Exhibit 10.1
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APPLIED EXTRUSION TECHNOLOGIES, INC.
CREDIT AGREEMENT
Dated as of April 7, 1994
as Amended and Restated as of January 21, 2003
JPMORGAN CHASE BANK
as Administrative Agent
Collateral Agent and
Issuing Bank
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▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇ BANK
as Sole Book Manager and Sole Lead Arranger
▇.▇. ▇▇▇▇▇▇ BUSINESS CREDIT CORPORATION
as Advisor
TABLE OF CONTENTS
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ARTICLE 1
Definitions and Accounting Matters
Section 1.01. Certain Defined Terms ................................................... 1
Section 1.02. Accounting Terms and Determinations ..................................... 24
Section 1.03. Types of Loans .......................................................... 25
ARTICLE 2
The Credits
Section 2.01. Loans and Letters of Credit ............................................. 25
Section 2.02. Funding of Loans ........................................................ 26
Section 2.03. Principal Repayment of Loans ............................................ 27
Section 2.04. Mandatory Prepayments and Cover ......................................... 28
Section 2.05. Interest ................................................................ 29
Section 2.06. Interest Periods ........................................................ 31
Section 2.07. Conversions ............................................................. 31
Section 2.08. Voluntary Prepayments ................................................... 32
Section 2.09. Uncollected Funds Compensation .......................................... 32
Section 2.10. Termination or Reduction of Working Capital Commitments ................. 32
Section 2.11. Certain Notices ......................................................... 33
Section 2.12. Calculation of Borrowing Base ........................................... 33
Section 2.13. Letters of Credit ....................................................... 33
Section 2.14. Settlement Between Administrative Agent and Lenders ..................... 36
Section 2.15. Fees .................................................................... 36
Section 2.16. Payments Generally ...................................................... 37
Section 2.17. Commitment Increases .................................................... 38
Section 2.18. Use of Proceeds ......................................................... 39
Section 2.19. Exchange Rate for Canadian Dollars ...................................... 39
ARTICLE 3
Payments; Pro Rata Treatment; Sharing of Payments, Etc.
Section 3.01. Pro Rata Treatment ...................................................... 39
Section 3.02. Non-receipt of Funds by the Administrative Agent ........................ 40
Section 3.03. Sharing of Payments, Etc ................................................ 40
Section 3.04. Several Obligations ..................................................... 41
Section 3.05. Taxes ................................................................... 41
ARTICLE 4
Yield Protection and Illegality
Section 4.01. Additional Costs ........................................................ 44
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Section 4.02. Limitation on Types of Loans .................................... 45
Section 4.03. Illegality ...................................................... 46
Section 4.04. Substitute Base Rate Loans ...................................... 46
Section 4.05. Compensation .................................................... 46
Section 4.06. Additional Costs in Respect of Letters of Credit ................ 47
Section 4.07. Capital Adequacy ................................................ 47
ARTICLE 5
Conditions
Section 5.01. Phase I Effective Date .......................................... 48
Section 5.02. Phase II Effective Date ......................................... 50
Section 5.03. Loans and Letters of Credit ..................................... 51
ARTICLE 6
Representations and Warranties
Section 6.01. Corporate Existence ............................................. 52
Section 6.02. Information ..................................................... 52
Section 6.03. Litigation ...................................................... 53
Section 6.04. No Breach ....................................................... 53
Section 6.05. Corporate Action ................................................ 54
Section 6.06. Approvals ....................................................... 54
Section 6.07. Regulations U and X ............................................. 54
Section 6.08. ERISA ........................................................... 54
Section 6.09. Taxes ........................................................... 55
Section 6.10. Subsidiaries; Agreements ........................................ 55
Section 6.11. Investment Company Act .......................................... 55
Section 6.12. Public Utility Holding Company Act .............................. 55
Section 6.13. Ownership and Use of Properties ................................. 56
Section 6.14. Environmental Matters ........................................... 56
Section 6.15. Bank Accounts ................................................... 59
ARTICLE 7
Covenants
Section 7.01. Information ..................................................... 59
Section 7.02. Taxes and Claims ................................................ 63
Section 7.03. Insurance ....................................................... 64
Section 7.04. Maintenance of Existence; Conduct of Business ................... 65
Section 7.05. Maintenance of and Access to Properties ......................... 65
Section 7.06. Compliance with Applicable Laws ................................. 65
Section 7.07. Litigation ...................................................... 65
Section 7.08. Indebtedness .................................................... 66
Section 7.09. Minimum EBITDA .................................................. 66
Section 7.10. Mergers, Asset Dispositions, Acquisitions, Etc .................. 67
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Section 7.11. Liens .............................................................. 68
Section 7.12. Investments ........................................................ 68
Section 7.13. Restricted Payments ................................................ 69
Section 7.14. Transactions with Affiliates ....................................... 69
Section 7.15. Lines of Business .................................................. 70
Section 7.16. Capital Expenditures; Additional Property .......................... 70
Section 7.17. Modification of Other Agreements ................................... 70
Section 7.18. Bank Accounts; Cash and Liquid Investments ......................... 70
Section 7.19. Environmental Matters .............................................. 71
Section 7.20. Senior Notes ....................................................... 71
Section 7.21. Certain Obligations Respecting Guaranties and Collateral ........... 71
Section 7.22. Field Audits; Inventory Appraisals ................................. 73
Section 7.23. Deposits into Collateral Account ................................... 73
Section 7.24. Lockbox Operation .................................................. 73
ARTICLE 8
Defaults
Section 8.01. Events of Default .................................................. 74
Section 8.02. Collateral Account ................................................. 77
ARTICLE 9
The Administrative Agent
Section 9.01. Appointment, Powers and Immunities ................................. 77
Section 9.02. Reliance by Administrative Agent ................................... 78
Section 9.03. Defaults ........................................................... 78
Section 9.04. Rights as a Lender ................................................. 79
Section 9.05. Indemnification .................................................... 79
Section 9.06. Non-reliance on Administrative Agent and Other Lenders ............. 79
Section 9.07. Failure to Act ..................................................... 80
Section 9.08. Resignation or Removal of Administrative Agent ..................... 80
Section 9.09. Collateral Sub-Agents .............................................. 81
ARTICLE 10
Miscellaneous
Section 10.01. Waiver ............................................................ 81
Section 10.02. Notices ........................................................... 81
Section 10.03. Expenses, Etc ..................................................... 81
Section 10.04. Indemnification ................................................... 82
Section 10.05. Amendments, Etc ................................................... 82
Section 10.06. Successors and Assigns ............................................ 83
Section 10.07. Confidentiality ................................................... 85
Section 10.08. Survival .......................................................... 86
Section 10.09. Captions .......................................................... 86
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Section 10.10. Counterparts; Integration ................................................... 86
Section 10.11. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL ............. 86
Section 10.12. Effectiveness ............................................................... 87
ARTICLE 11
Amendment of Security Agreement
Section 11.01. Amendment to Definitions .................................................... 87
Section 11.02. Amendment to Section 3 ...................................................... 89
Section 11.03. Amendment to Section 4 ...................................................... 90
Section 11.04. Amendment to Section 5 ...................................................... 90
Section 11.05. Amendment to Section 9 ...................................................... 97
Section 11.06. Miscellaneous Amendments .................................................... 98
ARTICLE 12
Amendment of Pledge Agreement
Section 12.01. Amendment to Definitions .................................................... 99
Section 12.02. Amendment to Section 13 ..................................................... 100
Section 12.03. Miscellaneous Amendments .................................................... 102
Schedules
SCHEDULE I - Assigned Agreements
SCHEDULE II - Security Documents
SCHEDULE III - Bank Accounts
SCHEDULE IV - [intentionally omitted]
SCHEDULE V - Investments
SCHEDULE VI - Agreements; Liens
SCHEDULE VII - Environmental Matters
SCHEDULE VIII - Insurance
Exhibits
EXHIBIT A - Form of Assignment and Assumption
EXHIBIT B - Form of Note
EXHIBIT C-1 - Form of Phase I Borrowing Base Certificate
EXHIBIT C-2 - Form of Phase II Borrowing Base Certificate
EXHIBIT D - Form of Opinion of Special Counsel to the Company
EXHIBIT E - [intentionally omitted]
EXHIBIT F - Form of Company Security Agreement
EXHIBIT G - Form of Company Pledge Agreement
EXHIBIT H - Form of Subsidiary Guaranty
EXHIBIT I - Form of Guarantor Acknowledgment
EXHIBIT J - Form of Commitment Acceptance
EXHIBIT K - Form of Weekly Collateral Certificate
AMENDED AND RESTATED CREDIT AGREEMENT
AGREEMENT dated as of April 7, 1994 and amended and restated as of January
21, 2003 among: APPLIED EXTRUSION TECHNOLOGIES, INC., a corporation duly
organized and validly existing under the laws of the State of Delaware (together
with its successors, the "Company"); each of the lenders which is or which may
from time to time become a signatory hereto (individually, together with its
successors, a "Lender" and, collectively, together with their respective
successors, the "Lenders"); and JPMORGAN CHASE BANK, as administrative agent for
the Lenders (in such capacity, together with its successors in such capacity,
the "Administrative Agent").
WHEREAS, the Company is a party to a Credit Agreement (as heretofore
amended, the "Original Agreement") dated as of April 7, 1994, together with each
of the Lenders and JPMorgan Chase Bank, as administrative agent for the Lenders;
WHEREAS, the parties hereto desire to further amend the Original Agreement
to make certain changes thereto; and
WHEREAS, in order to set forth in one document, for the convenience of the
parties, the text of the Original Agreement as heretofore amended and as amended
by the amendments to be made upon the effectiveness hereof, the Original
Agreement as heretofore amended will, upon satisfaction of the conditions set
forth in Section 5.01 hereof, be amended and restated to read in full as set
forth herein;
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01. Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"Administrative Agent" shall have the meaning set forth in the preamble to
this Amended Agreement.
"Affiliate" shall mean, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled by,
such Person and, if such Person is an individual, any member of the immediate
family (including parents, siblings, spouse, children, stepchildren, nephews,
nieces and grandchildren) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean possession, directly or indirectly, of
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), provided that, in any event, any Person which owns
directly or indirectly more than 5% of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
more than 5% of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to control
such corporation or other Person.
"Agreement" shall mean the Amended Agreement, as the same may be modified
and supplemented and in effect from time to time.
"Amended Agreement" shall mean this Credit Agreement dated as of April 7,
1994 and amended and restated as of January 21, 2003 among the Company, the
Lenders and the Administrative Agent.
"Applicable Lending Office" shall mean, for each Lender and for each Type
of Loan or Letter of Credit, the Lending Office of such Lender (or of an
Affiliate of such Lender) designated for such Type of Loan or Letter of Credit
below its name on the signature pages hereof or such other office of such Lender
(or of an Affiliate of such Lender) as such Lender may from time to time specify
to the Administrative Agent and the Company as the office by which its Loans of
such Type or such Letters of Credit are to be made and/or issued and maintained.
"Applicable Leverage Ratio" shall mean, for any day, the ratio, as at the
end of the most recently ended fiscal quarter of the Company for which the
Company has delivered to the Administrative Agent and the Lenders the financial
statements required to be delivered by the Company pursuant to Section 7.01(a),
7.01(b) or 7.01(c), as the case may be, of Funded Indebtedness as at the end of
the four fiscal quarters then ended to EBITDA for such four fiscal quarters;
provided that if the Company shall not have timely delivered any such financial
statements, and the Majority Lenders shall not have agreed otherwise, the
Applicable Leverage Ratio for each day from and including the day on which such
financial statements are required to be delivered to but excluding the day on
which such financial statements are delivered shall be deemed to be greater than
8.75:1.
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"Applicable Margin" shall mean (a) for any day prior to the September
Financials Delivery Date, (i) for Base Rate Loans, 1.25% per annum, and (ii) for
Eurodollar Loans or with respect to any letter of credit fee payable hereunder,
as the case may be, 2.75% per annum and (b) for any day thereafter, with respect
to any Base Rate Loan or Eurodollar Loan, or with respect to any letter of
credit fee payable hereunder, as the case may be, the applicable rate per annum
set forth below under the caption "Base Rate Margin", "Eurodollar Margin" or
"Letter of Credit Fee Rate", as the case may be, based upon the Applicable
Leverage Ratio on such day:
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Base Rate Eurodollar Letter of Credit
Applicable Leverage Ratio: Margin Margin Fee Rate
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*5.75 to 1 1.00% 2.25% 2.25%
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**** 5.75 to 1 and * 7.24 to 1 1.00% 2.50% 2.50%
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**** 7.25 to 1 and * 8.75 to 1 1.25% 2.75% 2.75%
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**8.75 to 1 1.50% 3.00% 3.00%
==================================================================================================
* means less than
** means greater than
**** means greater than or equal to
Notwithstanding the foregoing, the Applicable Margin for trade letters of
credit shall be the greater of (x) the applicable rate per annum set forth above
under "Letter of Credit Fee Rate" less 0.50% per annum and (y) 1.00% per annum.
"Assignment and Assumption" shall mean an assignment and assumption entered
into by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 10.06) and accepted by the Administrative Agent,
in the form of Exhibit A hereto or any other form approved by the Administrative
Agent.
"Assigned Agreements" shall mean, collectively, the agreements listed on
Schedule I hereto, as each such agreement shall, subject to Section 7.17 hereof,
be modified and supplemented and in effect from time to time.
"Available Funds" shall mean all deposits in the Collateral Account which
shall have been made by 2:00 p.m. on a Business Day, or such later time in any
Business Day as the Administrative Agent shall have expressly agreed.
"Bank Product Obligations" shall mean all obligations of the Company or its
Subsidiaries pursuant to and under any Lockbox Agreement or Controlled Account
Agreement and all obligations of the Company or its Subsidiaries pursuant to and
under any cash management service agreement between the Company or any
Subsidiary Guarantor and the Administrative Agent or any Lender.
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"Bankruptcy Code" shall mean the United States Bankruptcy Code, as now
or hereafter in effect, or any successor statute.
"Base Rate" shall mean, with respect to any Base Rate Loan for any day, the
rate per annum equal to the higher as of such day of (i) the Federal Funds Rate
plus 1/2 of 1% and (ii) the Prime Rate. Any change in the Base Rate due to a
change in the Federal Funds Rate or the Prime Rate shall be effective from and
including the effective date of such change in the Federal Funds Rate and the
Prime Rate, respectively.
"Base Rate Loans" shall mean Loans which bear interest at a rate based
upon the Base Rate.
"Basic Documents" shall mean the Financing Documents, the Assigned
Agreements, the Indenture, the Senior Notes and any other agreement governing or
providing for the issuance of the Senior Notes.
"Borrowing Base" shall mean the sum in Dollars of the following, determined
as of the date of the Borrowing Base Certificate then most recently delivered to
the Administrative Agent pursuant to Section 7.01(e):
(a) up to 85% of the aggregate amount of Eligible Receivables; plus
(b) solely on and after the Phase II Effective Date, up to the least of
(i) 60% of Eligible Inventory, (ii) 85% of the appraised net orderly liquidation
value of Eligible Inventory based on the most recent inventory appraisal
conducted pursuant to Section 5.02(a) or 7.22 and (iii) $25,000,000; minus
(c) the aggregate amount of reserves established from time to time by the
Administrative Agent for Interest Rate Protection Obligations and Foreign
Exchange Obligations that are secured by the Collateral pursuant to the Security
Documents;
in each case as calculated by the Administrative Agent from time to time in
accordance with Section 2.12; provided that the Administrative Agent, in its
reasonable discretion, may on three Business Days prior written notice to the
Company from time to time adjust the Borrowing Base by reducing the advance
rates for Eligible Receivables or Eligible Inventory or by setting up such
reserves or other reductions in the amount of the Borrowing Base as the
Administrative Agent deems appropriate in its reasonable credit judgment from
time to time. Any such adjustment shall not require the consent of the Company,
any Subsidiary Guarantor or any Lender.
"Borrowing Base Certificate" shall mean a certificate, duly executed by a
Senior Officer, appropriately completed and in substantially the form of Exhibit
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C-1 hereto (if delivered on or after the Phase II Effective Date) or Exhibit C-2
hereto (if delivered prior to the Phase II Effective Date).
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in New York City and, if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, a conversion of or into, or an Interest Period for, a Eurodollar Loan or a
notice by the Company with respect to any such borrowing, payment, prepayment,
conversion or Interest Period, which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Canadian Dollars" and "C$" shall mean lawful money of Canada.
"Capital Expenditures" shall mean expenditures in respect of fixed or
capital assets (including, without limitation, spare parts) by the Company or
any of its Subsidiaries, including the capital portion of lease payments made in
respect of Capital Lease Obligations, but excluding expenditures for the
restoration or replacement of fixed assets to the extent financed by the
proceeds of any Property/Business Interruption Insurance Policy. For purposes of
the definition of Fixed Charge Coverage Ratio and Section 7.16, Capital
Expenditures shall be calculated without giving effect to the deemed acquisition
of the ▇▇▇▇▇▇▇▇▇ Lease solely as a result of its amendment or refinancing in
accordance with Section 7.10(g).
"Capital Lease Obligations" shall mean, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Cash Taxes" shall mean, for any period, income taxes paid in cash during
such period.
"Closing Date" shall mean the date of the initial Loans under the Original
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Collateral" shall mean all of the property (including capital stock and
other beneficial interests) in which Liens are purported to be granted under the
Security Documents as security for all Obligations of the Company and the
Subsidiary Guarantors hereunder.
5
"Collateral Account" shall mean any account of the Company maintained at
the Administrative Agent as an account into which all proceeds of Collateral
shall be deposited pursuant to any of the Security Documents or pursuant to any
Lockbox Agreement or Controlled Account Agreement which the Company or any of
its Subsidiaries may enter into.
"Commitment Fee Rate" shall mean (a) for any day prior to the September
Financials Delivery Date, 0.50% per annum, and (b) for any day thereafter, the
applicable rate per annum set forth below, based on Average Facility
Availability on such day:
Average Facility Availability Commitment Fee Rate
----------------------------- -------------------
**$20,000,000 0.50%
***$20,000,000 0.375%
** means greater than
*** means less than or equal to
For the purpose of this definition, the "Average Facility Availability" for
any day shall mean the daily average Facility Availability for the quarter (or
part thereof) ended on the immediately preceding day
Anything in this Agreement to the contrary notwithstanding, after the
occurrence and during the continuance of any Event of Default, the Commitment
Fee Rate shall equal 0.50%.
"Controlled Account" shall mean any deposit or other bank account
maintained by any of the Company or any of its Subsidiaries with (i) the
Administrative Agent, or (ii) any financial institution other than the
Administrative Agent that is the subject of a Controlled Account Agreement in
favor of the Administrative Agent.
"Controlled Account Agreement" shall mean, with respect to any deposit or
other bank account maintained by the Company or any of its Subsidiaries, an
agreement among the Company or such Subsidiary, the depository institution at
which such account is maintained and the Administrative Agent in form and
substance satisfactory to the Administrative Agent that provides for the
financial institution at which such account is maintained to comply with
instructions originated by the Administrative Agent with respect to the funds
from time to time on deposit in such account without further consent of the
Company or such Subsidiary or any other Person.
"Controlled Disbursements Account" shall mean, collectively, any account of
the Company at a financial institution acceptable to the Administrative Agent,
or at the Administrative Agent as a zero balance, cash management account under
controlled disbursement service agreements between the Company
6
and the Administrative Agent or such other financial institution, and through
which all disbursements by the Company and any designated Subsidiaries are made
and settled on a daily basis with no uninvested balance remaining overnight.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company, are treated as a single
employer under Section 414 of the Code.
"▇▇▇▇▇▇▇▇▇ Assets" shall mean the property described in the equipment
schedules to the ▇▇▇▇▇▇▇▇▇ Lease.
"▇▇▇▇▇▇▇▇▇ Lease" shall mean the Equipment Lease Agreement dated as of
December 29, 1997 by and between LaSalle National Leasing Corporation and its
successors and assigns and the Company, as such agreement may be amended or
refinanced in accordance with Section 7.10(g).
"Default" shall mean an Event of Default or an event which with notice or
lapse of time or both would, unless cured or waived, become an Event of Default.
"Dollars" and "$" shall mean lawful money of the United States of America.
"EBITDA" shall mean for any fiscal period, the sum (determined on a
consolidated basis for the Company and its Subsidiaries) of (a) the net income
of the Company and its Subsidiaries for such period computed in accordance with
GAAP, plus (b) Interest Expense for such period as reported on the Company's
consolidated financial statements for such period, plus (c) the income tax
expense of the Company and its Subsidiaries for such period as reported on the
Company's consolidated financial statements for such period, plus (d) the amount
reported on the Company's consolidated financial statements as the depreciation
of the assets of the Company and its Subsidiaries for such period computed in
accordance with GAAP, plus (e) the amount reported on the Company's consolidated
financial statements as the amortization of intangibles assets of the Company
and its Subsidiaries for such period computed in accordance with GAAP, plus (f)
the amount reported on the Company's consolidated financial statements as the
write-down of intangible assets of the Company and its Subsidiaries that consist
of goodwill for such period computed in accordance with GAAP, and plus (g) all
cash and non-cash extraordinary expenses and losses of the Company and its
Subsidiaries for such period computed in accordance with GAAP, minus (h) all
cash and non-cash extraordinary income and gains of the Company and its
Subsidiaries for such period, in each case as such item is used in the
computation of net income of the Company and its Subsidiaries for such period.
7
"Eligible Assignee" shall mean: (a) a Lender; (b) an Affiliate of a Lender;
(c) a commercial bank organized under the laws of the United States, or any
State thereof, and having total assets in excess of $1,000,000,000; (d) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof, and having total assets in excess of
$1,000,000,000; (e) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development ("OECD") or has concluded special lending arrangements with the
International Monetary Fund associated with its General Arrangements to Borrow
or of the Cayman Islands, or a political subdivision of any such country, and
having total assets in excess of $1,000,000,000, so long as such bank is acting
through a branch or agency located in the United States; (f) the central bank of
any country that is a member of the OECD; (g) a finance company, insurance
company or other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business
and has total assets in excess of $1,000,000,000; and (h) any other Person
approved by the Administrative Agent; provided that none of the Company or any
of its Affiliates shall qualify as an Eligible Assignee under this definition.
"Eligible Inventory" shall mean, as at any date of determination thereof,
the value (determined at the lower of cost or market on an average cost basis)
of all raw material and finished goods Inventory owned by (and in the possession
or under the control of) the Company or any Subsidiary Guarantor other than:
(a) Inventory not located in a jurisdiction in the United States of
America or Canada;
(b) Inventory that is not subject to an enforceable, perfected, first
priority Lien in favor of the Administrative Agent;
(c) Inventory that is not located at premises owned or leased by the
Company or a Subsidiary Guarantor;
(d) Inventory located at premises leased by the Company or a Subsidiary
Guarantor from a landlord or warehouseman from which the Administrative Agent
has not received a landlord's or warehouseman's waiver on terms satisfactory to
the Administrative Agent;
(e) Inventory located at premises owned by the Company or a Subsidiary
Guarantor and mortgaged to a mortgagee from which the Administrative Agent has
not received a mortgagee's waiver on terms satisfactory to the Administrative
Agent;
8
(f) (i) work in progress, spare parts, packaging and shipping
materials, catalogues and other promotional materials of any kind or
supplies or (ii) returned or damaged or defective Inventory not eligible
for resale;
(g) slow moving, obsolete or unmerchantable Inventory, as reasonably
determined by the Administrative Agent;
(h) Inventory held by the Company or a Subsidiary Guarantor on
consignment from another Person;
(i) Inventory held for return to vendors; and
(j) any Inventory that the Administrative Agent, in its good faith
discretion, has deemed to be otherwise ineligible.
Notwithstanding the foregoing definition, the Administrative Agent may,
on three Business Days prior written notice to the Company and on the basis
of periodic field examinations and Inventory appraisals conducted from time
to time, modify any of the foregoing exceptions from "Eligible Inventory"
or add additional exceptions from "Eligible Inventory", if the result of
any such modification or addition is to reduce the aggregate amount of
Inventory that would constitute Eligible Inventory on any date. Any such
modification or addition shall not require the consent of the Company, any
Subsidiary Guarantor or any Lender.
"Eligible Receivables" shall mean, as at any date of determination
thereof, the aggregate of all Receivables at said date due to the Company
or a Subsidiary Guarantor other than the following (determined without
duplication):
(a) any Receivable which, at the date of the original issuance
of the respective invoice therefore, was payable more than 90 days
after such date;
(b) any Receivable which remains unpaid more than (i) 60 days
from the due date or (ii) 90 days from the original date of the invoice
relating thereto;
(c) any Receivable due from an account debtor whose principal
place of business is located outside the United States of America or
Canada;
(d) any Receivable due from an Affiliate of the Company or any
Subsidiary Guarantor;
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(e) any Receivable due from an account debtor which is the
holder of any indebtedness or other obligation due from or payable by
the Company or such Subsidiary Guarantor;
(f) any Receivable (i) which is not a valid and legally
enforceable obligation of the account debtor, (ii) which is subject to
any claim for credit, defense, offset, deduction, chargeback,
counterclaim or adjustment by the account debtor, other than any
discount allowed for prompt payment, or (iii) with respect to which
there is any unresolved dispute;
(g) any Receivable with respect to which goods are placed on
consignment, guaranteed sale, ▇▇▇▇-and-hold, repurchase or return, or
other terms by reason of which payment by the account debtor may be
conditional;
(h) any Receivable evidenced by a promissory note, warrant or
other instrument or chattel paper;
(i) any Receivable due from an account debtor which is (i) an
individual or (ii) the United States of America or Canada or any
department, agency or instrumentality thereof;
(j) any Receivable due from an account debtor if more than 50%
of the aggregate amount of the Receivables due from such account debtor
are otherwise excluded from the definition of "Eligible Receivables";
provided that, if the aggregate amount of Receivables owing from an
account debtor exceeds 25% of the total receivables owing from all
account debtors at such time, all Receivables owing from such account
debtor shall be ineligible if more than 35% of the total Receivables
owing from such account debtor are deemed ineligible;
(k) the portion, if any, of the aggregate amount of
Receivables owing from any single account debtor that exceeds 25% of
the aggregate amount of Receivables owing from all account debtors at
such time;
(l) any Receivable due from any account debtor (i) which is
the subject of bankruptcy, insolvency or similar proceedings, (ii)
whose business has failed or been terminated or suspended, or (iii)
which the Administrative Agent has notified the Company does not have a
satisfactory credit standing (as determined in its sole discretion);
(m) any Receivable arising out of sale of goods or rendering
of services which did not occur in the ordinary course of business of
the Company and its Subsidiaries;
10
(n) any Receivable which is not subject to an enforceable,
perfected first priority Lien in favor of the Administrative Agent;
(o) any Receivable determined by the Administrative Agent in its
reasonable discretion to be unusual or not customary for the Company's
and the Subsidiary Guarantors' type of business or otherwise ineligible
for inclusion in the Borrowing Base;
(p) any Receivable for which a Complying Invoice has not been
sent to the applicable account debtor. "Complying Invoice" shall mean
an invoice in form and substance reasonably satisfactory to the
Administrative Agent bearing an invoice date contemporaneous with or
later than the date of the sale of goods or rendering of services
giving rise to such invoice;
(q) any Receivable (i) which, in whole or in part, did not arise
from the sale of goods or the provision of services to the account
debtor by the Company or a Subsidiary Guarantor; (ii) with respect to
which the aforementioned services or goods have not been performed or
provided in full; or (iii) which is not evidenced by invoices, shipping
documents or other instruments ordinarily used in the trade and
reasonably satisfactory to the Administrative Agent;
(r) any Receivable otherwise failing to conform to any
representation, warranty or other provision of this Agreement or the
Security Documents relating to Receivables; and
(s) any Receivable which includes fees charged for services or
goods that exceed limitations imposed by applicable law or regulation.
Notwithstanding the foregoing definition, the Administrative Agent may, on three
Business Days prior written notice to the Company and on the basis of periodic
examinations conducted from time to time, modify any of the foregoing exceptions
from "Eligible Receivables" or add additional exceptions from "Eligible
Receivables" if the result of any such modification or addition is to reduce the
aggregate amount of Receivables that would constitute Eligible Receivables on
any date. Any such modification or addition shall not require the consent of the
Company, any Subsidiary Guarantor or any Lender.
"Environmental Laws" shall mean any and all applicable federal, state,
local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, codes, injunctions, permits, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment or the effect of the environment on human health or to
emissions, discharges or release of pollutants, contaminants, wastes or other
hazardous
11
substances into the environment, including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, wastes or other hazardous substances or
the clean-up or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities in connection
with or relating to the business, assets, presently or previously owned or
leased property, activities (including, without limitation, off-site disposal)
or operations of the Company and each Subsidiary, whether vested or unvested,
contingent or fixed, actual or potential, known or unknown, which arise under or
relate to matters covered by Environmental Laws (including, without limitation,
any matter disclosed or required to be disclosed in Schedule VII hereto).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Loans, the rate per annum appearing on Page 3750 of the Dow ▇▇▇▇▇ Market Service
(or any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m. London time on the day two Business Days prior to the
first day of the Interest Period for such Loans as the rate for dollar deposits
with a maturity comparable to such Interest Period. If such rate is not
available at such time for any reason, then the Eurodollar Base Rate for such
Loans for such Interest Period shall be the rate at which dollar deposits of
$500,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m. London time on
the day two Business Days prior to the first day of the Interest Period for such
Loans.
"Eurodollar Loans" shall mean Loans the interest on which is determined
on the basis of rates referred to in the definition of "Eurodollar Base Rate" in
this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loans, a rate per
annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) determined by
the Administrative Agent to be equal to (i) the Eurodollar Base Rate for such
Loans for the Interest Period for such Loans multiplied by (ii) the Statutory
Reserve Rate for such Interest Period.
12
"Event of Default" shall have the meaning assigned to such term in
Section 8.01 hereof.
"Existing Letters of Credit" shall mean the following Letters of Credit
outstanding on the Phase I Effective Date: (i) the IRB Letter of Credit with a
face amount of $6,093,997.62 and (ii) the Letter of Credit in favor of Travelers
Indemnity with a face amount of $125,000.
"Facility Availability" shall mean, at any time, the amount by which
(a) Maximum Facility Availability at such time exceeds (b) Total Exposure at
such time; provided that for the purpose of Section 5.02(h), Facility
Availability shall be calculated as if the Phase II Effective Date shall have
occurred.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average of the rate
quotations for such day for such transactions received by the Administrative
Agent from three Federal Funds brokers of recognized standing selected by it.
"Financing Documents" shall mean this Agreement, the Subsidiary
Guaranty, the Guarantor Acknowledgment, the Notes and the Security Documents.
"Fixed Charge Coverage Ratio" shall mean, at any time, the ratio,
calculated as at the end of each fiscal quarter for the four fiscal quarters
then ended, of (i) EBITDA for such period minus Capital Expenditures to (ii)
Fixed Charges for such period.
"Fixed Charges" shall mean, for any period, the sum of (a) Interest
Expense for such period plus (b) Cash Taxes for such period plus (c) the
aggregate amount of regularly scheduled principal payments made during such
period in respect of Long-Term Debt of the Company and its Subsidiaries (except
payments made by the Company or any Subsidiary to the Company or any
Subsidiary), plus (d) the aggregate amount of principal payments (except
scheduled principal payments) made during such period in respect of Long-Term
Debt of the Company and its Subsidiaries (other than the Loans), in each case to
the extent that such payment reduced any scheduled principal payments that would
have become due within one year after the date of such payment. For the
13
purpose of this definition, "Long Term Debt" shall mean any Indebtedness that,
in accordance with GAAP, constitutes (or when incurred, constituted) a long-term
liability.
"Foreign Exchange Obligations" shall mean all obligations of the
Company or its Subsidiaries pursuant to and under any and all foreign exchange
contracts and agreements to which the Company or any Subsidiary is a party. For
the purpose of computing the amount thereof in connection with any calculation
under this Agreement, such obligations shall be determined as of any date of
computation as if such foreign exchange agreement were to be terminated or
declared to be in default on such date (after giving effect to any netting
provisions).
"Funded Indebtedness" shall mean Indebtedness which matures more than
one year after the incurrence thereof or is extendible, renewable or refundable,
at the option of the obligor, to a date more than one year after the incurrence
thereof (including the current portion thereof).
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States consistently applied.
"Guarantor Acknowledgment" shall mean the Guarantor Acknowledgment
dated as of the Phase I Effective Date, substantially in the form of Exhibit I
hereto.
"Guaranty" by any Person shall mean any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise, other
than agreements to purchase goods at an arm's length price in the ordinary
course of business) or (ii) entered into for the purpose of assuring in any
other manner the holder of such Indebtedness of the payment thereof or to
protect such holder against loss in respect thereof (in whole or in part),
provided that the term Guaranty shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Hazardous Substances" shall mean any pollutants, contaminants, wastes
or other toxic, radioactive, caustic or otherwise hazardous substances,
including petroleum, its derivatives, by-products and other hydrocarbons, or any
substance
14
having constituent elements displaying any of the foregoing characteristics,
regulated under Environmental Laws.
"Indebtedness" shall mean, as to any Person (determined without
duplication): (i) indebtedness of such Person for borrowed money (whether by
loan or the issuance and sale of debt securities) or for the deferred purchase
or acquisition price of property or services, other than accounts payable (other
than for borrowed money) incurred in the ordinary course of business; (ii)
obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for the
account of such Person (whether or not such obligations are contingent); (iii)
Capital Lease Obligations of such Person; (iv) obligations of such Person to
redeem or otherwise retire shares of capital stock of such Person; (v) all
Foreign Exchange Obligations and Interest Rate Protection Obligations; and (vi)
indebtedness of others of the type described in clause (i), (ii), (iii), (iv) or
(v) above secured by a Lien on the property of such Person, whether or not the
respective obligation so secured has been assumed by such Person; and (vii)
indebtedness of others of the type described in clause (i), (ii), (iii), (iv) or
(v) above Guaranteed by such Person.
"Indenture" shall mean the Indenture dated as of June 19, 2001 between
the Company and ▇▇▇▇▇ Fargo Bank Minnesota, N.A., as Trustee, as such agreement
shall, subject to Section 7.17 hereof, be modified and supplemented and in
effect from time to time.
"Interest Expense" shall mean, for any period, the sum (determined
without duplication) of the aggregate amount of interest accruing during such
period on Indebtedness of the Company and its Subsidiaries (on a consolidated
basis), including the interest portion of payments under Capital Lease
Obligations and any capitalized interest, and excluding amortization of debt
discount and expense.
"Interest Period" shall mean, with respect to any Eurodollar Loans, the
period commencing on the date such Loans are made or converted from Base Rate
Loans or the last day of the next preceding Interest Period with respect to such
Loans and ending on the numerically corresponding day in the first, second or
third calendar month thereafter, as the Company may select as provided in
Sections 2.06 and 2.07 hereof, except that each such Interest Period which
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month.
"Interest Rate Protection Obligations" shall mean the obligations of
any Person pursuant to any arrangement with any other Person whereby, directly
or indirectly, such person is entitled to receive from time to time periodic
payments
15
calculated by applying either a floating or a fixed rate of interest on a stated
notional amount in exchange for periodic payments made by such Person calculated
by applying a fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate swaps, caps, floors,
collars and similar agreements. For the purpose of computing the amount thereof
in connection with any calculation under this Agreement, such obligations shall
be determined as of any date of computation as if such arrangement were to be
terminated or declared to be in default on such date (after giving effect to any
netting provisions).
"Inventory" shall mean inventory (as defined in Article 9 of the Uniform
Commercial Code) to the extent comprised of readily marketable materials,
products or goods of a type manufactured or consumed by the Company or any
Subsidiary Guarantor in the ordinary course of business as presently conducted.
"Investments" shall have the meaning assigned to such term in Section 7.12
hereof.
"IRB Letter of Credit" shall mean one or more Letters of Credit securing
the Company's obligations in respect of outstanding City of Salem, Massachusetts
Flexible Mode Industrial Development Revenue Bonds (Applied Extrusion
Technologies, Inc. Issue), in form and substance satisfactory to JPMorgan Chase.
"JPMorgan Chase" shall mean JPMorgan Chase Bank and its successors.
"Lender" shall have the meaning set forth in the preamble to this Amended
Agreement.
"Letter of Credit" shall mean any Existing Letter of Credit and any letter
of credit issued pursuant to Section 2.01(c) by JPMorgan Chase for the Company
as account party.
"Letter of Credit Liabilities" shall mean, at any time and in respect of
any Letter of Credit, the sum of (i) the amount available for drawings under
such Letter of Credit plus (ii) the aggregate unpaid amount of all Reimbursement
Obligations at the time due and payable in respect of previous drawings made
under such Letter of Credit.
"Lien" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Company and each of its Subsidiaries
shall be deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset.
16
"Liquid Investments" shall mean (i) certificates of deposit maturing within
180 days of the acquisition thereof denominated in Dollars and issued by (X) a
Lender or (Y) a bank or trust company having combined capital and surplus of at
least $500,000,000 and which has (or which is a Subsidiary of a bank holding
company which has) publicly traded debt securities rated AA or higher by
Standard & Poor's Corporation or Aa-2 or higher by ▇▇▇▇▇'▇ Investors Service,
Inc.; (ii) obligations issued or guaranteed by the United States of America,
with maturities not more than 180 days after the date of issue; (iii) commercial
paper with maturities of not more than 90 days and a published rating of not
less than A-1 from Standard & Poor's Corporation or P-1 from ▇▇▇▇▇'▇ Investors
Service, Inc. and (iv) such other liquid investments as the Administrative
Agent, in the exercise of its sole discretion, shall approve from time to time.
"Loans" shall mean the loans provided for by Section 2.01(a) hereof.
"Loan Tranche" shall mean any portion of the Loans outstanding under the
Notes as Base Rate Loans or any portion of the Loans outstanding under the Notes
as Eurodollar Loans having the same Interest Period. Each portion of the
Eurodollar Loans outstanding under the Notes having a different Interest Period
shall constitute a separate Loan Tranche, and all Base Rate Loans shall
constitute a single Loan Tranche.
"Lockbox" shall mean a post office box established by the Administrative
Agent or such other financial institutions as shall be acceptable to the
Administrative Agent pursuant to a Lockbox Agreement with the Company or its
Subsidiaries into which account debtors of the Company are directed to remit
payments.
"Lockbox Agreement" shall mean an agreement pursuant to which the
Administrative Agent or another financial institution acceptable to the
Administrative Agent maintains a post office box into which account debtors of
the Company and certain of its Subsidiaries remit payments, and which payments
are deposited into a Controlled Account.
"Majority Lenders" shall mean, at any time while no Loans or Letter of
Credit Liabilities are outstanding, Lenders having at least 51% (or, if at such
time there are fewer than three Lenders, 100%) of the aggregate amount of the
Working Capital Commitments and, at any time while any Loans or Letter of Credit
Liabilities are outstanding, Lenders holding at least 51% (or, if at such time
there are fewer than three Lenders, 100%) of the outstanding aggregate principal
amount of the Loans and Letter of Credit Liabilities (including, without
limitation, participations in the Letters of Credit).
"Material Adverse Effect" shall mean (i) a material adverse effect on the
condition (financial or otherwise), results of operations, properties, assets,
17
liabilities (including, without limitation, tax and ERISA liabilities and
Environmental Liabilities), business, operations, capitalization, stockholders'
equity, licenses, franchises or prospects of the Company and its Subsidiaries,
taken as a whole; (ii) a material adverse effect on the ability of any the
Company or any Subsidiary to perform its obligations under each Basic Document
to which it is a party; or (iii) a material adverse effect on the rights and
remedies of the Administrative Agent and the Lenders under the Financing
Documents.
"Maximum Facility Availability" shall mean: (a) at any time on or after the
Phase I Effective Date but prior to the Phase II Effective Date, the least of
(i) the Working Capital Commitments at such time, (ii) the Borrowing Base at
such time and (iii) the sum of $13,000,000 in aggregate principal amount of
Loans and $6,218,997.62 in Letter of Credit Liabilities, and (b) at any time on
or after the Phase II Effective Date, the amount by which the lesser of the
Working Capital Commitments and Borrowing Base at such time exceeds $5,000,000.
"Mortgages" shall mean, collectively, the mortgages, deeds of trust, deeds
of hypothecation, leasehold mortgages, leasehold deeds of trust and similar
instruments listed on Schedule II, each in form and substance satisfactory to
the Administrative Agent, executed by the respective mortgagors in favor of the
Administrative Agent for the benefit of the Lenders.
"Multiemployer Plan" shall mean at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which the Company or
any member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a
member of the Controlled Group during such five year period.
"Net Cash Proceeds" shall mean, in each case as set forth in reasonable
detail in a certificate of a Senior Officer delivered to the Administrative
Agent: (a) with respect to the disposition of any asset by the Company or any of
its Subsidiaries, the excess, if any, of (i) the cash received (including any
cash payments received by way of deferred payment pursuant to, or monetization
of, a note or installment receivable or otherwise, but only as and when
received) in connection with such disposition over (ii) the sum of (A) the
amount of any Indebtedness which is secured by such asset and which is required
to be repaid in connection with the disposition thereof, plus (B) the reasonable
out-of-pocket expenses incurred by the Company or such Subsidiary, as the case
may be, in connection with such disposition, plus (C) provision for taxes,
including income taxes, attributable to the disposition of such asset; (b) with
respect to the incurrence of Indebtedness of the Company or any of its
Subsidiaries, the gross proceeds received from such incurrence less all
reasonable out-of-pocket expenses, discounts and commissions and other fees and
expenses incurred or to be incurred and all federal, state, local and foreign
taxes assessed or to be assessed
18
in connection with the closing of such transaction; (c) with respect to the
receipt by the Company or the Administrative Agent of any payment under a
Property Insurance Policy or pursuant to any condemnation award, the aggregate
amount of any such payment made to the Company or the Administrative Agent less
any income tax liability of the Company relating to such payment and all legal
expenses incurred in connection with the recovery or collection thereof; and (d)
with respect to the termination of any Plan, the excess, if any, of (i) the
amounts received by the Company or any Subsidiary in connection with such
termination over (ii) the amount of taxes payable by such Person in connection
therewith.
"Notes" shall mean the promissory notes of the Company evidencing the
Loans, substantially in the form of Exhibit B hereto, and "Note" shall mean any
one of the Notes.
"Obligations" shall mean all obligations of the Company and the Subsidiary
Guarantors to the Lenders and the Administrative Agent under this Agreement or
any of the other Financing Documents, including, without limitation, all
indebtedness evidenced by the Notes, all obligations under or in respect of the
Letters of Credit and all Reimbursement Obligations, Interest Rate Protection
Obligations, Foreign Exchange Obligations and Bank Product Obligations together
with all accrued and unpaid interest (including, without limitation, all
interest that, but for the filing of a petition in, or commencement of a case,
proceeding or other action relating to, bankruptcy, insolvency or reorganization
of the Company or any of its Subsidiaries, would have accrued, whether or not a
claim is allowed against the Company or such Subsidiary for such interest in the
related bankruptcy proceeding), fees, expenses and charges payable by the
Company or the Subsidiary Guarantors hereunder or under any of the other
Financing Documents.
"Offering Materials" shall mean the projections and other information
prepared in connection with the transactions contemplated by this Amended
Agreement and provided to the Lenders in January, 2003.
"Original Agreement" shall have the meaning set forth in the preamble to
this Amended Agreement.
"Original Lender" shall mean each "Lender" as defined in the Original
Agreement.
"Overadvance" shall mean a loan, advance, or providing of credit support
(such as the issuance of any letter of Credit) to the extent that, immediately
after its having been made, Facility Availability is less than zero.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
19
"Person" shall mean an individual, a corporation, a company, a voluntary
association, a partnership, a trust, an unincorporated organization or a
government or any agency, instrumentality or political subdivision thereof.
"Permissible Overadvances" shall mean Loans which are Overadvances, but as
to which each of the following conditions is satisfied: (a) after giving effect
to such Overadvances, Total Exposure does not exceed the aggregate amount of the
Working Capital Commitments; (b) when such Overadvances are aggregated with all
other Overadvances, the total outstanding amount of Overadvances does not exceed
$2,000,000; and (c) such Overadvances are made or undertaken in the
Administrative Agent's discretion to protect and preserve the interests of the
Lenders holding Loans.
"Phase I Effective Date" shall mean the first date on which each of the
conditions set forth in Section 5.01 shall have been satisfied.
"Phase II Effective Date" shall mean the first date on which each of the
conditions set forth in Section 5.02 shall have been satisfied.
"Plan" shall mean an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained or contributed to, by the Company or any member of the Controlled
Group for employees of the Company or any member of the Controlled Group or (ii)
has at any time within the preceding five years been maintained, or contributed
to, by the Company or any Person which was at such time a member of the
Controlled Group for employees of any Person which was at such time a member of
the Controlled Group.
"Plants" shall mean the facilities of the Company located in Terre Haute,
Indiana; ▇▇▇▇▇▇▇▇▇, Virginia; and Varennes, Quebec, Canada.
"Pledge Agreement" shall mean the Company Pledge Agreement dated as of
April 7, 1994 substantially in the form of Exhibit G hereto.
"Post-Default Rate" shall mean (i) for any principal of any Loan, a rate
per annum equal to the rate which is then in effect for such Loan plus 2% and
(ii) for any other amount due or payable hereunder, a rate per annum equal to
the rate which is then in effect for Base Rate Loans plus 2%.
"Prime Rate" shall mean the rate of interest from time to time announced by
JPMorgan Chase at its New York City principal office as its prime commercial
lending rate. Each change in the interest rate provided for herein resulting
from a change in the Prime Rate shall take effect at the time of such change in
the Prime Rate.
20
"Property Insurance Policy" shall mean insurance (x) against loss or damage
covering all tangible real and personal property and improvements of the Company
and its Subsidiaries, by reason of any Peril (as defined below) and (y) covering
any construction or repair of improvements, for the total value of the work
performed and equipment, supplies and material furnished against any Peril. For
purposes of this definition, the term "Peril" shall mean, collectively, (i)
fire, lighting, flood, windstorm, hail, explosion, riot and civil commotion,
vandalism and malicious mischief, damage from aircraft, vehicles and smoke and
(ii) all other perils covered by the "all-risk" endorsement then in use in the
States in which the Plants are located.
"Purchase Agreement" shall mean the Sale and Purchase Agreement dated as of
March 8, 1994 between the Company and Hercules Incorporated, a Delaware
corporation, as such agreement shall, subject to Section 7.17 hereof, be
modified and supplemented and in effect from time to time.
"QPF Acquisition" shall mean the acquisition by the Company of assets
relating to the oriented polypropylene business of QPF, LLC, including without
limitation tangible personal property (such as inventories, machinery and
equipment) and intellectual property, pursuant to the Asset Purchase Agreement
dated as of May 3, 2001 among the Company, QPF, LLC and Hood Companies, Inc., as
amended by Amendment No. 1 dated as of June 12, 2001 and Amendment No. 2 dated
as of December 20, 2001.
"Quebec" shall mean the Province of Quebec, Canada.
"Receivable" shall mean, as at any date of determination thereof, the
unpaid portion of the obligation, as stated in U.S. Dollars or Canadian Dollars
on the respective invoice, of a customer of the Company or any Subsidiary
Guarantor in respect of Inventory purchased and shipped or services rendered,
net of any credits, rebates or offsets owed to the respective customer and, to
the extent reflected in such invoice, also net of any commissions payable to
third parties which are billed in addition to the ▇▇▇▇ for such Inventory.
"Regulated Activity" shall mean any generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Substance.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" shall mean, with respect to any Lender, any change on
or after the date of this Amended Agreement in United States federal, state or
foreign laws or regulations (including Regulation D) or the adoption or making
on or after such date of any interpretations, directives or requests applying to
a class
21
of lenders including such Lender of or under any United States federal or state,
or any foreign, laws or regulations (whether or not having the force of law) by
any court or governmental or monetary authority charged with the interpretation
or administration thereof.
"Reimbursement Obligation" shall mean the obligation of the Company to
reimburse JPMorgan Chase for any amount paid by JPMorgan Chase pursuant to and
under any Letter of Credit.
"Release" shall mean any discharge, emission or release, including a
"Release" as defined in CERCLA at 42 U.S.C. Section 9601(22). The term
"Released" shall have a corresponding meaning.
"Restricted Payment" shall mean dividends (in cash, property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for the purchase,
redemption, retirement or other acquisition of, any shares of any class of
capital stock of the Company, or the exchange or conversion of any shares of any
class of capital stock of the Company for or into any obligations of or shares
of any other class of capital stock of the Company or any other property, but
excluding dividends payable solely in, or exchanges or conversions for or into,
shares of capital stock of the Company of the same or a junior class; provided
that payments to the Company or a Wholly-Owned Subsidiary shall not constitute
Restricted Payments.
"Security Agreement" shall mean the Company Security Agreement dated as of
April 7, 1994 substantially in the form of Exhibit F hereto.
"Security Documents" shall mean, collectively, the Mortgages and the other
agreements listed on Schedule II hereto as modified, supplemented and in effect
from time to time; and, from and after the execution and delivery thereof, shall
include any supplemental mortgage or security document required pursuant to
Section 7.16.
"Senior Notes" shall mean the Company's 10 3/4% Senior Notes Due 2011
issued pursuant to the Indenture, as such Senior Notes shall, subject to
Section 7.17 hereof, be modified and supplemented and in effect from time to
time.
"Senior Officer" shall mean the chief executive officer, chief operating
officer, chief financial officer, treasurer or vice president of finance of the
Company.
"September Financials Delivery Date" shall mean the date on which the
Company shall have delivered to the Administrative Agent financial statements
22
and related documents required to be delivered pursuant to Sections 7.01(a) and
7.01(b) as at, and for the fiscal periods ending, September 30, 2003.
"Statutory Reserve Rate" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board of Governors of the Federal Reserve System to which the
Administrative Agent is subject for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to Regulation D. Eurodollar
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"Subsidiary" shall mean, with respect to any Person, any corporation of
which at least a majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more of the Subsidiaries
of such Person or by such Person and one or more of the Subsidiaries of such
Person.
"Subsidiary Guarantor" shall mean each of the following Subsidiaries of the
Company: Applied Extrusion Technologies (Canada), Inc., a Delaware corporation,
and each other Subsidiary of the Company that from time to time becomes a party
to the Subsidiary Guaranty or otherwise guarantees the obligations of the
Company hereunder pursuant to Section 7.21.
"Subsidiary Guaranty" shall mean the Subsidiary Guaranty dated as of the
Closing Date, in substantially the form of Exhibit H hereto, as said agreement
shall be modified and supplemented and in effect from time to time.
"Termination Date" shall mean March 30, 2006 or, if such day is not a
Business Day, the next preceding Business Day.
"Total Exposure" shall mean, at any time, the sum of (i) the aggregate
outstanding principal amount of Loans, (ii) accrued and unpaid interest, fees
and charges and (iii) Letter of Credit Liabilities owing from the Company and
the Subsidiary Guarantors to the Lenders and the Administrative Agent, in each
case under the Financing Documents at such time.
23
"Type" shall have the meaning assigned to such term in Section 1.03 hereof.
"Uncollected Funds" shall mean all deposits of items which shall be on
deposit in the Collateral Account from time to time during the period from the
date on which such deposits became Available Funds to the beginning of the
second following Business Day.
"Uncollected Funds Compensation" shall mean the compensation payable to the
Administrative Agent pursuant to Section 2.09.
"Unfunded Liabilities" shall mean, with respect to any Plan, at any time,
the amount (if any) by which (i) the value of all benefits liabilities under
such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such benefits under Title IV
of ERISA (excluding any accrued but unpaid contributions), all determined as of
the then most recent valuation date for such Plan, but only to the extent that
such excess represents a potential liability of the Company or any member of the
Controlled Group to the PBGC or any other Person under Title IV of ERISA.
"Weekly Collateral Certificate" shall mean a certificate substantially in
the form of Exhibit K hereto.
"Wholly-Owned Subsidiary" shall mean a Subsidiary of the Company all of
whose outstanding shares of capital stock (except directors' qualifying shares)
are directly or indirectly owned by the Company.
"Working Capital Availability Period" shall mean the period from and
including the date hereof to but not including the Termination Date.
"Working Capital Commitment" shall mean, as to any Lender, the obligation
of such Lender to make Loans and incur Letter of Credit Liabilities in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount set forth opposite such Lender's name on the signature pages hereof
under the caption "Working Capital Commitment" (as the same may be reduced from
time to time pursuant to Section 2.10 hereof).
"Working Capital Commitment Percentage" shall mean, as to any Lender, the
percentage equivalent of a fraction the numerator of which is the Working
Capital Commitment of such Lender and the denominator of which is the aggregate
amount of the Working Capital Commitments of all Lenders.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
24
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP;
provided that if any change in GAAP in itself materially affects the calculation
of any financial covenant in Article 7, the Company may by notice to the
Administrative Agent, or the Administrative Agent (at the request of the
Majority Lenders) may by notice to the Company, require that such covenant
thereafter be calculated in accordance with GAAP as in effect, and applied by
the Company, immediately before such change in GAAP occurs. If such notice is
given, the compliance certificates delivered pursuant to Section 7.01 after such
change occurs shall be accompanied by reconciliations of the difference between
the calculation set forth therein and a calculation made in accordance with GAAP
as in effect from time to time after such change occurs. To enable the ready
determination of compliance with the covenants set forth in Article 7 hereof,
the Company will not change from September 30 in each year the date on which its
fiscal year ends, nor from December 31, March 31, and June 30 the dates on which
the first three fiscal quarters in each fiscal year end.
Section 1.03. Types of Loans. Loans hereunder are distinguished by "Type".
The "Type" of a Loan refers to the determination whether such Loan is a
Eurodollar Loan or a Base Rate Loan.
ARTICLE 2
THE CREDITS
Section 2.01. Loans and Letters of Credit. (a) Subject to the terms and
conditions of this Agreement, each of the Lenders severally agrees to make Loans
to the Company from time to time during the Working Capital Availability Period
in an aggregate principal amount at any one time outstanding up to but not
exceeding its Working Capital Commitment; provided that the obligation of each
Lender to make Loans hereunder at any time is subject to the conditions that (i)
the Total Exposure (after giving effect to the funding of such Loans but without
giving effect to outstanding Permissible Overadvances made in accordance with
Section 2.01(d)) shall not exceed the Maximum Facility Availability at such time
and (ii) the Total Exposure (determined after giving effect to the funding of
such Loans and including all Permissible Overadvances) shall not exceed the
aggregate amount of all Working Capital Commitments.
(b) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Company shall issue to such Lender a Note,
payable to the order of such Lender.
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(c) Subject to the provisions of Section 2.13 and the other terms and
conditions of this Agreement, at the request of the Company, JPMorgan Chase, on
behalf of the Lenders, shall issue Letters of Credit from time to time during
the Working Capital Availability Period; provided that after giving effect to
the issuance of each Letter of Credit, (i) the aggregate Letter of Credit
Liabilities shall not exceed $7,000,000, (ii) Total Exposure (determined without
giving effect to outstanding Permissible Overadvances made in accordance with
Section 2.01(d)) shall not exceed Maximum Facility Availability and (iii) Total
Exposure (including all Permissible Overadvances) shall not exceed the aggregate
amount of Working Capital Commitments.
(d) No Lender shall have any obligation to make a Loan, or otherwise to
provide any credit to or for the benefit of the Company where the result of such
Loan or credit is an Overadvance; provided that, notwithstanding anything herein
to the contrary, the Administrative Agent is permitted (but not obligated) to
make Permissible Overadvances to the Company for a period of not more than 30
days in any twelve-month period without the consent of the Lenders and the
Lenders shall be obligated to participate pro rata in such Permissible
Overadvances and reimburse the Administrative Agent therefor pursuant to Section
2.14. The Administrative Agent's or the Lenders' providing of an Overadvance on
any one occasion does not affect the obligations of the Company hereunder
(including the Borrower's obligation to immediately repay any amount which
constitutes an Overadvance which is not a Permissible Overadvance) nor obligate
the Administrative Agent or the Lenders to do so on any other occasion.
Section 2.02. Funding of Loans. (a) Until such time as the Company shall
have established a Controlled Disbursements Account with the Administrative
Agent, to request the funding of any Loans hereunder, the Company shall deliver
to the Administrative Agent notice in accordance with Section 2.11 setting forth
the amount of the requested Loans to be funded, the Facility Availability as set
forth in the most recent Borrowing Base Certificate delivered to the
Administrative Agent, whether such Loans are to be Base Rate Loans or Eurodollar
Loans and, if such Loans are to be Eurodollar Loans, the Interest Period for
such Eurodollar Loans. Following receipt of such notice, the Administrative
Agent shall, not later than 2:00 p.m. on (i) the same Business Day that such
notice is given, if such Loans are to be Base Rate Loans, or (ii) on the third
Business Day after such notice is given, if such Loans are to be Eurodollar
Loans, subject to the conditions of this Agreement, make available to the
Company by a credit to an account of the Company maintained at the
Administrative Agent the amount of such requested Loans. The Loans shall be
deemed to be made by each Lender and to be outstanding under the Note issued to
such Lender as of the date that such credit is made available to the Company
without regard to the settlement procedures between the Administrative Agent and
the Lenders pursuant to Section 2.14.
26
(b) After such time as the Company shall have established a Controlled
Disbursements Account with the Administrative Agent, not later than 2:00 p.m. on
each Business Day, the Administrative Agent shall, subject to the conditions of
this Agreement (but without any further written notice required), make available
to the Company by a credit to an account of the Company maintained at the
Administrative Agent the proceeds of Base Rate Loans to the extent necessary to
pay items to be drawn on the Controlled Disbursements Account that day after
giving effect to all Available Funds to be deposited to the Collateral Account
on that day. All other Loans and all requests for the making of Eurodollar
Loans, or for the conversion of Base Rate Loans into Eurodollar Loans, shall be
made upon notice given in accordance with Section 2.11. The Loans shall be
deemed to be made by each Lender and to be outstanding under the Note issued to
such Lender as of the date that such credit is made available to the Company
without regard to the settlement procedures between the Administrative Agent and
the Lenders pursuant to Section 2.14.
Section 2.03. Principal Repayment of Loans. (a) Each Loan shall mature
and be payable in full on the Termination Date.
(b) Except to the extent otherwise expressly provided in any Security
Document, the Administrative Agent shall, not later than as of 2:00 p.m. on each
Business Day when any Loans shall be outstanding, (i) debit the Collateral
Account in an amount equal to the balance of the Collateral Account after giving
effect to all Available Funds deposited to the Collateral Account on such day
(including all moneys remitted to the Administrative Agent by account debtors or
by financial institutions at which Controlled Accounts are maintained) and prior
to giving effect to any other transfers from the Collateral Account and (ii)
apply the amount so debited to repay first, the outstanding principal amount of
all of Base Rate Loans and second, the outstanding principal amount of all
Eurodollar Loans; provided that, except upon the occurrence and during the
continuance of an Event of Default, no payment of a Eurodollar Loan shall be
made under this Section 2.03(b) on a date other than the last day of an Interest
Period or the Termination Date. To the extent that the amount debited in
accordance with the preceding sentence exceeds the outstanding principal amount
of Loans repaid in accordance with the preceding sentence, thereby creating a
credit balance, such credit balance shall bear interest at a rate per annum
equal to the greater of (x) zero percent (0%) and (y) the Prime Rate minus 3%
(which shall be credited against Total Exposure of the Company); provided that
the Administrative Agent shall, at the request of the Company, invest such
credit balance in Liquid Investments held with the Administrative Agent as long
as (i) no Default shall have occurred and be continuing, (ii) there shall be no
Loans outstanding hereunder, and (iii) the Phase II Effective Date shall have
occurred. In order to access such credit balance, the Company shall give the
Administrative Agent notice in accordance with the Administrative Agent's
customary operating procedures.
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Section 2.04. Mandatory Prepayments and Cover. (a) Events Requiring
Prepayment and Cover
(i) Borrowing Base and Working Capital Commitment Amount. The
Company shall prepay the Loans (or provide cover for Letter of Credit
Liabilities as provided below) in such amounts as shall be necessary so
that Total Exposure (determined without giving effect to outstanding
Permissible Overadvances made in accordance with Section 2.01(d)) shall
be less than or equal to Maximum Facility Availability.
(ii) Insurance Proceeds and Condemnation Awards. Promptly following
the receipt thereof by the Company or any of its Subsidiaries, the
Company shall deposit into an account (the "Insurance Proceeds Account")
with the Administrative Agent an amount of cash or Liquid Investments
equal to the aggregate Net Cash Proceeds of any payment made to the
Company or any of its Subsidiaries (i) under any Property Insurance
Policy or (ii) pursuant to any condemnation award. With respect to any
such payment or award, so long as no Default has occurred and is
continuing, the aggregate amount of such Net Cash Proceeds which the
Company or such Subsidiary has expended or committed to expend for the
restoration or replacement of the asset in respect of which such payment
or award was made shall be released by the Administrative Agent to the
Company upon request (specifying in reasonable detail the use of the
released funds) to pay for such restoration or replacement; provided that
in the event that within 270 days of receipt of such payment the Company
or such Subsidiary shall not have expended or committed to expend an
equivalent amount for the restoration or replacement of the asset in
respect of which such payment was made, the excess of the amount of such
payment over the amount of such expenditures and commitments shall be
transferred from the Insurance Proceeds Account to the Collateral Account
and applied to prepay the Loans (or provide cover for Letter of Credit
Liabilities as provided below) on such 270th day.
(iii) Incurrence of Indebtedness. The Company shall prepay the Loans
(or provide cover for Letter of Credit Liabilities as provided below) in
the amount of and on the date of each receipt by the Company or any of
its Subsidiaries of Net Cash Proceeds from the incurrence of any Funded
Indebtedness not otherwise permitted under Section 7.08 to which the
Majority Lenders have consented.
(iv) Asset Dispositions. The Company shall prepay the Loans (or
provide cover for Letter of Credit Liabilities as provided below) in the
amount of and on the date of each receipt by the Company or any of its
Subsidiaries of the Net Cash Proceeds of any disposition by such Person
of
28
any assets not otherwise permitted under Section 7.10 to which the
Majority Lenders have consented.
(v) Reversion of Pension Plans. The Company shall prepay the Loans
(or provide cover for Letter of Credit Liabilities as provided below) in
the amount of and on the date of each receipt by the Company or any of
its Subsidiaries of Net Cash Proceeds from the termination of a Plan.
(b) Prepayment and Cover of Obligations. In the event of any mandatory
prepayment pursuant to this Section 2.04, such prepayment shall be applied,
first to the payment of accrued interest in respect of outstanding Base Rate
Loans, second to the principal amount of outstanding Base Rate Loans, third to
accrued interest in respect of outstanding Eurodollar Loans, fourth to the
principal amount of outstanding Eurodollar Loans, fifth to provide cover for
Letter of Credit Liabilities as provided in the immediately following sentence
and sixth to all other outstanding Obligations; provided that except upon the
occurrence and during the continuance of an Event of Default, no payment of a
Eurodollar Loan shall be made under this Section 2.04 on a date other than the
last day of the applicable Interest Period or the Termination Date. Cover for
Letter of Credit Liabilities shall be effected by paying all Reimbursement
Obligations then due and payable and then paying to the Administrative Agent
immediately available funds, to be held by the Administrative Agent in the
Collateral Account maintained by the Company pursuant to the Security Documents,
in an amount equal to the required prepayment, which amount shall be retained by
the Administrative Agent in such Collateral Account and applied to pay any
Reimbursement Obligations which become due until such time as the Letters of
Credit shall have been terminated and all of the Letter of Credit Liabilities
paid in full. The Working Capital Commitments shall be automatically and
permanently reduced as a result of any mandatory prepayment made pursuant to
Section 2.04(a)(ii), 2.04(a)(iii), 2.04(a)(iv) or 2.04(a)(v).
(c) Prepayment Penalties. The Company shall not be required to pay any
prepayment premiums or penalties in connection with any mandatory prepayments
pursuant to this Section 2.04, other than payments required to be paid pursuant
to Section 4.05 in connection with any prepayment of Eurodollar Loans.
Section 2.05. Interest. (a) Interest shall accrue on the outstanding and
unpaid principal amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan is repaid, at the following
rates per year: (i) for a Loan which is a Base Rate Loan, at a variable rate per
annum equal to the Base Rate plus the Applicable Margin; and (ii) for a Loan
which is a Eurodollar Loan, at a fixed rate during the applicable Interest
Period equal to the corresponding Eurodollar Rate plus the Applicable Margin;
provided that, after the occurrence and during the continuance of an Event of
Default, and following a
29
written demand of the Administrative Agent to the Company at the request of the
Majority Lenders, interest shall accrue on all Loans and all other amounts
payable hereunder (including, to the extent permitted by law, interest on
overdue interest) at the Post-Default Rate.
(b) Interest on each Loan shall be calculated on the basis of a year of
360 days for the actual number of days elapsed.
(c) Subject to paragraph (f) below, accrued interest on each Base Rate
Loan shall be due and payable to the Administrative Agent for account of each
Lender in arrears on the first Business Day of each calendar month, regardless
of any payment of the principal thereof.
(d) Subject to paragraph (f) below, accrued interest on each Eurodollar
Loan shall be due and payable to the Administrative Agent for account of each
Lender in arrears upon any payment of principal and on the last day of each
Interest Period applicable to such Loan.
(e) The Administrative Agent shall determine the Base Rate, the
Eurodollar Rate and the Eurodollar Base Rate; and such determination shall be
conclusive absent manifest error. Promptly after the determination of any
interest rate provided for herein or any change therein, the Administrative
Agent shall notify the Company and the Lenders thereof.
(f) Notwithstanding the foregoing, (i) interest accrued pursuant to the
proviso to paragraph (a) above shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Loan, accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior
to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.
(g) (i) Notwithstanding the foregoing provisions of this Section 2.05, if
at any time the rate of interest set forth above on any Loan of or other
obligation payable to any Lender (the "Stated Rate") exceeds the maximum
non-usurious interest rate permissible for such Lender to charge commercial
borrowers under applicable law (the "Maximum Rate" for such Lender), the rate of
interest charged on such Loan of or other obligation payable to such Lender
hereunder shall be limited to the Maximum Rate for such Lender.
(ii) If the Stated Rate for any Loan of a Lender that has
theretofore been subject to the preceding paragraph at any time is less
than the Maximum Rate for such Lender, the principal amount of such Loan
shall bear interest at the Maximum Rate for such Lender until the total
amount of interest paid to such Lender or accrued on its Loans hereunder
30
equals the amount of interest which would have been paid to such Lender
or accrued on such Lender's Loans hereunder if the Stated Rate had at all
times been in effect.
(iii) If, upon payment in full of all amounts payable
hereunder, the total amount of interest paid to any Lender or accrued on
such Lender's Loans under the terms of this Agreement is less than the
total amount of interest which would have been paid to such Lender or
accrued on such Lender's Loans if the Stated Rate had, at all times, been
in effect, then the Company shall, to the extent permitted by applicable
law, pay to the Administrative Agent for the account of such Lender an
amount equal to the difference between (a) the lesser of (i) the amount
of interest which would have accrued on such Lender's Loans if the
Maximum Rate for such Lender had at all times been in effect or (ii) the
amount of interest which would have accrued on such Lender's Loans if the
Stated Rate had at all times been in effect and (b) the amount of
interest actually paid to such Lender or accrued on its Loans under this
Agreement.
(iv) If any Lender ever receives, collects or applies as
interest any sum in excess of the Maximum Rate for such Lender, such
excess amount shall be applied to the reduction of the principal balance
of its Loans or to other amounts (other than interest) payable hereunder,
and if no such principal is then outstanding, such excess or part thereof
remaining shall be paid to the Company.
Section 2.06. Interest Periods. In the case of each Eurodollar Loan, the
Company shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.01, subject to the following
limitations: (a) no Interest Period shall have a duration of less than one
month, and if any such proposed Interest Period would otherwise be for a shorter
period (as a result of the Termination Date or otherwise), such Interest Period
shall not be available; (b) there may be no more than six Loan Tranches
comprising Eurodollar Loans outstanding at any one time, and (c) if an Interest
Period would end on a day which is not a Business Day, such Interest Period
shall be extended to the next Businesses Day, unless such next Business Day
would fall in the next calendar month, in which event such Interest Period shall
end on the immediately preceding Business Day. All elections of an Interest
Period shall be made by the Company upon three Business Days notice to the
Administrative Agent in accordance with Section 2.11, and the Administrative
Agent shall quote to the Company the actual Eurodollar Rate to take effect for
such Interest Period (based upon the rate quotation described in the definition
of Eurodollar Rate) on the next Business Day.
Section 2.07. Conversions. The Company shall have the right to convert
a Loan from a Base Rate Loan to a Eurodollar Loan or from a Eurodollar Loan to
31
a Base Rate Loan, at any time or from time to time, provided that: (a) if the
Loan is outstanding as a Eurodollar Loan, it may be converted only on the last
day of the applicable Interest Period; (b) no Loan Tranche comprising a
Eurodollar Loan may be in a principal amount less than $500,000; and (c) there
may be no more than six Loan Tranches comprising Eurodollar Loans outstanding at
any one time; (d) if the Loan is outstanding as a Eurodollar Loan, it shall
automatically convert to a Base Rate Loan on the last day of the applicable
Interest Period, unless the Company gives notice to the Administrative Agent in
accordance with Section 2.11 three Business Days prior to the last day of the
corresponding Interest Period specifying a new Interest Period to apply to such
Loan; and (e) no Loan Tranche comprising a Eurodollar Loan may be created (or
continued after the last day of the applicable Interest Period) while any
Default exists and continues.
Section 2.08. Voluntary Prepayments. In addition to repayments made
pursuant to Section 2.03(b), the Company shall have the right to prepay Loans at
any time or from time to time; provided that (i) the Company shall give the
Administrative Agent notice of each such prepayment as provided in Section 2.11;
(ii) no Loan Tranche comprising a Eurodollar Loan may be in a principal amount
less than $500,000; and (iii) the Company shall be responsible for the payment
of amounts required to be paid pursuant to Section 4.05 in connection with the
prepayment of any Eurodollar Loans prepaid on any date other than the last day
of the corresponding Interest Period.
Section 2.09. Uncollected Funds Compensation. Any credit extended by
the Administrative Agent to the Company by allowing the Uncollected Funds in the
Collateral Account maintained by the Company at the Administrative Agent to be
immediately available funds to the Company shall not be deemed to be Loans
hereunder. Uncollected Funds Compensation to the Administrative Agent shall
accrue on the amount of the Uncollected Funds in existence from time to time at
a variable rate per annum equal to the Base Rate plus the Applicable Margin for
Base Rate Loans for two full days. Upon making such computation, the
Administrative Agent is authorized to make a Loan to the Company for the amount
thereof (or during the continuance of an Event of Default, debit the Collateral
Account) for the payment thereof to the Administrative Agent. The Administrative
Agent shall notify the Company of the amount of the Uncollected Funds
Compensation for the preceding calendar month in the next monthly statement
rendered by the Administrative Agent to the Company.
Section 2.10. Termination or Reduction of Working Capital Commitments.
(a) The Working Capital Commitments shall terminate on the Termination Date.
(b) The Working Capital Commitments shall be reduced in accordance with
Section 2.04(b).
32
(c) The Company shall have the right to terminate or permanently reduce
the amount of Working Capital Commitments in whole or in part at any time, to an
amount (which may be zero) not less than the aggregate Working Capital
Outstandings then outstanding; provided that (a) the Company shall give notice
of such termination or reduction to the Administrative Agent as provided in
Section 2.11, (b) each reduction of the Working Capital Commitments shall be in
an amount that is at least equal to $1,000,000 or any greater multiple of
$1,000,000 and (c) any amount required to be paid under Section 2.15(c) shall
have been paid. Any portion of the Working Capital Commitments that has been
terminated may not be reinstated.
Section 2.11. Certain Notices. Notices by the Company to the
Administrative Agent of borrowings (other than pursuant to Section 2.02(b)),
notice of conversion of any Base Rate Loans to Eurodollar Loans pursuant to
Section 2.07, and notice of each prepayment of a Loan pursuant to Section 2.08
(which does not include repayments pursuant to Section 2.03(b)) or of
termination or reduction of the Working Capital Commitments pursuant to Section
2.10 shall be irrevocable and shall be effective only if received by the
Administrative Agent in writing on a Business Day and (a) in the case of Base
Rate Loans and prepayments of Base Rate Loans, given not later than 11:00 a.m.
on the date of such Base Rate Loan or such prepayment; (b) in the case of
Eurodollar Loans and prepayments of Eurodollar Loans, given not later than 11:00
a.m. three Business Days prior to the date of such Eurodollar Loan or such
prepayment and (c) in the case of termination or reduction of the Working
Capital Commitments, given not later than 12:00 noon four Business Days prior
thereto. Each such notice of borrowing or prepayment shall specify the amount of
the Loans to be borrowed or prepaid and the date of borrowing or prepayment
(which shall be a Business Day). The Administrative Agent shall promptly notify
the Lenders of the contents of each such notice.
Section 2.12. Calculation of Borrowing Base. The Administrative Agent
shall calculate from time to time the amount of the Borrowing Base, based upon
the most recent Borrowing Base Certificate as updated by the most recent Weekly
Collateral Certificate and any other relevant information, and such amount shall
be the "Borrowing Base" hereunder; provided that the Administrative Agent, in
its reasonable credit judgment, may establish additional reserves against the
Borrowing Base, taking into account, among other things, but without limitation
in any way, increases in receivables dilution as shown in periodic field
examinations.
Section 2.13. Letters of Credit. (a) On the Phase I Effective Date,
without further action by any party hereto, JPMorgan Chase shall be deemed to
have granted to each Lender, and each Lender shall be deemed to have acquired
from JPMorgan Chase, a participation in each Existing Letter of Credit and the
33
related Letter of Credit Liabilities equal to such Lender's Working Capital
Commitment Percentage thereof.
(b) Subject to the terms and conditions set forth herein, the Company may
request the issuance of Letters of Credit for the account of the Company, in a
form reasonably acceptable to the Administrative Agent and JPMorgan Chase, by
delivering to the Administrative Agent and JPMorgan Chase by electronic or
facsimile transmission (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a letter of credit application in the form
required by the Administrative Agent and JPMorgan Chase. A Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit, the Company shall be
deemed to represent and warrant that), after giving effect to such issuance,
amendment, renewal or extension (i) the aggregate Letter of Credit Liabilities
shall not exceed $7,000,000, (ii) Total Exposure (determined without giving
effect to outstanding Permissible Overadvances made in accordance with Section
2.01(d)) shall not exceed Maximum Facility Availability and (iii) Total Exposure
(including all Permissible Overadvances) shall not exceed the aggregate amount
of Working Capital Commitments.
(c) Each Letter of Credit shall expire at or prior to the close of
business on the earlier of (i) the date 364 days after the date of the issuance
of such Letter of Credit (or, in the case of any renewal or extension of any
Letter of Credit, 364 days after such renewal or extension), and (ii) the date
that is thirty Business Days prior to the Termination Date. No Letter of Credit
may be extended beyond the date that is thirty Business Days prior to the
Termination Date.
(d) By the issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the part
of the Administrative Agent or the Lenders, JPMorgan Chase hereby grants to each
Lender, and each Lender hereby acquires from JPMorgan Chase, a participation in
such Letter of Credit equal to such Lender's Working Capital Commitment
Percentage of the aggregate amount available to be drawn under such Letter of
Credit. Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstances
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the aggregate Working Capital Commitments. If JPMorgan Chase
shall make any disbursement in respect of any Letter of Credit, the resulting
Reimbursement Obligation created thereby shall be deemed to be a Loan from each
of the Lenders in accordance with each Lender's Working Capital Commitment
Percentage. JPMorgan Chase shall notify the Administrative Agent and the Lenders
of the creation of any Reimbursement Obligation within two Business Days of any
disbursement made by JPMorgan Chase pursuant to or under any Letter of Credit.
34
(e) The Reimbursement Obligations with respect to Letters of Credit shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit, or any term or provision therein, (ii) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in
any respect, (iii) payment by JPMorgan Chase to the beneficiary under a Letter
of Credit against presentation of a draft or other document that does not
strictly comply with the terms of such Letter of Credit, (iv) the existence of
any claim, setoff, defense or other right that the Company or any other Person
may at any time have against the beneficiary under any Letter of Credit, the
Administrative Agent, or any Lender or any other Person, whether in connection
with this Agreement, any other Financing Document or otherwise, and (v) any
other event or circumstance whatsoever (other than gross negligence or willful
misconduct of JPMorgan Chase), whether or not similar to any of the foregoing,
that might, but for the provisions of this Section 2.13, constitute a legal or
equitable discharge of the Company's' obligations hereunder.
(f) In furtherance and extension and not in limitation of the specific
provisions herein above set forth, any action taken or omitted by JPMorgan Chase
under or in connection with Letters of Credit issued by it or any related
certificates shall not, in the absence of gross negligence or willful
misconduct, put JPMorgan Chase under any resulting liability to the Company or
any of its Subsidiaries or relieve the Company of any of its obligations
hereunder to JPMorgan Chase or the Lenders.
(g) The Company hereby indemnifies and holds harmless each Lender and the
Administrative Agent (which for purposes of this Section 2.13(g) shall include a
reference to JPMorgan Chase acting in its individual capacity hereunder as
issuer of Letters of Credit) from and against any and all claims and damages,
losses, liabilities, costs or expenses which such Lender or the Administrative
Agent may incur (or which may be claimed against such Lender or the
Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or failure to pay
under any Letter of Credit, including, without limitation, any claims, damages,
losses, liabilities, costs or expenses which the Administrative Agent may incur
by reason of or in connection with the failure of any other Lender to fulfill or
comply with its obligations to the Administrative Agent hereunder (but nothing
herein contained shall affect any rights the Company may have against such
defaulting Lender); provided that the Company shall not be required to indemnify
any Lender or the Administrative Agent for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
(i) the willful misconduct or gross negligence of such Lender or the
Administrative Agent in
35
determining whether a request presented under any Letter of Credit complied with
the terms of such Letter of Credit or (ii) such Lender's failure to pay under
any Letter of Credit after the presentation to it of a request strictly
complying with the terms and conditions of the Letter of Credit. Nothing in this
Section 2.13(g) is intended to limit the obligations of the Company under any
other provision of this Agreement.
Section 2.14. Settlement Between Administrative Agent and Lenders. The
Administrative Agent and the Lenders shall settle on an aggregated and netted
basis (the "Settlement Amount") on a weekly basis or with such greater frequency
as the Administrative Agent may determine (each such date on which such a
settlement occurs being a "Settlement Date") for all amounts which shall have
become due to and due from the Administrative Agent and the Lenders since the
immediately preceding Settlement Date with respect to any Obligations, other
than the Settlement Amount which became due on the immediately preceding
Settlement Date. The Administrative Agent shall notify the Lenders by 11:00 a.m.
on each Settlement Date of the Settlement Amount which is payable by the
Administrative Agent or the Lenders, and the Administrative Agent or the
Lenders, as the case may be, shall make payment of the Settlement Amount by an
electronic funds transfer not later than 5:00 p.m. on the Settlement Date.
Nothing in this Section 2.14 or the settlement procedures made pursuant to this
Section 2.14 shall be deemed to change, as between the Company and the Lenders,
the amount of the Loans which are outstanding or the accrual of interest due to
each of the Lenders on such Loans.
Section 2.15. Fees. (a) The Company agrees to pay to the Administrative
Agent quarterly through the Termination Date and on the Termination Date for the
account of each of the Lenders a commitment fee which shall accrue on the daily
average unused amount of such Lender's Working Capital Commitments for the
period from and including the Phase I Effective Date through the Termination
Date. The commitment fee shall be calculated on the basis of a 360 day year for
the actual number of days elapsed at a rate per year equal to the applicable
Commitment Fee Rate. The commitment fee shall be due and payable in arrears
quarterly on the first Business Day of each calendar quarter and shall be
computed by Administrative Agent. On each such payment date, the Administrative
Agent is authorized to make a Loan to the Company for the amount thereof (or
during the continuance of an Event of Default, debit the Collateral Account) for
the payment thereof to the Lenders.
(b) The Company agrees to pay, with respect to Letters of Credit issued
hereunder, the following quarterly fees: (i) to the Administrative Agent for the
benefit of the Lenders (according to each Lender's Working Capital Commitment
Percentage), a letter of credit fee in respect of each Letter of Credit issued
hereunder which accrues at a rate equal to (x) the daily aggregate amount
available for drawing under such Letter of Credit multiplied by (y) the
Applicable
36
Margin, such fees to be calculated on the basis of a 360 day year for actual
number of days elapsed and paid by the Company quarterly in advance on the first
Business Day of each calendar quarter, (ii) JPMorgan Chase for its own account,
a letter of credit fronting fee payable in respect of each Letter of Credit
issued hereunder which accrues at a rate equal to (x) the face amount of such
Letter of Credit multiplied by (y) 0.125% per annum, such fees to be calculated
on the basis of a 360 day year for the actual number of days elapsed and paid by
the Company quarterly in advance on the first Business Day of each calendar
quarter and (iii) to JPMorgan Chase for its own account, customary processing
fees and expenses charged by JPMorgan Chase for issuing, amending, modifying or
extending any Letter of Credit. Upon making a computation of the amount of any
Letter of Credit fee, the Administrative Agent is authorized to make a Loan to
the Company for the amount thereof.
(c) In the event that the Working Capital Commitments are terminated or
reduced by the Company prior to the first anniversary of the Phase I Effective
Date pursuant to Section 2.10(c), the Company shall pay to the Administrative
Agent for the account of each of the Lenders an early termination fee in an
amount equal to 1.00% of the aggregate amount so terminated or reduced; provided
that no such prepayment fee shall be payable under this paragraph (c) if the
Working Capital Commitments are terminated in connection with a refinancing of
the Loans by the Administrative Agent or any of its affiliates.
(d) The Company agrees to pay the Administrative Agent (for its own
account) such fees payable in such amounts and at the times separately agreed to
in writing between the Company and the Administrative Agent.
Section 2.16. Payments Generally. All payments under this Agreement or the
Notes shall be made in Dollars in funds which are immediately available not
later than 1:00 p.m. on the relevant dates specified herein at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ for the account of each
Lender and any payment made after such time on such due date will be deemed to
have been made on the next succeeding Business Day. In the event that any
payment (other than with respect to the principal of the Loans) under this
Agreement becomes due, the Administrative Agent, at its discretion without the
requirement of obtaining the consent of or giving prior notice to the Company,
may make a Loan to the Company for the amount thereof (or during the continuance
of an Event of Default, debit the Collateral Account for the payment thereof to
the Lenders). The Administrative Agent, or any Lender (subject to Section 3.03)
for whose account any such payment is to be made, may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time to any ordinary deposit account of the Company with the Administrative
Agent or such Lender, as the case may be, and any Lender so doing shall promptly
notify the Administrative Agent. Subject to Section 3.01, the Company shall, at
the time of making each payment under this Agreement or the
37
Notes, specify to the Administrative Agent the principal or other amount payable
by the Company under this Agreement or the Notes to which such payment is to be
applied and in the event that it fails to so specify, or if a Default or Event
of Default has occurred and is continuing, the Administrative Agent may, subject
to Section 3.01, apply such payment as it may elect in its sole discretion. If
the due date of any payment under this Agreement or the Notes would otherwise
fall on a day which is not a Business Day, such date shall be extended to the
next succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension. Each payment received by the
Administrative Agent hereunder or under any Note for the account of a Lender
shall be paid promptly to such Lender, in immediately available funds, for the
account of the Applicable Lending Office.
Section 2.17. Commitment Increases. (a) At any time and from time to time,
the Company may, if it so elects, increase the amount of the Commitments (in
each case in an aggregate amount of not less than $5,000,000), either by
designating one or more financial institutions not theretofore Lenders to become
Lenders or by agreeing with one or more of the existing Lenders that such
Lenders' Working Capital Commitments shall be increased. Upon execution and
delivery by the Company and such Lenders or other financial institutions of an
instrument (a "Commitment Acceptance") substantially in the form of Exhibit J
hereto, such existing Lenders shall have additional Working Capital Commitments
as therein set forth or such other financial institutions shall become Lenders
with Working Capital Commitments as therein set forth and with all rights and
obligations of Lenders with Working Capital Commitments as therein set forth;
provided that no such increase shall be effective unless (i) the Administrative
Agent shall have consented to the designation of any financial institution not
theretofore a Lender (it being understood that no consent or approval from any
Lender shall be required), (ii) immediately after such increase, the aggregate
Working Capital Commitments shall not exceed $50,000,000, (iii) no Default shall
have occurred and be continuing, (iv) in the case of the first such increase,
each Original Lender shall first have been offered an opportunity to provide all
(or its ratable share of) any such increase, and such offer shall have been
declined or deemed declined in accordance with the procedure set forth in the
immediately following sentence and (v) the Phase II Effective Date shall have
occurred. The Company shall, prior to entering into a Commitment Acceptance with
any Lender or other financial institution with respect to the initial increase
of Working Capital Commitments, provide written notice of any proposed increase
to the Administrative Agent, which notice shall constitute an offer to each
Original Lender to provide the requested increase or a portion thereof and shall
specify the amount of the requested increase, the requested effective date of
such increase (the "Increase Date"), and the time period within which each
Original Lender is requested to respond to such offer. Upon receipt of any such
notice, the Administrative Agent shall promptly notify the Original Lender and
each such Original Lender shall notify the Administrative Agent within the
specified period
38
whether or not it agrees to a Lender hereunder. Any Original Lender not
responding within such time period shall be deemed to have declined to become a
Lender. The Administrative Agent shall notify the Company of each Lender's or
other institution's response to each offer made hereunder.
(b) If and to the extent any Loans or Letters of Credit are outstanding on
the Increase Date, the Administrative Agent shall reallocate them ratably among
the Lenders after giving effect to such increase (and appropriate payments shall
be made to and from the Lenders) so that each Lender's pro rata share thereof is
based on the increased aggregate Working Capital Commitments then in effect.
Section 2.18. Use of Proceeds. The proceeds of the Loans shall be used
solely: (i) for general corporate and working capital purposes, (ii) for the
issuance of letters of credit for the benefit of the Company and the Subsidiary
Guarantors, and (iii) to finance up to $10,000,000 of the cost to repurchase the
▇▇▇▇▇▇▇▇▇ Assets; provided that on any date on which the proceeds of the Loans
are proposed to be used for such purpose (each a "Test Date"), the ▇▇▇▇▇▇▇▇▇
Lease Conditions shall have been satisfied. For the purpose of this Section
2.18, "▇▇▇▇▇▇▇▇▇ Lease Conditions" shall mean each of the following conditions,
measured on any Test Date on a pro-forma basis after giving effect to the
funding of any proposed Loans and the application of the proceeds thereof to
finance the repurchase of ▇▇▇▇▇▇▇▇▇ Assets (and, in the case of the Fixed Charge
Coverage Ratio, as if such repurchase had occurred on the first day of the
relevant period): (i) Facility Availability will be at least equal to
$20,000,000, (ii) the Fixed Charge Coverage Ratio for the period of four
consecutive fiscal quarters most recently ended prior to the relevant Test Date
shall exceed 1.01:1 and (iii) no Default shall have occurred and be continuing.
Section 2.19. Exchange Rate for Canadian Dollars. For purposes of
determining the value in Dollars of any amounts denominated in Canadian Dollars
(including without limitation, any Receivables of the Company or any Subsidiary
Guarantor which are so denominated) on any date of determination, the rate of
exchange used shall be the rate of exchange publicly announced by the
Administrative Agent for the exchange of Canadian Dollars into United States
Dollars as of the Business Day immediately preceding such date of determination.
ARTICLE 3
Payments; Pro Rata Treatment; Sharing of Payments, Etc.
Section 3.1. Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each borrowing from the Lenders under Section 2.01 hereof shall be
made from the Lenders, each payment of commitment fees, letter of credit fees
and early termination fees under Section 2.15 hereof shall be made for the
account of the Lenders, and each termination or reduction of the Working Capital
Commitments under Section 2.10 hereof shall be applied to the Working Capital
39
Commitments of the Lenders, pro rata according to the Lenders' respective
Working Capital Commitment Percentages; (b) each payment by the Company of
principal of or interest on Loans of a particular Type (other than payments in
respect of Loans of individual Lenders provided for by Article 4 hereof) shall
be made to the Administrative Agent for the account of the Lenders pro rata in
accordance with the respective unpaid principal amounts of such Loans held by
the Lenders; (c) each conversion of Loans of a particular Type (other than
conversions of Loans of individual Lenders pursuant to Section 4.04 hereof)
shall be made pro rata among the Lenders in accordance with the respective
principal amounts of such Loans held by the Lenders; and (d) the Lenders (other
than JPMorgan Chase) shall purchase from JPMorgan Chase participations in the
Letters of Credit to the extent of their respective Working Capital Commitment
Percentages.
Section 3.02. Non-receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or the Company (the
"Payor") prior to the date on which such Lender is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder (or
the payment of any amount by such Lender to reimburse JPMorgan Chase for a
drawing under any Letter of Credit) or the Company is to make a payment to the
Administrative Agent for the account of one or more of the Lenders, as the case
may be (such payment being herein called the "Required Payment"), which notice
shall be effective upon receipt, that the Payor does not intend to make the
Required Payment to the Administrative Agent, the Administrative Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient on such date and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient of such payment (or,
if such recipient is the beneficiary of a Letter of Credit, the Company and, if
the Company fails to pay the amount thereof to the Administrative Agent
forthwith upon demand, the Lenders ratably in proportion to their respective
Working Capital Percentages) shall, on demand, pay to the Administrative Agent
the amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent receives such
amount at a rate per annum equal to the Federal Funds Rate for such period ;
provided that as used in this Section 3.02, "Required Payment" does not include
any amounts due from a Lender to the Administrative Agent which are to be
settled on the next Settlement Date pursuant to Section 2.14, but "Required
Payment" shall include, as of each Settlement Date, any amounts due from a
Lender to the Administrative Agent as part of the Settlement Amount to be paid
on such Settlement Date pursuant to Section 2.14.
Section 3.03. Sharing of Payments, Etc. The Company agrees that, in
addition to (and without limitation of) any right of set-off, bankers' lien or
40
counterclaim a Lender may otherwise have, each Lender shall be entitled, at its
option, to offset balances held by it for the account of the Company at any of
its offices, in Dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans to the Company hereunder, or any
Reimbursement Obligation or other obligation of the Company hereunder, which is
not paid when due (regardless of whether such balances are then due to the
Company), in which case it shall promptly notify the Company and the
Administrative Agent thereof, provided that such Lender's failure to give such
notice shall not affect the validity thereof. If a Lender shall obtain payment
of any principal of or interest on any Loan made by it under this Agreement, or
on any Reimbursement Obligation or other obligation then due to such Lender
hereunder, through the exercise of any right of set-off, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from the
other Lenders participations in the Loans made, or Reimbursement Obligations or
other obligations held, by the other Lenders in such amounts, and make such
other adjustments from time to time as shall be equitable to the end that all
the Lenders shall share the benefit of such payment (net of any expenses which
may be incurred by such Lender in obtaining or preserving such benefit) pro rata
in accordance with the unpaid principal and interest on the Loans and
Reimbursement Obligations or other obligations then due to each of them. To such
end all the Lenders shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored. The Company agrees, to the fullest extent it may
effectively do so under applicable law, that any Person purchasing a
participation in the Loans made, or Reimbursement Obligations or other
obligations held, by another Person, whether or not acquired pursuant to the
foregoing arrangements, may exercise all rights of set-off, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans and Reimbursement Obligations or other
obligations in the amount of such participation. Nothing contained herein shall
require any Lender to exercise any such right or shall affect the right of any
Lender to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Company.
Section 3.04. Several Obligations. The failure of any Lender to make any
Loan to be made by it on the date specified therefor shall not relieve any other
Lender of its obligation to make its Loan on such date, but neither the
Administrative Agent nor any Lender shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender.
Section 3.05. Taxes. (a) Any and all payments by the Company hereunder
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Administrative Agent, taxes imposed on its income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which such Lender or the
41
Administrative Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Company shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, (i) except as provided in
subsection (h) below, the sum payable shall be increased as may be necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.05), such Lender or the
Administrative Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company shall
make such deductions and (iii) the Company shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, any
Letter of Credit or any other Basic Document or other document referred to
herein or therein (hereinafter referred to as "Other Taxes").
(c) The Company will indemnify each Lender and the Administrative Agent
for the full amount of Taxes or Other Taxes (including related penalties,
interest and expenses resulting from the Company's failure to pay Taxes or Other
Taxes in accordance with this Section 3.05) imposed by any jurisdiction on
amounts payable under this Section 3.05 paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date such Lender or
the Administrative Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Company
will furnish to the Administrative Agent, at its address referred to in Section
10.02, the original or a certified copy of a receipt evidencing payment thereof.
(e) If any Lender subsequently receives from a taxing authority a refund
of any Tax previously paid by the Company and for which the Company has
indemnified the Lender pursuant to this Section 3.05 or if the Lender takes a
credit for such Tax against taxes otherwise owing by it to the jurisdiction to
which the Company paid the Tax, such Lender shall within 30 days after receipt
of such refund, and to the extent permitted by applicable law, pay to the
Company the net
42
amount of any such recovery after deducting taxes and expenses attributable
thereto.
(f) Not later than the Closing Date or, in the case of any bank or
financial institution that became or becomes a Lender after the Closing Date
pursuant to Section 10.06, the date of the instrument of assignment pursuant to
which such bank or financial institution became a Lender, and annually
thereafter or at such other times as the Administrative Agent or the Company may
request, each Lender organized under the laws of a jurisdiction outside the
United States has provided or shall provide the Administrative Agent and the
Company with duly completed copies of Form W-8 BEN or Form W-8ECI or any
successor form prescribed by the Internal Revenue Service of the United States
certifying as to such Lender's status as exempt from United States withholding
taxes with respect to all payments to be made to such Lender hereunder or other
documents satisfactory to the Company and the Administrative Agent indicating
that all payments to be made to such Lender hereunder are not subject to such
taxes (an "Exemption Certificate"). In the case of payments to or for any Lender
organized under the laws of a jurisdiction outside the United States, unless the
Administrative Agent has received an Exemption Certificate from such Lender, the
Administrative Agent may withhold taxes from such payments at the applicable
statutory rate and the Company shall not be liable therefor under this Section
3.05.
(g) If the Company is required to pay additional amounts to any Lender
pursuant to this Section 3.05, such Lender shall use reasonable efforts to
designate a different Applicable Lending Office if such designation will
thereafter avoid the need for any additional payments under this Section 3.05
and will not, in the sole judgment of such Lender, be otherwise disadvantageous
to such Lender.
(h) If a Lender organized under the laws of a jurisdiction outside the
United States has not delivered an Exemption Certificate to the Company on or
before the Closing Date or, in the case of any bank or financial institution
that became or becomes a Lender after the Closing Date pursuant to Section
10.06, the date of the instrument of assignment pursuant to which such bank or
financial institution became a Lender, then the Company shall not have any
obligation to indemnify such Lender for Taxes (including related penalties,
interest and expenses) imposed by the United States or any political subdivision
thereof pursuant to Section 3.05(a) and 3.05(c) hereof.
43
ARTICLE 4
Yield Protection and Illegality
Section 4.01. Additional Costs. (a) The Company shall pay to the
Administrative Agent for the account of each Lender from time to time such
amounts as such Lender may determine to be necessary to compensate it for any
costs incurred by such Lender which such Lender determines are attributable to
its making or maintaining of any Eurodollar Loans hereunder or its obligation to
make any of such Loans hereunder, or any reduction in any amount receivable by
such Lender hereunder in respect of any of such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), in each case resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or its Notes in respect of any of such Loans
(other than changes which affect taxes measured by or imposed on the
overall net income of such Lender or of its Applicable Lending Office for
any of such Loans by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office and other than Taxes and
Other Taxes); or
(ii) imposes or modifies any reserve, special deposit, insurance
assessment or similar requirements relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of, such Lender
(including any of such Loans or any deposits referred to in the definition
of "Eurodollar Base Rate" in Section 1.01 hereof but excluding, with
respect to any such Eurodollar Loan, any reserve requirements reflected in
the applicable Eurodollar Rate); or
(iii) imposes any other condition affecting this Agreement (or any
of such extensions of credit or liabilities).
Each Lender will notify the Company through the Administrative Agent of any
event occurring after the date of this Agreement which will entitle such Lender
to compensation pursuant to this Section 4.01(a) as promptly as practicable
after it obtains knowledge thereof and determines to request such compensation,
and (if so requested by the Company through the Administrative Agent) will
designate a different Applicable Lending Office for the Eurodollar Loans of such
Lender if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender (provided that such Lender shall have no
obligation to so designate an Applicable Lending Office located in the United
States of America). Each Lender will furnish the Company with a statement
setting forth the basis and amount of each request by such Lender for
compensation under this Section 4.01(a). If any Lender requests compensation
44
from the Company under this Section 4.01(a), the Company may, by notice to such
Lender through the Administrative Agent, suspend the obligation of such Lender
to make additional Eurodollar Loans to the Company until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 4.04 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 4.01, in the event that, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender which includes Eurodollar
Loans or (ii) becomes subject generally to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Lender so
elects by notice to the Company (with a copy to the Administrative Agent), the
obligation of such Lender to make or continue, or to convert Base Rate Loans
into, Eurodollar Loans hereunder shall be suspended until the date such Lender
withdraws such notice or such Regulatory Change ceases to be in effect (in which
case the provisions of Section 4.04 hereof shall be applicable).
(c) Determinations and allocations by any Lender for purposes of this
Section 4.01 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans, and of the additional amounts required to
compensate such Lender in respect of any Additional Costs, shall be conclusive
absent manifest error.
Section 4.02. Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if, prior to the commencement of any Interest Period with
respect to any Eurodollar Loans:
(a) the Administrative Agent determines (which determination shall be
conclusive) that adequate and reasonable shall mean do not exist for
ascertaining the Eurodollar Base Rate for such Interest Period; or
(b) the Majority Lenders determine (which determination shall be
conclusive) and notify the Administrative Agent that the Eurodollar Base Rate
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining such Loans for such Interest Period;
then the Administrative Agent shall promptly notify the Company and each Lender
thereof, and so long as such condition remains in effect, the Lenders shall be
under no obligation to make Eurodollar Loans or to convert Base Rate Loans into
Eurodollar Loans and the Company shall, on the last day(s) of the then
45
current Interest Period(s) for the outstanding Eurodollar Loans, either prepay
such Loans or convert such Loans into Base Rate Loans in accordance with Section
2.07 hereof.
Section 4.03. Illegality. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it becomes unlawful for any Lender
or its Applicable Lending Office to (a) honor its obligation to make Eurodollar
Loans hereunder, or (b) maintain Eurodollar Loans hereunder, then such Lender
shall promptly notify the Company thereof through the Administrative Agent and
such Lender's obligation to make Eurodollar Loans hereunder shall be suspended
until such time as such Lender may again make and maintain Eurodollar Loans (in
which case the provisions of Section 4.04 hereof shall be applicable).
Section 4.04. Substitute Base Rate Loans. If the obligation of any
Lender to make Eurodollar Loans shall be suspended pursuant to Section 4.01,
4.02 or 4.03 hereof, all Loans which would otherwise be made by such Lender as
Eurodollar Loans shall be made instead as Base Rate Loans (and, if an event
referred to in Section 4.01(b) or 4.03 hereof has occurred and such Lender so
requests by notice to the Company with a copy to the Administrative Agent, each
Eurodollar Loan of such Lender then outstanding shall be automatically converted
into a Base Rate Loan on the date specified by such Lender in such notice) and,
to the extent that Eurodollar Loans are so made as (or converted into) Base Rate
Loans, all payments of principal which would otherwise be applied to such
Eurodollar Loans shall be applied instead to such Base Rate Loans.
Section 4.05. Compensation. The Company shall pay to the Administrative
Agent for the account of each Lender, upon the request of such Lender through
the Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost or
expense incurred by it as a result of:
(a) any payment, prepayment or conversion of a Eurodollar Loan made by
such Lender on a date earlier than the last day of an Interest Period for such
Loan; or
(b) any failure by the Company to borrow a Eurodollar Loan to be made
by such Lender on the date for such borrowing specified in the relevant notice
of borrowing under Section 2.11 hereof;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the principal
amount so paid, prepaid or converted or not borrowed for the period from the
date of such payment, prepayment or conversion or failure to borrow to the last
day of the Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan which would have commenced on the date
of such failure to
46
borrow) at the applicable rate of interest for such Loan provided for herein
over (ii) the interest component (as reasonably determined by such Lender) of
the amount (as reasonably determined by such Lender) such Lender would have bid
in the London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and maturities comparable to such period.
Section 4.06. Additional Costs in Respect of Letters of Credit. If as a
result of any Regulatory Change there shall be imposed, modified or deemed
applicable any tax, reserve, special deposit or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder or participations therein, and the result shall be to increase
the cost to any Lender of issuing or maintaining any Letter of Credit or any
participation therein, or reduce any amount receivable by any Lender hereunder
in respect of any Letter of Credit (which increase in cost, or reduction in
amount receivable, shall be the result of such Lender's reasonable allocation of
the aggregate of such increases or reductions resulting from such event), then,
upon demand by such Lender, the Company agrees to pay to such Lender, from time
to time as specified by such Lender, such additional amounts as shall be
sufficient to compensate such Lender for such increased costs or reductions in
amount. A statement as to such increased costs or reductions in amount incurred
by such Lender shall be submitted by such Lender to the Company and shall be
conclusive as to the amount thereof absent manifest error.
Section 4.07. Capital Adequacy. If any Lender shall determine that the
adoption or implementation of any applicable law, rule, regulation or treaty
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office) with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital of such Lender or any
Person controlling such Lender (a "Parent") as a consequence of its obligations
hereunder to a level below that which such Lender (or its Parent) could have
achieved but for such adoption, change or compliance (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time, within 15 days after demand by
such Lender (with a copy to the Administrative Agent), the Company shall pay to
such Lender such additional amount or amounts as will compensate such Lender for
such reduction. A statement of any Lender claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive absent manifest error. In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
47
ARTICLE 5
Conditions
Section 5.01. Phase I Effective Date. The Phase I Effective Date shall
occur on the first day on which all following conditions precedent shall have
been fulfilled to the satisfaction of the Administrative Agent:
(a) The Administrative Agent shall have received certified copies of
the certificate of incorporation and by-laws of the Company and each Subsidiary
Guarantor and of all corporate action taken by the Company and such Subsidiary
Guarantor authorizing the execution, delivery and performance of, in the case of
the Company, this Amended Agreement, and in the case of each Subsidiary
Guarantor, the Guarantor Acknowledgment (including, without limitation, a
certificate of the Company and such Subsidiary Guarantor setting forth the
resolutions of its Board of Directors authorizing the transactions contemplated
thereby).
(b) The Company and each Subsidiary Guarantor shall have delivered to
the Administrative Agent a certificate in respect of the name and signature of
each of the officers (i) who is authorized to sign on its behalf, in the case of
the Company, this Amended Agreement, and in the case of each Subsidiary
Guarantor, the Guarantor Acknowledgment and (ii) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with the Basic Documents. The Administrative
Agent and each Lender may conclusively rely on such certificates until it
receives notice in writing from the Company to the contrary.
(c) No default or unmatured event of default with respect to the
Company or any Subsidiary Guarantor shall have occurred and be continuing under
any material agreement or instrument to which it is party or by which it is
bound or to which it is subject.
(d) The Company shall have paid to the Administrative Agent, for its
account and for the account of the Lenders, fees in the amounts previously
agreed upon among the Company and the Administrative Agent; and shall have in
addition paid to the Administrative Agent all amounts payable under Section
10.03 hereof on or before the Phase I Effective Date.
(e) The Administrative Agent shall have received an opinion of Ropes &
▇▇▇▇, New York counsel to the Company, substantially to the effect of Exhibit D
hereto and covering such other matters relating to the transactions contemplated
hereby as the Majority Lenders may reasonably request.
48
(f) Each of the Lenders shall have received a copy of, and shall be
satisfied with, consolidated and consolidating balance sheets of the Company and
its Subsidiaries for the fiscal quarter ending December 31, 2002, and the
related statements of income, retained earnings and cash flow for the fiscal
quarter then ended together with such supporting documentation as such Lenders
shall have requested.
(g) The Administrative Agent shall have received counterparts of this
Amended Agreement and the Guarantor Acknowledgment, executed and delivered by or
on behalf of each of the parties thereto (or, in the case of any Lender as to
which the Administrative Agent shall not have received such a counterpart, the
Administrative Agent shall have received evidence satisfactory to it of the
execution and delivery by such Lender of a counterpart of this Amended
Agreement).
(h) The Administrative Agent shall have received such other documents
relating to the transactions contemplated hereby (including, without limitation,
amendments to the Security Documents, certificates of officers of the Company
and insurance certificates) as the Administrative Agent may reasonably request.
(i) The Administrative Agent shall have received evidence satisfactory
to it of the receipt by each Lockbox bank located in the United States of
America of instructions from the Administrative Agent to deposit amounts
received by it into the Collateral Account without further action of the
Company.
(j) The Company shall have obtained an amendment and waiver under the
Original Agreement with respect to financial covenant defaults thereunder at
September 30, 2002 and December 31, 2002 and other defaults, in form and
substance satisfactory to the Administrative Agent, and such waiver shall be in
full force and effect.
(k) The Administrative Agent shall have received evidence satisfactory
to it that the Company and the Subsidiary Guarantors shall have taken or caused
to be taken all such actions, executed and delivered or caused to be executed
and delivered all such agreements, documents and instruments and made or caused
to be made all such filings and recordings that may be necessary or, in the
opinion of the Administrative Agent, desirable in order to create in favor of
the Administrative Agent, for the benefit of the Lenders, a valid and perfected
first priority security interest in the Collateral (as defined in the Security
Documents).
(l) The Administrative Agent shall have received evidence satisfactory
to it that the financial statements referred to in Section 6.02(b)(i) have been
finalized and, subject only to the effectiveness of this Amended Agreement, are
ready for filing with the Securities and Exchange Commission.
49
(m) The Administrative Agent shall have received a Perfection
Certificate for each of the Company and the Subsidiary Guarantors. The
information set forth therein shall be, and the Company and each Subsidiary
Guarantor shall be deemed to have represented that such information is, correct
and complete.
Section 5.02. Phase II Effective Date. The Phase II Effective Date
shall occur on the first date, if any, prior to March 31, 2003, on which all of
the following conditions precedent shall have been fulfilled to the satisfaction
of the Administrative Agent:
(a) The Phase I Effective Date shall have occurred.
(b) Each of the Company, the Subsidiary Guarantors, the Administrative
Agent and the Lenders shall have entered into such additional or amended
Financing Documents as the Administrative Agent and the Lenders shall have
requested, each in form and substance satisfactory to the Administrative Agent.
(c) ▇.▇. ▇▇▇▇▇▇ Business Credit Corporation or another examiner
satisfactory to the Administrative Agent shall have conducted a field
examination of the Company's and the Subsidiary Guarantors' assets, liabilities,
management information and cash management systems, books and records, and the
results of such field examination shall be satisfactory to the Administrative
Agent in all respects.
(d) The Administrative Agent shall have conducted and be satisfied with
reasonable due diligence checks on the Company's and the Subsidiary Guarantors'
customers and suppliers.
(e) The Administrative Agent shall be satisfied with the Company's and
the Subsidiary Guarantors' management information systems and cash management
arrangements (including domestic Lockbox arrangements) and the Administrative
Agent shall have received counterparts of the Lockbox Agreements and Controlled
Account Agreements with respect to all Lockboxes and accounts that receive the
proceeds of Collateral, duly executed by all parties thereto and such Lockbox
Agreements and Controlled Account Agreements shall be in full force and effect
and in form and substance reasonably satisfactory to the Administrative Agent.
(f) The Administrative Agent shall have received and be satisfied with
an inventory appraisal, to be performed by a third party appraiser acceptable to
the Administrative Agent, of the inventory of the Company and each Subsidiary
Guarantor.
50
(g) The Administrative Agent shall have received and be satisfied with
landlord's waivers on the Company's and the Subsidiary Guarantors' leased
facilities and mortgagee's waivers on the Company's and the Subsidiary
Guarantors' owned and mortgaged facilities (if applicable). Such landlord's and
mortgagee's waivers shall be in a form and substance satisfactory to the
Administrative Agent. The Administrative Agent may, in its discretion, waive the
Company's and the Subsidiary Guarantors' obligation to deliver such waivers with
respect to one or more facilities or require, with respect to one or more
facilities, in lieu of delivering such waivers, exclusion of the Inventory at
such locations from the Borrowing Base or application of additional reserves
with respect thereto.
(h) Facility Availability shall be not less than $20,000,000 on the
date of satisfaction of all the conditions set forth above.
(i) The Administrative Agent shall have received and be satisfied with
opinions of counsel to the Company covering such matters as the Administrative
Agent shall reasonably require.
Section 5.03. Loans and Letters of Credit. The obligation of each
Lender to make any Loan to be made by it hereunder, or to issue any Letter of
Credit hereunder, is subject to the conditions precedent that, as of the date of
such Loan or such issuance, and before and after giving effect thereto:
(a) no Default shall have occurred and be continuing; and
(b) the representations and warranties made by each of the Company and
its Subsidiaries in each Basic Document to which it is a party shall be true
(or, in the case of Basic Documents which are not Financing Documents, true in
all material respects) on and as of the date of the making of such Loan or such
issuance, with the same force and effect as if made on and as of such date.
Each notice of borrowing by the Company hereunder, or request for issuance of a
Letter of Credit, shall constitute a certification by the Company to the effect
set forth in the preceding sentence (both as of the date of such notice and as
of the date of such borrowing or issuance).
51
ARTICLE 6
Representations and Warranties
The Company represents and warrants to the Lenders and the
Administrative Agent as follows:
Section 6.01. Corporate Existence. Each of the Company and its
Subsidiaries: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power, and has all governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being or as proposed to be conducted, except in the case of such licenses,
authorizations, consents and approvals, where the failure to obtain them would
not have a Material Adverse Effect; and (c) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify would have a Material
Adverse Effect.
Section 6.02. Information. (a) Each of the Offering Materials and the
financial statements referred to in Section 5.01(f) hereof (the "Company
Financials") did not as of the date thereof and will not as of the Phase I
Effective Date contain any untrue statement of a material fact or assumption or
omit to state a material fact or assumption necessary in order to make the
statements contained therein not misleading; provided that (i) although the
management of the Company believed as of the Phase I Effective Date that the
projections contained in the Offering Materials are reasonable, the Company
makes no representation as to their attainability, and (ii) it is understood
that the Offering Materials are not intended to, and do not, contain all the
information that would be contained in a prospectus prepared in accordance with
the requirements of the Securities Act of 1933, as amended.
(b) Without limiting the generality of paragraph (a):
(i) The audited consolidated balance sheets of the Company
and its Subsidiary as of September 30, 2002 and the related
consolidated statements of operations, stockholders' equity and cash
flows for the year then ended (the "Company Audited Statements"), have
been prepared in accordance with generally accepted accounting
principles as in effect on December 31, 2002 consistently applied. The
Company Audited Statements fairly present the financial position of the
Company and its Subsidiary at September 30, 2002 and the results of
their operations and cash flows for the year then ended in conformity
with generally accepted accounting principles.
(ii) The consolidated balance sheets of the Company and its
Subsidiary as of December 31, 2002 and the related consolidated
52
statements of operations, stockholders' equity and cash flows for the
three months then ended have been prepared in accordance with generally
accepted accounting principles for interim financial information as in
effect on January 15, 2003, and fairly present, in all material
respects, the financial position of the Company and its Subsidiary as
of December 31, 2002 and the results of their operations and cash flows
for the three months then ended.
(iii) The Company and its Subsidiaries did not on the date of
the balance sheets referred to in clauses (i) and (ii) above, and will
not on the Phase I Effective Date, have any material contingent
liabilities, material liabilities for taxes, unusual and material
forward or long-term commitments or material unrealized or anticipated
losses from any unfavorable commitments, except as referred to or
reflected or provided for in said balance sheets.
(c) The Company has disclosed to the Lenders in writing in or pursuant
to this Agreement and in the Offering Materials any and all facts (other than
general economic and industry conditions) which have or pose a material risk of
having a Material Adverse Effect.
(d) Since September 30, 2002 no event has occurred and no condition has
come into existence which has had, or is reasonably likely to have, a Material
Adverse Effect, it being understood that the restatement of the Company's
financial statements to the extent referred to in the Company's press release
dated December 20, 2002 shall not constitute a Material Adverse Effect.
Section 6.03. Litigation. Except as disclosed in the Company's press
release dated January 15, 2002, there are no legal or arbitral proceedings or
any proceedings by or before any governmental or regulatory authority or agency,
now pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries in which there is a reasonable
possibility of an adverse decision which could have a Material Adverse Effect.
Section 6.04. No Breach. None of the execution and delivery of the
Basic Documents, the consummation of the transactions therein contemplated, or
compliance with the terms and provisions thereof did or will conflict with or
result in a breach of, or require any consent under, the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any Basic Document or other
material agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which it is bound or to which it is subject, or constitute a
default under any such agreement or instrument, or (except for the Liens created
pursuant to the Security Documents) result in the creation or imposition of any
Lien upon any of the
53
revenues or assets of the Company or any of its Subsidiaries pursuant to the
terms of any such agreement or instrument.
Section 6.05. Corporate Action. Each of the Company and its
Subsidiaries has all necessary corporate power and authority to execute, deliver
and perform its obligations under the Basic Documents to which it is a party;
the execution, delivery and performance by the Company and its Subsidiaries of
the Basic Documents to which they are parties have been duly authorized by all
necessary corporate action; and this Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company and, on the Phase I Effective Date, each of
the other Basic Documents to which the Company or any of its Subsidiaries is a
party will constitute its legal, valid and binding obligation, in each case
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or moratorium or other
similar laws relating to the enforcement of creditors' rights generally and by
general equitable principles.
Section 6.06. Approvals. Each of the Company and its Subsidiaries has
obtained all authorizations, approvals and consents of, and has made all filings
and registrations with, any governmental or regulatory authority or agency and
any third party necessary for the execution, delivery or performance by it of
any Basic Document to which it is a party, or for the validity or enforceability
thereof, except for filings and recordings of the Liens created pursuant to, or
permitted by, the Security Documents.
Section 6.07. Regulations U and X. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U or X of the Board of Governors
of the Federal Reserve System) and no part of the proceeds of any Loan hereunder
will be used to purchase or carry any such margin stock.
Section 6.08. ERISA. The Company and each member of the Controlled
Group have fulfilled their obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of ERISA and the Code
with respect to each Plan. No such Person has (i) sought a waiver of the minimum
funding standard under Section 412 of the Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or Multiemployer Plan, or
made any amendment to any Plan, which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code, or (iii) incurred any liability under Title IV of ERISA (other than a
liability to the PBGC for premiums under Section 4007 of ERISA).
54
Section 6.09. Taxes. Each of the Company and its Subsidiaries has filed
all United States Federal income tax returns and all other material tax returns
which are required to be filed by it and has paid all taxes due pursuant to such
returns or pursuant to any assessment received by it, except to the extent the
same may be contested as permitted by Section 7.02 hereof. There are no material
tax disputes or contests pending as of the Phase I Effective Date. The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of taxes and other governmental charges are, in the opinion of the
Company, adequate.
Section 6.10. Subsidiaries; Agreements. (a) Schedule V hereto is a
complete and correct list, as of the Phase I Effective Date, of all Subsidiaries
of the Company and of all Investments held by the Company or any of its
Subsidiaries in any joint venture or other Person. Except for the Liens created
by the Security Documents, the Company owns, free and clear of Liens, all
outstanding shares of its Subsidiaries and all such shares are validly issued,
fully paid and non-assessable and the Company (or the respective Subsidiary of
the Company) also owns, free and clear of Liens, all such Investments.
(b) Schedule VI hereto is a complete and correct list of all credit
agreements, indentures, capitalized leases, obligations in respect of letters of
credit, guaranties, joint venture agreements, and other material instruments in
effect as of the Phase I Effective Date providing for, evidencing, securing or
otherwise relating to any Indebtedness or lease obligations of the Company or
any of its Subsidiaries, and such list correctly sets forth the names of the
debtor or lessee and creditor or lessor with respect to the Indebtedness or
lease obligations outstanding or to be outstanding and the property subject to
any Lien securing such Indebtedness or lease obligation, all as of the Phase I
Effective Date. The Company has heretofore delivered to the Administrative Agent
a complete and correct copy of all such credit agreements, indentures,
capitalized leases, letter of credit obligations, guaranties, joint venture
agreements and other material instruments, including any modifications or
supplements thereto, as in effect on the Phase I Effective Date.
Section 6.11. Investment Company Act. Neither the Company nor any of
its Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940, as amended, or, directly or indirectly, controlled by or
acting on behalf of any Person which is an investment company, within the
meaning of said Act.
Section 6.12. Public Utility Holding Company Act. Neither the Company
nor any of its Subsidiaries is a "holding company", or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
55
Section 6.13. Ownership and Use of Properties. Each of the Company and its
Subsidiaries will have on the Phase I Effective Date and at all times
thereafter, legal title or ownership of, or the right to use pursuant to
enforceable and valid agreements or arrangements, all tangible property, both
real and personal and all franchises, licenses, copyrights, patents and know-how
which is material to the operation of its business as proposed to be conducted.
Section 6.14. Environmental Matters. (a) The Company and each of its
Subsidiaries have obtained all permits, certificates, licenses, approvals,
registrations and other authorizations which are required under all applicable
Environmental Laws, except to the extent failure to have any such permit,
certificate, license, approval, registration or authorization would not have a
Material Adverse Effect. The Company and each of its Subsidiaries are in
compliance with the terms and conditions of all such permits, certificates,
licenses, approvals, registrations and authorizations, and are also in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any notice or demand letter from any
regulatory authority issued, entered, promulgated or approved thereunder, except
to the extent failure to comply would not have a Material Adverse Effect.
(b) In addition, (x) except as described in Schedule VII or (y) to the
extent that the liabilities that would result from the matters (excluding
matters described in Schedule VII) referred to in Sections 6.14(b)(i) through
(iv), 6.14(b)(v)(B) and 6.14(b)(vi) through (viii) would not exceed $250,000
individually or $750,000 in the aggregate,
(i) During the last four years, no written notice, notification,
demand, request for information, citation, summons or order has been
issued, no complaint has been filed, no penalty has been assessed and, to
the best knowledge of the Company, no investigation or review is pending or
threatened by any governmental entity or other Person with respect to (1)
any alleged failure by the Company or any of its Subsidiaries to have any
environmental permit, certificate, license, approval, registration or
authorization required in connection with the conduct of the business of
the Company or any of its Subsidiaries, (2) any alleged failure by the
Company or any of its Subsidiaries to comply with the terms and conditions
of any such permit, certificate, license, approval, registration or
authorization or of any other limitation, restriction, condition, standard,
prohibition, requirement, obligation, schedule or timetable contained in
any applicable Environmental Law, (3) any Regulated Activity or (4) any
Release of any Hazardous Substance;
(ii) Neither the Company nor its Subsidiaries nor the businesses
conducted by such Persons nor, to the best knowledge of the Company or
56
any of its Subsidiaries, any other Person, other than in compliance with
applicable Environmental Laws, has disposed of or placed, held, located or
otherwise handled, any Hazardous Substance on, under or at any property now or
previously owned, operated or leased by the Company or any of its Subsidiaries,
and none of such properties has been used (whether by the Company or any of its
Subsidiaries or, to the best knowledge of the Company or any of its
Subsidiaries, by any other Person) as a dump site or storage (whether permanent
or temporary) site for any Hazardous Substance; and
(A) no polychlorinated biphenyls (PCBs), radioactive material, urea
formaldehyde or lead is or has been present at any property now or
previously owned, operated or leased by the Company or any of its
Subsidiaries except in compliance with applicable Environmental Laws;
(B) no asbestos is or has been present in airborne form in
concentrations in violation of Environmental Laws or in friable form at any
property now or previously owned, operated or leased by the Company or any
of its Subsidiaries;
(C) there are no underground storage tanks, active or abandoned, which
have been used to store or which otherwise contain or have contained any
Hazardous Substance at any property now or previously owned, operated or
leased by the Company or any of its Subsidiaries; and
(D) except in accordance with the terms of any permit relating to or
required by Environmental Laws held by the Company or any of its
Subsidiaries, no Hazardous Substance has been Released in a reportable
quantity or is present in a threshold planning quantity (except as a
commercial product), where such a quantity has been established by statute,
ordinance, rule, regulation or order, at, on or under any property now or
previously owned, operated or leased by the Company or any of its
Subsidiaries.
(iii) To the best knowledge of the Company, none of the Company, any of its
Subsidiaries, or any of the businesses conducted by such Persons has transported
or arranged for the transportation (directly or indirectly) of any Hazardous
Substance except as a commercial product to any location which is listed or
proposed for listing on the National Priorities List promulgated pursuant to
CERCLA ("NPL"), or the Comprehensive Environmental Response, Compensation and
Liability Information System ("CERCLIS") or on any similar federal, state,
foreign or local list or which is the subject of federal, state, foreign or
local
57
enforcement actions or other investigations which may lead to claims against the
Company or any of its Subsidiaries for clean-up costs, remedial work, damages to
natural resources or for personal injury claims, including, but not limited to,
claims under CERCLA;
(iv) All oral or written notifications of a Release of a Hazardous
Substance required to be filed under any applicable Environmental Law have been
filed by or on behalf of the Company and its Subsidiaries;
(v) No property now or previously owned, operated or leased by the Company
or any of its Subsidiaries is listed or, to the best knowledge of the Company or
any of its Subsidiaries, proposed for listing, on (A) the NPL or (B) on CERCLIS
or any similar federal, state, foreign or local list of sites requiring
investigation or clean-up which may lead to claims for clean-up costs, remedial
work, damages to natural resources or for personal injury claims, including, but
not limited to, claims under CERCLA;
(vi) No Hazardous Substance generated by the Company or any of its
Subsidiaries has been stored (except as a commercial product), recycled, treated
or released, except in compliance with applicable Environmental Laws or disposed
of by the Company or any of its Subsidiaries at any location;
(vii) There are no Liens arising under or pursuant to any applicable
Environmental Laws on property owned, operated or leased by the Company or any
of its Subsidiaries, and, to the best knowledge of the Company, no actions by
any governmental entity have been taken or are in process which could subject
any of such properties to such Liens, and no notice or restriction relating to
the presence of any Hazardous Substance at any such property is required to be
placed in any deed to such property; and
(viii) There are no existing liabilities or potential liabilities of the
Company or any Subsidiary identified in any environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or which are in
the possession of the Company or any of its Subsidiaries in relation to any
property or facility now or previously owned, operated or leased by the Company
or any Subsidiary which are not disclosed in the reports described in Section
7.01(p) of the Original Agreement (as in effect prior to September 20, 2002) or
disclosed in Schedule VII. The Company conducts and has conducted all such
environmental investigations, studies, audits, tests, reviews or other analyses
in relation to all properties and facilities now or previously owned, operated
or leased by the Company or any of its Subsidiaries which are required under
applicable Environmental
58
Laws and maintains such records and reports for the time periods prescribed
under applicable Environmental Laws.
(c) For purposes of this Section, representations given with respect to the
Company and its Subsidiaries shall be deemed given also with respect to any
matters which could result in Environmental Liabilities, to the extent successor
liability could be imposed under applicable Environmental Laws on the Company or
any of its Subsidiaries.
Section 6.15. Bank Accounts. Schedule III lists all banks and other
financial institutions at which the Company or any Subsidiary Guarantor
maintains deposits or other accounts as of the Phase I Effective Date, and such
Schedule correctly identifies the name, address and telephone number of each
depositary, the name in which the account is held, a description of the purpose
of the account and the complete account number.
ARTICLE 7
Covenants
The Company agrees that, so long as any of the Working Capital Commitments
are in effect and until payment in full of all Loans hereunder, the termination
of all Letters of Credit and payment in full of all Letter of Credit
Liabilities, all interest thereon and all other amounts payable under the
Financing Documents, unless the Majority Lenders shall agree otherwise as
contemplated by Section 10.05 hereof:
Section 7.01. Information. The Company shall deliver to each of the
Lenders:
(a) as soon as available and in any event (i) in the case of the fiscal
year ended September 30, 2002, no later than January 31, 2002 and (ii)
otherwise, within 90 days after the end of each fiscal year of the Company,
consolidated (and, if the Company's Subsidiaries, if aggregated and considered
as a single subsidiary, would meet the definition of a "significant subsidiary"
contained as of the date hereof in Regulation S-X of the Securities and Exchange
Commission, consolidating) statements of income, retained earnings and cash flow
of the Company and its Subsidiaries for such year and the related consolidated
(and, if required, consolidating) balance sheet as at the end of such year,
setting forth in each case in comparative form the corresponding figures (if
any) for the preceding fiscal year, and accompanied, in the case of said
consolidated financial statements, by an opinion thereon of Deloitte & Touche
LLP or other independent certified public accountants of recognized national
standing, which opinion shall not contain a "going concern" or similar
qualification or exception or any
59
qualification or exception as to the scope of such audit and shall state that
said consolidated financial statements fairly present in all material respects
the consolidated financial condition and results of operations of the Company
and its Subsidiaries as at the end of, and for, such fiscal year, and a standard
letter from such accountants stating that, in performing the auditing procedures
necessary for their above-described opinion, nothing came to their attention
that caused them to believe, except as specifically stated, that (i) the Company
was not in compliance with any of the terms, covenants, provisions or conditions
of this Agreement and (ii) the Company's calculation of the Receivables and
Inventory included in the Borrowing Base as of the end of such fiscal year was
not fairly stated, in all material respects, in relation to the financial
statements from which such information was derived;
(b) as soon as available and in any event within 45 days after the end of
each fiscal quarter of the Company other than the last fiscal quarter in each
fiscal year, consolidated (and, if the Company's Subsidiaries if aggregated and
considered as a single subsidiary, would meet the definition of a "significant
subsidiary" contained as of the date hereof in Regulation S-X of the Securities
and Exchange Commission, consolidating) statements of income, retained earnings
and cash flow of the Company and its Subsidiaries, in each case in a form
satisfactory to the Administrative Agent, for such fiscal quarter and for the
portion of the fiscal year ended at the end of such fiscal quarter, and the
related consolidated (and, if required, consolidating) balance sheet as at the
end of such fiscal quarter, setting forth in each case in comparative form the
corresponding figures from the Company's operating budget for such fiscal year,
and accompanied, in each case, by (i) a statement of net sales, sales volume,
gross margin and operating profit by product group, (ii) a certificate of a
Senior Officer, which certificate shall state that said consolidated financial
statements fairly present in all material respects the consolidated financial
condition and results of operations of the Company as at the end of, and for,
such fiscal quarter (subject to normal year-end audit adjustments) in accordance
with GAAP, consistently applied, and, accompanied by, in form and detail
reasonably satisfactory to the Administrative Agent, (iii) a reconciliation, of
the Inventory and Receivables figures set forth in such financial statements as
at the end of such fiscal quarter to the Borrowing Base Certificate previously
delivered as at said date pursuant to clause (e) below, and (iv) a summary of
aging of receivables and a summary of aging of accounts payable;
(c) as soon as available and in any event within 20 Business Days after the
end of each monthly accounting period of the Company, consolidated (and, if the
Company's Subsidiaries, if aggregated and considered as a single subsidiary,
would meet the definition of a "significant subsidiary" contained as of the date
hereof in Regulation S-X of the Securities and Exchange Commission,
consolidating) statements of income, retained earnings and cash flow of the
Company and its Subsidiaries, in each case in a form satisfactory to the
60
Administrative Agent, for such monthly accounting period and for the portion of
the fiscal year ended at the end of such monthly accounting period, and the
related consolidated balance sheet as at the end of such monthly accounting
period, setting forth in each case in comparative form the corresponding figures
from the Company's operating budget for such fiscal year, and accompanied, in
each case, by (i) a statement of net sales, sales volume, gross margin and
operating profit by product group, and (ii) a certificate of a Senior Officer,
which certificate shall state that said consolidated financial statements fairly
present in all material respects the consolidated financial condition and
results of operations of the Company in accordance with GAAP (except for the
absence of footnotes), consistently applied, as at the end of, and for, such
period (subject to normal year-end audit adjustments);
(d) (i) not later than 30 days prior to the end of each fiscal year of the
Company, a copy of the operating budget, including, without limitation,
projection of the anticipated cash flows of the Company and its Subsidiaries,
divisions and product groups for such fiscal year and each monthly accounting
period included in such fiscal year, such budget to be prepared in accordance
with GAAP and accompanied by a certificate of a Senior Officer specifying the
assumptions on which such budget was prepared, stating that such officer has no
reason to question the reasonableness of any material assumptions on which such
budget was prepared and providing such other details as the Administrative Agent
may reasonably request, and (ii) as soon as available and in any event within 45
days after the end of each of the first three fiscal quarters of the Company in
each fiscal year, a projection for each of the remaining fiscal quarters in such
fiscal year of the anticipated consolidated cash flow of the Company and its
Subsidiaries and the related balance sheets;
(e) monthly (or with such greater frequency as the Administrative Agent
may reasonably request), within ten Business Days after the last day of each
calendar month (or by such other date as the Administrative Agent may reasonably
specify in the event the Administrative Agent requests that such information be
provided more frequently):
(i) a declaration or statement of (A) the aging of Receivables
and accounts payable and (B) Inventory (identifying Eligible Inventory and
ineligible inventory); all as of the prior month end and certified by a
Senior Officer and in form reasonably acceptable to the Administrative
Agent; and
(ii) a Borrowing Base Certificate.
(f) weekly, on Wednesday of each week (as of the immediately preceding
Saturday), a Weekly Collateral Certificate, certified by a Senior Officer.
61
(g) at the Administrative Agent's reasonable request, and within three
Business Days of any such request, certified true copies of customer's invoices,
or the equivalent, for all services rendered and goods provided; and
(h) at the Administrative Agent's reasonable request, and within a
reasonable time period, certified true copies of all contracts, security
agreements, mortgages and other documents executed by customers in connection
with all services rendered and any other information, reports, reconciliations,
account debtor's addresses or documents the Administrative Agent may call upon
the Company to submit from time to time;
(i) promptly upon (i) the mailing thereof to the shareholders or creditors
of the Company generally, copies of all financial statements, reports and proxy
statements so mailed or (ii) the delivery thereof to the holders of or trustee
for the Senior Notes, copies of all documents or notices required to be
delivered to such Persons pursuant to the Indenture;
(j) promptly upon the filing thereof, copies of all registration
statements (other than any registration statements on Form S-8 or its
equivalent) and any reports which the Company shall have filed with the
Securities and Exchange Commission;
(k) if and when the Company or any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a trustee to administer
any Plan, a copy of such notice; (iv) applies for a waiver of the minimum
funding standard under Section 412 of the Code, a copy of such application; (v)
gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (vi) gives notice
of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or makes any amendment to any Plan which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security, a certificate of a Senior Officer setting forth details as to such
occurrence and action, if any, which the Company or member of the Controlled
Group is required or proposes to take;
62
(l) promptly following the delivery thereof to the Company or to the Board
of Directors or management of the Company, a copy of any management letter or
written report by independent public accountants with respect to the financial
condition, operations, business or prospects of the Company;
(m) promptly after management of the Company knows that any Default has
occurred and is continuing, a notice of such Default, describing the same in
reasonable detail;
(n) once during each fiscal year of the Company, if requested by the
Administrative Agent or the Majority Lenders because it or they believe that
current liabilities and potential sources of future liabilities may have
increased materially since the date of the most recent such report or update, an
update prepared by an independent engineer satisfactory to the Administrative
Agent of the reports delivered pursuant to Section 7.01(p) of the Original
Agreement (as in effect prior to September 20, 2002), reporting any material
changes in the estimate of current liabilities and assessment of potential
sources of future liabilities contained therein;
(o) twice during each fiscal year, if requested by the Administrative
Agent, a list in form satisfactory to the Administrative Agent, of the names and
addresses of all account debtors of the Company and its Subsidiaries; and
(p) from time to time such other information regarding the financial
condition, operations, prospects or business of the Company as the
Administrative Agent or any Lender through the Administrative Agent may
reasonably request.
The Company will furnish to each Lender, at the time it furnishes each set
of financial statements pursuant to paragraphs (a), (b) or (c) above, a
certificate of a Senior Officer (i) to the effect that, to the best of his
knowledge after due inquiry, no Default has occurred and is continuing (or, if
any Default has occurred and is continuing, describing the same in reasonable
detail) and (ii) setting forth in reasonable detail the computations necessary
to determine whether it was in compliance with Sections 7.08 to 7.13, inclusive,
and 7.16 and 7.18 hereof as of the end of the respective monthly accounting
period, fiscal quarter or fiscal year.
Section 7.02. Taxes and Claims. The Company will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all material taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any property belonging to it (including with respect
to the Mortgages on such properties), prior to the date on which penalties
attach thereto, and all lawful claims which, if unpaid, might become a Lien upon
the property of the Company or such Subsidiary, provided that neither the
Company nor such Subsidiary shall be required to pay any such tax, assessment,
charge, levy or claim the payment of which is being contested in good faith and
by proper
63
proceedings if (x) it maintains adequate reserves with respect thereto, (y) such
contest, proceedings and reserves have been described in a certificate of a
Senior Officer delivered to the Lenders, and (z) foreclosure or realization upon
any Lien on the property of the Company or such Subsidiary has not occurred and
does not appear to be imminent.
Section 7.03. Insurance. The Company will maintain, and will cause each of
its Subsidiaries to maintain, insurance in responsible companies in such amounts
and against such risks as is usually carried by owners of similar businesses and
properties in the same general areas in which the Company and its Subsidiaries
operate, provided that in any event the Company shall maintain insurance not
less favorable than set forth in Schedule VIII.
Such insurance shall be written by financially responsible companies
selected by the Company, having an A.M. Best rating of "A-" or better and in a
financial size category of XV or larger, or by other companies acceptable to the
Majority Lenders, and (other than workers' compensation) shall name the
Administrative Agent as loss payee and/or as additional insured, as its
interests may appear. Each policy referred to in this Section 7.03 shall include
effective waivers by the insurer of all claims for insurance premiums against
the Administrative Agent or any Lender, provide that all insurance proceeds in
excess of $250,000 per claim which would otherwise be payable to the Company or
any Subsidiary of the Company under any of the policies referred to in this
Section 7.03 shall be adjusted with and payable to the Administrative Agent (for
deposit in the Collateral Account maintained pursuant to the Security Documents
and application in accordance with Section 2.04(c)), provide that it will not be
cancelled or reduced or amended except after not less than 30 days' written
notice to the Administrative Agent and provide that the interests of the
Administrative Agent and the Lenders shall not be invalidated by any act or
negligence of the Company or any Person having an interest in the Plants nor by
occupancy or use of the Plants for purposes more hazardous than permitted by
such policy nor by any foreclosure or other proceedings relating to the Plants.
The Company will advise the Administrative Agent promptly of any policy
cancellation, reduction or amendment.
On the Closing Date the Company delivered to the Administrative Agent
certificates of insurance satisfactory to the Administrative Agent evidencing
the existence of all insurance required to be maintained by the Company
hereunder and showing the termination or expiry date of such insurance.
Thereafter, not later than five Business Days prior to the termination or expiry
date of any such insurance the Company has delivered and shall deliver to the
Administrative Agent certificates of insurance evidencing that such insurance
has been renewed or replaced, subject only to the payment of premiums as they
become due. The Company shall not obtain or carry separate insurance concurrent
in form or contributing in the event of loss with that required by this Section
unless the
64
Administrative Agent is named as loss payee and insured therein, with loss
payable as provided herein. The Company will immediately notify the
Administrative Agent whenever any such separate insurance is obtained and shall
deliver to the Administrative Agent the certificates evidencing the same.
If, in the opinion of the Company, any of the insurance which it is
required to maintain pursuant to this Section is not available on commercially
reasonable terms, the Company shall so notify the Administrative Agent and the
Lenders and, with the consent of the Majority Lenders, may elect not to purchase
such insurance; provided that if the Company shall not have received notice of
disapproval from the Majority Lenders within 20 days of receipt by the Lenders
of such notice from the Company, the Lenders shall be deemed to have consented,
for the purposes of this Section, to the election not to purchase such
insurance.
Section 7.04. Maintenance of Existence; Conduct of Business. The Company
will preserve and maintain, and will cause each of its Subsidiaries to preserve
and maintain, its corporate existence and all material rights, privileges and
franchises necessary or desirable in the normal conduct of its business, and
will conduct its business in a regular manner; provided that nothing herein
shall prevent the merger and dissolution of any Subsidiary of the Company into
the Company or a Wholly-Owned Subsidiary so long as the Company or such
Wholly-Owned Subsidiary is the surviving corporation.
Section 7.05. Maintenance of and Access to Properties. The Company will
keep, and will cause each of its Subsidiaries to keep, all of its properties
necessary in its business in good working order and condition (having regard to
the condition of such properties at the time such properties were acquired by
the Company or such Subsidiary), ordinary wear and tear excepted, and proper
books of record and account in which entries shall be made in conformity with
GAAP of all dealings and transactions in relation to its business activities,
and will permit representatives of the Lenders to inspect such properties and,
upon reasonable notice and at reasonable times, to examine and make extracts and
copies from the books and records of the Company and any such Subsidiary.
Section 7.06. Compliance with Applicable Laws. The Company will comply, and
will cause each of its Subsidiaries to comply, with the requirements of all
applicable laws, rules, regulations and orders of any governmental body or
regulatory authority (including, without limitation, all Environmental Laws), a
breach of which would have a Material Adverse Effect, except where contested in
good faith and by proper proceedings.
Section 7.07. Litigation. The Company will promptly give to the
Administrative Agent (which shall promptly notify each Lender) notice in writing
of (i) all judgments against it or any of its Subsidiaries which individually
exceed $250,000 or in the aggregate exceed $500,000 and (ii) all litigation and
of all
65
proceedings of which it is aware before any courts, arbitrators or
governmental or regulatory agencies affecting the Company or any of its
Subsidiaries except litigation or proceedings which, if adversely determined,
would not in the reasonable opinion of the Company have a Material Adverse
Effect.
Section 7.08. Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except: (i) Indebtedness to the Lenders under the Financing Documents, (ii)
Indebtedness outstanding on the Phase I Effective Date and identified in
Schedule VI hereto and any renewals, extensions or refinancings of Indebtedness
in Part B of such Schedule, provided that such renewals, extensions or
refinancings shall not increase the amount of such Indebtedness or of the
collateral securing it, (iii) Indebtedness of Subsidiary Guarantors to the
Company in an aggregate principal amount at any time outstanding not to exceed
$55,000,000, so long as such Indebtedness is evidenced by one or more notes
satisfactory to the Administrative Agent, (iv) Indebtedness secured by Liens
permitted by clause (ii) of Section 7.11, (v) Foreign Currency Obligations or
Interest Rate Protection Obligations incurred in the ordinary course of
business, (vi) other Indebtedness of the Company in an aggregate principal
amount at any time outstanding not to exceed $1,000,000, (vii) Indebtedness of
the Company to the Government of Canada in an aggregate principal amount at any
time outstanding not to exceed $1,500,000, provided that (x) such Indebtedness
is unsecured and contains no covenant or event of default the effect of which is
to impose a restriction, limitation or obligation in favor of the lender not
imposed in favor of the Lenders hereunder and (y) payments with respect to the
principal thereof or interest thereon are not required prior to the fourth
anniversary of the date of incurrence thereof, (viii) the Senior Notes, (ix)
Indebtedness of the Company or any Wholly-Owned Subsidiary to any Wholly-Owned
Subsidiary and Guaranties by any Wholly-Owned Subsidiary of any Indebtedness
otherwise permitted by this Section, and (x) Indebtedness attributable to the
▇▇▇▇▇▇▇▇▇ Lease if amended or refinanced in accordance with Section 7.10(h).
Section 7.09. Minimum EBITDA. (a) The Company will not permit the
EBITDA for any period set forth below to be less the amount set forth below for
such period:
Period Minimum EBITDA
Fiscal quarter ended 3/31/03 $ 6,035,000
Two fiscal quarters ended 3/31/03 $16,433,000
Fiscal quarter ended 6/30/03 $ 7,675,000
Three consecutive fiscal quarters ended 6/30/03 $27,945,000
66
Fiscal quarter ended 9/30/03 $ 7,649,000
Four consecutive fiscal quarters ended 9/30/03 $39,419,000
Fiscal quarter ended 12/31/03 $ 7,949,000
Four consecutive fiscal quarters ended 12/31/03 $43,964,000
Fiscal quarter ended 3/31/04 $ 9,668,000
Four consecutive fiscal quarters ended 3/31/04 $49,412,000
Fiscal quarter ended 6/30/04 $ 9,875,000
Four consecutive fiscal quarters ended 6/30/04 $52,711,000
Fiscal quarter ended 9/30/04 $ 8,980,000
Four consecutive fiscal quarters ended 9/30/04 $54,076,000
Fiscal quarter ended 12/31/04 $ 8,620,000
Four consecutive fiscal quarters ended 12/31/04 $54,076,000
Fiscal quarter ended 3/31/05 $11,051,000
Four consecutive fiscal quarters ended 3/31/05 $54,706,000
Fiscal quarter ended 6/30/05 $12,119,000
Four consecutive fiscal quarters ended 6/30/05 $54,706,000
Fiscal quarter ended 9/30/05 $11,420,000
Four consecutive fiscal quarters ended 9/30/05 $54,706,000
Fiscal quarter ended 12/31/05 $ 9,748,000
Four consecutive fiscal quarters ended 12/31/05 $57,000,000
Section 7.10. Mergers, Asset Dispositions, Acquisitions, Etc. Except as
expressly permitted by Section 7.04, the Company will not, and will not permit
any of its Subsidiaries to, be a party to any merger or consolidation, or sell,
lease, assign, transfer or otherwise dispose of any assets, or acquire assets
from any Person, except the following:
(a) dispositions of inventory in the ordinary course of business;
(b) dispositions of worn out or obsolete tools, machinery or equipment
no longer used or useful in the business of the Company and its Subsidiaries,
provided that the proceeds of such dispositions are applied to purchase
replacement tools, machinery or equipment within 60 days of such dispositions;
67
(c) acquisitions of assets (other than fixed or capital assets) in
the ordinary course of business and expenditures in respect of fixed or capital
assets to the extent permitted under Section 7.16 hereof;
(d) acquisitions of Investments permitted under Section 7.12 hereof;
(e) dispositions of any asset having a fair market value not
exceeding $1,000,000;
(f) dispositions of assets not otherwise permitted pursuant to this
Section for cash proceeds in an amount not less than the fair market value of
the assets being disposed of (determined in good faith by the Board of Directors
and supported by a current third-party appraisal if the fair market value of any
asset disposed of in any one transaction or series of transactions exceeds
$2,500,000); provided that such cash proceeds, taken together with all other
cash proceeds received for assets disposed of pursuant to this clause 7.10(f),
and net of the amount of such proceeds used to replace the assets disposed of,
shall not exceed $5,000,000 in the aggregate;
(g) the deemed acquisition or sale of the ▇▇▇▇▇▇▇▇▇ Assets arising
from a use of proceeds of Loans permitted by Section 2.18(a)(iii); and
(h) dispositions of machinery and equipment acquired in the QPF
Acquisition.
Section 7.11. Liens. The Company will not, and will not permit any of
its Subsidiaries to, create or suffer to exist any Lien upon any property or
assets, now owned or hereafter acquired, securing any Indebtedness or other
obligation, except: (i) the Liens created pursuant to the Security Documents and
other Liens existing on the Phase I Effective Date and listed in Schedule VI
hereto; (ii) Liens (including capital leases) existing on other assets at the
date of acquisition thereof or which attach to such assets concurrently with or
within 90 days after the acquisition thereof, securing Indebtedness incurred to
finance the acquisition thereof in an aggregate principal amount at any time
outstanding not exceeding $2,000,000; (iii) other Liens arising in the ordinary
course of the business of the Company or such Subsidiary which are not incurred
in connection with the borrowing of money or the obtaining of advances or credit
and which do not materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business; and (iv) the
Permitted Encumbrances referred to in the Mortgages.
Section 7.12. Investments. The Company will not, and will not permit
any of its Subsidiaries to, make or permit to remain outstanding any advances,
loans or other extensions of credit or capital contributions (other than prepaid
expenses in the ordinary course of business) to (by shall mean of transfers of
68
property or assets or otherwise), or purchase or own any stocks, bonds, notes,
debentures or other securities of, any Person (all such transactions being
herein called "Investments"), except: (i) accounts permitted pursuant to Section
7.18; (ii) Liquid Investments in the name and under the control of the
Administrative Agent (or a collateral sub-agent for the Administrative Agent) as
contemplated by the Security Documents; (iii) subject to Section hereof,
Investments in accounts and notes receivable acquired in the ordinary course of
business as presently conducted; (iv) loans by the Company and its Subsidiaries
to employees in the ordinary course of business in an aggregate principal amount
at any time outstanding not exceeding $1,000,000 and Investments in employee
pension plans; (v) Investments existing on the Closing Date in Wholly-Owned
Subsidiaries and additional Investments in Subsidiaries, so long as such
Investments are made with cash and are in amounts reasonably needed to support
the operations of such Subsidiaries, in an aggregate amount (on a cost basis,
net of repayments by such Subsidiaries of such Investments) not to exceed
$75,000,000 at any one time outstanding; (vi) Investments consisting of
acquisitions permitted by Section 7.11; and (vii) Investments by Wholly-Owned
Subsidiaries consisting of loans or advances or transfers of property or assets
to the Company or another Wholly-Owned Subsidiary.
Section 7.13. Restricted Payments. The Company will not, and will not
permit any of its Subsidiaries to, declare or make any Restricted Payment,
except that so long as no Default has occurred and is continuing the Company may
make payments to repurchase or redeem and retire common stock of the Company
owned by employees of the Company or any of its Subsidiaries upon termination of
employment (including death or disability) of such employees in an aggregate
amount not to exceed $1,000,000 in any fiscal year of the Company.
Section 7.14. Transactions with Affiliates. Except as expressly
permitted by this Agreement, the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly: (i) make any Investment in an
Affiliate of the Company; (ii) transfer, sell, lease, assign or otherwise
dispose of any assets to an Affiliate of the Company; (iii) merge into or
consolidate with or purchase or acquire assets from an Affiliate of the Company;
or (iv) enter into any other transaction directly or indirectly with or for the
benefit of an Affiliate of the Company (including, without limitation,
Guaranties and assumptions of obligations of an Affiliate of the Company);
provided that (a) any Affiliate of the Company who is an individual may serve as
a director, officer or employee of the Company and receive reasonable
compensation or indemnification in connection with his or her services in such
capacity; (b) the Company or a Subsidiary of the Company may enter into any
transaction with an Affiliate of the Company providing for the leasing of
property, the rendering or receipt of services or the purchase or sale of
inventory and other assets in the ordinary course of business if the monetary or
business consideration arising therefrom would be substantially as advantageous
to the Company or such Subsidiary as the monetary or business
69
consideration which would obtain in a comparable arm's length transaction with a
Person not an Affiliate of the Company.
Section 7.15. Lines of Business. Neither the Company nor any of its
Subsidiaries shall engage to any substantial extent in any line or lines of
business activity other than the businesses conducted by it on the Phase I
Effective Date and the Melt Blown business (consisting of equipment to be
constructed for the manufacture of filtration products through a plastic
extrusion process).
Section 7.16. Capital Expenditures; Additional Property. The Company
will not permit the aggregate amount of Capital Expenditures made during any
fiscal year to exceed $20,000,000. If any property acquired or constructed by
the Company after the date hereof is not subject to the Lien of the Security
Documents, the Company will execute and deliver such mortgages and other
security documents as may be necessary, or as the Administrative Agent may
request, to subject such property to such a Lien.
Section 7.17. Modification of Other Agreements. The Company will not,
and will not permit any of its Subsidiaries to, consent to any modification,
supplement or waiver of any of the provisions of any of the Assigned Agreements
in any respect to the extent such modification, supplement or waiver would
impair materially the benefit to the Company or such Subsidiary of such Assigned
Agreement, it being understood that any modification, supplement or waiver of
any Assigned Agreement which adversely affects the amount or timing of any
payment by or to the Company or any of its Subsidiaries thereunder shall be
deemed to impair materially the benefit thereof to the Company for purposes
hereof, without the prior written consent of the Administrative Agent (with the
approval of the Majority Lenders). The Company will not amend or modify its
certificate of incorporation or by-laws or the Indenture, the Senior Notes or
any other document governing the Senior Notes (or any renewal, extension or
refinancing thereof) or, so long as the IRB Letter of Credit is outstanding, any
document governing obligations secured by the IRB Letter of Credit, without the
prior written consent of the Administrative Agent (with the approval of the
Majority Lenders); provided that if the Company shall not have received notice
of disapproval from the Majority Lenders within 20 days of receipt by the
Lenders of notice from the Company of a proposed modification, supplement,
waiver or amendment, the Lenders shall be deemed to have consented thereto.
Section 7.18. Bank Accounts; Cash and Liquid Investments. Neither the
Company nor any of its Subsidiaries (other than, prior to the Phase II Effective
Date, Applied Extrusion Technologies (Canada) Inc.) will maintain any accounts
with any bank or other financial institution or have Liquid Investments (other
than Liquid Investments made pursuant to Section 2.03(b)) at any one time
exceeding $10,000 in the aggregate except (i) the Collateral Accounts, (ii) any
Controlled Accounts, (iii) any Lockbox accounts with respect to which a letter
substantially
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in the form of the lockbox letter set forth in the Security Documents has been
executed in favor of the Administrative Agent, (iv) cash and Liquid Investments
of the Company held in rabbi trusts pursuant to the Company's Amended and
Restated Executive Deferred Compensation Plan dated August 14, 2001 and the
Amended and Restated 1999 Supplemental Executive Retirement Plan dated August
10, 2001 and (v) any accounts maintained solely to meet payroll disbursements
with respect to employees of the Company or its Subsidiaries, which accounts
shall contain amounts not in excess of two weeks' estimated payroll
disbursements. It is understood that notwithstanding any other provision of this
Agreement to the contrary, an aggregate amount not to exceed $300,000 at the
close of business on any day may remain in Controlled Accounts which are
operating accounts and need not be transferred to Collateral Accounts.
Section 7.19. Environmental Matters. The Company will promptly give to the
Lenders notice in writing of any complaint, order, citation, notice or other
written communication from any Person with respect to, or if the Company becomes
aware after due inquiry of, (i) the existence or alleged existence of a
violation of any applicable Environmental Law or Environmental Liability at,
upon, under or within any property now or previously owned, leased, operated or
used by the Company or any of its Subsidiaries or any part thereof, or due to
the operations or activities of the Company, any Subsidiary or any other Person
on or in connection with such property or any part thereof (including receipt by
the Company or any Subsidiary of any notice of the happening of any event
involving the Release or cleanup of any Hazardous Substance), (ii) any Release
on such property or any part thereof in a quantity that is reportable under any
applicable Environmental Law, (iii) the commencement of any cleanup pursuant to
or in accordance with any applicable Environmental Law of any Hazardous
Substances on or about such property or any part thereof and (iv) any pending or
threatened proceeding for the termination, suspension or non-renewal of any
permit required under any applicable Environmental Law, in each of cases (i),
(ii), (iii) and (iv), (x) which could reasonably be expected to result in
liability or expenses in excess of $250,000 or (y) which individually or in the
aggregate could have a Material Adverse Effect.
Section 7.20. Senior Notes. The Company shall not, and shall not permit any
of its Subsidiaries to, purchase, redeem, retire or otherwise acquire for value,
deposit any monies with any Person with respect to, or make any voluntary
payment or prepayment of the principal of or interest on, or any other amount
owing in respect of, any Senior Notes other than regularly scheduled payments of
interest in respect thereof required pursuant to the Senior Notes and the
Indenture.
Section 7.21. Certain Obligations Respecting Guaranties and Collateral.
(a) The Company shall notify the Administrative Agent immediately if it knows,
or has reason to know, that any application or registration relating to any
Copyright, Patent or Trademark that is material to the business of the
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Company or any of its Subsidiaries may become abandoned or dedicated, or of any
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Copyright Office, the United States Patent and Trademark
Office, or any court) regarding the Company's ownership of any Copyright, Patent
or Trademark that is material to the business of the Company or any of its
Subsidiaries, its right to register or patent the same, or to keep and maintain
the same. In the event that any right to Copyright, Copyright License, Patent,
Patent License, Trademark or Trademark License that is material to the business
of the Company or any of its Subsidiaries is infringed, misappropriated or
diluted by a third party, the Company shall notify the Administrative Agent
promptly after it learns thereof and shall promptly ▇▇▇ for infringement,
misappropriation or dilution or take such other action as is appropriate to
recover any and all damages for such infringement, misappropriation or dilution,
and take such other actions as the Company shall reasonably deem appropriate
under the circumstances to protect such Copyright, Copyright License, Patent,
Patent License, Trademark or Trademark License; provided that the Company shall
not be obligated to take any action if, in its reasonable business judgment, the
cost of such action exceeds the benefit to be derived therefrom. Capitalized
terms not otherwise defined in this subsection (a) shall have the meanings
ascribed to them in the Security Documents.
(b) The Majority Lenders shall have the right from time to time to
require the Company, pursuant to a written request from the Administrative
Agent, to cause any domestic Subsidiary of the Company as may be specified in
such request to become a party to the Subsidiary Guaranty or to execute and
deliver such other guaranties, in form and substance satisfactory to the
Majority Lenders, guaranteeing payment of the Company's obligations hereunder
and to provide, or to cause such Subsidiary to provide, Liens upon such assets
as may be specified in such request to secure the obligations of the Company and
such Subsidiary hereunder and under the Subsidiary Guaranty or such other
guaranties. Any such request shall be made by the Majority Lenders in the good
faith exercise of their discretion. Within 30 days after any such request, the
Company shall, and shall cause such Subsidiary of the Company to, (i) execute
and deliver to the Administrative Agent such number of copies as the
Administrative Agent may specify of documents creating such guaranties and Liens
and (ii) do all other things which may be necessary or which the Administrative
Agent may reasonably request in order to confer upon and confirm to the Lenders
the benefits of such security. Within 45 days after a request for security
pursuant hereto, the Company shall, and shall cause such Subsidiary of the
Company to, deliver such legal opinions, certificates, evidences of corporate
action or other documents as the Administrative Agent may reasonably request,
all in form and substance satisfactory to the Administrative Agent, relating to
the satisfaction of the Company's obligations under this Section.
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Section 7.22. Field Audits; Inventory Appraisals. The Company shall permit
the Administrative Agent or an Affiliate thereof or any other Person selected by
the Administrative Agent (the "Examiner") to conduct field audit examinations
of, among other things, the Company's and its Subsidiaries' assets, liabilities,
books, records, billing and collection processes and management information
systems three times during each fiscal year of the Company and inventory
appraisals annually (or, in each case, with such greater frequency as the
Administrative Agent may reasonably require); provided that the Company will
permit the Examiner to conduct such examinations and appraisal at any time and
from time to time upon the occurrence and during the continuance of a Default.
The Company will reimburse the Examiner for the expense of each field audit
examination and inventory appraisal at the Examiner's standard per diem rate per
person, plus actual out-of-pocket expenses or, if applicable, for such other
amounts as shall reasonably be charged from time to time by the Examiner for
work of this kind. In connection with such field audits, the Company will permit
the Examiner to make test verifications of the Receivables with the Company's
and its Subsidiaries' customers.
Section 7.23. Deposits into Collateral Account. The Company and each of
its Subsidiaries shall (a) subject to Section 2.04(a)(i) and Section 7.18, remit
to the Administrative Agent promptly following receipt, and hold in trust for
the Administrative Agent and the Lenders until so remitted, any and all moneys
received from any source for deposit into the Collateral Account, including
without limitation any proceeds from any equity investment or extraordinary
transaction, and (b) direct all financial institutions at which any Controlled
Accounts are maintained to remit to the Administrative Agent on a daily basis
(or at such other frequency as the Administrative Agent, in its discretion shall
specify to the Company), all collected funds in such Controlled Accounts. At all
times from and after the date hereof, the Company shall take all actions
necessary to maintain, preserve and protect the rights and interests of the
Administrative Agent with respect to all cash deposits of the Company and all
other proceeds of Collateral and shall not, without the Administrative Agent's
prior written consent, open any new or additional deposit or other bank
accounts.
Section 7.24. Lockbox Operation. The Company and each of its
Subsidiaries shall at all times direct their account debtors to make all
payments directly to Lockboxes or Controlled Accounts under the control of the
Administrative Agent or under the control of another financial institution
reasonably acceptable to the Administrative Agent that has entered into a
Controlled Account Agreement with the Administrative Agent.
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ARTICLE 8
Defaults
Section 8.01. Events of Default. If one or more of the following events
(herein called "Events of Default") shall occur and be continuing:
(a) default in the payment of the principal of any Loan, any Reimbursement
Obligation, or interest or any other amount payable under the Financing
Documents when due; or
(b) the Company or any of its Subsidiaries shall default in the payment
when due of any principal of or interest on Indebtedness having an aggregate
outstanding principal amount of at least $1,000,000 (other than the Loans); or
any event or condition shall occur which results in the acceleration of the
maturity of any such Indebtedness or enables (or, with the giving of notice or
lapse of time or both, would enable) the holder of any such Indebtedness or any
Person acting on such holder's behalf to accelerate the maturity thereof; or
(c) any representation or warranty made or deemed made by the Company or
any of its Subsidiaries in any Financing Document or in any certificate
furnished to any Lender or the Administrative Agent pursuant to the provisions
of any Financing Document, shall prove to have been false or misleading in any
material respect as of the time made or furnished; or
(d) (i) the Company shall default in the performance of any of its
obligations under clauses (e)(ii) or (m) of Section 7.01, or Section 7.03 or
Sections 7.08 through 7.20 or Section 7.22 through 7.24 hereof; (ii) any
Subsidiary Guarantor shall default in the performance of any of its obligations
under the Subsidiary Guaranty; (iii) the Company shall default in the
performance of its obligations under clause (f) of Section 7.01, and such
default shall continue unremedied for a period of one Business Day; or (iv) the
Company or any Subsidiary Guarantor shall default in the performance of any of
its other obligations in any Basic Document, and such default described in this
subclause (iv) shall continue unremedied for a period of 30 days after notice
thereof to the Company by the Administrative Agent or the Majority Lenders
(through the Administrative Agent); or
(e) the Company or any of its Subsidiaries shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become due;
or
(f) the Company or any of its Subsidiaries shall (i) apply for or consent
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Bankruptcy Code, (iv) file a petition seeking to take
advantage of any
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other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code, or (vi) take any corporate or
partnership action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of the Company or any of its Subsidiaries in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of such
Person or of all or any substantial part of its assets, or (iii) similar relief
in respect of such Person under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 days; or an order for relief against
such Person shall be entered in an involuntary case under the Bankruptcy Code;
or
(h) a final judgment or judgments for the payment of money shall be
rendered by a court or courts against the Company or any of its Subsidiaries in
excess of $250,000 in the aggregate, and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within 10 days from the date of entry thereof, or the
Company or such Subsidiary shall not, within said period of 10 days, or such
longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal; or
(i) the Company or any member of the Controlled Group shall fail to pay
when due an amount or amounts aggregating in excess of $250,000 which it shall
have become liable under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Liabilities in excess of $250,000 shall
be filed under Title IV of ERISA by the Company or any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer, any such Plan or Plans; or
a condition shall exist by reason of which the PBGC would be entitled to obtain
a decree adjudicating that any such Plan or Plans must be terminated; or there
shall occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause the Company or one or more members of the
Controlled Group to incur a current payment obligation in excess of $250,000; or
75
(j) any of the Assigned Agreements shall be terminated prior to the end of
its stated term, or shall cease to be in full force and effect prior to the end
of its stated term, for whatever reason, without the prior consent of the
Majority Lenders; or
(k) (i) as a result of one or more transactions after the date of this
Agreement, any "person" or "group" of persons (other than ▇▇▇▇ ▇▇▇▇▇▇, his
lineal descendants or trusts established by ▇▇▇▇ ▇▇▇▇▇▇ for his lineal
descendants) shall have "beneficial ownership" (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder) of 30% or more of the outstanding
common stock of the Company; or (ii) without limiting the generality of the
foregoing, during any period of 12 consecutive months, commencing after the date
of this Agreement, individuals who at the beginning of such 12-month period were
directors of the Company shall cease for any reason to constitute a majority of
the board of directors of the Company; or (iii) ▇▇▇▇ ▇▇▇▇▇▇, his lineal
descendants and trusts established by ▇▇▇▇ ▇▇▇▇▇▇ for his lineal descendants
shall have "beneficial ownership" of 40% or more of the outstanding common stock
of the Company; or
(l) (i) any Security Document or the Subsidiary Guaranty shall cease, for
any reason, to be in full force and effect or any party thereto (other than the
Lenders) shall so assert in writing; or (ii) any Security Document shall cease
to be effective to ▇▇▇▇▇ ▇ ▇▇▇▇ on the collateral described therein with the
priority purported to be created thereby; or
(m) the Company shall fail to completed the refinancing or extension of the
▇▇▇▇▇▇▇▇▇ Lease on terms and conditions reasonably satisfactory to the
Administrative Agent not later than 30 Business Days prior to the maturity of
such lease:
THEREUPON: the Administrative Agent may (and, if directed by the Majority
Lenders, shall) (a) declare the Working Capital Commitments terminated
(whereupon the Working Capital Commitments shall be terminated) and/or (b)
terminate any Letter of Credit providing for such termination by sending a
notice of termination as provided therein (and/or, in the case of the IRB Letter
of Credit, notify the trustee for the bonds secured by the IRB Letter of Credit
of such Event of Default and direct the trustee to declare an event of default
with respect to and accelerate such bonds, draw under the IRB Letter of Credit
and exercise remedies under the bond documents, and/or by notice to the Company,
the trustee and remarketing agent for such bonds, terminate the liquidity period
therefor) and/or (c) declare the principal amount then outstanding of and the
accrued interest on the Loans and Reimbursement Obligations and commitment fees,
letter of credit fees and all other amounts payable hereunder and under the
Notes to be forthwith due and payable, whereupon such amounts shall be and
become immediately due
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and payable, without notice (including, without limitation, notice of intent to
accelerate), presentment, demand, protest or other formalities of any kind, all
of which are hereby expressly waived by the Company and/or (d) exercise any or
all rights and remedies authorized or provided for in the Security Documents or
under applicable law; provided that in the case of the occurrence of an Event of
Default with respect to the Company referred to in clause (f), (g) or (k) of
this Section 8.01, the Working Capital Commitments shall be automatically
terminated and the principal amount then outstanding of and the accrued interest
on the Loans and Reimbursement Obligations and commitment fees, letter of credit
fees and all other amounts payable hereunder and under the Notes shall be and
become automatically and immediately due and payable, without notice (including,
without limitation, notice of intent to accelerate), presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Company.
Section 8.02. Collateral Account. The Company hereby agrees, in addition to
the provisions of Section 8.01 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the
Administrative Agent or the Majority Lenders, pay (and, in the case of any Event
of Default with respect to the Company referred to in clause (f), (g) or (k) of
Section 8.01 hereof, forthwith, without any demand or the taking of any other
action by the Lenders, it shall automatically be obligated to pay) to the
Administrative Agent an amount in immediately available funds equal to the then
aggregate amount available for drawings under all Letters of Credit issued for
the account of the Company, which funds shall be held by the Administrative
Agent in the Collateral Account maintained by the Company pursuant to the
Security Documents, and be subject to investment and withdrawal only as provided
therein.
ARTICLE 9
The Administrative Agent
Section 9.01. Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the Letters of Credit and the other Basic Documents with
such powers as are specifically delegated to the Administrative Agent by the
terms hereof and thereof, together with such other powers as are reasonably
incidental thereto. The Administrative Agent (which term as used in this Section
9.01 shall include reference to its affiliates and its and its affiliates'
officers, directors, employees and agents and to JPMorgan Chase acting in its
individual capacity hereunder as issuer of Letters of Credit): (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement,
the Letters of Credit and the other Basic Documents, and shall not by reason of
this Agreement,
77
the Letters of Credit or any other Basic Document be a trustee for any Lender;
(b) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement, the Letters of Credit
or any other Basic Document, or in any certificate or other document referred to
or provided for in, or received by any of them under, this Agreement, the
Letters of Credit or any other Basic Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, the
Letters of Credit or any other Basic Document or any other document referred to
or provided for herein or therein or for any failure by the Company or any of
its Subsidiaries or any other Person to perform any of its obligations hereunder
or thereunder; (c) shall not be required to initiate or conduct any litigation
or collection proceedings hereunder or under any other Basic Document except to
the extent requested by the Majority Lenders; and (d) shall not be responsible
for any action taken or omitted to be taken by it hereunder or under the Letters
of Credit, any other Basic Document or any other document or instrument referred
to or provided for herein or therein or in connection herewith or therewith,
except for its own gross negligence or willful misconduct. The Administrative
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Without in any way limiting any of the foregoing, each
Lender acknowledges that the Administrative Agent shall have no greater
responsibility in the operation of Letters of Credit than is specified in the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (or any replacement or
revision thereof in effect from time to time).
Section 9.02. Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Administrative Agent.
As to any matters not expressly provided for by this Agreement, the Letters of
Credit or any other Basic Document, the Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Majority Lenders and
such instructions of the Majority Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders.
Section 9.03. Defaults. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Default (other than the non-payment of
principal of or interest on Loans or Reimbursement Obligations) unless the
Administrative Agent has received notice from a Lender or the Company specifying
such Default and stating that such notice is a "Notice of Default". In the event
that the Administrative Agent receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the
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Lenders (and shall give each Lender prompt notice of each such non-payment). The
Administrative Agent shall (subject to Section 9.07 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders.
Section 9.04. Rights as a Lender. With respect to its Working Capital
Commitments and the Loans made and Letter of Credit Liabilities held by it,
JPMorgan Chase in its capacity as a Lender hereunder shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Administrative Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Administrative Agent
in its individual capacity. The Administrative Agent may (without having to
account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with the
Company (and any of its Affiliates) as if it were not acting as the
Administrative Agent, and the Administrative Agent may accept fees and other
consideration from the Company (in addition to the agency fees and arrangement
fees heretofore agreed to between the Company, the Administrative Agent for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
Section 9.05. Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 2.13(g), 10.03
or 10.04 hereof, but without limiting the obligations of the Company under said
Sections 2.13(g), 10.03 and 10.04 ), ratably in accordance with their respective
Working Capital Commitments, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement, the Letters of Credit or any other Basic Document or any
other documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Company is obligated to pay under Sections 2.13(g),
10.03 and 10.04 hereof but excluding, unless a Default has occurred and is
continuing, normal administrative costs and expenses incident to the performance
of its agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
Section 9.06. Non-reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
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information as it has deemed appropriate, made its own credit analysis of the
Company and decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement, the Letters of Credit or any of the other
Basic Documents. The Administrative Agent shall not be required to keep itself
informed as to the performance or observance by the Company (other than
maintaining records of payments by the Company to it) or any other Person of
this Agreement or any of the other Basic Documents or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Company or any other Person. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, under the Letters of Credit or the other
Basic Documents, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Company or any
other Person (or any of their affiliates) which may come into the possession of
the Administrative Agent.
Section 9.07. Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, under the Letters of Credit and under the other
Basic Documents, the Administrative Agent shall in all cases be fully justified
in failing or refusing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction by the Lenders of their indemnification
obligations under Section 9.05 hereof against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action.
Section 9.08. Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Company and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent reasonably acceptable to the Company. If no
successor Administrative Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Administrative Agent (the "Notice Date"), then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent reasonably acceptable to the Company. Any
successor Administrative Agent shall be (i) a Lender or (ii) if no Lender has
accepted such appointment within 40 days after the Notice Date, a bank which has
an office in New York, New York with a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
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Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Section 9.08 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Administrative Agent.
Section 9.09. Collateral Sub-Agents. Each Lender by its execution and
delivery of this Agreement agrees, as contemplated by the Security Documents,
that, in the event it shall hold any Liquid Investments referred to therein,
such Liquid Investments shall be held in the name and under the control of such
Lender and such Lender shall hold such Liquid Investments as a collateral
sub-agent for the Administrative Agent thereunder.
ARTICLE 10
Miscellaneous
Section 10.01. Waiver. No failure on the part of the Administrative Agent
or any Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under any Basic Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided in the Basic Documents are cumulative and not exclusive of any remedies
provided by law.
Section 10.02. Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex, telegraph,
telecopy, cable or other writing and telexed, telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof; or, as to any party, at
such other address as shall be designated by such party in a notice to the
Company and the Administrative Agent given in accordance with this Section
10.02. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 10.03. Expenses, Etc. The Company agrees to pay or reimburse each
of the Lenders and the Administrative Agent for paying: (a) the reasonable fees
and expenses of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the
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Administrative Agent, and special local counsel to the Administrative Agent in
the States in which the Mortgages are recorded in connection with (i) the
preparation, execution and delivery of this Agreement (including the Exhibits
hereto) and the Security Documents and the making of the Loans and issuance of
Letters of Credit hereunder and (ii) any modification, supplement or waiver of
any of the terms of this Agreement, the Letters of Credit or any other Basic
Document; (b) if an Event of Default occurs, all costs and expenses of each of
the Lenders and the Administrative Agent (including reasonable counsels' fees)
incurred as a result of such Event of Default and collection, enforcement,
bankruptcy, insolvency and other proceedings resulting therefrom; (c) all costs,
expenses, taxes, assessments and other charges incurred in connection with any
filing, registration, recording or perfection of any lien or security interest
contemplated by this Agreement, any Security Document or any document referred
to herein or therein; and (d) all costs, expenses and other charges in respect
of title insurance procured with respect to the Liens created pursuant to the
Mortgages.
Section 10.04. Indemnification. The Company shall indemnify the
Administrative Agent, the Lenders and each affiliate thereof and their
respective directors, officers, employees, attorneys and agents from, and hold
each of them harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from (i) any actual or
proposed use by the Company of the proceeds of any extension of credit (whether
a Loan or a Letter of Credit) by any Lender hereunder or breach by the Company
of this Agreement or any other Basic Document, (ii) any Environmental
Liabilities, (iii) any accident, injury to or death of Persons or loss of or
damage to property occurring in, on or about any of the Plants or on any
sidewalks, curbs, property or parking areas adjoining the Plants, (iv) the
performance of any labor or services or the furnishing of any materials or other
property in respect of any of the Plants, or (v) any investigation, litigation
or other proceeding (including any threatened investigation or proceeding)
relating to the foregoing, whether or not the indemnified Person is a party
thereto, and the Company shall reimburse the Administrative Agent and each
Lender, and each affiliate thereof and their respective directors, officers,
employees and agents, upon demand for any expenses (including legal fees and
fees of engineers, environmental consultants and similar technical personnel)
incurred in connection with any such investigation or proceeding; but excluding
any such losses, liabilities, claims, damages or expenses incurred by reason of
the gross negligence or willful misconduct of the Person to be indemnified or as
a result of a successful suit by the Company seeking to enforce its rights
against such Person under the Financing Documents.
Section 10.05. Amendments, Etc. Except as otherwise specifically
provided herein or therein, no amendment or waiver of any provision of this
Agreement or the Notes or any other Financing Document, nor any consent to any
departure by the Company therefrom, shall in any event be effective unless the
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same shall be agreed or consented to by the Majority Lenders and the Company,
and each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, that:
(a) no amendment, waiver or consent shall, unless in writing and signed by
all the Lenders, do any of the following: (i) increase any Working Capital
Commitment of any of the Lenders or subject the Lenders to any additional
obligations (except pursuant to Section 2.17); (ii) reduce the principal of, or
interest on, any Loan, Reimbursement Obligation or fees hereunder; (iii)
postpone any date fixed for any payment of principal of, or interest on, any
Loan, Reimbursement Obligation or fee hereunder pursuant to Sections 2.03, 2.05,
2.13 or 2.15 hereof; (iv) change the percentage of any of the Working Capital
Commitments or of the aggregate unpaid principal amount of any of the Loans and
Letter of Credit Liabilities, or the number of Lenders, which shall be required
for the Lenders or any of them to take any action under this Agreement; (v)
change any provision contained in Sections 2.18, Article 4, Section 10.03, or
Section 10.04 hereof or this Section 10.05 or Section 10.08 hereof; (vi) release
all or a substantial portion of the security for the obligations of the Company
under this Agreement or any Note;
(b) no amendment, waiver or consent shall, without the written consent of
the Supermajority Lenders, modify the Borrowing Base to increase the advance
rate percentages applicable to any category of Collateral included therein; and
(c) no amendment, waiver or consent shall be made with respect to Article
9 without the consent of the Administrative Agent.
For purposes of this Section 10.05, "Supermajority Lenders" shall mean, at
any time while no Loans or Letter of Credit Liabilities are outstanding, Lenders
having at least 75% (or, if at such time there are fewer than three Lenders,
100%) of the aggregate amount of the Working Capital Commitments and, at any
time while any Loans or Letter of Credit Liabilities are outstanding, Lenders
holding at least 75% (or, if at such time there are fewer than three Lenders,
100%) of the outstanding aggregate principal amount of the Loans and Letter of
Credit Liabilities (including, without limitation, participations in the Letters
of Credit).
Section 10.06. Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns except that the Company may not assign its rights or
obligations hereunder or under the Notes without the prior written consent of
all of the Lenders. Each Lender may assign any Loan or Loans or Letter of Credit
Liabilities or all or any part of its Working Capital Commitments (i) to any
affiliate thereof, (ii) to any other Lender, or (iii) with the consent of the
Administrative Agent, which consent shall not be unreasonably withheld, to any
other Eligible Assignee; provided that any assignment shall not be less than
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$2,000,000 or, if less, shall constitute an assignment of all of such Lender's
Working Capital Commitments, Loans and Letter of Credit Liabilities. Upon
execution by the assignor and the assignee of an instrument pursuant to which
the assignee assumes such rights and obligations, payment by such assignee to
such assignor of an amount equal to the purchase price agreed between such
assignor and such assignee and delivery to the Administrative Agent and the
Company of an executed copy of such instrument together with payment by such
assignee to the Administrative Agent of a processing fee of $2,500, such
assignee shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights and benefits as it would have if it were a Lender
hereunder and the assignor shall be, to the extent of such assignment (unless
otherwise provided therein) released from its obligations under this Agreement.
Upon the consummation of such assignment, the Company shall make appropriate
arrangements so that, if required, new Notes are issued to the assignor and the
assignee. If such assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the date of the
applicable instrument of assumption, deliver to the Company and the
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 3.05(f).
Each Lender may (without the consent of any other party to this Agreement) sell
participations in all or any part of any Loan or Loans made or Letter of Credit
Liabilities held by it to another bank or other entity, in which event the
participant shall not have any rights under this Agreement (except as provided
in the next succeeding sentence hereof), or in the case of a Loan, such Lender's
Note (the participant's rights against such Lender in respect of such
participation to be those set forth in the agreement executed by such Lender in
favor of the participant relating thereto, which agreement shall not give the
participant the right to consent to any modification, amendment or waiver other
than one described in clause (i), (ii), (iii) or (vi) of Section 10.05 hereof).
The Company agrees that each participant shall be entitled to the benefits of
Sections 3.03 and Article 4 with respect to its participation; provided that no
participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such participant had no such transfer occurred. Each Lender may furnish any
information concerning the Company and its Subsidiaries in the possession of
such Lender from time to time to assignees and participants (including
prospective assignees and participants) which have agreed in writing to be bound
by the provisions of Section 10.07 hereof. The Administrative Agent and the
Company may, for all purposes of this Agreement, treat any Lender as the holder
of any Note drawn to its order (and owner of the Loans evidenced thereby) until
written notice of assignment or other transfer shall have been received by them
from such Lender. Notwithstanding anything to the contrary, any Lender may at
any time assign all or any portion of its rights under this Agreement, its Notes
and the other Financing Documents to a Federal Reserve Bank. No such assignment
shall release the transferor Lender from its obligations under the Financing
Documents.
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(b) Notwithstanding anything to the contrary contained herein, any Lender
(a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC")
of such Granting Lender, identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the Company, the option to
provide to the Company all or any part of any Loan that such Granting Lender
would otherwise be obligated to make to the Company, provided that (i) nothing
herein shall constitute a commitment to make any Loan by any SPC and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by the Granting Lender. Each party hereto agrees that no SPC
shall be liable for any payment under this Agreement for which a Lender would
otherwise be liable, for so long as, and to the extent, the related Granting
Lender makes such payment. In furtherance of the foregoing, each party hereto
hereby agrees that, prior to the date that is one year and one day after the
payment in full of all outstanding senior indebtedness of any SPC, it will not
institute against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceedings under the laws of the United States or any State thereof.
In addition, notwithstanding anything to the contrary contained in this Section
10.06 any SPC may (i) with notice to, but without the prior written consent of,
the Company or the Administrative Agent and without paying any processing fee
therefor, assign all or portion of its interests in any Loans to its Granting
Lender or to any financial institutions (if consented to by the Company and the
Administrative Agent) providing liquidity and/or credit facilities to or for the
account of such SPC to fund the Loans made by such SPC or to support the
securities (if any) issued by such SPC to fund such Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of a surety, guarantee or
credit or liquidity enhancement to such SPC.
Section 10.07. Confidentiality. Each Lender agrees to exercise all
reasonable efforts to keep confidential any information delivered or made
available by the Company to it which is clearly indicated to be confidential
information; provided that nothing herein shall prevent any Lender from
disclosing such information (i) to any other Lender, (ii) to its officers,
directors, employees, agents, attorneys and accountants who have a need to know
such information in accordance with customary banking practices and who receive
such information having been made aware of the restrictions set forth in this
Section, (iii) upon the order of any court or administrative agency, (iv) upon
the request or demand of any regulatory agency or authority having jurisdiction
over such Lender, (v) which has been publicly disclosed, (vi) to the extent
reasonably required in connection with any litigation to which the
Administrative Agent, any Lender, the Company or their respective affiliates may
be a party, (vii) to the
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extent reasonably required in connection with the exercise of any remedy
hereunder, (viii) to such Lender's legal counsel and independent auditors,
and (ix) to any actual or proposed participant or assignee of all or part
of its rights hereunder which has agreed in writing to be bound by the
provisions of this Section 10.07.
Section 10.08. Survival. The obligations of the Company under Sections
2.13(g), 3.05, 4.01, 4.05, 4.06, 4.07, 10.03 and 10.04 hereof and the
obligations of the Lenders under Section 10.05 shall survive the repayment
of the Loans and Reimbursement Obligations and the termination of the
Working Capital Commitments and the Letters of Credit.
Section 10.09. Captions. The table of contents and the captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any
provision of this Agreement.
Section 10.10. Counterparts; Integration. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement
constitutes the entire agreement and understanding among the parties hereto
and supersedes any and all prior agreements and understandings, oral and
written, relating to the subject matter hereof (except to the extent
specific reference is made to any such agreement in Section 2.15 hereof).
Section 10.11. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. THE COMPANY HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT
SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO
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THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.12. Effectiveness. This Amended Agreement shall become effective
on the date on the Phase I Effective Date. On the Phase I Effective Date, the
Original Agreement will be automatically amended and restated in its entirety to
read as set forth herein. On and after the Phase I Effective Date (i) the rights
and obligations of the parties hereto shall be governed by this Amended
Agreement; provided that rights and obligations of the parties hereto with
respect to the period prior to the Phase I Effective Date shall continue to be
governed by the provisions of the Original Agreement as in effect prior to the
Phase I Effective Date, and (ii) each reference to "the date hereof" shall mean
"the Phase I Effective Date". From and including the Phase I Effective Date, (i)
the Working Capital Commitment of each Lender shall be the amount set forth
opposite the name of such Lender on the signature pages hereof, as such amount
may be reduced from time to time pursuant to Section 2.10 hereof, and (ii) each
of LaSalle Business Credit, Inc., PNC Bank, N.A., and Provident Bank (x) shall
be released from its obligations (and shall have no rights other than the right
to any payment due to it except with respect to Section 2.17) under the Original
Agreement and (y) shall have no rights or obligations under this Amended
Agreement.
ARTICLE 11
Amendment of Security Agreement
The Security Agreement is amended as follows:
Section 11.01. Amendment to Definitions. (a) Section 1 of the Security
Agreement is amended by amending the definition of Secured Obligation to read in
its entirety as follows:
"Secured Obligations" means the obligations secured under this
Agreement, including (a) all principal of and interest (including, without
limitation, any interest which accrues after or would accrue but for the
commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Company, whether or not
allowed or allowable as a claim in any such case, proceeding or other
action) on any Loan to the Company under, or any Note issued by the Company
pursuant to, or any Reimbursement Obligation of the Company under, the
Credit Agreement; (b) all other amounts payable by the Company under the
Credit Agreement; (c) all other amounts payable by the Company hereunder or
under any other Security Document; (d) all Addition Secured Obligations and
(e) any renewals or extensions of any of the foregoing.
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(b) Section 1 of the Security Agreement is amended by adding the following
new definitions in their appropriate alphabetical order:
"Additional Secured Obligations" means, on any date, Interest Rate
Protection Obligations and Foreign Exchange Obligations to Lenders which
the Company has, on or prior to such date, designated as additional Secured
Obligations for the purposes hereof by delivering to the Administrative
Agent a certificate signed by a Senior Officer that (i) identifies such
Interest Rate Protection Obligations or Foreign Exchange Obligations (as
applicable), specifies the name and address of the Lender party thereto,
the notional principal amount thereof and the expiration date thereof and
(ii) states that such Interest Rate Protection Obligations or the Foreign
Exchange Obligations (as applicable) are designated as Secured Obligations
for the purposes hereof.
"Collateral Support" means all property (real or personal) assigned,
hypothecated or otherwise securing any Collateral and shall include any
security agreement or other agreement granting a lien or security interest
in such real or personal property.
"Contingent Secured Obligations" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature at such time,
including any Secured Obligation that is:
(i) an obligation to reimburse for drawings not yet made under a
Letter of Credit;
(ii) an Interest Rate Protection Obligation or Foreign Exchange
Obligation that cannot be quantified at such time;
(iii) any other obligation (including any Guaranty) that is
contingent in nature at such time; or
(iv) an obligation to provide collateral to secure any of the
foregoing types of obligations.
"Non-Contingent Secured Obligation" means any Secured Obligation other
than a Contingent Secured Obligation.
"Permitted Liens" means the Security Interests and the other Liens on
the Collateral permitted to be created, assumed or to exist pursuant to
Section 7.11 of the Credit Agreement.
"Receivables Records" means (i) all original copies of all documents,
instruments or other writings or electronic records or other
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Records (as defined in the UCC) evidencing the Accounts, (ii) all books,
correspondence, credit or other files, Records (as defined in the UCC),
ledger sheets or cards, invoices, and other papers relating to Accounts,
including, without limitation, all tapes, cards, computer tapes, computer
discs, computer runs, record keeping systems and other papers and documents
relating to the Accounts, whether in the possession or under the control of
the Company or any computer bureau or agent from time to time acting for
the Company or otherwise, (iii) all evidences of the filing of financing
statements and the registration of other instruments in connection
therewith, and amendments, supplements or other modifications thereto,
notices to other creditors or agents thereof, and certificates,
acknowledgments, or other writings, including, without limitation, lien
search reports, from filing or other registration officers, (iv) all credit
information, reports and memoranda relating thereto, and (v) all other
written or non-written forms of information related in any way to the
foregoing or any Accounts.
"Supporting Obligations" means "supporting obligations" as defined in
the UCC.
(c) Section 1 of the Security Agreement is amended by deleting the
definition of Collateral Account.
Section 11.02. Amendment to Section 3. Section 3 of the Security Agreement
is amended by adding at the end of paragraph (A)(10) the following new
paragraph:
The parties hereto acknowledge that it is the intention of the Company
that the assets which have been irrevocably deposited in trusts to
fund the Company's obligations under the Company's Amended and
Restated Deferred Compensation Plan dated August 14, 2001 and Amended
and Restated Supplemental Executive Retirement Plan dated August 10,
2001, each as amended from time to time (collectively, the "Plans"),
are not to be available to creditors of the Company unless the Company
is Insolvent, as defined in the agreements establishing such trusts.
The parties further acknowledge that, unless such assets are available
to creditors of the Company, whether because the Company is Insolvent
or otherwise, the assets so deposited are not considered to be assets
of the Company, including, without limitation, for purposes of this
Agreement or any of the other Financing Documents.
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Section 11.03. Amendment to Section 4. (a) Section 4 of the Security
Agreement is amended by amending paragraphs (C), (F), (G) and (H) thereof to
read in their entirety as follows:
(C) [Intentionally Omitted]
(F) [Intentionally Omitted]
(G) [Intentionally Omitted]
(H) [Intentionally Omitted]
Section 11.04. Amendment to Section 5. Section 5 of the Security Agreement
is amended to read in its entirety as follows:
SECTION 5 INVENTORY, EQUIPMENT AND ACCOUNTS
5.1 Equipment and Inventory
(a) Representations and Warranties. The Company represents and
warrants that, as of January 21, 2003, all of the Equipment and Inventory
included in the Collateral is at the locations specified in Section 2 of
the Perfection Certificate; and
(b) Covenants and Agreements. The Company covenants and agrees that:
(i) it shall keep the Equipment and Inventory in the locations
specified in its Perfection Certificate (as amended or supplemented
from time to time) unless it shall have (a) notified the
Administrative Agent in writing, at least thirty days prior to any
change in locations, identifying such new locations and providing
landlords' and mortgagees' waivers and consents with respect to such
new location and such other information in connection therewith as the
Administrative Agent may reasonably request and (b) taken all actions
necessary or advisable to maintain the continuous validity, perfection
and the same or better priority of the Administrative Agent's security
interest in the Collateral intended to be granted and agreed to
hereby, or to enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder, with respect to such Equipment and
Inventory;
(ii) it shall keep records (which shall be correct and accurate
in all material respects) of the Inventory, itemizing and describing
the kind, type and quantity of Inventory, the Company's
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cost therefor and (where applicable) the current list prices for the
Inventory, in each case, in reasonable detail;
(iii) it shall not deliver any Document to any Person other than
(x) the issuer of such Document to claim the goods evidenced thereby
or (y) the Administrative Agent;
(iv) if any Equipment or Inventory is in possession or control
of any one or more third parties, including, without limitation, any
warehouseman, bailee or agent, the Company shall join with the
Administrative Agent in notifying such third parties of the
Administrative Agent's security interest and obtaining an
acknowledgment (authenticated in accordance with the UCC) from such
third parties that it is holding the Equipment and Inventory for the
benefit of the Administrative Agent and will act upon the instructions
of the Administrative Agent without further consent from any Company
or any other Person; provided that, unless otherwise requested by the
Administrative Agent acting on the instructions of the Majority
Lenders this Section 5.2(b)(iv) shall not be applicable with respect
to Equipment and Inventory in possession or control of any one or more
third parties with a value of less than $500,000 in the aggregate; and
5.2 Accounts
(a) Representations and Warranties. The Company represents and
warrants that:
(i) each Account (A) is and will be the legal, valid and
binding obligation of the account debtor in respect thereof,
representing an unsatisfied obligation of such account debtor, (B) is
and will be enforceable in accordance with its terms, (C) is not and
will not be subject to any setoffs, defenses, taxes, counterclaims
(except for discounts required by contract or agreement made in the
ordinary course of business, corrections of billing errors in the
ordinary course of business and discounts, credits and allowances
expressly permitted by Section 5.2(b)(v)) and (D) is and will be in
compliance with all applicable laws, whether federal, state, local or
foreign;
(ii) none of the account debtors in respect of any Account that
is included in the Borrowing Base calculation set forth on any
Borrowing Base Certificate is the government of the United States or
Canada, any agency or instrumentality thereof, any state or
municipality, or any foreign sovereign. No Account requires the
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consent of the account debtor in respect thereof in connection with
the pledge hereunder, except any consent which has been obtained;
(iii) no Account is evidenced by, or constitutes, an Instrument
which has not been delivered to, or otherwise subjected to the control
of, the Administrative Agent in accordance with Section 5.2(c); and
(iv) with respect to Accounts: (A) each existing Account
represents, and each future Account shall represent, a bona fide sale
or lease and delivery of goods or rendition of services by the Company
in the ordinary course of business; (B) each existing Account is, and
each future Account shall be, at the time any such Account arose and
at the time any such Account is billed, for a liquidated amount
payable by the account debtor thereon on the terms set forth in the
invoice therefor, without offset, deduction, defense, or counterclaim,
other than discounts required by contract or agreement made in the
ordinary course of business, corrections of billing errors in the
ordinary course of business, and discounts, credits and allowances
expressly permitted by Section 5.1(b)(v); (C) each copy of an invoice
or claim form delivered to the Administrative Agent by the Company
shall be a genuine copy of the original invoice or claim form sent to
the account debtor named therein; (D) all goods described in any
invoice or claim form representing a sale of goods shall have been
delivered to the account debtor and all services of the Company
described in any invoice or claim form shall have been performed; and
(E) no direction of the Company or any other Person is in effect
directing any account debtor to make payments in respect of the
Accounts other than to a Lockbox, a Controlled Account or a Collateral
Account.
(b) Covenants and Agreements: The Company hereby covenants and
agrees that:
(i) it shall keep and maintain at its own cost and expense
records (which shall be accurate and complete in all material
respects) of the Accounts, including, but not limited to, the
originals of all documentation with respect to all Accounts and
records of all payments received and all credits granted on the
Accounts, all merchandise returned and all other dealings therewith;
(ii) it shall perform in all material respects all of its
obligations with respect to the Accounts;
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(iii) The Company shall use its best efforts, subject to
reasonable business practices, to collect from its account debtors, as
and when due, any and all amounts owing under or on account of each
Account (including, without limitation, Accounts which are delinquent,
such Accounts to be collected in accordance with lawful collection
procedures) and to apply forthwith upon receipt thereof all such
amounts as are so collected to the outstanding balance of such
Account; provided that the Company shall not (x) other than as
expressly permitted by Section 5.2(b)(v), compromise or settle any
dispute, claim or legal proceeding with respect to any Account for
less than the total unpaid balance thereof or (y) other than as
expressly permitted by Section 5.2(b)(v), allow any credit or discount
on any Account; and provided further that if an Event of Default shall
have occurred and be continuing, the Company shall not (x) grant any
extension or renewal of the time of payment of any Account or (y)
release, wholly or partially, any Person liable for the payment of any
Account.
(iv) it shall ▇▇▇▇ conspicuously, in form and manner reasonably
satisfactory to the Administrative Agent, all Instruments and other
evidence of Accounts (other than any delivered to the Administrative
Agent as provided herein), as well as the Accounts Records with an
appropriate reference to the fact that the Administrative Agent has a
security interest therein;
(v) with respect to Accounts: (A) it shall not re-date any
invoice, claim form or sale relating to any Account; (B) if it becomes
aware of any matter that is reasonably likely to materially adversely
affect any individual Account with an outstanding balance of $500,000
or more, including information regarding the relevant account debtor's
credit worthiness, the Company shall promptly so advise the
Administrative Agent; (C) it shall not accept any note, warrant or
other instrument (except a check or other instrument for the immediate
payment of money) with respect to any Account without the written
consent of the Administrative Agent (it being understood that if the
Administrative Agent consents to the acceptance of any such note,
warrant or other instrument, it shall be considered as evidence of the
Account and not payment thereof, and the Company shall promptly
deliver such note, warrant or instrument to the Administrative Agent,
appropriately endorsed and regardless of the form of presentment,
demand, notice of dishonor, protest, and notice of protest with
respect thereto, the account debtor shall remain liable thereon until
such note, warrant or instrument is paid
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in full); (D) it shall notify the Administrative Agent promptly of all
disputes and claims (other than as to discounts required by contract
or agreement made in the ordinary course of business and corrections
of billing errors in the ordinary course of business) with any account
debtor, involving in excess of $250,000 for any single dispute or
claim and in excess of $500,000 for all such disputes and claims,
whether any such account debtor is acting in its capacity as an
account debtor or in its individual capacity; (E) it shall not grant
any discount, credit or allowance with respect to any Account to any
account debtor without the consent of the Administrative Agent, except
for: (i) discounts or rebates required by contract or agreement made
in the ordinary course of business and corrections of billing errors
in the ordinary course of business; and (ii) any other discount which
does not exceed $150,000, provided that the aggregate amount of
discounts permitted pursuant to this clause (ii) during any calendar
year with respect to any single account debtor shall not exceed
$500,000; (F) if an account debtor returns any Inventory to the
Company when no Event of Default exists, then the Company shall
promptly determine the reason for such return and shall issue a credit
memorandum to the account debtor in the appropriate amount; provided
that the Company shall immediately report to the Administrative Agent
in the event that the aggregate amount of such returns exceed $700,000
during any year with respect to any single account debtor (which
report shall indicate the reasons for the returns and the locations
and condition of the returned Inventory); and (G) if an account debtor
returns any Inventory to the Company when an Event of Default exists
and such Inventory is returned in a condition that makes it unfit for
resale in the ordinary course of business, the Company shall: (i) hold
such returned Inventory in trust for the Administrative Agent; (ii)
segregate all such returned Inventory from all of its other property;
(iii) dispose of such returned Inventory solely according to the
written instructions of the Administrative Agent; and (iv) not issue
any credits or allowances with respect thereto without the prior
written consent of the Majority Lenders. All returned Inventory shall
remain subject to the Administrative Agent's security interest.
Whenever any Inventory is returned for which a Account had been
created, such Account shall be credited to the extent of such returned
Inventory, with the credit reported in the Weekly Collateral
Certificate; and
(vi) it shall use its best efforts to keep in full force and
effect any Supporting Obligation or Collateral Support relating to any
Account.
94
(c) Delivery and Control of Accounts. The Company will promptly
deliver and pledge each Instrument to the Administrative Agent,
appropriately endorsed to the Administrative Agent, provided that so long
as no Event of Default shall have occurred and be continuing, the Company
may retain for collection in the ordinary course any Instruments (other
than checks and drafts constituting payments in respect of Accounts, as to
which the provisions of Section 5.2(d) shall apply) received by it in the
ordinary course of business and the Administrative Agent shall, promptly
upon request of the Company, make appropriate arrangements for making any
other Instrument pledged by the Company available to it for purposes of
presentation, collection or renewal (any such arrangement to be effected,
to the extent deemed appropriate to the Administrative Agent, against
trust receipt or like document).
(d) Collection of Accounts.
(i) On or before the Phase I Effective Date, the Company
shall (A) direct all of its account debtors to make all payments on
Accounts directly to one or more Lockboxes or Controlled Accounts,
(B) establish Controlled Accounts with the Administrative Agent or
such other financial institutions as shall be acceptable to the
Administrative Agent, into which all payments received in the
Lockboxes shall be deposited, and into which the Company will
promptly deposit all payments made for Inventory or other assets or
services sold or rendered by the Company and received by the Company
in the identical form in which such payments were made, whether by
cash or check; and (C) cause each Subsidiary, and any other Person
acting for or in concert with the Company or its Subsidiaries that
receives any monies, checks, notes, drafts or other payments
relating to or as proceeds of Accounts or other Collateral, to
promptly remit the same (or cause the same to be remitted) in hand
to the Controlled Accounts.
(ii) The Company agrees to pay all reasonable fees, costs
and expenses which the Company and its Subsidiaries incur in
connection with opening and maintaining any Lockbox and Controlled
Account. All of such fees, costs and expenses which remain unpaid
pursuant to any Lockbox Agreement or Controlled Account Agreement to
the extent the same shall have been paid by the Administrative Agent
hereunder, shall constitute Loans under the Credit Agreement, shall
be payable to the Administrative Agent by the Company on demand,
and, until paid, shall bear interest at the rate applicable to Base
Rate Loans at such time. All checks, drafts, instruments and other
items of payment or proceeds of Collateral delivered to the
Administrative Agent in kind shall be
95
endorsed by the Company and its Subsidiaries, to the Administrative
Agent, and, if that endorsement of any such item shall not be made
for any reason, the Administrative Agent is hereby irrevocably
authorized to endorse the same on behalf of the Company and its
Subsidiaries, notwithstanding the inclusion on any such item of
restrictive notations such as "paid in full", "balance of account",
or other restrictions.
(iii) Without limiting Section 6, for the purpose of this
Section 5.2(d), and effective so long as this Agreement shall remain
in force and effect, the Company, on behalf of itself and its
Subsidiaries, irrevocably hereby makes, constitutes and appoints the
Administrative Agent (and all Persons designated by the
Administrative Agent for that purpose) as the Company's or such
Subsidiary's true and lawful attorney and agent-in-fact (A) to
endorse the name of the Company or its Subsidiary upon said items of
payment and/or proceeds of Collateral of the Company and upon any
chattel paper, document, instrument, invoice or similar document or
agreement relating to any Account or goods pertaining thereto; (B)
to take control in any manner of any item of payment or proceeds
thereof; (C) to have access to any Lockbox or postal box into which
any checks or other forms of payment in respect of Accounts are
remitted; and (D) open all mail containing checks and other forms of
payment in respect of Accounts and process such checks and other
forms of payment.
(iv) The Administrative Agent (and all Persons designated
by the Administrative Agent for such purpose) may, at any time and
from time to time after the occurrence and during the continuance of
an Event of Default, whether before or after notification to any
account debtor and whether before or after the maturity of any of
the Secured Obligations, (A) enforce collection of any Accounts or
contract right of the Company by suit or otherwise; (B) exercise all
of the rights and remedies of the Company and its Subsidiaries with
respect to proceedings brought to collect any Accounts; (C)
surrender, release or exchange all or any part of any Accounts of
the Company and its Subsidiaries, or compromise or extend or renew
for any period (whether or not longer than the original period) any
indebtedness thereunder; (D) sell or assign any Account of the
Company and its Subsidiaries upon such terms, for such amount and at
such time or times as the Administrative Agent deems advisable; (E)
prepare, file and sign the names of the Company and its Subsidiaries
on any proof of claim in bankruptcy or other similar document
against any account debtor indebted on an Account; and (F) do all
other acts and things
96
which are necessary, in the Administrative Agent's sole discretion,
to fulfill the Secured Obligations and to allow the Administrative
Agent to collect the Accounts. In addition to any other provision
hereof or in any of the other Financing Documents, the
Administrative Agent may at any time on or after the occurrence of
an Event of Default, at the sole expense of Company and its
Subsidiaries, notify any parties obligated on any of the Accounts to
make payment directly eto the Administrative Agent of any amounts
due or to become due thereunder.
(v) In the event that any account debtor remits any payments
directly to the Company rather than to a Lockbox or a Controlled
Account, the Company shall promptly take all steps, if any,
necessary or advisable to ensure the validity, perfection, priority
and, if applicable, control of the Administrative Agent over such
payments (including, without limitation, delivery thereof to the
Administrative Agent) and pending any such action the Company shall
be deemed to hold such payments in trust for the benefit of the
Administrative Agent and such payments shall be segregated from all
other property of the Company.
Section 11.05. Amendment to Section 9. (a)Section 9(A) of the Security
Agreement is amended by amending paragraphs third and fourth thereof, and adding
paragraph fifth thereof, to read in their entirety as follows:
third, to the ratable payment of unpaid principal of the Secured
Obligations (other than the Additional Secured Obligations) (or to the
provision for payment thereof pursuant to Section 9(B) below);
fourth, to the ratable payment of unpaid principal of the Secured
Obligations (other than the Additional Secured Obligations) (or to the
provision for payment thereof pursuant to Section 9(B) below);
fifth, to the ratable payment of the Additional Secured Obligations
(or to the provision for payment thereof pursuant to Section 9(B) below);
(b) Section 9(B) of the Security Agreement is amended to read in its
entirety as follows:
(B) If at any time any portion of any monies collected or received
by the Administrative Agent would, but for the provisions of this Section
9(B), be payable pursuant to Section 9(A) in respect of the Contingent
Secured Obligation, the Administrative Agent shall not apply any monies
to pay such Contingent Secured Obligation but instead shall request the
holder thereof, at least five Business Days before each proposed
97
distribution hereunder, to notify the Administrative Agent as to the
maximum amount of such Contingent Secured Obligation if then
ascertainable (e.g., in the case of a letter of credit, the maximum
amount available for subsequent drawings thereunder). If the holder of
such Contingent Secured Obligation does not notify the Administrative
Agent of the maximum ascertainable amount thereof at least two Business
Days before such distribution, such holder will not be entitled to
share in such distribution. If such holder does so notify the
Administrative Agent as to the maximum ascertainable amount thereof,
the Administrative Agent will allocate to such holder a portion of the
monies to be distributed in such distribution, calculated as if such
Contingent Secured Obligation were outstanding in such maximum
ascertainable amount. However, the Administrative Agent will not apply
such portion of such monies to pay such Contingent Secured Obligation,
but instead will hold such monies or invest such monies in Liquid
Investments. All such monies and Liquid Investments and all proceeds
thereof will constitute Collateral hereunder, but will be subject to
distribution in accordance with this Section 9(B) rather than Section
9(A). The Administrative Agent will hold all such monies and Liquid
Investments and the net proceeds thereof in trust until all or part of
such Contingent Secured Obligation becomes a Non-Contingent Secured
Obligation, whereupon the Administrative Agent at the request of the
relevant Secured Party will apply the amount so held in trust to pay
such Non-Contingent Secured Obligation; provided that, if the other
Secured Obligations theretofore paid pursuant to the same clause of
Section 9(A) (i.e., clause third, fourth or fifth) were not paid in
full, the Administrative Agent will apply the amount so held in trust
to pay the same percentage of such Non-Contingent Secured Obligation as
the percentage of such other Secured Obligations theretofore paid
pursuant to the same clause of Section 9(A). If (i) the holder of such
Contingent Secured Obligation shall advise the Administrative Agent
that no portion thereof remains in the category of a Contingent Secured
Obligation and (ii) the Administrative Agent still holds any amount
held in trust pursuant to this Section 9(B) in respect of such
Contingent Secured Obligation (after paying all amounts payable
pursuant to the preceding sentence with respect to any portions thereof
that became Non-Contingent Secured Obligations), such remaining amount
will be applied by the Administrative Agent in the order of priorities
set forth in Section 9(A).
Section 11.06. Miscellaneous Amendments. (a)Section 4(J) of the
Security Agreement is amended by replacing the reference to "Section 9.12"
therein with a reference to "Section 7.10".
(b) Section 4(K) of the Security Agreement is amended by replacing the
reference to "Section 9.03" therein with a reference to "Section 7.03".
98
(c) Section 9(A) of the Security Agreement is amended by replacing the
reference to "Section 12.03" in paragraph first thereof with a reference to
"Section 10.03".
(d) Section 11 of the Security Agreement is amended by replacing the
reference to "Section 11" therein with a reference to "Article 9".
(e) Section 13 of the Security Agreement is amended by replacing the
reference to "Section 9.02" therein with a reference to "Section 7.02".
(f) Section 15 of the Security Agreement is amended by replacing the
reference to "Section 12.02" therein with a reference to "Section 10.02".
ARTICLE 12
Amendment of Pledge Agreement
The Pledge Agreement is amended as follows:
Section 12.01. Amendment to Definitions. (a)Section 1 of the Pledge
Agreement is amended by amending the definition of "Secured Obligations" to read
in its entirety as follows:
"Secured Obligations" means the obligations secured under this
Agreement, including (a) all principal of and interest (including,
without limitation, any interest which accrues after or would accrue
but for the commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the
Company, whether or not allowed or allowable as a claim in any such
case, proceeding or other action) on any Loan to the Company under, or
any Note issued by the Company pursuant to, or any Reimbursement
Obligation of the Company under, the Credit Agreement; (b) all other
amounts payable by the Company under the Credit Agreement; (c) all
other amounts payable by the Company hereunder or under any other
Security Document; (d) all Additional Secured Obligations and (e) any
renewals or extensions of any of the foregoing.
(b) Section 1 of the Pledge Agreement is amended by adding the
following new definitions in their appropriate alphabetical order:
"Additional Secured Obligations" means, on any date, Interest Rate
Protection Obligations and Foreign Exchange Obligations to Lenders
which the Company has, on or prior to such date, designated as
additional Secured Obligations for the purposes hereof by delivering to
the
99
Administrative Agent a certificate signed by a Senior Officer that (i)
identifies such Interest Rate Protection Obligations or Foreign Exchange
Obligations (as applicable), specifies the name and address of the Lender
party thereto, the notional principal amount thereof and the expiration
date thereof and (ii) states that such Interest Rate Protection
Obligations or the Foreign Exchange Obligations (as applicable) are
designated as Secured Obligations for the purposes hereof.
"Contingent Secured Obligations" means, at any time, any Secured
Obligation (or portion thereof) that is contingent in nature at such
time, including any Secured Obligation that is:
(i) an obligation to reimburse for drawings not yet made
under a Letter of Credit;
(ii) an Interest Rate Protection Obligation or Foreign
Exchange Obligation that cannot be quantified at such time;
(iii) any other obligation (including any Guaranty) that is
contingent in nature at such time; or
(iv) an obligation to provide collateral to secure any of the
foregoing types of obligations.
"Non-Contingent Secured Obligation" means any Secured Obligation
other than a Contingent Secured Obligation.
(c) Section 1 of the Pledge Agreement is amended by deleting the
definition of "Collateral Account".
Section 12.02. Amendment to Section 13. (a)Section 13(A) of the Pledge
Agreement is amended by amending paragraphs third and fourth thereof, and adding
paragraph fifth thereof, to read in their entirety as follows:
third, to the ratable payment of unpaid principal of the Secured
Obligations (other than the Additional Secured Obligations) (or to the
provision for payment thereof pursuant to Section 13(B) below);
fourth, to the ratable payment of unpaid principal of the Secured
Obligations (other than the Additional Secured Obligations) (or to the
provision for payment thereof pursuant to Section 13(B) below);
fifth, to the ratable payment of the Additional Secured Obligations
(or to the provision for payment thereof pursuant to Section 13(B)
below);
100
(b) Section 13(B) of the Pledge Agreement is amended to read in its
entirety as follows:
(B) If at any time any portion of any monies collected or received by
the Administrative Agent would, but for the provisions of this Section
13(B), be payable pursuant to Section 13(A) in respect of the Contingent
Secured Obligation, the Administrative Agent shall not apply any monies to
pay such Contingent Secured Obligation but instead shall request the holder
thereof, at least five Business Days before each proposed distribution
hereunder, to notify the Administrative Agent as to the maximum amount of
such Contingent Secured Obligation if then ascertainable (e.g., in the case
of a letter of credit, the maximum amount available for subsequent drawings
thereunder). If the holder of such Contingent Secured Obligation does not
notify the Administrative Agent of the maximum ascertainable amount thereof
at least two Business Days before such distribution, such holder will not
be entitled to share in such distribution. If such holder does so notify
the Administrative Agent as to the maximum ascertainable amount thereof,
the Administrative Agent will allocate to such holder a portion of the
monies to be distributed in such distribution, calculated as if such
Contingent Secured Obligation were outstanding in such maximum
ascertainable amount. However, the Administrative Agent will not apply such
portion of such monies to pay such Contingent Secured Obligation, but
instead will hold such monies or invest such monies in Liquid Investments.
All such monies and Liquid Investments and all proceeds thereof will
constitute Collateral hereunder, but will be subject to distribution in
accordance with this Section 13(B) rather than Section 13(A). The
Administrative Agent will hold all such monies and Liquid Investments and
the net proceeds thereof in trust until all or part of such Contingent
Secured Obligation becomes a Non-Contingent Secured Obligation, whereupon
the Administrative Agent at the request of the relevant Secured Party will
apply the amount so held in trust to pay such Non-Contingent Secured
Obligation; provided that, if the other Secured Obligations theretofore
paid pursuant to the same clause of Section 13(A) (i.e., clause third,
fourth or fifth) were not paid in full, the Administrative Agent will apply
the amount so held in trust to pay the same percentage of such
Non-Contingent Secured Obligation as the percentage of such other Secured
Obligations theretofore paid pursuant to the same clause of Section 13(A).
If (i) the holder of such Contingent Secured Obligation shall advise the
Administrative Agent that no portion thereof remains in the category of a
Contingent Secured Obligation and (ii) the Administrative Agent still holds
any amount held in trust pursuant to this Section 13(B) in respect of such
Contingent Secured Obligation (after paying all amounts payable pursuant to
the preceding sentence with respect to any portions thereof that became
Non-Contingent Secured
101
Obligations), such remaining amount will be applied by the Administrative
Agent in the order of priorities set forth in Section 13(A).
Section 12.03 Miscellaneous Amendments. (a) Section 13(A) of the Pledge
Agreement is amended by replacing the reference to "Section 12.03" in paragraph
first thereof with a reference to "Section 10.03".
(b) Section 14 of the Pledge Agreement is amended by replacing the
reference to "Section 11" therein with a reference to "Article 9".
(c) Section 17 of the Pledge Agreement is amended by replacing the
reference to "Section 12.02" therein with a reference to "Section 10.02".
102
IN WITNESS WHEREOF, the parties hereto have caused this Amended Agreement
to be duly executed and delivered as of the day and year first above written.
APPLIED EXTRUSION TECHNOLOGIES,
INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
Address for Notices:
Applied Extrusion Technologies, Inc.
▇▇ ▇▇▇▇'▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy Number: ▇▇▇-▇▇▇-▇▇▇▇
Copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy Number: ▇▇▇-▇▇▇-▇▇▇▇
Working Capital JPMORGAN CHASE BANK
Commitment:
$25,000,000
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Total Working Capital Commitments
$25,000,000
JPMORGAN CHASE BANK,
as Administrative Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Address for Notices:
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy Number: ▇▇▇-▇▇▇-▇▇▇▇
Each of the undersigned acknowledges and agrees to the last sentence of
Section 10.12 above.
LASALLE BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Mexham
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Mexham
Title: Assistant Vice President
Each of the undersigned acknowledges and agrees to the last sentence of
Section 10.12 above.
PNC BANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
Each of the undersigned acknowledges and agrees to the last sentence of
Section 10.12 above.
PROVIDENT BANK
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Title: Credit Officer
SCHEDULE I
Assigned Agreements
1. Sale and Purchase Agreement between Hercules Incorporated and Applied
Extrusion Technologies, Inc., dated as of March 8, 1994.
2. Asset Purchase Agreement dated as of May 3, 2001 among Applied Extrusion
Technologies, Inc, QPF, LLC and Hood Companies, Inc. and each ancillary
agreement (including, without limitation, the Inventory Note and
Inventory Security Agreement) referred to therein.
SCHEDULE II
Security Documents
Title Insurance
Mortgage/Deed of Trust Amount
Mortgage, Assignment of Leases and Rents, Security Agreement and $13,900,000 (increased September
Financing Statement dated as of April 6, 1994 between the Company and 25, 2002 from $8,375,000)
the Administrative Agent, relating to U. S. Highway 41N, Terre Haute, (Lawyers Title Insurance
Indiana, recorded April 7, 1994 in Mortgage Record P-20, Page 1528 in Corporation Policy #
the records of Recorder's Office of Vigo County, Indiana, as amended by ▇▇▇-▇▇-▇▇▇▇▇▇, as endorsed
(1) Amendment No. 1 to Mortgage, Assignment of Leases and Rents, January 28, 1998, May 15, 2000,
Security Agreement and Financing Statement dated as of January 29, January 22, 2001 and September
1998, recorded with Vigo County Recorder on February 9, 1998 in 25, 2002)
Mortgage Record T-20, Page 543, (2) Amendment No. 2 to Mortgage,
Assignment of Leases and Rents, Security Agreement and Financing
Statement dated as of April 12, 2000, recorded with Vigo County
Recorder on May 1, 2000 in Mortgage Record V-20, Page 12027, (3)
Amendment No. 3 to Mortgage, Assignment of Leases and Rents Security
Agreement and Financing Statement dated as of December 15, 2000,
recorded with Vigo County Recorder on December 27, 2000 in Mortgage
Record V-20, Page 42480, and (4) Amendment No. 4 to Mortgage,
Assignment of Leases and Rents, Security Agreement and Financing
Statement dated as of September 20, 2002, recorded with Vigo County
Recorder on September 25, 2002 as Instrument 200227076.
Title Insurance
Mortgage/Deed of Trust Amount
Deed of Trust, Assignment of Leases and Rents, $5,875,000
Security Agreement and Financing Statement dated (Lawyers Title Insurance
as of April 6, 1994 between the Company and the Corporation Policy #
Administrative Agent, relating to ▇▇▇▇▇▇ Plant, ▇▇▇-▇▇-▇▇▇▇▇▇, as endorsed
Edgemont Drive, Covington, Virginia, recorded in February 17, 1998, June
Deed Book 337, Page 589 in the Clerk's Office of 26, 2000, January 22, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ for County of Allegheny, and September 27, 2002)
Commonwealth of Virginia, as amended by (1)
Amendment No. 1 to Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Financing
Statement dated as of January 29, 1998, recorded
with Clerk's Office of the Circuit Court of
Allegheny County on February 17, 1998 in Deed Book
383, Page 1447, (2) Amendment No. 2 to Deed of
Trust, Assignment of Leases and Rents, Security
Agreement and Financing Statement, dated as of
April 12, 2000, recorded with Clerk's Office of
the Circuit Court of Allegheny County on June 3,
2000 in Deed Book 418, Page 105, (3) Amendment No.
3 to Deed of Trust, Assignment of Leases and
Rents, Security Agreement and Financing Statement,
dated as of December 15, 2000, recorded with
Clerk's Office of the Circuit Court of Allegheny
County on December 29, 2000 in Deed Book 426, Page
258, and (4) Amendment No. 4 to Deed of Trust,
Assignment of Leases and Rents, Security Agreement
and Financing Statement, dated as of September 20,
2002, recorded with Clerk's Office of the Circuit
Court of Allegheny County on September 27, 2002 as
Instrument No. 020003161.
Title Insurance
Mortgage/Deed of Trust Amount
Deed of Movable and Immovable Hypothec dated April $1,603,913
7, 1994 between Applied Extrusion Technologies (First America Title
(Canada), Inc. and the Administrative Agent, relating Insurance Company
to ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Policy
registered April 15, 1994 as Instrument No. 272411, as #PQL00000002, as
amended by a Supplemental Deed of Movable and Immovable endorsed on February
Hypothec dated January 29, 1998, registered February 17, 17, 1998)
1998 as Instrument No. 300760, as extended on
August 1, 2002 to July 31, 2012.
Other Security Documents
1. Company Security Agreement dated as of April 7, 1994 between the Company
and the Administrative Agent, substantially in the form of Exhibit F to the
Credit Agreement (the "Company Security Agreement").
2. Company Pledge Agreement dated as of April 7, 1994 between the Company and
the Administrative Agent, substantially in the form of Exhibit G to the
Credit Agreement.
3. Patent Security Agreement dated as of April 7, 1994 between the Company and
the Administrative Agent in the form attached as Exhibit B to the Company
Security Agreement.
4. Trademark Security Agreement dated as of April 7,1994 between the Company
and the Administrative Agent in the form attached as Exhibit C to the
Company Security Agreement.
SCHEDULE III
Bank Accounts
(Cash Accounts)
----------------------------------------------------------------------------------------------------------------------
U.S. Accounts
-------------
----------------------------------------------------------------------------------------------------------------------
Account # Description Bank Address Phone #
--------- ----------- ---- ------- -------
----------------------------------------------------------------------------------------------------------------------
818-U792 Cash Options-Corp. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇ 617-946-4000
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
05-0124-4475 Operating-Corp. Fleet Bank ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
818-07034 ML Gov't. Cash Merrill ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇ 617-946-4000
Acct.-Corp. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
JD-05520-21 Temporary UBS ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 617-439-8000
Investments-Corp. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇-▇▇▇-▇▇▇▇▇ Operating-Films PNC Bank ▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇-▇▇▇-▇▇▇▇▇ Disbursement-Films PNC Bank ▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇-▇▇▇-▇▇▇▇▇ Lockbox-Films PNC Bank ▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇-▇▇▇-▇▇▇▇▇ Payroll-Films PNC Bank ▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇-▇▇▇-▇▇▇▇▇ Operating-Middletown PNC Bank ▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇-▇▇▇-▇▇▇▇▇ Lockbox-Middletown PNC Bank ▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇-▇▇▇-▇▇▇▇▇ Payroll-Middletown PNC Bank ▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
14701 Temporary Investments Provident PFPC, ▇.▇. ▇▇▇ ▇▇▇▇ 800-441-7450
Institutional Funds ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
1114-1697 Covington Operating First Virginia Bank Attn: Operations Services Inc. 540-962-6131
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
4304276 Terre Haute Operating Old National Bank ▇.▇. ▇▇▇ ▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Canada
Accounts
----------------------------------------------------------------------------------------------------------------------
Account # Description Bank Address Phone #
--------- ----------- ---- ------- -------
----------------------------------------------------------------------------------------------------------------------
▇▇▇-▇▇▇-▇ Manual Checking Royal Bank of Royal Bank of Canada ▇▇▇-▇▇▇-▇▇▇▇
(CAD) Canada Business Services Center
▇▇▇ ▇▇▇▇' ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇▇-▇▇▇-▇ Disbursement Royal Bank of Royal Bank of Canada ▇▇▇-▇▇▇-▇▇▇▇
(CAD) Canada Business Services Center
▇▇▇ ▇▇▇▇' ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇▇-▇▇▇-▇ Operating (CAD) Royal Bank of Royal Bank of Canada ▇▇▇-▇▇▇-▇▇▇▇
Canada Business Services Center
▇▇▇ ▇▇▇▇' ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇▇-▇▇▇-▇ Lockbox (CAD) Royal Bank of Royal Bank of Canada ▇▇▇-▇▇▇-▇▇▇▇
Canada Business Services Center
▇▇▇ ▇▇▇▇' ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
▇▇▇-▇▇▇-▇ U.S. Dollar Account Royal Bank of Royal Bank of Canada ▇▇▇-▇▇▇-▇▇▇▇
Canada Business Services Center
▇▇▇ ▇▇▇▇' ▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
----------------------------------------------------------------------------------------------------------------------
SCHEDULE IV
[intentionally deleted]
SCHEDULE V
Investments
Subsidiaries of Applied Extrusion Technologies, Inc.
1. Applied Extrusion Technologies (Canada), Inc.
2. Applied Extrusion Technologies, Limited
SCHEDULE VI
Agreements; Liens
1. The Company's obligations under the City of Salem, Massachusetts Flexible
Mode Industrial Development Revenue Bonds in the original principal amount
of $6,500,000.
2. Equipment Lease Agreement dated as of December 29, 1997 by and between
LaSalle National Leasing Corporation, its successors and assigns and
Applied Extrusion Technologies, Inc. and its successors and assigns as the
same has been assigned to various additional lessors.
3. Master Lease Agreement dated as of March 27, 2002 by and between General
Electric Capital Corporation and Applied Extrusion Technologies, Inc.
SCHEDULE VII
Environmental Matters
1. Asbestos is present throughout the facilities located in Covington,
Virginia ("▇▇▇▇▇▇▇▇▇") and Terre Haute, Indiana ("Terre Haute").
2. An open AST issue at Covington exists in regard to an abandoned, removed
AST formerly used for "used machine lubrications" where ground
contamination was detected and corrected. All DEQ notifications are in
order.
3. The ▇▇▇▇▇▇▇▇▇ facility has three wastewater lagoons which are permitted by
the VPDES. Phase II testing at and near the site of the lagoons indicates
that there may be levels of 1,1-dichloroethene and heptachlor epoxide
exceeding levels of state regulatory concern. This is monitored each time a
permit is renewed. No EPA or DEQ monitoring or correction action has been
mandated.
4. The ▇▇▇▇▇▇▇▇▇ facility is listed on CERCLIS with the notation "no further
action". The Company is aware that two disposal sites used in connection
with the ▇▇▇▇▇▇▇▇▇ facility, Cyanokem, in Detroit, Michigan. and Chem Met
Services in Wyandotte, Michigan are listed on the Michigan State Priority
List.
5. There is a former on-site solid waste disposal area at ▇▇▇▇▇▇▇▇▇ (not
including the area to be retained by Hercules, Inc. known as the Hercules
Industrial Landfill) located near the wastewater lagoon. Results of testing
conducted at or near this area are described in no. 4 above.
6. In 1992, approximately 2,400 gallons of no. 2 fuel oil were released as a
result of the overfill of an aboveground fuel oil storage tank at Terre
Haute. Hercules, Inc. executed the cleanup and did not seek a site closure.
7. The facility located in Varennes, Quebec has conducted training at a "fire
practice area" where small amounts of gasoline, no. 2 fuel oil and kerosene
were ignited. It is possible that some of the petroleum compounds were
spilled and/or spread on the soils in the area.
8. The Company has received an information request with respect to the Solvent
Recovery Services of New England Site in Southington, Connecticut. A
predecessor entity has assumed responsibility for that notice.
9. Terre Haute water and air permits are pending action by Indiana Department
of Environmental Management (IDEM) action. All applications were timely
submitted.
10. Terre Haute's pH levels have exceeded the pH parameters of its NPDES permit
at times.
11. Written Notices have been received by:
a. Terre Haute for exceeding drinking water lead and copper levels. IDEM
has provided feedback on the corrective action plan, and AET has until
2005 to implement it.
▇. ▇▇▇▇▇▇▇▇▇ has received one "Warning Letter" from DEQ for not
inspecting an abandoned A.S.T. (tank removed as corrective action),
and not having two AST level gages at loading station for the 2 fuel
oil tanks. (2 tank gages were installed). The case was reviewed by DEQ
in 2002 and noted as complete.
c. "Warning Letters" received from DEQ for missing data on V.P.D.E.S. DMR
reports. Warning letter is the most minimal method of formal
communication from DEQ. All corrections to data submitted. No pending
action.
▇. ▇▇▇▇▇▇▇▇▇ has received "Warning Letters" for vegetation control on lab
methods under VPDES permit. Corrective actions taken. No pending
actions.
12. There are two underground fuel oil storage tanks at Terre Haute that have
been "environmentally cleaned" and abandoned in place. Formal IDEM closure
conducted.
13. Threshold planning quantities of hazardous substances exist at Terre Haute
and ▇▇▇▇▇▇▇▇▇ such as VDC, sulfuric acid, MMA, etc. All are used for raw
materials to processes.
14. Terre Haute is listed in an environmental database noting an unresolved
LUST (Leaking Underground Storage Tank). Hercules removed the tank in 1989,
but minor soil contamination remained. There is no action planned on this
issue; the item is listed in the database as "Priority Low."
SCHEDULE VIII
Insurance
Type: Property
Insurer: FM Global Insurance Company
Effective Date: 10/1/02 - 10/1/03
$661,186,340 Blanket
$100,000,000 Earthquake (Annual Aggregate)
$100,000,000 Flood (Annual Aggregate)
Note #1: Additional sublimits apply. Refer to policy forms.
Note #2: Coverage includes U.S. and Canada
Note #3: Coverage includes Business Interruption and Boiler and
Machinery coverages
-------------------------------------------------------------------------------------------
Type: Workers' Compensation
Insurer: Travelers Insurance Company
Effective Date: 10/1/02 - 10/1/03
Statutory Benefits (Workers' Compensation)
$500,000 (Employer's Liability)
-------------------------------------------------------------------------------------------
Type: Comprehensive General Liability (including
premises and operations liability as well as products
and completed operations liability coverage,
including Canada)
Insurer: Travelers Insurance Company
Effective Date: 10/1/02 - 10/1/03
Limit: $1,000,000 Each Occurrence
$2,000,000 Products/Completed Operations Aggregate
$2,000,000 General Aggregate
-------------------------------------------------------------------------------------------
Type Automobile Liability
Insurer: Travelers Insurance Company
Effective Date: 10/1/02- 10/1/03
Limit: $1,000,000 each occurrence; includes Canada
(Combined Single Limit)
-------------------------------------------------------------------------------------------
Type: Comprehensive Crime Coverage
Insurer: ▇▇▇▇▇▇ Insurance Co.
Effective Date: 10/1/02 - 10/1/03
Limit: $3,000,000 single loss limit
--------------------------------------------------------------------------------
Type: Ocean Cargo and Inland Marine
Insurer: American Home Assurance Company
Effective Date: 10/1/02 - 10/1/03
Limit: $1,000,000 limit per shipment; covers shipments in
transit, worldwide coverage
--------------------------------------------------------------------------------
Type: Foreign Liability
Insurer: The Insurance Company of The State of Pennsylvania
Effective Date: 10/1/02 - 10/1/03
$1,000,000 CSL Commercial General Liability
including Products Liability for occurrences emanating
from Foreign Operations
$1,000,000 CSL Automobile DIC/Excess Liability
Foreign Voluntary Workers' Compensation
$1,000,000 Employer's Liability
$100,000 Repatriation Expense
--------------------------------------------------------------------------------
Type: Umbrella/Excess Liability
Insurer: Fireman's Fund Insurance Company
Effective Date: 10/1/02 - 10/1/03
Limit: $50,000,000
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ________ __, ____ among [NAME OF ASSIGNOR] (the
"Assignor") and [NAME OF ASSIGNEE] (the "Assignee").
WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates
to the Credit Agreement dated as of April 7, 1994 and amended and restated as of
January __, 2003 (as further amended from time to time, the "Credit Agreement")
among Applied Extrusion Technologies, Inc. (the "Borrower"), the Lenders party
thereto and JPMorgan Chase Bank, as Administrative Agent;
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Credit Agreement in respect of [a portion of] its
Working Capital Commitment thereunder in an amount equal to $__________[,
together with a corresponding portion of each of its outstanding Loans and its
Letter of Credit Liabilities] (the "Assigned Amount"), and the Assignee proposes
to accept such assignment and assume the corresponding obligations of the
Assignor under the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
Section 1.01. Definitions. All capitalized terms not otherwise defined
herein have the respective meanings set forth in the Credit Agreement.
Section 1.02. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount. Upon the execution and
delivery hereof by the Assignor and the Assignee [and the execution of the
consent attached hereto by the Administrative Agent]/1/ and the payment of the
amounts specified in Section 3 required to be paid on the date hereof, (i) the
Assignee shall, to the extent of the Assigned Amount, have the rights and
obligations of a Lender under the Credit Agreement and (ii) except as otherwise
provided in the Credit Agreement, the Assignor shall, to the extent of the
__________________________
/1/ Delete if consent is not required.
Assigned Amount, relinquish its rights and be released from its obligations
under the Credit Agreement. The assignment provided for herein shall be without
recourse to the Assignor.
Section 1.03. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them./2/ Fees
accrued before the date hereof with respect to amounts assigned to the Assignee
hereunder are for the account of the Assignor and such fees accruing on and
after the date hereof with respect to such amounts are for the account of the
Assignee. Each of the Assignor and the Assignee agrees that if it receives any
amount under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to the
extent of such other party's interest therein and promptly pay the same to such
other party.
[Section 1.04. Consent of the Administrative Agent. This Agreement is
conditioned upon the consent of the Administrative Agent pursuant to Section
10.06 of the Credit Agreement.]/3/
Section 1.05. No Reliance on Assignor. The Assignor makes no representation
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition or statements of the Borrower, or the
validity and enforceability of the Borrower's obligations under the Credit
Agreement or any promissory note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and financial
condition of the Borrower.
Section 1.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
Section 1.07. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
___________________
/2/ Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion of
any upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
/3/ Delete if consent is not required.
2
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[NAME OF ASSIGNOR]
By:_________________________
Name:
Title:
[NAME OF ASSIGNEE]
By:_________________________
Name:
Title:
The undersigned consents to the foregoing assignment./4/
JPMORGAN CHASE BANK,
as Administrative Agent
By:__________________________
Name:
Title:
__________________
/4 4/ Delete signature block if consent is not required.
3
EXHIBIT B
PROMISSORY NOTE
New York, New York
--------- --, ----
FOR VALUE RECEIVED, Applied Extrusion Technologies, Inc., a Delaware
corporation, (together with its successors, the "Company"), hereby promises to
pay to ___________________ (the "Lender"), or order, at the office of JPMorgan
Chase Bank at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, the
aggregate unpaid principal amount of the Loans made by the Lender to the Company
under the Credit Agreement referred to below, in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
The Lender is hereby authorized by the Company to endorse on the schedule
(or a continuation thereof) attached to this Note, the date and amount of each
Loan made by the Lender to the Company under the Credit Agreement, and the date
and amount of each payment or prepayment of principal of such Loan received by
the Lender, provided that any failure by the Lender to make any such endorsement
or any error in such endorsement shall not affect the obligations of the Company
under the Credit Agreement or under this Note in respect of such Loan.
This Note is one of the Notes referred to in the Credit Agreement (as
modified and supplemented and in effect from time to time, the "Credit
Agreement") dated as of April 7, 1994 and amended and restated as of January __,
2003 among the Company, the lenders named therein (including the Lender) and
JPMorgan Chase Bank, as Administrative Agent, and evidences Loans made by the
Lender thereunder. Capitalized terms used in this Note have the respective
meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of Loans upon the
terms and conditions specified therein.
Pursuant to the Subsidiary Guaranty dated as of April 7, 1994 and the
Guarantor Acknowledgment dated as of January __, 2003, each by Applied Extrusion
Technologies (Canada), Inc. (the "Subsidiary Guarantor") in favor of the
Administrative Agent and the Lenders, payment of principal and interest on this
Note is unconditionally guaranteed by the Subsidiary Guarantor.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By_________________________
Name:
Title:
2
SCHEDULE
This Note evidences Loans made under the within-described Credit Agreement to
the Company in the principal amounts set forth below, which Loans were made on
the dates set forth below, subject to the payments and prepayments of principal
set forth below:
--------------------------------------------------------------------------------
Principal Amount Date of Payment Amount Paid or Balance
Date Made of Loan or Prepayment Prepaid Outstanding
--------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
EXHIBIT C-1
PHASE I BORROWING BASE CERTIFICATE
Reference is made to the Credit Agreement dated as of April 7, 1994 and
amended and restated as of January __, 2003 (as modified and supplemented and in
effect from time to time, the "Credit Agreement") among Applied Extrusion
Technologies, Inc., a Delaware corporation (the "Company"), the lenders named
therein and JPMorgan Chase Bank, as Administrative Agent. Terms defined in the
Credit Agreement are used herein as defined therein.
Pursuant to Section 7.01(f) of the Credit Agreement, the undersigned,
through an authorized officer of the Company, hereby certifies that, to the best
of its knowledge, attached hereto as Annex 1 is, in all material respects, a
true and accurate calculation of the Borrowing Base as at the monthly accounting
period ended _____________, ____ determined in accordance with the requirements
of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly
executed as of the __ day of ____________, ____.
Applied Extrusion Technologies, Inc.
____________________________________
By:
Title:
ANNEX 1
JPMorganChase
JPMorgan Chase Bank
Phase I Monthly Borrowing Base Certificate
Applied Extrusion Technologies, Inc.
For the Month of:
-----------
ACCOUNTS RECEIVABLE RECONCILIATION
Total Accounts Receivable as the date of
last submitted Certificate
-----------
+ Sales
-----------
- Collections
-----------
- Credits
-----------
+ Debits
-----------
Accounts Receivable as of
----------- -----------
ACCOUNTS RECEIVABLE AGING as of
------------------
Total A/R Current 1-30 31-60 61-90 91 & Over
------------------ ----------- ----------- ----------- ----------- -----------
ACCOUNTS RECEIVABLE
Total Gross Accounts
Receivable dated:
------------------
Total Accounts Receivable (as shown on aging)
-----------
Less:
Over 60 Days past due date
-----------
Credits over 60 past due date
-----------
Over 90 days past Invoice date
-----------
Datings over 90 Days
-----------
50% Rule or Cross Aging
-----------
35% Rule or Cross Aging on 25% Concentration
-----------
25% Concentration
-----------
Affiliate/Interco. A/R
-----------
Contra Accounts
-----------
Government
-----------
Finance charges
-----------
Rebate Reserves
-----------
C.O.D.
-----------
Foreign
-----------
Bankrupt Accounts
-----------
Other (see Definition of Eligible Receivables):
-----------
Other (see Definition of Eligible Receivables):
-----------
Total Ineligible Receivables
-----------
Total Eligible Accounts Receivable
-----------
Total A/R Availability at Advance Rate of: 85%
----------
JPMorganChase
JPMorgan Chase Bank
Phase I Monthly Borrowing Base Certificate
Applied Extrusion Technologies, Inc.
For the Month of:
-----------
Reserves
Other:
Other:
Total Reserves
Borrowing Base Calculation
Total Accounts Receivable Availability , plus
-----------
Total Reserves. , minus
-----------
Total Borrowing Base
-----------
AVAILABILITY CALCULATION
----------
(A) Borrowing Base*
(B) Aggregate Outstanding Revolving Credit Loans
----------
Aggregate Outstanding Letters of Credit 6,218,998
----------
(B) Total Exposure 6,218,998
----------
(C) Availability (line A less line B) (6,218,998)
----------
* Maxiumum Facility Availability is lesser of Borrowing Base or aggregate $13,000,000 and the L/C total of $6,218,997.62
BY: DATE:
------------------------------------- -------------
Title:
-------------------------------------
EXHIBIT C-2
PHASE II BORROWING BASE
Reference is made to the Credit Agreement dated as of April 7, 1994 and
amended and restated as of January __, 2003 (as modified and supplemented and in
effect from time to time, the "Credit Agreement") among Applied Extrusion
Technologies, Inc., a Delaware corporation (the "Company"), the lenders named
therein and JPMorgan Chase Bank, as Administrative Agent. Terms defined in the
Credit Agreement are used herein as defined therein.
Pursuant to Section 7.01(f) of the Credit Agreement, the undersigned,
through an authorized officer of the Company, hereby certifies that, to the best
of its knowledge, attached hereto as Annex 1 is, in all material respects, a
true and accurate calculation of the Borrowing Base as at the monthly accounting
period ended _____________, ____ determined in accordance with the requirements
of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be duly
executed as of the __ day of ____________, ____.
ANNEX 1
JPMorganChase
JPMorgan Chase Bank
Phase II Monthly Borrowing Base Certificate
Applied Extrusion Technologies, Inc.
For the Month of:
-----------
ACCOUNTS RECEIVABLE RECONCILIATION
Total Accounts Receivable as the date of
last submitted Certificate
-----------
+ Sales
-----------
- Collections
-----------
- Credits
-----------
+ Debits
-----------
Accounts Receivable as of
----------- -----------
ACCOUNTS RECEIVABLE AGING as of
------------------
Total A/R Current 1-30 31-60 61-90 91 & Over
------------------ ----------- ----------- ----------- ----------- -----------
ACCOUNTS RECEIVABLE
Total Gross Accounts
Receivable dated:
------------------
Total Accounts Receivable (as shown on aging)
-----------
Less:
Over 60 Days past due date
-----------
Credits over 60 past due date
-----------
Over 90 days past Invoice date
-----------
Datings over 90 Days
-----------
50% Rule or Cross Aging
-----------
35% Rule or Cross Aging on 25% Concentration
-----------
25% Concentration
-----------
Affiliate/Interco. A/R
-----------
Contra Accounts
-----------
Government
-----------
Finance charges
-----------
Rebate Reserves
-----------
C.O.D.
-----------
Foreign
-----------
Bankrupt Accounts
-----------
Other (see Definition of Eligible Receivables):
-----------
Other (see Definition of Eligible Receivables):
-----------
Total Ineligible Receivables
-----------
Total Eligible Accounts Receivable
-----------
Total A/R Availability at Advance Rate of: 85%
----------(1)
JPMorganChase
JPMorgan Chase Bank
Phase II Monthly Borrowing Base Certificate
Applied Extrusion Technologies, Inc.
For the Month of:
-----------
INVENTORY
Gross Inventory as of the Month ended:
------------------
Total Gross Inventory
------------
Less:
Not Located in the USA or Canada
------------
WIP
------------
Spare Parts
------------
Slow Moving/Obsolete
------------
Off Site not covered by Landlord Waivers
Packaging & shipping materials
------------
Financial Reserves
------------
Consigned
------------
Damaged, defective, returned goods, or not
eligible for resale
------------
Other:
---------------------
------------
------------
Other:
---------------------
------------
Total Ineligibles
------------
Total Eligible Inventory:
------------
Total Inventory Availability at Advance Rate of: 60% (2)
-----------
Reserves
Other:
Other:
Total Reserves (3)
-----------
Borrowing Base Calculation
Total Accounts Receivable Availability (1) , plus
-----------
Total Inventory Availability (2) , plus
-----------
Total Reserves. (3) , minus
-----------
Total Borrowing Base
-----------
AVAILABILITY CALCULATION
(A) Borrowing Base*
-----------
(B) Aggregate Outstanding Revolving Credit Loans
-----------
Aggregate Outstanding Letters of Credit 6,218,998
-----------
(B) Total Exposure 6,218,998
-----------
(C) Minimum Availabilty Requirement 5,000,000
-----------
(D) Availability (line A less line B and line C) (11,218,998)
-----------
* Maxiumum Facility Availability is lesser of Borrowing Base or the current Line Amount
BY: DATE:
------------------------------------- -------------
Title:
-------------------------------------
EXHIBIT D
OPINION OF SPECIAL COUNSEL
FOR THE COMPANY
ROPES ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ 617-951-7000 F ▇▇▇-▇▇▇-▇▇▇▇
& ▇▇▇▇ BOSTON NEW YORK SAN FRANCISCO WASHINGTON, DC
January 21, 2003
To the Lenders and the
Administrative Agent
Referred to Below
c/o JPMorgan Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
We have acted as counsel for Applied Extrusion Technologies, Inc., a
Delaware corporation (the "Company"), in connection with the transactions
contemplated by the Credit Agreement, dated as of April 7, 1994, as amended and
restated as of January 21, 2003 (as so amended and restated, the "Amended
Agreement"), among the Company, the lenders listed on the signature pages
thereof and JPMorgan Chase Bank, as Administrative Agent. This opinion is
delivered pursuant to Section 5.01(e) of the Amended Agreement. Terms defined in
the Amended Agreement, including in the schedules and exhibits thereto, and not
otherwise defined herein are used herein as defined in the Amended Agreement,
including in such schedules and exhibits.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion. As to questions of fact not independently verified by
us, we have relied, to the extent we deemed appropriate, upon representations
and certificates of officers of the Company, public officials and other
appropriate persons and on the representations as to matters of fact (not
constituting conclusions of law) set forth in the Amended Agreement.
The opinions expressed herein are limited to matters governed by the
internal laws of the State of New York, the General Corporation Law of the State
of Delaware (the "DGCL") and the federal law of the United States of America.
Upon the basis of the foregoing, we are of the opinion that:
1. Each of the Company and Applied Extrusion Technologies (Canada),
Inc. (the "Subsidiary Guarantor") is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power required to carry on its business as now conducted
as described in the Company's annual report on Form 10-K for its fiscal year
ended September 30, 2002 that is to be filed with the Securities and Exchange
Commission, in the form delivered to the Administrative Agent on or prior to the
date hereof.
2. The execution and delivery by the Company of the Amended Agreement
and the Notes and the performance by the Company of its obligations thereunder
and under the Pledge Agreement identified on Schedule II to the Amended Credit
Agreement, as amended by the Amended Agreement (the "Pledge Agreement"), the
Security Agreement, as amended by the Amended Agreement (the Pledge Agreement
and the Security Agreement, together with the Amended Agreement and the Notes,
the "Company Documents"), and the Mortgages identified on Schedule II to the
Amended Credit Agreement to which it is a party (i) are within the Company's
corporate powers and have been duly authorized by all necessary corporate
action, (ii) require no action by or in respect of, or filing with, any
governmental body, agency or official (except as contemplated by the Security
Documents and the Mortgages), and (iii) do not contravene, or constitute a
default under (or, in the case of clause (c) below, result in the creation of
any Lien on the assets of the Company under), any provision of (a) New York or
federal law or regulation or of the DGCL, (b) the certificate of incorporation
or by-laws of the Company or (c) the Indenture dated as of June 19, 2001, as in
effect on the date hereof (the "Indenture"), between the Company and ▇▇▇▇▇ Fargo
Bank Minnesota, National Association, Trustee, relating to the Company's 10 3/4
% Senior Notes due 2011.
3. The execution and delivery by the Subsidiary Guarantor of the
Guarantor Acknowledgment and the performance by the Subsidiary Guarantor of its
obligations thereunder and under the Subsidiary Guaranty (the Subsidiary
Guaranty, together with the Guarantor Acknowledgment, the "Guarantor Documents",
and together with the Company Documents, the "Credit Documents") and the
Mortgage to which it is a party (i) are within the Subsidiary Guarantor's
corporate powers and have been duly authorized by all necessary corporate
action, (ii) require no action by or in respect of, or filing with, any
governmental body, agency or official (except as contemplated by the Security
Documents), and (iii) do not contravene, or constitute a default under (or, in
the case of clause (c) below, result in the creation of any Lien on the assets
of the Subsidiary Guarantor under) any provision of (a) New York or federal law
or regulation or of the DGCL, (b) the certificate of incorporation or by-laws of
the Subsidiary Guarantor or (c) the Indenture.
4. Subject to the qualifications appearing after the numbered
paragraphs hereof, the Company Documents constitute legal, valid and binding
obligations of the Company, in each case enforceable against the Company in
accordance with their terms.
5. Subject to the qualifications appearing after the numbered
paragraphs hereof, the Guarantor Documents constitute legal, valid and binding
obligations of the Subsidiary Guarantor, enforceable against the Subsidiary
Guarantor in accordance with their terms.
6. Neither the Company nor the Subsidiary Guarantor is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and, to our knowledge is not, directly or indirectly, controlled by or acting on
behalf of any Person which is an "investment company" within the meaning of said
Act.
7. Neither the Company nor the Subsidiary Guarantor is a "holding
company" or, to our knowledge, an "affiliate" of a "holding company" or a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
8. The security interests created by the Security Agreement and the
Pledge Agreement secure the Secured Obligations (as defined in each of the
Security Agreement and the Pledge Agreement) in respect of all future Loans made
by the Lenders to, and all obligations with respect to Letters of Credit
incurred by, the Company under the Amended Agreement, whether or not at the time
such Loans are made or obligations incurred an Event of Default or other event
not within the control of the Lenders has relieved or may relieve the Lenders
from their obligations to make such Loans or to perform under Letters of Credit.
9. To our knowledge, neither the Company nor the Subsidiary Guarantor
is a party to any action, suit or proceeding before any court, governmental
agency or arbitrator which places in question the validity or enforceability of,
or seeks to enjoin the performance of, any Credit Document or Mortgage.
Our opinion that the relevant Credit Documents of the Company or the
Subsidiary Guarantor constitute the legal, valid, binding and enforceable
obligations, is subject to (i) bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application affecting the rights
and remedies of creditors and secured parties and (ii) general principles of
equity, regardless of whether applied in proceedings in equity or at law.
The opinions expressed herein do not purport to cover, and we express
no opinion with respect to, the applicability of Section 548 of the federal
Bankruptcy Code or any comparable provision of state law.
The opinions expressed herein are subject to the qualification that the
enforceability of provisions in the Credit Documents providing for
indemnification or contribution may be limited by public policy considerations.
In addition, we express no opinion as to (i) the extent to which broadly worded
waivers may be enforced, (ii) the enforceability of any provision of the Credit
Documents which purports to grant the right of setoff to a purchaser of a
participation in the loans outstanding thereunder or which provides for interest
on interest or automatic compounding interest, (iii) the extent to which
provisions providing for conclusive presumptions or determinations,
non-effectiveness of oral modifications, arbitration, submission to
jurisdiction, waiver of or consent to service of process and venue or waiver of
offset or defenses will be enforced, or (iv) the ordinances, statutes,
administrative decisions, orders, rules and regulations of any municipality,
county, special district or other political subdivision of the State of New
York.
In addition, certain provisions contained in the Credit Documents,
including the grant of powers of attorney thereunder, may be unenforceable in
whole or in part but the inclusion of such provisions in the Credit Documents
does not affect the validity of any of the other provisions thereof, and the
remaining provisions of the Credit Documents are sufficient for the practical
realization of the benefits intended to be provided thereby.
We further express no opinion as to the existence of, or as to the
title of any Person who has granted a security interest in any collateral under
the Security Documents (the "Collateral"), to any item of Collateral or as to
the priority or the perfection of any security interest in the Collateral. For
purposes of paragraph 8 above, we express no opinion with respect to security
interests in goods which are in accession to, or commingled or processed with
other goods to the extent that a security interest is limited by Section 9-336
of New York Article 9 or Article 9 of the Delaware Uniform Commercial Code.
This opinion is solely for the benefit of the Lenders and the
Administrative Agent in connection with the transactions provided for in or
contemplated by the Amended Agreement. It may not be otherwise distributed or
relied upon by any Person or quoted or reproduced, in whole or in part, in any
other document or filed with any government agency without our prior written
consent except that a copy of this opinion may be delivered to any participant
or assignee under the Amended Agreement.
Very truly yours,
Ropes & ▇▇▇▇
EXHIBIT E
[Intentionally Omitted]
EXHIBIT F
COMPANY
SECURITY AGREEMENT
AGREEMENT dated as of April 7, 1994 between APPLIED EXTRUSION TECHNOLOGIES,
INC., a Delaware corporation (with its successors, the "Company"), and THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION), as administrative agent (with its
successors in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Company, certain lenders (the "Lenders") and the
Administrative Agent are parties to a Credit Agreement dated as of April 7, 1994
(as the same may be amended and in effect from time to time, the "Credit
Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit (by making loans and issuing letters of credit) to be made
by the Lenders to the Company;
WHEREAS, in order to induce the Lenders and the Administrative Agent to
enter into the Credit Agreement, the Company has agreed to grant a continuing
security interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Credit Agreement, including, without limitation, its
obligations under the notes issued pursuant to the Credit Agreement and its
reimbursement obligations with respect to letters of credit issued pursuant
thereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions
Terms defined in the Credit Agreement and not otherwise defined herein
have, as used herein, the respective meanings provided for therein. The
following additional terms, as used herein, have the following respective
meanings:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Company and shall also mean and include all accounts
receivable, contract rights, book debts, notes, drafts and other obligations or
indebtedness owing to the Company arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services by it
(including, without limitation, any such obligation which might be characterized
as an account, contract right or general intangible under the Uniform Commercial
Code
in effect in any jurisdiction) and all of the Company's rights in, to and under
all purchase orders for goods, services or other property, and all of the
Company's rights to any goods, services or other property represented by any of
the foregoing (including returned or repossessed goods and unpaid sellers'
rights of rescission, replevin, reclamation and rights to stoppage in transit)
and all monies due to or to become due to the Company under all contracts for
the sale, lease or exchange of goods or other property and/or the performance of
services by it (whether or not yet earned by performance on the part of the
Company), in each case whether now in existence or hereafter arising or acquired
including, without limitation, the right to receive the proceeds of said
purchase orders and contracts and all collateral security and guarantees of any
kind given by any Person with respect to any of the foregoing.
"Collateral" has the meaning set forth in Section 3(A).
"Collateral Account" has the meaning set forth in Section 5(A).
"Copyright License" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right to use, copy, reproduce, distribute, prepare derivative
works, display or publish any records or other materials on which a Copyright is
in existence or may come into existence.
"Copyrights" means all the following: (i) all copyrights under the laws of
the United States or any other country (whether or not the underlying works of
authorship have been published), all registrations and recordings thereof, all
intellectual property rights to works of authorship (whether or not published),
and all applications for copyrights under the laws of the United States or any
other country, including, without limitation, registrations, recordings and
applications in the United States Copyright Office or in any similar office or
agency of the United States, any State thereof or any other country or any
political subdivision thereof, (ii) all reissues, renewals and extensions
thereof, (iii) all claims for, and rights to ▇▇▇ for, past or future
infringements of any of the foregoing, and (iv) all income, royalties, damages
and payments now or hereafter due or payable with respect to any of the
foregoing, including, without limitation, damages and payments for past or
future infringements thereof.
"Copyright Security Agreement" means a Copyright Security Agreement
executed and delivered by the Company in favor of the Administrative Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit D
hereto, as the same may be amended from time to time.
"Documents" means all "documents" (as defined in the UCC) or other receipts
covering, evidencing or representing goods, now owned or hereafter acquired, by
the Company.
2
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by the Company, including, without limitation, all motor
vehicles, trucks, trailers and Rolling Stock.
"General Intangibles" means all "general intangibles" (as defined in the
UCC) now owned or hereafter acquired by the Company, to the extent valid and
enforceable provisions contained therein do not prohibit the assignment thereof,
including, without limitation, (i) all right, title and interest of the Company
under the Assigned Agreements, (ii) all obligations or indebtedness owing to the
Company (other than Accounts) from whatever source arising, (iii) all Copyright
Licenses, Copyrights, Patent Licenses, Patents, Trademark Licenses, Trademarks,
rights in intellectual property, goodwill, trade names, service marks, trade
secrets, permits and licenses, (iv) all rights or claims in respect of refunds
for taxes paid and (v) all rights in respect of any pension plan or similar
arrangement maintained for employees of any member of the Controlled Group.
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC) evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts, including (but not limited to) promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by the Company.
"Inventory" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by the Company, wherever located, and shall also mean and
include, without limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any, commingled therewith or added thereto.
"Leased Rolling Stock" has the meaning set forth in Section 3(A).
"Patent License" means any agreement now or hereafter in existence granting
to the Company, or pursuant to which the Company has granted to any other
Person, any right with respect to any Patent or any invention now or hereafter
in existence, whether patentable or not, whether a patent or application for
patent is in existence on such invention or not, and whether a patent or
application for patent on such invention may come into existence, including,
without limitation, the agreements identified in Schedule 1 to Exhibit B hereto.
"Patents" means all the following: (i) all letters patent and design
letters patent of the United States or any other country and all applications
for letters patent and design letters patent of the United States or any other
country, including, without limitation, applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof,
including, without limitation, those described in Schedule 1 to Exhibit B
hereto, (ii) all reissues, divisions, continuations, continuations-in-part,
renewals and extensions
3
thereof, (iii) all claims for, and rights to ▇▇▇ for, past or future
infringements of any of the foregoing and (iv) all income, royalties, damages
and payments now or hereafter due or payable with respect to any of the
foregoing, including, without limitation, damages and payments for past or
future infringements thereof.
"Patent Security Agreement" means the Patent Security Agreement executed
and delivered by the Company in favor of the Administrative Agent, for the
benefit of the Secured Parties, substantially in the form of Exhibit B hereto,
as the same may be amended from time to time.
"Perfection Certificate" means a certificate substantially in the form of
Exhibit A hereto, completed and supplemented with the schedules and attachments
contemplated thereby to the satisfaction of the Administrative Agent, and duly
executed by the chief financial officer of the Company.
"Permitted Liens" means the Security Interests and the other Liens on the
Collateral permitted to be created, assumed or to exist pursuant to Section 9.13
of the Credit Agreement.
"Proceeds" means all proceeds of, and all other profits, products,
rentals or receipts, in whatever form, arising from the collection, sale, lease,
exchange, assignment, licensing or other disposition of, or other realization
upon, collateral, including, without limitation, all claims of the Company
against third parties for loss of, damage to or destruction of, or for proceeds
payable under, or unearned premiums with respect to, policies of insurance in
respect of, any collateral, and any condemnation or requisition payments with
respect to any collateral, in each case whether now existing or hereafter
arising.
"Rolling Stock" means all railcars, barges and other water carrier
equipment, and all accessions, appurtenances and parts installed on and
additions thereto, and replacements thereof, now owned or hereafter acquired by
the Company.
"Rolling Stock Leases" has the meaning set forth in Section 3(A).
"Rolling Stock Revenues" means any monies, revenues, payments or credits
now owned or hereafter acquired by the Company which are generated by or
attributable to the Rolling Stock or Leased Rolling Stock, including, without
limitation, railcar hire payments, mileage allowances, per diem mileage
payments, empty mileage allowances, mileage credits and excess mileage credits,
in each case whether now existing or hereafter arising.
"Secured Obligations" means the obligations secured under this Agreement,
including (a) all principal of and interest (including, without limitation, any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such case,
4
proceeding or other action) on any Loan to the Company under, or any Note issued
by the Company pursuant to, or any Reimbursement Obligation of the Company
under, the Credit Agreement; (b) all other amounts payable by the Company under
the Credit Agreement; (c) all other amounts payable by the Company hereunder or
under any other Security Document; and (d) any renewals or extensions of any of
the foregoing.
"Secured Parties" means (i) the Lenders and (ii) the Administrative
Agent.
"Security Interests" means the security interests granted pursuant to
Section 3, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Trademark License" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right to use any Trademark, including, without limitation, the
agreements identified on Schedule 1 to Exhibit C hereto.
"Trademarks" means all of the following: (i) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, brand names, trade dress, prints and labels on
which any of the foregoing have appeared or appear, package and other designs,
and any other source or business identifiers, and general intangibles of like
nature, and the rights in any of the foregoing which arise under applicable law,
(ii) the goodwill of the business symbolized thereby or associated with each of
them, (iii) all registrations and applications in connection therewith,
including, without limitation, registrations and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, including, without limitation, those described in Schedule
1 to Exhibit C hereto, (iv) all reissues, extensions and renewals thereof, (v)
all claims for, and rights to ▇▇▇ for, past or future infringements of any of
the foregoing and (vi) all income, royalties, damages and payments now or
hereafter due or payable with respect to any of the foregoing, including,
without limitation, damages and payments for past or future infringements
thereof.
"Trademark Security Agreement" means the Trademark Security Agreement
executed and delivered by the Company in favor of the Administrative Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit C
hereto, as the same may be amended from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of New York; provided that if by reason of mandatory provisions of
law, the perfection or the effect of perfection or non-perfection of the
Security Interests in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, "UCC" means the
5
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.
SECTION 2. Representations and Warranties
The Company represents and warrants as follows:
(A) The Company has good and marketable title to all of the Collateral,
free and clear of any Liens other than the Permitted Liens.
(B) The Company has not performed any acts which might prevent the
Administrative Agent from enforcing any of the terms of this Agreement or which
would limit the Administrative Agent in any such enforcement. Other than
financing statements or other similar or equivalent documents or instruments
with respect to the Security Interests and Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file or of record in
any jurisdiction in which such filing or recording would be effective to perfect
a Lien on such Collateral. No Collateral is in the possession of any Person
(other than the Company) asserting any claim thereto or security interest
therein, except that the Administrative Agent or its designee may have
possession of Collateral as contemplated hereby, other than Collateral being
repaired by third parties in the ordinary course of business, Inventory in
transit and Inventory held by warehousemen.
(C) Not later than the date of the first borrowing under the Credit
Agreement, the Company shall deliver the Perfection Certificate to the
Administrative Agent. The information set forth therein shall be correct and
complete. Not later than 60 days following the date of the first borrowing, the
Company shall furnish to the Administrative Agent file search reports from each
filing office set forth in Schedule 7 to the Perfection Certificate or other
evidence satisfactory to the Majority Lenders acting through the Administrative
Agent confirming the filing information set forth in such Schedule.
(D) The Security Interests constitute valid security interests under the
UCC securing the Secured Obligations. When UCC financing statements in the form
specified in the Perfection Certificate have been filed in the offices specified
in the Perfection Certificate, and this Agreement and any amendments hereto in
appropriate form have been filed in the office of the Secretary of the
Interstate Commerce Commission, with respect to any Rolling Stock, Leased
Rolling Stock or Rolling Stock Leases, the Security Interests shall constitute
perfected security interests in the Collateral (except Inventory in transit) to
the extent that a security interest therein may be perfected by filing pursuant
to the UCC and the Interstate Commerce Act, prior to all other Liens and rights
of others therein except for the Permitted Liens. When the Patent Security
Agreement and the Trademark Security Agreement have been filed with the United
States Patent and Trademark
6
Office, the Security Interests shall constitute perfected security interests in
all right, title and interest of the Company in Patents and Trademarks, prior to
all other Liens and rights of others therein except for the Permitted Liens.
When a Copyright Security Agreement has been filed with the United States
Copyright Office, the Security Interests shall constitute perfected security
interests in all right, title and interest of the Company in Copyrights, prior
to all other Liens and rights of others therein except for the Permitted Liens.
(E) The Inventory and Equipment are insured in accordance with the
requirements of the Credit Agreement.
(F) All Inventory has or will have been produced in compliance with the
applicable requirements of the Fair Labor Standards Act, as amended.
SECTION 3. The Security Interests
(A) In order to secure the full and punctual payment of the Secured
Obligations in accordance with the terms thereof, and to secure the performance
of all of the obligations of the Company hereunder and under the Credit
Agreement, the Company hereby hypothecates, assigns by way of security,
transfers and grants to the Administrative Agent for the ratable benefit of the
Secured Parties a continuing security interest in and to all right, title and
interest of the Company in and to the following property, whether now owned or
existing or hereafter acquired or arising and regardless of where located (all
being collectively referred to as the "Collateral"):
(1) Accounts;
(2) Inventory;
(3) General Intangibles;
(4) Documents;
(5) Instruments;
(6) Equipment;
(7) The Collateral Account, all cash deposited therein from
time to time, the Liquid Investments made pursuant to Section 5(D) and
other monies and property of any kind of the Company in the possession or
under the control of the Administrative Agent;
(8) All books and records (including, without limitation,
customer lists, marketing information, credit files, price lists,
operating records, vendor and supplier price lists, sales literature,
computer programs, disks, printouts and other computer materials and
records, whether maintained by
7
the Company or any servicing agency) of the Company pertaining to any
of the Collateral;
(9) All right, title, claims and benefits now owned or
hereafter acquired by the Company in and to any railcar leases,
subleases, rental agreements and car hire contracts in which the
Company shall at any time have any interest, and any right, title,
claim and benefits of the Company now owned or hereafter acquired in
and to any management agreement concerning all such leases and
agreements (collectively, "Rolling Stock Leases"); and all right, title
and interest of the Company in the railcars and equipment provided
pursuant to any Rolling Stock Leases ("Leased Rolling Stock"); in each
case, including, without limitation, all rights of the Company to
receive and apply any Rolling Stock Revenues attributable to any Leased
Rolling Stock or pursuant to any Rolling Stock Leases; and
(10) All Proceeds of, attachments or accessions to, or
substitutions for, all or any of the Collateral described in Clauses 1
through 10 hereof.
(B) The Security Interests are granted as security only and shall not
subject the Administrative Agent or any other Secured Party to, or transfer or
in any way affect or modify, any obligation or liability of the Company with
respect to any of the Collateral or any transaction in connection therewith.
SECTION 4. Further Assurances; Covenants
(A) (I) The Company will not change (i) the location of its chief
executive office or its chief place of business or (ii) the locations where it
keeps or holds any Collateral (other than Inventory and Rolling Stock in
transit) or records relating thereto from the applicable location described in
the Perfection Certificate unless it shall have given the Administrative Agent
notice thereof and taken all steps reasonably requested by the Administrative
Agent to perfect the Security Interests contemplated hereby with respect to the
new location in question (including without limitation an opinion of counsel, if
so requested). The Company shall not in any event change the location of any
Collateral if such change would cause the Security Interests in such Collateral
to lapse or cease to be perfected.
(II) The Company will not change its name, identity or corporate
structure in any manner unless it shall have given the Administrative Agent
prior notice thereof and taken all steps reasonably requested by the
Administrative Agent to perfect the Security Interests contemplated hereby in
connection with such change (including without limitation an opinion of counsel,
if so requested).
(B) The Company will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including, without
limitation, any filings with the United States Patent and Trademark Office, any
filings with the United States Copyright Office, any filings with the Interstate
Commerce Commission,
8
any filings of financing or continuation statements under the UCC and any
filings in, or agreements governed by the laws of, any foreign jurisdictions)
that from time to time may be necessary or desirable, or that the Administrative
Agent may request, in order to create, preserve, upgrade in rank (to the extent
required hereby), perfect, confirm or validate the Security Interests or to
enable the Administrative Agent and the other Secured Parties to obtain the full
benefits of this Agreement, or to enable the Administrative Agent to exercise
and enforce, or facilitate the exercise and enforcement of, any of its rights,
powers and remedies hereunder with respect to any of the Collateral. To the
extent permitted by law, the Company hereby authorizes the Administrative Agent
to execute and file financing statements or continuation statements without the
Company's signature appearing thereon. The Company agrees that a carbon,
photographic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. The Company shall pay the costs of, or
incidental to, any recording or filing of any financing or continuation
statements concerning the Collateral.
(C) If any Collateral is at any time in the possession or control of any
warehouseman, bailee or any of the Company's agents or processors, the Company
shall, upon the request of the Administrative Agent acting on the instructions
of the Majority Lenders, notify such warehouseman, bailee, agent or processor of
the Security Interests created hereby and instruct such Person to hold all such
Collateral for the Administrative Agent's account subject to the Administrative
Agent's instructions.
(D) The Company shall keep full and accurate books and records relating to
the Collateral, and stamp or otherwise ▇▇▇▇ such books and records in such
manner as the Majority Lenders may reasonably request in order to reflect the
Security Interests.
(E) The Company will immediately deliver and pledge each Instrument to the
Administrative Agent, appropriately endorsed to the Administrative Agent,
provided that so long as no Event of Default shall have occurred and be
continuing, the Company may retain for collection in the ordinary course any
Instruments (other than checks and drafts constituting payments in respect of
Accounts, as to which the provisions of Section 5(B) shall apply) received by it
in the ordinary course of business and the Administrative Agent shall, promptly
upon request of the Company, make appropriate arrangements for making any other
Instrument pledged by the Company available to it for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the extent deemed
appropriate to the Administrative Agent, against trust receipt or like
document).
(F) The Company shall use its best efforts, subject to reasonable business
practices, to collect from its account debtors, as and when due, any and all
amounts owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be collected in
9
accordance with lawful collection procedures) and to apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Account. Unless an Event of Default has occurred and is continuing and
the Administrative Agent is exercising its rights hereunder to collect Accounts,
the Company may allow in the ordinary course of business as adjustments to
amounts owing under its Accounts (i) an extension or renewal of the time or
times of payment, or settlement for less than the total unpaid balance, which
the Company finds appropriate in accordance with sound business judgment and
(ii) a refund or credit due as a result of returned or damaged merchandise, all
in accordance with the Company's ordinary course of business consistent with its
historical collection practices. The costs and expenses (including, without
limitation, attorney's fees) of collection, whether incurred by the Company or
the Administrative Agent, shall be borne by the Company.
(G) Upon the occurrence and during the continuance of any Event of Default,
upon the request of the Majority Lenders acting through the Administrative
Agent, the Company will promptly notify (and the Company hereby authorizes the
Administrative Agent so to notify) each account debtor in respect of any Account
or Instrument that such Collateral has been assigned to the Administrative Agent
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Administrative Agent or its designee.
(H) The Company shall, (i) as soon as practicable after the date hereof, in
the case of Equipment now owned constituting goods in which a security interest
is perfected by a notation on the certificate of title or similar evidence of
the ownership of such goods, and (ii) within 10 days of acquiring any other
similar Equipment, in each case, (a) having a value in excess of $50,000 or (b)
having a value in excess of $25,000, if the aggregate of all such items owned by
the Company at any time is greater than $100,000, deliver to the Administrative
Agent any and all certificates of title, applications for title or similar
evidence of ownership of such Equipment and shall cause the Administrative Agent
to be named as lienholder on any such certificate of title or other evidence of
ownership; provided that the foregoing shall not apply to up to three
automobiles owned by the Company unless the Administrative Agent otherwise so
requests. The Company shall not permit any such items to become a fixture to
real estate other than real estate described in the Mortgages.
(I) The Company shall as soon as practicable after the date hereof, at its
own cost and expense, cause to be plainly, distinctly, permanently and
conspicuously placed, fastened or painted upon each side of each item of Rolling
Stock a legend bearing such words as the Administrative Agent may request
indicating the Lien over and security interest in such Rolling Stock created
hereby in letters not less than one inch in height. The Company may permit the
Rolling Stock to be operated within the United States, but shall not permit the
Rolling Stock to be operated outside the boundaries of the continental United
States.
10
(J) Without the prior written consent of the Majority Lenders, the Company
will not (a) sell, lease, exchange, assign or otherwise dispose of, or grant any
option with respect to, any Collateral except, subject to the rights of the
Administrative Agent and the Lenders hereunder if an Event of Default shall have
occurred and be continuing, as permitted under Section 9.12 of the Credit
Agreement and, in the case of any such disposition, the Security Interests
created hereby in such item (but not in any Proceeds arising from such sale or
exchange) shall cease immediately without any further action on the part of the
Administrative Agent; or (b) create, incur or suffer to exist any Lien with
respect to any Collateral, except for the Permitted Liens.
(K) The Company will maintain insurance in accordance with Section 9.03 of
the Credit Agreement.
(L) The Company will, promptly upon request, provide to the Administrative
Agent all information and evidence it may reasonably request concerning the
Collateral, and in particular the Accounts, to enable the Administrative Agent
to enforce the provisions of this Agreement.
(M) If the Company shall, either itself or through any agent, employee or
licensee, file an application for the registration of any Copyright with the
United States Copyright Office or any Patent or Trademark with the United States
Patent and Trademark Office, or with any similar office or agency in any other
country or any political subdivision thereof, not less than 30 days thereafter
it shall inform the Administrative Agent, and, upon request of the
Administrative Agent, execute and deliver any and all agreements, instruments,
documents and papers the Administrative Agent may request to evidence the
Security Interests in such Copyright, Patent or Trademark and the goodwill and
general intangibles of the Company relating thereto or represented thereby, and
the Company hereby constitutes the Administrative Agent its attorney-in-fact to
execute and file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, shall be irrevocable until the Secured Obligations are paid in full.
(N) If the Administrative Agent shall so request, based on its
determination that changed circumstances warrant such a request, the Company
shall, at its cost and expense, cause to be delivered to the Secured Parties an
opinion of counsel satisfactory to the Administrative Agent as to such matters
relating to the transactions contemplated hereby as the Majority Lenders may
reasonably request.
Section 5. Collateral Account
(A) There is hereby established with the Administrative Agent a cash
collateral account (the "Collateral Account") in the name and under the control
of the Administrative Agent into which there shall be deposited from time to
time the cash proceeds of the Collateral required to be delivered to the
Administrative
11
Agent pursuant to subsection (B) of this Section 5 or any other provision of
this Agreement, any other Security Document or the Credit Agreement. Any income
received by the Administrative Agent with respect to the balance from time to
time standing to the credit of the Collateral Account, including any interest or
capital gains on Liquid Investments, shall remain, or be deposited, in the
Collateral Account. All right, title and interest in and to the cash amounts on
deposit from time to time in the Collateral Account together with any Liquid
Investments from time to time made pursuant to subsection (D) of this Section
shall vest in the Administrative Agent, shall constitute part of the Collateral
hereunder and shall not constitute payment of the Secured Obligations until
applied thereto as hereinafter provided.
(B) The Company shall instruct all account debtors and other Persons
obligated in respect of all Accounts to make all payments in respect of such
Accounts either (i) directly to the Administrative Agent (by instructing that
such payments be remitted to a post office box which shall be in the name and
under the control of the Administrative Agent) or (ii) to one or more other
banks in any state (other than Louisiana) in the United States (each a "Lockbox
Bank") (by instructing that such payments be remitted to a post office box which
shall be in the name and under the control of such Lockbox Bank) for deposit
into an account in the name and under the control of such Lockbox Bank (a
"Lockbox Account") under a Lockbox Letter substantially in the form of Exhibit G
hereto duly executed by the Company and such Lockbox Bank or under other
arrangements, in form and substance satisfactory to the Administrative Agent,
pursuant to which the Company shall have irrevocably instructed such Lockbox
Bank (and such Lockbox Bank shall have agreed) to remit all proceeds of such
payments directly to the Administrative Agent for deposit into the Collateral
Account or as the Administrative Agent may otherwise instruct such Lockbox Bank;
provided that on or prior to the 60th day after the Closing Date, account
debtors and other Persons obligated in respect of such Accounts shall be
permitted to make all payments in respect of such Accounts to one or more other
banks for deposit in an account in the name and control of Hercules
Incorporated, such payments to be remitted by Hercules Incorporated to the
Company. Unless and until an Event of Default shall have occurred and be
continuing, the Administrative Agent shall instruct such Lockbox Bank to remit
such proceeds to the Company or as the Company may otherwise so instruct such
Lockbox Bank. All such payments made to the Administrative Agent shall be
deposited in the Collateral Account. In addition to the foregoing, the Company
agrees that if the proceeds of any Collateral hereunder (including the payments
made in respect of Accounts) shall be received by it, the Company shall as
promptly as possible deposit such proceeds into a Lockbox Account. Until so
deposited, all such proceeds shall be held in trust by the Company for and as
the property of the Administrative Agent and the Secured Parties and shall not
be commingled with any other funds or property of the Company.
(C) The balance from time to time standing to the credit of the Collateral
Account shall, except (i) upon the occurrence and continuation of an Event of
12
Default or (ii) as provided by Section 3.02(b)(i)(2) of the Credit Agreement, be
distributed to the Company upon the order of the Company. If immediately
available cash on deposit in the Collateral Account is not sufficient to make
any distribution to the Company referred to in the previous sentence of this
Section 5(C), the Administrative Agent shall liquidate as promptly as
practicable Liquid Investments as required to obtain sufficient cash to make
such distribution and, notwithstanding any other provision of this Section 5,
such distribution shall not be made until such liquidation has taken place. Upon
the occurrence and continuation of an Event of Default, the Administrative Agent
shall, if so instructed by the Majority Lenders, apply or cause to be applied
(subject to collection) any or all of the balance from time to time standing to
the credit of the Collateral Account in the manner specified in Section 9.
(D) Amounts on deposit in the Collateral Account shall be invested and
re-invested from time to time in such Liquid Investments as the Company shall
determine, which Liquid Investments shall be held in the name and be under the
control of the Administrative Agent, provided that, if an Event of Default has
occurred and is continuing, the Administrative Agent shall, if instructed by the
Majority Lenders, liquidate any such Liquid Investments and apply or cause to be
applied the proceeds thereof to the payment of the Secured Obligations in the
manner specified in Section 9. For this purpose, (i) each Liquid Investment
shall mature within 30 days after it is acquired by the Administrative Agent and
(ii) in order to provide the Administrative Agent, for the benefit of the
Secured Parties, with a perfected security interest therein, each Liquid
Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Administrative Agent, which
(together with any appropriate instruments of transfer) are delivered to,
and held by, the Administrative Agent or an agent thereof (which shall not
be the Company or any of its Affiliates) in the State of New York; or
(ii) in book-entry form and issued by the United States and subject to
pledge under applicable state law and Treasury regulations and as to which
(in the opinion of counsel to the Administrative Agent) appropriate
measures shall have been taken for perfection of the Security Interests.
SECTION 6. General Authority
The Company hereby irrevocably appoints the Administrative Agent its true
and lawful attorney, with full power of substitution, in the name of the
Company, the Administrative Agent, the Secured Parties or otherwise, for the
sole use and benefit of the Administrative Agent and the other Secured Parties,
but at the Company's expense, to the extent permitted by law to exercise, at any
time and from time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect to all or any of the
Collateral:
13
(i) to demand, ▇▇▇ for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue
thereof, including without limitation the endorsement of the Company's
name on any checks, notes, acceptances, money orders, drafts or other
forms of payment,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually as
if the Administrative Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
provided that the Administrative Agent shall give the Company not less
than ten days' prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market. The Company agrees that such notice constitutes
"reasonable notification" within the meaning of Section 9-504(3) of the UCC.
SECTION 7. Remedies upon Event of Default
(A) If any Event of Default has occurred and is continuing, the
Administrative Agent may exercise on behalf of the Secured Parties all rights of
a secured party under the UCC (to the extent permitted by law, whether or not in
effect in the jurisdiction where such rights are exercised) and, in addition,
the Administrative Agent may, without being required to give any notice, except
as herein provided or as may be required by mandatory provisions of law, (i)
withdraw all cash and Liquid Investments in the Collateral Account and apply
such monies, Liquid Investments and other cash, if any, then held by it as
Collateral as specified in Section 9 and (ii) if there shall be no such monies,
Liquid Investments or cash or if such monies, Liquid Investments or cash shall
be insufficient to pay all the Secured Obligations in full, sell the Collateral
or any part thereof at public or private sale, for cash, upon credit or for
future delivery, and at such price or prices as the Administrative Agent may
deem satisfactory so long as the sale is conducted in a commercially reasonable
manner. The Administrative Agent or any other Secured Party may be the purchaser
of any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations, at any
private sale) and thereafter hold the same, absolutely, free from any right or
claim of whatsoever kind. The Company will execute and deliver such documents
and take such other action as the Administrative Agent deems necessary or
advisable in order that any such sale may be made in compliance with law. Upon
any such sale the Administrative
14
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold to it absolutely, free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Company which may be
waived, and the Company, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which it has or may have
under any law now existing or hereafter adopted. The notice (if any) of such
sale required by Section 6 shall (1) in case of a public sale, state the time
and place fixed for such sale, and (2) in the case of a private sale, state the
day after which such sale may be consummated. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Administrative Agent may fix in the notice of such sale. At any such sale
the Collateral may be sold in one lot as an entirety or in separate parcels, as
the Administrative Agent may determine. The Administrative Agent shall not be
obligated to make any such sale pursuant to any such notice. The Administrative
Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Administrative Agent until the selling price is paid by the
purchaser thereof, but the Administrative Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Administrative Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(B) For the purpose of enforcing any and all rights and remedies under
this Agreement the Administrative Agent may (i) require the Company to, and the
Company agrees that it will, at its expense and upon the request of the
Administrative Agent, forthwith assemble all or any part of the Collateral as
directed by the Administrative Agent and make it available at a place designated
by the Administrative Agent which is, in its opinion, reasonably convenient to
the Administrative Agent and the Company, whether at the premises of the Company
or otherwise, (ii) to the extent permitted by applicable law, enter, with or
without process of law and without breach of the peace, any premise where any of
the Collateral is or may be located, and without charge or liability to it seize
and remove such Collateral from such premises, (iii) have access to and use the
Company's books and records relating to the Collateral and (iv) prior to the
disposition of the Collateral, store or transfer it without charge in or by
means of any storage or transportation facility owned or leased by the Company,
process, repair or recondition it or otherwise prepare it for disposition in any
manner and to the extent the Administrative Agent deems appropriate and, in
connection with such preparation and disposition, use without charge any
copyright, trademark, trade name, patent or technical process used by the
Company.
15
(C) Without limiting the generality of the foregoing, if any Event of
Default has occurred and is continuing,
(i) the Administrative Agent may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Copyrights, Patents or Trademarks included in
the Collateral throughout the world for such term or terms, on such
conditions and in such manner as the Administrative Agent shall in its
sole discretion determine;
(ii) the Administrative Agent may (without assuming any
obligations or liability thereunder), at any time and from time to
time, in its sole discretion, enforce (and shall have the exclusive
right to enforce) against any licensee or sublicensee all rights and
remedies of the Company in, to and under any Copyright Licenses, Patent
Licenses or Trademark Licenses and take or refrain from taking any
action under any thereof, and the Company hereby releases the
Administrative Agent and each of the other Secured Parties from, and
agrees to hold the Administrative Agent and each of the other Secured
Parties free and harmless from and against any claims and expenses
arising out of, any lawful action so taken or omitted to be taken with
respect thereto; and
(iii) upon request by the Administrative Agent, the Company will
execute and deliver to the Administrative Agent a power of attorney, in
form and substance satisfactory to the Administrative Agent, for the
implementation of any lease, assignment, license, sublicense, grant of
option, sale or other disposition of a Copyright, Patent or Trademark
or any action related thereto. In the event of any such disposition
pursuant to this Section, the Company shall supply its know-how and
expertise relating to the manufacture and sale of the products bearing
Trademarks or the products or services made or rendered in connection
with Patents, and its customer lists and other records relating to such
Patents or Trademarks and to the distribution of said products, to the
Administrative Agent.
SECTION 8 Limitation on Duty of Administrative Agent in Respect of
Collateral
Beyond the exercise of reasonable care in the custody thereof, the
Administrative Agent shall have no duty as to any Collateral in its possession
or control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it
accords its own property, and shall not be liable or responsible for any loss or
damage to any of the Collateral, or for any diminution in the value thereof, by
reason of the act or
16
omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by the Administrative Agent in good faith.
SECTION 9. Application of Proceeds
(A) Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held in the Collateral Account shall be applied
by the Administrative Agent in the following order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to the
Administrative Agent and its agents and counsel, and all expenses,
liabilities and advances incurred or made by the Administrative
Agent in connection therewith, and any other unreimbursed expenses
for which the Administrative Agent or any other Secured Party is to
be reimbursed pursuant to Section 12.03 of the Credit Agreement or
Section 13 hereof and unpaid fees owing to the Administrative Agent
under the Credit Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Company or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
(B) The Administrative Agent may make distributions hereunder in cash
or in kind or, on a ratable basis, in any combination thereof. The
Administrative Agent shall invest all amounts to be applied to Letter of Credit
Liabilities in Liquid Investments selected by it and hold such amount in trust
for application to future drawings under the Letters of Credit notified to it by
the issuing Lenders in the order in which such drawings are made. If the
Administrative Agent holds any amounts which were distributable in respect of
Letter of Credit Liabilities after the Letters of Credit have expired and all
amounts payable with respect thereto have been paid, such amounts shall be
applied in the order set forth in subsection (A) above.
(C) In making the determinations and allocations required by this
Section, the Administrative Agent shall have no liability to any of the Lenders
for actions taken in reliance on information supplied by the Lenders as to the
amounts of the
17
Secured Obligations held by them. All distributions made by the Administrative
Agent pursuant to this Section shall be final and the Administrative Agent shall
have no duty to inquire as to the application by the Lenders of any amount
distributed to them. However, if at any time the Administrative Agent determines
that an allocation or distribution previously made pursuant to this Section was
based on a mistake of fact (including, without limiting the generality of the
foregoing, mistakes based on an assumption that principal or interest has been
paid by payments which are subsequently recovered from the recipient thereof
through the operation of any bankruptcy, reorganization, insolvency or other
laws or otherwise), the Administrative Agent may in its discretion, but shall
not be obligated to, adjust subsequent allocations and distributions hereunder
so that, on a cumulative basis, the Secured Parties receive the distributions to
which they would have been entitled if such mistake of fact had not been made.
SECTION 10. Assigned Agreements
The Company hereby irrevocably authorizes and empowers the
Administrative Agent for and on behalf of the Secured Parties, in the
Administrative Agent's sole discretion, if an Event of Default has occurred and
is continuing, to assert, either directly or on behalf of the Company any claims
the Company may have, from time to time, against any other party to the Assigned
Agreements or to otherwise exercise any right or remedy of the Company under the
Assigned Agreements (including, without limitation, the right to enforce
directly against any party to an Assigned Agreement all of the Company's rights
thereunder, to make all demands and give all notices and make all requests
required or permitted to be made by the Company under the Assigned Agreements)
as the Administrative Agent may deem proper. The Company hereby irrevocably
makes, constitutes and appoints the Administrative Agent (and all officers,
employees or agents designated by the Administrative Agent) as the Company's
true and lawful attorney-in-fact for the purpose of enabling the Administrative
Agent, to assert and collect such claims and to exercise such rights and
remedies. The Company shall keep the Administrative Agent informed of all
material circumstances bearing upon the right, title and interest of the Company
under the Assigned Agreements.
SECTION 11. Concerning the Administrative Agent
The provisions of Section 11 of the Credit Agreement shall inure to the
benefit of the Administrative Agent in respect of this Agreement and shall be
binding upon the parties to the Credit Agreement in such respect. In furtherance
and not in derogation of the rights, privileges and immunities of the
Administrative Agent therein set forth:
(A) The Administrative Agent is authorized to take all such action as
is provided to be taken by it as Administrative Agent hereunder and all other
action reasonably incidental thereto. As to any matters not expressly provided
for herein (including, without limitation, the timing and methods of realization
upon the
18
Collateral) the Administrative Agent shall act or refrain from acting
in accordance with written instructions from the Majority Lenders or, in the
absence of such instructions, in accordance with its discretion.
(B) The Administrative Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Administrative Agent shall have no duty to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement by the Company.
SECTION 12. Appointment of Co-Administrative Agents
At any time or times, in order to comply with any legal requirement in any
jurisdiction, the Administrative Agent may appoint another bank or trust company
or one or more other persons, either to act as co-agent or co-agents, jointly
with the Administrative Agent, or to act as separate agent or agents on behalf
of the Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment (which may, in the discretion of the Administrative
Agent, include provisions for the protection of such co-agent or separate agent
similar to the provisions of Section 11).
SECTION 13. Expenses
In the event that the Company fails to comply with the provisions of the
Credit Agreement or this Agreement, such that the value of any Collateral or the
validity, perfection, rank or value of any Security Interest is thereby
diminished or potentially diminished or put at risk, the Administrative Agent if
requested by the Majority Lenders may, but shall not be required to, effect such
compliance on behalf of the Company, and the Company shall reimburse the
Administrative Agent for the costs thereof on demand. All insurance expenses and
all expenses of protecting, storing, warehousing, appraising, insuring,
handling, maintaining and shipping the Collateral, any and all excise, property,
sales, and use taxes imposed by any state, federal, or local authority on any of
the Collateral, or in respect of periodic appraisals and inspections of the
Collateral to the extent the same may reasonably be requested by the Majority
Lenders acting through the Administrative Agent from time to time, or in respect
of the sale or other disposition thereof, shall be borne and paid by the
Company; and if the Company fails to promptly pay any portion thereof when due,
except, if no Event of Default has occurred and is continuing, with respect to
taxes which are being contested as permitted by Section 9.02 of the Credit
Agreement, the Administrative Agent or any other Secured Party may, at its
option, but shall not be required to, pay the same and charge the Company's
account therefor, and the Company agrees to reimburse the Administrative Agent
or such Secured Party therefor on demand. All sums so paid or incurred by the
Administrative Agent or any other Secured
19
Party for any of the foregoing and any and all other sums for which the Company
may become liable hereunder and all costs and expenses (including attorneys'
fees, legal expenses and court costs) reasonably incurred by the Administrative
Agent or any other Secured Party in enforcing or protecting the Security
Interests or any of their rights or remedies under this Agreement, shall,
together with interest thereon for each day until paid at the Post-Default Rate
for such day, be additional Secured Obligations hereunder.
SECTION 14. Termination of Security Interests; Release of Collateral
Upon the repayment in full of all Secured Obligations and the termination
of the Commitments and Letters of Credit under the Credit Agreement, the
Security Interests shall terminate and all rights to the Collateral shall revert
to the Company. At any time and from time to time prior to such termination of
the Security Interests, the Administrative Agent may release all or any part of
the Collateral with the prior consent of the Majority Lenders; provided that if
any such release would constitute a release of all or substantially all of the
security for the obligations of the Company under the Credit Agreement or under
any Note, such release will require the consent of all the Lenders. Upon any
such termination of the Security Interests or release of Collateral, the
Administrative Agent will, at the expense of the Company, execute and deliver to
the Company such documents as the Company shall reasonably request to evidence
the termination of the Security Interests or the release of such Collateral, as
the case may be.
SECTION 15. Notices
All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with Section 12.02 of the Credit
Agreement.
SECTION 16. Waivers, Non-Exclusive Remedies
No failure on the part of the Administrative Agent to exercise, and no
delay in exercising and no course of dealing with respect to, any right under
the Credit Agreement or this Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise by the Administrative Agent of any right
under the Credit Agreement or this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The rights in this
Agreement and the Credit Agreement are cumulative and are not exclusive of any
other remedies provided by law.
20
SECTION 17. Successors and Assigns
This Agreement is for the benefit of the Administrative Agent and the other
Secured Parties and their successors and assigns, and in the event of an
assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the Company and its
successors and assigns and the rights of the Company hereunder shall inure to
the benefit of the Company's successors and permitted assigns.
SECTION 18. Changes in Writing
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by the Company and
the Administrative Agent with the consent of the Majority Lenders (or, in the
case of Section 14 or this Section, the Lenders).
SECTION 19.NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF
ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE COMPANY AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
21
SECTION 20. Severability
If any provision hereof is invalid and unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Administrative Agent and the other Secured
Parties in order to carry out the intentions of the parties hereto as nearly as
may be possible; and (ii) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
SECTION 21. Counterparts
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
APPLIED EXTRUSION TECHNOLOGIES,
INC.
By _____________________________
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By _____________________________
Title:
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
I, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY, that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Financial Officer and
Treasurer of APPLIED EXTRUSION TECHNOLOGIES, INC., personally known to me to be
the same person whose name is subscribed to the foregoing instrument as such
Chief Financial Officer and Treasurer, appeared before me this day in person and
acknowledged that he signed, executed and delivered the said instrument as his
own free and voluntary act and as the free and voluntary act of said Company,
for the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this 6th day of April, 1994.
[Seal]
________________________________
Signature of notary public
My Commission expires ▇-▇-▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
I, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY, that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Director of THE
CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), personally known to me to be the
same person whose name is subscribed to the foregoing instrument as such
Managing Director, appeared before me this day in person and acknowledged that
he signed, executed and delivered the said instrument as his own free and
voluntary act and as the free and voluntary act of said Company, for the uses
and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this 6th day of April, 1994.
[Seal]
_____________________________________
Signature of notary public
My Commission expires 7-1-95
EXHIBIT A
to
COMPANY SECURITY
AGREEMENT
PERFECTION CERTIFICATE
The undersigned, the chief executive officer of Applied Extrusion
Technologies, Inc. a Delaware corporation (the "Company"), hereby certifies with
reference to the Company Security Agreement dated as of April __, 1994, between
the Company and The Chase Manhattan Bank (National Association), as
Administrative Agent (terms defined therein being used herein as therein
defined), to the Administrative Agent and each Lender as follows:
1. Names. (a) The exact corporate name of the Company as it appears
in its certificate of incorporation is as follows:
(b) Set forth below is each other corporate name the Company has had
since its organization, together with the date of the relevant change:
(c) Except as set forth in Schedule 1, the Company has not changed its
identity or corporate structure in any way within the past five years. [Changes
in identity or corporate structure would include mergers, consolidations and
acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by paragraphs 1, 2 and 3 of this certificate as to each
acquiree or constituent party to a merger or consolidation.]
(d) The following is a list of all other names (including trade names
or similar appellations) used by the Company or any of its divisions or other
business units at any time during the past five years:
2. Current Locations. (a) The chief executive office of the Company
is located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the locations where the Company maintains any
books or records relating to any Accounts:
Mailing
Name Address County State
---- ------- ------ -----
(c) The following are all the places of business of the Company not
identified above:
Mailing
Name Address County State
---- ------- ------ -----
(d) The following are all the locations where the Company maintains
any Inventory not identified above:
Mailing
Name Address County State
---- ------- ------ -----
(e) The following are the names and addresses of all Persons other than
the Company which have possession of any of the Company's Inventory:
Mailing
Name Address County State
---- ------- ------ -----
3. Prior Locations. (a) Set forth below is the information required
by subparagraphs (a), (b) and (c) of paragraph 2 with respect to each location
or place of business maintained by the Company at any time during the past five
years:
(b) Set forth below is the information required by subparagraphs (d)
and (e) of paragraph 2 with respect to each location or bailee where or with
whom Inventory has been lodged at any time during the past four months:
2
4. Unusual Transactions. [Except as set forth in Schedule 4,] all
Accounts have been originated by the Company and all Inventory and Equipment has
been acquired by the Company in the ordinary course of its business.
5. File Search Reports. Attached hereto as Schedule 5(A) is a true copy
of a file search report from the Uniform Commercial Code filing officer in each
jurisdiction identified in paragraph 2 or 3 above with respect to each name set
forth in paragraph 1 above. Attached hereto as Schedule 5(B) is a true copy of
each financing statement or other filing identified in such file search reports.
6. UCC Filings. A duly signed financing statement on Form UCC-1 in
substantially the form of Schedule 6(A) hereto has been duly filed in the
Uniform Commercial Code filing office in each jurisdiction identified in
paragraph 2 hereof. Attached hereto as Schedule 6(B) is a true copy of each such
filing duly acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as Schedule 7 is a schedule
setting forth filing information with respect to the filings described in
paragraph 6 above.
8. Filing Fees. All filing fees and taxes payable in connection with
the filings described in paragraph 6 above have been paid.
IN WITNESS WHEREOF, I have hereunto set my hands this __ day of
__________, 199_.
______________________________
Title:
3
SCHEDULE 6(A)
Description of Collateral
All accounts, chattel paper, contract rights, general intangibles, inventory,
equipment and documents, now owned or hereafter acquired, wherever located, and
all proceeds thereof.
4
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File Number Date of Filing/5/
------ -------------- ----------- --------------
______________________
/5/Indicate lapse date, if other than fifth anniversary.
5
EXHIBIT B
to
COMPANY SECURITY
AGREEMENT
PATENT SECURITY AGREEMENT
(PATENTS, PATENT APPLICATIONS AND PATENT LICENSES)
WHEREAS, Applied Extrusion Technologies, Inc., a Delaware corporation
(herein referred to as "Grantor") owns the Patents (as defined in the Security
Agreement referred to below) (including design patents and applications for
patents) listed on Schedule 1 annexed hereto, and is a party to the Patent
Licenses (as defined in the Security Agreement referred to below) identified in
Schedule 1 annexed hereto;
WHEREAS, Grantor, certain lenders and The Chase Manhattan Bank
(National Association), as administrative agent, are parties to a Credit
Agreement of even date herewith (as the same may be amended and in effect from
time to time among said parties and such lenders (the "Lenders") as may from
time to time be parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Company Security Agreement of
even date herewith (as said Agreement may be amended and in effect from time to
time, the "Security Agreement") between Grantor and The Chase Manhattan Bank
(National Association), as administrative agent for the secured parties referred
to therein (in such capacity, together with its successors in such capacity,
"Grantee"), Grantor has granted to Grantee for the benefit of such secured
parties a continuing security interest in substantially all the assets of
Grantor, including all right, title and interest of Grantor in, to and under the
Patent Collateral (as defined herein) whether now owned or existing or hereafter
acquired or arising, to secure the Secured Obligations (as defined in the
Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Patent Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Patent (including each design patent and patent
application), including, without limitation, each Patent (including
each
design patent and patent application) referred to in Schedule 1 annexed
hereto;
(ii) each Patent License, including, without limitation, each
Patent License identified in Schedule 1 annexed hereto; and
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any
claim by Grantor against third parties for past, present or future
infringement of any Patent (including any design patent), including,
without limitation, any Patent referred to in Schedule 1 annexed hereto
(including, without limitation, any such Patent issuing from any
application referred to in Schedule 1 annexed hereto), and all rights
and benefits of Grantor under any Patent License, including, without
limitation, any Patent License identified in Schedule 1 annexed hereto.
Grantor hereby irrevocably constitutes and appoints Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of Grantor or
in its name, from time to time, in Grantee's discretion, so long as any Event of
Default (as defined in the Credit Agreement) has occurred and is continuing, to
take with respect to the Patent Collateral any and all appropriate action which
Grantor might take with respect to the Patent Collateral and to execute any and
all documents and instruments which may be necessary or desirable to carry out
the terms of this Patent Security Agreement and to accomplish the purposes
hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or dispose
of, or grant any rights with respect to, or mortgage or otherwise encumber, any
of the foregoing Patent Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor does
hereby further acknowledge and affirm that the rights and remedies of Grantee
with respect to the security interest in the Patent Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.
2
IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement
to be duly executed by its officer thereunto duly authorized as of the ____ day
of April, 1994.
APPLIED EXTRUSION TECHNOLOGIES,
INC.
By:______________________________
Title:
Acknowledged:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:_________________________
Title:
▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
I, ______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of APPLIED EXTRUSION TECHNOLOGIES, INC., personally known to me
to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
19__.
[Seal]
________________________________
Signature of notary public
My Commission expires __________
4
Schedule 1
to Patent
Security Agreement
PATENTS
A. U.S. Patents and Design Patents
I.D. No. Patent No. Issue Date Title
-------- ---------- ---------- -----
B. U.S. Patent Applications
Serial No. Date Filed Title
---------- ---------- -----
C. Foreign Patents
I.D. No. Patent No. Issue Date Title
-------- ---------- ---------- -----
EXCLUSIVE PATENT LICENSES
Name of Parties Date of Subject
Agreement Licensor/Licensee Agreement Matter
--------- ----------------- --------- ------
5
EXHIBIT C
to
COMPANY SECURITY
AGREEMENT
TRADEMARK SECURITY AGREEMENT
(TRADEMARKS, TRADEMARK REGISTRATIONS, TRADEMARK
APPLICATIONS AND TRADEMARK LICENSES)
WHEREAS, Applied Extrusion Technologies, Inc., a Delaware corporation
(herein referred to as "Grantor"), owns the Trademarks (as defined in the
Security Agreement referred to below) listed on Schedule 1 annexed hereto, and
is a party to the Trademark Licenses (as defined in the Security Agreement
referred to below) identified in Schedule 1 annexed hereto;
WHEREAS, Grantor, certain lenders and The Chase Manhattan Bank (National
Association), as administrative agent, are parties to a Credit Agreement of even
date herewith (as the same may be amended and in effect from time to time among
said parties and such lenders (the "Lenders") as may from time to time be
parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Company Security Agreement of even
date herewith (as said Agreement may be amended and in effect from time to time,
the "Security Agreement") between Grantor and The Chase Manhattan Bank (National
Association), as administrative agent for the secured parties referred to
therein (in such capacity, together with its successors in such capacity,
"Grantee"), Grantor has granted to Grantee for the benefit of such secured
parties a security interest in substantially all the assets of Grantor,
including all right, title and interest of Grantor in, to and under the
Trademark Collateral (as defined herein), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined in
the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Trademark Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Trademark, including, without limitation, each Trademark
application referred to in Schedule 1 annexed hereto, and all of the
goodwill of the business connected with the use of, or symbolized by, each
such Trademark;
(ii) each Trademark License, including, without limitation, each
Trademark License identified in Schedule 1 annexed hereto, and all of the
goodwill of the business connected with the use of, or symbolized by, each
Trademark licensed pursuant thereto; and
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by Grantor
against third parties for past, present or future unfair competition with,
or violation of intellectual property rights in connection with or injury
to, or infringement or dilution of, any Trademark, including, without
limitation, any Trademark referred to in Schedule 1 hereto, and all rights
and benefits of Grantor under any Trademark License, including, without
limitation, any Trademark License identified in Schedule 1 hereto, or for
injury to the goodwill associated with any of the foregoing.
Grantor hereby irrevocably constitutes and appoints Grantee and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of Grantor or in its
name, from time to time, in Grantee's discretion, so long as any Event of
Default (as defined in the Credit Agreement) has occurred and is continuing, to
take with respect to the Trademark Collateral any and all appropriate action
which Grantor might take with respect to the Trademark Collateral and to execute
any and all documents and instruments which may be necessary or desirable to
carry out the terms of this Trademark Security Agreement and to accomplish the
purposes hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or dispose
of, or grant any rights with respect to, or mortgage or otherwise encumber, any
of the foregoing Trademark Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor does
hereby further acknowledge and affirm that the rights and remedies of Grantee
with respect to the security interest in the Trademark Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.
2
IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to
be duly executed by its officer thereunto duly authorized as of the ____ day of
April __, 1994.
APPLIED EXTRUSION TECHNOLOGIES,
INC.
By:____________________________
Title:
Acknowledged:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By: ________________________
Title:
▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
I, ______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of APPLIED EXTRUSION TECHNOLOGIES, INC., personally known to me
to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
19__.
[Seal]
________________________________
Signature of notary public
My Commission expires __________
4
Schedule 1
to Trademark
Security Agreement
U.S. TRADEMARKS AND TRADEMARK REGISTRATIONS
A. U.S. Trademarks and Trademark Registrations
▇▇▇▇ Reg. No. Reg. Date
---- -------- ---------
B. U.S. Trademark Applications
Serial No. Date Filed ▇▇▇▇
---------- ---------- ----
EXCLUSIVE TRADEMARK LICENSES
Name of Parties Date of Subject
Agreement Licensor/Licensee Agreement Matter
--------- ----------------- --------- ------
5
EXHIBIT D
to
COMPANY SECURITY
AGREEMENT
COPYRIGHT SECURITY AGREEMENT
(COPYRIGHTS, COPYRIGHT REGISTRATIONS, COPYRIGHT
APPLICATIONS AND COPYRIGHT LICENSES)
WHEREAS, Applied Extrusion Technologies, Inc., a Delaware corporation
(herein referred to as "Grantor") owns the Copyrights (as defined in the
Security Agreement referred to below) listed on Schedule 1 annexed hereto, and
is a party to the Copyright Licenses (as defined in the Security Agreement
referred to below) identified in Schedule 1 annexed hereto;
WHEREAS, Grantor, certain lenders and The Chase Manhattan Bank (National
Association), as administrative agent, are parties to a Credit Agreement of even
date herewith (as the same may be amended and in effect from time to time among
said parties and such lenders (the "Lenders") as may from time to time be
parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Company Security Agreement of even
date herewith (as said Agreement may be amended and in effect from time to time,
the "Security Agreement") between Grantor and The Chase Manhattan Bank (National
Association), as administrative agent for the secured parties referred to
therein (in such capacity, together with its successors in such capacity, the
"Grantee"), Grantor has granted to Grantee for the benefit of such secured
parties a security interest in substantially all the assets of the Grantor,
including all right, title and interest of Grantor in, to and under the
Copyright Collateral (as defined herein), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined in
the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Copyright Collateral"),
whether now owned or existing or hereafter acquired or arising:
(i) each Copyright, including, without limitation, each Copyright
referred to in Schedule 1 annexed hereto;
(ii) each Copyright License, including, without limitation, each
Copyright License identified in Schedule 1 annexed hereto; and
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by
Grantor against third parties for past, present or future infringement
of any Copyright, including, without limitation, any Copyright
referred to in Schedule 1 annexed hereto, and all rights and benefits
of Grantor under any Copyright License, including, without limitation,
any Copyright License identified in Schedule 1 annexed hereto.
Grantor hereby irrevocably constitutes and appoints Grantee and any officer
or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full power and authority in the name of Grantor or in its
name, from time to time, in Grantee's discretion, so long as any Event of
Default (as defined in the Credit Agreement) has occurred and is continuing, to
take with respect to the Copyright Collateral any and all appropriate action
which Grantor might take with respect to the Copyright Collateral and to execute
any and all documents and instruments which may be necessary or desirable to
carry out the terms of this Copyright Security Agreement and to accomplish the
purposes hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or dispose
of, or grant any rights with respect to, or mortgage or otherwise encumber, any
of the foregoing Copyright Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor does
hereby further acknowledge and affirm that the rights and remedies of Grantee
with respect to the security interest in the Copyright Collateral made and
granted hereby are more fully set forth in the Security Agreement, the terms and
provisions of which are incorporated by reference herein as if fully set forth
herein.
2
IN WITNESS WHEREOF, Grantor has caused this Copyright Security
Agreement to be duly executed by its officer thereunto duly authorized as of the
____ day of April __, 1994.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By: _______________________________
Title:
Acknowledged:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:_____________________
Title:
▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
I, ______________________, a Notary Public in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that _________________________,
_______________ of APPLIED EXTRUSION TECHNOLOGIES, INC., personally known to me
to be the same person whose name is subscribed to the foregoing instrument as
such _________________, appeared before me this day in person and acknowledged
that (s)he signed, executed and delivered the said instrument as her/his own
free and voluntary act and as the free and voluntary act of said Company, for
the uses and purposes therein set forth being duly authorized so to do.
GIVEN under my hand and Notarial Seal this ___ day of _______________,
19__.
[Seal]
_____________________________________
Signature of notary public
My Commission expires __________
4
Schedule 1
to Copyright
Security Agreement
COPYRIGHTS AND COPYRIGHT REGISTRATION
Registration No. Reg. Date Title
---------------- --------- -----
COPYRIGHT APPLICATIONS
Serial No. Date Filed Title
---------- ---------- -----
COPYRIGHT LICENSES
Name of Parties Date of Subject
Agreement Licensor/Licensee Agreement Matter
--------- ----------------- --------- ------
5
EXHIBIT E
to
COMPANY SECURITY
AGREEMENT
ROLLING STOCK
Rolling Stock AAR
[▇▇▇▇▇▇] Cars Designation
------------- -----------
AAR
[Tank] Cars Designation
----------- -----------
ROLLING STOCK LEASES AND LEASED ROLLING STOCK
Agreement and AAR
Cars Designation
---- -----------
EXHIBIT F
to
COMPANY SECURITY
AGREEMENT
OPINION OF
COUNSEL FOR THE COMPANY
* * * *
The Security Agreement creates and constitutes as security for the
Secured Obligations (as defined in the Security Agreement and including any
future obligations which are Secured Obligations), in favor of the
Administrative Agent for the ratable benefit of the Secured Parties, a valid
security interest in all right, title and interest of the Company in the
Collateral and all right, title and interest of the Company in the Collateral
Accounts. The security interests of the Administrative Agent in all right, title
and interest of the Company in the Collateral created by the Security Agreement
constitute perfected security interests under the Uniform Commercial Code, as in
effect in the State of _______ ("UCC"), the Interstate Commerce Act ("ICA"), the
United States Copyright Act ("CA"), the United States Patent Act ("PA") and the
United States Trademark Act ("TA"), to the extent that a security interest
therein may be perfected under the UCC, the ICA, the CA, the PA or the TA.
Insofar as the priority thereof is governed by the UCC, the priority of the
security interests created by the Security Agreement in the Collateral in which
the Company has rights on the date hereof will be the same with respect to Loans
made or deemed made or Letters of Credit issued pursuant to the Credit Agreement
after the date hereof as with respect to any such Loans made, Letters of Credit
issued or obligations incurred on the date hereof, except to the extent that any
priority may be affected by any security interest, lien or other encumbrance
imposed by law in favor of any government or governmental authority or agency.
Unless otherwise specifically defined herein, each term defined herein has the
meaning assigned to such term in the Security Agreement.
With respect to the enforceability of the Security Documents, we
express no opinion as to the availability of specific performance. Moreover, our
opinion with respect to the enforceability of the Security Documents is subject
to the further qualification that certain remedial provisions thereof may be
limited by the law of the State of _______ and applicable law of the United
States of America, but such laws do not, in our opinion, make the remedies
afforded thereby inadequate for the practical realization of the benefits of the
security intended to be provided thereby.
EXHIBIT G
to
COMPANY SECURITY
AGREEMENT
[FORM OF LOCKBOX LETTER]
_______________, 199_
[Name and Address of Bank]
Re: Applied Extrusion Technologies, Inc.
Gentlemen:
We hereby notify you that effective _____________, 199_, we have
transferred exclusive ownership and control of our [lock-box] account[s] No[s].
_________________ (the "Account[s]") maintained with you to The Chase Manhattan
Bank (National Association) as Administrative Agent (the "Administrative
Agent").
We also hereby notify you that the Administrative Agent shall be
irrevocably entitled to exercise any and all rights in respect of or in
connection with the Account[s], including, without limitation, the right to
specify when payments are to be made out of or in connection with the
Account[s].
By its acknowledgment below, the Administrative Agent hereby instructs you
that until such time as it specifies otherwise, all payments to be made by you
out of or in connection with the Account[s] shall be made as Applied Extrusion
Technologies, Inc. may direct.
All funds deposited into the Account[s] will not be subject to deductions,
set-off, banker's lien or any other right in favor of any other person than the
Administrative Agent, except that you may set-off against the Account[s] (i) the
face amount of any check deposited in and credited to such Account[s] which is
subsequently returned for any reason and (ii) the amount of any accrued but
unpaid reasonable and customary cash management fees. Your compensation for
providing the services contemplated herein shall be as mutually agreed between
you and us from time to time and we will continue to pay such compensation.
Please confirm your acknowledgment of and agreement to the foregoing
instructions by signing in the space provided below.
Very truly yours,
APPLIED EXTRUSION TECHNOLOGIES, INC.
By___________________________
Title:
Acknowledged and agreed
to as of this ____ day of
________, 199_.
[BANK]
By_________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By_________________________
Title:
2
EXHIBIT G
COMPANY
PLEDGE AGREEMENT
AGREEMENT dated as of April 7, 1994 between APPLIED EXTRUSION TECHNOLOGIES,
INC., a Delaware corporation (with its successors, the "Company"), and THE CHASE
MANHATTAN BANK (NATIONAL ASSOCIATION), as administrative agent (with its
successors in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the Company, certain lenders (the "Lenders") and the
Administrative Agent are parties to a Credit Agreement dated as of April 7, 1994
(as the same may be amended and in effect from time to time, the "Credit
Agreement"), providing, subject to the terms and conditions thereof, for
extensions of credit (by making loans and issuing letters of credit) to be made
by the Lenders to the Company;
WHEREAS, in order to induce the Lenders and the Administrative Agent to
enter into the Credit Agreement, the Company has agreed to grant a continuing
security interest in and to the Collateral (as hereafter defined) to secure its
obligations under the Credit Agreement, including, without limitation, its
obligations under the notes issued pursuant to the Credit Agreement and its
reimbursement obligations with respect to letters of credit issued pursuant
thereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions
Terms defined in the Credit Agreement and not otherwise defined herein
have, as used herein, the respective meanings provided for therein. The
following additional terms, as used herein, have the following respective
meanings:
"Collateral" has the meaning assigned to such term in Section 3(A).
"Collateral Account" has the meaning set forth in the Security Agreement.
"Issuer" means the issuers listed in Schedule A hereto.
"Pledged Instruments" means (i) the intercompany notes, if any, listed on
Schedule B hereto and (ii) any instrument required to be pledged to the
Administrative Agent pursuant to Section 3(B).
"Pledged Securities" means the Pledged Instruments and the Pledged Stock.
"Pledged Stock" means (i) the shares of stock of each Issuer set forth on
Schedule A hereto and (ii) any other capital stock required to be pledged to the
Administrative Agent pursuant to Section 3(B).
"Secured Obligations" means the obligations secured under this Agreement,
including (a) all principal of and interest (including, without limitation, any
interest which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the Company,
whether or not allowed or allowable as a claim in any such case, proceeding or
other action) on any Loan to the Company under, or any Note issued by the
Company pursuant to, or any Reimbursement Obligation of the Company under, the
Credit Agreement; (b) all other amounts payable by the Company under the Credit
Agreement; (c) all other amounts payable by the Company hereunder or under any
other Security Document; and (d) any renewals or extensions of any of the
foregoing.
"Secured Parties" means (i) the Lenders and (ii) the Administrative Agent.
"Security Agreement" means the Company Security Agreement dated as of April
7, 1994 between the Company and the Administrative Agent, as the same may be
modified and supplemented and in effect from time to time.
"Security Interests" means the security interests in the Collateral granted
hereunder securing the Secured Obligations.
Unless otherwise defined herein, or unless the context otherwise requires,
all terms used herein which are defined in the New York Uniform Commercial Code
as in effect on the date hereof shall have the meanings therein stated.
Section 2. Representations and Warranties
The Company represents and warrants as follows:
(A) Title to Pledged Securities. The Company owns all of the Pledged
Securities, free and clear of any Liens other than the Security Interests. The
Pledged Stock includes all of the issued and outstanding capital stock of each
Issuer. All of the Pledged Stock has been duly authorized and validly issued,
and is fully paid and non-assessable, and is subject to no options to purchase
or similar rights of any Person. The Company is not and will not become a party
to or
2
otherwise bound by any agreement, other than this Agreement, which restricts
in any manner the rights of any present or future holder of any of the Pledged
Securities with respect thereto.
(B) Validity, Perfection and Priority of Security Interests. Upon the
delivery of the Pledged Instruments and the certificates representing the
Pledged Stock to the Administrative Agent in accordance with Section 4 hereof,
the Administrative Agent will have valid and perfected security interests in the
Collateral subject to no prior Lien. No registration, recordation or filing with
any governmental body, agency or official is required in connection with the
execution or delivery of this Agreement or necessary for the validity or
enforceability hereof or for the perfection or enforcement of the Security
Interests. Neither the Company nor any of its Subsidiaries has performed or will
perform any acts which might prevent the Administrative Agent from enforcing any
of the terms and conditions of this Agreement or which would limit the
Administrative Agent in any such enforcement.
(C) UCC Filing Locations. The chief executive office of the Company is
located at the address specified below its name on the signature pages hereof.
Under the Uniform Commercial Code as in effect in the State in which such office
is located, no local filing is required to perfect a security interest in
collateral consisting of general intangibles.
(D) Applied Extrusion Technologies (UK), Limited does not own or hold
assets with a fair market value in excess of $50,000 and has not had operating
profit for any previous fiscal year in excess of $50,000.
Section 3. The Security Interests
In order to secure the full and punctual payment of the Secured Obligations
in accordance with the terms thereof, and to secure the performance of all the
obligations of the Company hereunder and under the Credit Agreement:
(A) The Company hereby assigns and pledges to and with the Administrative
Agent for the benefit of the Secured Parties and grants to the Administrative
Agent for the benefit of the Secured Parties security interests in the Pledged
Securities, and all of its rights and privileges with respect thereto, and all
proceeds, income and profits thereon, and all interest, dividends and other
payments and distributions with respect thereto (the "Collateral").
Contemporaneously with the execution and delivery hereof, the Company is
delivering the certificates representing the Pledged Instruments and the
certificates representing the Pledged Stock in pledge hereunder.
(B) In the event that any Issuer at any time issues any additional or
substitute shares of capital stock of any class or any note, or owes any other
Indebtedness to the Company evidenced by an instrument, the Company will
immediately pledge and deposit with the Administrative Agent certificates
3
representing all such shares and such note or an instrument evidencing such
other Indebtedness as additional security for the Secured Obligations. All such
shares, notes and instruments constitute Pledged Securities and are subject to
all provisions of this Agreement.
(C) The Security Interests are granted as security only and shall not
subject the Administrative Agent or any other Secured Party to, or transfer or
in any way affect or modify, any obligation or liability of the Company or any
of its Subsidiaries with respect to any of the Collateral or any transaction in
connection therewith.
SECTION 4. Delivery of Pledged Securities
All Pledged Instruments delivered to the Administrative Agent by the
Company pursuant hereto shall be endorsed in suitable form for transfer by
endorsement and delivery by the Administrative Agent, and accompanied by any
required transfer tax stamps, all in form and substance satisfactory to the
Administrative Agent. All certificates representing Pledged Stock delivered to
the Administrative Agent by the Company pursuant hereto shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, with signatures appropriately
guaranteed, and accompanied by any required transfer tax stamps, all in form and
substance satisfactory to the Administrative Agent.
SECTION 5. Filing; Further Assurances
(A) The Company agrees that it will, at its expense and in such manner and
form as the Administrative Agent may require, execute, deliver, file and record
any financing statement, specific assignment or other paper and take any other
action that the Administrative Agent may determine to be necessary or desirable
in order to create, preserve, perfect or validate any Security Interest or to
enable the Administrative Agent to exercise and enforce its rights hereunder
with respect to any of the Collateral. To the extent permitted by applicable
law, the Company hereby authorizes the Administrative Agent to execute and file,
in the name of the Company or otherwise, Uniform Commercial Code financing
statements (which may be carbon, photographic or other reproductions of this
Agreement or of a financing statement relating to this Agreement) which the
Administrative Agent in its sole discretion may deem necessary or appropriate to
further perfect the Security Interests.
(B) The Company agrees that it will not change (i) its name, identity or
corporate structure in any manner or (ii) the location of its chief executive
office unless it shall have given the Administrative Agent not more than four
months' nor less than 10 days' prior notice thereof.
SECTION 6. Record Ownership of Pledged Stock.
4
The Administrative Agent may at any time or from time to time during the
continuance of an Event of Default, in its sole discretion, cause any or all of
the Pledged Stock to be transferred of record into the name of the
Administrative Agent or its nominee. The Company will promptly give to the
Administrative Agent copies of any notices or other communications received by
it with respect to Pledged Stock registered in the name of the Company and the
Administrative Agent will promptly give to the Company copies of any notices and
communications received by the Administrative Agent with respect to Pledged
Stock registered in the name of the Administrative Agent or its nominee.
SECTION 7. Right to Receive Distributions on Collateral.
The Administrative Agent shall have the right to receive all dividends,
interest and other payments and distributions made upon or with respect to the
Collateral ("Collateral Distributions") other than cash dividends ("Cash
Dividends") and, during the continuance of any Event of Default, to receive Cash
Dividends and to retain all Collateral Distributions, in each case as Collateral
hereunder, and the Company shall take all such action as the Administrative
Agent may deem necessary or appropriate to give effect to such right. All
Collateral Distributions which are received by the Company shall be received in
trust for the benefit of the Administrative Agent and the other Secured Parties
and, if the Administrative Agent so directs during the continuance of an Event
of Default, shall be segregated from other funds of the Company and shall,
forthwith upon demand by the Administrative Agent during the continuance of an
Event of Default, be paid over to the Administrative Agent as Collateral in the
same form as received (with any necessary endorsement, without recourse). After
all Events of Default have been cured, the Administrative Agent's right to
retain Collateral Distributions under this Section 7 shall cease.
SECTION 8. Right to Vote Pledged Stock.
Unless an Event of Default shall have occurred and be continuing, the
Company shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Pledged Stock, and the
Administrative Agent shall, upon receiving a written request from the Company
accompanied by a certificate signed by its principal financial officer stating
that no Event of Default has occurred and is continuing, deliver to the Company
or as specified in such request such proxies, powers of attorney, consents,
ratifications and waivers in respect of any of the Pledged Stock which is
registered in the name of the Administrative Agent or its nominee as shall be
specified in such request and be in form and substance satisfactory to the
Administrative Agent.
If an Event of Default shall have occurred and be continuing, the
Administrative Agent shall have the right to the extent permitted by law, and
the Company shall take all such action as may be necessary or appropriate to
give effect to such right, to vote and to give consents, ratifications and
waivers, and take any other action with respect to any or all of the Pledged
Stock with the same
5
force and effect as if the Administrative Agent were the absolute and sole owner
thereof.
SECTION 9. General Authority
The Company hereby irrevocably appoints the Administrative Agent its true
and lawful attorney, with full power of substitution, in the name of the
Company, the Administrative Agent, the Secured Parties or otherwise, for the
sole use and benefit of the Administrative Agent and the other Secured Parties,
but at the expense of the Company, to the extent permitted by law to exercise,
at any time and from time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect to all or any of the
Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give acquittance
for any and all monies due or to become due upon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and effectually as if
the Administrative Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
provided that the Administrative Agent shall give the Company not less than ten
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral except any Collateral which threatens to
decline speedily in value or is of a type customarily sold on a recognized
market. The Administrative Agent and the Company agree that such notice
constitutes "reasonable notification" within the meaning of Section 9-504(3) of
the Uniform Commercial Code.
SECTION 10. Remedies upon Event of Default
If any Event of Default shall have occurred and be continuing, the
Administrative Agent may exercise on behalf of the Secured Parties all the
rights of a secured party under the Uniform Commercial Code (to the extent
permitted by law, whether or not in effect in the jurisdiction where such rights
are exercised) and, in addition, the Administrative Agent may, without being
required to give any notice, except as herein provided or as may be required by
law, (i) apply the cash, if any, then held by it as Collateral as specified in
Section 13 and (ii) if there shall be no such cash or if such cash shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral or
any part thereof at public or private sale
6
or at any broker's board or on any securities exchange, for cash, upon credit or
for future delivery, and at such price or prices as the Administrative Agent may
deem satisfactory. The Administrative Agent or any other Secured Party may be
the purchaser of any or all of the Collateral so sold at any public sale (or, if
the Collateral is of a type customarily sold in a recognized market or is of a
type which is the subject of widely distributed standard price quotations, at
any private sale) and thereafter hold the same, absolutely, free from any right
or claim of whatsoever kind.
The Administrative Agent is authorized, in connection with any such sale,
if it deems it advisable so to do, (i) to restrict the prospective bidders on or
purchasers of any of the Pledged Securities to a limited number of sophisticated
investors who will represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution or sale of any of
such Pledged Securities, (ii) to cause to be placed on any or all of the Pledged
Instruments and on certificates for any or all of the Pledged Stock or on any
other securities pledged hereunder a legend to the effect that such security has
not been registered under the Securities Act of 1933 and may not be disposed of
in violation of the provisions of said Act, and (iii) to impose such other
limitations or conditions in connection with any such sale as the Administrative
Agent deems necessary or advisable in order to comply with said Act or any other
law. The Company covenants and agrees that it will execute and deliver such
documents and take such other action as the Administrative Agent deems necessary
or advisable in order that any such sale may be made in compliance with law.
Upon any such sale the Administrative Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the Collateral so sold absolutely and free
from any claim or right of whatsoever kind, including any equity or right of
redemption of the Company which may be waived, and the Company, to the extent
permitted by law, hereby specifically WAIVES all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
adopted. The notice (if any) of such sale required by Section 9 shall (1) in
case of a public sale, state the time and place fixed for such sale, (2) in case
of sale at a broker's board or on a securities exchange, state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or the portion thereof so being sold, will first be offered for sale at such
board or exchange, and (3) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Administrative Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may determine. The Administrative Agent shall not be
obligated to make any such sale pursuant to any such notice. The Administrative
Agent may, without notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any time or place to
which the same may be so adjourned. In case of any sale of all or any part of
the Collateral on credit or for future delivery, the Collateral so sold may be
7
retained by the Administrative Agent until the selling price is paid by the
purchaser thereof, but the Administrative Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Administrative Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
SECTION 11. Expenses The Company agrees that it will forthwith upon demand
pay to the Administrative Agent:
(i) the amount of any taxes which the Administrative Agent
may have been required to pay by reason of the Security Interests or
to free any of the Collateral from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses,
including the fees and disbursements of counsel and of any other
experts employed to evaluate, protect or realize the value of the
Collateral, which the Administrative Agent may incur in connection
with (w) the administration or enforcement of this Agreement,
including such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of any
Security Interest, (x) the collection, sale or other disposition of
any of the Collateral, (y) the exercise by the Administrative Agent of
any of the rights conferred upon it hereunder or (z) any Default or
Event of Default.
Any such amount not paid on demand shall bear interest for each day until
paid at the Post-Default Rate for such day.
SECTION 12. Limitation on Duty of Administrative Agent in Respect of
Collateral.
Beyond the exercise of reasonable care in the custody thereof, the
Administrative Agent shall have no duty as to any Collateral in its possession
or control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which it accords its own property, and shall not be liable or responsible
for any loss or damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any agent or bailee selected
by the Administrative Agent in good faith.
SECTION 13. Application of Proceeds
8
(A) Upon the occurrence and during the continuance of an Event of
Default, the proceeds of any sale of, or other realization upon, all or any part
of the Collateral and any cash held shall be applied by the Administrative Agent
in the following order of priorities:
first, to payment of the expenses of such sale or other
realization, including reasonable compensation to the Administrative
Agent and its agents and counsel, and all expenses, liabilities and
advances incurred or made by the Administrative Agent in connection
therewith, and any other unreimbursed expenses for which the
Administrative Agent or any other Secured Party is to be reimbursed
pursuant to Section 12.03 of the Credit Agreement or Section 11
hereof and unpaid fees owing to the Administrative Agent under the
Credit Agreement;
second, to the ratable payment of accrued but unpaid interest
on the Secured Obligations;
third, to the ratable payment of unpaid principal of the
Secured Obligations;
fourth, to the ratable payment of all other Secured
Obligations, until all Secured Obligations shall have been paid in
full; and
finally, to payment to the Company or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
(B) The Administrative Agent may make distributions hereunder in cash or
in kind or, on a ratable basis, in any combination thereof. The Administrative
Agent shall invest all amounts to be applied to Letter of Credit Liabilities in
Liquid Investments selected by it and hold such amount in trust for application
to future drawings under the Letters of Credit notified to it by the issuing
Lenders in the order in which such drawings are made. If the Administrative
Agent holds any amounts which were distributable in respect of Letter of Credit
Liabilities after the Letters of Credit have expired and all amounts payable
with respect thereto have been paid, such amounts shall be applied in the order
set forth in subsection (A) above.
(C) In making the determinations and allocations required by this
Section, the Administrative Agent shall have no liability to any of the Lenders
for actions taken in reliance on information supplied by the Lenders as to the
amounts of the Secured Obligations held by them. All distributions made by the
Administrative Agent pursuant to this Section shall be final and the
Administrative Agent shall have no duty to inquire as to the application by the
Lenders of any amount distributed to them. However, if at any time the
Administrative Agent determines
9
that an allocation or distribution previously made pursuant to this Section was
based on a mistake of fact (including, without limiting the generality of the
foregoing, mistakes based on an assumption that principal or interest has been
paid by payments which are subsequently recovered from the recipient thereof
through the operation of any bankruptcy, reorganization, insolvency or other
laws or otherwise), the Administrative Agent may in its discretion, but shall
not be obligated to, adjust subsequent allocations and distributions hereunder
so that, on a cumulative basis, the Secured Parties receive the distributions to
which they would have been entitled if such mistake of fact had not been made.
SECTION 14. Concerning the Administrative Agent
The provisions of Section 11 of the Credit Agreement shall inure to the
benefit of the Administrative Agent in respect of this Agreement and shall be
binding upon the parties to the Credit Agreement in such respect. In furtherance
and not in derogation of the rights, privileges and immunities of the
Administrative Agent therein set forth:
(A) The Administrative Agent is authorized to take all such action as is
provided to be taken by it as Administrative Agent hereunder and all other
action reasonably incidental thereto. As to any matters not expressly provided
for herein (including, without limitation, the timing and methods of realization
upon the Collateral), the Administrative Agent shall act or refrain from acting
in accordance with written instructions from the Majority Lenders or, in the
absence of such instructions, in accordance with its discretion.
(B) The Administrative Agent shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Security Interests in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder. The Administrative Agent shall have no duty to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement by the Company.
SECTION 15. Appointment of Co-Administrative Agents
At any time or times, in order to comply with any legal requirement in
any jurisdiction, the Administrative Agent may appoint another bank or trust
company or one or more other persons, either to act as co-administrative agent
or co-administrative agents, jointly with the Administrative Agent, or to act as
separate administrative agent or administrative agents on behalf of the Lenders
with such power and authority as may be necessary for the effectual operation of
the provisions hereof and may be specified in the instrument of appointment
(which may, in the discretion of the Administrative Agent, include provisions
for the protection of such co-administrative agent or separate administrative
agent similar to the provisions of Section 14).
10
SECTION 16. Termination of Security Interests; Release of Collateral
Upon the repayment in full of all Secured Obligations and the termination
of the Commitments and Letters of Credit under the Credit Agreement, the
Security Interests shall terminate and all rights to the Collateral shall revert
to the Company. At any time and from time to time prior to such termination of
the Security Interests, the Administrative Agent may release all or any part of
the Collateral with the prior consent of the Majority Lenders; provided that if
any such release would constitute a release of all or substantially all of the
security for the obligations of the Company under the Credit Agreement or under
any Note, such release will require the consent of all the Lenders. Upon any
such termination of the Security Interests or release of Collateral, the
Administrative Agent will, at the expense of the Company, execute and deliver to
the Company such documents as the Company shall reasonably request to evidence
the termination of the Security Interests or the release of such Collateral, as
the case may be.
SECTION 17. Notices
All notices, communications and distributions hereunder shall be given in
accordance with Section 12.02 of the Credit Agreement.
SECTION 18. Waivers, Non-Exclusive Remedies
No failure on the part of the Administrative Agent to exercise, and no
delay in exercising and no course of dealing with respect to, any right under
this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise by the Administrative Agent of any right under the Credit
Agreement or this Agreement preclude any other or further exercise thereof or
the exercise of any other right. The rights in this Agreement and the Credit
Agreement are cumulative and are not exclusive of any other remedies provided by
law.
SECTION 19. Successors and Assigns
This Agreement is for the benefit of the Administrative Agent and the
other Secured Parties and their successors and assigns, and in the event of an
assignment of all or any of the Secured Obligations, the rights hereunder, to
the extent applicable to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the Company and its
successors and assigns and the rights of the Company hereunder shall inure to
the benefit of the Company's successors and permitted assigns.
SECTION 20. Changes in Writing
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by the Company and
11
the Administrative Agent with the consent of the Majority Lenders (or, in the
case of Section 16 and this Section, the Lenders).
SECTION 21. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF
ANY JURISDICTION OTHER THAN NEW YORK ARE GOVERNED BY THE LAWS OF SUCH
JURISDICTION. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE COMPANY AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 22. Severability
If any provision hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Administrative Agent and the Lenders in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (ii) the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 23. Counterparts
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
APPLIED EXTRUSION TECHNOLOGIES, INC.
By_______________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By_______________________
Title:
13
EXHIBIT H
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY dated as of April __, 1994 of Applied Extrusion
Technologies (Canada), Inc., a Delaware corporation (the "Guarantor") in favor
of The Chase Manhattan Bank (National Association), as administrative agent (the
"Administrative Agent").
W I T N E S S E T H :
WHEREAS, Applied Extrusion Technologies, Inc., a Delaware corporation (the
"Company"), certain lenders (the "Lenders") and the Administrative Agent, have
entered into a Credit Agreement dated as of April __, 1994 (as the same may be
amended and in effect from time to time, the "Credit Agreement"), providing,
subject to the terms and conditions thereof, for extensions of credit (by making
loans and issuing letters of credit) to be made by the Lenders to the Company;
WHEREAS, the Company owns all of the outstanding shares of capital stock of
the Guarantor;
WHEREAS, it is a condition to the borrowing of the initial loans under the
Credit Agreement that the Guarantor executes and delivers a Subsidiary Guaranty
whereby the Guarantor shall guarantee the payment when due of all principal,
interest and other amounts that shall be at any time payable by the Company
under the Credit Agreement, the Security Documents; and
WHEREAS, in order to induce the Lenders and the Administrative Agent to
enter into the Credit Agreement, the Guarantor is willing to guarantee the
obligations of the Company under the Credit Agreement and the Security
Documents;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantor agrees as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2. Representations and Warranties. The Guarantor represents that:
(a) The Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (ii) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals necessary to
own its assets and carry on its business as now being or as proposed to be
conducted, except in the case of such licenses, authorizations, consents
and approvals, where the failure to obtain them would not have a material
adverse effect on its condition (financial or otherwise), assets, nature of
assets, liabilities (including without limitation, tax, ERISA and
Environmental Liabilities) or prospects; and (iii) is qualified to do
business in all jurisdictions in which the nature of the business conducted
by it makes such qualification necessary and where failure so to qualify
would have a material adverse effect on its condition (financial or
otherwise), assets, nature of assets, liabilities (including, without
limitation, tax, ERISA and environmental liabilities) or prospects.
(b) The Guarantor has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Subsidiary
Guaranty; the execution, delivery and performance by the Guarantor of this
Subsidiary Guaranty has been duly authorized by all necessary corporate
action; and this Subsidiary Guaranty has been duly and validly executed and
delivered by the Guarantor and constitutes the legal, valid and binding
obligation of the Guarantor, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or moratorium or other similar laws relating to
the enforcement of creditors' rights generally and by general equitable
principles.
(c) Neither the execution and delivery by the Guarantor of the Basic
Documents to which it is party nor compliance with the terms and provisions
thereof by the Guarantor will conflict with or result in a breach of, or
require any consent under, the certificate of incorporation or by-laws of
the Guarantor or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or
any Basic Document or other material agreement or instrument to which the
Guarantor is a party or by which it is bound or to which it is subject, or
constitute a default under any such agreement or instrument, or (except for
the Liens created pursuant to, or permitted by, the Security Documents)
result in the creation or imposition of any Lien upon any of the revenues
or assets of the Guarantor pursuant to the terms of any such agreement or
instrument.
(d) There are no legal or arbitral proceedings or any proceedings by
or before any governmental or regulatory authority or agency, now pending
or, to the knowledge of the Guarantor, threatened against or affecting the
Guarantor in which there is a reasonable possibility of an adverse decision
which could have a material adverse effect on its
2
condition (financial or otherwise), assets, nature of assets, liabilities
(including, without limitation, tax, ERISA and Environmental Liabilities)
or prospects.
(e) The Guarantor has obtained all authorizations, approvals and
consents of, and has made all filings and registrations with, any
governmental or regulatory authority or agency and any third party
necessary for the consummation of the Acquisition and the execution,
delivery or performance by it of any Basic Document to which it is a party,
or for the validity or enforceability thereof, except for filing and
recordings of the Liens created pursuant to, or permitted by, the Security
Documents.
SECTION 3. The Guaranty. The Guarantor hereby unconditionally guarantees
the full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the principal of and interest on each Note issued by the Company
pursuant to, and each Reimbursement Obligation of the Company under, the Credit
Agreement, and the full and punctual payment of all other amounts payable by the
Company under the Credit Agreement and the Security Documents. Upon failure by
the Company to pay punctually any such amount, the Guarantor agrees that it
shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in the Credit Agreement or the relevant Security Document, as
the case may be.
SECTION 4. Guaranty Unconditional. The obligations of the Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under the Credit
Agreement, any Note or any Security Document, or any obligation of the
Guarantor hereunder or under any Security Document, by operation of law or
otherwise;
(ii) any modification or amendment of or supplement to the Credit
Agreement, any Note or any Security Document;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Company under the Credit
Agreement, any Note or any Security Document or any obligation of the
Guarantor hereunder or under any Security Document;
(iv) any change in the corporate existence, structure or ownership
of the Company, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Company or its assets or any resulting
release or discharge of any obligation of the Company contained in the
Credit Agreement, any Note of any Security Document;
3
(v) the existence of any claim, set-off or other rights which the
Guarantor may have at any time against the Company, the Administrative
Agent, any Lender or any other Person, whether in connection herewith or
any unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Company for any reason of the Credit Agreement, any Note or any Security
Document, or any provision of applicable law or regulation purporting to
prohibit the payment by the Company of the principal of or interest on any
Note or any other amount payable by the Company under the Credit Agreement
or any Security Document; or
(vii) any other act or omission to act or delay of any kind by the
Company, the Guarantor, the Administrative Agent, any Lender or any other
Person or any other circumstance whatsoever which might, but for the
provisions of this paragraph, constitute a legal or equitable discharge of
the Guarantor's obligations hereunder.
SECTION 5. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances. The Guarantor's obligations hereunder shall remain in full force
and effect until the principal of and interest on the Notes and all other
amounts payable by the Company under the Credit Agreement and the Security
Documents shall have been paid in full and the Commitments and Letters of Credit
under the Credit Agreement shall have terminated or expired. If at any time any
payment of the principal of or interest on any Note or any other amount payable
by the Company under the Credit Agreement or any Security Document is rescinded
or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, the Guarantor's obligations
hereunder with respect to such payment shall be reinstated as though such
payment had been due but not made at such time.
SECTION 6. Waiver by the Guarantor. The Guarantor waives acceptance hereof,
presentment, demand, protest and, to the fullest extent permitted by law, any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any Person against the Company, the Guarantor hereunder, or
any other Person.
SECTION 7. Waiver of Subrogation. The Guarantor hereby irrevocably waives
any right or claim of exoneration, reimbursement, subrogation, contribution or
indemnity and any other similar right or claim arising out of any payment by the
Guarantor hereunder.
SECTION 8. Stay of Acceleration. If acceleration of the time for payment of
any amount payable by the Company under the Credit Agreement or any Note is
stayed upon the insolvency, bankruptcy or reorganization of the Company, all
such amounts otherwise subject to acceleration under the terms of the Credit
4
Agreement shall nonetheless be payable by the Guarantor hereunder forthwith on
demand by the Administrative Agent made at the request of the Majority Lenders.
SECTION 9. Limitation on Guarantor's Obligations. The obligations of the
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code or any applicable provisions of
comparable state law. The obligations of the Guarantor hereunder shall rank pari
passu.
SECTION 10. Notices. All notices, requests and other communications to any
party hereunder shall be given or made by telex, telegraph, telecopy, cable or
other writing and telexed, telecopied, telegraphed, cabled, mailed or delivered
to the intended recipient at its address or telex or facsimile transmission
number set forth on the signature page hereof or such other address or telex or
telecopy number as such party may hereafter specify for the purpose by notice to
the Administrative Agent. Except as otherwise provided in this Subsidiary
Guaranty, all such communications shall be deemed to have been duly given when
transmitted by telex or telecopier, delivered to the telegraph or cable office
or personally delivered or, in the case of a mailed notice, upon receipt, in
each case given or addressed as aforesaid.
SECTION 11. No Waivers. No failure or delay by the Administrative Agent or
any Lender in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided in this Subsidiary Guaranty, the
Credit Agreement and the Security Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 12. Successors and Assigns. This Subsidiary Guaranty is for the
benefit of the Administrative Agent and the Lenders and their respective
successors and assigns and in the event of an assignment of the Loans or other
amounts payable under the Credit Agreement or the Security Documents, the rights
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Subsidiary Guaranty shall be binding
upon the Guarantor and its successors and assigns.
SECTION 13. Changes in Writing. Neither this Subsidiary Guaranty nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Guarantor and the Administrative Agent with the
consent of the Majority Lenders.
SECTION 14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS SUBSIDIARY GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY SUBMITS
5
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS SUBSIDIARY GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE GUARANTOR HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
6
IN WITNESS WHEREOF, the party hereto has caused this Subsidiary
Guaranty to be duly executed by its officer thereunto duly authorized as of the
day and year first above written.
APPLIED EXTRUSION TECHNOLOGIES
(CANADA), INC.
By: _________________________
Title:
Address for Notices:
Address:
Attention:
Copy to:
Telex Number:
Telecopy Number:
7
EXHIBIT I
SUBSIDIARY GUARANTOR ACKNOWLEDGMENT AND CONSENT
Dated as of January __, 2003
Reference is made to the Credit Agreement dated as of April 7, 1994, as
amended and restated as of January __, 2003 (the "Amended and Restated Credit
Agreement"), among Applied Extrusion Technologies, Inc. (the "Company"), the
lenders party thereto and JPMorgan Chase Bank, as Administrative Agent. The
undersigned, a wholly owned subsidiary of the Company, as Guarantor under the
Subsidiary Guaranty dated as of April 7, 1994 (the "Subsidiary Guaranty"), and
as a Grantor under the Deed of Movable and Immovable Hypothec dated as of April
7, 1994 (the "Hypothec"), in each case in favor of the Administrative Agent for
the benefit of the Lenders (as defined in the Amended and Restated Credit
Agreement), hereby:
(a) consents to the Amended and Restated Credit Agreement,
including without limitation the incurrence by the Company of
additional Loans contemplated thereby; and
(b) hereby confirms and agrees that (i) each of the Subsidiary
Guaranty and the Hypothec, is, and shall continue to be, in
full force and effect and is hereby ratified and confirmed in
all respects except that, upon the effectiveness of, and on
and after the date of, the Amended and Restated Credit
Agreement, each reference in each of the Subsidiary Guaranty
and the Hypothec to the Credit Agreement shall mean and be a
reference to the Amended and Restated Credit Agreement and
(ii) the Hypothec and all of the Collateral described therein,
do, and shall continue to, secure the payment of all of the
Secured Obligations (as defined therein).
APPLIED EXTRUSION TECHNOLOGIES
(CANADA), INC.
By__________________________________
Name:
Title:
EXHIBIT J
FORM OF COMMITMENT ACCEPTANCE
[Date]
JPMorgan Chase Bank,
as General Administrative Agent
under the Credit Agreement referred to below
Reference is made to the Credit Agreement dated as of April 7, 1994, as
amended and restated as of January __, 2002 (the "Credit Agreement") among
Applied Extrusion Technologies, Inc. (the "Borrower"), the Lenders party thereto
and JPMorgan Chase Bank, as Administrative Agent, and to Section 2.17 thereof.
The undersigned hereby agrees and confirms that effective as of the
date hereof, the undersigned is a party to the Credit Agreement and is a Lender
for all purposes of the Credit Agreement and each other Financing Document (as
defined in the Credit Agreement). The undersigned assumes a Working Capital
Commitment (as defined in the Credit Agreement) in the amount of $ __________.
[By your signature below, you hereby consent to the designation of the
undersigned as a Lender under the Credit Agreement]/6/
Very truly yours,
[NAME OF LENDER]
By: ________________________
Title:
Address:
Facsimile number:
Telephone number:
-----------------
/6/ Include if Lender is not already a Bank party to the Credit
Agreement.
ACKNOWLEDGED AND AGREED:
APPLIED EXTRUSION TECHNOLOGIES, INC.
By: ____________________
Name:
Title:
The undersigned hereby consent
to the foregoing:
JPMORGAN CHASE BANK,
as Administrative Agent
By: ____________________
Name:
Title:
2
EXHIBIT K
JPMorganChase
FORM OF WEEKLY COLLATERAL CERTIFICATE
JPMorgan Chase Bank
WEEKLY COLLATERAL CERTIFICATE
Applied Extrusion Technologies, Inc.
DATE: SCHEDULE #
-------------------- -----------------
BEGINNING ACCOUNTS RECEIVABLE
-----------------
PLUS GROSS SALES
-----------------
LESS GROSS COLLECTIONS
DEPOSIT DATE:
----------- -----------------
LESS CREDITS
-----------------
PLUS/(MINUS) ADJUSTMENTS
-----------------
CLOSING ACCOUNTS RECEIVABLE
=================
GROSS COLLECTIONS
-----------------
DEPOSIT DATE:
-----------
LESS DEDUCTIONS
-----------------
PLUS NON A/R CASH
-----------------
PLUS/(MINUS) ADJUSTMENTS
-----------------
NET COLLECTIONS
=================
THE UNDERSIGNED CERTIFIES THE INFORMATION IN THIS REPORT TO THE
J P MorganChase BANK IS ACCURATE BASED ON THE ACCOUNT RECORDS OF THE
RESPECTIVE COMPANY.
AUTHORIZED SIGNATURE:
----------------------------------------------------------