered pursuant to Annex E, an aging of accounts
payable, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;
(e) To Agent, at the time of delivery of each of the annual Financial
Statements delivered pursuant to Annex E, (i) a listing of government contracts
of Borrower subject to the Federal Assignment of Claims Act of 1940; and (ii) a
list of any applications for the registration of any Patent, Trademark or
Copyright filed by any Credit Party with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
the prior Fiscal Quarter;
(f) Borrower, at its own expense, shall deliver to Agent the results
of each physical verification, if any, that Borrower or any of its Subsidiaries
may in their discretion have made, or caused any other Person to have made on
their behalf, of all or any portion of their Inventory (and, if a Default or an
Event of Default has occurred and is continuing, Borrower shall, upon the
request of Agent, conduct, and deliver the results of, such physical
verifications as Agent may require);
(g) Borrower, at its own expense, shall deliver to Agent such
appraisals of its assets as Agent may request such appraisals to be conducted by
an appraiser, and in form and substance reasonably satisfactory to Agent;
provided that Borrower shall not be liable for the cost of more than one
appraisal per year unless there exists a Default or an Event of Default; and
(h) Such other reports, statements and reconciliations with respect
to the Borrowing Base, Collateral or Obligations of any or all Credit Parties as
Agent shall from time to time request in its reasonable discretion.
F-2
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Maximum Capital Expenditures. Borrower and its Subsidiaries on a
consolidated basis shall not make Capital Expenditures during any Fiscal Year
that exceed in the aggregate the amounts set forth opposite each of such Fiscal
Year:
Fiscal Year ending Maximum Capital Expenditures
------------------ ----------------------------
September 30, 2003 $14,229,000
September 30, 2004 8,700,000
September 30, 2005
and each Fiscal Year thereafter 12,800,000
provided, however, that, if the Fixed Charge Coverage Ratio for the 12-month
period ending at the end of any Fiscal Year is greater than 1.20, the maximum
amount set forth above for the immediately succeeding Fiscal Year shall be
increased to $20,000,000; and provided, however, that, if the Fixed Charge
Coverage Ratio for the 12-month period ending at the end of any Fiscal Year (the
"Prior Fiscal Year") is greater than 1.00, the amount of permitted Capital
Expenditures referenced above will be increased in the immediately succeeding
Fiscal Year by the positive amount equal to the difference obtained by taking
the Capital Expenditures limit specified above for such Prior Fiscal Year minus
the actual amount of any Capital Expenditures expended during such Prior Fiscal
Year (the "Carry Over Amount"), and for purposes of measuring compliance
herewith, the Carry Over Amount shall be deemed to be the last amount spent on
Capital Expenditures in such immediately succeeding Fiscal Year.
G-1
(b) Minimum Fixed Charge Coverage Ratio. Borrower and its
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter set forth below, a Fixed Charge Coverage Ratio for the 12-month period
then ended of not less than the following:
Fiscal Quarter ending Minimum Fixed Charge Coverage Ratio
--------------------- -----------------------------------
September 30, 2003 0.65
December 31, 2003 0.55
March 31, 2004 0.60
June 30, 2004 0.70
September 30, 2004 1.00
December 31, 2004 1.05
March 31, 2005 1.10
June 30, 2005 1.15
September 30, 2005
and each Fiscal Quarter ending thereafter 1.20
(c) Minimum EBITDA. Borrower and its Subsidiaries on a consolidated
basis shall have, at the end of each Fiscal Quarter set forth below, EBITDA for
the 12-month period then ended of not less than the following:
Fiscal Quarter ending Minimum EBITDA
--------------------- --------------
September 30, 2003 $37,125,000
December 31, 2003 35,628,000
March 31, 2004 36,445,000
June 30, 2004 38,879,000
September 30, 2004 49,122,000
December 31, 2004 54,343,000
March 31, 2005 57,495,000
June 30, 2005 60,689,000
September 30, 2005
and each Fiscal Quarter ending thereafter 62,000,000
(d) Minimum Borrowing Availability. Borrower shall at all times
through June 30, 2004 have Borrowing Availability of at least $5,000,000.
Unless otherwise specifically provided herein, any accounting term
used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial
G-2
covenants, standards or terms used in the Agreement or any other Loan Document,
then Borrower, Agent and Lenders agree to enter into negotiations in order to
amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by Borrower's certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrower and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrower and Requisite
Lenders cannot agree upon the required amendments within 30 days following the
date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex G shall be deemed to have occurred as of any date of determination by
Agent or as of the last day of any specified measurement period, regardless of
when the Financial Statements reflecting such breach are delivered to Agent.
G-3
ANNEX H (Section 9.9(a))
to
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Deutsche Bank Trust Company Americas
New York, New York
ABA #: ▇▇▇▇▇▇▇▇▇
Account #: ▇▇▇▇▇▇▇▇
Account Name: GECC/CAF Depository
Reference: Applied Extrusion Technologies
H-1
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇, Applied Extrusion Technologies, Inc, Account
Manager
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
and to:
General Electric Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Applied Extrusion Technologies, Inc, Account Manager
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
and, with respect to any Default or Event of Default, to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
and
General Electric Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Counsel - Capital Funding, Inc.
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
and
I-1
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
(B) If to Borrower, at
Applied Extrusion Technologies, Inc.
▇▇ ▇▇▇▇'▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and, with respect to any Default or Event of Default, to:
Ropes & ▇▇▇▇ LLP
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I-2
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
Lender(s)
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Revolving Loan Commitment
(including a Swing Line Commitment
of $5,000,000 and a Export-Related
Loan Commitment of $5,000,000)
$50,000,000.00 General Electric Capital Corporation
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Term Loan Commitment:
$50,000,000.00 General Electric Capital Corporation
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J-1