Exhibit 10.2
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$340,000,000
CREDIT AGREEMENT
among
PAPERWEIGHT DEVELOPMENT CORP.,
APPLETON PAPERS INC.,
as Borrower,
the Several Lenders
from Time to Time Parties Hereto,
BEAR STEARNS CORPORATE LENDING INC.,
as Syndication Agent,
FIRSTAR BANK N.A. and LASALLE BANK NATIONAL ASSOCIATION,
as Documentation Agents,
and
TORONTO DOMINION (TEXAS), INC.,
as Administrative Agent
Dated as of November 8, 2001
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BEAR, STEARNS & CO. INC., as Sole Lead Arranger and Sole Bookrunner
Table of Contents
Page
SECTION 1. DEFINITIONS .......................................................... 2
1.1. Defined Terms ......................................................... 2
1.2. Other Definitional Provisions ......................................... 26
SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS ................................. 26
2.1. Term Commitments ...................................................... 26
2.2. Procedure for Term Loan Borrowing ..................................... 27
2.3. Repayment of Term Loans ............................................... 27
SECTION 3. AMOUNT AND TERMS OF REVOLVING COMMITMENTS ............................ 28
3.1. Revolving Commitments ................................................. 28
3.2. Procedure for Revolving Loan Borrowing ................................ 29
3.3. Swingline Commitment .................................................. 29
3.4. Procedure for Swingline Borrowing; Refunding of Swingline Loans ....... 30
3.5. Commitment Fees, etc. ................................................. 31
3.6. Termination or Reduction of Revolving Commitments ..................... 32
3.7. L/C Commitment ........................................................ 32
3.8. Procedure for Issuance of Letter of Credit ............................ 32
3.9. Fees and Other Charges ................................................ 33
3.10. L/C Participations .................................................... 33
3.11. Reimbursement Obligation of the Borrower .............................. 34
3.12. Obligations Absolute .................................................. 35
3.13. Letter of Credit Payments ............................................. 35
3.14. Applications .......................................................... 36
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT ........ 36
4.1. Optional Prepayments .................................................. 36
4.2. Mandatory Prepayments ................................................. 36
4.3. Conversion and Continuation Options ................................... 37
4.4. Limitations on Eurodollar Tranches .................................... 38
4.5. Interest Rates and Payment Dates ...................................... 38
4.6. Computation of Interest and Fees ...................................... 39
4.7. Inability to Determine Interest Rate .................................. 39
4.8. Pro Rata Treatment and Payments ....................................... 40
4.9. Requirements of Law ................................................... 41
4.10. Taxes ................................................................. 42
4.11. Indemnity ............................................................. 44
4.12. Change of Lending Office .............................................. 45
4.13. Replacement of Lenders ................................................ 45
4.14. Evidence of Debt ...................................................... 45
4.15. Illegality ............................................................ 46
SECTION 5. REPRESENTATIONS AND WARRANTIES ....................................... 46
5.1. Financial Condition ................................................... 46
5.2. No Change ............................................................. 47
5.3. Corporate Existence; Compliance with Law .............................. 48
5.4. Power; Authorization; Enforceable Obligations ......................... 48
5.5. No Legal Bar .......................................................... 48
i
5.6. Litigation ........................................................ 49
5.7. No Default ........................................................ 49
5.8. Ownership of Property; Liens ...................................... 49
5.9. Intellectual Property ............................................. 49
5.10. Taxes ............................................................. 49
5.11. Federal Regulations ............................................... 49
5.12. Labor Matters ..................................................... 50
5.13. ERISA ............................................................. 50
5.14. Investment Company Act; Other Regulations ......................... 52
5.15. Subsidiaries ...................................................... 52
5.16. Use of Proceeds ................................................... 52
5.17. Environmental Matters ............................................. 52
5.18. Accuracy of Information, etc. ..................................... 53
5.19. Security Documents ................................................ 54
5.20. Solvency .......................................................... 54
5.21. Senior Indebtedness ............................................... 54
5.22. Regulation H ...................................................... 55
5.23. Certain Documents ................................................. 55
5.24. S Corporation Status .............................................. 55
SECTION 6. CONDITIONS PRECEDENT 55
6.1. Conditions to Initial Extension of Credit ......................... 55
6.2. Conditions to Each Extension of Credit ............................ 61
SECTION 7. AFFIRMATIVE COVENANTS ............................................ 62
7.1. Financial Statements .............................................. 62
7.2. Certificates; Other Information ................................... 62
7.3. Payment of Obligations ............................................ 64
7.4. Maintenance of Existence; Compliance .............................. 64
7.5. Maintenance of Property; Insurance ................................ 64
7.6. Inspection of Property; Books and Records; Discussions ............ 64
7.7. Notices ........................................................... 64
7.8. Environmental Laws ................................................ 65
7.9. Interest Rate Protection .......................................... 65
7.10. Additional Collateral, etc. ....................................... 66
7.11. Further Assurances ................................................ 67
7.12. ERISA ............................................................. 68
SECTION 8. NEGATIVE COVENANTS ............................................... 68
8.1. Financial Condition Covenants ..................................... 68
8.2. Indebtedness ...................................................... 70
8.3. Liens ............................................................. 72
8.4. Fundamental Changes ............................................... 73
8.5. Disposition of Property ........................................... 74
8.6. Restricted Payments ............................................... 74
8.7. Capital Expenditures .............................................. 75
8.8. Investments ....................................................... 76
8.9. Optional Payments and Modifications of Certain Debt Instruments ... 77
8.10. Transactions with Affiliates ...................................... 78
8.11. Sales and Leasebacks .............................................. 78
8.12. Changes in Fiscal Periods ......................................... 78
8.13. Negative Pledge Clauses ........................................... 79
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8.14. Clauses Restricting Subsidiary Distributions.................. 79
8.15. Lines of Business ............................................ 79
8.16. Material Agreements .......................................... 79
8.17. S Corporation Status ......................................... 80
8.18. Appleton Recycled ............................................ 80
8.19. Holding Company Status ....................................... 80
8.20. Holdings Sub Conduct ......................................... 80
8.21. ESOP Amendments .............................................. 81
SECTION 9. EVENTS OF DEFAULT ............................................ 81
SECTION 10. THE AGENTS ................................................... 84
10.1. Appointment .................................................. 84
10.2. Delegation of Duties ......................................... 85
10.3. Exculpatory Provisions ....................................... 85
10.4. Reliance by Agents ........................................... 85
10.5. Notice of Default ............................................ 86
10.6. Non-Reliance on Agents and Other Lenders ..................... 86
10.7. Indemnification .............................................. 86
10.8. Agent in Its Individual Capacity ............................. 87
10.9. Successor Administrative Agent ............................... 87
10.10. Agents Generally ............................................. 88
10.11. The Lead Arranger ............................................ 88
SECTION 11. MISCELLANEOUS ................................................ 88
11.1. Amendments and Waivers ....................................... 88
11.2. Notices ...................................................... 89
11.3. No Waiver; Cumulative Remedies ............................... 90
11.4. Survival of Representations and Warranties ................... 90
11.5. Payment of Expenses and Taxes ................................ 91
11.6. Successors and Assigns; Participations and Assignments ....... 92
11.7. Adjustments; Set-off ......................................... 94
11.8. Counterparts ................................................. 95
11.9. Severability ................................................. 95
11.10. Integration .................................................. 95
11.11. GOVERNING LAW ................................................ 95
11.12. Submission To Jurisdiction; Waivers .......................... 95
11.13. Acknowledgments .............................................. 96
11.14. Releases of Guarantees and Liens ............................. 96
11.15. Confidentiality .............................................. 97
11.16. WAIVERS OF JURY TRIAL ........................................ 97
11.17. Delivery of Addenda .......................................... 97
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ANNEX:
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A Pricing Grid
SCHEDULES:
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1.1A Commitments
1.1B Mortgaged Property
3.7 Existing Letters of Credit
5.1 Undisclosed Matters
5.15 Subsidiaries
5.17 Environmental Matters
8.2(d) Existing Indebtedness
8.3(f) Existing Liens
EXHIBITS:
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A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of White & Case LLP
F-2 Form of Legal Opinion of Godfrey & Kahn, S.C.
F-3 Form of Legal Opinion of Paul Karch, Esq.
F-4 Form of Legal Opinion of McDermott, Will and Emery
F-5 Form of Legal Opinion of United Kingdom counsel
F-6 Form of Legal Opinion of Bermuda counsel
F-7 Form of Legal Opinion of counsel to Insurer
F-8 Form of Legal Opinion of special tax counsel
F-9 Form of Legal Opinion of special ERISA counsel
G Form of Prepayment Option Notice
H Form of Exemption Certificate
I-1 Form of Term Note
I-2 Form of Revolving Note
I-3 Form of Swingline Note
J Form of Addendum
K Form of Subordination Agreement
iv
CREDIT AGREEMENT, dated as of November 8, 2001, among
PAPERWEIGHT DEVELOPMENT CORP., a Wisconsin corporation ("Holdings"), APPLETON
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PAPERS INC., a Delaware corporation (the "Borrower"), the several banks and
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other financial institutions or entities from time to time parties to this
Agreement (the "Lenders"), BEAR, STEARNS & CO. INC., as sole lead arranger and
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sole bookrunner (in such capacity, the "Lead Arranger"), BEAR STEARNS CORPORATE
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LENDING INC., as syndication agent (in such capacity, the "Syndication Agent"),
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U.S. BANK NATIONAL ASSOCIATION d/b/a FIRSTAR BANK, N.A. and LASALLE BANK
NATIONAL ASSOCIATION, each as documentation agent (in such capacity, the
"Documentation Agents"), M&I MARSHALL & ILSLEY BANK, as managing agent (in such
--------------------
capacity, the "Managing Agent"), Associated Bank, N.A., as co-agent (in such
--------------
capacity, the "Co-Agent") and TORONTO DOMINION (TEXAS), INC., as administrative
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agent (in such capacity, the "Administrative Agent").
--------------------
R E C I T A L S:
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WHEREAS, Holdings and its wholly-owned subsidiary, New
Appleton LLC, a Wisconsin limited liability company ("New Appleton"), have
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entered into the Purchase Agreement, dated as of July 5, 2001 (the "Acquisition
-----------
Agreement"), with Arjo Wiggins US Holdings Ltd. ("AWUS"), Arjo Wiggins North
- --------- ----
America Investments Ltd. ("AWNA"), and Arjo Wiggins Appleton p.l.c. ("AWA",
---- ---
together with AWUS and AWNA, the "Sellers"), pursuant to which Holdings and New
-------
Appleton will acquire (the "Acquisition") all of the partnership interests of
-----------
Arjo Wiggins Delaware General Partnership, a Delaware general partnership
("AWDGP"), from AWUS and AWNA;
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WHEREAS, in connection with the Acquisition, Holdings and the
Borrower have solicited employees of the Borrower to transfer funds from their
existing 401(k) and 401(a) plan account balances to a newly-created employee
stock ownership plan component (the "ESOP Component") of the Appleton Papers
--------------
Retirement Savings and Employee Stock Ownership Plan (the "ESOP") pursuant to a
----
Rule 701 private placement (the "ESOP Offering");
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WHEREAS, the sole shareholder of Holdings is the Appleton
Papers Inc. Employee Stock Ownership Trust (the "ESOP Trust"), which is the
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funding vehicle of the ESOP Component, and, upon consummation of the
Acquisition, (a) AWDGP, the Borrower and their respective subsidiaries will
become wholly-owned subsidiaries of Holdings, (b) substantially all the existing
indebtedness of AWDGP and its subsidiaries, other than the Permitted Existing
Debt (as hereafter defined), will be repaid, and (c) certain existing assets and
subsidiaries of the Borrower will be transferred to, or retained by, the Sellers
pursuant to the Acquisition Agreement (the "Excluded Assets");
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WHEREAS, concurrently with the consummation of the
Acquisition, the Borrower will (a) obtain senior secured credit facilities
aggregating $340,000,000, on the terms and conditions described herein, (b)
issue its senior subordinated unsecured note in the principal amount of
$250,000,000 to AWA (the "Seller Senior Subordinated Note") and (c) provide
-------------------------------
loans to Holdings and New Appleton in a principal amount of approximately
$546,000,000 in the aggregate (collectively, the "Intercompany Acquisition
------------------------
Loan") utilizing (i) $265,000,000 of term loans to be made hereunder, (ii) up to
- ----
$5,000,000 of revolving loans to be made hereunder and
(iii) other available cash on the consolidated balance sheet of AWDGP
immediately prior to consummation of the Acquisition; and
WHEREAS, Holdings will finance the Acquisition, with (a)
proceeds from the Intercompany Acquisition Loan, (b) at least $105,000,000 in
cash proceeds from the ESOP Offering, and (c) the issuance of a deferred payment
obligation to the Sellers (the "Deferred Payment Obligation") under which
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Holdings will agree to pay to the Sellers $320,882,564 on the date that is eight
years and six months after the consummation of the Acquisition (which is the
mathematical equivalent of a $140,000,000 principal obligation issued on such
date accruing interest at a rate of 10% per year, compounded semi-annually) (the
foregoing transactions, together with the Acquisition and the ESOP Offering and
the other transaction contemplated hereby, are collectively referred to herein
as the "Transactions");
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NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms.
-------------
As used in this Agreement, the terms listed in this Section
1.1 shall have the respective meanings set forth in this Section 1.1.
"Acquisition": as defined in the recitals to this Agreement.
-----------
"Acquisition Agreement": as defined in the recitals to this
---------------------
Agreement.
"Acquisition Documentation": collectively, the Acquisition
-------------------------
Agreement and all schedules, exhibits and annexes thereto and all side letters
and agreements affecting the terms thereof or entered into in connection
therewith including, without limitation, the Fox River Indemnity Arrangements,
the Subordination Agreement and all other agreements, if any, entered into in
connection with the Deferred Payment Obligation.
"Addendum": an instrument, substantially in the form of
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Exhibit J, by which a Lender becomes a party to this Agreement as of the Closing
Date.
"Adjustment Date": as defined in the Pricing Grid.
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"Administrative Agent": as defined in the recitals to this
--------------------
Agreement.
"Affiliate": as to any Person, any other Person that, directly
---------
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent,
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the Documentation Agents, the Managing Agent, the Co-Agent, the Lead Arranger
and the Administrative Agent, which term shall include, for purposes of Section
10 only, each Issuing Lender.
"Aggregate Exposure": with respect to any Lender at any time,
------------------
an amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii) the
amount of such Lender's Revolving Commitment then in effect or, if the Revolving
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at
-----------------------------
any time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all Lenders at such time.
"Agreement": this Credit Agreement, as amended, supplemented
---------
or otherwise modified from time to time.
"AIG Credit Support": the Indemnity Claim Insurance Policy,
------------------
substantially in the form of Schedule 6.1.5.1 to the AWA Environmental Indemnity
Agreement, to be issued on the Closing Date by the Insurer in favor of Bermuda
Company.
"AILLC": Appleton Investments LLC, a Delaware limited
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liability company and a wholly-owned subsidiary of AWDGP.
"Appleton Recycled": Appleton Recycled Fibers Inc., a
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Delaware corporation.
"Applicable Margin": for each Type of Loan, the rate per annum
-----------------
set forth under the relevant column heading below:
Base Rate Loans Eurodollar Loans
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Revolving Loans and 2.50% 3.50%
Swingline Loans
Tranche A Term Loans 2.50% 3.50%
Tranche B Term Loans 3.25% 4.25%
; provided, that, on and after the first Adjustment Date (as defined in the
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Pricing Grid) occurring after the date which is six months after the Closing
Date, the Applicable Margin with respect to Revolving Loans, Swingline Loans and
Tranche A Term Loans will be determined pursuant to the Pricing Grid.
Notwithstanding the foregoing or anything set forth in the Pricing Grid, at any
time upon the occurrence and during the continuation of an Event of Default, the
Applicable Margin for each Type of Loan shall be the highest rate set forth in
the Pricing Grid for such Type of Loan.
"Application": an application, in such form as the relevant
-----------
Issuing Lender may specify from time to time, requesting such Issuing Lender to
open a Letter of Credit.
"Approved Fund": with respect to any Lender that is a fund
-------------
that invests in commercial loans, any other fund that invests in commercial
loans and is managed or advised by the same investment advisor as such Lender or
by an Affiliate of such investment advisor.
"Asset Sale": any Disposition of Property or series of related
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Dispositions of Property (excluding any such Disposition permitted by clause
(a), (b), (c), (d) or (e) of Section 8.5) that yields gross proceeds to any
Group Member (valued at the initial principal amount thereof in the case of
non-cash proceeds consisting of notes or other debt securities and valued at
fair market value in the case of other non-cash proceeds) in excess of $500,000.
"Assignee": as defined in Section 11.6(c).
--------
"Assignment and Acceptance": an Assignment and Acceptance,
-------------------------
substantially in the form of Exhibit E.
"Assignor": as defined in Section 11.6(c).
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"Available ESOP Contributions": with respect to any period,
----------------------------
the sum of (a) the aggregate amount of cash received by Holdings in respect of
ESOP Stock Issuances during such period, which cash has been, in turn,
contributed to the other Parent Entities and then to the Borrower during such
period, and (b) any Carryover Contributions for such period.
"Available Revolving Commitment": as to any Revolving Lender
------------------------------
at any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Commitment then in effect over (b) such Lender's Revolving Extensions
----
of Credit then outstanding; provided that, in calculating any Lender's Revolving
--------
Extensions of Credit for the purpose of determining such Lender's Available
Revolving Commitment pursuant to Section 3.5(a), the aggregate principal amount
of Swingline Loans then outstanding shall be deemed to be zero.
"AWA": as defined in the recitals to this Agreement.
---
"AWA Environmental Indemnity Agreement": the Fox River AWA
-------------------------------------
Environmental Indemnity Agreement, substantially in the form of Exhibit A-2 to
the Acquisition Agreement, to be entered into on the Closing Date by Holdings,
New Appleton, the Borrower and AWA.
"AWA Sub": Arjo Wiggins (Bermuda) Holdings Limited, a company
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limited by shares organized under the Companies Act of 1981 of the Island of
Bermuda.
"AWNA": as defined in the recitals to this Agreement.
----
"AWUS": as defined in the recitals to this Agreement.
----
"AWDGP": as defined in the recitals to this Agreement.
-----
"Base Rate": for any day, a rate per annum (rounded upwards,
---------
if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 0.50%. For purposes hereof: "Prime Rate" shall mean the rate of
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interest per annum publicly announced from time to time by the Reference Lender
as its prime rate in effect at its principal office in New York City (the Prime
Rate not being intended to be the lowest rate of interest charged by the
Reference Lender in connection with extensions of credit to debtors). Any change
in the Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to
---------------
which is based upon the Base Rate.
"Benefitted Lender": as defined in Section 11.7(a).
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"Bermuda Company": Arjo Wiggins Appleton (Bermuda) Limited,
---------------
a company limited by shares organized under the Companies Act of 1981 of the
Island of Bermuda.
"Bermuda Company Agreements": the collective reference to (a)
--------------------------
the Relationship Agreement, dated as of the Closing Date, among Holdings, AWA,
Holdings Sub, and AWA Sub, (b) the Assignment and Assumption Deed, dated as of
the Closing Date hereof, between AWA and the Bermuda Company, (c) the Bye-Laws
and Memorandum of Association of the Bermuda Company, (d) the Certificate of
Incorporation and By-laws of Holdings Sub, (e) the By-Laws and Memorandum of
Association of AWA Sub and (f) Bermuda Security Agreement.
"Bermuda Security Agreement": the Collateral Assignment,
--------------------------
dated as of the Closing Date hereof by the Bermuda Company in favor of the
Borrower.
"Board": the Board of Governors of the Federal Reserve System
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of the United States (or any successor).
"Borrower": as defined in the preamble to this Agreement.
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"Borrowing Date": any Business Day specified by the Borrower
--------------
as a date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Business": as defined in Section 5.17(b).
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"Business Day": a day other than a Saturday, Sunday or other
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day on which commercial banks in New York City are authorized or required by law
to close, provided, that with respect to notices and determinations in
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connection with, and payments of principal and interest on, Eurodollar Loans,
such day is also a day for trading by and between banks in Dollar deposits in
the interbank eurodollar market.
"Capital Expenditures": for any period, with respect to any
--------------------
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing (pursuant to a capital lease) of fixed or capital
assets or additions to equipment (including replacements, capitalized repairs
and improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations
-------------------------
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and,
for the purposes of this Agreement, the amount of such obligations at any time
shall be the capitalized amount thereof at such time determined in accordance
with GAAP.
"Capital Stock": any and all shares, interests, participations
-------------
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Carryover Contributions": with respect to any period, the
-----------------------
amount (if any) by which the aggregate amount of cash received by Holdings, in
respect of ESOP Stock Issuances during the period from the Closing Date to the
day immediately preceding the first day of such period exceeds ESOP Related
Distributions during the period from the Closing Date to the day immediately
preceding the first day of such period.
"Cash Equivalents": (a) marketable direct obligations issued
----------------
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
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Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
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nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Closing Date": the date on which the conditions precedent
------------
set forth in Section 6.1 shall have been satisfied, which date is November 9,
2001.
"Co-Agent": as defined in the recitals to this Agreement.
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"Code": the Internal Revenue Code of 1986, as amended from
----
time to time.
"Collateral": all property of the Loan Parties, now owned or
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hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"Commitment": as to any Lender, the sum of the Tranche A Term
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Commitment, the Tranche B Term Commitment and the Revolving Commitment of such
Lender.
"Commitment Fee Rate": 0.50% per annum.
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"Commonly Controlled Entity": an entity, whether or not
--------------------------
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group that includes the Borrower and
that is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
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Responsible Officer substantially in the form of Exhibit B.
"Conduit Lender": any special purpose entity organized and
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administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument,
subject to the consent of the Administrative Agent and the Borrower (which
consent shall not be unreasonably withheld); provided, that the designation by
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any Lender of a Conduit Lender shall not relieve the designating Lender of any
of its obligations to fund a Loan under this Agreement if, for any reason, its
Conduit Lender fails to fund any such Loan, and the designating Lender (and not
the Conduit Lender) shall have the sole right and responsibility to deliver all
consents and waivers required or requested under this Agreement with respect to
its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be
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entitled to receive any greater amount pursuant to Section 4.9, 4.10, 4.11 or
11.5 than the designating Lender would have been entitled to receive in respect
of the extensions of credit made by such Conduit Lender or (b) be deemed to have
any Commitment.
"Confidential Information Memorandum": the Confidential
-----------------------------------
Information Memorandum dated September 2001 and furnished to the Lenders.
"Consolidated Current Assets": at any date, all amounts (other
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than cash and Cash Equivalents) that would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of Holdings and its Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts
--------------------------------
that would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet of
Holdings and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of Holdings and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving Loans
or Swingline Loans to the extent otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income
-------------------
for such period plus, without duplication and to the extent reflected as a
----
charge in the statement of such Consolidated Net Income for such period, the sum
of (a) income tax expense, (b) interest expense, amortization or writeoff of
debt discount and debt issuance costs and commissions, discounts and other fees
and charges associated with Indebtedness (including the Loans), (c) depreciation
and amortization expense (including, but not limited to, goodwill), (d) any
extraordinary charges or losses determined in accordance with GAAP, (e) non-cash
charges from
employee compensation deferrals and employer matching contributions pursuant to
the ESOP Documentation relating to ESOP Stock Issuances, and (f) any other
non-cash charges, non-cash expenses or non-cash losses of Holdings or any of its
Subsidiaries (excluding any such charge, expense or loss incurred in the
ordinary course of business that constitutes an accrual of or a reserve for cash
charges for any future period) and minus, to the extent included in the
-----
statement of such Consolidated Net Income for such period, the sum of (a)
interest income, (b) any extraordinary income or gains determined in accordance
with GAAP and (c) any other non-cash income (excluding any items that represent
the reversal of any accrual of, or cash reserve for, anticipated cash charges in
any prior period that are described in the parenthetical to clause and (i)
above), all as determined on a consolidated basis. For the purpose of
calculating Consolidated EBITDA for any period ending on or prior to September
30, 2002, Consolidated EBITDA shall include pro forma adjustments of Holdings
--- -----
and its Subsidiaries in connection with the Transactions described in the
Confidential Information Memorandum calculated in accordance with Regulation S-X
or as otherwise acceptable to the Syndication Agent. For the purposes of
calculating Consolidated EBITDA for any period of four consecutive fiscal
quarters (each, a "Reference Period") pursuant to any determination of the
----------------
Consolidated Leverage Ratio and the Consolidated Senior Debt Ratio, (i) if at
any time during such Reference Period the Borrower or any Subsidiary shall have
made any Material Disposition, the Consolidated EBITDA for such Reference Period
shall be reduced by an amount equal to the Consolidated EBITDA (if positive)
attributable to the property that is the subject of such Material Disposition
for such Reference Period or increased by an amount equal to the Consolidated
EBITDA (if negative) attributable thereto for such Reference Period and (ii) if
during such Reference Period the Borrower or any Subsidiary shall have made a
Material Acquisition, Consolidated EBITDA for such Reference Period shall be
calculated after giving pro forma effect thereto as if such Material Acquisition
--- -----
occurred on the first day of such Reference Period. As used in this definition,
"Material Acquisition" means any acquisition of property or series of related
--------------------
acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by the Borrower and its Subsidiaries in excess of $1,000,000;
and "Material Disposition" means any Disposition of property or series of
--------------------
related Dispositions of property that yields gross proceeds to the Borrower or
any of its Subsidiaries in excess of $1,000,000.
"Consolidated Fixed Charge Coverage Ratio": for any period,
----------------------------------------
the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges": for any period, the sum (without
--------------------------
duplication) of (a) Consolidated Interest Expense for such period, (b) the
aggregate amount actually paid by Holdings and its Subsidiaries during such
period on account of Capital Expenditures (excluding the principal amount of
Indebtedness incurred during such period to finance such expenditures (but
including any repayments of any Indebtedness incurred during such period or any
prior period to finance such expenditures) and any such expenditures financed
with the proceeds of Reinvestment Deferred Amounts), (c) scheduled payments made
during such period on account of principal of Indebtedness of Holdings or any of
its Subsidiaries (including scheduled principal payments in respect of the Term
Loans), (d) the excess (if any) of (i) the ESOP Related Distributions during
such period, over (ii) any Carryover Contributions for such period and (e) any
----
taxes actually paid in cash by Holdings or any of its Subsidiaries during such
period.
9
"Consolidated Interest Coverage Ratio": for any period, the ratio of (a)
------------------------------------
Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
"Consolidated Interest Expense": for any period, total cash interest
-----------------------------
expense (including that attributable to Capital Lease Obligations) of Holdings
and its Subsidiaries for such period with respect to all outstanding
Indebtedness of Holdings and its Subsidiaries (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Hedge Agreements in respect of
interest rates to the extent such net costs are allocable to such period in
accordance with GAAP).
"Consolidated Leverage Ratio": at any time, the ratio of (a) Consolidated
---------------------------
Total Debt as of the last day of the most recently completed fiscal quarter to
(b) Consolidated EBITDA for the period of four consecutive fiscal quarters ended
on such last day.
"Consolidated Net Income": for any period, the consolidated net income (or
-----------------------
loss) of Holdings and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) the income (or
--------
deficit) of any Person accrued prior to the date it becomes a Subsidiary of
Holdings or is merged into or consolidated with Holdings or any of its
Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary
of Holdings) in which Holdings or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by
Holdings or such Subsidiary in the form of dividends or similar distributions
and (c) the undistributed earnings of any Subsidiary of Holdings to the extent
that the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or Requirement of Law applicable
to such Subsidiary.
"Consolidated Net Worth": at any date, all amounts that would, in
----------------------
conformity with GAAP, be included on a consolidated balance sheet of Holdings
and its Subsidiaries under stockholders' equity at such date.
"Consolidated Senior Debt": all Consolidated Total Debt other than (a) the
------------------------
Permitted Senior Subordinated Notes and (b) other Indebtedness expressly
subordinated to the prior payment in full of the Obligations on the same terms
as the Permitted Senior Subordinated Notes or on terms otherwise acceptable to
the Syndication Agent and the Administrative Agent.
"Consolidated Senior Leverage Ratio": at any time, the ratio of (a)
----------------------------------
Consolidated Senior Debt as of the last day of the then most recently completed
fiscal quarter to (b) Consolidated EBITDA for the period of four consecutive
fiscal quarters ended on such last day.
"Consolidated Total Debt": at any date, the aggregate principal amount of
-----------------------
all Indebtedness of Holdings and its Subsidiaries at such date, determined on a
consolidated basis in accordance with GAAP other than the Deferred Payment
Obligation and Indebtedness permitted under clauses (h) and (i) of Section 8.2.
"Consolidated Working Capital": at any date, the excess of Consolidated
----------------------------
Current Assets on such date over Consolidated Current Liabilities on such date.
----
10
"Continuing Directors": (a) with respect to Holdings, the directors of
--------------------
Holdings on the Closing Date, after giving effect to the Transactions and the
other transactions contemplated hereby, and each other director, if, in each
case, such other director's nomination for election to the board of directors of
Holdings is recommended by at least a majority of the then Continuing Directors
of Holdings and (b) with respect to the Borrower, the directors of the Borrower
on the Closing Date, after giving effect to the Transactions and the other
transactions contemplated hereby, and each other director, if, in each case,
such other director's nomination for election to the board of directors of the
Borrower is recommended by at least a majority of the Continuing Directors of
the Borrower.
"Contractual Obligation": as to any Person, any provision of any security
----------------------
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
"Default": any of the events specified in Section 9, whether or not any
-------
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"Deferred Payment Obligation": as defined in the recitals to this
---------------------------
Agreement.
"Derivatives Counterparty": any financial institution, commodities or stock
------------------------
exchange or clearinghouse.
"Designated Lenders": as defined in Section 6.1(a).
------------------
"Disposition": with respect to any Property, any sale, lease, sale and
-----------
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "Dispose" and "Disposed of" shall have correlative meanings.
------- -----------
"Documentation Agents": as defined in the preamble to this Agreement.
--------------------
"Dollars" and "$": dollars in lawful currency of the United States.
------- -
"Domestic Subsidiary": any Subsidiary of the Borrower organized under the
-------------------
laws of any jurisdiction within the United States.
"ECF Percentage": 75%.
--------------
"Environmental Laws": any and all applicable foreign, Federal, state, local
------------------
or municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or other Requirements of Law (including common law) regulating, relating
to or imposing liability or standards of conduct concerning protection of human
health or the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time.
"ESOP": as defined in the recitals to this Agreement.
----
"ESOP Component": as defined in the recitals to this Agreement.
--------------
11
"ESOP Documentation": the collective reference to (a) the Appleton Papers
------------------
Retirement Savings and Employee Stock Ownership Plan, restated effective January
1, 2001, (b) the Appleton Papers Inc. Employee Stock Ownership Trust, adopted
July 19, 2001, (c) the Prospectus dated July 23, 2001 distributed in connection
with the ESOP Offering and (d) all amendments, supplements or other
modifications to any of the foregoing, all schedules, exhibits and annexes
thereto and all agreements affecting the terms thereof or entered into in
connection therewith.
"ESOP Offering": as defined the recitals to this Agreement.
-------------
"ESOP Related Distributions": all payments, loans, advances, distributions
--------------------------
or dividends made by the Borrower to the Parent Entities to permit Holdings to
satisfy its obligations to repurchase its common stock pursuant to the ESOP
Documentation.
"ESOP Stock Issuances": with respect to any period, any issuance of common
--------------------
stock by Holdings to the ESOP during such period.
"ESOP Trust": as defined in the recitals to this Agreement.
----------
"Eurocurrency Reserve Requirements": for any day as applied to a Eurodollar
---------------------------------
Loan, the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate screen (or otherwise on such screen),
the "Eurodollar Base Rate" shall be determined by reference to such other
--------------------
comparable publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent or, in the absence of such availability, by
reference to the rate at which the Administrative Agent is offered Dollar
deposits at or about 11:00 A.M., New York City time, two Business Days prior to
the beginning of such Interest Period in the interbank eurodollar market where
its eurodollar and foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the number
of days comprised therein; provided, however, that in no event shall the
--------- -------
Eurodollar Base Rate with respect to the Tranche B Term Loans be less than
2.50%.
"Eurodollar Loans": Loans the rate of interest applicable to which is based
----------------
upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest Period
---------------
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):
12
Eurodollar Base Rate
---------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans under a
------------------
particular Facility the then current Interest Periods with respect to all of
which begin on the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 9, provided that
---------------- --------
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied and/or lapsed, as applicable.
"Excess Cash Flow": for any fiscal year of Holdings, the excess, if any, of
----------------
(a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal
year, (ii) the amount of all non-cash charges (including depreciation and
amortization) deducted in arriving at such Consolidated Net Income, (iii)
decreases in Consolidated Working Capital for such fiscal year, and (iv) the
aggregate net amount of non-cash loss on the Disposition of Property by the
Borrower and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent deducted in
arriving at such Consolidated Net Income over (b) the sum, without duplication,
----
of (i) the amount of all non-cash credits included in arriving at such
Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower
and its Subsidiaries in cash during such fiscal year on account of Capital
Expenditures (excluding the principal amount of Indebtedness incurred to finance
such expenditures (but including repayments of any such Indebtedness incurring
during such period or any prior period) and any such expenditures financed with
the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of
all prepayments of Revolving Loans and Swingline Loans during such fiscal year
to the extent accompanying permanent optional reductions of the Revolving
Commitments and all optional prepayments of the Term Loans during such fiscal
year, (iv) the aggregate amount of all regularly scheduled principal payments of
Funded Debt (including the Term Loans) of the Borrower and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit facility
to the extent there is not an equivalent permanent reduction in commitments
thereunder), (v) increases in Consolidated Working Capital for such fiscal year,
(vi) the aggregate net amount of non-cash gain on the Disposition of Property by
the Borrower and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent included in
arriving at such Consolidated Net Income and (vii) the excess (if any) of (A)
ESOP Related Distributions during such fiscal year, over (B) Available ESOP
----
Contributions for such fiscal year.
"Excess Cash Flow Application Date": as defined in Section 4.2.
---------------------------------
"Excluded Assets": as defined in the recitals to this Agreement.
---------------
"Excluded Foreign Subsidiary": any Foreign Subsidiary in respect of which
---------------------------
either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.
"Excluded Indebtedness": all Indebtedness permitted by Section 8.2.
---------------------
13
"Existing Letters of Credit": as defined in Section 3.7.
--------------------------
"Facility": each of (a) the Tranche A Term Commitments and the
--------
Tranche A Term Loans made thereunder (the "Tranche A Term Facility"), (b) the
-----------------------
Tranche B Term Commitments and the Tranche B Term Loans made thereunder (the
"Tranche B Term Facility") and (c) the Revolving Commitments and the extensions
-----------------------
of credit made thereunder (the "Revolving Facility").
------------------
"Federal Funds Effective Rate": for any day, the weighted
----------------------------
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is
------------------
not a Domestic Subsidiary.
"Fox River Indemnity Arrangements": the collective reference
--------------------------------
to the PDC Environmental Indemnity Agreement, the AWA Environmental Indemnity
Agreement, the AIG Credit Support, the Fox River Security Agreement and the
Bermuda Company Agreements.
"Fox River Security Agreement": the Security Agreement,
----------------------------
substantially in the form of Exhibit B to the AWA Environmental Indemnity
Agreement, to be entered into among the Borrower, Holdings, New Appleton and
AWA.
"Funded Debt": as to any Person, all Indebtedness of such
-----------
Person that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year from such date, including
all current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrower, Indebtedness in respect of the
Loans.
"Funding Office": the office of the Administrative Agent
--------------
specified in Section 11.2 or such other office as may be specified from time to
time by the Administrative Agent as its funding office by written notice to the
Borrower and the Lenders.
"GAAP": generally accepted accounting principles in the United
----
States as in effect from time to time. In the event that any Accounting Change
(as defined below) shall occur and such change results in a change in the method
of calculation of financial covenants, standards or terms in this Agreement,
then Holdings, the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating Holdings' and the Borrower's financial condition shall
be the same after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been executed and
delivered by Holdings, the Borrower, Administrative
14
Agent and the Required Lenders, all financial covenants, standards and terms in
this Agreement shall continue to be calculated or construed as if such
Accounting Changes had not occurred. "Accounting Changes" refers to changes in
------------------
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if applicable, the SEC.
"Governmental Authority": any nation or government, any state
----------------------
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"Group Members": the collective reference to Holdings, the
-------------
Borrower and their respective Subsidiaries.
"Guarantee and Collateral Agreement": the Guarantee and
----------------------------------
Collateral Agreement to be executed and delivered by each Parent Entity, the
Borrower and each Subsidiary Guarantor, substantially in the form of Exhibit A.
"Guarantee Obligation": as to any Person (the "guaranteeing
-------------------- ------------
person"), any obligation of (a) the guaranteeing person or (b) another Person
- ------
(including any bank under any letter of credit) to induce the creation of which
the guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
-------------------
of any other third Person (the "primary obligor") in any manner, whether
---------------
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
-------- -------
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantors": the collective reference to the Parent Entities
----------
and the Subsidiary Guarantors.
15
"Hedge Agreements": all interest rate swaps, caps or collar
----------------
agreements or similar arrangements dealing with interest rates or currency
exchange rates or the exchange of nominal interest obligations or commodity
agreements or other similar arrangements designed to protect against
fluctuations in commodity prices, either generally or under specific
contingencies.
"Holdings": as defined in the preamble to this Agreement.
--------
"Holdings Sub": PDC Capital Corporation, a Delaware
------------
corporation.
"Indebtedness": of any Person at any date, without
------------
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than current trade payables incurred in the ordinary course of
such Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property, provided that, if recourse in respect
--------
of such Indebtedness is so limited, the amount of such Indebtedness shall be
deemed to be the lesser of the principal amount thereof and the fair market
value of the property encumbered by such Lien as determined in good faith by the
Board of Directors of Holdings), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) the liquidation value of all
redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations
of such Person in respect of obligations of the kind referred to in clauses (a)
through (g) above, (i) all obligations of the kind referred to in clauses (a)
through (h) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation
(provided that, if such Person has not assumed or otherwise become liable in
--------
respect of such Indebtedness, the amount of such Indebtedness shall be deemed to
be the lesser of the principal amount of such Indebtedness and the fair market
value of the property encumbered by such Lien as determined in good faith by the
Board of Directors of Holdings), and (j) for the purposes of Sections 8.2 and
9(e) only, all obligations of such Person in respect of Hedge Agreements. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness expressly provide that such Person is not liable
therefor.
"Insolvency": with respect to any Multiemployer Plan, the
----------
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Insurer": Commerce & Industry Insurance Company.
-------
"Intellectual Property": the collective reference to all
---------------------
rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or
16
foreign laws or otherwise, including copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to sue at law or in equity for any infringement or
other impairment thereof, including the right to receive all proceeds and
damages therefrom.
"Intercompany Acquisition Loan": as defined in the recitals to
-----------------------------
this Agreement.
"Interest Payment Date": (a) as to any Base Rate Loan, the
---------------------
last day of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or less, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day that is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such Interest
Period and (d) as to any Loan (other than any Revolving Loan that is an Base
Rate Loan and any Swingline Loan), the date of any repayment or prepayment made
in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially,
---------------
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last day of
the then current Interest Period with respect thereto; provided that, all of the
--------
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a
day that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period
under a particular Facility that would extend beyond the
Revolving Termination Date or beyond the date final payment is
due on the Tranche A Term Loans or the Tranche B Term Loans,
as the case may be; and
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month.
"Investments": as defined in Section 8.8.
-----------
"Issuing Lender": (a) with respect to Existing Letters of
--------------
Credit, M&I Marshall & Ilsley Bank and (b) with respect to any Letters of Credit
issued after the Closing Date, The Toronto Dominion-Bank or any other Lender
designated in writing as an Issuing Lender by the
17
Borrower with the consent of the Administrative Agent and such Lender, in each
case in its capacity as issuer of any Letter of Credit.
"L/C Commitment": $25,000,000.
--------------
"L/C Fee Payment Date": the last day of each March, June, September
--------------------
and December and the last day of the Revolving Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 3.11.
"L/C Participants": with respect to any Letter of Credit, the
----------------
collective reference to all the Revolving Lenders other than the Issuing Lender
of such Letter of Credit.
"Lead Arranger": as defined in the recitals to this Agreement.
-------------
"Lender Affiliate": (a) any Affiliate of any Lender, (b) any Person
----------------
that is administered or managed by any Lender and that is engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business and (c) with respect
to any Lender which is a fund that invests in commercial loans and similar
extensions of credit, any other fund that invests in commercial loans and
similar extensions of credit and is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such Lender or investment advisor.
"Lenders": as defined in the preamble hereto; provided, that unless
------- --------
the context otherwise requires, each reference herein to the Lenders shall be
deemed to include any Conduit Lender.
"Letters of Credit": as defined in Section 3.7(a).
-----------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
----
"Loan Documents": this Agreement, the Security Documents and the
--------------
Notes.
"Loan Parties": each Group Member that is a party to a Loan Document.
------------
"Majority Facility Lenders": with respect to any Facility, the holders
-------------------------
of more than 50% of the aggregate unpaid principal amount of the Term Loans or
the Total Revolving Extensions of Credit, as the case may be, outstanding under
such Facility (or, in the case of the Revolving Facility, prior to any
termination of the Revolving Commitments, the holders of more than 50% of the
Total Revolving Commitments).
18
"Managing Agent": as defined in the recitals to this Agreement.
--------------
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
Acquisition (as of the Closing Date), (b) the business, assets, property,
condition (financial or otherwise), results of operations or prospects of
Holdings and its Subsidiaries taken as a whole or (c) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Agents or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"Mortgaged Properties": the real properties listed on Schedule 1.1B,
--------------------
as to which the Administrative Agent for the benefit of the Lenders shall be
granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any Loan
---------
Party in favor of, or for the benefit of, the Administrative Agent for the
benefit of the Lenders, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable under the law of the jurisdiction in which
such mortgage or deed of trust is to be recorded).
"Multiemployer Plan": a Plan that is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"NCR Agreements": the collective reference to (a) the Settlement
--------------
Agreement, dated February 12, 1998, among the Borrower, NCR and B.A.T.
Industries p.l.c., (b) Joint Defense and Representation Agreement, effective
July 1, 1998, among NCR, the Borrower, Sidley & Austin, Godfrey & Kahn, S.C. and
Simpson Thacher & Bartlett and (c) the Joint Defense Agreement and the
Subsequent Allocation Arbitration Agreement, dated February 12, 1998, among the
Borrower, NCR and B.A.T. Industries p.l.c. with respect to environmental
liabilities related to the Fox River.
"NCR": NCR Corp., a Maryland corporation.
---
"Net Cash Proceeds": (a) in connection with any Disposition of
-----------------
Property (including, without limitation, any Asset Sale) or any Recovery Event,
the proceeds thereof in the form of cash and Cash Equivalents (including any
such proceeds received by way of deferred payment of principal pursuant to a
note or installment receivable or purchase price adjustment receivable or by the
disposition of any non-cash consideration received in connection therewith or
otherwise, but only as and when received) of such Disposition or Recovery Event,
net of attorneys' fees, accountants' fees, investment banking fees, amounts
required to be applied to the repayment of Indebtedness secured by a Lien
expressly permitted hereunder on any asset that is the subject of such
Disposition or Recovery Event (other than any Lien pursuant to a Security
Document) and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (b) in connection with any
issuance or sale of Capital Stock or any incurrence of Indebtedness, the cash
19
proceeds received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"New Appleton": as defined in the recitals to this Agreement.
------------
"Non-Excluded Taxes": as defined in Section 4.10(a).
------------------
"Non-Executing Person": as defined in Section 6.1(a).
--------------------
"Non-U.S. Lender": as defined in Section 4.10(d).
---------------
"Notes": the collective reference to any promissory note evidencing
-----
Loans.
"Obligations": the unpaid principal of and interest on (including
-----------
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to any Agent or to any Lender (or, in the case of
Specified Hedge Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Specified Hedge
Agreement entered into with any Agent or Lender or any affiliate of any Agent or
Lender or any other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to any Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise; provided, that (i)
--------
obligations of the Borrower or any Subsidiary under any Specified Hedge
Agreement shall be secured and guaranteed pursuant to the Security Documents
only to the extent that, and for so long as, the other Obligations are so
secured and guaranteed and (ii) any release of Collateral or Guarantors effected
in the manner permitted by this Agreement shall not require the consent of
holders of obligations under Specified Hedge Agreements.
"Other Taxes": any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement or any other Loan Document and
any liabilities resulting from any delay in paying such taxes.
"Parent Entities": the collective reference to Holdings, New Appleton,
---------------
AWDGP and AILLC.
"Participant": as defined in Section 11.6(b).
-----------
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA (or any successor).
20
"PDC Environmental Indemnity Agreement": the Fox River PDC
-------------------------------------
Environmental Indemnity Agreement, substantially in the form of Exhibit A-1 to
the Acquisition Agreement, to be entered into on the Closing Date by Holdings,
New Appleton and the Borrower.
"Permitted Existing Debt": Indebtedness described on Schedule 8.2(d).
-----------------------
"Permitted Senior Subordinated Notes": the collective reference to the
-----------------------------------
Seller Senior Subordinated Note and the Senior Subordinated Notes.
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan that is
----
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Planned Restructuring": as defined in Section 8.4(b).
---------------------
"Pricing Grid": the pricing grid attached hereto as Annex A.
------------
"Pro Forma Balance Sheet": as defined in Section 5.1(a).
-----------------------
"Pro Forma Income Statements": as defined in Section 5.1(a).
---------------------------
"Projections": as defined in Section 7.2(c).
-----------
"Properties": as defined in Section 5.17(a).
----------
"Property": any right or interest in or to property of any kind
--------
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, Capital Stock.
"Recovery Event": any settlement of or payment in respect of any
--------------
property or casualty insurance claim or any condemnation proceeding relating to
any asset of any Group Member.
"Reference Lender": Toronto Dominion (Texas), Inc.
----------------
"Refunded Swingline Loans": as defined in Section 3.4.
------------------------
"Refunding Date": as defined in Section 3.4.
--------------
"Register": as defined in Section 11.6(d).
--------
"Regulation U": Regulation U of the Board as in effect from time to
------------
time.
"Reimbursement Obligation": the obligation of the Borrower to
------------------------
reimburse each Issuing Lender pursuant to Section 3.11 for amounts drawn under
Letters of Credit.
21
"Reinvestment Deferred Amount": with respect to any Reinvestment
----------------------------
Event, the aggregate Net Cash Proceeds received by any Group Member in
connection therewith that are not applied to prepay the Term Loans or reduce the
Revolving Commitments pursuant to Section 4.2(b) as a result of the delivery of
a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
------------------
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
-------------------
Officer stating that no Event of Default has occurred and is continuing and that
the Borrower (directly or indirectly through one or more of its Subsidiaries)
intends and expects to use all or a specified portion of the Net Cash Proceeds
of an Asset Sale or Recovery Event to acquire or repair fixed or capital assets
useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
------------------------------
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire or repair
fixed or capital assets useful in the Borrower's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
----------------------------
Event, the earlier of (a) the date occurring twelve months after such
Reinvestment Event (or, in the case of a Recovery Event only, such longer period
as may be necessary to repair or rebuild the property which is the subject of
such Recovery Event, provided that binding agreements to effect such repairs or
--------
rebuilding have been entered into within such twelve month period and so long as
the Borrower is using commercially reasonable efforts to complete such repairs
or rebuilding in a timely manner), and (b) the date on which the Borrower shall
have determined not to, or shall have otherwise ceased to, acquire or repair
fixed or capital assets useful in the Borrower's or its Subsidiaries' business
with all or any portion of the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC
Reg.(S) 4043.
"Required Lenders": at any time, the holders of more than 50% of (a)
----------------
until the Closing Date, the Commitments then in effect and (b) thereafter, the
sum of (i) the aggregate unpaid principal amount of the Term Loans then
outstanding and (ii) the Total Revolving Commitments then in effect or, if the
Revolving Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding.
"Requirement of Law": as to any Person, the Certificate or Articles of
------------------
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
22
"Responsible Officer": the chief executive officer, president, chief
-------------------
financial officer or treasurer of Holdings, but in any event, with respect to
financial matters, the chief financial officer or treasurer of Holdings and, for
the purposes of Section 7.7 only, any vice president or other officer of
Holdings or the Borrower who is responsible for compliance with the Loan
Documents.
"Restricted Payments": as defined in Section 8.6.
-------------------
"Revolving Commitment": as to any Lender, the obligation of such
--------------------
Lender, if any, to make Revolving Loans and participate in Swingline Loans and
Letters of Credit in an aggregate principal and/or face amount not to exceed the
amount set forth under the heading "Revolving Commitment" opposite such Lender's
name on Schedule 1.1A or in the Assignment and Acceptance pursuant to which such
Lender became a party hereto, as the same may be changed from time to time
pursuant to the terms hereof. The original amount of the Total Revolving
Commitments is $75,000,000.
"Revolving Commitment Period": the period from and including the
---------------------------
Closing Date to the Revolving Termination Date.
"Revolving Extensions of Credit": as to any Revolving Lender at any
------------------------------
time, an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Loans held by such Lender then outstanding, (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding and (c) such
Lender's Revolving Percentage of the aggregate principal amount of Swingline
Loans then outstanding.
"Revolving Lender": each Lender that has a Revolving Commitment or
----------------
that holds Revolving Loans.
"Revolving Loans": as defined in Section 3.1(a).
---------------
"Revolving Percentage": as to any Revolving Lender at any time, the
--------------------
percentage which such Lender's Revolving Commitment then constitutes of the
Total Revolving Commitments (or, at any time after the Revolving Commitments
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Revolving Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Loans then outstanding).
"Revolving Termination Date": November 8, 2005.
--------------------------
"SEC": the Securities and Exchange Commission, any successor thereto
---
and any analogous Governmental Authority.
"Security Documents": the collective reference to the Guarantee and
------------------
Collateral Agreement, the Mortgages and all other security documents hereafter
delivered to the Administrative Agent granting a Lien on any property of any
Person to secure the obligations and liabilities of any Loan Party under any
Loan Document.
"Seller Note Purchase Agreement": the Note Purchase Agreement, dated
------------------------------
as of the Closing Date hereof, entered into between AWA and the Borrower in
connection with the
23
issuance of the Seller Senior Subordinated Note, together with all instruments
and other agreements entered into by the Borrower in connection therewith.
"Sellers": as defined in the recitals to this Agreement.
-------
"Seller Senior Subordinated Note": as defined in the recitals to this
-------------------------------
Agreement.
"Senior Subordinated Note Indenture": the Indenture entered into by
----------------------------------
Holdings, the Borrower and certain of its Subsidiaries in connection with the
issuance of the Senior Subordinated Notes, together with all instruments and
other agreements entered into by Holdings, the Borrower or such Subsidiaries in
connection therewith.
"Senior Subordinated Notes": senior subordinated unsecured notes of
-------------------------
the Borrower issued in a public offering or in a transaction involving a Rule
144A private placement and having terms substantially the same as the Seller
Senior Subordinated Note, except such modified terms as the Syndication Agent
agrees are necessary to reflect prevailing market terms at the time of issuance
of such senior subordinated notes for "high-yield" securities issued by
companies of comparable size, capitalization (including, without limitation,
having a senior secured credit facility in place) and credit rating or are
otherwise acceptable to the Syndication Agent; provided that in no event shall
--------
the Senior Subordinated Notes (a) amortize, or otherwise be subject to scheduled
redemptions, repurchases or other payments of principal or have a final maturity
date that is earlier than the Seller Senior Subordinated Note, (b) be
subordinated to the Obligations in a manner less favorable to the Lenders than
the Seller Senior Subordinated Note, (c) provide for covenants, events of
default and remedies materially less favorable to the Borrower than the Seller
Senior Subordinated Note or (d) require prepayments or mandatory redemptions in
a manner more extensive than the Seller Senior Subordinated Note.
"Single Employer Plan": any Plan that is covered by Title IV of ERISA,
--------------------
but that is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of any
-------
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
24
"Specified Change of Control": a "Change of Control" (or any other
---------------------------
defined term having a similar purpose) as defined in the Seller Senior
Subordinated Note or the Senior Subordinated Note Indenture.
"Specified Hedge Agreement": any Hedge Agreement (other than in
-------------------------
respect of commodities purchases) (a) entered into by (i) the Borrower or any of
its Subsidiaries and (ii) any Agent or Lender or any affiliate thereof, as
counterparty and (b) that has been designated by such Agent or Lender, as the
case may be, and the Borrower, by notice to the Administrative Agent, as a
Specified Hedge Agreement. The designation of any Hedge Agreement as a Specified
Hedge Agreement shall not create in favor of the Agent, Lender or affiliate
thereof that is a party thereto any rights in connection with the management or
release of any Collateral or of the obligations of any Guarantor under the
Guarantee and Collateral Agreement.
"Subordination Agreement": the Subordination Agreement to be executed
-----------------------
and delivered to the Administrative Agent by AWA and Holdings, substantially in
the form of Exhibit K.
"Subsidiary": as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than any
--------------------
Excluded Foreign Subsidiary, Holdings Sub or Appleton Recycled.
"Swingline Commitment": the obligation of the Swingline Lender to make
--------------------
Swingline Loans pursuant to Section 3.3 in an aggregate principal amount at any
one time outstanding not to exceed $5,000,000.
"Swingline Lender": Toronto Dominion (Texas), Inc., in its capacity as
----------------
the lender of Swingline Loans.
"Swingline Loans": as defined in Section 3.3.
---------------
"Swingline Participation Amount": as defined in Section 3.4.
------------------------------
"Syndication Agent": as defined in the preamble to this Agreement.
-----------------
"Synthetic Purchase Agreement": any agreement pursuant to which any
----------------------------
Group Member is or may become obligated to make (a) any payment in connection
with the purchase by any third party from a Person other than a Group Member of
any Capital Stock of any Group Member or any Indebtedness referred to in Section
7.9 or (b) any payment (except as otherwise expressly permitted by Section 7.6
or 7.9) the amount of which is determined by reference to the price or value at
any time of any such Capital Stock or Indebtedness; provided, that no phantom
--------
25
stock or similar plan providing for payments only to current or former
directors, officers or employees of any Group Member (or to their heirs or
estates) shall be deemed to be a Synthetic Purchase Agreement.
"Term Lenders": the collective reference to the Tranche A Term
------------
Lenders and the Tranche B Term Lenders.
"Term Loans": the collective reference to the Tranche A Term
----------
Loans and Tranche B Term Loans.
"Total Revolving Commitments": at any time, the aggregate amount
---------------------------
of the Revolving Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the
------------------------------------
aggregate amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.
"Tranche A Term Commitment": as to any Lender, the obligation of
-------------------------
such Lender, if any, to make a Tranche A Term Loan to the Borrower hereunder in
a principal amount equal to the amount set forth under the heading "Tranche A
Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Tranche A Term Commitments is $115,000,000.
"Tranche A Term Lender": each Lender that has a Tranche A Term
Commitment or that holds a Tranche A Term Loan.
"Tranche A Term Loan": as defined in Section 2.1.
-------------------
"Tranche A Term Percentage": as to any Tranche A Term Lender at
-------------------------
any time, the percentage which such Lender's Tranche A Term Commitment then
constitutes of the aggregate Tranche A Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche A Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche A Term Loans then outstanding).
"Tranche B Term Commitment": as to any Lender, the obligation of
-------------------------
such Lender, if any, to make a Tranche B Term Loan to the Borrower hereunder in
a principal amount equal to the amount set forth under the heading "Tranche B
Term Commitment" opposite such Lender's name on Schedule 1.1A. The original
aggregate amount of the Tranche B Term Commitments is $150,000,000.
"Tranche B Term Lender": each Lender that has a Tranche B Term
---------------------
Commitment or that holds a Tranche B Term Loan.
"Tranche B Term Loan": as defined in Section 2.1.
-------------------
"Tranche B Term Percentage": as to any Tranche B Lender at any
-------------------------
time, the percentage which such Lender's Tranche B Term Commitment then
constitutes of the aggregate Tranche B Term Commitments (or, at any time after
the Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche B Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche B Term Loans then outstanding).
26
"Transactions": as defined in the recitals to this Agreement.
------------
"Transferee": any Assignee or Participant.
----------
"Type": as to any Loan, its nature as a Base Rate Loan or a
----
Eurodollar Loan.
"United States": the United States of America.
-------------
"Wholly Owned Subsidiary": as to any Person, any other Person all
-----------------------
of the Capital Stock of which (other than directors' qualifying shares required
by law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
1.2. Other Definitional Provisions.
-----------------------------
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the other Loan
Documents or any certificate or other document made or delivered pursuant hereto
or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto, (i)
accounting terms relating to any Group Member not defined in Section 1.1 and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), and (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM COMMITMENTS
2.1. Term Commitments.
----------------
Subject to the terms and conditions hereof, (a) each Tranche A
Term Lender severally agrees to make a term loan (a "Tranche A Term Loan") to
-------------------
the Borrower on the Closing Date in an amount equal to the amount of the Tranche
A Term Commitment of such Lender and (b) each Tranche B Term Lender severally
agrees to make a term loan (a "Tranche B Term Loan") to the Borrower on the
-------------------
Closing Date in an amount equal to the amount of the Tranche B
27
Term Commitment of such Lender. The Term Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.2 and 4.3.
2.2. Procedure for Term Loan Borrowing.
---------------------------------
(a) (a) The Borrower shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to 10:00
A.M., New York City time, one Business Day prior to the anticipated Closing
Date) requesting that the Term Lenders make the Term Loans on the Closing Date
and specifying the amount to be borrowed. The Term Loans made on the Closing
Date shall initially be Base Rate Loans. Upon receipt of such notice the
Administrative Agent shall promptly notify each Term Lender thereof. Not later
than 12:00 Noon, New York City time, on the Closing Date each Term Lender shall
make available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the Term Loan or Term Loans to be made by
such Lender. The Administrative Agent shall credit the account of the Borrower
on the books of such office of the Administrative Agent with the aggregate of
the amounts made available to the Administrative Agent by the Term Lenders in
immediately available funds.
(b) The Borrower shall pay to each Tranche B Lender on the Closing
Date, at such Tranche B Lender's option either (i) an amount representing
original issue debt discount on each such Tranche B Lender's Tranche B Term Loan
(the "OID Amount") equal to 2.50% of the principal amount of such Tranche B Term
----------
Loan or (ii) an amount representing an additional fee in respect of such Tranche
B Lender's Tranche B Term Loan (the "Additional Fee Amount") equal to 2.50% of
---------------------
the principal amount of such Tranche B Term Loan. The obligation of each Tranche
B Lender to make a Tranche B Term Loan pursuant to paragraph (a) of this Section
2.2 and the Borrower's obligation to pay the OID Amount or the Additional Fee
Amount, as the case may be, pursuant to this paragraph (b) shall (unless such
Tranche B Lender requests that such amount be paid directly to such Tranche B
Lender) be netted against each other, such that each such Tranche B Lender shall
pay to the Borrower the amount by which such Tranche B Lender's obligation to
make a Tranche B Term Loan pursuant to paragraph (a) exceeds the OID Amount or
the Additional Fee Amount, as the case may be. Amounts payable under this
paragraph (b) are in addition to any other fees or other amounts payable to any
Tranche B Lender under this Agreement.
2.3. Repayment of Term Loans.
-----------------------
(a) The Tranche A Term Loan of each Tranche A Lender shall mature in
15 consecutive quarterly installments, commencing on March 31, 2002 each of
which shall be in an amount equal to such Lender's Tranche A Term Percentage
multiplied by the amount set forth below opposite such installment:
Installment Date Principal Amount
---------------- ----------------
March 31, 2002 $7,666,666
June 30, 2002 $7,666,666
September 30, 2002 $7,666,666
December 31, 2002 $7,666,666
28
Installment Date Principal Amount
---------------- ----------------
March 31, 2003 $7,666,666
June 30, 2003 $7,666,666
September 30, 2003 $7,666,666
December 31, 2003 $7,666,666
March 31, 2004 $7,666,666
June 30, 2004 $7,666,666
September 30, 2004 $7,666,666
December 31, 2004 $7,666,666
March 31, 2005 $7,666,666
June 30, 2005 $7,666,666
November 8, 2005 $7,666,676
(b) The Tranche B Term Loan of each Tranche B Lender shall mature
in 19 consecutive quarterly installments, commencing on March 31, 2002 each of
which shall be in an amount equal to such Lender's Tranche B Term Percentage
multiplied by the amount set forth below opposite such installment:
Installment Date Principal Amount
---------------- ----------------
March 31, 2002 $375,000
June 30, 2002 $375,000
September 30,2002 $375,000
December 31, 2002 $375,000
March 31, 2003 $375,000
June 30, 2003 $375,000
September 30, 2003 $375,000
December 31, 2003 $375,000
March 31, 2004 $375,000
June 30, 2004 $375,000
September 30, 2004 $375,000
December 31, 2004 $375,000
March 31, 2005 $375,000
June 30, 2005 $375,000
September 30, 2005 $375,000
December 31, 2005 $375,000
March 31, 2006 $375,000
June 30, 2006 $375,000
November 8, 2006 $143,250,000
SECTION 3. AMOUNT AND TERMS OF REVOLVING COMMITMENTS
3.1. Revolving Commitments.
---------------------
(a) Subject to the terms and conditions hereof, each Revolving
Lender severally agrees to make revolving credit loans ("Revolving Loans") to
---------------
the Borrower from time to time
29
during the Revolving Commitment Period in an aggregate principal amount at any
one time outstanding which, when added to such Lender's Revolving Percentage of
the sum of (i) the L/C Obligations then outstanding and (ii) the aggregate
principal amount of the Swingline Loans then outstanding, does not exceed the
amount of such Lender's Revolving Commitment. During the Revolving Commitment
Period, the Borrower may use the Revolving Commitments by borrowing, prepaying
and reborrowing the Revolving Loans in whole or in part, all in accordance with
the terms and conditions hereof. The Revolving Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 3.2 and 4.3.
(b) The Borrower shall repay all outstanding Revolving Loans on
the Revolving Termination Date.
3.2. Procedure for Revolving Loan Borrowing.
--------------------------------------
The Borrower may borrow under the Revolving Commitments during
the Revolving Commitment Period on any Business Day, provided that the Borrower
--------
shall give the Administrative Agent irrevocable notice in such form as the
Administrative Agent may reasonably request (which notice must be received by
the Administrative Agent prior to 1:00 P.M., New York City time, (a) three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (b) one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Loans), specifying (i) the amount and Type of Revolving Loans
to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor. Any Revolving Loans
made on the Closing Date shall initially be Base Rate Loans. Each borrowing
under the Revolving Commitments shall be in an amount equal to (x) in the case
of Base Rate Loans, $500,000 or a whole multiple thereof (or, if the then
aggregate Available Revolving Commitments are less than $500,000, such lesser
amount) and (y) in the case of Eurodollar Loans, $2,000,000 or a whole multiple
of $1,000,000 in excess thereof; provided, that the Swingline Lender may
--------
request, on behalf of the Borrower, borrowings under the Revolving Commitments
that are Base Rate Loans in other amounts pursuant to Section 3.4. Upon receipt
of any such notice from the Borrower, the Administrative Agent shall promptly
notify each Revolving Lender thereof. Each Revolving Lender will make the amount
of its pro rata share of each borrowing available to the Administrative Agent
--- ----
for the account of the Borrower at the Funding Office prior to 1:00 P.M., New
York City time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrower by the Administrative Agent crediting the account
of the Borrower on the books of such office with the aggregate of the amounts
made available to the Administrative Agent by the Revolving Lenders and in like
funds as received by the Administrative Agent. Revolving Loans in an aggregate
amount not to exceed $5,000,000 may be made on the Closing Date.
3.3. Swingline Commitment.
--------------------
(a) Subject to the terms and conditions hereof, the Swingline
Lender agrees to make a portion of the credit otherwise available to the
Borrower under the Revolving Commitments from time to time during the Revolving
Commitment Period by making swing line loans ("Swingline Loans") to the
---------------
Borrower; provided that (i) the aggregate principal amount of
--------
30
Swingline Loans outstanding at any time shall not exceed the Swingline
Commitment then in effect (notwithstanding that the Swingline Loans outstanding
at any time, when aggregated with the Swingline Lender's other outstanding
Revolving Loans hereunder, may exceed the Swingline Commitment then in effect)
and (ii) the Borrower shall not request, and the Swingline Lender shall not
make, any Swingline Loan if, after giving effect to the making of such Swingline
Loan, the aggregate amount of the Available Revolving Commitments would be less
than zero. During the Revolving Commitment Period, the Borrower may use the
Swingline Commitment by borrowing, repaying and reborrowing, all in accordance
with the terms and conditions hereof. Swingline Loans shall be Base Rate Loans
only.
(b) The Borrower shall repay all outstanding Swingline Loans on the
Revolving Termination Date.
3.4. Procedure for Swingline Borrowing; Refunding of Swingline Loans.
---------------------------------------------------------------
(a) Whenever the Borrower desires that the Swingline Lender make
Swingline Loans it shall give the Swingline Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swingline Lender not later than 1:00 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date (which shall be a Business Day during the Revolving Commitment
Period). Each borrowing under the Swingline Commitment shall be in an amount
equal to $500,000 or a whole multiple of $100,000 in excess thereof. Not later
than 3:00 P.M., New York City time, on the Borrowing Date specified in a notice
in respect of Swingline Loans, the Swingline Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the amount of the Swingline Loan to be made by the Swingline
Lender. The Administrative Agent shall make the proceeds of such Swingline Loan
available to the Borrower on such Borrowing Date by depositing such proceeds in
the account of the Borrower with the Administrative Agent on such Borrowing Date
in immediately available funds.
(b) The Swingline Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swingline Lender to act on its behalf), on one Business
Day's notice given by the Swingline Lender no later than 12:00 Noon, New York
City time, request each Revolving Lender to make, and each Revolving Lender
hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving
Lender's Revolving Percentage of the aggregate amount of the Swingline Loans
(the "Refunded Swingline Loans") outstanding on the date of such notice, to
------------------------
repay the Swingline Lender. Each Revolving Lender shall make the amount of such
Revolving Loan available to the Administrative Agent at the Funding Office in
immediately available funds, not later than 10:00 A.M., New York City time, one
Business Day after the date of such notice. The proceeds of such Revolving Loans
shall be immediately made available by the Administrative Agent to the Swingline
Lender for application by the Swingline Lender to the repayment of the Refunded
Swingline Loans. The Borrower irrevocably authorizes the Swingline Lender to
charge the Borrower's accounts with the Administrative Agent (up to the amount
available in each such account) in order to immediately pay the amount of such
Refunded Swingline Loans to the extent amounts received from the Revolving
Lenders are not sufficient to repay in full such Refunded Swingline Loans.
31
(c) If prior to the time a Revolving Loan would have otherwise been
made pursuant to Section 3.4(b), one of the events described in Section 9(f)
shall have occurred and be continuing with respect to the Borrower or if for any
other reason, as determined by the Swingline Lender in its sole discretion,
Revolving Loans may not be made as contemplated by Section 3.4(b), each
Revolving Lender shall, on the date such Revolving Loan was to have been made
pursuant to the notice referred to in Section 3.4(b) (the "Refunding Date"),
--------------
purchase for cash an undivided participating interest in the then outstanding
Swingline Loans by paying to the Swingline Lender an amount (the "Swingline
---------
Participation Amount") equal to (i) such Revolving Lender's Revolving Percentage
- --------------------
times (ii) the sum of the aggregate principal amount of Swingline Loans then
- -----
outstanding that were to have been repaid with such Revolving Loans.
(d) Whenever, at any time after the Swingline Lender has received from
any Revolving Lender such Lender's Swingline Participation Amount, the Swingline
Lender receives any payment on account of the Swingline Loans, the Swingline
Lender will distribute to such Lender its Swingline Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender's participating interest was outstanding and
funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
--- ----
pay the principal of and interest on all Swingline Loans then due); provided,
--------
however, that in the event that such payment received by the Swingline Lender is
- -------
required to be returned, such Revolving Lender will return to the Swingline
Lender any portion thereof previously distributed to it by the Swingline Lender.
(e) Each Revolving Lender's obligation to make the Loans referred to
in Section 3.4(b) and to purchase participating interests pursuant to Section
3.4(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such Revolving Lender or the Borrower may have against the
Swingline Lender, the Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default or an Event of Default or the
failure to satisfy any of the other conditions specified in Section 6; (iii) any
adverse change in the condition (financial or otherwise) of the Borrower; (iv)
any breach of this Agreement or any other Loan Document by the Borrower, any
other Loan Party or any other Revolving Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
3.5. Commitment Fees, etc.
--------------------
(a) The Borrower agrees to pay to the Administrative Agent for the
account of each Revolving Lender a commitment fee for the period from and
including the Closing Date to the last day of the Revolving Commitment Period,
computed at the Commitment Fee Rate on the average daily amount of the Available
Revolving Commitment of such Lender during the period for which payment is made,
payable quarterly in arrears on the last day of each March, June, September and
December and on the Revolving Termination Date, commencing on the first of such
dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees in
the amounts and on the dates previously agreed to in writing by the Borrower and
the Administrative Agent.
32
(c) The Borrower agrees to pay to the Syndication Agent and the Lead
Arranger the fees in the amounts and on the dates previously agreed to in
writing by the Borrower, the Syndication Agent and the Lead Arranger.
3.6. Termination or Reduction of Revolving Commitments.
-------------------------------------------------
The Borrower shall have the right, upon not less than one Business
Day's notice to the Administrative Agent, to terminate the Revolving Commitments
or, from time to time, to reduce the amount of the Revolving Commitments;
provided that no such termination or reduction of Revolving Commitments shall be
- --------
permitted if, after giving effect thereto and to any prepayments of the
Revolving Loans and the Swingline Loans made on the effective date thereof, the
Total Revolving Extensions of Credit would exceed the Total Revolving
Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a
whole multiple thereof, and shall reduce permanently the Revolving Commitments
then in effect.
3.7. L/C Commitment.
--------------
(a) Subject to the terms and conditions hereof, each Issuing Lender,
in reliance on the agreements of the other Revolving Lenders set forth in
Section 3.10(a), agrees to issue letters of credit ("Letters of Credit") for the
-----------------
account of the Borrower on any Business Day during the Revolving Commitment
Period in such form as may be reasonably satisfactory to such Issuing Lender;
provided that such Issuing Lender shall have no obligation to issue any Letter
- --------
of Credit if, after giving effect to such issuance, (i) the L/C Obligations
would exceed the L/C Commitment or (ii) the aggregate amount of the Available
Revolving Commitments would be less than zero. Each Letter of Credit shall (i)
be denominated in Dollars, (ii) have a face amount of at least $250,000 (unless
otherwise agreed by the relevant Issuing Lender) and (iii) expire no later than
the earlier of (x) the first anniversary of its date of issuance and (y) the
date that is five Business Days prior to the Revolving Termination Date,
provided that any Letter of Credit with a one-year term may provide for the
- --------
renewal thereof for additional periods of up to one-year (which shall in no
event extend beyond the date referred to in clause (y) above). Each of the
letters of credit described on Schedule 3.7 (which were issued prior to the
Closing Date) (the "Existing Letters of Credit") shall be deemed to be, for all
--------------------------
purposes of this Agreement and the other Loan Documents, Letters of Credit
issued under this Agreement on the Closing Date.
(b) No Issuing Lender shall at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause such
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.8. Procedure for Issuance of Letter of Credit.
------------------------------------------
The Borrower may from time to time request that an Issuing Lender
issue a Letter of Credit by delivering to such Issuing Lender at its address for
notices specified herein an Application therefor, completed to the satisfaction
of such Issuing Lender, and such other certificates, documents and other papers
and information as such Issuing Lender may reasonably request. Upon receipt of
any Application, such Issuing Lender will notify the Administrative Agent of the
amount, the beneficiary and the requested expiration of the requested Letter of
Credit, and upon receipt of confirmation from the Administrative Agent that
after giving effect to the requested issuance, the Available Revolving
Commitments would not be less than zero, such
33
Issuing Lender will process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall such Issuing Lender be required
to issue any Letter of Credit earlier than three Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed to by such
Issuing Lender and the Borrower. Such Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrower (with a copy to the Administrative Agent)
promptly following the issuance thereof. Such Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the
Lenders, notice of the issuance of each Letter of Credit (including the amount
thereof).
3.9. Fees and Other Charges.
----------------------
(a) The Borrower will pay a fee on all outstanding Letters of Credit
at a per annum rate equal to the Applicable Margin then in effect with respect
to Eurodollar Loans under the Revolving Facility, shared ratably among the
Revolving Lenders and payable quarterly in arrears on each L/C Fee Payment Date
after the issuance date. In addition, the Borrower shall pay to each Issuing
Lender for its own account a fronting fee on the undrawn and unexpired amount of
each Letter of Credit issued by such Issuing Lender as agreed by the Borrower
and such Issuing Lender, payable quarterly in arrears on each L/C Fee Payment
Date after the Issuance Date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse each Issuing Lender for such normal and customary costs and expenses
as are incurred or charged by such Issuing Lender in issuing, negotiating,
effecting payment under, amending or otherwise administering any Letter of
Credit.
3.10. L/C Participations.
------------------
(a) Each Issuing Lender irrevocably agrees to grant and hereby
grants to each L/C Participant, and, to induce such Issuing Lender to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept
and purchase and hereby accepts and purchases from such Issuing Lender, on the
terms and conditions set forth below, for such L/C Participant's own account and
risk an undivided interest equal to such L/C Participant's Revolving Percentage
in such Issuing Lender's obligations and rights under and in respect of each
Letter of Credit issued hereunder by such Issuing Lender and the amount of each
draft paid by such Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with such Issuing Lender that, if a draft
is paid under any Letter of Credit for which such Issuing Lender is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Administrative Agent upon
demand of such Issuing Lender an amount equal to such L/C Participant's
Revolving Percentage of the amount of such draft, or any part thereof, that is
not so reimbursed. The Administrative Agent shall promptly forward such amounts
to such Issuing Lender.
(b) If any amount required to be paid by any L/C Participant to the
Administrative Agent for the account of the Issuing Lender pursuant to Section
3.10(a) in respect of any unreimbursed portion of any payment made by any
Issuing Lender under any Letter of
34
Credit issued by such Issuing Lender is paid to the Administrative Agent for the
account of such Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to the Administrative Agent for
the account of such Issuing Lender on demand an amount equal to the product of
(i) such amount, times (ii) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to such Issuing Lender,
times (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to Section 3.10(a) is not
made available to the Administrative Agent for the account of such Issuing
Lender by such L/C Participant within three Business Days after the date such
payment is due, such Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate per annum applicable to Base Rate Loans under the Revolving
Facility. A certificate of an Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after an Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
---
rata share of such payment in accordance with Section 3.10(a), the
- ----
Administrative Agent or such Issuing Lender receives any payment related to such
Letter of Credit (whether directly from the Borrower or otherwise, including
proceeds of collateral applied thereto by such Issuing Lender), or any payment
of interest on account thereof, the Administrative Agent or such Issuing Lender,
as the case may be, will distribute to such L/C Participant its pro rata share
--- ----
thereof; provided, however, that in the event that any such payment received by
-------- -------
Administrative Agent or such Issuing Lender, as the case may be, shall be
required to be returned by the Administrative Agent or such Issuing Lender, such
L/C Participant shall return to the Administrative Agent for the account of such
Issuing Lender the portion thereof previously distributed by the Administrative
Agent or such Issuing Lender, as the case may be, to it.
(d) Each Revolving Lender's obligation to purchase participating
interests in unreimbursed drafts pursuant to Section 3.10(a) shall be absolute
and unconditional and shall not be affected by any circumstance, including (i)
any setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender or the Borrower may have against any Issuing Lender, the Borrower or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 6; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Revolving Lender; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
3.11. Reimbursement Obligation of the Borrower.
----------------------------------------
The Borrower agrees to reimburse any Issuing Lender on the Business
Day next succeeding the Business Day on which such Issuing Lender notifies the
Borrower of the date and amount of a draft presented under any Letter of Credit
issued by such Issuing Lender and paid by such Issuing Lender for the amount of
(a) such draft so paid and (b) any taxes, fees, charges or other costs or
expenses incurred by such Issuing Lender in connection with such payment. Each
Issuing Lender agrees to notify the Administrative Agent and the Borrower
promptly of any draft
35
paid under any Letter of Credit issued by such Issuing Lender. Each such payment
shall be made to such Issuing Lender at its address for notices referred to
herein in Dollars and in immediately available funds. Interest shall be payable
on any such amounts from the date on which the relevant draft is paid until
payment in full at the rate set forth in (i) until the Business Day next
succeeding the date of the relevant notice, Section 4.5(b) and (ii) thereafter,
Section 4.5(c). Each drawing under any Letter of Credit shall (unless (x) an
event of the type described in clause (i) or (ii) of Section 9(f) shall have
occurred and be continuing with respect to the Borrower, in which case the
procedures specified in Section 3.10 for funding by L/C Participants shall apply
or (y) the Borrower has otherwise notified the Administrative Agent ) constitute
a request by the Borrower to the Administrative Agent for a borrowing pursuant
to Section 3.2 of Base Rate Loans in the amount of such drawing (notwithstanding
the minimum borrowing amounts set forth therein). The Borrowing Date with
respect to such borrowing shall be the first date on which a borrowing of
Revolving Credit Loans could be made, pursuant to Section 3.2, if the
Administrative Agent had received a notice of such borrowing at the time the
Administrative Agent receives notice from the relevant Issuing Lender of such
drawing under such Letter of Credit.
3.12. Obligations Absolute.
--------------------
The Borrower's obligations under Section 3.11 shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment that the Borrower may have or have had
against any Issuing Lender, any beneficiary of a Letter of Credit or any other
Person. The Borrower also agrees with each Issuing Lender that such Issuing
Lender shall not be responsible for, and the Borrower's Reimbursement
Obligations under Section 3.11 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of the Borrower against any beneficiary of such Letter of
Credit or any such transferee. No Issuing Lender shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit,
except to the extent resulting from the gross negligence or willful misconduct
of such Issuing Lender. The Borrower agrees that any action taken or omitted by
any Issuing Lender under or in connection with any Letter of Credit issued by
such Issuing Lender or the related drafts or documents, if done in the absence
of gross negligence or willful misconduct and in accordance with the standards
of care specified in the Uniform Commercial Code of the State of New York, shall
be binding on the Borrower and shall not result in any liability of such Issuing
Lender to the Borrower.
3.13. Letter of Credit Payments.
-------------------------
If any draft shall be presented for payment under any Letter of
Credit, the relevant Issuing Lender shall promptly notify the Borrower of the
date and amount thereof. The responsibility of each Issuing Lender to the
Borrower in connection with any draft presented for payment under any Letter of
Credit issued by such Issuing Lender shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.
36
3.14. Applications.
------------
To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Section 3, the
provisions of this Section 3 shall apply.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS
AND LETTERS OF CREDIT
4.1. Optional Prepayments.
--------------------
The Borrower may at any time and from time to time prepay the Loans,
in whole or in part, without premium or penalty, upon irrevocable notice
delivered to the Administrative Agent at least three Business Days prior thereto
in the case of Eurodollar Loans and at least one Business Day prior thereto, in
the case of Base Rate Loans, which notice shall specify the date and amount of
prepayment, whether Term Loans, Revolving Loans, Swingline Loans or any
combination thereof will be repaid, and whether the prepayment is of Eurodollar
Loans or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any
--------
day other than the last day of the Interest Period applicable thereto, the
Borrower shall also pay any amounts owing pursuant to Section 4.11. Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with (except in
the case of Revolving Loans that are Base Rate Loans and Swingline Loans)
accrued interest to such date on the amount prepaid. Partial prepayments of Term
Loans and Revolving Loans shall be in an aggregate principal amount of
$1,000,000 or a whole multiple thereof. Partial prepayments of Swingline Loans
shall be in an aggregate principal amount of $100,000 or a whole multiple
thereof.
4.2. Mandatory Prepayments.
---------------------
(a) If any Capital Stock or Indebtedness shall be issued or incurred
by any Group Member (other than (i) any Capital Stock issued by Holdings to the
ESOP pursuant to the ESOP Documentation, (ii) equity contributions to the
Borrower or any Subsidiary of the Borrower made by Holdings or any Subsidiary of
Holdings or (iii) Excluded Indebtedness), an amount equal to 100% of the Net
Cash Proceeds thereof shall be applied on the date of such issuance or
incurrence toward the prepayment of the Term Loans as set forth in Section
4.2(d).
(b) If on any date any Group Member shall receive Net Cash Proceeds
from any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall
be delivered in respect thereof, such Net Cash Proceeds shall be applied on such
date toward the prepayment of the Term Loans as set forth in Section 4.2(d);
provided, that, notwithstanding the foregoing, (i) the aggregate Net Cash
- --------
Proceeds of Asset Sales that may be excluded from the foregoing requirement
pursuant to a Reinvestment Notice shall not exceed $2,000,000 in any fiscal year
of the Borrower and (ii) on each Reinvestment Prepayment Date, an amount equal
to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment
Event shall be applied toward the prepayment of the Term Loans as set forth in
Section 4.2(d). Notwithstanding the foregoing, the Term Loans shall be prepaid
with the Net Cash Proceeds of any Disposition of Property by any Group Member to
the extent that absent such prepayment the
37
Borrower would be required to make an "Asset Sale Offer" pursuant to and as
defined in the Seller Senior Subordinated Note or the Senior Subordinated Notes
Indenture as a result of such Disposition.
(c) If, for any fiscal year of Holdings commencing with the fiscal
year ending on or about December 30, 2002, there shall be Excess Cash Flow, the
Borrower shall, on the relevant Excess Cash Flow Application Date, apply the ECF
Percentage of such Excess Cash Flow toward the prepayment of the Term Loans as
set forth in Section 4.2(d). Each such prepayment shall be made on a date (an
"Excess Cash Flow Application Date") no later than five Business Days after the
---------------------------------
date on which the financial statements of Holdings referred to in Section
7.1(a), for the fiscal year with respect to which such prepayment is made, are
required to be delivered to the Lenders.
(d) Amounts to be applied in connection with prepayments made pursuant
to Section 4.2 shall be applied to the prepayment of the Term Loans only, and
the Borrower shall be entitled to retain any such amounts after the repayment in
full of the Term Loans. The application of any prepayment pursuant to Section
4.2 shall be made, first, to Base Rate Loans and, second, to Eurodollar Loans.
----- ------
Each prepayment of the Loans under Section 4.2 shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.
(e) Notwithstanding anything to the contrary in Section 4.2(d) or 4.8,
with respect to 50% of the amount of any mandatory prepayment described in
Section 4.2 that is allocated to Tranche B Term Loans (such amounts, the
"Tranche B Prepayment Amount"), at any time when Tranche A Term Loans remain
---------------------------
outstanding, the Borrower will, in lieu of applying such amount to the
prepayment of Tranche B Term Loans, as provided in paragraph (d) above, on the
date specified in Section 4.2 for such prepayment, give the Administrative Agent
telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Tranche B Lender a notice
(each, a "Prepayment Option Notice") as described below. As promptly as
------------------------
practicable after receiving such notice from the Borrower, the Administrative
Agent will send to each Tranche B Lender a Prepayment Option Notice, which shall
be in the form of Exhibit G, and shall include an offer by the Borrower to
prepay on the date (each a "Mandatory Prepayment Date") that is 10 Business Days
-------------------------
after the date of the Prepayment Option Notice, the Tranche B Term Loans of such
Lender by an amount equal to the portion of the Tranche B Prepayment Amount
indicated in such Lender's Prepayment Option Notice as being applicable to such
Lender's Tranche B Term Loans. On the Mandatory Prepayment Date, (i) the
Borrower shall pay to the Tranche B Lenders the aggregate amount necessary to
prepay that portion of the outstanding Tranche B Term Loans in respect of which
such Tranche B Lenders have accepted prepayment as described above and (ii) the
Borrower shall pay to the Tranche A Lenders an amount equal to the portion of
the Tranche B Prepayment Amount not accepted by the Tranche B Lenders, and such
amount shall be applied to the prepayment of the Tranche A Term Loans.
4.3. Conversion and Continuation Options.
-----------------------------------
(a) The Borrower may elect from time to time to convert Eurodollar
Loans to Base Rate Loans by giving the Administrative Agent at least two
Business Days' prior irrevocable notice of such election, provided that any such
--------
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto. The Borrower may elect
38
from time to time to convert Base Rate Loans to Eurodollar Loans by giving the
Administrative Agent at least three Business Days' prior irrevocable notice of
such election (which notice shall specify the length of the initial Interest
Period therefor), provided that no Base Rate Loan under a particular Facility
--------
may be converted into a Eurodollar Loan when any Event of Default has occurred
and is continuing and the Administrative Agent or the Majority Facility Lenders
in respect of such Facility have determined in its or their sole discretion not
to permit such conversions. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
--------
that no Eurodollar Loan under a particular Facility may be continued as such
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations, and
provided, further, that if the Borrower shall fail to give any required notice
- -------- -------
as described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso such Loans shall be automatically converted to
Base Rate Loans on the last day of such then expiring Interest Period. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
relevant Lender thereof.
4.4. Limitations on Eurodollar Tranches.
----------------------------------
Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions and continuations of Eurodollar Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be made
pursuant to such elections so that, (a) after giving effect thereto, the
aggregate principal amount of the Eurodollar Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess
thereof and (b) no more than seven Eurodollar Tranches shall be outstanding at
any one time.
4.5. Interest Rates and Payment Dates.
--------------------------------
(a) Each Eurodollar Loan shall bear interest for each day during each
Interest Period with respect thereto at a rate per annum equal to the Eurodollar
Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of Reimbursement Obligations, the rate
----
applicable to Base Rate Loans under the Revolving Facility plus 2%, and (ii) if
----
all or a portion of any interest payable on any Loan or Reimbursement Obligation
or any commitment fee or other
39
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear interest
at a rate per annum equal to the rate then applicable to Base Rate Loans under
the relevant Facility plus 2% (or, in the case of any such other amounts that do
----
not relate to a particular Facility, the rate then applicable to Base Rate Loans
under the Revolving Facility plus 2%), in each case, with respect to clauses (i)
----
and (ii) above, from the date of such non-payment until such amount is paid in
full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
4.6. Computation of Interest and Fees.
--------------------------------
(a) Interest and fees payable pursuant hereto shall be calculated on
the basis of a 360-day year for the actual days elapsed, except that, with
respect to Base Rate Loans the rate of interest on which is calculated on the
basis of the Prime Rate, the interest thereon shall be calculated on the basis
of a 365- (or 366-, as the case may be) day year for the actual days elapsed.
The Administrative Agent shall as soon as practicable notify the Borrower and
the relevant Lenders of each determination of a Eurodollar Rate. Any change in
the interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 4.5(a).
4.7. Inability to Determine Interest Rate.
------------------------------------
If prior to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar
40
Loans under the relevant Facility requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Loans under the
relevant Facility that were to have been converted on the first day of such
Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and
(z) any outstanding Eurodollar Loans under the relevant Facility shall be
converted, on the last day of the then-current Interest Period, to Base Rate
Loans. Until such notice has been withdrawn by the Administrative Agent or the
Majority Facility Lenders under the relevant Facility (which shall be given
promptly if the relevant circumstances cease to exist), as the case may be no
further Eurodollar Loans under the relevant Facility shall be made or continued
as such, nor shall the Borrower have the right to convert Loans under the
relevant Facility to Eurodollar Loans.
4.8. Pro Rata Treatment and Payments.
-------------------------------
(a) Each borrowing by the Borrower from the Lenders hereunder, each
payment by the Borrower on account of any commitment fee and any reduction of
the Commitments of the Lenders shall be made pro rata according to the
--- ----
respective Tranche A Term Percentages, Tranche B Term Percentages or Revolving
Percentages, as the case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made pro rata
--- ----
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Lenders (except as otherwise provided in Section 4.2(e)). The
amount of each principal prepayment of the Term Loans shall be applied to reduce
the then remaining installments of the Tranche A Term Loans and Tranche B Term
Loans, as the case may be, pro rata based upon the then remaining principal
--- ----
amount thereof. Amounts prepaid on account of the Term Loans may not be
reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made pro
---
rata according to the respective outstanding principal amounts of the Revolving
- ----
Loans then held by the Revolving Lenders.
(d) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 1:00 P.M., New
York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
41
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans under the relevant Facility, on demand, from the Borrower.
(f) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment due to be made by the
Borrower hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the Borrower is
making such payment, and the Administrative Agent may, but shall not be required
to, in reliance upon such assumption, make available to the Lenders their
respective pro rata shares of a corresponding amount. If such payment is not
--- ----
made to the Administrative Agent by the Borrower within three Business Days
after such due date, the Administrative Agent shall be entitled to recover, on
demand, from each Lender to which any amount which was made available pursuant
to the preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing herein
shall be deemed to limit the rights of the Administrative Agent or any Lender
against the Borrower.
4.9. Requirements of Law.
-------------------
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application
or any Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 4.10 and changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender that is not otherwise included in
the determination of the Eurodollar Rate hereunder; or
42
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender any
additional amounts reasonably determined by such Lender to be necessary to
compensate such Lender for such increased cost or reduced amount receivable
within ten Business Days of its receipt of a written notice, showing in
reasonable detail the basis for the calculation thereof, submitted to the
Borrower by such Lender with a copy to the Administrative Agent.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof and not included in the calculation
of the Eurodollar Rate shall have the effect of reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations
hereunder or under or in respect of any Letter of Credit to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then the Borrower shall pay such Lender any
additional amounts reasonably determined by such Lender in good faith to be
necessary to compensate such Lender or such corporation for such reduction
within ten Business Days of its receipt of a written notice as to the additional
amounts owed to such Lender, showing in reasonable detail the basis for the
calculation thereof, submitted to the Borrower by such Lender with a copy to the
Administrative Agent; provided that the Borrower shall not be required to
--------
compensate a Lender pursuant to this paragraph for any amounts incurred more
than six months prior to the date that such Lender notifies the Borrower of such
Lender's intention to claim compensation therefor; and provided further that, if
-------- -------
the circumstances giving rise to such claim have a retroactive effect, then such
six-month period shall be extended to include the period of such retroactive
effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) showing in reasonable detail the basis for the calculation
thereof shall be conclusive in the absence of manifest error. The obligations of
the Borrower pursuant to this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
4.10. Taxes.
-----
(a) All payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes, net profits taxes, and franchise taxes (imposed in lieu of net
income or net profits taxes) imposed on any Agent or any Lender as a
43
result of a present or former connection between such Agent or such Lender and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or Other Taxes are required to be withheld from any
------------------
amounts payable to any Agent or any Lender hereunder, the amounts so payable to
such Agent or such Lender shall be increased to the extent necessary to yield to
such Agent or such Lender (after payment of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement, provided, however, that the Borrower
-------- -------
shall not be required to increase any such amounts payable to any Lender with
respect to any Non-Excluded Taxes (i) that are attributable to such Lender's
failure to comply with the requirements of paragraph (d) or (e) of this Section
or (ii) that are United States withholding taxes imposed on amounts payable to
such Lender at the time such Lender becomes a party to this Agreement, except to
the extent that such Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
Non-Excluded Taxes pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Agent or Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes or Other Taxes (or if such receipt is not
obtainable, other evidence of such payment reasonably acceptable to such Lender)
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Agents and the Lenders for any
incremental taxes, interest or penalties that may become payable by any Agent or
any Lender as a result of any such failure.
(d) Each Lender (or Transferee) that is not a "U.S. Person" as defined
in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
---------------
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form W-8BEN (with respect to a
reduced rate of or complete exemption from tax under an income tax treaty) or
Form W-8-ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a statement substantially in the form of
Exhibit H and a Form W-8BEN (with respect to a the portfolio interest
exemption), or any subsequent versions thereof or successors thereto, properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or a reduced rate of, U.S. federal withholding tax on all payments by the
Borrower under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver (i) such forms promptly upon the obsolescence or invalidity
of any form previously delivered by such Non-U.S. Lender and (ii) at
44
the request of the Borrower, such other forms as may be required in order to
confirm or establish the entitlement of such Non-U.S. Lender to continued
exemption from or reduction in U.S. withholding tax with respect to payments
under this Agreement and the other Loan Documents. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or any
other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this paragraph, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this paragraph (d)
that such Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located or from which payments hereunder are made, or any treaty to which
such jurisdiction is a party, with respect to payments under this Agreement or
any other Loan Documents shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
--------
legally entitled to complete, execute and deliver such documentation and in such
Lender's judgment such completion, execution or submission would not materially
prejudice the legal position of such Lender.
(f) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(g) If a Lender (or the Administrative Agent on behalf of a Lender)
receives a refund in respect of, any Taxes or Other Taxes for which the Borrower
has paid additional amounts pursuant to this Section 4.10 which refund in the
sole good faith judgment of such Lender (or the Administrative Agent) is
allocable to such payment, such Lender shall within 30 days from the date of the
receipt of such refund pay to the Borrower an amount equal to such refund (net
of all out-of-pocket expenses of such Lender or the Administrative Agent);
provided, however, that the Borrower upon the request of such Lender or the
- -------- -------
Administrative Agent agrees to repay the amount paid over to the Borrower (and
any interest or penalties thereon) to such Lender or to the Administrative Agent
in the event such Lender or the Administrative Agent is required to repay such
refund. Nothing in this Section 4.10(g) shall require a Lender to disclose its
tax returns to the Borrower.
4.11. Indemnity.
---------
The Borrower agrees to indemnify each Lender and to hold each Lender
harmless from any loss or expense that such Lender may sustain or incur (but
excluding any loss of anticipated profits) as a consequence of (a) default by
the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Borrower in
making any prepayment of or conversion from Eurodollar Loans after the Borrower
has given a notice thereof in accordance with the provisions of this Agreement
or (c) the making of a prepayment of Eurodollar Loans on a day that is not the
last day of an Interest Period with respect thereto. Such indemnification may
include an amount equal to the excess, if any, of (i) the amount of interest
that would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to
45
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
----
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
4.12. Change of Lending Office.
------------------------
Each Lender agrees that, upon the occurrence of any event giving rise
to the operation of Section 4.9, 4.10(a) or 4.15 with respect to such Lender, it
will, if requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another lending office for
any Loans affected by such event with the object of avoiding the consequences of
such event; provided, that such designation is made on terms that, in the
--------
reasonable discretion of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
--------
further, that nothing in this Section shall affect or postpone any of the
- -------
obligations of the Borrower or the rights of any Lender pursuant to Section 4.9,
4.10(a) or 4.15
4.13. Replacement of Lenders.
----------------------
The Borrower shall be permitted to replace, with a replacement
financial institution, any Lender that (a) requests reimbursement for amounts
owing or relief pursuant to Section 4.9, 4.10(a) or 4.15, (b) defaults in its
obligation to make Loans hereunder or (c) is unable to make Eurodollar Loans as
a result of circumstances described in Section 4.15; provided that (i) such
--------
replacement does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement,
(iii) prior to any such replacement, such Lender shall have taken no action
under Section 4.12 so as to eliminate the continued need for payment of amounts
owing or relief pursuant to Section 4.9, 4.10(a) or 4.15, (iv) the replacement
financial institution shall purchase, at par, all Loans and other amounts owing
to such replaced Lender on or prior to the date of replacement, (v) the Borrower
shall be liable to such replaced Lender under Section 4.11 if any Eurodollar
Loan owing to such replaced Lender shall be purchased other than on the last day
of the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent, (vii) the replaced Lender shall be obligated to make such
replacement in accordance with the provisions of Section 11.6 (provided that the
Borrower shall be obligated to pay the registration and processing fee referred
to therein), (viii) until such time as such replacement shall be consummated,
the Borrower shall pay all additional amounts (if any) required pursuant to
Section 4.9, 4.10(a) or 4.15, as the case may be, and (ix) any such replacement
shall not be deemed to be a waiver of any rights that the Borrower, the
Administrative Agent or any other Lender shall have against the replaced Lender.
4.14. Evidence of Debt.
----------------
46
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 11.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type of such Loan and each
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) both the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 4.14(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Borrower therein recorded; provided, however, that the
-------- -------
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
the Borrower by such Lender in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing any Term Loans, Revolving Credit
Loans or Swingline Loans, as the case may be, of such Lender, substantially in
the forms of Exhibit I-1, I-2 or I-3, respectively, with appropriate insertions
as to date and principal amount.
4.15. Illegality.
----------
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
shall make it unlawful for any Lender to make or maintain Eurodollar Loans as
contemplated by this Agreement and for so long as such circumstances exist, (a)
the commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Base Rate Loans to Eurodollar Loans shall
forthwith be canceled and (b) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 4.11.
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, each of
Holdings and the Borrower hereby, jointly and severally, represents and warrants
to each Agent and each Lender that:
5.1. Financial Condition.
-------------------
47
(a) The unaudited pro forma consolidated balance sheet of Holdings
--- -----
and its consolidated Subsidiaries as at or about September 30, 2001 (including
the notes thereto) (the "Pro Forma Balance Sheet") and the unaudited pro forma
----------------------- --- -----
consolidated statements of income of Holdings and its consolidated Subsidiaries
for the twelve month period ended on or about December 31, 2000 and the
quarterly periods ended on or about March 31, 2001, June 30, 2001 and September
30, 2001 (the "Pro Forma Income Statements"), copies of which have heretofore
---------------------------
been furnished to each Lender, have been prepared giving effect (as if such
events had occurred on September 30, 2001 or on the first day of the relevant
period, as the case may be) to (i) the consummation of Transactions, (ii) the
Loans to be made and the Seller Senior Subordinated Note to be issued on the
Closing Date and the use of proceeds thereof and (iii) the payment of fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet and the
Pro Forma Income Statements have been prepared based on the best information
available to Holdings as of the date of delivery thereof, and present fairly on
a pro forma basis the estimated financial position of Holdings and its
--- -----
consolidated Subsidiaries as at September 30, 2001 and the estimated
consolidated results of operations of Holdings and its consolidated Subsidiaries
for each period covered by the Pro Forma Income Statements, assuming that the
events specified in the preceding sentence had actually occurred, in the case of
the Pro Forma Balance Sheet, on September 30, 2001 and, in the case of each Pro
Forma Income Statement, on the first day of the relevant period covered thereby,
in accordance with Regulation S-X of the Securities Act of 1933, as amended,
except as otherwise approved by the Syndication Agent.
(b) The audited consolidated balance sheets of AWDGP as at or about
December 31, 1999 and December 31, 2000, and the related consolidated statements
of income and of cash flows for the fiscal years ended on such dates, reported
on by and accompanied by an unqualified report from PriceWaterhouse Coopers LLC
present fairly in all material respects the consolidated financial condition of
AWDGP as at such date, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of AWDGP as at or about March 31, 2001,
June 30, 2001 and September 30, 2001, and the related unaudited consolidated
statements of income and cash flows for the quarterly period ended on such
dates, present fairly in all material respects the consolidated financial
condition of AWDGP as at such dates, and the consolidated results of its
operations and its consolidated cash flows for the quarterly periods then ended
(subject to normal year-end audit adjustments and the absence of footnotes). All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein). Except as disclosed on Schedule 5.1, neither AWDGP, any
of its Subsidiaries or any Group Member has any material Guarantee Obligations,
contingent liabilities and liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph. During the period from the date of the most
recent audited consolidated balance sheet delivered pursuant to this clause (b)
to and including the date hereof, there has been no Disposition by AWDGP of any
material part of its business or property (other than the Disposition of the
Borrower's Harrisburg, Pennsylvania facility described in the Acquisition
Documentation and the Excluded Assets).
5.2. No Change.
---------
48
Since December 30, 2000, there has been no development or event
that has had or could reasonably be expected to have a Material Adverse Effect.
5.3. Corporate Existence; Compliance with Law.
----------------------------------------
Each Group Member (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, (b) has
the power and authority, and the legal right, to own and operate its property,
to lease the property it operates as lessee and to conduct the business in which
it is currently engaged, (c) is duly qualified as a foreign entity and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect, and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
5.4. Power; Authorization; Enforceable Obligations.
---------------------------------------------
Each Loan Party has the power and authority, and the legal
right, to make, deliver and perform the Loan Documents to which it is a party
and, in the case of the Borrower, to obtain extensions of credit hereunder. Each
Loan Party has taken all necessary organizational action to authorize the
execution, delivery and performance of the Loan Documents to which it is a party
and, in the case of the Borrower, to authorize the extensions of credit on the
terms and conditions of this Agreement. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the Transactions and the
extensions of credit hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement or any of the Loan Documents,
except (i) consents, authorizations, filings and notices, which have been
obtained or made and are in full force and effect and (ii) the filings referred
to in Section 5.19. Each Loan Document has been duly executed and delivered on
behalf of each Loan Party party thereto. This Agreement constitutes, and each
other Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
5.5. No Legal Bar.
------------
The execution, delivery and performance of this Agreement and
the other Loan Documents, the issuance of Letters of Credit, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or any Contractual Obligation of Holdings, the Borrower or any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents). No Requirement of Law or Contractual
Obligation applicable to the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
49
5.6. Litigation.
----------
No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of Holdings
or the Borrower, threatened by or against Holdings, the Borrower or any of its
Subsidiaries or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or Transactions, or (b) that could
reasonably be expected to have a Material Adverse Effect.
5.7. No Default.
----------
Neither Holdings, the Borrower nor any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
5.8. Ownership of Property; Liens.
----------------------------
Each of Holdings, the Borrower and its Subsidiaries has title
in fee simple to, or a valid leasehold interest in, all its real property, and
good title to, or a valid leasehold interest in, all its other property, and
none of such property is subject to any Lien except as permitted by Section 8.3.
5.9. Intellectual Property.
---------------------
Holdings, the Borrower and each of its Subsidiaries owns, or
is licensed to use, all Intellectual Property necessary for the conduct of its
business as currently conducted, except where the failure to own or license such
Intellectual Property could not reasonably be expected to have a Material
Adverse Effect. No material claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property or the validity
or effectiveness of any Intellectual Property, nor does Holdings or the Borrower
know of any valid basis for any such claim. To the best of Holdings', the
Borrower's and the Subsidiaries' knowledge, the use of Intellectual Property by
Holdings, the Borrower and its Subsidiaries does not infringe on the rights of
any Person in any material respect.
5.10. Taxes.
-----
Each of Holdings, the Borrower and each of its Subsidiaries
has filed or caused to be filed all Federal, state and other material tax
returns that are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other material taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any the amount or
validity of that are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of Holdings, the Borrower or its Subsidiaries, as the case
may be); no tax Lien has been filed, and, to the knowledge of Holdings and the
Borrower, no claim has been asserted, with respect to any such tax, fee or other
charge, which claim, if determined adversely to Holdings, the Borrower or any of
its Subsidiaries could reasonably be expected to have a Material Adverse Effect.
5.11. Federal Regulations.
-------------------
50
No part of the proceeds of any Loans, and no other extensions
of credit hereunder, will be used for "buying" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation U as
now and from time to time hereafter in effect or for any purpose that violates
the provisions of the Regulations of the Board. If requested by any Lender or
the Administrative Agent, the Borrower will furnish to the Administrative Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.
5.12. Labor Matters.
-------------
Except as, in the aggregate, could not reasonably be expected
to have a Material Adverse Effect: (a) there are no strikes or other labor
disputes against any Group Member pending or, to the knowledge of Holdings or
the Borrower, threatened; (b) hours worked by and payment made to employees of
each Group Member have not been in violation of the Fair Labor Standards Act or
any other applicable Requirement of Law dealing with such matters; and (c) all
payments due from any Group Member on account of employee health and welfare
insurance have been paid or accrued as a liability on the books of the relevant
Group Member.
5.13. ERISA.
-----
(a) Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a liability under
ERISA which could reasonably be expected to have a Material Adverse Effect, and
neither the Borrower nor any Commonly Controlled Entity would become subject to
any liability under ERISA which could reasonably be expected to have a Material
Adverse Effect if the Borrower or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made.
No such Multiemployer Plan is in Reorganization or Insolvent.
(b) Favorable determination letters have been received from
the Internal Revenue Service with respect to each Plan (other than the ESOP)
which is intended to comply with the provisions of Section 401(a) of the Code
and, to Holdings and the Borrower's knowledge, each Plan (including, without
limitation, the ESOP) complies in form and in operation with the requirements of
Section 401(a) of the Code, the relevant provisions of ERISA, and any other
applicable laws, rules, and regulations required as of the date of this
Agreement.
(c) To Holdings and the Borrower's knowledge, neither
Holdings nor the Borrower nor any ERISA Affiliate of Holdings or the Borrower,
nor any trustee, administrator,
51
or fiduciary of any of the Plans, has (i) engaged in a "prohibited transaction,"
as that term is defined in Section 4975 of the Code or Section 406 of ERISA,
which could directly or indirectly subject the applicable Plan or trust or
Holdings, the Borrower or an ERISA Affiliate of Holdings and the Borrower to any
liability for a tax or penalty imposed by Section 4975 of the Code or Section
502(i) of ERISA, or (ii) committed a breach of its fiduciary duties (as defined
in Section 404 of ERISA) which could directly or indirectly subject the
applicable Plan or trust or Holdings, the Borrower, or an ERISA Affiliate of
Holdings or the Borrower to any liability under Section 502 of ERISA.
(d) The valuation of the Capital Stock being acquired by the
ESOP Trust has been performed by a qualified independent appraiser within the
meaning of Section 401(a)(28)(C) of the Code.
(e) The purchase of the Capital Stock by the ESOP Trust from
Holdings, the execution and performance of this Agreement, the Loan Documents,
the Acquisition Agreement, and the ESOP Documentation, and the consummation of
the transactions contemplated by this Agreement and by the Loan Documents, the
Acquisition Agreement, and the ESOP Documentation will not (i) involve a
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
for which there is no exemption under Section 408 of ERISA or Section 4975 of
the Code, respectively; (ii) be a violation of the fiduciary responsibility
standards imposed by Section 404 of ERISA; or (iii) adversely affect the
qualified status of the ESOP under Sections 401(a) or 4975(e)(7) of the Code.
(f) (i) The ESOP Component is an "employee stock ownership
plan" within the meaning of Section 4975(e)(7) of the Code and the ESOP is
qualified under Section 401(a) of the Code; (ii) the ESOP has been duly
established in accordance with and under applicable law and the ESOP's trusts
are tax-exempt trusts under Section 501(a) of the Code; (iii) the terms of the
Acquisition Agreement, and the ESOP Documentation comply with the applicable
provisions of Title I of ERISA; (iv) the shares of Capital Stock acquired by the
ESOP Trust are "employer securities," within the meaning of Section 409(l) of
the Code; (v) the purchase price paid by the ESOP Trust to Holdings for the
Capital Stock under the Acquisition Agreement will not exceed "adequate
consideration," as defined in Section 3(18) of ERISA; and (vi) all of the
information provided by, or on behalf of, Holdings and the Borrower to the
independent appraiser for the ESOP Trust, in connection with the transactions
contemplated by the Acquisition Agreement and the ESOP Documentation, will be
true and accurate in all material respects and there will be no failure by, or
on behalf of, the Borrower to disclose any material information to the
independent appraiser for the ESOP Trust.
(g) The Prospectus for participants in the ESOP and the
Appleton Papers Inc. Retirement Medical Savings Plan (the "401(a) Plan") dated
July 23, 2001 and supplemented on August 14, 2001 (as so supplemented, the
"Prospectus"), was distributed by Borrower to all participants in the ESOP and
----------
the 401(a) Plan who were active participants as of July 23, 2001 (the
"Participants"). The Prospectus contains a true and complete description of all
of the material terms and conditions under which the Participants were provided
an opportunity to direct the transfer to the ESOP Component of portions of their
accounts balances under the ESOP and 401(a) Plan. The Prospectus also provides a
full and accurate description of all material information relating to the
operations of Borrower, the terms of the Acquisition Agreement, and the risks
associated with an investment in Borrower's stock. The Prospectus did
52
not when issued on July 23, 2001 and when supplemented on August 14, 2001 (and,
as of the Closing Date, does not) contain any untrue statement of material fact
and did not when issued on July 23, 2001 and when supplemented on August 14,
2001 (and, as of the Closing Date, does not), omit any material facts necessary
to make the statements contained in the Prospectus not misleading. The offer
made by Borrower to the Participants to transfer portions of their non-ESOP
Component accounts under the ESOP and 401(a) Plan account balances to the ESOP
Component was carried out in full compliance with all applicable federal and
state securities laws. The transfers of portions of the account balances of the
Participants from the ESOP and 401(a) Plan to the ESOP Component will be
completed in the manner set forth in the Prospectus and in compliance with all
applicable laws.
5.14. Investment Company Act; Other Regulations.
-----------------------------------------
No Loan Party is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended. No Loan Party is subject to regulation under
any Requirement of Law (other than Regulation X of the Board) that limits its
ability to incur Indebtedness.
5.15. Subsidiaries.
------------
Except as disclosed to the Administrative Agent by Holdings or
the Borrower in writing from time to time after the Closing Date, (a) Schedule
5.15 sets forth the name and jurisdiction of incorporation of each Subsidiary of
Holdings and, as to each such Subsidiary, the percentage of each class of
Capital Stock owned by any Loan Party and (b) except as set forth in the ESOP
Documentation, there are no outstanding subscriptions, options, warrants, calls,
rights or other agreements or commitments (other than stock options granted to
employees or directors and directors' qualifying shares) of any nature relating
to any Capital Stock of Holdings, the Borrower or any of their Subsidiaries,
except as created by the Loan Documents.
5.16. Use of Proceeds.
---------------
The proceeds of the Term Loans shall, and up to $5,000,00 of
proceeds of the Revolving Loans may, be used to finance a portion of the
Acquisition and to pay related fees and expenses. Following the Closing Date,
the proceeds of the Revolving Loans and the Swingline Loans may be used,
together with the proceeds of the Letters of Credit, for general corporate
purposes of the Borrower and its Subsidiaries.
5.17. Environmental Matters.
---------------------
Except as, in the aggregate (excluding matters set forth on
Schedule 5.17), could not reasonably be expected to have a Material Adverse
Effect:
(a) the facilities and properties owned, leased or operated
by any Group Member (the "Properties") do not contain, and have not previously
----------
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances that constitute or constituted a violation of, or could
give rise to liability under, any Environmental Law;
(b) no Group Member has received or is aware of any notice
of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or
53
compliance with Environmental Laws with regard to any of the Properties or the
business operated by any Group Member (the "Business"), nor does Holdings or the
--------
Borrower have knowledge or reason to believe that any such notice will be
received or is being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
that could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative action is
pending or, to the knowledge of Holdings and the Borrower, threatened, under any
Environmental Law to which any Group Member is or will be named as a party with
respect to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of any Group Member in connection with the Properties or
otherwise in connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws;
(f) the Properties and all operations at the Properties are in compliance,
and have in the last five years been in compliance, with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the Business; and
(g) no Group Member has assumed any liability of any other Person under
Environmental Laws.
5.18. Accuracy of Information, etc.
-----------------------------
No statement or information, other than the projections and pro forma
financial information, contained in this Agreement, any other Loan Document, the
Confidential Information Memorandum or any other document, certificate or
statement furnished by or on behalf of any Loan Party to the Administrative
Agent or the Lenders, or any of them, for use in connection with the
Transactions or the other transactions contemplated by this Agreement or the
other Loan Documents, contained as of the date such statement, information,
document or certificate was so furnished (or, in the case of the Confidential
Information Memorandum, as of the date of this Agreement), any untrue statement
of a material fact, or omitted to state a material fact necessary to make the
statements contained herein or therein, taken as a whole, not misleading. The
projections and pro forma financial information contained in the materials
--- -----
referenced above are based upon good faith estimates and assumptions believed by
management of the Borrower to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount. As of the date hereof,
the
54
representations and warranties of Holdings and its Subsidiaries contained in the
Acquisition Documentation are true and correct in all material respects. As of
the date hereof, there is no fact known to any Loan Party that could reasonably
be expected to have a Material Adverse Effect that has not been expressly
disclosed herein, in the other Loan Documents, in the Confidential Information
Memorandum or in any other documents, certificates and statements furnished to
the Administrative Agent and the Lenders for use in connection with the
Transactions or the other transactions contemplated hereby and by the other Loan
Documents.
5.19. Security Documents.
------------------
(a) The Guarantee and Collateral Agreement is effective to create in
favor of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable security interest in the Collateral described therein and
proceeds thereof. In the case of the Pledged Stock described in the Guarantee
and Collateral Agreement, when stock certificates and related stock powers
representing such Pledged Stock are delivered to the Administrative Agent (and
so long as the Administrative Agent retains possession of such certificates and
stock powers in the State of New York), and in the case of the other Collateral
described in the Guarantee and Collateral Agreement, when financing statements
and other filings specified on Schedule 3(a) to the Guarantee and Collateral
Agreement in appropriate form are filed in the offices specified on Schedule
3(a) to the Guarantee and Collateral Agreement, to the extent that a security
interest therein can be perfected by the filing of a financing statement or by
the other filings described in Schedule 3(a) to the Guarantee and Collateral
Agreement, the Guarantee and Collateral Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement), in each
case prior and superior in right to any other Person (except, in the case of
Collateral other than Pledged Stock, Liens permitted by Section 8.3).
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
3(b) to the Guarantee and Collateral Agreement, each such Mortgage shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in the Mortgaged Properties and the proceeds
thereof, as security for the Obligations (as defined in the relevant Mortgage),
in each case prior and superior in right to any other Person (except as
reflected in the exceptions to the title policies delivered pursuant to Section
6.1(n) or Section 7.10(b)). Schedule 1.1B lists each parcel of real property in
the United States owned in fee simple by Holdings or any of its Subsidiaries as
of the Closing Date.
5.20. Solvency.
--------
Each Loan Party is, and after giving effect to the Acquisition and the
incurrence of all Indebtedness and obligations being incurred in connection
herewith and therewith will be and will continue to be, Solvent.
5.21. Senior Indebtedness
-------------------
55
The Obligations constitute "Senior Debt" and "Designated Senior Debt" (or
any other defined term having a similar purpose) of the Borrower under the
Seller Senior Subordinated Note and, at any time after the Senior Subordinated
Note Indenture is in effect, under the Senior Subordinated Note Indenture. At
any time after the Senior Subordinated Note Indenture is in effect, the
obligations of each Subsidiary Guarantor under the Guarantee and Collateral
Agreement will constitute "Guarantor Senior Debt" (or any other defined term
having a similar purpose) of such Subsidiary Guarantor under the Senior
Subordinated Note Indenture. There is no other Indebtedness (other than the
Obligations) which has been designated as "Designated Senior Debt" (or any other
defined term having a similar purpose) for the purposes of the Seller Senior
Subordinated Note Indenture and, at any time after the Senior Subordinated Note
Indenture is in effect, for the purposes of the Senior Subordinated Note
Indenture.
5.22. Regulation H.
------------
No Mortgage encumbers improved real property that is located in an area
that has been identified by the Secretary of Housing and Urban Development as an
area having special flood hazards and in which flood insurance has been made
available, and has not been obtained, under the National Flood Insurance Act of
1968.
5.23. Certain Documents.
-----------------
(a) (a) On or prior to the Closing Date, the Borrower has delivered to the
Syndication Agent a complete and correct copy of the Acquisition Documentation,
the Seller Senior Subordinated Note, and the ESOP Offering Documentation,
including any amendments, supplements or modifications with respect to any of
the foregoing.
(b) To the best of Holdings' and the Borrower's, knowledge, all of the
representations and warranties of the Sellers contained in the Acquisition
Agreement are true and correct.
5.24. S Corporation Status.
--------------------
(a) (a) Holdings has qualified and elected to be treated as an "S
Corporation" under Subchapter S of the Code, and as of the Closing Date has
filed all forms and taken all other actions necessary to qualify and elect that
each Domestic Subsidiary of Holdings (other than any such Subsidiary that is an
"Ineligible Corporation" under Section 1361(b)(2) of the Code) be treated as a
"qualified subchapter S subsidiary", in each case for U.S. federal income tax
purposes and in accordance with all applicable Requirements of Law.
(b) No Governmental Authority has disputed Holdings' qualification as an "S
Corporation" under Subchapter S of the Code, or the qualification of each
Domestic Subsidiary (b) of Holdings (other than any such Subsidiary that is an
"Ineligible Corporation" under Section 1361(b)(2) of the Code) as a "qualified
subchapter S subsidiary", in each case for U.S. federal income tax purposes.
SECTION 6. CONDITIONS PRECEDENT
6.1. Conditions to Initial Extension of Credit.
-----------------------------------------
56
The agreement of each Lender to make the initial extension of credit
requested to be made by it is subject to the satisfaction, prior to or
concurrently with the making of such extension of credit on the Closing Date
(but in any event no later than November 21, 2001), of the following conditions
precedent:
(a) Credit Agreement; Guarantee and Collateral Agreement. The Syndication
----------------------------------------------------
Agent shall have received (i) this Agreement, or, in the case of the Lenders, an
Addendum, executed and delivered by each Agent, Holdings, the Borrower and each
Person listed on Schedule 1.1A, (ii) the Guarantee and Collateral Agreement,
executed and delivered by Holdings, the Borrower and each Subsidiary Guarantor,
(iii) the Subordination Agreement, executed and delivered by the Administrative
Agent, AWA and Holdings and (iv) an Acknowledgment and Consent in the form
attached to the Guarantee and Collateral Agreement, executed and delivered by
each Issuer (as defined therein), if any, that is not a Loan Party.
In the event that any one or more Persons listed on Schedule 1.1A have not
executed and delivered an Addendum on the date scheduled to be the Closing Date
(each such Person being referred to herein as a "Non-Executing Person"), the
--------------------
condition referred to in clause (i) above shall nevertheless be deemed satisfied
if on such date the Borrower and the Syndication Agent shall have designated one
or more Persons (the "Designated Lenders") to assume, in the aggregate, all of
------------------
the Commitments that would have been held by the Non-Executing Persons (subject
to each such Designated Lender's consent and its execution and delivery of an
Addendum). Schedule 1.1A shall automatically be deemed to be amended to reflect
the respective Commitments of the Designated Lenders and the omission of the
Non-Executing Persons as Lenders hereunder.
(b) Transactions. The following transactions shall have been consummated:
------------
(i) The Acquisition shall have been consummated, in all material
respects in accordance with the terms of the Acquisition Documentation and
all Requirements of Law for aggregate consideration not exceeding
$810,000,000 (as adjusted pursuant to the Acquisition Agreement), and no
material provision of the Acquisition Documentation shall have been
amended, waived or otherwise modified without the prior written consent of
the Syndication Agent.
(ii) The Excluded Assets shall have been transferred to, or retained
by, the Sellers in accordance with the Acquisition Documentation and all
Requirements of Law.
(iii) The Fox River Indemnity Arrangements shall have been executed
and delivered by the parties thereto in accordance with the terms of the
Acquisition Documentation and the Syndication Agent shall have received a
letter from the Insurer that all conditions to the effectiveness of the AIG
Credit Support (including the payment of the premium in respect thereof)
shall have been satisfied.
(iv) The employees of the Borrower shall have elected to transfer at
least $105,000,000 to the ESOP Component pursuant to the ESOP Documentation
and all Requirements of Law and no material provision of the ESOP
57
Documentation shall have been amended, waived or otherwise modified
without the prior written consent of the Syndication Agent, and the
ESOP shall have contributed the proceeds of the ESOP Offering to
Holdings and the ESOP Trust shall be the owner of 100% of the common
stock of Holdings.
(v) Holdings shall have entered into the Deferred Payment
Obligation in accordance with the Acquisition Documentation.
(vi) The Borrower shall have issued the Seller Senior
Subordinated Note in accordance therewith.
(vii) The Syndication Agent shall have received satisfactory
evidence that the fees and expenses to be incurred in connection with
the Acquisition and the financing thereof shall not exceed
$35,000,000.
(viii) (A) The Syndication Agent shall have received satisfactory
evidence that all existing Indebtedness of AWDGP and its Subsidiaries
other than the Permitted Existing Debt shall have been terminated and
all amounts thereunder shall have been paid in full and (B)
satisfactory arrangements shall have been made for the termination of
all Liens granted in connection therewith.
(c) Pro Forma Balance Sheet and Income Statements; Financial
--------------------------------------------------------
Statements. The Lenders shall have received and the Syndication Agent shall be
- ----------
satisfied with each of the financial statements described in Section 5.1.
(d) Financial Condition. (i) Consolidated EBITDA for the twelve month
-------------------
period ended on or about September 30, 2001, as determined on a pro forma basis
from the Pro Forma Income Statements shall be at least $195,000,000, (ii) the
Consolidated Senior Debt Ratio and the Consolidated Leverage Ratio, in each case
as determined from the Pro Forma Balance Sheet and the Pro Forma Income
Statement for the period ended on or about September 30, 2001, shall not exceed
1.40 and 2.70, respectively and (iii) the Syndication Agent shall have received
and shall be satisfied with a certificate of the chief financial officer of
Holdings which (A) shall document that Holdings and its Subsidiaries, after
giving effect to the Transactions and the other transactions contemplated
hereby, are Solvent and (B) shall set forth Consolidated EBITDA for the monthly
period ending October 31, 2001 (calculated in a manner consistent with the Pro
Forma Income Statements), together with a comparison to the same period for the
prior fiscal year, which shall be at least $17,400,000.
(e) Approvals. All governmental and third party approvals (including
---------
landlords' and other consents) necessary or, in the reasonable discretion of the
Syndication Agent, advisable in connection with the Transactions, the continuing
operations of the Group Members and the transactions contemplated hereby shall
have been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Acquisition or the financing contemplated hereby.
(f) Lien Searches. The Syndication Agent shall have received the
-------------
results of a recent lien search in each of the jurisdictions where assets of the
Loan Parties are located, and
58
such search shall reveal no liens on any of the assets of the Loan Parties
except for liens permitted by Section 8.3 or discharged on or prior to the
Closing Date pursuant to documentation satisfactory to the Syndication Agent.
(g) Environmental Audit. The Syndication Agent and each of the Lenders
-------------------
shall have received and the Syndication Agent shall be satisfied with (i) Phase
One environmental audits from a firm satisfactory to the Syndication Agent with
respect to the real property of the Borrower located in Appleton, Wisconsin,
Roaring Spring, Pennsylvania, West Carrollton, Ohio and Portage, Wisconsin, (ii)
Phase Two environmental audits from a firm satisfactory to the Syndication Agent
with respect to the real property of the Borrower located in West Carrollton,
Ohio and Portage, Wisconsin, as agreed by the Borrower and the Syndication Agent
and (iii) a report from an environmental consulting firm with respect to the Fox
River liabilities confirming, in all material respects, the information
previously provided to the Syndication Agent by (or on behalf of) the Sellers or
the Borrower.
(h) Appraisal. The Syndication Agent and each of the Lenders shall
---------
have received and the Syndication Agent shall be satisfied with an appraisal of
the tangible and intangible property of the Borrower and its Subsidiaries from
American Appraisal Associates.
(i) Fees. The Lenders and the Agents shall have received all fees
----
required to be paid, and all expenses for which invoices have been presented
(including the reasonable fees and expenses of legal counsel), on or before the
Closing Date. All such amounts will be paid with proceeds of Loans made on the
Closing Date and will be reflected in the funding instructions given by the
Borrower to the Syndication Agent on or before the Closing Date.
(j) Closing Certificate. The Syndication Agent shall have received a
-------------------
certificate of each Loan Party, dated the Closing Date, substantially in the
form of Exhibit C, with appropriate insertions and attachments.
(k) Legal Opinions. The Syndication Agent shall have received the
--------------
following executed legal opinions:
(i) the legal opinion of White & Case LLP, New York
counsel to Holdings and its Subsidiaries, substantially in the form of
Exhibit F-1;
(ii) the legal opinion of Godfrey & Kahn, S.C., Wisconsin
counsel to Holdings and its Subsidiaries, substantially in the form of
Exhibit F-2;
(iii) the legal opinion of Paul Karch, Esq., general counsel
of Holdings and its Subsidiaries, substantially in the form of Exhibit
F-3;
(iv) the legal opinion of McDermott, Will and Emery,
counsel to Sellers, substantially in the form of Exhibit F-4;
(v) the legal opinion of McDermott, Will and Emery, United
Kingdom counsel to the Sellers, substantially in the form of Exhibit
F-5;
(vi) the legal opinion of special Bermuda counsel,
substantially in the form of Exhibit F-6;
59
(vii) the legal opinion of in-house counsel to the Insurer,
substantially in the form of Exhibit F-7;
(viii) the legal opinion of Deloitte & Touche LLP, special
tax counsel to Holdings and its Subsidiaries, substantially in the
form of Exhibit F-8;
(ix) the legal opinion special ERISA counsel,
substantially in the form of Exhibit F-9;
(x) to the extent consented to by the relevant counsel,
each legal opinion, if any, delivered in connection with the
Acquisition Agreement, accompanied by a reliance letter in favor of
the Lenders; and
(xi) the legal opinion of local counsel in each of
Pennsylvania and Ohio and of such other special and local counsel as
may be required by the Syndication Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Syndication Agent may
reasonably require.
(l) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
------------------------------------------
Agent shall have received (i) the certificates, if any, representing the shares
of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement (in
each case to the extent certificated), together with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the
pledgor thereof and (ii) each promissory note (if any) pledged to the
Administrative Agent pursuant to the Guarantee and Collateral Agreement endorsed
(without recourse) in blank (or accompanied by an executed transfer form in
blank) by the pledgor thereof.
(m) Filings, Registrations and Recordings. Each document (including
-------------------------------------
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Syndication Agent or the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Lenders, a perfected
Lien on the Collateral described therein, prior and superior in right to any
other Person (other than with respect to Liens expressly permitted by Section
8.3), shall be in proper form for filing, registration or recordation.
(n) Mortgages, etc. (i) The Syndication Agent shall have received a
--------------
Mortgage with respect to each Mortgaged Property, executed and delivered by a
duly authorized officer of each party thereto.
(ii) If requested by the Syndication Agent, the
Syndication Agent shall have received, and the title insurance company
issuing the policy referred to in clause (iii) below (the "Title
-----
Insurance Company") shall have received, maps or plats of an as-built
-----------------
survey of the sites of the Mortgaged Properties certified to the
Administrative Agent and the Title Insurance Company in a manner
satisfactory to them, dated a date reasonably satisfactory to the
Syndication Agent and the Title Insurance Company by an independent
professional licensed land surveyor
60
reasonably satisfactory to the Syndication Agent and the Title
Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of
the foregoing, there shall be surveyed and shown on such maps, plats
or surveys the following: (A) the locations on such sites of all the
buildings, structures and other improvements and the established
building setback lines; (B) the lines of streets abutting the sites
and width thereof; (C) all access and other easements appurtenant to
the sites; (D) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building structures and
improvements on the sites; (F) if the site is described as being on a
filed map, a legend relating the survey to said map; and (G) the flood
zone designations, if any, in which the Mortgaged Properties are
located.
(iii) The Syndication Agent shall have received in respect
of each Mortgaged Property a mortgagee's title insurance policy (or
policies) or marked up unconditional binder for such insurance. Each
such policy shall (A) be in an amount satisfactory to the
Administrative Agent; (B) be issued at ordinary rates; (C) insure that
the Mortgage insured thereby creates a valid first Lien on such
Mortgaged Property free and clear of all defects and encumbrances,
except as disclosed therein; (D) name the Administrative Agent for the
benefit of the Lenders as the insured thereunder; (E) be in the form
of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or
equivalent policies); (F) contain such endorsements and affirmative
coverage as the Syndication Agent may reasonably request and (G) be
issued by First American Title Insurance Company. The Syndication
Agent shall have received evidence satisfactory to it that all
premiums in respect of each such policy, all charges for mortgage
recording tax, and all related expenses, if any, have been paid.
(iv) If requested by the Syndication Agent, the Syndication
Agent shall have received (A) a policy of flood insurance that (1)
covers any parcel of improved real property that is encumbered by any
Mortgage (2) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage that is
reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of
property under the National Flood Insurance Act of 1968, whichever is
less, and (3) has a term ending not later than the maturity of the
Indebtedness secured by such Mortgage and (B) confirmation that the
Borrower has received the notice required pursuant to Section
208(e)(3) of Regulation H of the Board.
(v) The Syndication Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in,
the title policy or policies referred to in clause (iii) above and a
copy of all other material documents affecting the Mortgaged
Properties.
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(o) Insurance. The Syndication Agent shall have received insurance
---------
certificates satisfying the requirements of Section 5.2(b) of the Guarantee and
Collateral Agreement.
(p) S Corporation Status. Holdings shall have qualified and elected to
--------------------
be treated as an "S Corporation" under Subchapter S of the Code, and shall have
filed all forms and taken all other actions necessary to qualify and elect that
each Domestic Subsidiary of Holdings (other than any such Subsidiary that is an
"Ineligible Corporation" under Section 1361(b)(2) of the Code) be treated as a
"qualified subchapter S subsidiary", for U.S. federal income tax purposes, in
each case in accordance with all applicable Requirements of Law.
(q) Corporate Governance. The Syndication Agent shall be satisfied
--------------------
with the corporate governance arrangements relating to Holdings and the Borrower
(which arrangements shall provide, among other things, that the board of
directors of each of Holdings and the Borrower shall include at least two
independent directors).
(r) Valuation Opinion. The Syndication Agent shall have received the
-----------------
valuation opinion of Willamette Management Associates in form and substance
acceptable to the Syndication Agent which shall include an opinion that the
transaction as contemplated by the ESOP Documentation is fair to the ESOP
participants and that the ESOP Trust is not paying more for the stock purchased
than adequate consideration as defined in Section 3(18) of ERISA.
(s) Trustee Certificate. The Syndication Agent shall have received
-------------------
from the trustee of the ESOP Component a Trustee Certificate reasonably
acceptable to the Syndication Agent.
6.2. Conditions to Each Extension of Credit.
--------------------------------------
The agreement of each Lender to make any extension of credit requested
to be made by it on any date (including its initial extension of credit) is
subject to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents shall be
true and correct on and as of such date as if made on and as of such date,
except to the extent a representation or warranty is made only as of a specified
date in which case such representation or warranty shall be true as of such
specified date.
(b) No Default. No Default or Event of Default shall have occurred and
----------
be continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 6.2 have been satisfied.
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SECTION 7. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or Agent
hereunder, each of Holdings and the Borrower shall and shall cause each of its
Subsidiaries to:
7.1. Financial Statements.
--------------------
Furnish to the Administrative Agent and each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of Holdings, a copy of the audited consolidated balance
sheet of Holdings and its consolidated Subsidiaries as at the end of such year
and the related audited consolidated statements of income and of cash flows for
such year, setting forth in each case in comparative form the figures for the
previous year, reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
PriceWaterhouse Coopers LLC or other independent certified public accountants of
nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of Holdings, the unaudited consolidated balance sheet of Holdings and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments).
(c) so long as the Consolidated Leverage Ratio as at the last day of
the most recently ended fiscal quarter of Holdings is greater than 2.50 to 1.00,
within 30 days after the end of each calendar month, financial data for such
month summarizing the results of operations of Holdings and its Subsidiaries for
such month (including, without limitation, volume data, revenues, gross profits,
operating income and Consolidated EBITDA) in form and substance reasonably
acceptable to the Syndication Agent
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail, and the financial statement
under paragraph (a) and (b) above shall be prepared in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except for the absence of footnotes in the quarterly statements and as
approved by such accountants or officer, as the case may be, and disclosed
therein).
7.2. Certificates; Other Information.
-------------------------------
Furnish to the Administrative Agent and each Lender (or, in the case
of clause (g), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 7.1(a), a certificate of the independent certified public
accountants reporting on such
63
financial statements stating that in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default with
respect to the financial covenants set forth in Section 8.1, except as specified
in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 7.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, each Loan Party
during such period has observed or performed all of its covenants and other
agreements contained in this Agreement and the other Loan Documents to which it
is a party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of quarterly or
annual financial statements, (x) a Compliance Certificate containing all
information and calculations necessary for determining compliance with the
provisions of this Agreement referred to therein as of the last day of the
fiscal quarter or fiscal year of Holdings, as the case may be, and, if
applicable, for determining the Applicable Margins, and (y) to the extent not
previously disclosed to the Administrative Agent, a listing of any Intellectual
Property acquired by any Loan Party since the date of the most recent list
delivered pursuant to this clause (y) (or, in the case of the first such list so
delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 60 days after
the end of each fiscal year of Holdings, a detailed consolidated budget for the
following fiscal year (including a projected consolidated balance sheet of
Holdings and its Subsidiaries as of the end of the following fiscal year, the
related consolidated statements of projected cash flow, projected changes in
financial position and projected income and a description of the underlying
assumptions applicable thereto), and, as soon as available, significant
revisions, if any, of such budget and projections with respect to such fiscal
year (collectively, the "Projections"), which Projections shall in each case be
-----------
accompanied by a certificate of a Responsible Officer stating that such
Projections are based on estimates, information and assumptions believed by such
Responsible Officer to be reasonable at the time made and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect at the time provided;
(d) together with delivery of the respective financial statements
pursuant to Section 7.1, within 45 days after the end of each fiscal quarter of
Holdings, a narrative discussion and analysis of the financial condition and
results of operations of Holdings and its Subsidiaries for such fiscal quarter
and for the period from the beginning of the then current fiscal year to the end
of such fiscal quarter, as compared to the portion of the Projections covering
such periods and to the comparable periods of the previous year;
(e) no later than 10 Business Days prior to the effectiveness thereof
(or such shorter period as may be acceptable to the Syndication Agent and the
Administrative Agent, copies of substantially final drafts of any proposed
amendment, supplement, waiver or other modification with respect to the Seller
Senior Subordinated Note, Seller Note Purchase Agreement, the Senior
Subordinated Note Indenture, the ESOP Documentation or the Acquisition
Documentation;
(f) within five days after the same are sent, copies of all financial
statements and reports that Holdings or the Borrower sends to the holders of any
class of its debt securities or
64
public equity securities and, within five days after the same are filed, copies
of all financial statements and reports (other than the exhibits to the
foregoing of any registration statement on Form S-8 or a successor form) that
Holdings or the Borrower may make to, or file with, the SEC; and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
7.3. Payment of Obligations.
----------------------
Pay, discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its material obligations of whatever nature,
except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the relevant Group Member.
7.4. Maintenance of Existence; Compliance.
------------------------------------
(a) (i) Preserve, renew and keep in full force and effect its
corporate existence and (ii) take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, except, in each case, as otherwise permitted by Section 8.4 and
except, in the case of clause (ii) above, to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (b)
comply with all Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.
7.5. Maintenance of Property; Insurance.
----------------------------------
(a) Keep all property (other than property that is the subject of a
Recovery Event) useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business.
7.6. Inspection of Property; Books and Records; Discussions.
------------------------------------------------------
(a) Keep proper books of records and account in conformity with GAAP
and all Requirements of Law and (b) permit representatives of any Lender to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time and as often as may reasonably
be desired and to discuss the business, operations, properties and financial and
other condition of the Group Members with officers and employees of the Group
Members and with their independent certified public accountants; provided that
all such visits shall be arranged through the Administrative Agent which shall
use reasonable efforts to coordinate such visits so as to minimize the total
number thereof.
7.7. Notices.
-------
65
Promptly give notice to the Administrative Agent, the Syndication
Agent and each Lender upon any Responsible Officer becoming aware of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or proceeding
that may exist at any time between any Group Member and any Governmental
Authority, that in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Group Member (i) in
which the amount involved is $5,000,000 or more and not covered by insurance,
(ii) in which injunctive or similar relief is sought or (iii) which relates to
any Loan Document;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the termination, Reorganization or Insolvency of, any Plan; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 7.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action Holdings, the Borrower or the relevant
Subsidiary proposes to take with respect thereto.
7.8. Environmental Laws.
------------------
(a) Comply in all respects with, and ensure compliance in all
respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws, and obtain and comply in all respects with and maintain, and
ensure that all tenants and subtenants obtain and comply in all respects with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws, except to the extent that the
failure to take such actions could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all respects with all lawful orders
and directives of all Governmental Authorities regarding Environmental Laws,
except to the extent that the failure to take such actions could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
7.9. Interest Rate Protection.
------------------------
66
In the case of the Borrower, within 90 days after the Closing Date,
enter into, and thereafter maintain, Hedge Agreements to the extent
necessary to provide that at least 50% of the aggregate principal
amount of the Term Loans is subject to either a fixed interest rate or
interest rate protection for a period of not less than two years,
which Hedge Agreements shall otherwise have terms and conditions
reasonably satisfactory to the Syndication Agent.
7.10. Additional Collateral, etc.
--------------------------
(a) With respect to any property acquired after the Closing Date by
any Group Member (other than (w) any property which would not have been subject
to the Lien created by the Guarantee and Collateral Agreement as of the Closing
Date had such property been owned as of the Closing Date, (x) any property
described in paragraph (b), (c) or (d) below, (y) any property subject to a Lien
expressly permitted by Section 8.3(g) and (z) property acquired by any Excluded
Foreign Subsidiary) as to which the Administrative Agent, for the benefit of the
Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
or such other documents as the Administrative Agent deems necessary or advisable
to grant to the Administrative Agent, for the benefit of the Lenders, a security
interest in such property and (ii) take all actions necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in such property (subject to Liens permitted by
Section 8.3), including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Administrative
Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $1,000,000 acquired after
the Closing Date by any Group Member (other than (x) any such real property
subject to a Lien expressly permitted by Section 8.3(g) and (z) real property
acquired by any Excluded Foreign Subsidiary), promptly (i) execute and deliver a
first priority Mortgage, in favor of the Administrative Agent, for the benefit
of the Lenders, covering such real property, (ii) if requested by the
Administrative Agent, provide the Lenders with (x) title and extended coverage
insurance covering such real property in an amount at least equal to the
purchase price of such real property (or such other amount as shall be
reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such Mortgage, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by any Group
Member (which, for the purposes of this paragraph (c), shall include any
existing Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement as the Administrative Agent deems necessary
or advisable to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary that is owned by any Group Member, (ii) deliver to the
Administrative Agent the certificates, if any,
67
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the relevant Group
Member, (iii) cause such new Subsidiary (A) to become a party to the Guarantee
and Collateral Agreement, (B) to take such actions necessary or advisable to
grant to the Administrative Agent for the benefit of the Lenders a perfected
first priority security interest in the Collateral described in the Guarantee
and Collateral Agreement (subject to Liens permitted by Section 8.3) with
respect to such new Subsidiary, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be requested by the Administrative
Agent and (C) to deliver to the Administrative Agent a certificate of such
Subsidiary, substantially in the form of Exhibit C, with appropriate insertions
and attachments, and (iv) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by any Group Member (other than by any Group
Member that is an Excluded Foreign Subsidiary), promptly (i) execute and deliver
to the Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent deems necessary or advisable to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in the Capital Stock of such new Subsidiary that is
owned by any such Group Member (provided that in no event shall more than 65% of
the total outstanding Capital Stock of any such new Subsidiary be required to be
so pledged), (ii) deliver to the Administrative Agent the certificates, if any,
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the relevant Group
Member, as the case may be, and at the request of the Administrative Agent, take
such other action as may be reasonably necessary to perfect the Administrative
Agent's security interest therein, and (iii) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent.
(e) With respect to Appleton Papers de Mexico S.A. de C.V. and
Appleton Papers International Sales Inc., promptly after the Closing Date, but
in any event no later than 10 days thereafter, (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such Subsidiaries that is owned by any
Group Member and (ii) deliver to the Administrative Agent the certificates, if
any, representing such Capital Stock, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of the relevant Group
Member, as the case may be, and at the request of the Administrative Agent, take
such other action as may be reasonably necessary to perfect the Administrative
Agent's security interest therein.
7.11. Further Assurances.
------------------
From time to time execute and deliver, or cause to be executed and
delivered, such additional instruments, certificates or documents, and take all
such actions, as the Administrative Agent may reasonably request for the
purposes of implementing or effectuating the provisions of this Agreement and
the other Loan Documents, or of more fully perfecting or
68
renewing the rights of the Administrative Agent and the Lenders with respect to
the Collateral (or with respect to any additions thereto or replacements or
proceeds thereof or with respect to any other property or assets hereafter
acquired by the borrower or any Subsidiary which may be deemed to be part of the
Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative
Agent or any Lender of any power, right, privilege or remedy pursuant to this
Agreement or the other Loan Documents which requires any consent, approval,
recording qualification or authorization of any Governmental Authority, the
Borrower will execute and deliver, or will cause the execution and delivery of,
all applications, certifications, instruments and other documents and papers
that the Administrative Agent or such Lenders may be required to obtain from the
Borrower or any of its Subsidiaries for such governmental consent, approval,
recording, qualification or authorization.
7.12. ERISA.
(a) In the case of Holdings, promptly contribute all cash received
by it (including, without limitation, from the ESOP but excluding any cash
received by it pursuant to Sections 8.8(h) and 8.6(b) which is forthwith
remitted to the ESOP) to the other Parent Entities and, in the case of the other
Parent Entities, promptly contribute such cash amounts to the Borrower.
(b) To the extent permitted by law, immediately upon receipt by
Holdings or the Borrower, copies of any notices, reports, financial statements,
annual valuation updates, annual repurchase liability studies, or other material
documents to be delivered by the Borrower or Holdings to the ESOP or any trustee
under the ESOP or to be delivered by the ESOP or any trustee under the ESOP to
Holdings or the Borrower pursuant to the terms of the ESOP.
(c) Holdings shall (i) prior to December 31, 2001, take all necessary
actions to apply for a favorable determination letter from the IRS that the ESOP
is tax-qualified and tax-exempt under Sections 401(a) and 501(a), respectively,
of the Code and that the ESOP Component is an "employee stock ownership plan"
within the meaning of Section 4975(e)(7) of the Code; (ii) use its best efforts
to obtain a favorable determination letter from the IRS that the ESOP is
tax-qualified and tax-exempt under Sections 401(a) and 501(a), respectively, of
the Code and that the ESOP Component is an "employee stock ownership plan"
within the meaning of Section 4975(e)(7) of the Code; (iii) take all actions
necessary to preserve the existence of the ESOP and to maintain its
tax-qualified status under Sections 401(a) and 501(a), respectively, of the Code
and the ESOP Component's status as an employee stock ownership plan; and (iv)
administer the ESOP in compliance with the terms of the ESOP and the provisions
of the Code and ERISA, as applicable to the ESOP, and make any remedial
amendments required by the IRS within the time period allowed for the
amendments.
SECTION 8. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or Agent
hereunder, each of Holdings and the Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:
8.1. Financial Condition Covenants.
-----------------------------
69
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
---------------------------
Ratio as at the last day of any period of four consecutive fiscal quarters of
Holdings ending with any fiscal quarter set forth below to exceed the ratio set
forth below opposite such fiscal quarter:
Fiscal Quarter Consolidated
Ending On or About Leverage Ratio
------------------ --------------
December 31, 2001 3.25 to 1.00
March 31, 2002 3.25 to 1.00
June 30, 2002 3.25 to 1.00
September 30, 2002 3.25 to 1.00
December 31, 2002 2.40 to 1.00
March 31, 2003 2.40 to 1.00
June 30, 2003 2.40 to 1.00
September 30, 2003 2.40 to 1.00
December 31, 2003 2.10 to 1.00
March 31, 2004 2.10 to 1.00
June 30, 2004 2.10 to 1.00
September 30, 2004 2.10 to 1.00
December 31, 2004 and thereafter 1.60 to 1.00
; provided, that for the purposes of determining the ratio described above for
--------
the fiscal quarters of Holdings, Consolidated EBITDA for the fiscal quarters
ending on or about March 31, 2001, June 30, 2001 and September 30, 2001 shall be
deemed to be $43,281,000, $43,412,00 and $55,542,000, respectively.
(b) Consolidated Senior Leverage Ratio. Permit the Consolidated Senior
----------------------------------
Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of Holdings ending with any fiscal quarter set forth below to exceed
the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Consolidated Senior
Ending On or About Leverage Ratio
------------------ --------------
December 31, 2001
March 31, 2002 1.65 to 1.00
June 30, 2002 1.65 to 1.00
September 30, 2002 1.65 to 1.00
December 31, 2002 1.65 to 1.00
and thereafter 1.00 to 1.00
; provided, that for the purposes of determining the ratio described above for
--------
the fiscal quarters of Holdings, Consolidated EBITDA for the fiscal quarters
ending on or about March 31, 2001, June 30, 2001 and September 30, 2001 shall be
deemed to be $43,281,000, $43,412,00 and $55,542,000, respectively.
70
(c) Consolidated Interest Coverage Ratio. Permit the Consolidated
------------------------------------
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
Holdings (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Consolidated Interest
During Period Below Coverage Ratio
------------------- --------------
March 31, 2002 through Fiscal Quarter 3.85 to 1.00
ending on or about December 31, 2002
March 31, 2003 and thereafter 4.00 to 1.00
(d) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated
----------------------------------------
Fixed Charge Coverage Ratio for any period of four consecutive fiscal quarters
of Holdings (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Consolidated Fixed Charge
During Period Below Coverage Ratio
------------------- --------------
March 31, 2002 through Fiscal Quarter 1.30 to 1.00
ending on or about December 31, 2002
March 31, 2003 through Fiscal Quarter 1.35 to 1.00
ending on or about December 31, 2003
March 31, 2004 and thereafter 1.65 to 1.00
(e) Consolidated Net Worth. Permit Consolidated Net Worth at any time
----------------------
to be less than the sum of (i) $107,000,000, (ii) 50% of cumulative Consolidated
Net Income for each fiscal quarter of Holdings (beginning with the fiscal
quarter ending on or about March 31, 2002) for which Consolidated Net Income is
positive and (iii) the excess of (A) the aggregate amount of all ESOP Stock
Issuances after the Closing Date, over (B) the aggregate amount of any ESOP
----
Related Distributions after the Closing Date.
8.2. Indebtedness.
------------
Create, issue, incur, assume, become liable in respect of or suffer to
exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness (i) of the Borrower to any Subsidiary, (ii) of any
Subsidiary Guarantor to the Borrower or any other Subsidiary, (iii) of any
Foreign Subsidiary to any Foreign Subsidiary, (iv) subject to Section 8.8(g), of
any Foreign Subsidiary to the Borrower or any Subsidiary Guarantor, (v) under
the Intercompany Acquisition Loan and (vi) resulting from ESOP Related
Distributions permitted by Section 8.8(h); provided, in each case, that any such
--------
71
Indebtedness described in the foregoing clauses (i) through (v) incurred by a
Loan Party is expressly subordinated to the prior payment in full in cash of the
Obligations;
(c) Guarantee Obligations incurred in the ordinary course of business
by the Borrower or any of its Subsidiaries of obligations of the Borrower, any
Subsidiary Guarantor and, subject to Section 8.8(g), of any Foreign Subsidiary;
(d) Permitted Existing Debt and any refinancings, refundings, renewals
or extensions thereof (without increasing, or shortening the maturity of, the
principal amount thereof); (e) Indebtedness (including, without limitation,
Capital Lease Obligations) secured by Liens permitted by Section 8.3(g) in an
aggregate principal amount not to exceed $10,000,000 at any one time
outstanding;
(f) (i) Indebtedness of the Borrower in respect of the Permitted
Senior Subordinated Notes in an aggregate principal amount not to exceed
$250,000,000 and (ii) Guarantee Obligations of the Parent Entities and any
Subsidiary Guarantor in respect of such Indebtedness, provided that such
--------
Guarantee Obligations are subordinated to the same extent as the obligations of
the Borrower in respect of the Permitted Senior Subordinated Notes;
(g) Hedge Agreements in respect of Indebtedness otherwise permitted
hereby that bears interest at a floating rate, so long as such agreements are
not entered into for speculative purposes;
(h) Indebtedness under the AWA Environmental Indemnity Agreement;
provided that such Indebtedness is recourse only to the property described in
- --------
Section 8.3(i);
(i) Guarantee Obligations of the Borrower with respect to obligations
of Holdings and New Appleton pursuant to the AWA Environmental Indemnity
Agreement;
(j) Indebtedness under the Deferred Payment Obligation;
(k) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business so long as such Indebtedness is extinguished
within three Business Days of the incurrence thereof;
(l) Indebtedness of the Borrower or any of its Subsidiaries in respect
of performance bonds and surety bonds incurred in the ordinary course of
business consistent with past practice;
(m) Indebtedness of the Borrower or any Subsidiary of the Borrower
arising from agreements of the Borrower or a Subsidiary of the Borrower
providing for indemnification, adjustment of purchase price, earn out or other
similar obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary of the Borrower permitted
under this Agreement, other than guarantees of Indebtedness incurred by any
Person acquiring all or any portion of such business, assets or Subsidiary for
the purpose of financing such acquisition, provided that the maximum amount of
--------
any such Indebtedness shall at
72
no time exceed 20% of the gross proceeds actually received by the Borrower and
its Subsidiaries in connection with the relevant disposition; and
(n) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $15,000,000 at any one time outstanding.
8.3. Liens.
-----
Create, incur, assume or suffer to exist any Lien upon any of its
property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes or assessments not yet due or that are being
contested in good faith by appropriate proceedings, provided that adequate
--------
reserves with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are not
overdue for a period of more than 30 days or that are being contested in good
faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(e) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar encumbrances incurred in the ordinary
course of business that, in the aggregate, are not substantial in amount and
that do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 8.3(f),
securing Indebtedness permitted by Section 8.2(d), provided that no such Lien is
--------
spread to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 8.2(e) to finance the acquisition of
fixed or capital assets, provided that (i) such Liens shall be created
--------
simultaneously with, or within 120 days after, the acquisition of such fixed or
capital assets, (ii) such Liens do not at any time encumber any property other
than the property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
73
(i) Liens on rights to "Recovery" in favor of AWA pursuant to and as
defined in the AWA Environmental Indemnity Agreement and the API Environmental
Indemnity Agreement;
(j) any interest or title of a lessor under any lease entered into by
the Borrower or any other Subsidiary in the ordinary course of its business and
covering only the assets so leased;
(k) Liens arising from judgments, decrees or attachments in
circumstances involving an aggregate liability not exceeding $5,000,000 at any
time;
(l) licenses, leases or subleases granted to third Persons in the
ordinary course of business not interfering in any material respect with the
business of Holdings or any of its Subsidiaries;
(m) Liens in favor of customs or revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods so long as such Lien covers only the goods being imported;
(n) Liens on the assets of a Foreign Subsidiary which is not a
Subsidiary Guarantor securing Indebtedness incurred by such Foreign Subsidiary
pursuant to Section 8.2(n); and
(o) Liens not otherwise permitted by this Section so long as neither
(i) the aggregate outstanding principal amount of the obligations secured
thereby nor (ii) the aggregate fair market value (determined as of the date such
Lien is incurred) of the assets subject thereto exceeds (as to the Borrower and
all Subsidiaries) $2,000,000 at any one time.
8.4. Fundamental Changes.
-------------------
Enter into any merger, consolidation or amalgamation, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or
Dispose of, all or substantially all of its property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
--------
surviving corporation) or with or into any Subsidiary Guarantor (provided that
--------
the Subsidiary Guarantor shall be the continuing or surviving corporation) or,
subject to Section 8.8(g), with or into any Foreign Subsidiary;
(b) Any Parent Entity (other than Holdings) may be merged or
consolidated with or into Holdings (provided that Holdings shall be the
--------
continuing or surviving corporation) or may Dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to Holdings (the "Planned
-------
Restructuring"); and
- -------------
(c) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor or, subject to Section 8.8(g), any Foreign Subsidiary.
74
8.5. Disposition of Property.
-----------------------
Dispose of any of its property, whether now owned or hereafter
acquired, or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 8.3, 8.4 or 8.6;
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Subsidiary Guarantor;
(e) Disposition of the Excluded Assets; and
(f) the Disposition of other property having a fair market value not
to exceed $2,000,000 in the aggregate for any fiscal year of the Borrower.
8.6. Restricted Payments.
-------------------
Declare or pay any dividend (other than dividends payable solely in
common stock of the Person making such dividend) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any
Capital Stock of any Group Member, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Holdings, the Borrower or any
Subsidiary (collectively, "Restricted Payments"), except that:
-------------------
(a) any Subsidiary may make Restricted Payments to the Borrower or
any Subsidiary Guarantor;
(b) so long as no Default or Event of Default shall have occurred and
be continuing or would result therefrom, Subsidiaries of Holdings may pay
dividends to permit Holdings (i) to satisfy, and Holdings may satisfy, its
obligations to repurchase its common stock pursuant to the ESOP Documentation
from accounts allocated to participants in the ESOP upon the death, disability
or termination of employment of such participants or upon the exercise by any
such participant of his or her diversification rights under the ESOP
Documentation, (ii) to make loans to the ESOP to permit the ESOP to make loans
to participants in the ESOP in accordance with the ESOP Documentation and (iii)
to provide funds to the ESOP to permit the ESOP to fund hardship distributions
to participants in the ESOP in accordance with the ESOP Documentation; provided,
--------
that the aggregate amount of payments to Holdings under this clause (b) in any
fiscal year, together with all ESOP Related Distributions made pursuant to
Section 8.8(h) in such fiscal year, shall not exceed the sum of (A) Available
ESOP Contributions for such fiscal year, plus (B) an amount in any fiscal year
equal to the amount set forth below opposite such fiscal year:
75
-------------------------------------------------------
Fiscal Years Amount
------------ ------
-------------------------------------------------------
2002 and 2003 $10,000,000
-------------------------------------------------------
2004 through 2006 $25,000,000
-------------------------------------------------------
; provided, further that after giving effect to such dividend Holdings and its
-------- -------
Subsidiaries shall be in compliance on a pro forma basis with the financial
---------
covenants contained in Section 8.1 as if such dividend had been made on the last
day of the most recent four consecutive fiscal quarter period of Holdings for
which financial statements have been delivered pursuant to Section 7.1;
(c) Subsidiaries of Holdings may make dividends to Holdings to permit
Holdings or New Appleton to repay the Intercompany Acquisition Loan so long as
the amount of such dividend is simultaneously netted against amounts owing to
the Borrower under the Intercompany Acquisition Loan and no cash is paid as a
result of any such dividend; and
(d) Subsidiaries of Holdings may pay dividends to permit Holdings or
any of its Subsidiaries to (i) pay corporate overhead expenses incurred in the
ordinary course of business not to exceed $350,000 in any fiscal year and (ii)
pay any taxes that are due and payable by Holdings and or any of its
Subsidiaries as part of a consolidated group.
8.7. Capital Expenditures.
--------------------
Make or commit to make any Capital Expenditure, except (a) Capital
Expenditures of the Borrower and its Subsidiaries not exceeding, during any
fiscal year of Holdings (or, in the case of fiscal year 2001, during the fourth
fiscal quarter of 2001) the amount set forth below opposite such fiscal year:
Fiscal Year Amount
----------- ------
2001 $15,600,000
2002 $60,000,000
2003 $50,000,000
2004 and thereafter $45,000,000
; provided, that (i) up to 50% of any such amount referred to above, if not so
--------
expended in the fiscal year for which it is permitted, may be carried over for
expenditure in the next succeeding fiscal year and (ii) Capital Expenditures
made pursuant to this clause (a) during any fiscal year shall be deemed made,
first, in respect of amounts permitted for such fiscal year as provided above
- -----
and, second, in respect of amounts carried over from the prior fiscal year
------
pursuant to
76
subclause (i) above and (b) Capital Expenditures made with the proceeds of any
Reinvestment Deferred Amount.
8.8. Investments.
-----------
Make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any Capital Stock, bonds,
notes, debentures or other debt securities of, or any assets constituting a
business unit of, or make any other investment in, any Person (all of the
foregoing, "Investments"), except:
-----------
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 8.2;
(d) (i) loans and advances to employees of any Group Member of the
Borrower in the ordinary course of business (including for travel, entertainment
and relocation expenses) in an aggregate amount for all Group Members not to
exceed $1,000,000 at any one time outstanding and (ii) additional loans or
advances to newly-hired employees of any Group Member of the Borrower in the
ordinary course of business for the purpose of paying relocation expenses of
such employees in an aggregate amount not to exceed $500,000 at any time
outstanding;
(e) Investments necessary to effect the Transactions, including the
Intercompany Acquisition Loan;
(f) intercompany Investments by any Group Member in the Borrower or
any Person that, prior to such Investment, is a Subsidiary Guarantor;
(g) intercompany Investments by the Borrower or any of its
Subsidiaries in any Person, that, prior to such Investment, is a Foreign
Subsidiary (including, without limitation, Guarantee Obligations with respect to
obligations of any such Foreign Subsidiary, loans made to any such Foreign
Subsidiary and Investments resulting from mergers with or sales of assets to any
such Foreign Subsidiary) in an aggregate amount (valued at cost) not to exceed,
together with any Investment pursuant to paragraph (l) of this Section that
results in the creation or acquisition of a Foreign Subsidiary or the
acquisition of assets by a Foreign Subsidiary or any Investment in the Capital
Stock of any Person which is incorporated outside the United States of America,
$5,000,000 during the term of this Agreement;
(h) so long as no Default or Event of Default shall have occurred and
be continuing or would result therefrom, loans and advances by the Borrower to
the Parent Entities and by the Parent Entities (other than Holdings) to other
Parent Entities to permit Holdings (i) to satisfy its obligation to repurchase
its common stock pursuant to the ESOP Documentation from accounts allocated to
participants in the ESOP upon the death, disability or termination of employment
of such participants or upon the exercise by any such participant of his or her
diversification rights under the ESOP Documentation, (ii) to make loans to the
ESOP to permit the ESOP to make loans to participants in the ESOP in accordance
with the ESOP Documentation and (iii) to provide funds to the ESOP to permit the
ESOP to fund hardship
77
distributions to participants in the ESOP in accordance with the ESOP
Documentation; provided that the aggregate amount (without duplication) of loans
--------
and advances under this clause (h) in any fiscal year, together with all ESOP
Related Distributions made pursuant to Section 8.6(b) in such fiscal year, shall
not exceed the sum of (A) Available ESOP Contributions for such fiscal year,
plus, (B) an amount in any fiscal year equal to the amount set forth below
opposite such fiscal year:
-------------------------------------------------------------
Fiscal Years Amount
------------ ------
-------------------------------------------------------------
2002 and 2003 $10,000,000
-------------------------------------------------------------
2004 through 2006 $25,000,000
-------------------------------------------------------------
; provided, further that after giving effect to any such loan or advance
-------- -------
Holdings and its Subsidiaries shall be in compliance on a pro forma basis with
--- -----
the financial covenant contained in Section 8.1(d) as if such loan or advance
had been made on the last day of the most recent four consecutive fiscal quarter
period of Holdings for which financial statements have been delivered pursuant
to Section 7.1;
(i) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(j) non-cash consideration issued to the Borrower or any of its
Subsidiaries by the purchaser of assets in connection with a sale of such assets
to the extent permitted by Section 8.5 in an aggregate amount not to exceed
$2,000,000 during the term of this Agreement;
(k) Guarantees of customary indemnities and insurance for directors
and officers of any Group Member; and
(l) in addition to Investments otherwise expressly permitted by this
Section, Investments by the Borrower or any of its Subsidiaries in an aggregate
amount (valued at cost) not to exceed $5,000,000 during the term of this
Agreement.
8.9. Optional Payments and Modifications of Certain Debt Instruments.
---------------------------------------------------------------
(a) Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of or otherwise optionally or voluntarily
defease or segregate funds with respect to the Permitted Senior Subordinated
Notes or the Deferred Payment Obligation or enter into any derivative or other
transaction with any Derivatives Counterparty obligating Holdings the Borrower
or any Subsidiary to make payments to such Derivatives Counterparty as a result
of any change in market value of the Permitted Senior Subordinated Notes or the
Deferred Payment Obligation (other than (A) the repurchase of Permitted Senior
Subordinated Notes pursuant to an "Excess Cash Flow Offer" under and as defined
in the Permitted Senior
78
Subordinated Notes; provided that (x) at the time of such repurchase no
--------
principal or interest in respect of the Term Loans shall be outstanding and (y)
before and after giving effect to such repurchase, no Default or Event of
Default shall have occurred or be continuing and (B) the prepayment, repurchase
or redemption of all or a portion of the Seller Senior Subordinated Note with
proceeds from the issuance of Senior Subordinated Notes), (b) amend, modify,
waive or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Permitted Senior Subordinated
Notes or the Deferred Payment Obligation (other than any such amendment,
modification, waiver or other change that (i) would extend the maturity or
reduce the amount of any payment of principal thereof or reduce the rate or
extend any date for payment of interest thereon and (ii) does not involve the
payment of a consent fee), (c) enter into or be party to, or make any payment
under, any Synthetic Purchase Agreement; or (d) designate any Indebtedness
(other than obligations of the Loan Parties pursuant to the Loan Documents) as
"Designated Senior Debt" (or any other defined term having a similar purpose)
for the purposes of the Seller Senior Subordinated Note or the Senior
Subordinated Note Indenture.
8.10. Transactions with Affiliates.
----------------------------
Enter into any transaction, including any purchase, sale, lease or
exchange of property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than Holdings,
the Borrower or any Wholly Owned Subsidiary Guarantor) unless such transaction
is (a) otherwise permitted under this Agreement, (b) in the ordinary course of
business of the relevant Group Member, and (c) upon fair and reasonable terms no
less favorable to the relevant Group Member, than it would obtain in a
comparable arm's length transaction with a Person that is not an Affiliate;
provided that the following shall in any event be permitted: (i) the
- --------
Transactions and other transactions or arrangements contemplated by the
Acquisition Documentation; (ii) customary fees paid to non-officer directors of
Holdings and its Subsidiaries; (iii) employment agreements, employee benefit
plans, indemnification provisions, equity incentive plans and other similar
compensatory arrangements entered into by Holdings and its Subsidiaries with
officers and directors of Holdings and its Subsidiaries in the ordinary course
of business, in each case to the extent that such transactions are otherwise
permitted by this Agreement; and (iv) transactions among Holdings and its
Subsidiaries to the extent otherwise permitted under this Agreement.
8.11. Sales and Leasebacks.
--------------------
Enter into any arrangement with any Person providing for the leasing
by any Group Member of real or personal property that has been or is to be sold
or transferred by such Group Member to such Person or to any other Person to
whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of such Group Member, other than the sale
and leaseback of the Borrower's real property located in Harrisburg,
Pennsylvania as contemplated by the Acquisition Agreement.
8.12. Changes in Fiscal Periods.
-------------------------
Permit the fiscal year of Holdings to be other than the 52-week or
53-week period ending the Saturday nearest December 31 or change Holdings'
method of determining fiscal quarters
79
8.13. Negative Pledge Clauses.
-----------------------
Enter into or suffer to exist or become effective any agreement that
prohibits or limits the ability of any Group Member to create, incur, assume or
suffer to exist any Lien upon any of its property or revenues, whether now owned
or hereafter acquired, to secure its obligations under the Loan Documents to
which it is a party, other than restrictions existing under or by reason of (a)
applicable law, (b) this Agreement and the other Loan Documents, (c) the Seller
Senior Subordinated Note, (d) the Senior Subordinated Note Indenture, (e) the
Deferred Payment Obligation, (f) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of Holdings or a
Subsidiary of Holdings, (g) customary provisions restricting assignment of any
licensing agreement entered into by Holdings or any Subsidiary of Holdings in
the ordinary course of business and (h) any agreements governing any purchase
money Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the assets
financed thereby).
8.14. Clauses Restricting Subsidiary Distributions.
--------------------------------------------
Enter into or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary of the Borrower to
(a) make Restricted Payments in respect of any Capital Stock of such Subsidiary
held by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary
of the Borrower, (b) make loans or advances to, or other Investments in, the
Borrower or any other Subsidiary of the Borrower or (c) transfer any of its
assets to the Borrower or any other Subsidiary of the Borrower, except for such
encumbrances or restrictions existing under or by reason of (i) this Agreement
or the other Loan Documents, (ii) applicable law, (iii) the Seller Senior
Subordinated Note, (iv) the Senior Subordinated Note Indenture, (v) the Deferred
Payment Obligation and (vi) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement that has been entered into in connection with
the Disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary.
8.15. Lines of Business.
-----------------
Enter into any business, either directly or through any Subsidiary,
except for those businesses in which the Borrower and its Subsidiaries are
engaged on the date of this Agreement or that are reasonably related or
complementary thereto.
8.16. Material Agreements.
-------------------
(a) Amend, supplement or otherwise modify, or permit the amendment,
supplement or modification of, (pursuant to a waiver, endorsement or otherwise)
the terms and conditions of (i) the Fox River Indemnity Arrangements without the
consent of the Required Lenders (other than to the extent necessary to change a
notice address or to cure any ambiguity, defect or inconsistency in a manner not
in any respect adverse to the Lenders) or (ii) the terms and conditions of the
other indemnities and licenses furnished to Holdings or any of its Subsidiaries
pursuant to the Acquisition Documentation (other than the Fox River Indemnity
Arrangements) such that after giving effect thereto such indemnities or licenses
shall be materially less favorable to the interests of the Loan Parties or the
Lenders with respect thereto, (b) otherwise amend, supplement or otherwise
modify the terms and conditions of the Acquisition Documentation or any such
other documents except for any such amendment,
80
supplement or modification that (i) becomes effective after the Closing Date and
(ii) could not reasonably be expected to have a Material Adverse Effect, (c)
deliver, or permit the delivery of, any election of "Reduced Cumulative Limits"
(under and as defined in the AIG Credit Support) except, with the consent of the
Administrative Agent and the Syndication Agent, or (d) assign any of its rights
under the Fox River Indemnity Arrangements without the consent of the Required
Lenders.
8.17. S Corporation Status.
--------------------
Take, or fail to take, any action that would terminate, or could
reasonably be expected to lead to the termination of, Holdings' qualification as
an "S Corporation" under Subchapter S of the Code, or the qualification of each
Domestic Subsidiary of Holdings (other than any such Subsidiary that is an
"Ineligible Corporation" under Section 1361(b)(2) of the Code) as a "qualified
subchapter S subsidiary", in each case for U.S. federal income tax purposes.
8.18. Appleton Recycled.
-----------------
(a) In the case of Appleton Recycled (i) conduct, transact or
otherwise engage in, or commit to conduct, transact or otherwise engage in, any
business or operations outside the ordinary course of business, (ii) incur,
create, assume or suffer to exist any Indebtedness or other liabilities or
financial obligations (other than Indebtedness existing on the Closing Date) or
(iii) own, lease, manage or otherwise operate any properties or assets (other
than property or assets owned or leased on the Closing Date), (b) make any
Investment in Appleton Recycled and (c) Dispose of any property to Appleton
Recycled.
8.19. Holding Company Status.
----------------------
In the case of the Parent Entities, (a) conduct, transact or otherwise
engage in, or commit to conduct, transact or otherwise engage in, any business
or operations other than those incidental to its direct or indirect ownership of
the Capital Stock of New Appleton, AWDGP, AILLC and the Borrower, as the case
may be, except the Planned Restructuring, (b) incur, create, assume or suffer to
exist any Indebtedness or other liabilities or financial obligations, except (i)
in the case of Holdings, the Deferred Payment Obligation, (ii) obligations
arising by operation of the ESOP Documentation, (iii) nonconsensual obligations
imposed by operation of law, (iv) pursuant to the Loan Documents to which it is
a party, (v) Indebtedness permitted under clauses (b), (f), (h) or (k) of
Section 8.2, and (vi) obligations with respect to its Capital Stock, or (c) own,
lease, manage or otherwise operate any properties or assets (including cash
(other than cash received in connection with dividends made to such Parent
Entity in accordance with Section 8.6 or loans or advances to such Parent Entity
in accordance with Section 8.8(h) pending, in each case, application in the
manner contemplated by said Section) and cash equivalents) other than the direct
or indirect ownership of shares of Capital Stock of New Appleton, AWDGP, AILLC
and the Borrower, as the case may be.
8.20. Holdings Sub.
------------
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In the case of Holdings Sub conduct, transact or otherwise engage in,
or commit to conduct, transact or otherwise engage in, any business, or
operations other than those incidental to its obligations under the Bermuda
Company Documents.
8.21. ESOP Amendments.
---------------
Amend or terminate the ESOP without the prior written consent of the
Administrative Agent, not to be unreasonably withheld, except that the Borrower
or Holdings may amend the ESOP to the extent required by the Internal Revenue
Service in order to obtain a favorable determination letter with respect to the
ESOP or to comply with changes in the law.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation,
or any other amount payable hereunder or under any other Loan Document, within
five days after any such interest or other amount becomes due in accordance with
the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) any Loan Party shall default in the observance or performance
of any agreement contained in clause (i) of Section 7.4(a) (with respect to
Holdings and the Borrower only), Section 7.7(a) or Section 8 of this Agreement
or Sections 5.5(a) and 5.8(b) of the Guarantee and Collateral Agreement or (ii)
an "Event of Default" under and as defined in any Mortgage shall have occurred
and be continuing; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 30 days after notice to the
Borrower from the Administrative Agent or any Lender; or
(e) any Group Member shall (i) default in making any payment of any
principal of any Indebtedness (including any Guarantee Obligation, but excluding
the Loans) on the scheduled or original due date with respect thereto; or (ii)
default in making any payment of any interest on any such Indebtedness beyond
the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in the
observance or performance of any other agreement or condition relating to any
such Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or beneficiary of such Indebtedness (or a trustee or agent on
behalf of such
82
holder or beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or to become subject to
a mandatory offer to purchase by the obligor thereunder or (in the case of any
such Indebtedness constituting a Guarantee Obligation) to become payable;
provided, that a default, event or condition described in clause (i), (ii) or
- --------
(iii) of this paragraph (e) shall not at any time constitute an Event of Default
unless, at such time, one or more defaults, events or conditions of the type
described in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $5,000,000; or
(f) (i) any Group Member (other Appleton Recycled) shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or any
Group Member shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against any Group Member (other than Appleton
Recycled) any case, proceeding or other action of a nature referred to in clause
(i) above that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or unbonded
for a period of 60 days; or (iii) there shall be commenced against any Group
Member (other than Appleton Recycled) any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets that results in the
entry of an order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Group Member (other than Appleton Recycled) shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) any Group Member (other than Appleton Recycled) shall not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could, in the sole
judgment of the Required Lenders, reasonably be expected to have a Material
Adverse Effect; or
83
(h) one or more judgments or decrees shall be entered against any
Group Member involving in the aggregate a liability (not paid or fully covered
by insurance as to which the relevant insurance company has acknowledged
coverage or not fully covered by the AIG Credit Support) of $5,000,000 or more,
and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 45 days from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan Party
shall so assert, or any Lien created by any of the Security Documents covering
Collateral having a fair market or book value in excess of $500,000 shall cease
to be enforceable and of the same effect and priority purported to be created
thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and effect
or any Loan Party or any Affiliate of any Loan Party shall so assert; or
(k) (i) the ESOP shall cease to have the power to vote or direct the
voting of securities having a majority of the ordinary voting power for the
election of directors of Holdings (determined on a fully diluted basis); (ii)
the ESOP Trust shall cease to own of record and beneficially at least 100% of
the outstanding Capital Stock of Holdings; (iii) the board of directors of the
Borrower shall cease to consist of a majority of Continuing Directors of the
Borrower; (iv) the board of directors of Holdings shall cease to consist of a
majority of Continuing Directors of Holdings; (v) Holdings shall cease to own
and control, of record and beneficially, directly or indirectly, 100% of each
class of outstanding Capital Stock of each of New Appleton, AWDGP, AILLC and the
Borrower (except, in the case of AWDGP and AILLC pursuant to the Planned
Restructuring), in each case free and clear of all Liens (except Liens created
by the Guarantee and Collateral Agreement); (vi) the board of directors of
either Holdings or the Borrower shall cease to include two independent directors
or (vii) a Specified Change of Control shall occur; or
(l) any Permitted Senior Subordinated Notes or the guarantees thereof
or the Deferred Payment Obligation shall cease, for any reason, to be validly
subordinated to the Obligations or the obligations of the Subsidiary Guarantors
under the Guarantee and Collateral Agreement, as the case may be, as provided in
the Seller Senior Subordinated Note, the Senior Subordinated Note Indenture or
the Subordination Agreement, as the case may, or any Loan Party, any Affiliate
of any Loan Party, the trustee in respect of the Permitted Senior Subordinated
Notes or the Deferred Payment Obligation, as the case may be, or the holders of
at least 25% in aggregate principal amount of the Seller Senior Subordinated
Note, the Senior Subordinated Notes or the Deferred Payment Obligation, as the
case may be, shall so assert; or
(m) (i) AWA shall default in the observance or performance of any
agreement contained in the AWA Environmental Indemnity Agreement (after giving
effect to any credit support provided with respect to such default pursuant to
the AIG Credit Support), (ii) any of the Fox River Indemnity Arrangements shall
be terminated, held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any party thereto,
or any Person acting on behalf of any party thereto, shall deny or disaffirm its
obligations under any of the Fox River Indemnity Arrangements or the Lien
created by the Bermuda Security Agreement shall cease to be enforceable and of
the same effect and priority
84
purported to be created thereby, (iii) any Seller shall otherwise default in the
observance or performance of any material agreement contained in the Acquisition
Documentation after giving effect to any applicable cure period, (iv) any party
shall default in the observance or performance of any agreement contained in the
Bermuda Company Agreements, or (v) NCR shall default in the observance or
performance of any agreement contained in the NCR Agreements,
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments to be terminated forthwith, whereupon the
Revolving Commitments shall immediately terminate; and (ii) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 10. THE AGENTS
10.1. Appointment.
-----------
Each Lender hereby irrevocably designates and appoints each Agent as
the agent of such Lender under this Agreement and the other Loan Documents, and
each such Lender irrevocably authorizes such Agent, in such capacity, to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to such Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably
85
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, no Agent shall have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against any Agent.
10.2. Delegation of Duties.
--------------------
Each Agent may execute any of its duties under this Agreement and the
other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
No Agent shall be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
10.3. Exculpatory Provisions.
----------------------
Neither any Agent nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except to the extent
that any of the foregoing are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from its or such Person's (or
that of its respective officers, directors or employees in the case of any
Agent) own gross negligence or willful misconduct) or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by any Loan Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agents under
or in connection with, this Agreement or any other Loan Document or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document or for any failure of any Loan Party a
party thereto to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party.
10.4. Reliance by Agents.
------------------
Each Agent shall be entitled to rely, and shall be fully protected in
relying, upon any instrument, writing, resolution, notice, consent, certificate,
affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including counsel to Holdings or the Borrower),
independent accountants and other experts selected by such Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. Each Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, if so specified by this Agreement,
all Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any
86
such action. The Agents shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
10.5. Notice of Default.
-----------------
No Agent shall be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless such Agent has received
notice from a Lender, Holdings or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders or any other instructing group of
Lenders specified by this Agreement); 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 or Event of Default as it shall
deem advisable in the best interests of the Lenders.
10.6. Non-Reliance on Agents and Other Lenders.
----------------------------------------
Each Lender expressly acknowledges that neither the Agents nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of a Loan Party
or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender. Each Lender represents to
the Agents that it has, independently and without reliance upon any Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party or any affiliate
of a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
10.7. Indemnification.
---------------
87
The Lenders agree to indemnify each Agent in its capacity as such (to
the extent not reimbursed by Holdings or the Borrower and without limiting the
obligation of Holdings or the Borrower to do so), ratably according to their
respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with such Aggregate Exposure
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever that may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against such Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by such Agent
under or in connection with any of the foregoing; provided that no Lender shall
--------
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent's gross negligence or
willful misconduct. The agreements in this Section shall survive the payment of
the Loans and all other amounts payable hereunder.
10.8. Agent in Its Individual Capacity.
--------------------------------
Each Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though such
Agent were not an Agent. With respect to its Loans made or renewed by it and
with respect to any Letter of Credit issued or participated in by it, each Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms "Lender" and "Lenders" shall include each Agent in its
individual capacity.
10.9. Successor Administrative Agent.
------------------------------
The Administrative Agent may resign as Administrative Agent upon 10
days' notice to the Lenders and the Borrower. If the Administrative Agent shall
resign as Administrative Agent under this Agreement and the other Loan
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an Event of
Default under Section 9(a) or Section 9(f) with respect to the Borrower shall
have occurred and be continuing) be subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the
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Required Lenders appoint a successor agent as provided for above. The
Syndication Agent may, at any time, by notice to the Lenders and the
Administrative Agent, resign as Syndication Agent hereunder, whereupon the
duties, rights, obligations and responsibilities of the Syndication Agent
hereunder shall automatically be assumed by, and inure to the benefit of, the
Administrative Agent, without any further act by the Syndication Agent, the
Administrative Agent or any Lender. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 10 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.
10.10. Agents Generally.
----------------
Except as expressly set forth herein, no Agent shall have any duties
or responsibilities hereunder in its capacity as such.
10.11. The Lead Arranger.
-----------------
The Lead Arranger, in its capacity as such, shall have no duties or
responsibilities, and shall incur no liability, under this Agreement and other
Loan Documents.
SECTION 11. MISCELLANEOUS
11.1. Amendments and Waivers.
----------------------
Neither this Agreement, any other Loan Document, nor any terms hereof
or thereof may be amended, supplemented or modified except in accordance with
the provisions of this Section 11.1. The Required Lenders and each Loan Party
party to the relevant Loan Document may, or, with the written consent of the
Required Lenders, the Administrative Agent and each Loan Party party to the
relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Loan
Parties hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
- -------- -------
modification shall (i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Term Loan, reduce the stated rate of any
interest or fee payable hereunder (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates, which waiver shall
be effective with the consent of the Majority Facility Lenders of each adversely
affected Facility) and (y) that any amendment or modification of defined terms
used in the financial covenants in this Agreement shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (i)) or
extend the scheduled date of any payment thereof, or increase the amount or
extend the expiration date of any Lender's Revolving Commitment (it being
understood that waivers or modifications of conditions precedent, covenants,
Defaults or Events of Defaults or of a mandatory reduction in the Total
Revolving Commitments shall not constitute an increase of the Commitment of any
Lender), in each case without the written consent of each Lender directly
89
affected thereby; (ii) eliminate or reduce the voting rights of any Lender under
this Section 11.1 without the written consent of such Lender; (iii) reduce any
percentage specified in the definition of Required Lenders, consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents, release all or substantially
all of the Collateral or release all or substantially all of the Subsidiary
Guarantors from their obligations under the Guarantee and Collateral Agreement,
in each case without the written consent of all Lenders; (iv) amend, modify or
waive any condition precedent to any extension of credit under the Revolving
Facility set forth in Section 6.2 (including in connection with any waiver of an
existing Default or Event of Default) without the written consent of the
Majority Facility Lenders with respect to the Revolving Facility; (v) amend,
modify or waive any provision of Section 4.8 without the written consent of the
Majority Facility Lenders in respect of each Facility adversely affected
thereby; (vi) reduce the amount of Net Cash Proceeds or Excess Cash Flow
required to be applied to prepay Loans under this Agreement without the written
consent of the Majority Facility Lenders with respect to each Facility; (vii)
reduce the percentage specified in the definition of Majority Facility Lenders
with respect to any Facility without the written consent of all Lenders under
such Facility; (viii) amend, modify or waive any provision of Section 10 without
the written consent of each Agent adversely affected thereby; (ix) amend, modify
or waive any provision of Sections 3.7 to 3.14 without the written consent of
each Issuing Lender; or (x) amend, modify or waive any provision of Section 3.3
or 3.4 without the written consent of the Swingline Lender. Any such waiver and
any such amendment, supplement or modification shall apply equally to each of
the Lenders and shall be binding upon the Loan Parties, the Lenders, the Agents
and all future holders of the Loans. In the case of any waiver, the Loan
Parties, the Lenders and the Agents shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
For the avoidance of doubt, this Agreement may be amended (or amended
and restated) with the written consent of the Required Lenders, the Syndication
Agent and the Borrower (a) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "Additional Extensions of Credit") to share ratably in the
-------------------------------
benefits of this Agreement and the other Loan Documents with the Term Loans and
Revolving Extensions of Credit and the accrued interest and fees in respect
thereof and (b) to include appropriately the Lenders holding such credit
facilities in any determination of the Required Lenders; provided, that no such
--------
amendment shall permit the Additional Extensions of Credit to share ratably with
or with preference to the Term Loans in the application of mandatory prepayments
without the consent of the Majority Facility Lenders under each Facility (other
than the Revolving Facility) or otherwise to share ratably with or with
preference to the Revolving Extensions of Credit without the consent of the
Majority Facility Lenders under the Revolving Facility.
11.2. Notices.
-------
All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered, or three Business Days after being sent by express the
mail, postage prepaid, or, in the case of telecopy notice, when
90
received, addressed as follows in the case of Holdings, the Borrower and the
Agents, and as set forth in an administrative questionnaire delivered to the
Administrative Agent in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto:
Holdings and the Borrower: 825 E. Wisconsin Avenue
P.O. Box 359
Appleton, WI 54912-0359
Attention: Paul Karch
Telecopy: (920) 991-7256
Telephone: (920) 740-6802
with a copy to: Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, WI 53202-3590
Attention: Christopher Noyes
Telecopy: 414-273-5198
Telephone: 414-273-3500
The Administrative Agent: Toronto Dominion (Texas), Inc.
909 Fannin, Suite 1700
Houston, Texas 77010
Attention: Jeff Lents
Telecopy: 713-951-9921
Telephone: 713-653-8229
The Syndication Agent: Bear Stearns Corporate Lending Inc.
245 Park Avenue
New York, NY 10167
Attention: Andrea Labonte
Telecopy: (212) 272-5446
Telephone: (212) 272-6206
provided that any notice, request or demand to or upon any Agent, any Issuing
- --------
Lender or the Lenders shall not be effective until received.
11.3. No Waiver; Cumulative Remedies.
------------------------------
No failure to exercise and no delay in exercising, on the part of any
Agent or any Lender, any right, remedy, power or privilege hereunder or under
the other Loan Documents shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
11.4. Survival of Representations and Warranties.
------------------------------------------
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All representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the making of the Loans and other extensions of credit
hereunder.
11.5. Payment of Expenses and Taxes.
-----------------------------
The Borrower agrees (a) to pay or reimburse the Syndication Agent for
all its reasonable out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including the reasonable fees and disbursements of counsel to the
Syndication Agent and filing and recording fees and expenses, with statements
with respect to the foregoing to be submitted to the Borrower prior to the
Closing Date (in the case of amounts to be paid on the Closing Date) and from
time to time thereafter on a quarterly basis or such other periodic basis as
such Agent shall deem appropriate and of the Administrative Agent with respect
of any supplement, amendment or modification hereof or thereof, (b) to pay or
reimburse each Lender and Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel without duplication of services from outside counsel) to each
Lender and of counsel to such Agent and (c) to pay, indemnify, and hold each
Lender and Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "Indemnitee") harmless from
----------
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of any Group Member or
any of the Properties and the reasonable fees and expenses of legal counsel in
connection with claims, actions or proceedings by any Indemnitee against any
Loan Party under any Loan Document (all the foregoing in this clause (d),
collectively, the "Indemnified Liabilities"), provided, that the Borrower shall
----------------------- --------
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities have resulted from the
gross negligence or willful misconduct of such Indemnitee or its respective
officers, directors, employees, agents, affiliates or controlling persons.
Without limiting the foregoing, and to the extent permitted by applicable law,
the Borrower agrees not to assert and to cause its Subsidiaries not to assert,
and hereby waives and agrees to cause its Subsidiaries to waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee, except to the
extent arising out of the gross negligence or willful misconduct of any
Indemnitee. All amounts due under this Section 11.5 shall be payable not later
than 10 days after written demand therefore, showing in reasonably detail the
basis for the calculation thereof. Statements payable by the Borrower pursuant
to this Section 11.5 shall be submitted to Dale Parker (Telephone No.
920-991-8366 (Telecopy No. 920-991-7256) at the address of the
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Borrower set forth in Section 11.2, or to such other Person or address as may be
hereafter designated by the Borrower in a written notice to the Administrative
Agent. The agreements in this Section 11.5 shall survive repayment of the Loans
and all other amounts payable hereunder.
11.6. Successors and Assigns; Participations and Assignments.
------------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
Holdings, the Borrower, the Lenders, the Administrative Agent, all future
holders of the Loans and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.
(b) Any Lender other than any Conduit Lender may, with notice to,
but without the consent of the Borrower, in accordance with applicable law, at
any time sell to one or more banks, financial institutions or other entities
(other than any entity that is in the same line of business as the Borrower and
is a direct competitor of the Borrower) (each, a "Participant") participating
-----------
interests in any Loan owing to such Lender, any Commitment of such Lender or any
other interest of such Lender hereunder and under the other Loan Documents. In
the event of any such sale by a Lender of a participating interest to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Loan for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Loans or
any fees payable hereunder, or postpone the date of the final maturity of the
Loans, in each case to the extent subject to such participation. The Borrower
agrees that if amounts outstanding under this Agreement and the Loans are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
--------
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 11.7(a) as
fully as if it were a Lender hereunder. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 4.9, 4.10 and 4.11
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if it was a Lender; provided that, in the case of Section
--------
4.10, such Participant shall have complied with the requirements of said Section
and provided, further, that no Participant shall be entitled to receive any
-------- -------
greater amount pursuant to any such Section 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.
(c) Any Lender other than any Conduit Lender (an "Assignor") may, in
--------
accordance with applicable law, at any time and from time to time assign to any
Lender, or any Lender Affiliate or any Approved Fund or, with the consent of the
Borrower, the Syndication
93
Agent and the Administrative Agent (which, in the case of the Borrower, shall
not be unreasonably withheld or delayed), to an additional bank, financial
institution or other entity (an "Assignee") all or any part of its rights and
--------
obligations under this Agreement and the other Loan Documents pursuant to an
Assignment and Acceptance, executed by such Assignee, such Assignor and any
other Person whose consent is required pursuant to this paragraph, and delivered
to the Administrative Agent (with a copy to the Syndication Agent) for its
acceptance and recording in the Register; provided that unless otherwise agreed
--------
by the Borrower and the Administrative Agent (x) no such assignment to an
Assignee (other than any Lender or any Lender Affiliate) shall be in an
aggregate principal amount of less than $1,000,000 and the aggregate principal
amount of the assigning Lender's Revolving Commitment and Loans remaining after
such assignment shall not be less than $1,000,000, in each case except in the
case of an assignment of all of a Lender's interests under this Agreement), (y)
in the case of any assignment of Revolving Commitments (other than to a Lender
or a Lender Affiliate), the consent of each Issuing Lender shall be required
(which shall not be unreasonably withheld or delayed), and (z) until the first
anniversary of the Closing Date, no consent shall be required for any assignment
by the Syndication Agent or any of its Affiliates (other than as agreed to
between the Administrative Agent and the Syndication Agent). For purposes of the
proviso contained in the preceding sentence, the amount described therein shall
be aggregated in respect of each Lender and its Lender Affiliates, if any. Any
such assignment need not be ratable as among the Facilities. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such Assignor shall cease to be a party hereto).
Notwithstanding any provision of this Section 11.6, the consent of the Borrower
shall not be required for any assignment that occurs when an Event of Default
pursuant to Section 9(f) (with respect to the Borrower) shall have occurred and
be continuing. Notwithstanding the foregoing, any Conduit Lender may assign at
any time to its designating Lender hereunder without the consent of the
Borrower, the Syndication Agent or the Administrative Agent any or all of the
Loans it may have funded hereunder and pursuant to its designation agreement and
without regard to the limitations set forth in the first sentence of this
Section 11.6(c).
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 11.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
--------
recordation of the names and addresses of the Lenders and the Commitment of, and
the principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each other Loan Party, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Loans and any Notes evidencing the Loans recorded therein for all
purposes of this Agreement. Any assignment of any Loan, whether or not evidenced
by a Note, shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Loan evidenced by a Note shall be
registered on the Register only upon surrender for registration of assignment or
transfer of the Note evidencing
94
such Loan, accompanied by a duly executed Assignment and Acceptance, and
thereupon one or more new Notes shall be issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
11.6(c), together with payment to the Administrative Agent of a registration and
processing fee of $3,500 (except, in the case of an assignment by or to the
Syndication Agent or any of its Affiliates), the Administrative Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) record the information
contained therein in the Register on the effective date determined pursuant
thereto.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 11.6 concerning assignments
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including any pledge or assignment by a
Lender to any Federal Reserve Bank in accordance with applicable law.
(g) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (f) above.
(h) Each of Holdings, the Borrower, each Lender and the
Administrative Agent hereby confirms that it will not institute against a
Conduit Lender or join any other Person in instituting against a Conduit Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued by
such Conduit Lender; provided, however, that each Lender designating any Conduit
--------
Lender hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage or expense arising out of its inability to
institute such a proceeding against such Conduit Lender during such period of
forbearance.
11.7. Adjustments; Set-off.
--------------------
(a) Except to the extent that this Agreement expressly provides for
payments to be allocated to a particular Lender or to the Lenders under a
particular Facility, if any Lender (a "Benefitted Lender") shall, at any time
-----------------
after the Loans and other amounts payable hereunder shall immediately become due
and payable pursuant to Section 9, receive any payment of all or part of the
Obligations owing to it, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 9(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of the Obligations owing to such other Lender, such Benefitted Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of the Obligations owing to each such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral ratably with each of the Lenders; provided, however,
-------- -------
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.
95
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to Holdings or
the Borrower, any such notice being expressly waived by Holdings and the
Borrower to the extent permitted by applicable law, upon the occurrence and
during the continuance of an Event of Default under Section 9(a), to set off and
appropriate and apply against any amount then due and payable to such Lender any
and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of Holdings or the Borrower, as the
case may be. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such setoff and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
- --------
such setoff and application.
11.8. Counterparts.
------------
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
Delivery of an executed signature page of this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof. A set of the copies of this Agreement signed by all the parties shall be
lodged with the Borrower and the Administrative Agent.
11.9. Severability.
------------
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.10. Integration.
-----------
This Agreement and the other Loan Documents represent the entire
agreement of Holdings, the Borrower, the Agents and the Lenders with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by any Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
11.11. GOVERNING LAW.
-------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
11.12. Submission To Jurisdiction; Waivers.
-----------------------------------
Each of Holdings and the Borrower hereby irrevocably and
unconditionally:
96
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to Holdings or the
Borrower, as the case may be at its address set forth in Section 11.2 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
11.13. Acknowledgments.
---------------
Each of Holdings and the Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) no Agent or Lender has any fiduciary relationship with or duty to
Holdings or the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Agents and
Lenders, on one hand, and Holdings and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among Holdings, the Borrower and the Lenders.
11.14. Releases of Guarantees and Liens.
--------------------------------
(a) Notwithstanding anything to the contrary contained herein or in
any other Loan Document, the Administrative Agent is hereby irrevocably
authorized by each Lender (without requirement of notice to or consent of any
Lender except as expressly required by Section 11.1) to take any action
requested by the Borrower having the effect of releasing any Collateral or
guarantee obligations (i) to the extent necessary to permit consummation of any
97
transaction not prohibited by any Loan Document or that has been consented to in
accordance with Section 11.1 or (ii) under the circumstances described in
paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations and the
other obligations under the Loan Documents (other than (x) contingent on-going
indemnity and similar obligations and (y) obligations under or in respect of
Hedge Agreements) shall have been paid in full, the Commitments have been
terminated and no Letters of Credit shall be outstanding, the Collateral shall
be released from the Liens created by the Security Documents, and the Security
Documents and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Loan Party under the Security
Documents shall terminate, all without delivery of any instrument or performance
of any act by any Person and the Administrative Agent agrees to take such
actions as may be reasonably requested by the Borrower to evidence such release
and termination.
11.15. Confidentiality.
----------------
Each Agent and each Lender agrees to keep confidential all information
provided to it by any Loan Party pursuant to this Agreement that is designated
by such Loan Party as confidential; provided that nothing herein shall prevent
--------
any Agent or any Lender from disclosing any such information (a) to any Agent,
any other Lender or any Lender Affiliate, (b) subject to an agreement to comply
with the provisions of this Section, to any actual or prospective Transferee or
any direct or indirect counterparty to any Hedge Agreement (or any professional
advisor to such counterparty), (c) to its employees, directors, agents,
attorneys, accountants and other professional advisors or those of any of its
affiliates in connection with its or their work in respect of this Agreement and
any related transactions, (d) upon the request or demand of any Governmental
Authority, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(f) if requested or required to do so in connection with any litigation or
similar proceeding, (g) that has been publicly disclosed other than pursuant to
any breach of this Section by such Lender or such Agent, as the case may be, (h)
to the National Association of Insurance Commissioners or any similar
organization or any nationally recognized rating agency that requires access to
information about a Lender's investment portfolio in connection with ratings
issued with respect to such Lender, or (i) in connection with the exercise of
any remedy hereunder or under any other Loan Document.
11.16. WAIVERS OF JURY TRIAL.
---------------------
HOLDINGS, THE BORROWER, THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
11.17. Delivery of Addenda.
-------------------
Each initial Lender shall become a party to this Agreement by
delivering to the Administrative Agent an Addendum duly executed by such Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
PAPERWEIGHT DEVELOPMENT CORP.
By: /s/ Dale E. Parker
Name: Dale E. Parker
Title: CFO
APPLETON PAPERS INC.
By: /s/ Paul J. Karch
Name: Paul J. Karch
Title: Paul J. Karch
BEAR, STEARNS & CO. INC., as Sole Lead
Arranger and Sole Book Manager
By: /s/ Keith C. Barnish
Name: Keith C. Barnish
Title: Senior Managing Director
BEAR STEARNS CORPORATE LENDING INC.,
as Syndication Agent and as a Lender
By: /s/ Keith C. Barnish
Name: Keith C. Barnish
Title: Executive Vice President
TORONTO DOMINION (TEXAS), INC., as
Administrative Agent and as a Lender
By: /s/ Jeffery R. Lents
Name: Jeffery R. Lents
Title: Vice President
THE TORONTO-DOMINION BANK, as an Issuing Lender
By: /s/ Jeffery R. Lents
Name: Jeffery R. Lents
Title: Mgr. Syndications & Credit Admin.
99
U.S. BANK NATIONAL ASSOCIATION d/b/a
FIRSTAR BANK, N.A., as a Documentation Agent
and as a Lender
By: /s/ Jeff Janza
Name: Jeff Janza
Title: Vice President
LA SALLE BANK NATIONAL ASSOCIATION, as a
Documentation Agent and as a Lender
By: /s/ Lou D. Banach
Name: Lou D. Banach
Title: First Vice President & Senior Lender
M&I MARSHAL & ILSLEY BANK, as
Managing Agent, as an Issuing Lender and as a
Lender
By: /s/ Leo D. Freeman
Name: Leo D. Freeman
Title: Vice President
By: /s/ James R. Miller
Name: James R. Miller
Title: Vice President
ASSOCIATED BANK, N.A., as a Co-Agent and as
a Lender
By: /s/ Joseph J. Gehrke
Name: Joseph J. Gehrke
Title: Assistant Vice President
Annex A
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PRICING GRID FOR REVOLVING LOANS, SWINGLINE LOANS AND
TRANCHE A TERM LOANS
===============================================================================================
Pricing Level Applicable Margin Applicable Margin
for Eurodollar Loans for Base Rate Loans
- -----------------------------------------------------------------------------------------------
I 3.50% 2.50%
II 3.00% 2.00%
III 2.50% 1.50%
IV 2.00% 1.00%
===============================================================================================
The Applicable Margin for Revolving Loans, Swingline Loans and Tranche A Term
Loans shall be adjusted, on and after the first Adjustment Date (as defined
below) occurring after the date which is six months after the Closing Date,
based on changes in the Consolidated Leverage Ratio, with such adjustments to
become effective on the date (the "Adjustment Date") that is three Business Days
---------------
after the date on which the relevant financial statements are delivered to the
Lenders pursuant to Section 7.1 and to remain in effect until the next
adjustment to be effected pursuant to this paragraph. If any financial
statements referred to above are not delivered within the time periods specified
in Section 7.1, then, until the date that is three Business Days after the date
on which such financial statements are delivered the highest rate set forth in
each column of the Pricing Grid shall apply. On each Adjustment Date, the
Applicable Margin for Revolving Loans, Swingline Loans and Tranche A Term Loans
shall be adjusted to be equal to the Applicable Margins opposite the Pricing
Level determined to exist on such Adjustment Date from the financial statements
relating to such Adjustment Date.
As used herein, the following rules shall govern the determination of
Pricing Levels on each Adjustment Date:
"Pricing Level I" shall exist on an Adjustment Date if the
---------------
Consolidated Leverage Ratio for the relevant period is greater than or equal to
2.50 to 1.00.
"Pricing Level II" shall exist on an Adjustment Date if the
----------------
Consolidated Leverage Ratio for the relevant period is less than 2.50 to 1.00
but greater than or equal to 2.00 to 1.00.
"Pricing Level III" shall exist on an Adjustment Date if the
-----------------
Consolidated Leverage Ratio for the relevant period is less than 2.00 to 1.00
but greater than or equal to 1.50 to 1.00.
"Pricing Level IV" shall exist on an Adjustment Date if the
----------------
Consolidated Leverage Ratio for the relevant period is less than 1.50 to 1.00.