<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934)
------------------------
AEP INDUSTRIES INC.
(NAME OF ISSUER)
(NAME OF PERSON(S) FILING STATEMENT)
------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
001031 10 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
PAUL M. FEENEY
EXECUTIVE VICE PRESIDENT--FINANCE
AEP INDUSTRIES INC.
125 PHILLIPS AVENUE
SOUTH HACKENSACK, NEW JERSEY 07606
(201) 641-6600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
------------------------
Copies of Communications to:
DENNIS J. BLOCK, ESQ.
WEIL, GOTSHAL & MANGES
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8187
------------------------
AUGUST 10, 1995
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
------------------------
CALCULATION OF FILING FEE
TRANSACTION VALUE:* $24,638,250 AMOUNT OF FILING FEE:* $4,927.65
*BASED ON $22.75 CASH PRICE PER SHARE FOR 1,083,000 SHARES.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
<TABLE>
<S> <C>
AMOUNT PREVIOUSLY PAID: NONE FILING PARTY: N/A
FORM OR REGISTRATION NO. N/A DATE FILED: N/A
</TABLE>
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is AEP Industries Inc., a Delaware corporation
(the 'Company'). The Company's principal executive offices are located at 125
Phillips Avenue, South Hackensack, New Jersey 07606.
(b) This statement relates to a tender offer by the Company to purchase up
to 1,083,000 shares of its Common Stock, par value $.01 per share ('Shares'),
for $22.75 per share, net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated August 10, 1995, and in
the related Letter of Transmittal (which together constitute the 'Offer'),
copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively.
Reference is hereby made to the 'Introduction,' Section 1, 'Number of Shares;
Proration; Extension of the Offer,' Section 8, 'Background and Purpose of the
Offer and the Purchase,' Section 12, 'Transactions and Arrangements Concerning
the Shares,' and Section 15, 'Extension of Tender Period; Termination;
Amendments,' of the Offer to Purchase, each of which is herein incorporated by
reference.
(c) Reference is hereby made to the 'Introduction' and Section 7, 'Price
Range of Shares; Dividends,' of the Offer to Purchase, each of which is herein
incorporated by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Reference is hereby made to Section 10, 'Source and Amount of
Funds,' of the Offer to Purchase, which Section is herein incorporated by
reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
Reference is hereby made to the 'Introduction,' Section 6, 'Certain
Conditions of the Offer,' Section 7, 'Price Range of Shares; Dividends,' Section
8, 'Background and Purpose of the Offer and the Purchase,' Section 9, 'Certain
Information Concerning the Company,' Section 10, 'Source and Amount of Funds,'
Section 12, 'Transactions and Arrangements Concerning the Shares,' and Section
14, 'Effects of the Offer on the Market for Shares; Registration under the
Exchange Act,' of the Offer to Purchase, each of which is herein incorporated by
reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Reference is hereby made to the 'Introduction,' Section 8, 'Background and
Purpose of the Offer and the Purchase,' and Section 12, 'Transactions and
Arrangements Concerning the Shares,' of the Offer to Purchase, each of which is
herein incorporated by reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
Reference is hereby made to the 'Introduction,' Section 8, 'Background and
Purpose of the Offer and the Purchase,' and Section 12, 'Transactions and
Arrangements Concerning the Shares,' of the Offer to Purchase, each of which is
herein incorporated by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the 'Introduction' and Section 16, 'Fees and
Expenses,' of the Offer to Purchase, each of which is herein incorporated by
reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) Reference is hereby made to Section 9, 'Certain Information
Concerning the Company,' of the Offer to Purchase, which Section is herein
incorporated by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Reference is hereby made to Section 12, 'Transactions and Arrangements
Concerning the Shares,' of the Offer to Purchase, which Section is herein
incorporated by reference.
(b) Reference is hereby made to Section 13, 'Certain Legal Matters;
Regulatory Approvals,' of the Offer to Purchase, which Section is herein
incorporated by reference.
1
<PAGE>
(c) Reference is hereby made to Section 14, 'Effects of the Offer on the
Market for Shares; Registration under the Exchange Act,' of the Offer to
Purchase, which Section is herein incorporated by reference.
(d) None.
(e) Reference is hereby made to the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)
and (a)(2), respectively, and are herein incorporated by reference in their
entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) -- Offer to Purchase, dated August 10, 1995.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) -- Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) -- Letter to the Company's Stockholders from the Chairman of the Board,
President and Chief Executive Officer of the Company.
(a)(8) -- Text of Press Release, dated August 3, 1995.
(a)(9) -- Text of Press Release, dated August 10, 1995.
(b) -- Credit Agreement, dated as of August 3, 1995, among the Company, The
Chase Manhattan Bank (National Association), as Administrative Agent
and Mellon Bank, N.A., as Documentation Agent and the lenders party
thereto.
(c) -- Stock Purchase Agreement, dated August 2, 1995, by and between J.
Brendan Barba and the Company.
(d) -- None.
(e) -- Not applicable.
(f) -- None.
</TABLE>
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
AEP INDUSTRIES INC.
By: /s/ PAUL M. FEENEY
-------------------------------------
Paul M. Feeney
Executive Vice President--Finance
Date: August 10, 1995
3
OFFER TO PURCHASE FOR CASH
BY
AEP INDUSTRIES INC.
UP TO
1,083,000 SHARES OF ITS COMMON STOCK
AT $22.75 NET PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 8, 1995, UNLESS THE
OFFER IS EXTENDED.
AEP Industries Inc., a Delaware corporation (the 'Company'), is offering
to purchase up to 1,083,000 shares of its Common Stock, par value $.01 per
share ('Shares'), for $22.75 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which together constitute the 'Offer'),
including the proration provisions described herein. The Company reserves the
right, in its sole discretion, to purchase more than 1,083,000 Shares pursuant
to the Offer, subject to any required extension of the period of time during
which the Offer is open. See Section 15.
------------------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 6.
------------------------
The Shares are traded on The Nasdaq Stock Market's National Market (the
'NNM'). On August 2, 1995, the last full trading day before the announcement
of the terms of the Offer, the closing bid price of the Shares on the NNM was
$20.75 per Share. On August 9, 1995, the last full trading day before the
commencement of the Offer, the closing bid price of the Shares on NNM was $22
per Share. Stockholders are urged to obtain a current market quotation for the
Shares.
------------------------
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
AS TO WHETHER ANY STOCKHOLDER SHOULD TENDER ANY OR ALL OF SUCH STOCKHOLDER'S
SHARES PURSUANT TO THE OFFER. EACH STOCKHOLDER MUST MAKE SUCH STOCKHOLDER'S
OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
------------------------
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
August 10, 1995
<PAGE>
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other documents required by the Letter
of Transmittal to The Chase Manhattan Bank (National Association), the
depositary for the Offer (the 'Depositary'), and either mail or deliver the
certificates for such Shares to the Depositary along with the Letter of
Transmittal or follow the procedure for book-entry transfer set forth in Section
3, or (2) request such stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such stockholder. A
stockholder having Shares registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such broker, dealer,
commercial bank, trust company or other nominee if such stockholder desires to
tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available (or who cannot follow the procedure for
book-entry transfer on a timely basis) or who cannot transmit the Letter of
Transmittal and all other required documents to the Depositary before the
Expiration Date (as defined in Section 1) should tender such Shares by following
the procedure for guaranteed delivery set forth in Section 3.
------------------------
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase and requests for
additional copies of this Offer to Purchase, the Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent.
Stockholders may also contact their broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL.
IF MADE OR GIVEN, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
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INTRODUCTION............................................................... 1
THE OFFER.................................................................. 2
1. Number of Shares; Proration; Extension of the Offer.................... 2
2. Tenders by Holders of Fewer than 100 Shares............................ 3
3. Procedure for Tendering Shares......................................... 3
4. Withdrawal Rights...................................................... 5
5. Acceptance for Payment of Shares and Payment of Purchase Price......... 6
6. Certain Conditions of the Offer........................................ 7
7. Price Range of Shares; Dividends....................................... 7
8. Background and Purpose of the Offer and the Purchase................... 8
9. Certain Information Concerning the Company............................. 10
10. Source and Amount of Funds............................................. 13
11. Certain Federal Income Tax Considerations.............................. 14
12. Transactions and Arrangements Concerning the Shares.................... 17
13. Certain Legal Matters; Regulatory Approvals............................ 18
14. Effects of the Offer on the Market for Shares; Registration under the
Exchange Act........................................................... 18
15. Extension of Tender Period; Termination; Amendments.................... 18
16. Fees and Expenses...................................................... 19
17. Miscellaneous.......................................................... 20
ANNEX A--Opinion of Bear, Stearns & Co. Inc................................ A-1
</TABLE>
<PAGE>
To the Holders of Common Stock of AEP Industries Inc.:
INTRODUCTION
AEP Industries Inc., a Delaware corporation (the 'Company'), is offering to
purchase up to 1,083,000 shares of its Common Stock, par value $.01 per share
('Shares'), at a price of $22.75 per Share (the 'Purchase Price'), net to the
seller in cash, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the 'Offer').
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS (THE 'BOARD') MAKES ANY
RECOMMENDATION AS TO WHETHER ANY STOCKHOLDER SHOULD TENDER ANY OR ALL OF SUCH
STOCKHOLDER'S SHARES PURSUANT TO THE OFFER. EACH STOCKHOLDER MUST MAKE SUCH
STOCKHOLDER'S OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES
TO TENDER.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6.
As of August 9, 1995, there were 5,870,041 Shares outstanding and 421,306
Shares were reserved for issuance in connection with outstanding stock options
under the Company's stock option plans. The 1,083,000 Shares that the Company is
offering to purchase in the Offer represent approximately 18% of the Shares
outstanding as of August 9, 1995 and approximately 17% of the fully-diluted
Shares outstanding as of such date.
Neither the Company nor the Board makes any recommendation to any holder of
options as to whether to exercise any or all such options or to tender any or
all Shares issuable upon such exercise.
Historically, the Company has maintained relatively low debt levels,
leaving the Company under-leveraged. The Board believes that the interests of
stockholders will be served by utilizing the Company's excess borrowing capacity
to afford stockholders an opportunity to sell a significant portion of their
Shares to the Company. The Board believes that the Company will generate
sufficient cash flow to repay the borrowings made to effect any Share
repurchases and to meet the future needs of the Company's business.
The Offer is designed to afford to stockholders who are considering the
sale of all or a portion of their Shares an opportunity to sell such Shares for
a higher price than that available in the open market immediately prior to the
announcement of the Offer, without the usual transaction costs associated with
market sales. However, stockholders should be aware that proceeds of sales
pursuant to the Offer may be treated as a dividend taxable as ordinary income to
a stockholder rather than capital gain. See Section 11.
On August 2, 1995, the Company and J. Brendan Barba, the Chairman of the
Board, President and Chief Executive Officer of the Company, entered into a
Stock Purchase Agreement (the 'Barba Purchase Agreement'), pursuant to which the
Company purchased from Mr. Barba on such date an aggregate of 1,550,000 Shares
for a cash purchase price of $21.04 per Share (the 'Barba Purchase').
Pursuant to the Barba Purchase Agreement, Mr. Barba has agreed that none of
the Shares beneficially owned by him or any of his affiliates or over which he
otherwise exercises dispositive power will be tendered and sold to the Company
pursuant to the Offer. The Company has been informed by its other directors and
executive officers that they do not intend to tender shares owned by them
pursuant to the Offer. After giving effect to the consummation of the Barba
Purchase and the repurchase of Shares by the Company pursuant to the Offer
(assuming 1,083,000 Shares are tendered and purchased pursuant to the Offer),
Mr. Barba will own beneficially approximately 32% of the outstanding Shares.
Shares acquired by the Company pursuant to the Offer and the Barba Purchase
will be held in the Company's treasury and will be available for the Company to
issue without further stockholder action (except as required by applicable law
or the rules of the NNM on which the Shares are traded). Shares could be issued
for such purposes as, among others, the acquisition of businesses, the raising
of additional capital for use in the Company's business, the distribution of
stock dividends and the implementation of employee benefit plans. Specifically,
the Board has authorized the establishment of an employee stock ownership plan
(the 'ESOP') which it expects will be implemented later in 1995. Shares acquired
by the Company pursuant to the Barba Purchase and the Offer may over time,
subject to the determination of the Board as to the appropriate level of
contributions and other relevant considerations, be contributed by the Company
to the ESOP. The purpose of the ESOP will be to attract and retain key employees
of the Company, to encourage an ownership commitment by
<PAGE>
those employees and to motivate such persons by providing incentives for the
successful implementation of the Company's strategic plans.
If before the Expiration Date (as defined in Section 1), a greater number
of Shares is properly tendered and not withdrawn than will be accepted for
purchase by the Company, the Company will accept Shares for purchase, first,
from all Shares properly tendered by any Odd Lot Holder (as defined in Section
1) who tenders all Shares beneficially owned by such Odd Lot Holder and complies
with the requirements set forth in Section 2 and, then, from all other Shares
properly tendered on a pro rata basis. See Sections 1 and 2. All Shares not
purchased pursuant to the Offer, including Shares not purchased because of
proration, will be returned to the tendering stockholders at the Company's
expense. Tendering stockholders will not be obligated to pay brokerage
commissions, solicitation fees or, subject to Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Company. The
Company will pay all fees and expenses of Bear, Stearns & Co. Inc. (the 'Dealer
Manager' or 'Bear Stearns'), The Chase Manhattan Bank (National Association)
(the 'Depositary') and D.F. King & Co., Inc. (the 'Information Agent'), in
connection with the Offer. See Section 16.
The Shares are traded on The Nasdaq Stock Market's National Market (the
'NNM'). On August 2, 1995, the last full trading day before the announcement of
the terms of the Offer, the closing bid price of the Shares on the NNM was
$20.75 per Share. On August 9, 1995, the last full trading day before the
commencement of the Offer, the closing bid price of the Shares on the NNM was
$22 per Share. See Section 7. Stockholders are urged to obtain a current market
quotation for the Shares.
THE OFFER
1. NUMBER OF SHARES; PRORATION; EXTENSION OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment (and will thereby purchase) up to 1,083,000 Shares or such
lesser number of Shares as are properly tendered (and not withdrawn in
accordance with Section 4) before the Expiration Date at the Purchase Price. The
term 'Expiration Date' means 12:00 Midnight, New York City time, on Friday,
September 8, 1995, unless and until the Company shall have extended the period
of time for which the Offer is open, in which event the term 'Expiration Date'
shall refer to the latest time and date at which the Offer, as so extended by
the Company, shall expire. For a description of the Company's rights to extend
the period of time during which the Offer is open and to delay, terminate or
amend the Offer, see Section 15. See also Section 6. Subject to the purchase of
Shares properly tendered and not withdrawn by Odd Lot Holders as set forth in
Section 2, if the Offer is oversubscribed, Shares tendered before the Expiration
Date will be subject to proration. The proration period also expires on the
Expiration Date.
The Company reserves the right, in its sole discretion, at any time or from
time to time, to extend the period of time during which the Offer is open by
giving oral or written notice of such extension to the Depositary and making a
public announcement thereof. See Section 15. There can be no assurance, however,
that the Company will exercise its right to extend the Offer.
The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, subject to certain other conditions. See
Section 6.
All Shares purchased pursuant to the Offer will be purchased at the
Purchase Price, net to the seller in cash. The Company reserves the right, in
its sole discretion, to purchase more than 1,083,000 Shares pursuant to the
Offer. If (a) the Company (i) increases or decreases the price to be paid for
Shares, (ii) increases the number of Shares being sought and any such increase
exceeds 2% of the outstanding Shares or (iii) decreases the number of Shares
being sought, and (b) the Offer is scheduled to expire at any time earlier than
the expiration of a period ending on the tenth business day from and including
the date that notice of such increase or decrease is first published, sent or
given in the manner specified in Section 15, the Offer will be extended until
the expiration of such ten business day period. For the purposes of the Offer, a
'business day' means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time.
2
<PAGE>
All Shares not purchased pursuant to the Offer, including Shares not
purchased because of proration, will be returned to the tendering stockholders
at the Company's expense as promptly as practicable (which, in the event of
proration, is expected to be approximately 12 NNM trading days) following the
Expiration Date.
If the number of Shares properly tendered and not withdrawn before the
Expiration Date is less than or equal to 1,083,000 Shares (or such greater
number of Shares as the Company may elect to purchase pursuant to the Offer),
the Company, upon the terms and subject to the conditions of the Offer, will
purchase at the Purchase Price all Shares so tendered and not withdrawn.
If the number of Shares properly tendered and not withdrawn before the
Expiration Date is greater than 1,083,000 Shares (or such greater number of
Shares as the Company may elect to purchase pursuant to the Offer), the Company,
upon the terms and subject to the conditions of the Offer, will accept Shares
for purchase in the following order of priority:
(a) first, all Shares properly tendered and not withdrawn before the
Expiration Date by any stockholder who beneficially owned as of the close
of business on August 3, 1995, and who continues to own beneficially until
the Expiration Date an aggregate of fewer than 100 Shares (each an 'Odd Lot
Holder') who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder
(partial tenders will not qualify for this preference); and
(2) completes the box captioned 'Odd Lots' on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery;
and
(b) then, after purchase of all the foregoing Shares, all other Shares
properly tendered and not withdrawn before the Expiration Date on a pro
rata basis, if necessary (with adjustments to avoid purchases of fractional
Shares).
In the event that proration of tendered Shares is required, the Company
will determine the final proration factor as promptly as practicable after the
Expiration Date. Although the Company does not expect that it will be able to
announce the final proration factor until approximately seven NNM trading days
after the Expiration Date, it will announce preliminary results of proration by
press release as promptly as practicable after the Expiration Date. Stockholders
may obtain such preliminary information from the Information Agent and may be
able to obtain such information from their brokers or financial advisors.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES
The Company, upon the terms and subject to the conditions of the Offer,
will accept for purchase, without proration, all Shares properly tendered and
not withdrawn before the Expiration Date by or on behalf of Odd Lot Holders. See
Section 1. To avoid proration, however, an Odd Lot Holder must properly tender
all Shares that such Odd Lot Holder beneficially owns. Partial tenders will not
qualify for this preference. This preference is not available to owners of 100
or more Shares even if such owners have separate stock certificates for fewer
than 100 Shares. Any Odd Lot Holder wishing to tender all Shares beneficially
owned by such Odd Lot Holder pursuant to the Offer and qualify for this
preference must complete the box captioned 'Odd Lots' on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery. See
Section 3.
3. PROCEDURE FOR TENDERING SHARES
Proper Tender of Shares. For Shares to be properly tendered pursuant to
the Offer:
(a) the certificates for such Shares (or confirmation of receipt of
such Shares pursuant to the procedure for book-entry transfer set forth
below), together with a properly completed and duly executed Letter of
Transmittal (or a facsimile copy thereof) with any required signature
guarantees, and any other documents required by the Letter of Transmittal,
must be received before the Expiration Date by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase; or
(b) the tendering stockholder must comply with the guaranteed delivery
procedure set forth below.
3
<PAGE>
It is a violation of Section 14(e) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder (collectively, the
'Exchange Act'), and Rule 14e-4 promulgated thereunder, for a person to tender
Shares for such person's own account unless the person so tendering:
(i) owns such Shares; or
(ii) owns an option, warrant or right to purchase such Shares and
intends to acquire Shares for tender by exercise of such option, warrant or
right.
Section 14(e) and Rule 14e-4 provide a similar restriction applicable to
the tender or guarantee of a tender on behalf of another person.
A tender of Shares made pursuant to any method of delivery set forth herein
will constitute a binding agreement between the tendering stockholder and the
Company upon the terms and subject to the conditions of the Offer, including the
tendering stockholder's representation that (i) such stockholder owns the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act and (ii) the tender of such Shares complies with Rule 14e-4.
Signature Guarantees and Methods of Delivery. No signature guarantee is
required on the Letter of Transmittal if the Letter of Transmittal is signed by
the registered owner of the Shares (which term, for purposes of this Section 3,
includes any participant in The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company (collectively, the
'Book-Entry Transfer Facilities') whose name appears on a security position
listing as the owner of the Shares) tendered therewith, and payment and delivery
are to be made directly to such registered owner at such owner's address shown
on the records of the Company, or if Shares are tendered for the account of a
financial institution (including most banks, savings and loan associations, and
brokerage houses) that is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchanges Medallion Program (each such entity being hereinafter
referred to as an 'Eligible Institution'). In all other cases, all signatures on
the Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 1 of the Letter of Transmittal. If a certificate representing Shares
is registered in the name of a person other than the person signing a Letter of
Transmittal, or if payment is to be made, or certificates for Shares not
purchased or tendered are to be issued, to a person other than the registered
owner, the certificate must be endorsed or accompanied by an appropriate stock
power, in either case signed exactly as the name of the registered owner appears
on the certificate, with the signature on the certificate or stock power
guaranteed by an Eligible Institution. In all cases, payment for Shares tendered
and accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities), a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) and any other
documents required by the Letter of Transmittal.
The method of delivery of all documents, including stock certificates, the
Letter of Transmittal and any other required documents, is at the election and
risk of the tendering stockholder. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended.
Federal Backup Withholding. Absent an exemption applying under the
applicable law concerning 'backup withholding' of federal income tax, the
Depositary will be required to withhold, and will withhold, 31% of the gross
proceeds otherwise payable to a stockholder (or other payee) pursuant to the
Offer unless the stockholder (or other payee) provides such person's tax
identification number (social security number or employer identification
number), certifies that such number is correct and certifies that such person is
not subject to backup federal income tax withholding. Each tendering
stockholder, other than a noncorporate foreign stockholder, should complete and
sign the main signature form and the Substitute Form W-9 included as part of the
Letter of Transmittal so as to provide the information and certifications
necessary to avoid backup withholding, unless an applicable exemption exists and
is proved in a manner satisfactory to the Company and the Depositary.
Noncorporate foreign stockholders generally should complete and sign a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding.
For a discussion of certain other federal income tax consequences of the
Offer, see Section 11.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at each of the Book-Entry Transfer Facilities for purposes of the
Offer within two business days after the date of this Offer to
4
<PAGE>
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of the Shares by causing
such facility to transfer such Shares into the Depositary's account in
accordance with such facility's procedure for such transfer. Even though
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof), with
any required signature guarantees and other required documents, must, in any
case, be transmitted to and received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase before the Expiration
Date, or the guaranteed delivery procedure set forth below must be followed.
Delivery of the Letter of Transmittal and any other required documents to one of
the Book-Entry Transfer Facilities does not constitute delivery to the
Depositary.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's stock certificates are not immediately
available (or the procedure for book-entry transfer cannot be followed on a
timely basis) or time will not permit the Letter of Transmittal and all other
required documents to reach the Depositary before the Expiration Date, such
Shares may nevertheless be tendered provided that all the following conditions
are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives (by hand, mail or facsimile transmission)
before the Expiration Date, a properly completed and duly executed Notice
of Guaranteed Delivery substantially in the form the Company has provided
with this Offer to Purchase; and
(c) the certificates for all tendered Shares in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within five NNM trading days
after the date of execution of such Notice of Guaranteed Delivery.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation To Give Notice of Defects. All questions as to the number of Shares
to be accepted and the validity, form, eligibility (including time of receipt)
and acceptance for payment of any tender of Shares will be determined by the
Company, in its sole discretion, which determination shall be final and binding
on all parties. The Company reserves the absolute right to reject any or all
tenders determined by it not to be in proper form or the acceptance for payment
of which may, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the absolute right to waive any of the conditions of the Offer
(except as otherwise provided in Section 6) and any defect or irregularity in
the tender of any particular Shares. No tender of Shares will be deemed properly
made until all defects or irregularities have been cured or waived. None of the
Company, the Dealer Manager, the Depositary, the Information Agent or any other
person is or will be obligated to give notice of any defects or irregularities
in tenders, and none of them will incur any liability for failure to give any
such notice.
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, a tender of Shares pursuant
to the Offer is irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time before the Expiration Date and, unless theretofore
accepted for payment by the Company, after 12:00 Midnight, New York City time,
on Friday, October 6, 1995.
For a withdrawal to be effective, the Depositary must timely receive (at
one of its addresses set forth on the back cover of this Offer to Purchase) a
written or facsimile transmission notice of withdrawal. Any notice of withdrawal
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and, if different from the name of the
person who tendered the Shares, the name of the registered owner of such Shares.
If the certificates have been delivered or otherwise identified to the
Depositary, then, prior to the release of such certificates, the tendering
stockholder must also submit the serial numbers shown on the particular
certificates evidencing such Shares and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution (except in the case of
Shares tendered by an Eligible Institution). If Shares have been delivered
pursuant to the procedure for book-entry transfer set forth in Section 3, the
notice of withdrawal must specify the name and the number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares
and otherwise comply with the procedures of such facility.
5
<PAGE>
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding on all parties. None of the
Company, the Dealer Manager, the Depositary, the Information Agent or any other
person is or will be obligated to give any notice of any defects or
irregularities in any notice of withdrawal, and none of them will incur any
liability for failure to give any such notice. A withdrawal of a tender of
Shares may not be rescinded and Shares properly withdrawn shall thereafter be
deemed not to be validly tendered for purposes of the Offer. Withdrawn Shares,
however, may be retendered before the Expiration Date by again following one of
the procedures described in Section 3.
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer, as soon as
practicable after the Expiration Date, the Company will purchase and pay the
Purchase Price for 1,083,000 Shares (subject to increase or decrease as provided
in Sections 1 and 15) or such lesser number of Shares as are properly tendered
and not withdrawn as permitted in Section 4. For purposes of the Offer, the
Company will be deemed to have accepted for payment (and thereby purchased),
subject to proration, Shares which are tendered and not withdrawn when, as and
if the Company gives oral or written notice to the Depositary of the Company's
acceptance of such Shares for payment pursuant to the Offer.
In the event that proration of tendered Shares is required, the Company
will determine the final proration factor as promptly as practicable after the
Expiration Date. Although the Company does not expect that it will be able to
announce the final proration factor until approximately seven NNM trading days
after the Expiration Date, it will announce the preliminary results of proration
by press release as promptly as practicable after the Expiration Date.
Stockholders may obtain such preliminary information from the Information Agent
and may be able to obtain such information from their brokers or financial
advisors. Certificates for all Shares not purchased pursuant to the Offer,
including Shares not purchased because of proration, will be returned to the
tendering stockholders (or, in the case of Shares delivered by book-entry
transfer, such Shares will be credited to the account maintained with one of the
Book-Entry Transfer Facilities by the participant therein who so delivered such
Shares) at the Company's expense as promptly as practicable (which, in the event
of proration, is expected to be approximately 12 NNM trading days following the
Expiration Date).
Payment for Shares purchased pursuant to the Offer will be made by the
Company by depositing the aggregate Purchase Price therefor with the Depositary,
which will act as agent for tendering stockholders for the purpose of receiving
payment from the Company and transmitting payment to the tendering stockholders.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of certificates for such Shares (or a timely
confirmation by a Book-Entry Transfer Facility of book-entry transfer of such
Shares to the Depositary), a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) with any required signature guarantees and
any other required documents. Under no circumstances will interest be paid on
the Purchase Price of the Shares to be paid by the Company, regardless of any
delay in making such payment.
The Company will pay any stock transfer taxes with respect to the transfer
and sale of Shares to it or its order pursuant to the Offer. If, however,
payment is to be made to, or certificates for Shares not purchased or tendered
are to be registered in the name of, any person other than the registered
holder, or if tendered certificates are registered in the name of any person
other than the person(s) signing the Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder or such other
person) payable on account of the transfer to such person will be deducted from
the Purchase Price unless evidence satisfactory to the Company of the payment of
such taxes or an exemption therefrom is submitted. See Instruction 6 of the
Letter of Transmittal.
ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL (OR, IN THE
CASE OF A NONCORPORATE FOREIGN STOCKHOLDER, A FORM W-8, WHICH IS OBTAINABLE FROM
THE DEPOSITARY) MAY BE SUBJECT TO A FEDERAL BACKUP WITHHOLDING TAX OF 31% OF THE
GROSS PROCEEDS TO BE PAID TO SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE
OFFER. SEE SECTIONS 3 AND 11.
6
<PAGE>
6. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of) the Company's right to extend, amend or terminate the
Offer at any time in its sole discretion, the Company shall not be required to
accept for payment or pay for any Shares tendered, and may terminate or amend
the Offer if, before acceptance for payment of or payment for any Shares, any of
the following shall have occurred (or shall have been determined by the Company
to have occurred):
(a) there shall have been instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency or authority or tribunal which challenges the making of the Offer or
the acquisition of Shares pursuant to the Offer, or otherwise, directly or
indirectly, relates in any manner to the Offer;
(b) there shall have been any action pending or taken, or approval
withheld, or any statute, rule, regulation, judgment, order or injunction
proposed, sought, promulgated, enacted, entered, amended, enforced or
deemed to be applicable to the Offer or the Company, by any court or any
government or governmental, regulatory or administrative authority, agency
or tribunal, domestic or foreign, which, in the Company's sole judgment,
would or might directly or indirectly (i) make the acceptance for payment
of, or payment for, some or all the Shares illegal or otherwise restrict or
prohibit consummation of the Offer, or (ii) delay or restrict the ability
of the Company, or render the Company unable, to accept for payment, or pay
for, some or all of the Shares;
(c) a default or event of default shall have occurred and be
continuing under, or funds shall otherwise not be available for borrowing
by the Company pursuant to, the Credit Agreement, dated as of August 3,
1995 among the Company and The Chase Manhattan Bank (National Association),
as administrative agent, Mellon Bank, N.A., as documentation agent and
certain lenders party thereto described in Section 10 below (the 'Credit
Agreement') pursuant to which the Company will obtain the funds to purchase
Shares pursuant to the Offer; or
(d) there shall be a reasonable likelihood that the purchase of Shares
pursuant to the Offer will cause either (i) the Shares to be held of record
by less than 300 persons, or (ii) the Shares not to be authorized to be
quoted on the NNM;
which, in the reasonable good faith judgment of the Company, in any such case
and regardless of the circumstances (including any action or inaction by the
Company) giving rise to such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition and, except as set
forth in the next sentence, any such condition may be waived by the Company, in
whole or in part, at any time and from time to time in its sole discretion. The
Company will not under any circumstances waive the condition set forth in
paragraph (d) above. The Exchange Act requires that all conditions to the Offer
must be satisfied or waived before the final Expiration Date. In certain cases,
waiver of a condition to the Offer would require an extension of the Offer. See
Section 15.
The Company's failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right; the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts or circumstances; and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
Any determination by the Company concerning the events described above and any
related judgment by the Company regarding the inadvisability of proceeding with
the acceptance for payment or payment for any tendered Shares will be final and
binding on all parties.
7. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are traded on the NNM under the symbol 'AEPI.' The table below
sets forth, for the periods indicated, the high and low closing bid prices per
Share on the NNM and the dividends paid per Share.
7
<PAGE>
<TABLE>
<CAPTION>
PER SHARE
HIGH* LOW* DIVIDEND*
----- ---- ---------
<S> <C> <C> <C>
FISCAL YEAR ENDED
OCTOBER 31, 1993:
First Quarter............... $ 9 $ 7 --
Second Quarter.............. 8 43/64 7 11/64 --
Third Quarter............... 11 37/64 8 1/2 $.016
Fourth Quarter.............. 13 21/64 10 11/64 .016
FISCAL YEAR ENDED
OCTOBER 31, 1994:
First Quarter............... 15 1/4 11 43/64 .017
Second Quarter.............. 20 3/8 15 3/4 .017
Third Quarter............... 19 1/4 15 3/4 .017
Fourth Quarter.............. 18 3/4 16 1/4 .017
FISCAL YEAR ENDING
OCTOBER 31, 1995:
First Quarter............... 18 3/8 16 .02
Second Quarter.............. 24 1/2 17 3/4 .025
Third Quarter............... 26 3/4 20 .025
Fourth Quarter
(through August 9,
1995).................... 22 1/2 20 3/4 --
</TABLE>
------------------
* The Board declared a 3-for-2 stock split in the form of a dividend to
stockholders of record as of December 30, 1993, effective January 11, 1994.
Closing bid prices prior to January 11, 1994 have been restated to give effect
to the stock split.
On August 2, 1995, the last full trading day before the announcement of the
Offer, the closing bid price of the Shares on the NNM was $20.75 per Share. On
August 9, 1995, the last full trading day before the commencement of the Offer,
the closing bid price of the Shares on the NNM was $22 per Share. Stockholders
are urged to obtain a current market quotation for the Shares.
The Company has paid cash dividends to its stockholders each fiscal quarter
commencing with the quarter ended July 31, 1993. The declaration of future
dividends (including a dividend for the fourth quarter of fiscal 1995) is within
the discretion of the Board and will depend upon business conditions, the
earnings and financial condition of the Company and other factors. Under the
Credit Agreement described in Section 10 below, the Company is prohibited from
paying any cash dividends to its stockholders if a default under the Credit
Agreement has occurred and is continuing and, in any event, during any fiscal
year commencing after October 31, 1995, the Company may only declare and pay
cash dividends in respect of the Shares not exceeding $750,000 in the aggregate
for such fiscal year.
8. BACKGROUND AND PURPOSE OF THE OFFER AND THE PURCHASE
In early 1995, at the request of J. Brendan Barba, the Company's Board
began a review of the Company's financial condition and alternatives to enhance
the liquidity of the Company's shares for the benefit of the Company's
stockholders. Following a review of a number of possible actions, the Board
determined that a share repurchase funded by bank borrowings would best serve
the Board's objectives and be in the best interests of the Company's
stockholders. Following discussions between Mr. Barba and the Company and its
financial and legal advisors, it was determined that Mr. Barba would sell a
portion of his shares to the Company in a private transaction at a price below
the price to be offered by the Company to its public stockholders and Mr. Barba
would be precluded from selling his remaining shares pursuant to the offer made
to the Company's public stockholders. The Company also agreed to repurchase a
greater percentage of Mr. Barba's shares (at such lower price) than the
percentage offered to be repurchased from the public, which ensured Mr. Barba
that the sale of his shares to the Company pursuant to the Barba Purchase will
be treated as a sale or exchange of such shares (rather than a dividend
distribution) for federal income tax purposes.
8
<PAGE>
Accordingly, on August 2, 1995, the Company and Mr. Barba entered into the
Barba Purchase Agreement, pursuant to which the Company purchased from Mr. Barba
an aggregate of 1,550,000 Shares for a cash purchase price of $21.04 per Share.
In connection with the Barba Purchase, the Board received a written opinion from
its financial advisor, Bear Stearns, to the effect that, based upon the
procedures followed, factors considered, and assumptions made by Bear Stearns as
set forth in its opinion, including, without limitation, that the Offer will be
made to the Company's public stockholders, the purchase of the Shares from Mr.
Barba by the Company pursuant to the Barba Purchase Agreement is fair, from a
financial point of view, to the stockholders of the Company, other than Mr.
Barba and his affiliates. Bear Stearns' opinion was rendered to the Board in
connection with the Barba Purchase. Bear Stearns, like the Company and its Board
of Directors, has not expressed any opinion and does not make any recommendation
as to whether any stockholder should tender any or all of such stockholders'
shares pursuant to the Offer. The full text of Bear Stearns' opinion, which sets
forth the assumptions made, matters considered and limitations on the review
undertaken by Bear Stearns, is attached hereto as Annex A and is incorporated
herein by reference.
In arriving at its decision to proceed with the Barba Purchase and the
Offer, the Board considered that the Company has maintained relatively low debt
levels, leaving the Company under-leveraged. The Board believes that the
interests of stockholders will be served by utilizing the Company's excess
borrowing capacity to afford stockholders an opportunity to sell a significant
portion of their Shares to the Company. The Board believes that the Company will
generate sufficient cash flow to repay the borrowings made to effect any Share
repurchases and to meet the future needs of the Company's business.
The Offer is designed to afford to stockholders who are considering the
sale of all or a portion of their Shares an opportunity to sell such Shares for
a higher price than that available in the open market immediately prior to the
announcement of the Offer, without the usual transaction costs associated with
market sales. In addition, the Offer will allow qualified Odd Lot Holders whose
Shares are purchased pursuant to the Offer to avoid the payment of brokerage
commissions and any applicable odd lot discount chargeable on a sale of Shares
that otherwise could apply to open market transactions. However, proceeds of
sales pursuant to the Offer may be treated as a dividend taxable as ordinary
income to a stockholder rather than capital gain. See Section 11. To the extent
the purchase of Shares in the Offer results in a reduction in the number of
stockholders of record, the costs to the Company for services to stockholders
will be reduced.
The Offer allows stockholders to sell a portion of their Shares while
retaining a continuing equity interest in the Company if they so desire.
Stockholders whose Shares are not purchased in the Offer will obtain an increase
in their ownership interest in the Company and thus in the Company's future
earnings and assets as a result of the acquisition of Shares by the Company
pursuant to the Offer.
Shares acquired by the Company pursuant to the Offer and the Barba Purchase
will be held in the Company's treasury and will be available for the Company to
issue without further stockholder action (except as required by applicable law
or the rules of the NNM on which the Shares are traded). Shares could be issued
for such purposes as, among others, the acquisition of businesses, the raising
of additional capital for use in the Company's business, the distribution of
stock dividends and the implementation of employee benefit plans. Specifically,
the Board has authorized the establishment of the ESOP which it expects will be
implemented later in 1995. Shares acquired by the Company pursuant to the Barba
Purchase and the Offer may, over time, subject to the determination of the Board
as to the appropriate level of contributions and other relevant considerations,
be contributed by the Company to the ESOP. The purpose of the ESOP is to attract
and retain key employees of the Company or its subsidiaries, to encourage an
ownership commitment by those employees and to motivate such persons by
providing incentives for the successful implementation of the Company's
strategic plans.
Pursuant to the Barba Purchase Agreement, Mr. Barba has agreed that none of
the Shares beneficially owned by him or any of his affiliates or over which he
otherwise exercises dispositive power will be tendered and sold to the Company
pursuant to the Offer. The Company has been informed by its other directors and
executive officers that they do not intend to tender shares owned by them
pursuant to the Offer. After giving effect to the consummation of the Barba
Purchase and the repurchase of Shares by the Company pursuant to the Offer
(assuming 1,083,000 Shares are tendered and purchased pursuant to the Offer),
Mr. Barba will beneficially own approximately 32% of the outstanding Shares.
9
<PAGE>
NEITHER THE COMPANY NOR THE BOARD MAKES ANY RECOMMENDATION AS TO WHETHER
ANY STOCKHOLDER SHOULD TENDER ANY OF OR ALL SUCH STOCKHOLDER'S SHARES PURSUANT
TO THE OFFER. EACH STOCKHOLDER MUST MAKE SUCH STOCKHOLDER'S OWN DECISION WHETHER
TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER.
Subject to applicable laws and regulations and restrictions set forth in
the Credit Agreement (see Section 10), the Company may in the future purchase
additional Shares on the open market, in private transactions, through tender
offers or otherwise. Any such purchases may be on the same terms or on terms
which are more or less favorable to stockholders than the terms of the Offer.
Any possible future purchases of Shares by the Company would depend on many
factors, including among others, the market price of the Shares, the results of
the Offer, the Company's business and financial position and general economic
and market conditions. Rule 13e-4 under the Exchange Act generally prohibits the
Company and its affiliates from purchasing any Shares, other than pursuant to
the Offer, for at least ten business days after the Expiration Date.
Certain pro forma financial effects of the purchase of the Shares pursuant
to the Barba Purchase Agreement and the Offer are described in Section 9 below.
9. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is engaged in the business of manufacturing and marketing low
density polyethylene plastic film products throughout the United States and in a
limited number of foreign countries. The Company's film products are used in the
packaging, transportation, textile, food, automotive, pharmaceutical, chemical,
electronics, construction, agricultural, and other industries. Manufacturing is
conducted at facilities in New Jersey, Illinois, North Carolina, Texas and
California, all of which are owned by the Company.
The Company's principal office is located at 125 Phillips Avenue, South
Hackensack, New Jersey 07606, and its telephone number is (201) 641-6600.
Summary Historical Financial Information. The summary financial
information for the years ended October 31, 1994 and 1993 set forth below has
been derived from, and should be read in conjunction with, the audited financial
statements (including the related notes thereto) included in the Company's
Annual Report on Form 10-K for the year ended October 31, 1994 (the 'Form
10-K'). The summary financial information for the six month periods ended April
30, 1995 and 1994, has been derived from, and should be read in conjunction
with, the unaudited financial statements for such periods included in the
Company's Quarterly Report on Form 10-Q for the period ended April 30, 1995 (the
'Form 10-Q'). Such summary financial information is qualified in its entirety by
reference to such reports and all financial statements and related notes
contained therein. The Form 10-K and the Form 10-Q should be available for
examination, and copies should be obtainable, in the manner set forth below
under 'Additional Information'.
The financial information for the six month periods ended April 30, 1995
and 1994 has not been audited, but in the opinion of management contains all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such information. Results for the six months periods are
not necessarily indicative of results for the full year.
10
<PAGE>
AEP INDUSTRIES INC.
SUMMARY HISTORICAL FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
--------------------- --------------------
1995 1994 1994 1993
--------- --------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Income Statement:
Net sales........................................................ $117,034 $82,154 $184,669 $153,307
Operating profit................................................. 11,620 9,325 19,734 14,277
Income before extraordinary items and provision for income
taxes.......................................................... 11,303 8,875 18,801 11,906
Income before extraordinary items................................ 6,933 5,507 11,404 7,334
Net income....................................................... 6,933 5,507 11,404 6,880
Balance Sheet (at end of period):
Working Capital.................................................. 25,442 21,031 20,592 23,303
Total long-term indebtedness..................................... 28,320 20,174 23,595 20,254
Shareholder's equity............................................. 68,650 55,994 61,789 50,616
Per Share(a)
Net income per common share before extraordinary items........... $.94 $.75 $1.55 $1.01
Extraordinary items(b)........................................... -- -- -- $(.06)
Net income per common share...................................... $.94 $.75 $1.55 $.95
Net income per common share (and common share equivalents)....... $.94 $.75 $1.55 $.95
Net income per share on a fully diluted basis.................... $.94 $.75 $1.55 $.95
Ratio of earnings to fixed charges............................... 6.89 6.10 6.18 3.67
Book value per share............................................. $9.27 $7.63 $8.39 $6.92
</TABLE>
------------------
(a) Average number of shares of Common Stock outstanding during the six month
periods ended April 30, 1995 and April 30, 1994 was 7,380,616 and 7,327,798,
respectively, and during the years ended October 31, 1994 and October 31,
1993 was 7,347,341 and 7,286,250, respectively (as adjusted to give effect
to stock dividends or stock splits).
(b) Reflects an extraordinary charge for the year ended October 31, 1993
resulting from prepayment of the Company's 10.65% Senior Notes, net of
income tax benefit.
Summary Pro Forma Financial Information (Unaudited). The following
unaudited pro forma financial information sets forth the pro forma effects on
the historical financial results of the Company of the consummation of the Barba
Purchase and the Offer and the borrowings and refinancing of debt to be effected
by the Company in connection therewith (see Section 10), assuming 1,083,000
Shares are purchased in the Offer for $22.75 per Share, net to the seller in
cash, for an aggregate cost to the Company of approximately $29,638,250
including estimated related fees and expenses of approximately $5,000,000.
The summary pro forma balance sheet data as of April 30, 1995 and October
31, 1994 assume that the repurchase of Shares by the Company pursuant to the
Barba Purchase Agreement and the Offer and related financings had occurred as of
the respective balance sheet dates. The summary pro forma income statement data
for the six month period ended April 30, 1995 and the year ended October 31,
1994 assume that the repurchase of Shares by the Company pursuant to the Barba
Purchase Agreement and the Offer and related financings had occurred as of
November 1, 1994 and November 1, 1993, respectively. See the footnotes to the
Summary Pro Forma Financial Information in this Section 9 below.
The estimated financial effects of the repurchase of Shares by the Company
pursuant to the Barba Purchase Agreement and the Offer and related financings
presented in the pro forma financial information are not necessarily indicative
of either the Company's financial position or the results of its operations
which would have been obtained had the transactions described above actually
occurred on the dates described above, nor are they necessarily indicative of
the results of future operations. The pro forma financial information should be
read in conjunction with the financial statements and related notes of the
Company set forth in the Form 10-K and the Form 10-Q.
11
<PAGE>
AEP INDUSTRIES INC.
SUMMARY PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1995 OCTOBER 31, 1994
----------------------- -----------------------
AS PRO FORMA AS PRO FORMA
REPORTED AS ADJUSTED REPORTED AS ADJUSTED
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Income Statement:
Net sales...................................................... $117,034 $117,034 $184,669 $184,669
Operating profit(a)............................................ 11,620 11,308 19,734 19,109
Income before extraordinary items and provision for income
taxes(b)..................................................... 11,303 8,419 18,801 14,252
Income before extraordinary items(c)........................... 6,933 5,162 11,404 8,643
Net income(d).................................................. 6,933 4,963 11,404 8,444
Balance Sheet (at end of period):
Working Capital(e)............................................. 25,442 26,384 20,592 21,935
Total long-term indebtedness(f)................................ 28,320 92,407 23,595 88,632
Shareholder's equity(g)........................................ 68,650 9,548 61,789 1,758
Per Share(h)
Net income per common share before extraordinary items......... $.94 $1.09 $1.55 $1.83
Extraordinary items............................................ -- $(.04) -- $(.04)
Net income per common share.................................... $.94 $1.05 $1.55 $1.79
Net income per common share (and common share equivalents)..... $.94 $1.01 $1.55 $1.73
Net income per share fully diluted............................. $.94 $1.01 $1.55 $1.73
Ratio of earnings to fixed charges............................. 6.89 3.01 6.18 2.73
Book value per share........................................... $9.27 $2.00 $8.39 $0.37
</TABLE>
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(a) As adjusted for amortization of fees incurred in connection with the
placement of the new $140 million credit facility described in Section 10.
(b) Reflects net increases in interest expense relating to the utilized portion
of the new credit facility and the retirement of pre-existing bank credit
facilities and $20 million aggregate principal amount of the Company's 6.59%
Senior Notes due May 15, 2003.
(c) Reflects the adjustments described in notes (a) and (b) and the
corresponding tax effects.
(d) Reflects the extraordinary charges relating to the early retirement of the
6.59% Senior Notes net of related tax benefit.
(e) Reflects the recording of the current portion of unamortized fees incurred
in connection with the placement of the $140 million credit facility.
(f) Reflects the recording of the utilized portion of the new $140 million
credit facility and the retirement of pre-existing credit facilities and
6.59% Senior Notes.
(g) Reflects all transactions related to the Barba Purchase and Offer.
(h) All per share information has been adjusted to reflect the adjustments
described in notes (a) through (g). Pro forma average number of shares of
Common Stock outstanding during the six months ended April 30, 1995 and the
year ended October 31, 1994 was 4,747,616 and 4,714,341, respectively.
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Additional Information. The Company is subject to the informational
reporting requirements of the Exchange Act and in accordance therewith the
Company files reports, proxy statements and other information with the SEC
relating to its business, financial condition and other matters. The Company is
required to disclose in such proxy statements and reports certain information,
as of particular dates, concerning the Company's directors and officers, their
remuneration, stock options granted to them, the principal owners of the
Company's securities and any material interest of such persons in transactions
with the Company. The Company has also filed an Issuer Tender Offer Statement on
the Schedule 13E-4 with the SEC which includes certain additional information
relating to the Offer. The reports, proxy statements and other information filed
by the Company with the SEC can be inspected and copied at the public reference
facilities maintained by the SEC at Judiciary Plaza, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC at
Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of
such material also can be obtained at prescribed rates from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Company to consummate the Barba
Purchase and the Offer and to pay related fees and expenses of the Offer is
estimated to be approximately $62,250,250. The amount of $32,612,000 was
required by the Company to purchase 1,550,000 Shares from Mr. Barba pursuant to
the Barba Purchase Agreement at $21.04 per Share. If 1,083,000 Shares are
purchased by the Company pursuant to the Offer at $22.75 per Share, net to the
seller in cash, the aggregate cost to the Company, including estimated related
fees and expenses of the Offer, will be approximately $29,638,250. The Company
has funded the Barba Purchase and anticipates that it will fund the purchase of
Shares pursuant to the Offer and the payment of related fees and expenses
through borrowings by the Company under the Credit Agreement described below.
See 'Summary Pro Forma Financial Information (Unaudited)' for further
information concerning the assumed cost of funds for the Barba Purchase and the
Offer.
In addition, the Company refinanced approximately $33,051,000 of existing
indebtedness outstanding at August 3, 1995 (including accrued interest and
prepayment premiums) on consummation of the Barba Purchase, the funds for which
were obtained by the Company through the initial borrowing under the Credit
Agreement.
The Company expects to repay the borrowings under the Credit Agreement
through, depending on business and market conditions, public or private
offerings of securities, additional bank borrowings, issuance of commercial
paper, internally generated funds or other financings, or such combination of
the foregoing as the Company may deem appropriate.
The following is a summary of the material terms of the Credit Agreement
and is qualified in its entirety by reference to such agreement, which is
incorporated by reference and a copy of which has been filed with the SEC as an
exhibit to the Schedule 13E-4. Such agreement may be examined, and copies
thereof may be obtained, as set forth in Section 9 above.
The Credit Agreement. On August 3, 1995, the Company entered into the
Credit Agreement with The Chase Manhattan Bank (National Association), as
administrative agent, Mellon Bank, N.A., as documentation agent and certain
lenders party thereto (collectively, the 'Banks'). Pursuant to the Credit
Agreement, the Banks have agreed to provide the Company with a new $140,000,000
credit facility (the 'New Credit Facility'). The New Credit Facility will
consist of (i) a three-year Revolving Credit Facility in an amount up to
$30,000,000 (with an $8,000,000 sub-limit for the issuance of documentary and
standby letters of credit), subject to a borrowing base (the 'Borrowing Base')
in an amount equal to 85% of all Eligible Accounts Receivable (as defined in the
Credit Agreement) plus 50% of all Eligible Inventory (as defined in the Credit
Agreement) plus 100% of all proceeds held in the collateral accounts under the
Security Documents (as defined in the Credit Agreement), and (ii) a seven-year
amortizing Term Loan Facility in an amount of $110,000,000. Ten million dollars
of the Revolving Credit Facility is currently available (subject to Borrowing
Base requirements) for drawing by the Company. The remaining $20,000,000 will
become available (subject to Borrowing Base requirements) upon the fulfillment
of certain conditions, including the granting by the Company to the Banks of
mortgages on all real property of the Company. As indicated above, the Company
has used $32,612,000 of borrowings under the Term Loan Facility to fund the
Barba Purchase and anticipates that it will use
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approximately $29,638,250 to fund the purchase of Shares pursuant to the Offer,
including estimated related fees and expenses of approximately $5,000,000. In
addition, the Company has used approximately $33,051,000 of such proceeds to
refinance the Company's indebtedness. The balance of the New Credit Facility
will be available for working capital and general corporate purposes.
Conditions to availability of funds under the New Credit Facility to pay
for Shares pursuant to the Offer include, without limitation, absence of
defaults and continued accuracy of all representations and warranties of the
Company under the Credit Agreement, delivery of corporate certificates,
borrowing base certificate, legal opinions, solvency analysis, certified copies
of the Offer to Purchase, and evidence that the conditions to the Offer have
been satisfied. Conditions to availability of funds in excess of $10,000,000
under the Revolving Credit Facility include, without limitation, absence of
defaults and continued accuracy of all representations and warranties of the
Company under the Credit Agreement, and delivery of mortgages, deeds of trust,
title insurance, as-built surveys, certificates of occupancy, Uniform Commercial
Code searches, appraisals, environmental surveys, certificates of insurance and
legal opinions, each of which relates to the real property of the Company.
The Revolving Credit Facility will mature on the last business day in July
1998. The Term Loan Facility will amortize in twenty-seven quarterly
installments, consisting of four installments of each of $1,125,000, $2,250,000,
$3,625,000, $4,250,000, $4,750,000 and $5,500,000 and three installments of
$8,000,000, respectively. The first installment will be due and payable in
January 1996 and the last installment will be due and payable in July 2002.
The interest rates under the Revolving Credit Facility will be, at the
option of the Company, at Base Rate (as defined in the Credit Agreement) plus a
margin of between 0 and 75 basis points or at LIBOR plus a margin of between 100
and 200 basis points, the margin in each case being adjusted quarterly based on
the Company's ratio of Funded Indebtedness (as defined in the Credit Agreement)
to EBITDA (as defined in the Credit Agreement) on a rolling four quarter basis.
The interest rates under the Term Loan Facility will be, at the option of the
Company, at Base Rate plus 125 basis points or LIBOR plus 250 basis points.
A commitment fee will accrue and be payable to the Banks under the New
Credit Facility on the aggregate unused amount of the New Credit Facility. Such
commitment fee with respect to the Revolving Credit Facility will be equal to a
rate per annum of between 25 and 50 basis points, such rate in each case being
adjusted quarterly based on the Company's ratio of Funded Indebtedness to
EBITDA. Such commitment fee with respect to the Term Loan Facility will be equal
to a rate per annum of 50 basis points and will be payable with respect to the
period commencing on August 3, 1995 and terminating on the earlier of 60 days
after such date and the date of the closing of the final purchase of Shares
pursuant to the Offer.
The loans under the New Credit Facility will be secured by perfected first
priority liens and security interests in all the assets of the Company,
including, but not limited to, all accounts receivable, inventory, and
intangibles, and real estate of the Company and its subsidiaries.
The New Credit Facility contains representations, warranties, covenants and
conditions which are customary for facilities of this type, including, but not
limited to, requirements to comply with certain financial covenants, including
compliance with interest coverage, fixed charges and leverage ratios and
maintenance of levels of tangible net worth, and covenants as to insurance,
corporate existence, use of loan proceeds, maintenance of interest rate
protection agreements, prohibition on fundamental changes, and limitations on
liens, indebtedness, investments, dividend payments, capital expenditures, lines
of business, transactions with affiliates and modifications of certain
documents.
Events of default under the New Credit Facility include, but are not
limited to, payment defaults, false or misleading representations or warranties,
noncompliance with certain covenants, appointment of receiver, custodian,
trustee or liquidator, reorganization, liquidation, or bankruptcy proceeding, a
final judgment against the Company in excess of $1,000,000, environmental claims
that are likely to have a material adverse effect (as defined in the Credit
Agreement) on the Company, Mr. Barba ceasing to own at least 20% of the capital
stock of the Company, and failure of liens securing the Company's obligations
under the Credit Agreement to be perfected in a timely fashion.
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11. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
In General. Set forth below is a summary of the principal federal income
tax consequences of a sale of Shares pursuant to the Offer under the Internal
Revenue Code of 1986, as amended to date (the 'Code').
The summary is based on the Code, existing and proposed Treasury
regulations, administrative pronouncements and judicial decisions now in effect,
all of which are subject to change (possibly on a retroactive basis). The
summary deals only with Shares held as capital assets within the meaning of
Section 1221 of the Code and does not address foreign, state or local tax
consequences, nor does it address estate or gift tax considerations.
Furthermore, the summary does not address all aspects of federal income taxation
that may be relevant to investors in light of their particular circumstances or
to certain types of investors subject to special treatment under the federal
income tax laws (such as dealers in securities or currencies, tax-exempt
organizations, life insurance companies, other financial institutions,
pass-through entities, regulated investment companies, foreign stockholders, or
stockholders holding the Shares as part of a conversion transaction or a hedging
transaction, or as a position in a straddle for tax purposes).
Each stockholder is urged to consult and rely on the stockholder's own tax
advisor with respect to the tax consequences to the stockholder of tendering
Shares pursuant to the Offer.
A stockholder's exchange of Shares for cash pursuant to the Offer will be a
taxable transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign and other tax laws. As
discussed more fully below, cash received by most stockholders pursuant to the
Offer may be treated as a dividend taxable as ordinary income.
Treatment as a Sale or Exchange. Generally, a transfer of Shares to the
Company pursuant to the Offer will be treated as a sale or exchange of the
Shares (rather than as a dividend distribution) if the receipt of cash upon the
sale (a) is 'substantially disproportionate' with respect to the stockholder,
(b) results in a 'complete termination' of the stockholder's interest in the
Company, or (c) is 'not essentially equivalent to a dividend' with respect to
the stockholder. These tests (the 'Section 302 tests') are discussed more fully
below.
The Company believes that, in determining whether any of the Section 302
tests is met, its purchases of Shares pursuant to the Barba Purchase and the
Offer should be treated as part of a single integrated transaction. In addition,
a stockholder must take into account not only Shares actually owned by the
stockholder, but also Shares that are constructively owned pursuant to Section
318 of the Code. Under Section 318, a stockholder may constructively own Shares
actually owned, and in some cases constructively owned, by certain related
individuals or entities and Shares which may be acquired by exercise of an
option or by conversion. Substantially contemporaneous dispositions or
acquisitions of Shares by a stockholder or related individuals or entities
(including market purchases and sales) may be deemed to be part of a single
integrated transaction to be taken into account in determining whether any of
the Section 302 tests has been satisfied. In the event that the Offer is
oversubscribed, the Company's purchase of Shares pursuant to the Offer will be
prorated. Thus, in such case, even if all the Shares actually and constructively
owned by a stockholder are tendered pursuant to the Offer, not all of the Shares
will be purchased by the Company, which in turn may affect the stockholder's
ability to satisfy the Section 302 tests.
The Section 302 tests are as follows:
(a) SUBSTANTIALLY DISPROPORTIONATE TEST. The receipt of cash by a
stockholder will be substantially disproportionate with respect to the
stockholder if the percentage of the outstanding Shares actually and
constructively owned by the stockholder immediately following the exchange of
Shares pursuant to the Offer (treating Shares purchased pursuant to the Barba
Purchase and exchanged pursuant to the Offer as not outstanding) is less than
80% of the percentage of the outstanding Shares actually and constructively
owned by the stockholder immediately before the Barba Purchase (treating Shares
purchased pursuant to the Barba Purchase and exchanged pursuant to the Offer as
outstanding).
(b) COMPLETE TERMINATION TEST. The receipt of cash by a stockholder will
be a complete termination of the stockholder's interest if either (i) all of the
Shares actually and constructively owned by the stockholder are sold pursuant to
the Offer or (ii) all of the Shares actually owned by the stockholder are sold
pursuant to the Offer and the stockholder is eligible to waive, and effectively
waives, the attribution of Shares
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<PAGE>
constructively owned by the stockholder in accordance with the procedures
described in Section 302(c)(2) of the Code. Stockholders considering terminating
their interest in accordance with Section 302(c)(2) of the Code should consult
with their own tax advisors.
(c) NOT ESSENTIALLY EQUIVALENT TO A DIVIDEND TEST. The receipt of cash by
a stockholder will be not essentially equivalent to a dividend if the
stockholder's sale of Shares pursuant to the Offer results in a 'meaningful
reduction' in the stockholder's interest in the Company as compared to such
stockholder's interest immediately before the Barba Purchase. Whether the
receipt of cash by a stockholder will be 'not essentially equivalent to a
dividend' will depend upon the individual stockholder's facts and circumstances.
The Internal Revenue Service (the 'IRS') has indicated in published rulings that
even a small reduction in the proportionate interest of a small minority
stockholder in a publicly held corporation who exercises no control over
corporate affairs may constitute such a 'meaningful reduction.' The IRS held in
Rev. Rul. 76-385, 1976-2 C.B. 92, that a reduction in the percentage ownership
interest of a stockholder in a publicly held corporation from .0001118% to
.0001081% (only a 3.3% reduction of the stockholder's prior percentage ownership
interest) would constitute a 'meaningful reduction.' Stockholders expecting to
rely upon the 'not essentially equivalent to a dividend' test should consult
their own tax advisors as to its application in their particular situation.
If any of the Section 302 tests is satisfied, and the sale of the Shares is
therefore treated as a 'sale or exchange' for federal income tax purposes, the
tendering stockholder will recognize gain or loss equal to the difference
between the amount of cash received by the stockholder and the stockholder's tax
basis in the Shares sold pursuant to the Offer. Any such gain or loss will be
capital gain or loss, and will be long term capital gain or loss if the Shares
have been held for more than one year. Long term capital gains are subject to
taxation at a maximum, marginal federal income tax rate of 28% for non-corporate
taxpayers and 35% for corporate taxpayers.
Treatment as a Dividend. If none of the Section 302 tests is satisfied,
the amount of cash received by a tendering stockholder will be treated as a
dividend taxable as ordinary income (without reduction for the tax basis of the
Shares sold pursuant to the Offer) to the extent of the stockholder's share of
the Company's earnings and profits. Ordinary income is subject to taxation at a
maximum, marginal federal income tax rate of 39.6% for non-corporate taxpayers,
and 35% for corporate taxpayers. The stockholder's basis in the Shares sold
pursuant to the Offer would be added to such stockholder's basis in its
remaining Shares, if any. If none of the Section 302 tests is satisfied, any
cash received for Shares pursuant to the Offer in excess of the Company's
earnings and profits will be treated, first, as a non-taxable return of capital
to the extent of the stockholder's basis for all of such stockholder's shares,
and, thereafter, as a capital gain to the extent it exceeds such basis.
As noted above, the Company believes that, in determining whether any of
the Section 302 tests is met, purchases pursuant to the Barba Purchase and the
Offer must be treated as part of a single integrated transaction. Accordingly,
each stockholder should compare its percentage interest in the Company
immediately before the Barba Purchase with its percentage interest in the
Company immediately after the Offer. Because of the Shares purchased by the
Company from Mr. Barba pursuant to the Barba Purchase, it is possible that a
stockholder's percentage interest will be higher after the Offer than before the
Barba Purchase. Any stockholder whose interest in the Company either remains
constant or increases as a result of the Barba Purchase and the Offer will be
unable to satisfy any Section 302 test and, therefore, will be subject to the
dividend treatment described above. A stockholder seeking sale or exchange
treatment should consult with the stockholder's own tax advisor concerning the
extent to which sales of Common Stock in the open market would be taken into
account in determining whether the stockholder's interest in the Company has
been reduced and, if so, how many Shares must be sold.
Special Rules for Corporate Stockholders. If a sale of Shares by a
corporate stockholder is treated as a dividend, the corporate stockholder may be
entitled to claim a deduction equal to 70% of the dividend under Section 243 of
the Code, subject to applicable limitations. Corporate stockholders should,
however, consider the effect of Section 246(c) of the Code, which disallows the
70% dividends-received deduction with respect to stock that is held for 45 days
or less. For this purpose, the length of time a taxpayer is deemed to have held
stock may be reduced by periods during which the taxpayer's risk of loss with
respect to the stock is diminished by reason of the existence of certain options
or other transactions. Moreover, under Section 246A of the Code, if a corporate
stockholder has incurred indebtedness directly attributable to an investment in
Shares, the 70% dividends-received deduction may be reduced. In addition, any
amount received by a corporate stockholder
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pursuant to the Offer that is treated as a dividend may constitute an
'extraordinary dividend' under Section 1059 of the Code. For this purpose, all
dividends received by a stockholder within, and having their ex-dividend date
within, an 85-day period (expanded to a 365-day period in the case of dividends
received in such period that in the aggregate exceed 20% of the stockholder's
adjusted tax basis in the Shares) are aggregated and may also be treated as
extraordinary dividends. Accordingly, if applicable, a corporate stockholder
would be required under Section 1059(a) of the Code to reduce its basis (but not
below zero) in its Shares by the non-taxed portion of the dividend (i.e., the
portion of the dividend for which a deduction is allowed), and if such portion
exceeds the stockholder's tax basis for its Shares, to treat the excess as gain
from the sale of such Shares in the year in which a sale or disposition of such
Shares occurs (which, in certain circumstances, may be the year in which Shares
are sold pursuant to the Offer). Corporate stockholders should be aware that in
a recent private letter ruling (which has no precedential effect), the IRS held
Section 1059 to be inapplicable where a stockholder's proportionate interest
increased as a result of a repurchase of shares.
Corporate stockholders also should be aware that legislation has been
introduced in the United States House of Representatives which, if enacted in
its current form, would generally treat any non-pro rata redemption of Shares
that is otherwise eligible for the dividends-received deduction as a sale of the
Shares rather than as a dividend. It is impossible to predict whether this or
similar legislation will be enacted. Corporate stockholders should consult their
own tax advisors concerning possible legislation affecting their ability to
claim a dividends-received deduction in connection with the Offer.
Foreign Stockholders. The Company will withhold United States federal
income tax at a rate of 30% from gross proceeds paid pursuant to the Offer to a
foreign stockholder or his agent, unless the Company determines either that a
reduced rate of withholding is applicable pursuant to a tax treaty or that an
exemption from withholding is applicable because such gross proceeds are
effectively connected with the conduct of a trade or business by the foreign
stockholder within the United States. For this purpose, a foreign stockholder is
any stockholder that is not (a) a citizen or resident of the United States, (b)
a corporation, partnership or other entity created or organized in or under the
laws of the United States, or (c) any estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
Without definite knowledge to the contrary, the Company will determine
whether a stockholder is a foreign stockholder by reference to the stockholder's
address. A foreign stockholder may be eligible to file for a refund of such tax
or a portion of such tax if such stockholder (a) meets the Section 302 tests
described above, (b) is entitled to a reduced rate of withholding pursuant to a
treaty and the Company withheld at a higher rate, or (c) is otherwise able to
establish that no tax or a reduced amount of tax was due. In order to claim an
exemption from withholding on the ground that gross proceeds paid pursuant to
the Offer are effectively connected with the conduct of a trade or business by a
foreign stockholder within the United States or that the foreign stockholder is
entitled to the benefits of a tax treaty, the foreign stockholder must deliver
to the Depositary a properly executed statement claiming such exemption or
benefits. Such statements may be obtained from the Depositary. Foreign
stockholders are urged to consult their own tax advisors regarding the
application of United States federal income tax withholding, including
eligibility for a withholding tax reduction or exemption and the refund
procedures.
Backup Withholding. Each tendering stockholder must provide certain
information through the Letter of Transmittal to avoid the 31% federal 'backup
withholding' tax on the gross proceeds payable pursuant to the Offer. See
Section 3.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE
BY THEM PURSUANT TO THE OFFER IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
12. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES
Based upon the Company's records and upon information provided to the
Company by its directors, executive officers and affiliates, neither the Company
nor, to the best of the Company's knowledge, any of the directors or executive
officers of the Company, nor any associates of any of the foregoing, has
effected any transactions in the Shares during the 40 business days prior to the
date hereof, other than pursuant to the Barba Purchase Agreement and
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the following purchases of Shares from the Company, effective as of June 30,
1995, pursuant to the Company's 1985 Employee Stock Purchase Plan, at a per
Share price of $14.25: 175 Shares purchased by Paul M. Feeney, Executive Vice
President--Finance and a director of the Company and 137 Shares purchased by
Lawrence R. Noll, Vice President--Finance and a director of the Company.
Except as set forth in this Offer to Purchase, neither the Company nor, to
the best of the Company's knowledge, any of its affiliates, directors or
executive officers, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Offer with respect to any securities of the Company (including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of proxies, consents or authorizations).
The Company has been informed by its directors and executive officers that
they currently do not intend to tender Shares owned by them pursuant to the
Offer.
13. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
acquisition of Shares as contemplated in the Offer or of any approval or other
action by any government or governmental, administrative or regulatory authority
or agency, domestic or foreign, that would be required for the Company's
acquisition or ownership of Shares pursuant to the Offer. Should any such
approval or other action be required, the Company currently contemplates that it
will seek such approval or other action. The Company cannot predict whether it
may determine that it is required to delay the acceptance for payment of Shares
tendered pursuant to the Offer pending the outcome of any such matter. There can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that the failure
to obtain any such approval or other action might not result in adverse
consequences to the Company's business. The Company intends to make all required
filings under the Exchange Act. The Company's obligation under the Offer to
accept Shares for payment is subject to certain conditions. See Section 6.
14. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and is likely to reduce the
number of stockholders. Nonetheless, the Company will not under any
circumstances waive the condition set forth in paragraph (d) of Section 6 above
which, in effect, requires that the Offer will not cause either (i) the Shares
to be held of record by less than 300 persons, or (ii) the Shares not to be
authorized to be quoted on the NNM.
The Shares are currently 'margin securities' under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company believes that,
following the purchase of Shares pursuant to the Offer, the Shares will continue
to be 'margin securities' for purposes of the Federal Reserve Board's margin
regulations. Eligibility for treatment as margin securities will, however,
continue to depend on maintenance of minimum daily trading volume.
The Shares are registered under the Exchange Act which requires, among
other things, that the Company furnish certain information to its stockholders
and to the SEC and comply with the SEC's proxy rules in connection with meetings
of the Company's stockholders. Registration of the Shares under the Exchange Act
may be terminated upon application by the Company to the SEC if the Shares are
held of record by less than 300 persons and are not quoted on the NNM. As noted
above, pursuant to the conditions of the Offer, the Company intends that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
15. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion, at any
time or from time to time and regardless of whether or not any of the events set
forth in Section 6 shall have occurred or shall be deemed by the Company to have
occurred, to extend the period of time during which the Offer is open and
thereby delay
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acceptance for payment of any Shares by giving oral or written notice of such
extension to the Depositary and making a public announcement thereof. During any
such extension, all Shares previously tendered and not purchased or withdrawn
will remain subject to the Offer, except to the extent that such Shares may be
withdrawn as set forth in Section 4. The Company also expressly reserves the
right, in its sole discretion, to terminate the Offer and not accept for payment
or pay for any Shares not theretofore accepted for payment or paid for or,
subject to applicable law, to postpone payment for Shares upon the occurrence of
any of the conditions specified in Section 6 or otherwise by giving oral or
written notice of such termination or postponement to the Depositary and making
a public announcement thereof. The Company's reservation of the right to delay
payment for Shares which it has accepted for payment is limited by Rule
13e-4(f)(5) promulgated under the Exchange Act, which requires that the Company
must pay the consideration offered or return the Shares tendered promptly after
termination or withdrawal of a tender offer. Subject to compliance with
applicable law, the Company further reserves the right, in its sole discretion,
and regardless of whether or not any of the events set forth in Section 6 shall
have occurred or shall be deemed by the Company to have occurred, to amend the
Offer in any respect (including, without limitation, by decreasing or increasing
the consideration offered in the Offer to owners of Shares or by decreasing the
number of Shares being sought in the Offer) or to waive the limitation on the
maximum number of shares to be purchased pursuant to the Offer. Amendments to
the Offer may be made at any time or from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled Expiration Date. Any disclosure of a material
change in the information published, sent or given to stockholders will be
disseminated promptly to stockholders in a manner reasonably designed to inform
stockholders of such change. Without limiting the manner in which the Company
may choose to make a public announcement pursuant to or concerning the Offer,
except as required by applicable law, the Company shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Company will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated
under the Exchange Act. The minimum period during which an offer must remain
open following material changes in the terms of the offer or information
concerning the offer (other than a change in price or a change in percentage of
securities sought) will depend on the facts and circumstances then existing,
including the relative materiality of the changed terms or information. If (a)
the Company (i) increases or decreases the price at which Shares may be properly
tendered, (ii) increases the number of Shares being sought and such increase
exceeds 2% of the outstanding Shares or (iii) decreases the number of Shares
being sought, and (b) the Offer is scheduled to expire at any time earlier than
the expiration of a period ending on the tenth business day from and including
the date that notice of such increase or decrease is first published, sent or
given, the Offer will be extended until the expiration of such ten business day
period.
16. FEES AND EXPENSES
The Company has retained Bear Stearns as its financial advisor and Dealer
Manager in connection with the Offer. Bear Stearns will receive a fee of
$800,000 for its services, including in respect of its opinion relating to the
fairness, from a financial point of view, of the Barba Purchase. The Company
will also reimburse Bear Stearns for its reasonable out-of-pocket expenses
relating to the Offer. The Company has agreed to indemnify Bear Stearns against
certain liabilities in connection with the Offer, including certain liabilities
under the federal securities laws.
The Company has retained D.F. King & Co., Inc. as Information Agent and The
Chase Manhattan Bank (National Association), as Depositary in connection with
the Offer. The Information Agent and the Depositary will each receive reasonable
and customary compensation for its services in connection with the Offer and
will be reimbursed for its reasonable out-of-pocket expenses, including the
reasonable fees and expenses of counsel. The Company has agreed to indemnify the
Information Agent and the Depositary against certain liabilities in connection
with the Offer, including certain liabilities under the federal securities laws.
Neither the Information Agent nor the Depositary has been retained to, or is
authorized to, make solicitations or recommendations in connection with the
Offer.
19
<PAGE>
The Company will not pay any fees or commissions to any broker, dealer,
commercial bank, trust company or other person for soliciting Shares pursuant to
the Offer. The Company will, however, on request, reimburse such persons for
customary handling and mailing expenses incurred in forwarding materials in
respect of the Offer to the beneficial owners for which they act as nominees. No
broker, dealer, commercial bank or trust company has been authorized to act as
an agent for the Company for the purpose of the Offer. The Company will not pay
(or cause to be paid) any stock transfer taxes on its purchase of Shares
pursuant to the Offer, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
17. MISCELLANEOUS
The Offer is not being made to, nor will the Company accept tenders from or
on behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or its acceptance would not be in compliance with the laws of such
jurisdiction. The Company is not aware of any jurisdiction where the making of
the Offer or the tender of Shares would not be in compliance with applicable
law. If the Company becomes aware of any jurisdiction where the making of the
Offer or the tender of Shares is not in compliance with any applicable law, the
Company will make a good faith effort to comply with such law. If, after such
good faith effort, the Company cannot comply with such law, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on the Company's behalf by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
AEP INDUSTRIES INC.
August 10, 1995
20
<PAGE>
[LETTERHEAD OF BEAR STEARNS] ANNEX A
August 2, 1995
Board of Directors
AEP Industries Inc.
125 Phillips Avenue
Hackensack, NJ 07606
Dear Sirs:
We understand that AEP Industries Inc. ('AEP') intends to purchase 1,550,000
shares of its common stock from its Chairman, J. Brendan Barba, at a price of
$21.04 per share (the 'Repurchase'). We also understand that AEP then intends to
commence a tender offer to purchase 1,083,000 shares of its common stock from
its public shareholders at a price of $22.75 per share, and that officers and
directors of AEP will sell no shares in the tender offer. You have provided us
with a draft of the Offer to Purchase (the 'Draft Offer to Purchase').
You have asked us to render our opinion as to whether the Repurchase is fair,
from a financial point of view, to the public shareholders of AEP.
In the course of our analyses for rendering this opinion, we have:
1. reviewed AEP's Annual Reports to Shareholders and Annual Reports on
Form 10-K for the fiscal years ended October 31, 1993 and 1994, its
Quarterly Reports on Form 10-Q for the periods ended January 31 and
April 30, 1995, and its Proxy Statement dated February 28, 1995;
2. reviewed the Draft Offer to Purchase;
3. reviewed certain operating and financial information, including
projections, provided to us by management relating to AEP's
business and prospects;
4. met with certain members of AEP's senior management to discuss its
operations, historical financial statements and future prospects;
5. reviewed the historical prices and trading volume of the common
shares of AEP;
6. reviewed publicly available financial data and stock market
performance data of companies which we deemed generally comparable
to AEP;
7. reviewed the terms of recent acquisitions of companies which we
deemed generally comparable to AEP; and
8. conducted such other studies, analyses, inquiries and
investigations as we deemed appropriate.
In the course of our review, we have relied upon and assumed the accuracy and
completeness of the financial and other information provided to us by AEP. With
respect to AEP's projected financial results, we have assumed that they have
been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of AEP as to its expected future
performance. We have not assumed any responsibility for the information or
projections provided to us and we have further relied upon the assurances of the
management of
A-1
<PAGE>
AEP that it is unaware of any facts that would make the information or
projections provided to us incomplete or misleading. In arriving at our opinion,
we have not performed or obtained any independent appraisal of the assets of
AEP. Our opinion is necessarily based on economic, market and other conditions,
and the information made available to us, as of the date hereof.
Based on the foregoing, it is our opinion that the Repurchase is fair, from a
financial point of view, to the public shareholders of AEP.
We have acted as financial advisor to AEP in connection with the Repurchase and
will receive a fee for such services.
Very truly yours,
BEAR, STEARNS & CO. INC.
A-2
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or such stockholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below.
The Depositary for the Offer is:
THE CHASE MANHATTAN BANK, N.A.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
Box 3032 c/o Chase Securities (9:00 a.m.-5:00 p.m.
4 Chase MetroTech Ctr. Processing Corp. New York Time)
Brooklyn, NY 11245 Ft. Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Dr.--6th Floor Floor 1-B
Ft. Lee, NJ 07024 Nassau and Liberty Streets
New York, NY 10081
By Facsimile Transmission:
(201) 592-4372
Information and Confirm by Telephone:
(201) 592-4370
</TABLE>
------------------------------
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and the telephone
numbers set forth below and requests for additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent. Stockholders may also contact their broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer. To confirm delivery of your Shares, stockholders are
directed to contact the Depositary.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550 (Call Collect)
or
1-800-848-3155 (Toll Free)
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-6471 (Call Collect)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
AEP INDUSTRIES INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 10, 1995
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 8, 1995,
UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE CHASE MANHATTAN BANK, N.A.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
Box 3032 c/o Chase Securities (9:00 a.m.-5:00 p.m.
4 Chase Metro Tech Ctr. Processing Corp. New York Time)
Brooklyn, NY 11245 Ft. Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Dr.--6th Floor Floor 1-B
Ft. Lee, NJ 07024 Nassau and Liberty Streets
New York, NY 10081
By Facsimile Transmission:
(201) 592-4372
Information and Confirm by Telephone:
(201) 592-4370
</TABLE>
------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Letter of Transmittal is to be used only if (a) certificates for
Shares (as defined below) are to be delivered with it or (b) Shares are being
delivered by book-entry transfer to the account maintained by the Depositary at
The Depository Trust Company ('DTC'), the Midwest Securities Trust Company
('MSTC') or the Philadelphia Depository Trust Company ('PDTC') (collectively,
the 'Book-Entry Transfer Facilities') as set forth in Section 3 of the Offer to
Purchase (as defined below).
Stockholders whose stock certificates are not immediately available (or who
cannot follow the procedure for book-entry transfer on a timely basis) or who
cannot transmit this Letter of Transmittal and all other required documents to
the Depositary before the Expiration Date (as defined in Section 1 of the Offer
to Purchase) may nevertheless tender their Shares according to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2.
A stockholder owning beneficially as of the close of business on August 3,
1995 and who continues to own beneficially until the Expiration Date an
aggregate of fewer than 100 Shares, and who satisfies the other requirements set
forth in Instruction 7, may have all such Shares purchased before proration, if
any, of the purchase of other Shares pursuant to the Offer.
Delivery of the Letter of Transmittal and the other required documents to
one of the Book-Entry Transfer Facilities does not constitute delivery to the
Depositary.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY AT ONE OF THE BOOK-ENTRY TRANSFER
FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ___________________________________________
Check Box of Applicable Book-Entry Transfer Facility:
/ / The Depository Trust Company / / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
<TABLE>
<S> <C>
Account Transaction Code
Number: ------------------------------ Number: --------------------------------
</TABLE>
<PAGE>
/ / CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of Tendering Stockholder(s): _______________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
Check Box of Applicable Book-Entry Transfer Facility and Give Account Number
if Delivered by Book-Entry Transfer:
/ / The Depository Trust Company / / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: ______________________________________________
Transaction Code Number: ________________________________________
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
-------------------------------------- --------------------------------------
NUMBER OF
SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
----------- --------------- ----------
TOTAL SHARES
* Need not be completed by if Shares are delivered by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to AEP Industries Inc., a Delaware
corporation (the 'Company'), the above-described shares of Common Stock, par
value $.01 per share, of the Company ('Shares'), at a price of $22.75 per Share
(the 'Purchase Price'), net to the seller in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase dated August 10, 1995 (the
'Offer to Purchase'), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the 'Offer').
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to all the Shares
tendered hereby, or orders the registration of such Shares delivered by
book-entry transfer, that are purchased pursuant to the Offer and hereby
irrevocably constitutes and appoints the depositary for the Offer (the
'Depositary') the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to:
(a) deliver certificates for such Shares, or transfer ownership of
such Shares on the account books maintained by any of the
Book-Entry Transfer Facilities, together, in any such case, with
all accompanying evidence of transfer and authenticity, to or upon
the order of the Company, upon receipt by the Depositary, as the
undersigned's agent, of the Purchase Price with respect to such
Shares;
(b) present certificates for such Shares for cancellation and transfer
of such Shares on the Company's books; and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, all in accordance with the
terms of the Offer.
The undersigned hereby represents and warrants that:
(a) the undersigned 'owns' the Shares tendered hereby within the
meaning of Rule 14e-4 promulgated under the Securities Exchange
Act of 1934, as amended, and has full power and authority to
validly tender, sell, assign and transfer the Shares tendered
hereby;
(b) the tender of Shares by the undersigned complies with Rule 14e-4;
(c) when and to the extent the Company accepts the Shares for
purchase, the Company will acquire good, marketable and
unencumbered title thereto, free and clear of all security
interests, liens, charges, encumbrances, conditional sales
agreements or other obligations relating to their sale or
transfer, and not subject to any adverse claim;
(d) on request, the undersigned will execute and deliver any
additional documents the Depositary or the Company deems necessary
or desirable to complete the assignment, transfer and purchase of
the Shares tendered hereby; and
(e) the undersigned has read and agrees to all the terms of the Offer.
The undersigned understands that all Shares properly tendered and not
withdrawn will be purchased at $22.75 per Share (or such other price that may be
set forth in an amendment to the Offer), net to the seller in cash, upon the
terms and subject to the conditions of the Offer, including the proration
provisions thereof and that the Company will return all other Shares, including
Shares not purchased because of proration.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may not
be required to accept for payment any of the Shares tendered herewith or may
accept for payment, pro rata with Shares tendered by other stockholders, fewer
than all the Shares tendered herewith.
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated on the Offer to Purchase, this tender is irrevocable.
Unless otherwise indicated under 'Special Payment Instructions,' please
issue the check for the aggregate Purchase Price and/or return or issue the
certificate(s) evidencing any Shares not tendered or not accepted for payment in
the name(s) of the registered holder(s) appearing under 'Description of Shares
Tendered.' Similarly, unless otherwise indicated under 'Special Delivery
Instructions', please mail the check for the aggregate Purchase Price and/or the
certificate(s) evidencing any Shares not tendered or not accepted for payment
(and accompanying documents, as appropriate) to the address(es) of the
registered holder(s) appearing under 'Description of Shares Tendered.' In the
event that both the 'Special Delivery Instructions' and the 'Special Payment
Instructions' are completed, please issue the check for the aggregate Purchase
Price and/or issue or return the certificate(s) evidencing any Shares not
tendered or accepted for payment in the name(s) of, and deliver said check
and/or certificate(s) to, the person or persons so indicated. In the case of
book-entry delivery of Shares, please credit the account maintained at the
Book-Entry Transfer Facility indicated above with any Shares not accepted for
payment. The undersigned recognizes that the Company has no obligation pursuant
to the 'Special Payment Instructions' to transfer any Shares from the name(s) of
the registered holder(s) thereof if the Company does not accept for payment any
of the Shares so tendered.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
--------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 7)
To be completed ONLY if Shares are being tendered by or on behalf of a
person who beneficially owned as of the close of business on August 3, 1995, and
who will continue to own beneficially until the Expiration Date an aggregate of
fewer than 100 Shares.
The undersigned either (check one box):
/ / was the beneficial owner as of the close of business on August 3,
1995, and will continue to be the beneficial owner until the
Expiration Date of an aggregate of fewer than 100 Shares, and is
tendering all such Shares, or
/ / is an 'Eligible Institution' (as defined in Instruction 1) that (i) is
tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner and (ii) believes, based upon
representations made to it by each such beneficial owner, that each
such beneficial owner beneficially owned as of the close of business
on August 3, 1995, and will continue to own beneficially until the
Expiration Date an aggregate of fewer than 100 Shares, and is
tendering all such Shares.
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 9)
To be completed ONLY if the check for the aggregate Purchase Price of
Shares purchased and/or certificates for Shares not tendered or not purchased
are to be mailed to someone other than the undersigned or to the undersigned at
an address other than that shown below the undersigned's signature.
Mail / / check and/or / / certificates to:
Name: __________________________________________________________________________
(PLEASE PRINT)
Address: _______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(ZIP CODE)
SPECIAL PAYMENT ISTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6, 8 AND 9)
To be completed ONLY if the check for the aggregate Purchase Price of
Shares purchased and/or certificates for Shares not tendered or not purchased
are to be issued in the name of someone other than the undersigned.
Issue any / / check and/or / / certificates to:
Name:
--------------------------------------------------------------------------
(PLEASE PRINT)
Address:
-----------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(ZIP CODE)
--------------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION NUMBER)
<PAGE>
SIGN HERE
(SEE INSTRUCTIONS 1 AND 5)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SIGNATURE(S) OF OWNER(S)
Name(s)
------------------------------------------------------------------------
(PLEASE PRINT)
--------------------------------------------------------------------------------
Capacity (full title)
----------------------------------------------------------
Address
------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone
Number
-------------------------------------------------------------------------
Taxpayer Identification
Number
-------------------------------------------------------------------------
(SEE INSTRUCTION 11)
Dated: , 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title. See
Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized
Signature
----------------------------------------------------------------------
Name
---------------------------------------------------------------------------
(PLEASE PRINT)
Title
--------------------------------------------------------------------------
Name of Firm
------------------------------------------------------------------
Address
------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
----------------------------------------------------
Dated: , 1995
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most banks, savings and loan associations, and brokerage
houses) that is a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchanges Medallion Program (each such entity being hereinafter referred to as
an 'Eligible Institution'). Signatures on this Letter of Transmittal need not be
guaranteed if (a) this Letter of Transmittal is signed by the registered owner
of the Shares (which term, for purposes of this document, shall include any
participant in one of the Book-Entry Transfer Facilities whose name appears on a
security position listing as the owner of Shares) tendered herewith and such
owner has not completed either of the boxes entitled 'Special Payment
Instructions' or 'Special Delivery Instructions' on this Letter of Transmittal
or (b) such Shares are tendered for the account of an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if (a) certificates
are to be forwarded with it to the Depositary or (b) delivery of Shares is to be
made by book-entry transfer pursuant to the procedure set forth in Section 3 of
the Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer of all Shares delivered electronically
into the Depositary's account at one of the Book-Entry Transfer Facilities,
together in each case with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary at one of its addresses set forth on the front page of this
Letter of Transmittal before the Expiration Date (as defined in the Offer to
Purchase). Delivery of documents to one of the Book-Entry Transfer Facilities
does not constitute delivery to the Depositary.
Stockholders whose certificates are not immediately available (or who
cannot follow the procedures for book-entry transfer on a timely basis) or who
cannot transmit this Letter of Transmittal and all other required documents to
reach the Depositary before the Expiration Date, may nevertheless tender their
Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of
the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made
by or through an Eligible Institution, (b) the Depositary must receive (by hand,
mail or facsimile transmission), before the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in the
form the Company has provided with the Offer to Purchase and (c) the
certificates for all tendered Shares in proper form for transfer (or
confirmation of a book-entry transfer of all such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and any
other documents required by this Letter of Transmittal, must be received by the
Depositary within five Nasdaq National Market trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of
the Offer to Purchase.
The method of delivery of all documents, including stock certificates, the
Letter of Transmittal and any other required documents, is at the election and
risk of the tendering stockholder. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal (or
a facsimile thereof), each tendering stockholder waives any right to receive any
notice of the acceptance of such stockholder's tender.
3. INADEQUATE SPACE. If the space provided in the box entitled
'Description of Shares Tendered' is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate signed schedule and attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable to stockholders
who deliver Shares by book-entry transfer.) If fewer than all the Shares
evidenced by any certificate delivered to the Depositary are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled 'Number
of Shares Tendered'. If such Shares are purchased, a new certificate for the
remainder of the Shares evidenced by the old certificate(s) will be sent to and
in the name of the registered holder(s) (unless otherwise specified by such
holder(s) having completed either of the boxes entitled 'Special Delivery
Instructions' or 'Special Payment Instructions' on this Letter of Transmittal)
as soon as practicable following the expiration or termination of the Offer. All
Shares represented by the certificate(s) listed and delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS; AND ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered herewith, the signature(s) must correspond exactly with the
name(s) as written on the face of the certificates without any change
whatsoever.
(b) If any of the Shares tendered herewith are registered in the names of
two or more joint owners, each such owner must sign this Letter of Transmittal.
(c) If any of the Shares tendered herewith are registered in different
names on different certificates, it will be necessary to complete, sign and
submit as many separate Letters of Transmittal as there are different
registrations of certificates.
(d) If this Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered herewith, no endorsements of certificates or separate stock
powers are required unless payment is to be made and/or certificates for Shares
not tendered or not purchased are to be issued to a person other than the
registered holder(s). If this Letter of Transmittal is signed by a person other
than the registered holder(s) of the Shares tendered herewith, however, the
certificates must be endorsed or accompanied by appropriate stock powers, in
either case, signed exactly as the name(s) of the registered holder(s) appear on
the certificates for such Shares. Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution. See Instruction 1.
(e) If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such
<PAGE>
person should so indicate when signing and proper evidence satisfactory to the
Company of the authority of such person so to act must be submitted.
6. STOCK TRANSFER TAXES. The Company will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the aggregate Purchase Price is to be made
to, or certificates for Shares not tendered or accepted for purchase are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such person) payable on
account of the transfer to such person will be deducted from the aggregate
purchase price unless satisfactory evidence of payment of such taxes or
exemption therefrom is submitted.
7. ODD LOTS. As described in Sections 1 and 2 of the Offer to Purchase, if
the number of Shares properly tendered and not withdrawn before the Expiration
Date is greater than 1,083,000 (or such greater number of Shares as the Company
may elect to purchase pursuant to the Offer), the Company, upon the terms and
subject to the conditions of the Offer, will accept Shares for purchase first
from all Shares properly tendered and not withdrawn before the Expiration Date
by any stockholder who beneficially owned as of the close of business on August
3, 1995, and who continues to own beneficially until the Expiration Date, an
aggregate of fewer than 100 Shares, who tendered all Shares beneficially owned
by such person (partial tenders of Shares will not qualify for this preference)
and who completes the box captioned 'Odd Lots' in this Letter of Transmittal
and, if applicable, on the Notice of Guaranteed Delivery. This preference will
not be available unless the box above entitled 'Odd Lots' is completed.
8. IRREGULARITIES. All questions as to the number of Shares to be accepted
and the validity, form, eligibility (including time of receipt) and acceptance
for payment of any tender of Shares will be determined by the Company, in its
sole discretion, which determination shall be final and binding on all parties.
The Company reserves the absolute right to reject any or all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any of the conditions of the Offer (except as provided
in Section 6 of the Offer to Purchase) and any defect or irregularity in the
tender of any particular Shares. The Company's interpretation of the terms and
conditions of the Offer (including these instructions) shall be final and
binding on all parties. No tender of Shares will be deemed properly made until
all defects or irregularities have been cured or waived. None of the Company,
the Dealer Manager, the Depositary, the Information Agent or any other person is
or will be obligated to give notice of any defects or irregularities in tenders,
and none of them will incur any liability for failure to give any such notice.
9. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the
aggregate Purchase Price of any Shares purchased is to be issued to, or any
Shares not tendered or not purchased are to be returned in the name of, a person
other than the person(s) signing this Letter of Transmittal or if the check or
any certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that shown
in the box entitled 'Descriptions of Shares Tendered,' the boxes entitled
'Special Payment Instructions' and/or 'Special Delivery Instructions' on this
Letter of Transmittal should be completed.
10. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers set forth below and requests for
additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent.
11. SUBSTITUTE FORM W-9. Except as provided above under 'Important Tax
Information,' each tendering stockholder is required to provide the Depositary
with a correct TIN on Substitute Form W-9 which is provided under 'Important Tax
Information' above. Failure to provide the information on the form may subject
the tendering stockholder to a $50 penalty and a 31% federal back-up withholding
tax may be imposed on the payments made to the stockholder or other payee with
respect to Shares purchased pursuant to the Offer.
12. FOREIGN STOCKHOLDER WITHHOLDING. Foreign stockholders should note that
the 30% U.S. withholding tax generally applicable to corporate distributions
will apply to the proceeds payable pursuant to the Offer, unless either a
reduced rate of withholding is applicable pursuant to a tax treaty or an
exemption from withholding is applicable because such gross proceeds are
effectively connected with the conduct of a trade or business by the foreign
stockholder within the United States.
Facsimile copies of this Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or such stockholder's broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below.
<PAGE>
IMPORTANT TAX INFORMATION
Under current U.S. federal income tax law, a stockholder whose tendered
Shares are accepted for payment is required by law to provide the Depositary
with such stockholder's correct taxpayer identification number ('TIN') on the
Substitute Form W-9 below. If the Depositary is not provided with the correct
TIN, the Internal Revenue Service may subject the stockholder or other payee to
a $50 penalty. In addition, payments that are made to such stockholder or other
payee with respect to Shares purchased pursuant to the Offer may be subject to
31% backup withholding for federal income tax purposes.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing 'exempt' across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, the stockholder must
submit a Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. A Form W-8 can be obtained from the Depositary. See
the enclosed 'Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9' for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments to be made to the stockholder or other payee. Backup
withholding is not an additional tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding in connection with
payments that are made with respect to Shares tendered in the Offer, you must
provide the Depositary with your correct TIN by completing the Substitute Form
W-9 below, certifying that the TIN provided on Substitute Form W-9 is correct
and that either (A) you have not been notified by the Internal Revenue Service
that you are subject to backup withholding or (B) the Internal Revenue Service
has notified you that you are no longer subject to backup withholding.
If you have not been issued a TIN and have applied for one, or if you
intend to apply for one in the near future, check the box in Part III and sign
and date both the Substitute Form W-9 and the 'Certificate of Taxpayer Awaiting
Identification Number.' You then have generally 60 days within which to provide
the Depositary with your TIN and a new Substitute Form W-9. If you fail to do
so, the Depositary will withhold 31% from any payments and distributions made to
you thereafter until a TIN and new Substitute Form W-9 are provided.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the certificates evidencing the Shares. If the Shares are
registered in more than one name or are not registered in the name of the actual
owner, consult the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional guidance on which
number to report.
<PAGE>
PAYER'S NAME: THE CHASE MANHATTAN BANK, N.A.
<TABLE>
<S> <C>
SUBSTITUTE PART I -- PLEASE PROVIDE ______________________________
FORM W-9 YOUR TIN IN THE BOX AT Social Security Number
RIGHT AND CERTIFY BY OR
DEPARTMENT OF THE TREASURY SIGNING AND DATING BELOW. ______________________________
INTERNAL REVENUE SERVICE Employer Identification Number
-------------------------------------------------------------------------------
PAYER'S REQUEST FOR PART II
TAXPAYER CERTIFICATION -- Under penalties of perjury, I certify that:
IDENTIFICATION (1) The number shown on this form is my current taxpayer identification number
NUMBER (TIN) (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding under the provision of Section
3406(a)(1)(c) of the Internal Revenue Code because (i) I have not been
notified by the Internal Revenue Service (the 'IRS') that I am subject to
backup withholding as a result of failure to report all interest or
dividends, or (ii) the IRS has notified me that I am no longer subject to
backup withholding.
-------------------------------------------------------------------------------
PART III
Awaiting TIN ______________________________________
-------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) in Part II above if you
have been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you are subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2).
-------------------------------------------------------------------------------
SIGNATURE: DATE:
-------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART III OF SUBSTITUTE FORM W-9
--------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver such an application in the near future. I understand that if I do not
provide a taxpayer identification number to the payer before the earliest of (i)
the date of payment or (ii) sixty (60) days, 31% of all reportable payments made
to me may be withheld.
------------------------------------------------- ---------------------, 1995
Signature: Date
--------------------------------------------------------------------------------
<PAGE>
The Depositary for the Offer is:
THE CHASE MANHATTAN BANK, N.A.
By Mail: By Overnight Delivery: By Hand:
Box 3032 c/o Chase Securities (9:00 a.m.-5:00 p.m.
4 Chase Metro Tech Ctr. Processing Corp. New York Time)
Brooklyn, NY 11245 Ft. Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Dr.--6th Floor Floor 1-B
Ft. Lee, NJ 07024 Nassau and Liberty Streets
New York, NY 10081
By Facsimile Transmission:
(201) 592-4372
Information and Confirm by Telephone:
(201) 592-4370
------------------------------
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below and requests for additional copies of the Offer to Purchase,
this Letter of Transmittal and the Notice of Guaranteed Delivery may be directed
to the Information Agent. Stockholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550 (Call Collect)
or
1-800-848-3155 (Toll Free)
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-6471 (Call Collect)
<PAGE>
AEP INDUSTRIES INC.
NOTICE OF GUARANTEED DELIVERY
OF SHARES OF COMMON STOCK
This form or a facsimile hereof must be used to accept the Offer (as
defined below) if:
(a) certificates for shares of Common Stock, par value $.01 per share
('Shares'), of AEP Industries Inc., a Delaware corporation (the 'Company'),
are not immediately available; or
(b) the procedure for book-entry transfer (set forth in Section 3 of
the Company's Offer to Purchase, dated August 10, 1995 (the 'Offer to
Purchase')) cannot be followed on a timely basis; or
(c) time will not permit the Letter of Transmittal and all other
required documents to be delivered to the depositary for the Offer (the
'Depositary') before the Expiration Date (as defined in Section 1 of the
Offer to Purchase).
This form, properly completed and duly executed, may be delivered by hand,
mail or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
To:
THE CHASE MANHATTAN BANK, N.A., DEPOSITARY
By Mail: By Overnight Delivery: By Hand:
Box 3032 c/o Chase Securities (9:00 a.m.-5:00 p.m.
4 Chase MetroTech Ctr. Processing Corp. New York Time)
Brooklyn, NY 11245 Ft. Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Dr.--6th Floor Floor 1-B
Ft. Lee, NJ 07024 Nassau and Liberty Streets
New York, NY 10081
By Facsimile Transmission:
(201) 592-4372
Information and Confirm by Telephone:
(201) 592-4370
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN THOSE SHOWN ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN 'ELIGIBLE INSTITUTION'
(AS DEFINED IN THE OFFER TO PURCHASE) UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, at a price of $22.75 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase and the related Letter of Transmittal (which
together constitute the 'Offer'), receipt of which is hereby acknowledged,
_______ Shares pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
--------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 7 OF THE LETTER OF TRANSMITTAL)
To be completed ONLY if Shares are being tendered by or on behalf of a
person who beneficially owned as of the close of business on August 3, 1995, and
who will continue to own beneficially until the Expiration Date, an aggregate of
fewer than 100 Shares.
The undersigned either (check one box):
/ / was the beneficial owner as of the close of business on August 3,
1995, and will continue to be the beneficial owner until the
Expiration Date, of an aggregate of fewer than 100 Shares, and is
tendering all such Shares, or
/ / is an 'Eligible Institution' that (i) is tendering, for the
beneficial owners thereof, Shares with respect to which it is the
record owner, and (ii) believes, based upon representations made
to it by each such beneficial owner, that each such beneficial
owner beneficially owned as of the close of business on August 3,
1995, and will continue to own beneficially until the Expiration
Date, an aggregate of fewer than 100 Shares, and is tendering all
such Shares.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Number of Shares tendered:
--------------------------------------------------------------------------------
Certificate Nos. (if available):
--------------------------------------------------------------------------------
If Shares will be delivered by book-entry transfer:
----------------------------
Name of Tendering Institution:
-------------------------------------------------
--------------------------------------------------------------------------------
Account No. ____________________________________________________________________
at:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SIGN HERE
--------------------------------------------------------------------------------
(Signature(s))
--------------------------------------------------------------------------------
(Signature(s))
--------------------------------------------------------------------------------
(Name(s)) (Please Print)
2
<PAGE>
--------------------------------------------------------------------------------
(Address)
--------------------------------------------------------------------------------
(Zip Code)
--------------------------------------------------------------------------------
(Area Code and Telephone No.)
--------------------------------------------------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an 'Eligible Institution,' guarantees that (a) the above
named person(s) 'own(s)' the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended, (b) such tender of
Shares complies with Rule 14e-4 and (c) the Depositary will receive either the
stock certificates representing the Shares tendered hereby, in proper form for
transfer, or confirmation of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company, in any such case
together with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and any other required documents, all within five Nasdaq
Stock Market National Market trading days after the date of execution of this
notice.
<TABLE>
<S> <C>
---------------------------------- --------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
---------------------------------- --------------------------------------
ADDRESS TITLE
Name:
---------------------------------- --------------------------------
ZIP CODE PLEASE PRINT
Area Code and Tel. No.: Date: , 1995
---------- --------------------
</TABLE>
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES MUST
BE SENT WITH THE LETTER OF TRANSMITTAL.
3
<PAGE>
AEP INDUSTRIES INC.
OFFER TO PURCHASE FOR CASH
UP TO 1,083,000 SHARES OF ITS COMMON STOCK
AT $22.75 NET PER SHARE
August 10, 1995
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
AEP Industries Inc., a Delaware corporation (the 'Company'), has appointed
us to act as Dealer Manager in connection with its offer pursuant to which the
Company is inviting its stockholders to tender shares of its Common Stock, par
value $.01 per share ('Shares'), at a price of $22.75 per Share (the 'Purchase
Price'), net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated August 10, 1995 (the 'Offer to
Purchase'), and in the related Letter of Transmittal (which together constitute
the 'Offer'). We enclose herewith the materials listed below relating to the
Offer.
The Company will purchase, at the Purchase Price, net to the seller in
cash, up to 1,083,000 Shares that are properly tendered and not withdrawn, upon
the terms and subject to the conditions of the Offer, including the proration
provisions described therein. The Company reserves the right, in its sole
discretion, to purchase more than 1,083,000 Shares pursuant to the Offer. The
Offer is not conditioned upon any minimum number of Shares being validly
tendered. The Offer is, however, subject to certain other conditions. See
Section 6 of the Offer to Purchase.
Neither the Company nor its Board of Directors makes any recommendation as
to whether any stockholder should participate in the Offer.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
(1) Offer to Purchase dated August 10, 1995;
(2) Letter of Transmittal for your use and for the information of your
clients (together with 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9');
(3) Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available (or the
procedures for book-entry transfer cannot be followed on a timely
basis) or time will not permit the Letter of Transmittal and all
other required documents to reach the depositary for the Offer
(the 'Depositary') before the Expiration Date (as defined in the
Offer to Purchase);
(4) Letter to Clients which may be sent to your clients for whose
accounts you hold Shares registered in your name (or in the name
of your nominee), with space provided for obtaining such clients'
instructions with regard to the Offer;
(5) Letter from J. Brendan Barba, Chairman of the Board, President and
Chief Executive Officer of the Company, dated August 10, 1995, to
stockholders of the Company; and
(6) Return envelope addressed to The Chase Manhattan Bank, N.A., as
Depositary.
PLEASE BRING THE OFFER TO THE ATTENTION OF YOUR CLIENTS AS PROMPTLY AS
POSSIBLE. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 8, 1995, UNLESS THE OFFER IS
EXTENDED.
No fees or commissions will be payable to brokers, dealers or other persons
for soliciting tenders of Shares pursuant to the Offer. The Company will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients. The
Company will pay any stock transfer taxes with respect to the transfer and sale
of Shares to it or its order pursuant to the Offer, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
<PAGE>
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3 of the Offer to Purchase, tenders may be made
even though stock certificates are not immediately available (or the procedures
for book-entry transfer cannot be followed on a timely basis) or time will not
permit the Letter of Transmittal and all other required documents to reach the
Depositary before the Expiration Date, if such tenders are made by or through an
'Eligible Institution' (as defined in the Offer to Purchase). Certificates for
Shares so tendered in proper form for transfer (or a confirmation of a
book-entry transfer of such Shares into the Depositary's account at one of the
'Book-Entry Transfer Facilities' described in the Offer to Purchase), together
with a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and any other documents required by the Letter of
Transmittal, must be received by the Depositary within five Nasdaq National
Market trading days after the date of execution of a properly completed and duly
executed Notice of Guaranteed Delivery.
Any questions you have with respect to the Offer should be addressed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase. Requests
for additional copies of the enclosed material may be directed to the
Information Agent, D.F. King & Co., Inc., at 1-800-848-3155.
Very truly yours,
BEAR, STEARNS & CO. INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE
INFORMATION AGENT OR THE DEPOSITARY OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE
ANY STATEMENTS OR USE ANY MATERIAL ON BEHALF OF ANY OF THEM WITH RESPECT TO THE
OFFER, OTHER THAN THE MATERIAL ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY
CONTAINED IN SUCH MATERIAL.
2
<PAGE>
AEP INDUSTRIES INC.
OFFER TO PURCHASE FOR CASH
UP TO 1,083,000 SHARES OF ITS COMMON STOCK
AT $22.75 NET PER SHARE
To Our Clients: August 10, 1995
Enclosed for your consideration are the Offer to Purchase dated August 10,
1995 (the 'Offer to Purchase'), and the related Letter of Transmittal (which
together constitute the 'Offer'), in connection with the Offer by AEP Industries
Inc., a Delaware corporation (the 'Company'), pursuant to which the Company is
inviting its stockholders to tender shares of its Common Stock, par value $.01
per share ('Shares'), at a price of $22.75 per Share (the 'Purchase Price'), net
to the seller in cash, upon the terms and subject to the conditions of the
Offer.
All Shares properly tendered and not withdrawn will be purchased at the
Purchase Price, net to the seller in cash, upon the terms and subject to the
conditions of the Offer, including the proration provisions thereof. All Shares
not purchased pursuant to the Offer, including Shares not purchased because of
proration, will be returned to the tendering stockholders at the Company's
expense as promptly as practicable following the Expiration Date (as defined in
Section 1 of the Offer to Purchase). The Company reserves the right, in its sole
discretion, to purchase more than 1,083,000 Shares pursuant to the Offer. See
Section 1 of the Offer to Purchase.
We are the holder of record of Shares held for your account. As such, we
are the only ones who can tender your Shares, and then only pursuant to your
instructions. The Letter of Transmittal is for your information only and cannot
be used by you to tender Shares we hold for your account.
Please instruct us as to whether you wish us to tender any of or all the
Shares we hold for your account upon the terms and subject to the conditions of
the Offer.
We call your attention to the following:
1. You may tender any portion of or all your Shares as indicated in
the attached instruction form.
2. The Offer is not conditioned upon any minimum number of Shares
being tendered. The Offer is, however, subject to certain other
conditions. See Section 6 of the Offer to Purchase.
3. The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Friday, September 8, 1995,
unless the Offer is extended.
4. The Offer is for 1,083,000 Shares, representing approximately 18%
of the Shares outstanding as of August 9, 1995, and approximately
17% of the sum of the Shares then outstanding and all Shares which
may be issued upon the exercise of outstanding stock options under
the Company's stock option plans as of such date.
5. Tendering stockholders will not be obligated to pay any brokerage
commissions, solicitation fees, or, subject to Instruction 6 of the
Letter of Transmittal, any stock transfer taxes with respect to the
transfer and sale of Shares to the Company pursuant to the Offer.
6. If you owned beneficially as of the close of business on August 3,
1995, and will continue to own beneficially until the Expiration
Date (as defined in the Offer to Purchase), an aggregate of fewer
than 100 Shares and you are tendering all such Shares and do not
withdraw such Shares before the Expiration Date and complete the
box captioned 'Odd Lots' in the attached instruction form, the
Company, upon the terms and subject to the conditions of the Offer,
will accept all such Shares for purchase before proration, if any,
of the purchase of other Shares tendered.
If you wish to have us tender any of or all your Shares, please so instruct
us by completing, executing and returning to us the attached instruction form.
An envelope to return your instruction form to us is enclosed. If you authorize
us to tender your Shares, we will tender all such Shares unless you specify
otherwise on the instruction form.
<PAGE>
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF BEFORE THE EXPIRATION DATE. THE OFFER, PRORATION
PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON FRIDAY, SEPTEMBER 8, 1995, UNLESS THE OFFER IS EXTENDED.
As described in Section 1 of the Offer to Purchase and subject to matters
described therein, if the number of Shares properly tendered and not withdrawn
before the Expiration Date is greater than 1,083,000 Shares (or such greater
number of Shares as the Company may elect to purchase pursuant to the Offer),
the Company, upon the terms and subject to the conditions of the Offer, will
accept Shares for purchase in the following order of priority:
(a) first, all Shares properly tendered and not withdrawn before the
Expiration Date by any stockholder who owned beneficially as of
the close of business on August 3, 1995, and who continues to own
beneficially until the Expiration Date, an aggregate of fewer than
100 Shares and who:
(1) tenders all Shares beneficially owned by such stockholder
(partial tenders will not qualify for this preference); and
(2) completes the box captioned 'Odd Lots' on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and
(b) then, after purchase of all the foregoing Shares, all other Shares
properly tendered and not withdrawn before the Expiration Date on
a pro rata basis, if necessary (with adjustments to avoid
purchases of fractional Shares).
This Offer is not being made to, nor will the Company accept tenders from
or on behalf of, owners of Shares residing in any jurisdiction in which the
making of the Offer or its acceptance would not be in compliance with the laws
of such jurisdiction. In any jurisdiction in which the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer will be deemed to be made on the Company's behalf by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS
WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
UP TO 1,083,000 SHARES OF COMMON STOCK
OF
AEP INDUSTRIES INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated August , 1995, and the related Letter of Transmittal
(which together constitute the 'Offer'), in connection with the Offer by AEP
Industries Inc., a Delaware corporation (the 'Company'), to purchase for cash up
to 1,083,000 shares of its Common Stock, par value $.01 per share ('Shares'), at
a price of $22.75 per Share, net to the seller in cash, upon the terms and
subject to the conditions of the Offer.
The undersigned hereby instruct(s) you to tender to the Company the number
of Shares indicated below or, if no number is indicated, all Shares you hold for
the account of the undersigned, upon the terms and subject to the conditions of
the Offer.
Aggregate number of Shares to be tendered by you for the account of the
undersigned:*
Shares
*Unless otherwise indicated, all the Shares held for the account of the
undersigned will be tendered.
ODD LOTS
/ / By checking this box, the undersigned represents that the undersigned
beneficially owned as of the close of business on August 3, 1995, and will
continue to own beneficially until the Expiration Date, an aggregate of fewer
than 100 Shares, and is tendering all such Shares.
--------------------------------------------------------------------------------
SIGNATURE BOX
Signature(s)
-------------------------------------------------------------------
Dated , 1995
-------------------------------------------------------------------
Name(s) and Address(es)
--------------------------------------------------------
--------------------------------------------------------------------------------
(PLEASE PRINT)
Area Code and Telephone No.
--------------------------------------------------
Taxpayer Identification or
Social Security Number
--------------------------------------------------------
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
----------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
----------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the account or,
(joint account) if combined funds, any one of the
individuals(1)
3. Husband and wife The actual owner of the account or,
(joint account) if joint funds, either person(1)
4. Custodian account of a minor (Uniform The minor(2)
Gift to Minors Act)
5. Adult and minor The adult or, if the minor is the
(joint account) only contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent
committee for a designated ward, person(3)
minor, or incompetent person
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust under
State law
8. Sole proprietorship account The owner(4)
</TABLE>
----------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------
GIVE THE EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
----------------------------------------------------------------
<S> <C> <C>
9. A valid trust, estate, or pension The legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not designated
in the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational The organization
organization account
12. Partnership account held in the name The partnership
of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
</TABLE>
----------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and
apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments of
interest and dividends include the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
o An international organization or any agency, or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of 1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
o Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
o Payments made to a nominee.
Exempt payees described above still must complete the Substitute Form W-9 to
avoid possible erroneous backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE 'EXEMPT' ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. ALSO SIGN
AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. --If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 20% on any portion of an
under-payment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
[LOGO OF AEP INDUSTRIES INC]
MAKING INDUSTRY BETTER WITH PLASTICS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
MANUFACTURING EXPERTS OF LOW DENSITY POLYETHYLENE FILM
August 10, 1995
To Our Stockholders:
We are pleased to inform you that AEP Industries Inc. is offering to
purchase up to 1,083,000 shares (representing approximately 18% of the currently
outstanding shares) of its common stock from its stockholders at a per share
price of $22.75, net to the seller in cash.
Historically, the Company has maintained relatively low debt levels,
leaving the Company under-leveraged. The Board of Directors believes that the
interests of stockholders will be served by utilizing the Company's excess
borrowing capacity to afford stockholders an opportunity to sell a significant
portion of their shares to the Company. The Company has entered into a $140
million loan facility with The Chase Manhattan Bank (National Association) and
Mellon Bank, N.A. to provide the Company with funds to effect purchases pursuant
to the tender offer, to refinance certain existing debt and to meet the future
needs of the Company's business.
The tender offer is designed to afford to stockholders who are considering
the sale of all or a portion of their shares an opportunity to sell such shares
for a higher price than that available in the open market immediately prior to
the announcement of the offer, without the usual transaction costs associated
with market sales and, in the case of those holders who own less than 100
shares, without incurring any applicable odd lot discounts. However,
stockholders should be aware that proceeds of sales pursuant to the offer may be
treated as a dividend taxable as ordinary income to a stockholder rather than
capital gain.
The Company has been informed by its directors and executive officers that
they do not intend to tender shares owned by them pursuant to the offer.
The tender offer is explained in detail in the enclosed Offer to Purchase
and Letter of Transmittal. If you wish to tender your shares, detailed
instructions on how to tender shares are also in the enclosed materials. We
encourage you to read these materials carefully before making any decision with
respect to the tender offer.
Neither the Company nor its Board of Directors makes any recommendation as
to whether any stockholder should participate in the offer.
Please note that the tender offer is scheduled to expire at 12:00 midnight,
New York City time, on Friday, September 8, 1995, unless extended by the
Company. Questions regarding the tender offer may be directed to D.F. King &
Co., Inc., the Information Agent, at 1-800-848-3155 (toll free) or Bear, Stearns
& Co. Inc., the Dealer Manager, at (212) 272-6471 (call collect).
Sincerely,
J. Brendan Barba
Chairman of the Board,
President and Chief Executive Officer
August 3, 1995
Contact: Barbara L. Brown
Director of Corporate Communications
(201) 807-2301
FOR IMMEDIATE RELEASE
AEP INDUSTRIES INC. ANNOUNCES BOARD APPROVAL OF CASH TENDER
OFFER FOR UP TO 1,083,000 SHARES AT $22.75 NET PER SHARE
South Hackensack, NJ, August 3, 1995 - AEP Industries Inc.
announced today that its Board of Directors has approved a
cash tender offer to purchase up to 1,083,000 shares of the
Company's common stock at a per share price of $22.75 in
cash. The offer is expected to commence on or about
Thursday, August 10, 1995. The closing bid price for the
Company's common stock on August 2, 1995 was $20.75 per
share.
The tender offer will not be conditioned upon any minimum
number of shares being tendered. The offer will be,
however, subject to certain customary conditions described
in offering materials to be distributed to stockholders.
Neither the Company nor its Board of Directors makes any
recommendation as to whether any stockholder should
participate in the offer.
Historically, the Company has maintained relatively low debt
levels, leaving the Company under-leveraged. The Board of
Directors believes that the interests of stockholders will
be served by utilizing the Company's excess borrowing
capacity to afford stockholders an opportunity to sell a
significant portion of their shares to the Company.
The Company also announced that yesterday the Company
purchased from J. Brendan Barba, the Chairman of the Board,
President and Chief Executive Officer of the Company, an
aggregate of 1,550,000 shares of the Company's common stock
for a cash purchase price of $21.04 per share. In
connection with such transaction, the Company's Board of
Directors received an opinion from its financial advisor,
Bear, Stearns & Co. Inc., to the effect that, based upon the
procedures followed, factors considered, and assumptions
made by Bear Stearns as set forth in its opinion, the
purchase of the shares from Mr. Barba by the Company
pursuant to the Stock Purchase Agreement is fair, from a
financial point of view, to the stockholders of the Company,
other than Mr. Barba and his affiliates.
Mr. Barba has agreed that none of the shares beneficially
owned by him or any of his affiliates or over which he
otherwise exercises dispositive power will be tendered and
sold to the Company pursuant to the tender offer. The
Company has been informed by its directors and officers that
they do not intend to tender shares owned by them pursuant
to the offer.
The Company is entering into a $140 million loan facility
with The Chase Manhattan Bank (National Association) and
Mellon Bank, N.A. to provide the Company with funds to
effect purchases pursuant to the tender offer, to refinance
certain existing debt and to meet the future needs of the
Company's business.
Bear, Stearns & Co. Inc. will act as dealer manager for the
tender offer and The Chase Manhattan Bank, N.A. will act as
the depositary.
AEP Industries manufactures and markets low density
polyethylane plastic film products throughout the United
States and in a limited number of foreign countries. Shares
of the Company's common stock are traded on The Nasdaq Stock
Market's National Market under the symbol "AEPI."
August 10, 1995
Contact: Barbara L. Brown
Director of Corporate Communications
(201) 807-2301
FOR IMMEDIATE RELEASE
AEP INDUSTRIES INC. COMMENCES CASH TENDER OFFER FOR UP TO
1,083,000 SHARES AT $22.75 NET PER SHARE
South Hackensack, New Jersey, August 10, 1995: AEP
Industries Inc. announced today that it has commenced a cash
tender offer to purchase up to 1,083,000 shares of the
Company's common stock at a per share price of $22.75 in
cash, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated August 10, 1995, and the
related Letter of Transmittal (which together constitute the
"Offer"). The closing bid price for the Company's common
stock on August 2, 1995 (the last full trading day before
the announcement of the Offer) was $20.75 per share. The
closing bid price for the Company's common stock on August
9, 1995 was $22 per share.
The 1,083,000 shares that the Company is offering to
purchase in the Offer represent approximately 18% of the
shares outstanding as of August 9, 1995, after giving effect
to the previously announced purchase by the Company from J.
Brendan Barba, the Chairman of the Board, President and
Chief Executive Officer of the Company, of an aggregate of
1,550,000 shares of the Company's common stock for a cash
purchase price of $21.04 per share.
The Offer is not conditioned upon any minimum number of
shares being tendered. The Offer is, however, subject to
certain customary conditions. The Offer, proration period
and withdrawal rights are scheduled to expire at 12:00
midnight, New York City time, on Friday, September 8, 1995,
unless the Offer is extended.
Neither the Company nor its Board of Directors makes any
recommendation as to whether any stockholder should
participate in the Offer.
Historically, the Company has maintained relatively low debt
levels, leaving the Company under-leveraged. The Board of
Directors believes that the interests of stockholders will
be served by utilizing the Company's excess borrowing
capacity to afford stockholders an opportunity to sell a
significant portion of their shares to the Company.
The Offer is designed to afford to stockholders who are
considering the sale of all or a portion of their shares an
opportunity to sell such shares for a higher price than that
available in the open market immediately prior to the
announcement of the offer, without the usual transaction
costs associated with market sales and, in the case of those
holders who own less than 100 shares, without incurring any
applicable odd lot discounts.
Mr. Barba has agreed that none of the shares beneficially
owned by him or any of his affiliates or over which he
otherwise exercises dispositive power will be tendered and
sold to the Company pursuant to the Offer. The Company has
been informed by its directors and executive officers that
they do not intend to tender shares owned by them pursuant
to the Offer.
The Company has entered into a $140 million loan facility
with The Chase Manhattan Bank (National Association) and
Mellon Bank, N.A. to provide the Company with funds to
effect purchases pursuant to the Offer, to refinance
certain existing debt and to meet the future needs of the
Company's business.
Bear, Stearns & Co. Inc. will act as dealer manager for the
Offer and The Chase Manhattan Bank, N.A. will act as the
depositary.
AEP Industries manufactures and markets low density
polyethylane plastic film products throughout the United
States and in a limited number of foreign countries. Shares
of the Company's common stock are traded on The Nasdaq Stock
Market's National Market under the symbol "AEPI."
************************************************************
AEP INDUSTRIES INC.
-----------------------------
CREDIT AGREEMENT
Dated as of August 3, 1995
------------------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
and
MELLON BANK, N.A.,
as Documentation Agent
************************************************************
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience of reference only.
Page
----
Section 1. Definitions and Accounting Matters...................... 1
1.01 Certain Defined Terms................................... 1
1.02 Accounting Terms and Determinations..................... 25
1.03 Classes and Types of Loans.............................. 26
Section 2. Commitments, Loans, Notes and Prepayments............... 27
2.01 Loans................................................... 27
2.02 Borrowings.............................................. 28
2.03 Letters of Credit....................................... 28
2.04 Changes of Commitments.................................. 34
2.05 Commitment Fee.......................................... 34
2.06 Lending Offices......................................... 35
2.07 Several Obligations; Remedies Independent............... 35
2.08 Notes................................................... 35
2.09 Optional Prepayments and Conversions or
Continuations of Loans.............................. 36
2.10 Mandatory Prepayments and Reductions of
Commitments......................................... 37
Section 3. Payments of Principal and Interest...................... 40
3.01 Repayment of Loans...................................... 40
3.02 Interest................................................ 42
Section 4. Payments; Pro Rata Treatment; Computations;
Etc..................................................... 43
4.01 Payments................................................ 43
4.02 Pro Rata Treatment...................................... 44
4.03 Computations............................................ 44
4.04 Minimum Amounts......................................... 44
4.05 Certain Notices......................................... 45
4.06 Non-Receipt of Funds by the Administrative
Agent............................................... 46
4.07 Sharing of Payments, Etc................................ 47
Section 5. Yield Protection, Etc................................... 48
5.01 Additional Costs........................................ 48
5.02 Limitation on Types of Loans............................ 51
5.03 Illegality.............................................. 51
5.04 Treatment of Affected Loans............................. 52
5.05 Compensation............................................ 52
5.06 Additional Costs in Respect of Letters of
Credit.............................................. 53
(i)
<PAGE>
Page
----
5.07 U.S. Taxes.............................................. 54
Section 6. Conditions Precedent.................................... 56
6.01 Initial Extension of Credit ............................ 56
6.02 Tender Offer Closing Date............................... 59
6.04 Initial and Subsequent Extensions of Credit............. 65
Section 7. Representations and Warranties.......................... 66
7.01 Corporate Existence..................................... 66
7.02 Financial Condition..................................... 66
7.03 Litigation.............................................. 67
7.04 No Breach............................................... 67
7.05 Action.................................................. 68
7.06 Approvals............................................... 68
7.07 ERISA................................................... 68
7.08 Taxes................................................... 68
7.09 Investment Company Act.................................. 69
7.10 Public Utility Holding Company Act...................... 69
7.11 Debt Agreements and Liens............................... 69
7.12 Environmental Matters................................... 69
7.13 Capitalization.......................................... 72
7.14 Subsidiaries and Investments............................ 73
7.15 Title to Assets......................................... 73
7.16 True and Complete Disclosure............................ 73
7.17 Real Property........................................... 74
7.18 Use of Credit........................................... 74
Section 8. Covenants of the Company................................ 74
8.01 Financial Statements Etc................................ 75
8.02 Litigation.............................................. 79
8.03 Existence, Etc.......................................... 79
8.04 Insurance............................................... 80
8.05 Prohibition of Fundamental Changes...................... 83
8.06 Limitation on Liens..................................... 84
8.07 Indebtedness............................................ 85
8.08 Investments............................................. 86
8.09 Dividend Payments....................................... 87
8.10 Certain Financial Covenants............................. 87
8.11 Capital Expenditures.................................... 88
8.12 Interest Rate Protection Agreements..................... 89
8.13 Lines of Business....................................... 89
8.14 Transactions with Affiliates............................ 89
8.15 Use of Proceeds......................................... 90
8.16 Modifications of Certain Documents...................... 90
8.17 Additional Mortgages and Other Real Estate
Matters............................................. 91
Section 9. Events of Default....................................... 92
Section 10. The Agents............................................. 97
10.01 Appointment, Powers and Immunities..................... 97
(ii)
<PAGE>
Page
----
10.02 Reliance by Administrative Agent....................... 98
10.03 Defaults............................................... 98
10.04 Rights as a Lender..................................... 99
10.05 Indemnification........................................ 99
10.06 Non-Reliance on Agents and Other Lenders...............100
10.07 Failure to Act.........................................100
10.08 Resignation or Removal of Agents.......................100
10.09 Consents under Other Credit Documents..................101
Section 11. Miscellaneous..........................................102
11.01 Waiver.................................................102
11.02 Notices................................................102
11.03 Expenses, Etc..........................................102
11.04 Amendments, Etc........................................104
11.05 Successors and Assigns.................................105
11.06 Assignments and Participations.........................105
11.07 Survival...............................................108
11.08 Captions...............................................108
11.09 Counterparts...........................................109
11.10 Governing Law; Submission to Jurisdiction..............109
11.11 Waiver of Jury Trial...................................109
11.12 Treatment of Certain Information;
Confidentiality....................................109
SCHEDULE I - Debt Agreements and Liens
SCHEDULE II - Environmental Matters
SCHEDULE III - Investments
SCHEDULE IV - Real Property
SCHEDULE V - Litigation
EXHIBIT A-1 - Form of Revolving Credit Note
EXHIBIT A-2 - Form of Term Loan Note
EXHIBIT B - Form of Borrowing Base Certificate
EXHIBIT C - Form of Security Agreement
EXHIBIT D - Form of Opinion of Counsel to the Company
EXHIBIT E - Form of Opinion of Special New York Counsel to Chase
EXHIBIT F - Form of Confidentiality Agreement
EXHIBIT G - Form of Notice of Assignment
(iii)
<PAGE>
CREDIT AGREEMENT dated as of August 3, 1995, between: AEP
INDUSTRIES INC., a corporation duly organized and validly existing under the
laws of the State of Delaware (the "Company"); each of the lenders that is a
signatory hereto identified under the caption "LENDERS" on the signature pages
hereto and each lender that becomes a "Lender" after the date hereof pursuant to
Section 11.06(b) hereof (individually, a "Lender" and, collectively, the
"Lenders"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national
banking association, as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent") and
MELLON BANK, N.A., as documentation agent for the Lenders (in such capacity,
together with its respective successors in such capacity, the "Documentation
Agent" and, together with the Administrative Agent, the "Agents").
The Company has requested that the Lenders extend credit to it
in an aggregate principal or face amount not exceeding $140,000,000 at any one
time outstanding and the Lenders are prepared to extend such credit upon the
terms and conditions hereof. Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Affiliate" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Company and,
if such Person is an individual, any member of the immediate family (including
parents, spouse, children and siblings) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), provided that, in any event, any
Person that owns directly or indirectly securities having 5% or more of the
voting power for the election of directors or other governing body of a
corporation or 5% or more of the partnership or other ownership
Credit Agreement
<PAGE>
- 2 -
interests of any other Person (other than as a limited partner of such other
Person) will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, (a) no individual shall be an Affiliate solely by
reason of his or her being a director, officer or employee of the Company or any
of its Subsidiaries and (b) none of the Wholly Owned Subsidiaries of the Company
shall be Affiliates.
"Applicable Commitment Fee Rate" shall mean 0.50% per annum;
provided that if the Leverage Ratio as at the last day of any fiscal quarter of
the Company after the Initial Closing Date shall fall within any of the ranges
set forth below then, upon the delivery to the Administrative Agent of a
certificate of a Responsible Financial Officer of the Company (which shall
accompany the financial statements for such fiscal quarter delivered under
Section 8.01(a) hereof) demonstrating such fact prior to the end of the next
succeeding fiscal quarter, the Applicable Commitment Fee Rate shall be changed
to the rate per annum set forth below opposite such range. Such change shall be
effective during the period commencing on the first day of the month following
the date of receipt of such certificate to but not including the first day of
the month following the date the next such certificate to be delivered under
this definition is delivered or due, whichever is earlier (except that,
notwithstanding the foregoing, the Applicable Commitment Fee Rate shall not as a
consequence of this proviso be so reduced for any period during which an Event
of Default shall have occurred and be continuing):
Range
of
Leverage Ratio Applicable Commitment Fee Rate
-------------- ------------------------------
Less than 2.00:1 0.25%
Equal to or greater than 0.375%
2.00:1 but less
than 2.40:1
Equal to or greater than 0.50%
2.40:1
"Applicable Lending Office" shall mean, for each Lender and
for each Type of Loan, the "Lending Office" of such Lender (or of an affiliate
of such Lender) designated for such Type of Loan on the signature pages hereof
or such other office of such Lender (or of an affiliate of such Lender) as such
Lender may from time to time specify to the Administrative Agent and the
Credit Agreement
<PAGE>
- 3 -
Company as the office by which its Loans of such Type are to be made and
maintained.
"Applicable Margin" shall mean: (a) with respect to Term Loans
that are (i) Base Rate Loans, 1.25% per annum and/or (ii) Eurodollar Loans,
2.50% per annum; and (b) with respect to Revolving Credit Loans that are (i)
Base Rate Loans, 0.75% per annum and/or (ii) Eurodollar Loans, 2.00% per annum;
provided that with respect to the Revolving Credit Loans, if the Leverage Ratio
as at the last day of any fiscal quarter of the Company after the Initial
Closing Date shall fall within the ranges set forth below then, subject to the
delivery to the Administrative Agent of a certificate of a Responsible Financial
Officer (which shall accompany the financial statements for such fiscal quarter
delivered under Section 8.01(a) hereof) demonstrating such fact prior to the end
of the next succeeding fiscal quarter, the "Applicable Margin" for each Loan
shall be the respective rate for the Type of Loan set forth below opposite such
range, effective during the period commencing on the first day of the month
following the date of receipt of such certificate to but not including the first
day of the month following the date the next such certificate to be delivered
under this definition is delivered or due, whichever is earlier (except that,
notwithstanding the foregoing, the Applicable Margin shall not as a consequence
of this proviso be so reduced for any period during which an Event of Default
shall have occurred and be continuing):
Range Applicable Margin (% p.a.)
of --------------------------
Leverage Ratio Base Rate Loans Eurodollar Loans
-------------- --------------- ----------------
Less than 2.0:1 0% 1.0%
Equal to or greater than 0.25% 1.50%
2.0:1 but less
than 2.40:1
Equal to or greater than 0.50% 1.75%
2.40:1 but less
than 2.80:1
Equal to or greater than 0.75% 2.00%
2.80:1
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of
1978, as amended from time to time.
Credit Agreement
<PAGE>
- 4 -
"Barba" shall mean Mr. J. Brendan Barba, the Chairman
of the Board of Directors of the Company as of the date hereof.
"Base Rate" shall mean, for any day, a rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates
based upon the Base Rate.
"Basic Documents" shall mean, collectively, the Credit
Documents, the Tender Offer Documents and all other agreements and documents
relating to the Transactions.
"Basle Accord" shall mean the proposals for risk-based capital
framework described by the Basle Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.
"Borrowing Base" shall mean, as at any date, the sum of (a)
85% of the aggregate amount of Eligible Receivables at said date plus (b) 50% of
the aggregate value of Eligible Inventory at said date plus (c) 100% of the
aggregate amount on deposit at said date with the Administrative Agent in any
collateral account under any of the Security Documents. The "value" of Eligible
Inventory shall be determined at the lower of cost or market in accordance with
GAAP, except that cost shall be determined on a first-in-first-out basis.
"Borrowing Base Certificate" shall mean a certificate of a
Responsible Financial Officer, substantially in the form of Exhibit B hereto and
appropriately completed.
"Business Day" shall mean any day (a) on which commercial
banks are not authorized or required to close in New York City and (b) if such
day relates to a borrowing of, a payment or prepayment of principal of or
interest on, a Conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Company with respect to any such borrowing, payment,
prepayment, Conversion or Interest Period, that is also a day on which dealings
in Dollar deposits are carried out in the London interbank market.
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"Capital Expenditures" shall mean, for any period,
expenditures (including, without limitation, the aggregate amount of Capital
Lease Obligations incurred during such period) made by the Company or any of its
Subsidiaries to acquire or construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding repairs and
replacements that are treated as expenses in accordance with the usual policies
and practices of the Company) during such period computed in accordance with
GAAP.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Casualty Event" shall mean, with respect to any Property of
any Person, any loss of or damage to, or any condemnation or other taking of,
such Property for which such Person or any of its Subsidiaries receives
insurance proceeds, or proceeds of a condemnation award or other compensation.
"Chase" shall mean The Chase Manhattan Bank (National
Association).
"Class" shall have the meaning assigned to such term in
Section 1.03 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral Account" shall have the meaning assigned to such
term in Section 4.01 of the Security Agreement.
"Commitments" shall mean the Revolving Credit
Commitments and the Term Loan Commitments.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.09 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.09 hereof of one Type of Loan into another Type
of Loan, which may be accompanied by the
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transfer by a Lender (at its sole discretion) of a Loan from one Applicable
Lending Office to another.
"Credit Documents" shall mean, collectively, this Agreement,
the Notes, the Letter of Credit Documents, each Interest Rate Protection
Agreement entered into pursuant to Section 8.12 hereof and the Security
Documents.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"Disposition" shall mean any sale, assignment, transfer or
other disposition of any Property (whether now owned or hereafter acquired) by
the Company or any of its Subsidiaries to any other Person excluding any sale,
assignment, transfer or other disposition of any Property sold or disposed of in
the ordinary course of business and on ordinary business terms.
"Dividend Payment" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Company or of any warrants, options or other rights to
acquire the same (or to make any payments to any Person, such as "phantom stock"
payments, where the amount thereof is calculated with reference to the fair
market or equity value of the Company or any of its Subsidiaries), but excluding
dividends payable solely in shares of common stock of the Company.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"EBITDA" shall mean, for any period, the sum, for the Company
and its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) net operating income (calculated
before taxes, Interest Expense, extraordinary and unusual items and income or
loss attributable to equity in Affiliates, in each case determined in accordance
with GAAP) for such period plus (b) depreciation and amortization (to the extent
deducted in determining net operating income) for such period plus (c) non-cash
charges relating to contributions to the Company's employee stock ownership plan
to the extent such charges do not exceed $3,000,000 for such period, provided
that in calculating Excess Cash Flow the amount of non-cash charges under this
clause (c) for any fiscal year shall not exceed $3,000,000.
Credit Agreement
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"Eligible Inventory" shall mean, as at any date, the sum of
all Inventory (a) that is owned by (and in the possession or under the control
of) the Company as at such date, (b) that is located in a jurisdiction in the
United States of America, (c) as to which appropriate Uniform Commercial Code
financing statements have been filed naming the Company as "debtor" and the
Administrative Agent as "secured party", (d) that is in good condition, (e) that
meets all standards imposed by any governmental agency or department or division
thereof having regulatory authority over such Inventory, its use or sale and (f)
that is either currently usable or currently saleable in the normal course of
the Company's business without any notice to, or consent of, any governmental
agency or department or division thereof (excluding however, except to the
extent that the Majority Lenders otherwise agree with respect to any specific
customer, any such Inventory that has been shipped to a customer of the Company,
even if on a consignment or "sale or return" basis); provided that (i) Eligible
Inventory shall not include work-in-process as reported on the accounts of the
Company and (ii) the Majority Lenders (through the Administrative Agent) may at
any time exclude from Eligible Inventory any other type of Inventory that the
Majority Lenders (in their sole discretion) determine to be unmarketable.
"Eligible Receivables" shall mean, as at any date, the
aggregate amount of all Receivables at such date payable to the Company other
than the following (determined without duplication):
(a) any Receivable not payable in Dollars,
(b) any Receivable that, at the date of issuance of the
invoice therefor, was payable more than 60 days after shipment of the
related Inventory, unless such Receivable is guaranteed, insured or
otherwise supported by a guarantee, letter of credit, insurance policy
or similar instrument issued on terms, and by a Person, satisfactory to
the Administrative Agent,
(c) any Receivable owing from a Subsidiary or
Affiliate of the Company,
(d) any Receivable owing from an account debtor whose
principal place of business is located outside of the United States of
America, unless such Receivable is guaranteed, insured or otherwise
supported by a guarantee, letter of credit, insurance policy or similar
instrument issued on
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terms, and by a Person, satisfactory to the Administrative
Agent,
(e) any Receivable owing from an account debtor that the
Majority Lenders (through the Administrative Agent) have notified the
Company does not have a satisfactory credit standing (as determined in
the sole discretion of the Majority Lenders),
(f) any Receivable that remains unpaid for more than 90 days
after the date of the issuance of the original invoice therefor,
(g) all Receivables of any account debtor if more than 25% of
the aggregate amount of the Receivables owing from such account debtor
shall at the time have remained unpaid for more than 90 days after the
date of the issuance of the original invoices therefor,
(h) Receivables owing from any account debtor to the extent
such Receivables when aggregated with all other Receivables owing from
such account debtor and its Affiliates are in excess of 10% of all
Receivables then payable to the Company, but excluding any Receivables
of such account debtor which is guaranteed, insured or otherwise
supported by a guarantee, letter of credit, insurance policy or similar
instrument issued on terms, and by a Person, satisfactory to the
Administrative Agent,
(i) any Receivable as to which there is any unresolved dispute
with the respective account debtor (but only to the extent of the
amount thereof in dispute),
(j) any Receivable evidenced by an Instrument (as
defined in the Security Agreement) not in the possession of
the Administrative Agent,
(k) any Receivable representing an obligation for goods sold
on consignment, approval or a sale-or-return basis or subject to any
other repurchase or return arrangement, except to the extent the
Majority Lenders (through the Administrative Agent) shall have
otherwise agreed in writing,
(l) any Receivable if the account debtor thereof or any Person
liable in connection therewith is insolvent, subject to bankruptcy or
receivership proceedings, or has made an assignment for the benefit of
creditors, and
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(m) any Receivable if the account debtor thereof or any Person
liable in connection therewith is the U.S. Government or any foreign
government or any state or municipality thereof or any agency,
authority, instrumentality or department thereof.
"Employee Stock Option Plan" shall mean (a) the 1985 Stock
Option Plan of the Company and (b) the 1995 Stock Option Plan of the Company as
described in the Company's Proxy Statement with respect to the Annual Meeting of
Stockholders To Be Held April 11, 1995.
"Employee Stock Purchase Plan" shall mean the 1995 Employee
Stock Purchase Plan of the Company as described in the Company's Proxy Statement
with respect to the Annual Meeting of Stockholders To Be Held April 11, 1995.
"Environmental Claim" shall mean, with respect to any Person,
any written or oral notice, claim, demand or other communication (collectively,
a "claim") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include, without limitation, any claim by any governmental authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Laws" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations, and any orders or
decrees, in each case as now or hereafter in effect, relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
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disposal, transport or handling of pollutants, contaminants, chemicals or toxic
or hazardous substances or wastes.
"Equity Issuance" shall mean (a) any issuance or sale by the
Company or any of its Subsidiaries after the Initial Closing Date of (i) any of
its capital stock, (ii) any warrants or options exercisable in respect of its
capital stock (other than any warrants or options issued to directors, officers
or employees of the Company or any of its Subsidiaries pursuant to employee
benefit plans established in the ordinary course of business and any capital
stock of the Company issued upon the exercise of such warrants or options) or
(iii) any other security or instrument representing an equity interest (or the
right to obtain any equity interest) in the Company or any of its Subsidiaries
or (b) the receipt by the Company or any of its Subsidiaries after the Initial
Closing Date of any capital contribution (whether or not evidenced by any equity
security issued by the recipient of such contribution); provided that Equity
Issuance shall not include (x) any such issuance or sale by any Subsidiary of
the Company to the Company or any Wholly Owned Subsidiary of the Company, (y)
any capital contribution by the Company or any Wholly Owned Subsidiary of the
Company to any Subsidiary of the Company or (z) any issuance or contribution of
up to 1,550,000 shares of common stock of the Company to an employee stock
ownership plan after the date hereof.
"Equity Rights" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code of which the Company is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which the Company is a member.
Credit Agreement
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"Eurodollar Base Rate" shall mean, with respect to any
Eurodollar Loan for any Interest Period therefor, the arithmetic mean (rounded
upwards, if necessary, to the nearest 1/16 of 1%), as determined by the
Administrative Agent, of the rates per annum quoted by the respective Reference
Lenders at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two Business Days prior to the first day of such
Interest Period for the offering by the respective Reference Lenders to leading
banks in the London interbank market of Dollar deposits having a term comparable
to such Interest Period and in an amount comparable to the principal amount of
the Eurodollar Loan to be made by the respective Reference Lenders for such
Interest Period. If any Reference Lender is not participating in any Eurodollar
Loans during any Interest Period therefor, the Eurodollar Base Rate for such
Loans for such Interest Period shall be determined by reference to the amount of
such Loans that such Reference Lender would have made or had outstanding had it
been participating in such Loan during such Interest Period.
"Eurodollar Loans" shall mean Loans that bear interest at
rates based on rates referred to in the definition of "Eurodollar Base Rate" in
this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the Eurodollar Base Rate for such Loan for such Interest Period divided by 1
minus the Reserve Requirement (if any) for such Loan for such Interest Period.
"Event of Default" shall have the meaning assigned to such
term in Section 9 hereof.
"Excess Cash Flow" shall mean, for any period, (a) EBITDA for
such period minus (b) the sum of (i) Capital Expenditures made during such
period (except for any such Capital Expenditures to the extent financed with the
proceeds of Indebtedness, or Capital Lease Obligations, incurred pursuant to
Section 8.07(c) hereof during such period) plus (ii) all regularly scheduled
payments of principal of Indebtedness (including, without limitation, the
principal component of any payments in respect of Capital Lease Obligations) and
all prepayment of Loans made during such period plus (iii) all Interest Expense
for such period plus (iv) the aggregate amount of taxes paid in respect of the
income or profit of the Company and its Subsidiaries for such period plus (v)
Dividend Payments made for such period to the extent permitted under Section
8.09
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hereof plus (c) decreases (if any) (or minus increases (if any)) in Working
Capital for such period.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to Chase on such Business Day on such
transactions as determined by the Administrative Agent.
"Fixed Charges Ratio" shall mean, as at any date, the ratio of
(a) the sum of EBITDA for the period of four consecutive fiscal quarters ending
on or most recently ended prior to such date minus the sum of (i) Capital
Expenditures made during such period (except for any such Capital Expenditures
to the extent financed with the proceeds of Indebtedness, or Capital Lease
Obligations, incurred pursuant to Section 8.07(c) hereof during such period)
plus (ii) the aggregate amount of taxes paid in respect of the income or profit
of the Company and its Subsidiaries for such period to (b) the sum of (i) all
regularly scheduled payments of principal of Indebtedness (including, without
limitation, the principal component of any payments in respect of Capital Lease
Obligations) made during such period plus (ii) all Interest Expense for such
period.
"Funded Indebtedness" shall mean, for any Person, any
Indebtedness of the Company of the type referred to in clauses (a), (b) and (e)
of the definition of "Indebtedness" in this Section 1.01 (and any Guarantees by
the Company of any Funded Indebtedness of others).
"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those that, in accordance with the last
sentence of Section 1.02(a) hereof, are to be used in making the calculations
for purposes of determining compliance with this Agreement.
"Guarantee" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the
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payment or maintenance of, or otherwise to be or become contingently liable
under or with respect to, the Indebtedness, other obligations, net worth,
working capital or earnings of any Person, or a guarantee of the payment of
dividends or other distributions upon the stock or equity interests of any
Person, or an agreement to purchase, sell or lease (as lessee or lessor)
Property, products, materials, supplies or services primarily for the purpose of
enabling a debtor to make payment of such debtor's obligations or an agreement
to assure a creditor against loss, and including, without limitation, causing a
bank or other financial institution to issue a letter of credit or other similar
instrument for the benefit of another Person, but excluding endorsements for
collection or deposit in the ordinary course of business. The terms "Guarantee"
and "Guaranteed" used as a verb shall have a correlative meaning.
"Hazardous Material" shall mean, collectively, (a) any
petroleum or petroleum products, flammable materials, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, and transformers or
other equipment that contain polychlorinated biphenyls ("PCB's"), (b) any
chemicals or other materials or substances that are now or hereafter become
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants",
"pollutants" or words of similar import under any Environmental Law and (c) any
other chemical or other material or substance, exposure to which is now or
hereafter prohibited, limited or regulated under any Environmental Law.
"Indebtedness" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of
Credit Agreement
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such Person; (e) Capital Lease Obligations of such Person; (f) Indebtedness of
others Guaranteed by such Person; and (g) obligations of the Company in respect
of Interest Rate Protection Agreements.
"Initial Closing Date" shall mean the date upon which the
initial extension of credit hereunder is made.
"Interest Coverage Ratio" shall mean, as at any date, the
ratio of (a) EBITDA for the period of four consecutive fiscal quarters ending on
or most recently ended prior to such date to (b) Interest Expense for such
period.
"Interest Expense" shall mean, for any period, the sum, for
the Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all interest in
respect of Indebtedness (including, without limitation, the interest component
of any payments in respect of Capital Lease Obligations) accrued or capitalized
during such period (whether or not actually paid during such period) plus (b)
the net amount payable (or minus the net amount receivable) under Interest Rate
Protection Agreements during such period (whether or not actually paid or
received during such period).
"Interest Period" shall mean, with respect to any Eurodollar
Loan, each period commencing on the date such Eurodollar Loan is made or
Converted from a Base Rate Loan or (in the event of a Continuation) the last day
of the next preceding Interest Period for such Loan and (subject to the
provisions of Section 2.01(c) hereof) ending on the numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as the
Company may select as provided in Section 4.05 hereof, except that each Interest
Period that commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Business Day of the appropriate
subsequent calendar month. Notwithstanding the foregoing: (i) if any Interest
Period for any Revolving Credit Loan would otherwise end after the Revolving
Credit Commitment Termination Date, such Interest Period shall end on the
Revolving Credit Commitment Termination Date; (ii) no Interest Period for any
Term Loan may commence before and end after any Principal Payment Date unless,
after giving effect thereto, the aggregate principal amount of the Term Loans
having Interest Periods that end after such Principal Payment Date shall be
equal to or less than the aggregate principal amount of the Term Loans scheduled
to be outstanding after giving effect to the payments of
Credit Agreement
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principal required to be made on such Principal Payment Date; (iii) each
Interest Period that would otherwise end on a day that is not a Business Day
shall end on the next succeeding Business Day (or, if such next succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day); and (iv) notwithstanding clauses (i) and (ii) above, no Interest
Period shall have a duration of less than one month and, if the Interest Period
for any Eurodollar Loan would otherwise be a shorter period, such Loan shall not
be available hereunder for such period.
"Interest Rate Protection Agreement" shall mean, for any
Person, an interest rate swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest risks either generally or under specific
contingencies.
"Inventory" shall mean raw and packaging materials and
finished goods (including spare parts) of the Company and its Subsidiaries held
for sale in the ordinary course of business, including, without limitation,
"work-in-process".
"Investment" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such sale); (b) the making of any deposit with, or advance, loan or other
extension of credit to, any other Person (including the purchase of Property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such Property to such Person), but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days arising
in connection with the sale of inventory or supplies by such Person in the
ordinary course of business; or (c) the entering into of any Guarantee of, or
other contingent obligation with respect to, Indebtedness or other liability of
any other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person.
"Issuing Bank" shall mean Chase, as the issuer of Letters of
Credit under Section 2.03 hereof, together with its successors and assigns in
such capacity.
"Key Employees" shall mean Barba, Lawrence R. Noll,
Paul M. Feeney, Robert W. Cron and William E. Rice.
Credit Agreement
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"Letter of Credit" shall have the meaning assigned to such
term in Section 2.03 hereof.
"Letter of Credit Documents" shall mean, with respect to any
Letter of Credit, collectively, any application therefor and any other
agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or providing
for (a) the rights and obligations of the parties concerned or at risk with
respect to such Letter of Credit or (b) any collateral security for any of such
obligations, each as the same may be modified and supplemented and in effect
from time to time.
"Letter of Credit Interest" shall mean, for each Revolving
Credit Lender, such Lender's participation interest (or, in the case of the
Issuing Bank, the Issuing Bank's retained interest) in the Issuing Bank's
liability under Letters of Credit and such Lender's rights and interests in
Reimbursement Obligations and fees, interest and other amounts payable in
connection with Letters of Credit and Reimbursement Obligations.
"Letter of Credit Liability" shall mean, without duplication,
at any time and in respect of any Letter of Credit, the sum of (a) the undrawn
face amount of such Letter of Credit plus (b) the aggregate unpaid principal
amount of all Reimbursement Obligations of the Company at such time due and
payable in respect of all drawings made under such Letter of Credit. For
purposes of this Agreement, a Revolving Credit Lender (other than the Issuing
Bank) shall be deemed to hold a Letter of Credit Liability in an amount equal to
its participation interest in the related Letter of Credit under Section 2.03
hereof, and the Issuing Bank shall be deemed to hold a Letter of Credit
Liability in an amount equal to its retained interest in the related Letter of
Credit after giving effect to the acquisition by the Revolving Credit Lenders
other than the Issuing Bank of their participation interests under said Section
2.03.
"Leverage Ratio" shall mean, as at any date, the ratio of (a)
the aggregate outstanding principal amount of Funded Indebtedness on such date
to (b) EBITDA for the period of four consecutive fiscal quarters ending on or
most recently ended prior to such date.
"Lien" shall mean, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this Agreement and the other Credit Documents, a
Person shall be
Credit Agreement
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deemed to own subject to a Lien any Property that it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement (other than an
operating lease) relating to such Property.
"Loans" shall mean the Revolving Credit Loans and the
Term Loans.
"Majority Lenders" shall mean Majority Revolving Credit
Lenders and Majority Term Loan Lenders.
"Majority Revolving Credit Lenders" shall mean Revolving
Credit Lenders having at least 66-2/3% of the aggregate amount of the Revolving
Credit Commitments or, if the Revolving Credit Commitments shall have
terminated, Lenders holding at least 66-2/3% of the sum of (a) the aggregate
unpaid principal amount of the Revolving Credit Loans plus (b) the aggregate
amount of all Letter of Credit Liabilities.
"Majority Term Lenders" shall mean Term Loan Lenders holding
at least 66-2/3% of the aggregate outstanding principal amount of the Term Loans
or, if the Term Loans shall not have been made, at least 66-2/3% of the Term
Loan Commitments.
"Margin Stock" shall mean "margin stock" within the meaning of
Regulations U and X.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company to perform its obligations under any of
the Credit Documents, (c) the validity or enforceability of any of the Credit
Documents, (d) the rights and remedies of the Lenders and the Administrative
Agent under any of the Credit Documents or (e) the timely payment of the
principal of or interest on the Loans or the Reimbursement Obligations or other
amounts payable in connection therewith.
"Mellon" shall mean Mellon Bank, N.A.
"Mortgages" shall mean, collectively, one or more mortgages or
deeds of trust or similar instruments executed and delivered by the Company
pursuant to Section 6.03(a)(i) or 8.17 hereof, in each case as the same shall be
modified and supplemented and in effect from time to time.
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"Mortgaged Properties" shall have the meaning assigned to such
term in Section 6.03(a)(i) hereof.
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been made by the
Company or any ERISA Affiliate and that is covered by Title IV of ERISA.
"Net Available Proceeds" shall mean: (a) in the case of any
Disposition, the amount of Net Cash Payments received in connection with such
Disposition; (b) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received by
the Company and its Subsidiaries in respect of such Casualty Event net of (i)
reasonable expenses incurred by the Company and its Subsidiaries in connection
therewith and (ii) contractually required repayments of Indebtedness to the
extent secured by a Lien on such Property and any income and transfer taxes
payable by the Company or any of its Subsidiaries in respect of such Casualty
Event; and (c) in the case of any Equity Issuance or the issuance of any
Indebtedness, the aggregate amount of all cash received by the Company and its
Subsidiaries in respect of such Equity Issuance or Indebtedness net of
reasonable expenses incurred by the Company and its Subsidiaries in connection
therewith.
"Net Cash Payments" shall mean, with respect to any
Disposition, the aggregate amount of all cash payments, and the fair market
value of any non-cash consideration, received by the Company and its
Subsidiaries directly or indirectly in connection with such Disposition;
provided that (a) Net Cash Payments shall be net of (i) the amount of any legal,
title and recording tax expenses, commissions and other fees and expenses paid
by the Company and its Subsidiaries in connection with such Disposition and (ii)
any Federal, state and local income or other taxes estimated to be payable by
the Company and its Subsidiaries as a result of such Disposition (but only to
the extent that such estimated taxes are in fact paid to the relevant Federal,
state or local governmental authority within six months of the date of such
Disposition) and (b) Net Cash Payments shall be net of any repayments by the
Company or any of its Subsidiaries of Indebtedness to the extent that (i) such
Indebtedness is secured by a Lien on the Property that is the subject of such
Disposition and (ii) the transferee of (or holder of a Lien on) such Property
requires that such Indebtedness be repaid as a condition to the purchase of such
Property.
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"Notes" shall mean the Revolving Credit Notes and the
Term Loan Notes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted Investments" shall mean: (a) direct obligations of
the United States of America, or of any agency thereof, or obligations
guaranteed as to principal and interest by the United States of America, or by
any agency thereof, in either case maturing not more than 90 days from the date
of acquisition thereof; (b) certificates of deposit issued by any bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; and (c) commercial paper rated A-1 or better or P-1 by Standard &
Poor's Ratings Group, a Division of McGraw Hill, Inc., or Moody's Investors
Services, Inc., respectively, maturing not more than 90 days from the date of
acquisition thereof; in each case so long as the same (i) provide for the
payment of principal and interest (and not principal alone or interest alone)
and (ii) are not subject to any contingency regarding the payment of principal
or interest.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, limited liability company, joint venture,
trust, unincorporated organization or government (or any agency, instrumentality
or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by the Company or any ERISA Affiliate and that is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean a rate per annum equal to 2%
plus the Base Rate as in effect from time to time plus the Applicable Margin for
Base Rate Loans, provided that, with respect to principal of a Eurodollar Loan
that shall become due (whether at stated maturity, by acceleration, by optional
or mandatory prepayment or otherwise) on a day other than the last day of the
Interest Period therefor, the "Post-Default Rate" shall be, for the period from
and including such due date to but excluding the last day of such Interest
Period, 2% plus the interest rate for such Loan as provided in Section 3.02(b)
hereof and, thereafter, the rate provided for above in this definition.
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"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial lending rate.
"Principal Office" shall mean the principal office of Chase,
located on the date hereof at 1 Chase Manhattan Plaza, New York, New York 10081.
"Principal Payment Dates" shall mean the Quarterly Dates,
commencing with the Quarterly Date in January, 1996, through and including the
Quarterly Date in July, 2002.
"Proceeds" shall have the meaning assigned to such term in
Section 2.10(b) hereof.
"Property" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Quarterly Dates" shall mean the last Business Day of January,
April, July and October in each year, the first of which shall be the first such
day after the date hereof.
"Receivables" shall mean, as at any date, the unpaid portion
of the obligation, as stated on the respective invoice, of a customer of the
Company in respect of Inventory sold and shipped by the Company to such
customer, net of any credits, rebates or offsets owed to such customer and also
net of any commissions payable to third parties (and for purposes hereof, a
credit or rebate paid by check or draft of the Company shall be deemed to be
outstanding until such check or draft shall have been debited to the account of
the Company on which such check or draft was drawn).
"Reference Lenders" shall mean Chase and Mellon (or their
respective Applicable Lending Offices, as the case may be).
"Register" shall have the meaning assigned to such term in
Section 11.06(g) hereof.
"Registered Holder" shall have the meaning assigned to such
term in Section 5.07(a)(ii) hereof.
"Registered Loan" shall have the meaning assigned to such term
in Section 2.08(e) hereof.
"Registered Note" shall have the meaning assigned to such term
in Section 2.08(e) hereof.
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"Regulations A, D, G, T, U and X" shall mean, respectively,
Regulations A, D, G, T, U and X of the Board of Governors of the Federal Reserve
System (or any successor), as the same may be modified and supplemented and in
effect from time to time.
"Regulatory Change" shall mean, with respect to any Lender,
any change after the date hereof in Federal, state or foreign law or regulations
(including, without limitation, Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including such Lender of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"Reimbursement Obligations" shall mean, at any time, the
obligations of the Company then outstanding, or that may thereafter arise in
respect of all Letters of Credit then outstanding, to reimburse amounts paid by
the Issuing Bank in respect of any drawings under a Letter of Credit.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
"Reserve Requirement" shall mean, for any Interest Period for
any Eurodollar Loan, the average maximum rate at which reserves (including,
without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall include any other reserves required to be maintained
by such member banks by reason of any Regulatory Change with respect to (i) any
category of liabilities that includes deposits by reference to which the
Eurodollar Base Rate is to be determined as provided in the definition of
"Eurodollar Base Rate" in this Section 1.01 or (ii) any category of extensions
of credit or other assets that includes Eurodollar Loans.
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"Responsible Financial Officer" shall mean the Chairman
of the Board of Directors, the President, the Chief Executive Officer, the
Chief Financial Officer or the Vice President-Finance of the Company.
"Revolving Credit Lenders" shall mean (a) on the date hereof,
the Lenders having Revolving Credit Commitments on the signature pages hereof
and (b) thereafter, the Lenders from time to time holding Revolving Credit Loans
and Revolving Credit Commitments after giving effect to any assignments thereof
permitted by Section 11.06(b) hereof.
"Revolving Credit Commitment" shall mean, as to each Revolving
Credit Lender, the obligation of such Lender to make Revolving Credit Loans, and
to issue or participate in Letters of Credit pursuant to Section 2.03 hereof, in
an aggregate principal or face amount at any one time outstanding up to but not
exceeding the amount set forth opposite the name of such Lender on the signature
pages hereof under the caption "Revolving Credit Commitment" or, in the case of
a Person that becomes a Revolving Credit Lender pursuant to an assignment
permitted under Section 11.06(b) hereof, as specified in the respective
instrument of assignment pursuant to which such assignment is effected (as the
same may be reduced from time to time pursuant to Section 2.04 or 2.10 hereof).
The original aggregate principal amount of the Revolving Credit Commitments is
$30,000,000.
"Revolving Credit Commitment Percentage" shall mean, with
respect to any Revolving Credit Lender, the ratio of (a) the amount of the
Revolving Credit Commitment of such Lender to (b) the aggregate amount of the
Revolving Credit Commitments of all of the Lenders.
"Revolving Credit Commitment Termination Date" shall
mean the Quarterly Date in July, 1998.
"Revolving Credit Loans" shall mean the loans provided for in
Section 2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Revolving Credit Notes" shall mean the promissory notes
provided for by Section 2.08(a) hereof and all promissory notes delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time. The term "Revolving Credit
Notes" shall include any Registered Notes evidencing Revolving Credit Loans
executed and delivered pursuant to Section 2.08(e) hereof.
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"Security Agreement" shall mean a Security Agreement
substantially in the form of Exhibit C hereto between the Company and the
Administrative Agent, as the same shall be modified and supplemented and in
effect from time to time.
"Security Documents" shall mean, collectively, the Security
Agreement, the Mortgages and all Uniform Commercial Code financing statements
required thereby to be filed with respect to the security interests in personal
Property and fixtures created
pursuant thereto.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
"Tangible Net Worth" shall mean, as at any date, the sum for
the Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following:
(a) the amount of capital stock; plus
(b) the amount of surplus and retained earnings (or, in the
case of a surplus or retained earnings deficit, minus the amount of
such deficit); minus
(c) the sum of the following: cost of treasury shares and the
book value of all assets that should be classified as intangibles
(without duplication of deductions in respect of items already deducted
in arriving at surplus and retained earnings) but in any event
including goodwill, minority interests, research and development costs,
trademarks, trade names, copyrights, patents and franchises,
unamortized debt discount and expense, all reserves and any write-up in
the book value of assets resulting from a revaluation thereof
subsequent to October 31, 1994.
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"Tender Offer" shall mean the offer of the Company to purchase
for cash up to 1,083,000 shares of common stock of the Company pursuant to the
Tender Offer Documents.
"Tender Offer Closing Date" shall mean the date (on or prior
to the Term Loan Commitment Termination Date) of the purchase by the Company of
the shares of its common stock tendered pursuant to the Tender Offer.
"Tender Offer Documents" shall mean the offer to purchase in
respect of the Tender Offer, all filings with the Securities and Exchange
Commission in connection with the Tender Offer and all amendments, exhibits and
schedules thereto, the fairness opinion received by the Company from Bear
Stearns & Co., Inc. in connection with the transactions contemplated hereby, all
documentation provided by the depositary in connection with the Tender Offer and
all other documentation relating to the Tender Offer, in each case which shall
be satisfactory to the Majority Lenders.
"Term Loan Lenders" shall mean (a) on the date hereof, the
Lenders having Term Loan Commitments on the signature pages hereof and (b)
thereafter, the Lenders from time to time holding Term Loans and Term Loan
Commitments after giving effect to any assignments thereof permitted by Section
11.06(b) hereof.
"Term Loan Commitment" shall mean, as to each Term Loan
Lender, the obligation of such Lender to make a Term Loan in a principal amount
up to but not exceeding the amount set opposite the name of such Lender on the
signature pages hereof under the caption "Term Loan Commitment" or, in the case
of a Person that becomes a Term Loan Lender pursuant to an assignment permitted
under Section 11.06(b) hereof, as specified in the respective instrument of
assignment pursuant to which such assignment is effected (as the same may be
reduced from time to time pursuant to Section 2.04 or 2.10 hereof). The original
aggregate principal amount of the Term Loan Commitments is $110,000,000.
"Term Loan Commitment Termination Date" shall mean the date 60
days after the Initial Closing Date.
"Term Loan Notes" shall mean the promissory notes provided for
by Section 2.08(b) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time. The term "Term Loan Notes" shall include any
Registered Notes evidencing Term Loans executed and delivered pursuant to
Section 2.08(e) hereof.
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"Term Loans" shall mean the loans provided for by Section
2.01(b) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Transactions" shall mean all of the transactions
contemplated by Section 8.15 hereof.
"Type" shall have the meaning assigned to such term in
Section 1.03 hereof.
"U.S. Person" shall mean a citizen or resident of the United
States of America, a corporation, partnership or other entity created or
organized in or under any laws of the United States of America or any State
thereof, or any estate or trust that is subject to Federal income taxation
regardless of the source of its income.
"U.S. Taxes" shall mean any present or future tax,
assessment or other charge or levy imposed by or on behalf of the
United States of America or any taxing authority thereof.
"Wholly Owned Subsidiary" shall mean, with respect to any
Person, any corporation, partnership or other entity of which all of the equity
securities or other ownership interests (other than, in the case of a
corporation, directors' qualifying shares) are directly or indirectly owned or
controlled by such Person or one or more Wholly Owned Subsidiaries of such
Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person.
"Working Capital" shall mean, for any period, (a) the
aggregate amount of inventory, accounts receivable and prepaid expenses of the
Company and its Subsidiaries minus (b) current accrued expenses and accounts
payable of the Company and its Subsidiaries.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered to
the Lenders hereunder shall (unless otherwise disclosed to the Lenders in
writing at the time of delivery thereof in the manner described in subsection
(b) below) be prepared, in accordance with generally accepted accounting
principles applied on a basis consistent with those used in the preparation of
the latest financial statements furnished to the Lenders hereunder (which, prior
to the delivery
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of the first financial statements under Section 8.01 hereof, shall mean the
audited financial statements as at October 31, 1994 referred to in Section 7.02
hereof). All calculations made for the purposes of determining compliance with
this Agreement shall (except as otherwise expressly provided herein) be made by
application of generally accepted accounting principles applied on a basis
consistent with those used in the preparation of the latest annual or quarterly
financial statements furnished to the Lenders pursuant to Section 8.01 hereof
(or, prior to the delivery of the first financial statements under Section 8.01
hereof, used in the preparation of the audited financial statements as at
October 31, 1994 referred to in Section 7.02 hereof) unless (i) the Company
shall have objected to determining such compliance on such basis at the time of
delivery of such financial statements or (ii) the Majority Lenders shall so
object in writing within 30 days after delivery of such financial statements, in
either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 8.01 hereof,
shall mean the audited financial statements referred to in Section 7.02 hereof).
(b) The Company shall deliver to the Lenders at the same time
as the delivery of any annual or quarterly financial statement under Section
8.01 hereof (i) a description in reasonable detail of any material variation
between the application of accounting principles employed in the preparation of
such statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subsection (a) above and (ii) reasonable estimates of the difference between
such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 8 hereof, the Company will
not change the last day of its fiscal year from October 31 of each year, or the
last days of the first three fiscal quarters in each of its fiscal years from
January 31, April 30 and July 31 of each year, respectively.
1.03 Classes and Types of Loans. Loans hereunder are
distinguished by "Class" and by "Type". The "Class" of a Loan (or of a
Commitment to make a Loan) refers to whether such Loan is a Revolving Credit
Loan or a Term Loan, each of which constitutes a Class. The "Type" of a Loan
refers to whether such
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Loan is a Base Rate Loan or a Eurodollar Loan, each of which constitutes a Type.
Loans may be identified by both Class and Type.
Section 2. Commitments, Loans, Notes and Prepayments.
2.01 Loans.
(a) Revolving Credit Loans. Each Revolving Credit Lender
severally agrees, on the terms and conditions of this Agreement, to make loans
to the Company in Dollars during the period from and including the Initial
Closing Date to but not including the Revolving Credit Commitment Termination
Date in an aggregate principal amount at any one time outstanding up to but not
exceeding the amount of the Revolving Credit Commitment of such Lender as in
effect from time to time (such Loans being herein called "Revolving Credit
Loans"), provided that (i) the Company shall only be permitted to borrow up to
an aggregate principal amount of $10,000,000 of Revolving Credit Loans hereunder
unless, not later than 60 days after the Initial Closing Date, all of the
conditions set forth in Section 6.03 hereof shall have been satisfied and (ii)
in no event shall the aggregate principal amount of all Revolving Credit Loans,
together with the aggregate amount of all Letter of Credit Liabilities, exceed
the aggregate amount of the Revolving Credit Commitments as in effect from time
to time. Subject to the terms and conditions of this Agreement, during such
period the Company may borrow, repay and reborrow the amount of the Revolving
Credit Commitments by means of Base Rate Loans and Eurodollar Loans and may
Convert Revolving Credit Loans of one Type into Revolving Credit Loans of
another Type (as provided in Section 2.09 hereof) or Continue Revolving Credit
Loans of one Type as Revolving Credit Loans of the same Type (as provided in
Section 2.09 hereof).
(b) Term Loans. Each Term Loan Lender severally agrees, on the
terms and conditions of this Agreement, to make a term loan to the Company in
Dollars on each of (i) the Initial Closing Date and (ii) the Tender Offer
Closing Date, such term loans in an aggregate principal amount up to but not
exceeding the amount of the Term Loan Commitment of such Term Loan Lender.
Thereafter the Company may Convert Term Loans of one Type into Term Loans of
another Type (as provided in Section 2.09 hereof) or Continue Term Loans of one
Type as Term Loans of the same Type (as provided in Section 2.09 hereof).
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(c) Limitations on Eurodollar Loans. No more than three
separate Interest Periods in respect of Eurodollar Loans of a Class may be
outstanding at any one time, provided that no Eurodollar Loans shall be made or
outstanding prior to 90 days after the Initial Closing Date.
2.02 Borrowings. The Company shall give the Administrative
Agent notice of each borrowing hereunder as provided in Section 4.05 hereof. Not
later than 1:00 p.m. New York time on the date specified for each borrowing
hereunder, each Lender shall make available the amount of the Loan or Loans to
be made by it on such date to the Administrative Agent, at account number
NYAO-DI-900-9-000002 maintained by the Administrative Agent with Chase at the
Principal Office, in immediately available funds, for account of the Company.
The amount so received by the Administrative Agent shall, subject to the terms
and conditions of this Agreement, be made available to the Company by depositing
the same, in immediately available funds, in an account of the Company
designated by the Company and maintained with Chase at the Principal Office.
2.03 Letters of Credit. Subject to the terms and conditions of
this Agreement, the Revolving Credit Commitments may be utilized, upon the
request of the Company, in addition to the Revolving Credit Loans provided for
by Section 2.01(a) hereof, by the issuance by the Issuing Bank of letters of
credit (collectively, "Letters of Credit") for account of the Company or any of
its Subsidiaries (as specified by the Company), provided that in no event shall
(i) the aggregate amount of all Letter of Credit Liabilities, together with the
aggregate principal amount of the Revolving Credit Loans, exceed the aggregate
amount of the Revolving Credit Commitments as in effect from time to time, (ii)
the outstanding aggregate amount of all Letter of Credit Liabilities exceed
$8,000,000 and (iii) the expiration date of any Letter of Credit extend beyond
the earlier of 6 months after the Revolving Credit Commitment Termination Date
and the date 12 months following the issuance of such Letter of Credit (except
for a Letter of Credit for the benefit of the Luzerne County Business
Development Authority, which may, at the request of the Company, be issued at
any time after satisfaction of the conditions set forth in Section 6.01 hereof
and have an expiry date of up to five years from the date of issuance thereof).
The following additional provisions shall apply to Letters of Credit:
(a) The Company shall give the Administrative Agent at least
three Business Days' irrevocable prior notice (effective upon receipt)
specifying the Business Day (which shall be no later than 30 days
preceding the Revolving
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Credit Commitment Termination Date) each Letter of Credit is to be
issued and the account party or parties therefor and describing in
reasonable detail the proposed terms of such Letter of Credit
(including the beneficiary thereof) and the nature of the transactions
or obligations proposed to be supported thereby (including whether such
Letter of Credit is to be a commercial letter of credit or a standby
letter of credit). Upon receipt of any such notice, the Administrative
Agent shall advise the Issuing Bank of the contents thereof.
(b) On each day during the period commencing with the issuance
by the Issuing Bank of any Letter of Credit and until such Letter of
Credit shall have expired or been terminated, the Revolving Credit
Commitment of each Revolving Credit Lender shall be deemed to be
utilized for all purposes of this Agreement in an amount equal to such
Lender's Revolving Credit Commitment Percentage of the then undrawn
face amount of such Letter of Credit. Each Revolving Credit Lender
(other than the Issuing Bank) agrees that, upon the issuance of any
Letter of Credit hereunder, it shall automatically acquire a
participation in the Issuing Bank's liability under such Letter of
Credit in an amount equal to such Lender's Revolving Credit Commitment
Percentage of such liability, and each Revolving Credit Lender (other
than the Issuing Bank) thereby shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and shall be
unconditionally obligated to the Issuing Bank to pay and discharge when
due, its Revolving Credit Commitment Percentage of the Issuing Bank's
liability under such Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit
of any demand for payment under such Letter of Credit, the Issuing Bank
shall promptly notify the Company (through the Administrative Agent) of
the amount to be paid by the Issuing Bank as a result of such demand
and the date on which payment is to be made by the Issuing Bank to such
beneficiary in respect of such demand. Notwithstanding the identity of
the account party of any Letter of Credit, the Company hereby
unconditionally agrees to pay and reimburse the Administrative Agent
for account of the Issuing Bank for the amount of each demand for
payment under such Letter of Credit that is in substantial compliance
with the provisions of such Letter of Credit at or prior to the date on
which payment is to be made by the Issuing Bank to the beneficiary
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thereunder, without presentment, demand, protest or other
formalities of any kind.
(d) Forthwith upon its receipt of a notice referred to in
paragraph (c) of this Section 2.03, the Company shall advise the
Administrative Agent whether or not the Company intends to borrow
hereunder to finance its obligation to reimburse the Issuing Bank for
the amount of the related demand for payment and, if it does, submit a
notice of such borrowing as provided in Section 4.05 hereof.
(e) Each Revolving Credit Lender (other than the Issuing Bank)
shall pay to the Administrative Agent for account of the Issuing Bank
at the Principal Office in Dollars and in immediately available funds,
the amount of such Lender's Revolving Credit Commitment Percentage of
any payment under a Letter of Credit upon notice by the Issuing Bank
(through the Administrative Agent) to such Revolving Credit Lender
requesting such payment and specifying such amount. Each such Revolving
Credit Lender's obligation to make such payment to the Administrative
Agent for account of the Issuing Bank under this paragraph (e), and the
Issuing Bank's right to receive the same, shall be absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the failure of any other Revolving
Credit Lender to make its payment under this paragraph (e), the
financial condition of the Company (or any other account party), the
existence of any Default or the termination of the Commitments. Each
such payment to the Issuing Bank shall be made without any offset,
abatement, withholding or reduction whatsoever. If any Revolving Credit
Lender shall default in its obligation to make any such payment to the
Administrative Agent for account of the Issuing Bank, for so long as
such default shall continue the Administrative Agent may at the request
of the Issuing Bank withhold from any payments received by the
Administrative Agent under this Agreement or any Note for account of
such Revolving Credit Lender the amount so in default and, to the
extent so withheld, pay the same to the Issuing Bank in satisfaction of
such defaulted obligation.
(f) Upon the making of each payment by a Revolving Credit
Lender to the Issuing Bank pursuant to paragraph (e) above in respect
of any Letter of Credit, such Lender shall, automatically and without
any further action on the part of the Administrative Agent, the Issuing
Bank or such Lender, acquire (i) a participation in an amount equal to
such payment in the Reimbursement Obligation owing to the
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Issuing Bank by the Company hereunder and under the Letter of Credit
Documents relating to such Letter of Credit and (ii) a participation in
a percentage equal to such Lender's Revolving Credit Commitment
Percentage in any interest or other amounts payable by the Company
hereunder and under such Letter of Credit Documents in respect of such
Reimbursement Obligation (other than the commissions, charges, costs
and expenses payable to the Issuing Bank pursuant to paragraph (g) of
this Section 2.03). Upon receipt by the Issuing Bank from or for
account of the Company of any payment in respect of any Reimbursement
Obligation or any such interest or other amount (including by way of
setoff or application of proceeds of any collateral security) the
Issuing Bank shall promptly pay to the Administrative Agent for account
of each Revolving Credit Lender entitled thereto, such Revolving Credit
Lender's Revolving Credit Commitment Percentage of such payment, each
such payment by the Issuing Bank to be made in the same money and funds
in which received by the Issuing Bank. In the event any payment
received by the Issuing Bank and so paid to the Revolving Credit
Lenders hereunder is rescinded or must otherwise be returned by the
Issuing Bank, each Revolving Credit Lender shall, upon the request of
the Issuing Bank (through the Administrative Agent), repay to the
Issuing Bank (through the Administrative Agent) the amount of such
payment paid to such Lender, with interest at the rate specified in
paragraph (j) of this Section 2.03.
(g) The Company shall pay to the Administrative Agent for
account of each Revolving Credit Lender (ratably in accordance with
their respective Commitment Percentages) a letter of credit fee in
respect of each Letter of Credit in an amount equal to (i) in the case
of any commercial letter of credit, 1/4 of 1% per annum, and (ii) in
the case of any standby letter of credit, a rate per annum equal to the
relevant Applicable Margin in effect for Eurodollar Loans as of the
date of issuance of such Letter of Credit, in the case of each of
clauses (i) and (ii) above, of the daily average undrawn face amount of
such Letter of Credit for the period from and including the date of
issuance of such Letter of Credit (x) in the case of a Letter of Credit
that expires in accordance with its terms, to and including such
expiration date and (y) in the case of a Letter of Credit that is drawn
in full or is otherwise terminated other than on the stated expiration
date of such Letter of Credit, to but excluding the date such Letter of
Credit is drawn in full or is terminated (such fee to be
non-refundable, to be paid in arrears on each Quarterly Date and on the
Revolving
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Credit Commitment Termination Date and to be calculated for any day
after giving effect to any payments made under such Letter of Credit on
such day). In addition, the Company shall pay to the Administrative
Agent for account of the Issuing Bank a fronting fee in respect of each
Letter of Credit in an amount equal to 1/4 of 1% per annum of the daily
average undrawn face amount of such Letter of Credit for the period
from and including the date of issuance of such Letter of Credit (i) in
the case of a Letter of Credit that expires in accordance with its
terms, to and including such expiration date and (ii) in the case of a
Letter of Credit that is drawn in full or is otherwise terminated other
than on the stated expiration date of such Letter of Credit, to but
excluding the date such Letter of Credit is drawn in full or is
terminated (such fee to be non-refundable, to be paid in arrears on
each Quarterly Date and on the Revolving Credit Commitment Termination
Date and to be calculated for any day after giving effect to any
payments made under such Letter of Credit on such day) plus all
commissions, charges, costs and expenses in the amounts customarily
charged by the Issuing Bank from time to time in like circumstances
with respect to the issuance of each Letter of Credit and drawings and
other transactions relating thereto.
(h) Promptly following the end of each calendar month, the
Issuing Bank shall deliver (through the Administrative Agent) to each
Revolving Credit Lender and the Company a notice describing the
aggregate amount of all Letters of Credit outstanding at the end of
such month. Upon the request of any Revolving Credit Lender from time
to time, the Issuing Bank shall deliver any other information
reasonably requested by such Lender with respect to each Letter of
Credit then outstanding.
(i) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Section 6
hereof, be subject to the conditions precedent that (i) such Letter of
Credit shall be in such form, contain such terms and support such
transactions as shall be satisfactory to the Issuing Bank consistent
with its then current practices and procedures with respect to letters
of credit of the same type and (ii) the Company shall have executed and
delivered such applications, agreements and other instruments relating
to such Letter of Credit as the Issuing Bank shall have reasonably
requested consistent with its then current practices and procedures
with respect to letters of credit of the same type, provided
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that in the event of any conflict between any such application,
agreement or other instrument and the provisions of this Agreement or
any Security Document, the provisions of this Agreement and the
Security Documents shall control.
(j) To the extent that any Lender shall fail to pay any amount
required to be paid pursuant to paragraph (e) or (f) of this Section
2.03 on the due date therefor, such Lender shall pay interest to the
Issuing Bank (through the Administrative Agent) on such amount from and
including such due date to but excluding the date such payment is made
at a rate per annum equal to the Federal Funds Rate, provided that if
such Lender shall fail to make such payment to the Issuing Bank within
three Business Days of such due date, then, retroactively to the due
date, such Lender shall be obligated to pay interest on such amount at
the Base Rate.
(k) The issuance by the Issuing Bank of any modification or
supplement to any Letter of Credit hereunder shall be subject to the
same conditions applicable under this Section 2.03 to the issuance of
new Letters of Credit, and no such modification or supplement shall be
issued hereunder unless either (i) the respective Letter of Credit
affected thereby would have complied with such conditions had it
originally been issued hereunder in such modified or supplemented form
or (ii) each Revolving Credit Lender shall have consented thereto.
The Company hereby indemnifies and holds harmless each Revolving Credit Lender
and the Administrative Agent from and against any and all claims and damages,
losses, liabilities, costs or expenses that such Lender or the Administrative
Agent may incur (or that may be claimed against such Lender or the
Administrative Agent by any Person whatsoever) by reason of or in connection
with the execution and delivery or transfer of or payment or refusal to pay by
the Issuing Bank under any Letter of Credit; provided that the Company shall not
be required to indemnify any Lender or the Administrative Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (x) the willful misconduct or gross negligence of the Issuing
Bank in determining whether a request presented under any Letter of Credit
complied with the terms of such Letter of Credit or (y) in the case of the
Issuing Bank, such Lender's failure to pay under any Letter of Credit after the
presentation to it of a request strictly complying with the terms and conditions
of such Letter of Credit. Nothing in this Section 2.03 is intended to limit the
other obligations of the
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Company, any Lender or the Administrative Agent under this Agreement.
2.04 Changes of Commitments.
(a) The aggregate amount of the Revolving Credit Commitments
shall be automatically reduced to zero on the Revolving Credit Commitment
Termination Date.
(b) The Company shall have the right at any time or from time
to time (i) to terminate or reduce the aggregate unused amount of the Term Loan
Commitments, (ii) so long as no Revolving Credit Loans or Letter of Credit
Liabilities are outstanding, to terminate the Revolving Credit Commitments and
(iii) to reduce the aggregate unused amount of the Revolving Credit Commitments
(for which purpose use of the Revolving Credit Commitments shall be deemed to
include the aggregate amount of Letter of Credit Liabilities); provided that (x)
the Company shall give notice of each such termination or reduction as provided
in Section 4.05 hereof and (y) each partial reduction shall be in an aggregate
amount at least equal to $5,000,000 (or a larger multiple of $1,000,000).
(c) Any portion of the Term Loan Commitments not used on the
Tender Offer Closing Date shall be automatically terminated.
(d) The Commitments once terminated or reduced may not
be reinstated.
2.05 Commitment Fee. The Company shall pay to the
Administrative Agent for account of each Lender a commitment fee on the daily
average unused amount of (a) such Lender's Revolving Credit Commitment (for
which purpose the aggregate amount of any Letter of Credit Liabilities shall be
deemed to be a pro rata (based on the Revolving Credit Commitments) use of each
Lender's Revolving Credit Commitment), for the period from and including the
date hereof to but not including the earlier of the date such Revolving Credit
Commitment is terminated and the Revolving Credit Commitment Termination Date,
at a rate per annum equal to the Applicable Commitment Fee Rate and (b) such
Lender's Term Loan Commitment, for the period from and including the date hereof
to but not including the earlier of the date such Term Loan Commitment is
terminated and the Tender Offer Closing Date, at a rate per annum equal to 1/2
of 1%. Accrued commitment fee shall be payable on each Quarterly Date and on the
earlier of the date the relevant Commitments are terminated and the Revolving
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Credit Commitment Termination Date or the Tender Offer Closing Date, as the
case may be.
2.06 Lending Offices. The Loans of each Type made by
each Lender shall be made and maintained at such Lender's
Applicable Lending Office for Loans of such Type.
2.07 Several Obligations; Remedies Independent. The
failure of any Lender to make any Loan to be made by it on the
date specified therefor shall not relieve any other Lender of its
obligation to make its Loan on such date, but neither any Lender
nor the Administrative Agent shall be responsible for the failure
of any other Lender to make a Loan to be made by such other
Lender, and (except as otherwise provided in Section 4.06 hereof)
no Lender shall have any obligation to the Administrative Agent
or any other Lender for the failure by such Lender to make any
Loan required to be made by such Lender. The amounts payable by
the Company at any time hereunder and under the Notes to each
Lender shall be a separate and independent debt and each Lender
shall be entitled to protect and enforce its rights arising out
of this Agreement and the Notes, and it shall not be necessary
for any other Lender or the Administrative Agent to consent to,
or be joined as an additional party in, any proceedings for such
purposes.
2.08 Notes.
(a) The Revolving Credit Loans (other than Registered Loans)
made by each Lender shall be evidenced by a single promissory note of the
Company substantially in the form of Exhibit A-1 hereto, dated the date hereof,
payable to such Lender in a principal amount equal to the amount of its
Revolving Credit Commitment as originally in effect and otherwise duly
completed.
(b) The Term Loan (other than Registered Loans) made by each
Lender shall be evidenced by a single promissory note of the Company
substantially in the form of Exhibit A-2 hereto, dated the date hereof, payable
to such Lender in a principal amount equal to the amount of its Term Loan
Commitment as originally in effect and otherwise duly completed.
(c) The date, amount, Type, interest rate and duration of
Interest Period (if applicable) of each Loan of each Class made by each Lender
to the Company, and each payment made on account of the principal thereof, shall
be recorded by such Lender on its books and, prior to any transfer of any Note
evidencing the Loans of such Class held by it, endorsed by such Lender on the
schedule attached to such Note or any continuation
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thereof; provided that the failure of such Lender to make any such recordation
or endorsement shall not affect the obligations of the Company to make a payment
when due of any amount owing hereunder or under such Note in respect of such
Loans.
(d) No Lender shall be entitled to have its Notes substituted
or exchanged for any reason, or subdivided for promissory notes of lesser
denominations, except (i) in connection with a permitted assignment of all or
any portion of such Lender's relevant Commitment, Loans and Notes pursuant to
Section 11.06 hereof, (ii) as provided in clause (e) below (and, if requested by
any Lender, the Company agrees to so exchange any Note) and (iii) in the event
the full amount of Term Loans are not made on the Tender Offer Closing Date.
(e) Notwithstanding the foregoing, any Lender that is not a
U.S. Person and is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code may request the Company (through the Administrative Agent), and the
Company agrees thereupon, to record on the Register referred to in Section
11.06(g) hereof any Loans of any Class held by such Lender under this Agreement.
Loans recorded on the Register ("Registered Loans") may not be evidenced by
promissory notes other than Registered Notes as defined below and, upon the
registration of any Loan, any promissory note (other than a Registered Note)
evidencing the same shall be null and void and shall be returned to the Company.
The Company agrees, at the request of any Lender that is the holder of
Registered Loans, to execute and deliver to such Lender a promissory note in
registered form to evidence such Registered Loans (i.e. containing the optional
registered note language as indicated in Exhibits A-1 or A-2 hereto, as the case
may be) and registered as provided in Section 11.06(g) hereof (a "Registered
Note"), dated the date hereof, payable to such Lender and otherwise duly
completed. A Loan once recorded on the Register may not be removed from the
Register so long as it remains outstanding and a Registered Note may not be
exchanged for a promissory note that is not a Registered Note.
2.09 Optional Prepayments and Conversions or Continuations of
Loans. Subject to Section 4.04 hereof, the Company shall have the right to
prepay Loans, or to Convert Loans of one Type into Loans of another Type or
Continue Loans of one Type as Loans of the same Type, at any time or from time
to time, provided that: (a) the Company shall give the Administrative Agent
notice of each such prepayment, Conversion or Continuation as provided in
Section 4.05 hereof (and, upon the date specified in any such notice of
prepayment, the amount to be prepaid shall become due and payable hereunder);
(b) Eurodollar Loans may be
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prepaid or Converted only on the last day of an Interest Period for such Loans;
(c) prepayments of the Term Loans shall be applied to the installments of the
Term Loans in the inverse order of their maturities; and (d) any Conversion or
Continuation of Eurodollar Loans shall be subject to the provisions of Section
2.01(c) hereof. Notwithstanding the foregoing, and without limiting the rights
and remedies of the Lenders under Section 9 hereof, in the event that any Event
of Default shall have occurred and be continuing, the Administrative Agent may
(and at the request of the Majority Lenders shall) suspend the right of the
Company to Convert any Loan into a Eurodollar Loan, or to Continue any Loan as a
Eurodollar Loan, in which event all Loans shall be Converted (on the last day(s)
of the respective Interest Periods therefor) or Continued, as the case may be,
as Base Rate Loans.
2.10 Mandatory Prepayments and Reductions of
Commitments.
(a) Borrowing Base. Until the Revolving Credit Commitment
Termination Date, the Company shall from time to time prepay the Revolving
Credit Loans (and/or provide cover for Letter of Credit Liabilities as specified
in paragraph (g) below) in such amounts as shall be necessary so that at all
times the aggregate outstanding amount of the Revolving Credit Loans together
with the outstanding Letter of Credit Liabilities shall not exceed the Borrowing
Base, such amount to be applied, first, to Revolving Credit Loans outstanding
and, second, as cover for Letter of Credit Liabilities outstanding.
(b) Casualty Events. Promptly upon the receipt by the Company
of the proceeds of insurance, condemnation award or other compensation in
respect of any Casualty Event affecting any Property of the Company or any of
its Subsidiaries (the "Proceeds"), the Company shall deposit such Proceeds into
the Collateral Account. Within 30 days following such deposit, the Company shall
inform the Administrative Agent as to whether it intends to repair, replace or
restore the Property affected by such Casualty Event. In the event the Company
so determines to repair, replace or restore such Property and commences such
repair, replacement or restoration within three months after receipt of the
Proceeds and thereafter diligently pursues such repair, replacement or
restoration, the Administrative Agent shall disburse such proceeds from the
Collateral Account in order to pay the costs of restoration, replacement or
repair of the Property affected by such Casualty Event against the receipt by
the Administrative Agent of invoices, receipts or other appropriate supporting
documentation reasonably requested by the
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Administrative Agent. In the event (i) the Company determines not to repair,
replace or restore such Property or fails to so determine within 30 days after
deposit, (ii) the Company does not commence such repair, replacement or
restoration within three months after receipt of such Proceeds or thereafter
does not diligently pursue such repair, replacement or restoration or (iii) the
amount of such Proceeds exceeds the costs of repair, replacement or restoration,
as the case may be, then (in the case of clause (i) above) on the date of such
determination or failing to make such determination or (in the case of clause
(ii) above) on the date three months after receipt of such Proceeds or promptly
following the date the Company is no longer diligently pursuing such repair,
replacement or restoration, as the case may be, or (in the case of clause (iii)
above) promptly upon receipt of such excess the Company shall prepay the Loans
(and/or provide cover for Letter of Credit Liabilities as specified in paragraph
(g) below), and the Commitments shall be subject to automatic reduction, in an
aggregate amount, if any, equal to 100% of the Net Available Proceeds of such
Casualty Event not theretofore applied to the repair or replacement of such
Property or such excess Proceeds, as the case may be, such prepayment and
reduction to be effected in each case in the manner and to the extent specified
in paragraph (f) of this Section 2.10. Notwithstanding the foregoing, in the
event that a Casualty Event shall occur with respect to Property covered by the
Mortgages, the Company shall prepay the Loans (and/or provide cover for Letter
of Credit Liabilities as specified in paragraph (g) below), and the Commitments
shall be subject to automatic reduction, on the dates, and in the amounts of the
required prepayments, specified in the Mortgages. Nothing in this paragraph (b)
shall be deemed to limit any obligation of the Company or any of its
Subsidiaries pursuant to any of the Security Documents to remit to a collateral
or similar account (including, without limitation, the Collateral Account)
maintained by the Administrative Agent pursuant to any of the Security Documents
the proceeds of insurance, condemnation award or other compensation received in
respect of any Casualty Event.
(c) Equity or Debt Issuance. Upon any Equity Issuance or the
issuance of any Indebtedness (other than Indebtedness permitted under Section
8.07 hereof, but excluding Section 8.07(e) hereof) after the Initial Closing
Date, the Company shall prepay the Loans (and/or provide cover for Letter of
Credit Liabilities as specified in paragraph (g) below), and the Commitments
shall be subject to automatic reduction, in an aggregate amount equal to 100% of
the Net Available Proceeds thereof, such prepayment and reduction to be effected
in each
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case in the manner and to the extent specified in paragraph (f) of this
Section 2.10.
(d) Excess Cash Flow. Not later than the date 45 days after
the end of each fiscal quarter of the Company ending on or after October 31,
1995, the Company shall prepay the Term Loans, in an aggregate amount equal to
100% of Excess Cash Flow for such fiscal quarter, such prepayment to be applied
to the Term Loans outstanding in the inverse order of the maturities of the
installments thereof (or, in the event the Initial Closing Date or the Tender
Offer Closing Date shall not yet have occurred, the Term Loan Commitments shall
be automatically reduced in an aggregate amount equal to the required
prepayment); provided, however, that if as at the end of any fiscal year after
the date hereof, the Leverage Ratio (as demonstrated by the audited financial
statements for such fiscal year delivered pursuant to Section 8.01(b) hereof) is
less than (i) 2.75:1, thereafter (and so long as the Leverage Ratio is less than
such ratio) an amount equal to 75% of Excess Cash Flow shall be prepaid or (ii)
2.25:1, thereafter (and so long as the Leverage Ratio is less than such ratio)
an amount equal to 50% of Excess Cash Flow shall be so prepaid.
(e) Sale of Assets. Without limiting the obligation of the
Company to obtain the consent of the Majority Lenders pursuant to Section 8.05
hereof to any Disposition not otherwise permitted hereunder, in the event that
the Net Available Proceeds of any Disposition (herein, the "Current
Disposition"), and of all prior Dispositions as to which a prepayment has not
yet been made under this Section 2.10(e), shall exceed $1,000,000 during any
fiscal year or $5,000,000 in the aggregate then, no later than five Business
Days prior to the occurrence of the Current Disposition, the Company will
deliver to the Lenders a statement, certified by a Responsible Financial
Officer, in form and detail satisfactory to the Administrative Agent, of the
amount of the Net Available Proceeds of the Current Disposition and of all such
prior Dispositions and, on the date of consummation of the Current Disposition,
will prepay the Loans (and/or provide cover for Letter of Credit Liabilities as
specified in paragraph (g) below), and the Commitments shall be subject to
automatic reduction, in an aggregate amount equal to 100% of the Net Available
Proceeds in excess of $1,000,000 during such fiscal year or $5,000,000 in the
aggregate, as the case may be, of the Current Disposition and such prior
Dispositions, such prepayment and reduction to be effected in each case in the
manner and to the extent specified in paragraph (f) of this Section 2.10.
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(f) Application. Prepayments and reductions of Commitments
described in the above paragraphs of this Section 2.10 (other than in paragraphs
(a) and (d) above) shall be effected as follows:
(i) first, the amount of the prepayment specified in
such paragraphs shall be applied to the Term Loans then outstanding in
the inverse order of the maturities of the installments thereof (or, in
the event the Initial Closing Date or the Tender Offer Closing Date
shall not yet have occurred, the Term Loan Commitments shall be
automatically reduced in an aggregate amount equal to the required
prepayment); and
(ii) second, the Revolving Credit Commitments shall be
automatically reduced in an amount equal to any excess over the amount
referred to in the foregoing clause (i) (and to the extent that, after
giving effect to such reduction, the aggregate principal amount of
Revolving Credit Loans, together with the aggregate amount of all
Letter of Credit Liabilities, would exceed the Revolving Credit
Commitments, the Company shall, first, prepay Revolving Credit Loans
and, second, provide cover for Letter of Credit Liabilities as
specified in paragraph (g) below, in an aggregate amount equal to such
excess).
(g) Cover for Letter of Credit Liabilities. In the event that
the Company shall be required pursuant to this Section 2.10 to provide cover for
Letter of Credit Liabilities, the Company shall effect the same by paying to the
Administrative Agent immediately available funds in an amount equal to the
required amount (which amount shall not exceed the Letter of Credit Liabilities
at such time), which funds shall be retained by the Administrative Agent in the
Collateral Account (as provided therein as collateral security in the first
instance for the Letter of Credit Liabilities) until such time as the Letters of
Credit shall have been terminated and all of the Letter of Credit Liabilities
paid in full.
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans.
(a) The Company hereby promises to pay to the Administrative
Agent for account of each Lender the entire outstanding principal amount of such
Lender's Revolving Credit
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Loans, and each Revolving Credit Loan shall mature, on the Revolving Credit
Commitment Termination Date.
(b) The Company hereby promises to pay to the Administrative
Agent for account of each Lender the principal of such Lender's Term Loan in 27
installments payable on the Principal Payment Dates in the respective amounts as
follows:
Principal Payment Date Occurring in Amount of
Installment ($) ---------
---------------
January, 1996 $1,125,000
April, 1996 1,125,000
July, 1996 1,125,000
October, 1996 1,125,000
January, 1997 2,250,000
April, 1997 2,250,000
July, 1997 2,250,000
October, 1997 2,250,000
January, 1998 3,625,000
April, 1998 3,625,000
July, 1998 3,625,000
October, 1998 3,625,000
January, 1999 4,250,000
April, 1999 4,250,000
July, 1999 4,250,000
October, 1999 4,250,000
January, 2000 4,750,000
April, 2000 4,750,000
July, 2000 4,750,000
October, 2000 4,750,000
January, 2001 5,500,000
April, 2001 5,500,000
July, 2001 5,500,000
October, 2001 5,500,000
January, 2002 8,000,000
April, 2002 8,000,000
July, 2002 8,000,000
If the Company does not borrow the full amount of the aggregate Term Loan
Commitments on or before the Tender Offer Closing Date, the shortfall shall be
applied to reduce the foregoing installments ratably.
(c) Notwithstanding anything contained in this Agreement or
the Notes to the contrary, in the event that, for any reason whatsoever, the
Tender Offer Closing Date shall not occur on or prior to the date 60 days after
the Initial Closing
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Date, all Loans shall be due and payable, and all Commitments shall
automatically be terminated, on such date.
3.02 Interest. The Company hereby promises to pay to the
Administrative Agent for account of each Lender interest on the unpaid principal
amount of each Loan made by such Lender for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:
(a) during such periods as such Loan is a Base Rate Loan, the
Base Rate (as in effect from time to time) plus the Applicable Margin
and
(b) during such periods as such Loan is a Eurodollar Loan, for
each Interest Period relating thereto, the Eurodollar Rate for such
Loan for such Interest Period plus the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable
Post-Default Rate on any principal of any Loan made by such Lender, on any
Reimbursement Obligation held by such Lender and on any other amount payable by
the Company hereunder or under the Notes held by such Lender to or for account
of such Lender, that shall not be paid in full when due (whether at stated
maturity, by acceleration, by mandatory prepayment or otherwise), for the period
from and including the due date thereof to but excluding the date the same is
paid in full. Accrued interest on each Loan shall be payable (i) in the case of
a Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the case of a
Eurodollar Loan, on the last day of each Interest Period therefor and, if such
Interest Period is longer than three months, at three-month intervals following
the first day of such Interest Period, and (iii) in the case of any Loan, upon
the payment or prepayment thereof or the Conversion of such Loan to a Loan of
another Type (but only on the principal amount so paid, prepaid or Converted),
except that interest payable at the Post-Default Rate shall be payable from time
to time on demand. Promptly after the determination of any interest rate
provided for herein or any change therein, the Administrative Agent shall give
notice thereof to the Lenders to which such interest is payable and to the
Company.
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Section 4. Payments; Pro Rata Treatment; Computations;
Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest, Reimbursement Obligations and other amounts to
be made by the Company under this Agreement and the Notes, and, except to the
extent otherwise provided therein, all payments to be made by the Company under
any other Credit Document, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Administrative Agent
at account number NYAO-DI-900-9-000002 maintained by the Administrative Agent
with Chase at the Principal Office, not later than 1:00 p.m. New York time on
the date on which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the next succeeding
Business Day).
(b) Any Lender for whose account any such payment is to be
made may (but shall not be obligated to) debit the amount of any such payment
that is not made by such time to any ordinary deposit account of the Company
with such Lender (with notice to the Company and the Administrative Agent),
provided that such Lender's failure to give such notice shall not affect the
validity thereof.
(c) The Company shall, at the time of making each payment
under this Agreement or any Note for account of any Lender, specify to the
Administrative Agent (which shall so notify the intended recipient(s) thereof)
the Loans, Reimbursement Obligations or other amounts payable by the Company
hereunder to which such payment is to be applied (and in the event that the
Company fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may distribute such payment to the Lenders
for application in such manner as it or the Majority Lenders, subject to Section
4.02 hereof, may determine to be appropriate).
(d) Except to the extent otherwise provided in the last
sentence of Section 2.03(e) hereof, each payment received by the Administrative
Agent under this Agreement or any Note for account of any Lender shall be paid
by the Administrative Agent promptly to such Lender, in immediately available
funds, for account of such Lender's Applicable Lending Office for the Loan or
other obligation in respect of which such payment is made.
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(e) If the due date of any payment under this Agreement or any
Note would otherwise fall on a day that is not a Business Day, such date shall
be extended to the next succeeding Business Day, and interest shall be payable
for any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each borrowing of Loans of a particular Class from the
Lenders under Section 2.01 hereof shall be made from the relevant Lenders, each
payment of commitment fee under Section 2.05 hereof in respect of Commitments of
a particular Class shall be made for account of the relevant Lenders, and each
termination or reduction of the amount of the Commitments of a particular Class
under Section 2.04 hereof shall be applied to the respective Commitments of such
Class of the relevant Lenders, pro rata according to the amounts of their
respective Commitments of such Class; (b) except as otherwise provided in
Section 5.04 hereof, Eurodollar Loans of any Class having the same Interest
Period shall be allocated pro rata among the relevant Lenders according to the
amounts of their respective Revolving Credit and Term Loan Commitments (in the
case of the making of Loans) or their respective Revolving Credit and Term Loans
(in the case of Conversions and Continuations of Loans); (c) each payment or
prepayment of principal of Revolving Credit Loans or Term Loans by the Company
shall be made for account of the relevant Lenders pro rata in accordance with
the respective unpaid principal amounts of the Loans of such Class held by them;
and (d) each payment of interest on Revolving Credit Loans and Term Loans by the
Company shall be made for account of the relevant Lenders pro rata in accordance
with the amounts of interest on such Loans then due and payable to the
respective Lenders.
4.03 Computations. Interest on Loans and Reimbursement
Obligations and commitment fee and letter of credit fees shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first day
but, except as otherwise provided in Section 2.03(g) hereof excluding the last
day) occurring in the period for which payable.
4.04 Minimum Amounts. Except for mandatory prepayments made
pursuant to Section 2.10 hereof and Conversions or prepayments made pursuant to
Section 5.04 hereof, each borrowing, Conversion and partial prepayment of
principal of Loans shall be in an aggregate amount at least equal to $5,000,000
or a larger multiple of $1,000,000 (borrowings, Conversions or prepayments of or
into Loans of different Types or, in the case of Eurodollar Loans, having
different Interest
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Periods at the same time hereunder to be deemed separate borrowings, Conversions
and prepayments for purposes of the foregoing, one for each Type or Interest
Period).
4.05 Certain Notices. Notices by the Company to the
Administrative Agent of terminations or reductions of the Commitments, of
borrowings, Conversions, Continuations and optional prepayments of Loans and of
Classes of Loans, of Types of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the
Administrative Agent not later than 10:00 a.m. New York time on the number of
Business Days prior to the date of the relevant termination, reduction,
borrowing, Conversion, Continuation or prepayment or the first day of such
Interest Period specified below:
Number of
Business
Notice Days Prior
------ ----------
Termination or reduction
of Commitments 3
Borrowing or prepayment of,
or Conversions into,
Base Rate Loans 1
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
Each such notice of termination or reduction shall specify the amount and the
Class of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify the
Class of Loans to be borrowed, Converted, Continued or prepaid and the amount
(subject to Section 4.04 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid and the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each such
notice of the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Administrative Agent shall promptly
notify the Lenders of the contents of each such notice. In the event that the
Company fails to select the Type of Loan, or the duration of any Interest Period
for any Eurodollar Loan, within the time period and otherwise as provided in
this Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be
automatically
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Converted into a Base Rate Loan on the last day of the then current Interest
Period for such Loan or (if outstanding as a Base Rate Loan) will remain as, or
(if not then outstanding) will be made as, a Base Rate Loan.
4.06 Non-Receipt of Funds by the Administrative Agent. Unless
the Administrative Agent shall have been notified by a Lender or the Company
(the "Payor") prior to the date on which the Payor is to make payment to the
Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be
made by such Lender hereunder or (in the case of the Company) a payment to the
Administrative Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid, provided that if neither the recipient(s)
nor the Payor shall return the Required Payment to the Administrative Agent
within three Business Days of the Advance Date, then, retroactively to the
Advance Date, the Payor and the recipient(s) shall each be obligated to pay
interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment
to be made by the Company to the Lenders, the Company and the
recipient(s) shall each be obligated retroactively to the Advance Date
to pay interest in respect of the Required Payment at the Post-Default
Rate (without duplication of the obligation of the Company under
Section 3.02 hereof to pay interest on the Required Payment at the
Post-Default Rate), it being understood that the return by the
recipient(s) of the Required Payment to the Administrative Agent shall
not limit such obligation of the
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Company under said Section 3.02 to pay interest at the
Post-Default Rate in respect of the Required Payment and
(ii) if the Required Payment shall represent proceeds of
a Loan to be made by the Lenders to the Company, the Payor and the
Company shall each be obligated retroactively to the Advance Date to
pay interest in respect of the Required Payment pursuant to whichever
of the rates specified in Section 3.02 hereof is applicable to the Type
of such Loan, it being understood that the return by the Company of the
Required Payment to the Administrative Agent shall not limit any claim
the Company may have against the Payor in respect of such Required
Payment.
4.07 Sharing of Payments, Etc.
(a) The Company agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Lender may
otherwise have, each Lender shall be entitled, at its option (to the fullest
extent permitted by law), to set off and apply any deposit (general or special,
time or demand, provisional or final), or other indebtedness, held by it for the
credit or account of the Company at any of its offices, in Dollars or in any
other currency, against any principal of or interest on any of such Lender's
Loans, Reimbursement Obligations or any other amount payable to such Lender
hereunder, that is not paid when due (regardless of whether such deposit or
other indebtedness are then due to the Company), in which case it shall promptly
notify the Company and the Administrative Agent thereof, provided that such
Lender's failure to give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from the Company payment of any
principal of or interest on any Loan of any Class or Letter of Credit Liability
owing to it or payment of any other amount under this Agreement or any other
Credit Document through the exercise of any right of set-off, banker's lien or
counterclaim or similar right or otherwise (other than from the Administrative
Agent as provided herein), and, as a result of such payment, such Lender shall
have received a greater percentage of the principal of or interest on the Loans
of such Class or Letter of Credit Liabilities or such other amounts then due
hereunder or thereunder by the Company to such Lender than the percentage
received by any other Lender, it shall promptly purchase from such other Lenders
participations in (or, if and to the extent specified by such Lender, direct
interests in) the Loans of such Class or Letter of Credit Liabilities or such
other amounts, respectively, owing to such other Lenders (or in
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interest due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such excess payment (net of any expenses that
may be incurred by such Lender in obtaining or preserving such excess payment)
pro rata in accordance with the unpaid principal of and/or interest on the Loans
of such Class or Letter of Credit Liabilities or such other amounts,
respectively, owing to each of the Lenders. To such end all the Lenders shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored.
(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans or other amounts (as the case
may be) owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Company. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 4.07 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.07 to
share in the benefits of any recovery on such secured claim.
Section 5. Yield Protection, Etc.
5.01 Additional Costs.
(a) The Company shall pay directly to each Lender from time to
time such amounts as such Lender may determine to be necessary to compensate
such Lender for any costs that such Lender determines are attributable to its
making or maintaining of any Eurodollar Loans or its obligation to make any
Eurodollar Loans hereunder, or any reduction in any amount receivable by such
Lender hereunder in respect of any of such Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change that:
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(i) shall subject any Lender (or its Applicable Lending
Office for any of such Loans) to any tax, duty or other charge in
respect of such Loans or its Notes or changes the basis of taxation of
any amounts payable to such Lender under this Agreement or its Notes in
respect of any of such Loans (excluding the imposition of, or changes
in the rate of, tax on the overall net income of such Lender or of such
Applicable Lending Office by the jurisdiction in which such Lender has
its principal office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements (other than the Reserve Requirement utilized in
the determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including, without limitation, any of such
Loans or any deposits referred to in the definition of "Eurodollar Base
Rate" in Section 1.01 hereof), or any commitment of such Lender
(including, without limitation, the Commitments of such Lender
hereunder); or
(iii) imposes any other condition affecting this
Agreement or its Notes (or any of such extensions of credit or
liabilities) or its Commitments.
If any Lender requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Lender (with a copy to the Administrative
Agent), suspend the obligation of such Lender thereafter to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the
Regulatory Change giving rise to such request ceases to be in effect (in which
case the provisions of Section 5.04 hereof shall be applicable), provided that
such suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) Without limiting the effect of the foregoing provisions of
this Section 5.01 (but without duplication), the Company shall pay directly to
each Lender from time to time on request such amounts as such Lender may
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any costs
that it determines are attributable to the maintenance by such Lender (or any
Applicable Lending Office or such bank holding company), pursuant to any law or
regulation or any interpretation, directive or request (whether or not having
the force of law and whether or not failure to comply therewith would
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be unlawful) of any court or governmental or monetary authority (i) following
any Regulatory Change or (ii) implementing any risk-based capital guideline or
other requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) hereafter issued by any
government or governmental or supervisory authority implementing at the national
level the Basle Accord, of capital in respect of its Commitments or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender (or any Applicable Lending
Office or such bank holding company) to a level below that which such Lender (or
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive or request).
(c) Each Lender shall notify the Company of any event
occurring after the date hereof entitling such Lender to compensation under
paragraph (a) or (b) of this Section 5.01 as promptly as practicable, but in any
event within 45 days, after such Lender obtains actual knowledge thereof;
provided that (i) if any Lender fails to give such notice within 45 days after
it obtains actual knowledge of such an event, such Lender shall, with respect to
compensation payable pursuant to this Section 5.01 in respect of any costs
resulting from such event, only be entitled to payment under this Section 5.01
for costs incurred from and after the date 45 days prior to the date that such
Lender does give such notice and (ii) each Lender will designate a different
Applicable Lending Office for the Loans of such Lender affected by such event if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, except that such Lender shall have no obligation
to designate an Applicable Lending Office located in the United States of
America. Each Lender will furnish to the Company a certificate setting forth the
basis and amount of each request by such Lender for compensation under paragraph
(a) or (b) of this Section 5.01. Determinations and allocations by any Lender
for purposes of this Section 5.01 of the effect of any Regulatory Change
pursuant to paragraph (a) of this Section 5.01, or of the effect of capital
maintained pursuant to paragraph (b) of this Section 5.01, on its costs or rate
of return of maintaining Loans or its obligation to make Loans, or on amounts
receivable by it in respect of Loans, and of the amounts required to compensate
such Lender under this Section 5.01, shall be conclusive in the absence of
manifest error, provided that such determinations and allocations are made on a
reasonable basis.
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5.02 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any Eurodollar
Base Rate for any Interest Period:
(a) the Administrative Agent determines, which determination
shall be conclusive in the absence of manifest error, that quotations
of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Base Rate" in Section 1.01 hereof are not
being provided in the relevant amounts or for the relevant maturities
for purposes of determining rates of interest for Eurodollar Loans as
provided herein; or
(b) if the related Loans are Revolving Credit Loans, the
Majority Revolving Credit Lenders or, if the related Loans are Term
Loans, the Majority Term Lenders determine, which determination shall
be conclusive in the absence of manifest error, and notify the
Administrative Agent that the relevant rates of interest referred to in
the definition of "Eurodollar Base Rate" in Section 1.01 hereof upon
the basis of which the rate of interest for Eurodollar Loans for such
Interest Period is to be determined are not likely adequately to cover
the cost to such Lenders of making or maintaining Eurodollar Loans for
such Interest Period;
then the Administrative Agent shall give the Company and each Lender prompt
notice thereof and, so long as such condition remains in effect, the Lenders
shall be under no obligation to make additional Eurodollar Loans, to Continue
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the
Company shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans
into Base Rate Loans in accordance with Section 2.09 hereof.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain Eurodollar
Loans hereunder (and, in the sole opinion of such Lender, the designation of a
different Applicable Lending Office would either not avoid such unlawfulness or
would be disadvantageous to such Lender), then such Lender shall promptly notify
the Company thereof (with a copy to the Administrative Agent) and such Lender's
obligation to make or Continue, or to Convert Loans of any other Type into,
Eurodollar Loans shall be suspended until such time as such Lender may again
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make and maintain Eurodollar Loans (in which case the provisions of Section 5.04
hereof shall be applicable).
5.04 Treatment of Affected Loans. If the obligation of any
Lender to make Eurodollar Loans or to Continue, or to Convert Base Rate Loans
into, Eurodollar Loans shall be suspended pursuant to Section 5.01 or 5.03
hereof, such Lender's Eurodollar Loans shall be automatically Converted into
Base Rate Loans on the last day(s) of the then current Interest Period(s) for
Eurodollar Loans (or, in the case of a Conversion resulting from a circumstance
described in Section 5.03 hereof, on such earlier date as such Lender may
specify to the Company with a copy to the Administrative Agent) and, unless and
until such Lender gives notice as provided below that the circumstances
specified in Section 5.01 or 5.03 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Eurodollar Loans have
been so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Eurodollar Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Eurodollar Loans shall be made or Continued instead as
Base Rate Loans, and all Base Rate Loans of such Lender that would
otherwise be Converted into Eurodollar Loans shall remain as Base Rate
Loans.
If such Lender gives notice to the Company with a copy to the Administrative
Agent that the circumstances specified in Section 5.01 or 5.03 hereof that gave
rise to the Conversion of such Lender's Eurodollar Loans pursuant to this
Section 5.04 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans of the same
Class made by other Lenders are outstanding, such Lender's Base Rate Loans of
such Class shall be automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the
extent necessary so that, after giving effect thereto, all Base Rate and
Eurodollar Loans of such Class are allocated among the Lenders ratably (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments of such Class.
5.05 Compensation. The Company shall pay to the Administrative
Agent for account of each Lender, upon the request of such Lender through the
Administrative Agent, such amount or amounts as shall be sufficient (in the
reasonable opinion of such
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Lender) to compensate it for any loss, cost or expense that such Lender
determines is attributable to:
(a) any payment, mandatory or optional prepayment or
Conversion of a Eurodollar Loan made by such Lender for any reason
(including, without limitation, the acceleration of the Loans pursuant
to Section 9 hereof) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Company for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Section 6 hereof to be satisfied) to borrow a Eurodollar
Loan from such Lender on the date for such borrowing specified in the
relevant notice of borrowing given pursuant to Section 2.02 hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
that otherwise would have accrued on the principal amount so paid, prepaid,
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan that would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest that otherwise would have accrued on
such principal amount at a rate per annum equal to the interest component of the
amount such Lender would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
with maturities comparable to such period (as reasonably determined by such
Lender).
5.06 Additional Costs in Respect of Letters of Credit. Without
limiting the obligations of the Company under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based capital
guideline or other requirement heretofore or hereafter issued by any government
or governmental or supervisory authority implementing at the national level the
Basle Accord there shall be imposed, modified or deemed applicable any tax,
reserve, special deposit, capital adequacy or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder and the result shall be to increase the cost to any Lender or
Lenders of issuing (or purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit hereunder or reduce any
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amount receivable by any Lender hereunder in respect of any Letter of Credit
(which increases in cost, or reductions in amount receivable, shall be the
result of such Lender's or Lenders' reasonable allocation of the aggregate of
such increases or reductions resulting from such event), then, upon demand by
such Lender or Lenders (through the Administrative Agent), the Company shall pay
immediately to the Administrative Agent for account of such Lender or Lenders,
from time to time as specified by such Lender or Lenders (through the
Administrative Agent), such additional amounts as shall be sufficient to
compensate such Lender or Lenders (through the Administrative Agent) for such
increased costs or reductions in amount. A statement as to such increased costs
or reductions in amount incurred by any such Lender or Lenders, submitted by
such Lender or Lenders to the Company shall be conclusive in the absence of
manifest error as to the amount thereof.
5.07 U.S. Taxes.
(a) The Company agrees to pay to each Lender that is not a
U.S. Person such additional amounts as are necessary in order that the net
payment of any amount due to such non-U.S. Person hereunder after deduction for
or withholding in respect of any U.S. Taxes imposed with respect to such payment
(or in lieu thereof, payment of such U.S. Taxes by such non-U.S. Person), will
not be less than the amount stated herein to be then due and payable, provided
that the foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to any Lender hereunder (other than
in respect of any Registered Loan) unless such Lender is, on the date
hereof (or on the date it becomes a Lender hereunder as provided in
Section 11.06(b) hereof) and on the date of any change in the
Applicable Lending Office of such Lender, either entitled to submit a
Form 1001 (relating to such Lender and entitling it to a complete
exemption from withholding on all interest to be received by it
hereunder in respect of the Loans) or Form 4224 (relating to all
interest to be received by such Lender hereunder in respect of the
Loans),
(ii) to any payment to any Lender hereunder in respect
of a Registered Loan (a "Registered Holder"), unless such Registered
Holder (or, if such Registered Holder is not the beneficial owner of
such Registered Loan, the beneficial owner thereof) is, on the date
hereof (or on the date such Registered Holder becomes a Lender as
provided in Section 11.06(b) hereof) and on the date of any change in
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the Applicable Lending Office of such Lender, entitled to submit a Form
W-8, together with an annual certificate stating that (x) such
Registered Holder (or beneficial owner, as the case may be) is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, and (y)
such Registered Holder (or beneficial owner, as the case may be) shall
promptly notify the Company if at any time, such Registered Holder (or
beneficial owner, as the case may be) determines that it is no longer
in a position to provide such certificate to the Company (or any other
form of certification adopted by the relevant taxing authorities of the
United States of America for such purposes), or
(iii) to any U.S. Taxes imposed solely by reason of the
failure by such non-U.S. Person (or, if such non-U.S. Person is not the
beneficial owner of the relevant Loan, such beneficial owner) to comply
with applicable certification, information, documentation or other
reporting requirements concerning the nationality, residence, identity
or connections with the United States of America of such non-U.S.
Person (or beneficial owner, as the case may be) if such compliance is
required by statute or regulation of the United States of America as a
precondition to relief or exemption from such U.S. Taxes.
For the purposes of this Section 5.07(a), (A) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (B) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates) and (C) "Form W-8" shall mean Form W-8 (Certificate
of Foreign Status of the Department of Treasury of the United States of
America). Each of the Forms referred to in the foregoing clauses (A), (B) and
(C) shall include such successor and related forms as may from time to time be
adopted by the relevant taxing authorities of the United States of America to
document a claim to which such Form relates.
(b) Within 30 days after paying any amount to the
Administrative Agent or any Lender from which it is required by law to make any
deduction or withholding, and within 30 days after it is required by law to
remit such deduction or withholding to any relevant taxing or other authority,
the
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Company shall deliver to the Administrative Agent for delivery to such non-U.S.
Person evidence satisfactory to such Person of such deduction, withholding or
payment (as the case may be).
(c) Any Lender claiming any additional amounts pursuant to
this Section 5.07 shall use reasonable efforts (consistent with its internal
policies and procedures and applicable legal and regulatory restrictions) to
designate another Applicable Lending Office if such designation would avoid the
need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not otherwise, in the sole opinion of such Lender,
be disadvantageous to such Lender.
Section 6. Conditions Precedent.
6.01 Initial Extension of Credit . The obligation of any
Lender to make its initial extensions of credit hereunder (whether by making a
Loan or issuing a Letter of Credit) on the Initial Closing Date is subject to
the conditions precedent that (i) such extensions of credit shall be made on or
before August 31, 1995 and (ii) the Administrative Agent shall have received the
following documents (with, in each case, sufficient copies for each Lender),
each of which shall be satisfactory to each Agent (and to the extent specified
below, to each Lender) in form and substance:
(a) Corporate Documents. Certified copies of the charter and
by-laws (or equivalent documents) of the Company and of all corporate
authority for the Company (including, without limitation, board of
director resolutions and evidence of the incumbency, including specimen
signatures, of officers) with respect to the execution, delivery and
performance of the Basic Documents and each other document to be
delivered by the Company from time to time in connection herewith and
the extensions of credit hereunder (and each Agent and each Lender may
conclusively rely on such certificate until it receives notice in
writing from the Company to the contrary).
(b) Officer's Certificate. A certificate of a
Responsible Financial Officer, dated the Initial Closing
Date, to the effect set forth in the first sentence of
Section 6.04 hereof.
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(c) Borrowing Base Certificate. A Borrowing Base
Certificate as of June 30, 1995, duly executed by the
Company.
(d) Opinion of Counsel to the Company. An opinion, dated the
Initial Closing Date, of Bachner, Tally, Polevoy & Misher LLP, counsel
to the Company, substantially in the form of Exhibit D hereto and
covering such other matters as either Agent or any Lender may
reasonably request (and the Company hereby instructs such counsel to
deliver such opinion to the Lenders and each Agent).
(e) Opinion of Special New York Counsel to Chase. An opinion,
dated the Initial Closing Date, of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase, substantially in the form of Exhibit
E hereto (and Chase hereby instructs such counsel to deliver such
opinion to the Lenders and each Agent).
(f) Notes. The Notes, duly completed and executed for each
Lender (except that, in the case of a Registered Holder, Notes shall be
required only to the extent that such Registered Holder shall have
requested the execution and delivery of a Note pursuant to Section
2.08(e) hereof).
(g) Security Agreement. The Security Agreement, duly executed
and delivered by the Company and the Administrative Agent. In addition,
the Company shall have taken such other action (including, without
limitation, delivering to the Administrative Agent, for filing,
appropriately completed and duly executed copies of Uniform Commercial
Code financing statements) as the Administrative Agent shall have
requested in order to perfect the security interests created pursuant
to the Security Agreement.
(h) Insurance. Certificates of insurance evidencing the
existence of all insurance required to be maintained by the Company
pursuant to Section 8.04 hereof and the designation of the
Administrative Agent as the loss payee or additional named insured, as
the case may be, thereunder to the extent required by said Section
8.04, such certificates to be in such form and contain such information
as is specified in said Section 8.04. In addition, the Company shall
have delivered a certificate of a Responsible Financial Officer setting
forth the insurance obtained by it in accordance with the requirements
of Section 8.04 and stating that such insurance is in full force and
effect and
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that all premiums then due and payable thereon have been
paid.
(i) Solvency Analysis. A certificate from a Responsible
Financial Officer to the effect that (I) as of the Initial Closing Date
and after giving effect to the initial extensions of credit hereunder
and the extensions of credit contemplated to occur as of the Tender
Offer Closing Date and to the other transactions contemplated hereby
(including, without limitation, the Transactions), (i) the aggregate
value of all Properties of the Company at their present fair saleable
value (i.e., the amount that may be realized within a reasonable time,
considered to be six months to one year, either through collection or
sale at the regular market value, conceiving the latter as the amount
that could be obtained for the Property in question within such period
by a capable and diligent businessman from an interested buyer who is
willing to purchase under ordinary selling conditions), exceed the
amount of all the debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of the Company,
(ii) the Company will not have an unreasonably small capital with which
to conduct its business operations as heretofore conducted and (iii)
the Company will have sufficient cash flow to enable it to pay its
debts as they mature and (II) the financial projections and underlying
assumptions contained in such analyses were at the time made, and on
the Initial Closing Date are, fair and reasonable and accurately
computed, as are the opinions of value and other appropriate factual
information supporting the conclusions of the solvency analyses and the
financial condition certificate required to be delivered as provided
above (which opinions of value shall not have been amended, modified or
revoked).
(j) Repayment of Existing Indebtedness. Evidence that the
principal of and interest on, and all other amounts owing in respect
of, the Indebtedness (including, without limitation, any contingent or
other amounts payable in respect of letters of credit) indicated on
Schedule I hereto that is to be repaid on the Initial Closing Date
shall have been (or shall be simultaneously) paid in full, that any
commitments to extend credit under the agreements or instruments
relating to such Indebtedness shall have been canceled or terminated
and that all Guarantees in respect of, and all Liens securing, any such
Indebtedness shall have been released (or arrangements for such release
satisfactory to the Majority Lenders shall have been made).
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(k) Consummation of the Transactions. Certified copies of all
documentation relating to the Transactions (to the extent such
documentation shall be in draft or final form, each of which shall be
satisfactory to the Majority Lenders), and evidence that all the
conditions to the consummation of each of the Transactions contemplated
to occur as of the Initial Closing Date shall have been met or waived
to the satisfaction of the Lenders.
(l) Projections. Copies of the Company's financial
projections for fiscal years 1995, 1996, 1997, 1998 and 1999.
(m) Shareholders Agreements. Certified copies of all
shareholder agreements and all non-compete agreements or
arrangements involving Key Employees and/or directors of the
Company.
(n) Litigation. A certificate of a Responsible Financial
Officer to the effect that there exists (i) no judgment, order,
injunction or other restraint issued or filed which prohibits the
making of the Loans or the consummation of the Transactions, (ii) no
action, suit, litigation or similar proceeding at law or in equity or
by or before any court or governmental or regulatory authority with
respect to the Transactions or the financing thereof and (iii) no other
actions, suits or proceedings pending or threatened with respect to the
Company which could reasonably be expected to have a Material Adverse
Effect.
(o) Other Documents. Such other documents and
evidence relating to the transactions contemplated hereby as
either Agent or any Lender or special New York counsel to
Chase may reasonably request.
The obligation of any Lender to make its initial extension of credit hereunder
is also subject to the payment by the Company of such fees as the Company shall
have agreed to pay or deliver to any Lender or the Agents in connection
herewith, including, without limitation, the reasonable fees and expenses of
counsel to each of the Agents, in connection with the negotiation, preparation,
execution and delivery of this Agreement and the Notes and the other Credit
Documents and the extensions of credit hereunder (to the extent that statements
for such fees and expenses have been delivered to the Company).
6.02 Tender Offer Closing Date. The obligation of any
Lender to make its extensions of credit hereunder (whether by
making a Loan or issuing a Letter of Credit) on the Tender Offer
Closing Date is subject to the conditions precedent that (i) the
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Initial Closing Date shall have occurred and (ii) the Administrative Agent shall
have received the following documents (with, in each case, sufficient copies for
each Lender), each of which shall be satisfactory to each Agent (and to the
extent specified below, to each Lender) in form and substance:
(a) Officer's Certificate. A certificate of a
Responsible Financial Officer, dated the Tender Offer
Closing Date, to the effect set forth in the first sentence
of Section 6.04 hereof.
(b) Borrowing Base Certificate. A Borrowing Base
Certificate as of a date not more than 30 days prior to the
Tender Offer Closing Date.
(c) Opinion of Counsel to the Company. An opinion, dated the
Tender Offer Closing Date, of Bachner, Tally, Polevoy & Misher LLP,
counsel to the Company, in form and substance satisfactory to each
Agent and covering such matters relating to the Transactions
contemplated to occur as of the Tender Offer Closing Date as either
Agent or any Lender shall reasonably request (and the Company hereby
instructs such counsel to deliver such opinion to the Lenders and each
Agent).
(d) Solvency Analysis. A certificate from an independent
solvency analyst of nationally recognized standing acceptable to the
Agents to the effect that, as of the Tender Offer Closing Date and
after giving effect to the initial extensions of credit hereunder and
to the other transactions contemplated hereby (including, without
limitation, the Transactions), (i) the aggregate value of all
Properties of the Company and its Subsidiaries at their present fair
saleable value (i.e., the amount that may be realized within a
reasonable time, considered to be six months to one year, either
through collection or sale at the regular market value, conceiving the
latter as the amount that could be obtained for the Property in
question within such period by a capable and diligent businessman from
an interested buyer who is willing to purchase under ordinary selling
conditions), exceed the amount of all the debts and liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities) of the Company and its Subsidiaries, (ii) the Company and
its Subsidiaries will not, on a consolidated basis, have an
unreasonably small capital with which to conduct its business
operations as heretofore conducted and (iii) the Company and its
Subsidiaries will have, on a consolidated basis, sufficient
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cash flow to enable it to pay their debts as they mature. In addition,
a Responsible Financial Officer shall certify to the effect that the
financial projections and underlying assumptions contained in such
analyses were at the time made, and on the Tender Offer Closing Date
are, fair and reasonable and accurately computed, as are the opinions
of value and other appropriate factual information supporting the
conclusions of the solvency analyses and the financial condition
certificate required to be delivered as provided above (which opinions
of value shall not have been amended, modified or revoked).
(e) Tender Offer. Certified copies of each of the Tender Offer
Documents (which shall be in form and substance satisfactory to the
Majority Lenders), certified by a Responsible Financial Officer, and
evidence that at least the minimum number of shares tendered for in the
Tender Offer shall have been validly tendered to the Company, that the
price per share to be paid by the Company for each such share shall not
exceed $27.00 and that such shares shall have been validly tendered to
the Company free and clear of all Liens and restrictions to purchase
imposed by applicable law and shall not have been withdrawn and are
available for purchase in accordance with the terms and conditions of
the related offer to purchase; and receipt of such information from the
depositary in respect of the Tender Offer regarding the amount of the
shares tendered in the Tender Offer (including any related
documentation) as shall be reasonably requested.
(f) Consummation of the Transactions. Certified
copies of all documentation relating to the Transactions
(which shall be satisfactory to the Majority Lenders), and evidence
that all the conditions to the consummation of each of the Transactions
contemplated to occur of, or prior to, the Tender Offer Closing Date
shall have been met or waived to the satisfaction of the Lenders,
including that all conditions to the Tender Offer (any such conditions
requiring the satisfaction of any person or entity other than the
Lenders to be deemed for this purpose to require the satisfaction of
the Lenders) shall have been met or waived with the concurrence of the
Lenders.
(g) Litigation. A certificate of a Responsible Financial
Officer to the effect that there exists (i) no judgment, order,
injunction or other restraint issued or filed which prohibits the
making of the Loans or the consummation of the Transactions, (ii) no
action, suit,
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litigation or similar proceeding at law or in equity or by or before
any court or governmental or regulatory authority with respect to the
Transactions or the financing thereof and (iii) no other actions, suits
or proceedings pending or threatened with respect to the Company which
could reasonably be expected to have a Material Adverse Effect.
(h) Other Documents. Such other documents and
evidence relating to the transactions contemplated hereby as
the Administrative Agent or any Lender or special New York
counsel to Chase may reasonably request.
(i) Payments of Fees and Expenses. The Company shall have paid
or reimbursed each Agent all costs and expenses not theretofore paid or
reimbursed in connection herewith, including, without limitation, the
reasonable fees and expenses of counsel for each Agent in connection
with the negotiation, preparation, execution and delivery of this
Agreement and the Notes and the other Credit Documents and the
extensions of credit hereunder (to the extent that statements for such
fees and expenses have been delivered to the Company).
6.03 Additional Conditions Precedent to Revolving Credit
Facility. The obligation of the Lenders to make extensions of credit in respect
of the Revolving Credit Commitments hereunder in excess of $10,000,000 in the
aggregate (whether by making a Loan or issuing a Letter of Credit) at any time
after the Initial Closing Date is subject to the satisfaction, on or prior to
the date 60 days after the Initial Closing Date, of the following conditions (in
each case to the satisfaction of the Lenders in their sole and absolute
discretion):
(a) Mortgages and Title Insurance. The following
documents each of which shall be executed (and, where
appropriate, acknowledged) and delivered to the
Administrative Agent:
(i) one or more mortgages, deeds of trust or
similar instruments covering the real Property of the Company
identified in Schedule IV hereto (the "Mortgaged Properties"),
in each case duly executed and delivered by the Company in
recordable form (in such number of copies as the
Administrative Agent shall have requested);
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(ii) one or more mortgagee policies of title
insurance on A.L.T.A. forms satisfactory to each Lender and
issued by one or more title companies satisfactory to each
Lender (the "Title Companies"), insuring the validity and
priority of the Liens created under the Mortgages for and in
amounts satisfactory to each Lender, subject only to such
exceptions as are satisfactory to each Lender, and, to the
extent necessary under applicable law, for filing in the
appropriate county land office(s), Uniform Commercial Code
financing statements covering fixtures relating to the
Mortgaged Properties, in each case appropriately completed and
duly executed;
(iii) as-built surveys of recent date of each
facility to be covered by a Mortgage, showing such matters as
may be required by any Lender, which surveys shall be in form
and content acceptable to each Lender, and certified to the
Administrative Agent and to each Lender and the Title
Companies, and shall have been prepared by a registered
surveyor acceptable to each Lender;
(iv) certified copies of permanent and
unconditional certificates of occupancy (or, if it is not the
practice to issue certificates of occupancy in the
jurisdiction in which the facilities to be covered by the
Mortgages are located, then such other evidence reasonably
satisfactory to each Lender) permitting the fully functioning
operation and occupancy of each such facility, zoning
correspondence and such other permits necessary for the use
and operation of each such facility issued by the respective
governmental authorities having jurisdiction over each such
facility;
(v) Uniform Commercial Code searches in each of the
jurisdictions (both state and county levels) where the
Mortgaged Properties are located; and
(vi) appraisals as of recent date of each of the
Mortgaged Properties (including the facilities and other
improvements located thereon and machinery and equipment)
(except as otherwise to be delivered pursuant to Section
8.17(b) or 8.17(c) hereof), such appraisals to be prepared by
an appraiser, and to use a methodology, acceptable to the
Administrative Agent.
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In addition, the Company shall have paid to the Title Companies all
expenses and premiums of the Title Companies in connection with the
issuance of such policies and in addition shall have paid to the Title
Companies an amount equal to the recording and stamp taxes payable in
connection with recording each Mortgage and the Uniform Commercial Code
Financing Statements in the appropriate county land office or state
recording office, as the case may be.
(b) Environmental Surveys. An environmental survey and
assessment of recent date prepared by a firm of licensed engineers
(familiar with the identification of toxic and hazardous substances) in
form and substance satisfactory to each Lender, such environmental
survey and assessment to be based upon physical on-site inspections by
such firm of each of the existing sites and facilities owned, operated
or leased by the Company and its Subsidiaries, as well as an historical
review of the uses of such sites and facilities and of the business and
operations of the Company (including any former Subsidiaries or
divisions of the Company or any of its Subsidiaries that have been
disposed of prior to the date of such survey and assessment and with
respect to which the Company may have retained liability for
Environmental Claims) and to provide that the Lenders may rely on the
results of such audits.
(c) Leasehold Interests. In the case of any leasehold
interests covered by the Mortgages, such estoppels, consents,
subordination agreements and other agreements from the lessor, the
holder of a fee mortgage or a sublessee, as the Administrative Agent
may reasonably request.
(d) Insurance. Certificates of insurance evidencing the
existence of all insurance required to be maintained by the Company
pursuant to Section 8.04 hereof and the designation of the
Administrative Agent as the loss payee or additional named insured, as
the case may be, thereunder to the extent required by said Section
8.04, such certificates to be in such form and contain such information
as is specified in said Section 8.04. In addition, the Company shall
have delivered a certificate of a Responsible Financial Officer setting
forth the insurance obtained by it in accordance with the requirements
of Section 8.04 and stating that such insurance is in full force and
effect and that all premiums then due and payable thereon have been
paid.
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(e) Opinions of Local Counsel to the Company. Opinions, each
dated the date the conditions set forth in this Section 6.03 are
satisfied, of local counsel in the respective states in which the
Mortgaged Properties are located, in form and substance satisfactory to
the Administrative Agent (and the Company hereby instructs such counsel
to deliver such opinion(s) to the Lenders and the Administrative
Agent).
(f) Opinion of Counsel to the Company. An opinion, dated the
Tender Offer Closing Date, of Bachner, Tally, Polevoy & Misher LLP,
counsel to the Company, in form and substance satisfactory to the
Administrative Agent and covering such matters relating to the due
authorization, execution and delivery of the Mortgages and other
matters relating to the Mortgages (other than those matters covered by
the opinions referred to in clause (e) above) as the Administrative
Agent or any Lender shall reasonably request (and the Company hereby
instructs such counsel to deliver such opinion to the Lenders and the
Administrative Agent).
(g) Other Evidence and Documents. Such other
documents and evidence relating to the foregoing conditions
as either Agent or any Lender may reasonably request.
(h) Payments of Fees and Expenses. The Company shall have paid
or reimbursed each Agent for all costs and expenses not theretofore
paid or reimbursed in connection herewith, including, without
limitation, the reasonable fees and expenses of counsel for each Agent,
in connection with the negotiation, preparation, execution and delivery
of this Agreement and the Notes and the other Credit Documents and the
extensions of credit hereunder (to the extent that statements for such
fees and expenses have been delivered to the Company).
6.04 Initial and Subsequent Extensions of Credit. The
obligation of the Lenders to make any Loan or otherwise extend
any credit to the Company upon the occasion of each borrowing or
other extension of credit hereunder (including the initial
borrowing) is subject to the further conditions precedent that,
both immediately prior to the making of such Loan or other
extension of credit and also after giving effect thereto and to
the intended use thereof:
(a) no Default shall have occurred and be continuing;
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(b) the representations and warranties made by the Company in
Section 7 hereof, and in each of the other Credit Documents, shall be
true and complete on and as of the date of the making of such Loan or
other extension of credit with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date); and
(c) the aggregate principal amount of the Revolving Credit
Loans together with the aggregate amount of all Letter of Credit
Liabilities shall not exceed the Borrowing Base reflected on the most
recent Borrowing Base Certificate delivered pursuant to Section 6.01(c)
or 8.01(f) hereof, as the case may be.
Each notice of borrowing or request for the issuance of a Letter of Credit by
the Company hereunder shall constitute a certification by the Company to the
effect set forth in the preceding sentence (both as of the date of such notice
or request and, unless the Company otherwise notifies the Administrative Agent
prior to the date of such borrowing or issuance, as of the date of such
borrowing or issuance).
Section 7. Representations and Warranties. The
Company represents and warrants to the Administrative Agent and
the Lenders that:
7.01 Corporate Existence. Each of the Company and its
Subsidiaries: (a) is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could (either
individually or in the aggregate) have a Material Adverse Effect.
7.02 Financial Condition. The Company has heretofore furnished
to each of the Lenders a balance sheet of the Company as at October 31, 1994 and
the related statements of income, retained earnings and cash flows of the
Company for the fiscal year ended on said date, with the opinion thereon of
Arthur
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Andersen LLP, and the unaudited balance sheet of the Company as at April 30,
1995 and the related statements of income, retained earnings and cash flows of
the Company for the six-month period ended on such date. All such financial
statements are complete and correct and fairly present the financial condition
of the Company as at said dates and the results of its operations for the fiscal
year and six-month period ended on said dates (subject, in the case of such
financial statements as at April 30, 1995, to normal year-end audit
adjustments), all in accordance with generally accepted accounting principles
and practices applied on a consistent basis. The Company does not have on the
date hereof any material contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided for in
said balance sheets as at said dates. Since October 31, 1994, there has been no
material adverse change in the financial condition, operations, business or
prospects taken as a whole of the Company from that set forth in said financial
statements as at said date.
7.03 Litigation. Except as disclosed to the Lenders in
Schedule V hereto, there are no legal or arbitral proceedings, or any
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of the Company) threatened against the Company or
any of its Subsidiaries that, if adversely determined could (either individually
or in the aggregate) have a Material Adverse Effect, including, without
limitation, in connection with the Transactions.
7.04 No Breach. None of the execution and delivery of this
Agreement and the Notes and the other Basic Documents, the consummation of the
transactions herein and therein contemplated or compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent under, the charter or by-laws of the Company, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any of them
or any of their Property is bound or to which any of them is subject, or
constitute a default under any such agreement or instrument, or (except for the
Liens created pursuant to the Security Documents) result in the creation or
imposition of any Lien upon any Property of the Company or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.
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7.05 Action. The Company has all necessary corporate power,
authority and legal right to execute, deliver and perform its obligations under
each of the Basic Documents; the execution, delivery and performance by the
Company of each of the Basic Documents have been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required shareholder approvals); and this Agreement has been duly and validly
executed and delivered by the Company and constitutes, and each of the Notes and
the other Basic Documents when executed and delivered (in the case of the Notes,
for value) will constitute, its legal, valid and binding obligation, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability affecting the enforcement of creditors'
rights and (b) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
7.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency, or any securities exchange, are necessary for the execution, delivery
or performance by the Company of this Agreement or any of the other Basic
Documents or for the legality, validity or enforceability hereof or thereof,
except for (a) filings and recordings in respect of the Liens created pursuant
to the Security Documents and (b) the filing of certain of the Tender Offer
Documents with the Securities and Exchange Commission.
7.07 ERISA. Each Plan, and, to the knowledge of the Company,
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which the Company would be
under an obligation to furnish a report to the Lenders under Section 8.01(e)
hereof.
7.08 Taxes. The United States Federal income tax returns of
the Company have been examined and closed by the Internal Revenue Service
through October 31, 1990. The Company and its Subsidiaries are members of an
affiliated group of corporations filing consolidated returns for Federal income
tax purposes, of which the Company is the "common parent" (within the meaning of
Section 1504 of the Code) of such group. The Company and its Subsidiaries have
filed all Federal income tax returns and all other material tax returns that are
required to be filed
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by them and have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Company or any of its Subsidiaries. The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of taxes and other governmental charges are, in the opinion of the
Company, adequate. The Company has not given or been requested to give a waiver
of the statute of limitations relating to the payment of any Federal, state,
local and foreign taxes or other impositions.
7.09 Investment Company Act. Neither the Company nor
any of its Subsidiaries is an "investment company", or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended.
7.10 Public Utility Holding Company Act. Neither the Company
nor any of its Subsidiaries is a "holding company", or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
7.11 Debt Agreements and Liens.
(a) Part A of Schedule I hereto is a complete and correct list
of each credit agreement, loan agreement, indenture, purchase agreement,
guarantee, letter of credit or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, the Company or any of its
Subsidiaries, outstanding on the date hereof, or that (after giving effect to
the transactions contemplated to occur on or before the Initial Closing Date)
will be outstanding on the Initial Closing Date, and the aggregate principal or
face amount outstanding or that may become outstanding under each such
arrangement is correctly described in Part A of said Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list
of each Lien securing Indebtedness of any Person outstanding on the date hereof,
or that (after giving effect to the transactions contemplated to occur on or
before the Initial Closing Date) will be outstanding on the Initial Closing
Date, covering any Property of the Company or any of its Subsidiaries, and the
aggregate Indebtedness secured (or that may be secured) by each such Lien and
the Property covered by each such Lien is correctly described in Part B of said
Schedule I.
7.12 Environmental Matters. Each of the Company and
its Subsidiaries has obtained all environmental, health and
safety permits, licenses and other authorizations required under
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all Environmental Laws to carry on its business as now being or as proposed to
be conducted, except to the extent failure to have any such permit, license or
authorization would not (either individually or in the aggregate) have a
Material Adverse Effect. Each of such permits, licenses and authorizations is in
full force and effect and each of the Company and its Subsidiaries is in
compliance with the terms and conditions thereof, and is also in compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply therewith would not (either
individually or in the aggregate) have a Material Adverse Effect.
In addition, except as set forth in Schedule II hereto (solely
with respect to clauses (a), (c) and (d) below):
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been
filed, no penalty has been assessed and no investigation or review is
pending or threatened by any governmental or other entity with respect
to any alleged failure by the Company or any of its Subsidiaries to
have any environmental, health or safety permit, license or other
authorization required under any Environmental Law in connection with
the conduct of the business of the Company or any of its Subsidiaries
or with respect to any generation, treatment, storage, recycling,
transportation, discharge or disposal, or any Release of any Hazardous
Materials generated by the Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries owns,
operates or leases a treatment, storage or disposal facility requiring
a permit under the Resource Conservation and Recovery Act of 1976, as
amended, or under any comparable state or local statute; and
(i) no polychlorinated biphenyls (PCB's) is or has
been present at any site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries
which could (either individually or in the aggregate) have a
Material Adverse Effect;
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(ii) no asbestos or asbestos-containing
materials is or has been present at any site or facility now
or previously owned, operated or leased by the Company or any
of its Subsidiaries which could (either individually or in the
aggregate) have a Material Adverse Effect;
(iii) there are no underground storage tanks or
surface impoundments for Hazardous Materials, active or
abandoned, at any site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries
which could (either individually or in the aggregate) have a
Material Adverse Effect;
(iv) no Hazardous Materials have been Released
at, on or under any site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries
in a reportable quantity established by statute, ordinance,
rule, regulation or order; and
(v) no Hazardous Materials have been otherwise
Released at, on or under any site or facility now or
previously owned, operated or leased by the Company or any of
its Subsidiaries that would (either individually or in the
aggregate) have a Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous
Material to any location that is listed on the National Priorities List
("NPL") under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), listed for possible
inclusion on the NPL by the Environmental Protection Agency in the
Comprehensive Environmental Response and Liability Information System,
as provided for by 40 C.F.R. ss. 300.5 ("CERCLIS"), or on any similar
state or local list or that is the subject of Federal, state or local
enforcement actions or other investigations that may lead to
Environmental Claims against the Company or any of its Subsidiaries.
(d) No Hazardous Material generated by the Company or any of
its Subsidiaries has been recycled, treated, stored, disposed of or
Released by the Company or any of its Subsidiaries at any location
other than in compliance with Environmental Laws.
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(e) No oral or written notification of a Release of a
Hazardous Material has been filed by or on behalf of the Company or any
of its Subsidiaries and no site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries is listed
or proposed for listing on the NPL, CERCLIS or any similar state list
of sites requiring investigation or clean-up.
(f) No Liens have arisen under or pursuant to any
Environmental Laws on any site or facility owned, operated or leased by
the Company or any of its Subsidiaries, and no government action has
been taken or is in process that could subject any such site or
facility to such Liens and neither the Company nor any of its
Subsidiaries would be required to place any notice or restriction
relating to the presence of Hazardous Materials at any site or facility
owned by it in any deed to the real property on which such site or
facility is located.
(g) All environmental investigations, studies, audits, tests,
reviews or other analyses conducted by or that are in the possession of
the Company or any of its Subsidiaries in relation to facts,
circumstances or conditions at or affecting any site or facility now or
previously owned, operated or leased by the Company or any of its
Subsidiaries and that could result in a Material Adverse Effect have
been made available to the Lenders.
7.13 Capitalization. The authorized capital stock of the
Company will consist, on the Initial Closing Date (after giving effect to the
transactions contemplated to occur on or before the Initial Closing Date), of
(i) 20,000,000 shares of common stock, par value $.01 per share, of which, after
giving effect to the transactions contemplated on the Initial Closing Date,
5,870,041 shares will be duly and validly issued and outstanding (and 1,550,000
shares will be held in treasury) and (ii) 1,000,000 shares of preferred stock,
par value $1.00 per share, of which, after giving effect to the transactions
contemplated on the Initial Closing Date, no such shares will be issued and
outstanding (and no such shares will be held in treasury), each of which issued
and outstanding shares will be fully paid and nonassessable. As of the Initial
Closing Date (after giving effect to the transactions contemplated to occur on
or before the Initial Closing Date), (a) there will be no outstanding Equity
Rights with respect to the Company (other than the Employee Stock Option Plan
and the Employee Stock Purchase Plan) and (b) there will be no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem, or
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otherwise acquire any shares of capital stock of the Company nor will there be
any outstanding obligations of the Company or any of its Subsidiaries to make
payments to any Person, such as "phantom stock" payments, where the amount
thereof is calculated with reference to the fair market value or equity value of
the Company or any of its Subsidiaries.
7.14 Subsidiaries and Investments. As of the date hereof the
Company has no Subsidiaries. Set forth in Schedule III hereto is a complete and
correct list of all Investments held by the Company or any of its Subsidiaries
in any Person on the date hereof, or that will be held on the Initial Closing
Date (after giving effect to the transactions contemplated to occur on or before
the Initial Closing Date), and, for each such Investment, (i) the identity of
the Person or Persons holding such Investment and (ii) the nature of such
Investment. Except as disclosed in Schedule III hereto, each of the Company and
its Subsidiaries owns (or will own, after giving effect to the transactions
contemplated to occur on or before the Initial Closing Date), free and clear of
all Liens (other than Liens created pursuant to the Security Documents), all
such Investments.
7.15 Title to Assets. The Company owns and has on the date
hereof, and will own and have on the Initial Closing Date (after giving effect
to the transactions contemplated to occur on or before the Initial Closing
Date), good and marketable title (subject only to Liens permitted by Section
8.06 hereof) to the Properties shown to be owned in the most recent financial
statements referred to in Section 7.02 hereof (other than Properties disposed of
in the ordinary course of business or otherwise permitted to be disposed of
pursuant to Section 8.05 hereof). The Company owns and has on the date hereof,
and will own and have on the Initial Closing Date (after giving effect to the
transactions contemplated to occur on or before the Initial Closing Date), good
and marketable title to, and enjoys on the date hereof, and will enjoy on the
Initial Closing Date (after giving effect to the transactions contemplated to
occur on or before the Initial Closing Date), peaceful and undisturbed
possession of, all Properties (subject only to Liens permitted by Section 8.06
hereof) that are necessary for the operation and conduct of its businesses.
7.16 True and Complete Disclosure. The information,
reports, financial statements, exhibits and schedules furnished
in writing by or on behalf of the Company to the Administrative
Agent or any Lender in connection with the negotiation,
preparation or delivery of this Agreement and the other Credit
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Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the date hereof by the
Company and its Subsidiaries to the Agents and the Lenders in connection with
this Agreement and the other Credit Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact known
to the Company that could have a Material Adverse Effect that has not been
disclosed herein, in the other Credit Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished to
the Lenders for use in connection with the transactions contemplated hereby or
thereby.
7.17 Real Property. Set forth on Schedule IV attached hereto
is a list, as of the date hereof, and as of the Initial Closing Date (after
giving effect to the transactions contemplated to occur on or before the Initial
Closing Date ), of all of the real property interests held by the Company and
its Subsidiaries, indicating in each case whether the respective Property is
owned or leased, the identity of the owner or lessee and the location of the
respective Property.
7.18 Use of Credit. The Company is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying Margin
Stock, and does not (and will not) own any Margin Stock. Neither the making of
any extension of credit hereunder, nor the use of the proceeds thereof, will
violate or be inconsistent with the provisions of Regulation G, T, U or X.
Section 8. Covenants of the Company. The Company covenants and
agrees with the Lenders and the Administrative Agent that, so long as any
Commitment, Loan or Letter of Credit Liability is outstanding and until payment
in full of all amounts payable by the Company hereunder:
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8.01 Financial Statements Etc. The Company shall
deliver to each of the Lenders:
(a) as soon as available and in any event within 45 days after
the end of each quarterly fiscal period of each fiscal year of the
Company, statements of income, retained earnings and cash flows of the
Company for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related
balance sheet of the Company as at the end of such period, setting
forth in each case in comparative form the corresponding figures for
the corresponding periods in the preceding fiscal year (except that, in
the case of a balance sheet, such comparison shall be to the last day
of the prior fiscal year), accompanied by a certificate of a
Responsible Financial Officer, which certificate shall state that said
financial statements fairly present the financial condition and results
of operations of the Company, in each case in accordance with generally
accepted accounting principles, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit adjustments);
(b) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, statements of income,
retained earnings and cash flows of the Company for such fiscal year
and the related balance sheet of the Company as at the end of such
fiscal year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, and accompanied by
an opinion thereon of Arthur Andersen LLP or other independent
certified public accountants of recognized national standing acceptable
to the Agents without a "going concern" or like qualification, which
opinion shall state that said financial statements fairly present the
financial condition and results of operations of the Company as at the
end of, and for, such fiscal year in accordance with generally accepted
accounting principles, and a statement of such accountants to the
effect that, in making the examination necessary for their opinion,
nothing came to their attention that caused them to believe that the
Company was not in compliance with Sections 8.09, 8.10 and 8.11 hereof,
insofar as such Sections relate to accounting matters;
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, that the
Company shall have filed with the Securities
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and Exchange Commission (or any governmental agency
substituted therefor) or any national securities exchange;
(d) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports and
proxy statements so mailed and, promptly upon their becoming available,
copies of all press releases, releases to analysts and any management
letter or similar written report by the Company's independent public
accountants with respect to the financial condition, operations,
business or prospects of the Company and any responses thereto;
(e) as soon as possible, and in any event within ten days
after the Company knows or has reason to believe that any of the events
or conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a Responsible
Financial Officer setting forth details respecting such event or
condition and the action, if any, that the Company or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to the PBGC by the
Company or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in
Section 4043(b) of ERISA and the regulations issued
thereunder, with respect to a Plan, as to which the PBGC has
not by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of
such event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of
ERISA, including, without limitation, the failure to make on
or before its due date a required installment under Section
412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code); and any request
for a waiver under Section 412(d) of the Code for any Plan;
(ii) the distribution under Section 4041 of
ERISA of a notice of intent to terminate any Plan or any
action taken by the Company or an ERISA Affiliate to terminate
any Plan;
(iii) the institution by the PBGC of
proceedings under Section 4042 of ERISA for the termination
of, or
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the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Company or any ERISA Affiliate that
results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by the Company
or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;
(v) the institution of a proceeding by a
fiduciary of any Multiemployer Plan against the Company or any
ERISA Affiliate to enforce Section 515 of ERISA, which
proceeding is not dismissed within 30 days; and
(vi) the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA, would result in the loss of tax-exempt status of
the trust of which such Plan is a part if the Company or an
ERISA Affiliate fails to timely provide security to the Plan
in accordance with the provisions of said Sections;
(f) as soon as available and in any event before the end of
each monthly accounting period (ending on the last day of each calendar
month), a Borrowing Base Certificate as at the last day of the
immediately preceding monthly accounting period and for the last
monthly accounting period of each fiscal year, within 35 days after the
end of such monthly accounting period;
(g) periodically at the request of the Administrative Agent or
the Majority Lenders (but unless a Default shall have occurred and be
continuing, no more frequently than once in any calendar year) and at
the expense of the Company, a report of an independent collateral
auditor (which may be, or be affiliated with, one of the Lenders) with
respect to the Receivables and Inventory components included in the
Borrowing Base as at the end of the latest fiscal quarter which report
shall indicate that, based upon a review by such auditors of the
Receivables (including,
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without limitation, verification with respect to the amount, aging,
identity and credit of the respective account debtors and the billing
practices of the Company and its Subsidiaries) and Inventory
(including, without limitation, verification as to the value, location
and respective types), the information set forth in the Borrowing Base
Certificate delivered by the Company as at the end of such fiscal
quarter is accurate and complete in all material respects and in
addition, as soon as available and in any event within 90 days after
the end of each fiscal year of the Company and at the expense of the
Company, a like report of Arthur Andersen LLP or other independent
public accountants of recognized national standing acceptable to the
Agents with respect to the Receivables and Inventory components
included in the Borrowing Base as at the end of such fiscal year;
(h) within two Business Days after the Company knows or has
reason to believe that any Default has occurred, a notice of such
Default describing the same in reasonable detail and, together with
such notice or as soon thereafter as possible, a description of the
action that the Company has taken or proposes to take with respect
thereto;
(i) simultaneously with the delivery of the financial
statements pursuant to Section 8.01(a) hereof (but in any event within
45 days after the end of each fiscal quarter) a products segment report
in form satisfactory to the Majority Lenders for such fiscal quarter;
(j) promptly after the occurrence of a Casualty Event,
notice of such Casualty Event describing the same in
reasonable detail;
(k) promptly upon receipt thereof, a copy of any notification
with respect to any audit by the Internal Revenue Service (or any
successor agency thereto) of the United States Federal income tax
returns of the Company and thereafter with respect to any such audit
copies of all material correspondence; and
(l) from time to time such other information regarding the
financial condition, operations, business or prospects of the Company
or any of its Subsidiaries (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Lender or the Administrative Agent may
reasonably request.
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The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
Responsible Financial Officer (i) to the effect that no Default has occurred and
is continuing (or, if any Default has occurred and is continuing, describing the
same in reasonable detail and describing the action that the Company has taken
or proposes to take with respect thereto) and (ii) setting forth in reasonable
detail the computations necessary to determine whether the Company is in
compliance with Sections 8.09, 8.10, 8.11 hereof as of the end of the respective
quarterly fiscal period or fiscal year.
8.02 Litigation. The Company will promptly give to each Lender
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceedings, affecting the Company or any of
its Subsidiaries, except proceedings that, if adversely determined, would not
(either individually or in the aggregate) have a Material Adverse Effect.
Without limiting the generality of the foregoing, the Company will give to each
Lender notice of the assertion of any Environmental Claim by any Person against,
or with respect to the activities of, the Company or any of its Subsidiaries and
notice of any alleged violation of or non-compliance with any Environmental Laws
or any permits, licenses or authorizations, other than any Environmental Claim
or alleged violation that, if adversely determined, would not (either
individually or in the aggregate) have a Material Adverse Effect.
8.03 Existence, Etc. The Company will, and will cause
each of its Subsidiaries to:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that
nothing in this Section 8.03 shall prohibit any transaction expressly
permitted under Section 8.05 hereof);
(b) comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory authorities
if failure to comply with such requirements could (either individually
or in the aggregate) have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its
income or profits or on any of its Property prior to the
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date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in
good faith and by proper proceedings and against which adequate
reserves are being maintained in accordance with GAAP;
(d) maintain all of its Properties used or useful in
its business in good working order and condition, ordinary
wear and tear excepted;
(e) keep adequate records and books of account, in which
complete entries will be made in accordance with generally accepted
accounting principles consistently applied; and
(f) permit representatives of any Lender or any Agent, during
normal business hours, to examine, copy and make extracts from its
books and records, to inspect any of its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably
requested by such Lender or such Agent (as the case may be).
8.04 Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies, and with respect to Property and risks of a character
usually maintained by corporations engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and in the
amounts customarily maintained by such corporations. The Company will in any
event maintain (with respect to itself and each of its Subsidiaries):
(1) Property Insurance -- insurance against loss or damage
covering all of the tangible real and personal Property and
improvements of the Company and each of its Subsidiaries by reason of
any Peril (as defined below) in such amounts (subject to such
deductibles as shall be satisfactory to the Majority Lenders) as shall
be reasonable and customary and sufficient to avoid the insured named
therein from becoming a co-insurer of any loss under such policy but in
any event in an amount (i) in the case of fixed assets and equipment
(excluding vehicles), at least equal to 100% of the actual replacement
cost of such assets (including, without limitation, foundation,
footings and excavation costs), subject to deductibles as aforesaid and
(ii) in the case of inventory, not less than the fair market value
thereof, subject to deductibles as aforesaid; provided, however, that
with respect to the real Property of
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the Company located in the State of California, the Company shall be
required to maintain such insurance against earthquakes as the Company
shall determine, in its reasonable judgment, to be available at
reasonable cost.
(2) Automobile Liability Insurance for Bodily Injury and
Property Damage -- insurance against liability for bodily injury and
property damage (other than collision damage) in respect of all
vehicles (whether owned, hired or rented by the Company or any of its
Subsidiaries) at any time located at, or used in connection with, its
Properties or operations in such amounts as are then customary for
vehicles used in connection with similar Properties and businesses, but
in any event to the extent required by applicable law.
(3) Comprehensive General Liability Insurance --insurance
against claims for bodily injury, death or Property damage occurring
on, in or about the Properties (and adjoining streets, sidewalks and
waterways) of the Company and its Subsidiaries, in such amounts as are
then customary for Property similar in use in the jurisdictions where
such Properties are located.
(4) Workers' Compensation Insurance -- workers' compensation
insurance (including, without limitation, employers' liability
insurance) to the extent required by applicable law.
(5) Product Liability Insurance -- insurance against claims
for bodily injury, death or Property damage resulting from the use of
products sold by the Company or any of its Subsidiaries in such amounts
as are then customarily maintained by responsible persons engaged in
businesses similar to that of the Company and its Subsidiaries.
(6) Business Interruption Insurance -- insurance against loss
of operating income by reason of any Peril in amounts not exceeding and
on terms no less favorable than in effect on the date hereof.
(7) Other Insurance -- such other insurance, including,
without limitation, War-Risk Insurance when and to the extent
obtainable from the United States Government, in each case as generally
carried by owners of similar Properties in the jurisdictions where such
Properties are located, in such amounts and against such risks as are
then customary for Property similar in use.
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Such insurance shall be written by financially responsible companies selected by
the Company and having an A. M. Best rating of "A+" or better and being in a
financial size category of XIV or larger, or by other companies acceptable to
the Majority Lenders, and (other than workers' compensation) shall name the
Administrative Agent as loss payee (to the extent covering risk of loss or
damage to tangible property) and as an additional named insured as its interests
may appear (to the extent covering any other risk). Each policy referred to in
this Section 8.04 shall provide that it will not be canceled or reduced, or
allowed to lapse without renewal, except after not less than 30 days' notice to
the Administrative Agent and shall also provide that the interests of the Agents
and the Lenders shall not be invalidated by any act or negligence of the Company
or any Person having an interest in any Property covered by the Mortgages nor by
occupancy or use of any such Property for purposes more hazardous than permitted
by such policy nor by any foreclosure or other proceedings relating to such
Property. The Company will advise the Administrative Agent promptly of any
policy cancellation, reduction or amendment.
On or before the Initial Closing Date, the Company will
deliver to the Administrative Agent certificates of insurance satisfactory to
the Administrative Agent evidencing the existence of all insurance required to
be maintained by the Company hereunder setting forth the respective coverages,
limits of liability, carrier, policy number and period of coverage, subject only
to the payment of premiums as they become due. Thereafter, the Company will
deliver from time to time to the Administrative Agent certificates of insurance
evidencing that all insurance required to be maintained by the Company
hereunder, subject only to the payment of premiums as they become due. In
addition, the Company will not modify any of the provisions of any policy with
respect to casualty insurance without delivering the original copy of the
endorsement reflecting such modification to the Administrative Agent accompanied
by a written report of a firm of independent insurance brokers of nationally
recognized standing, stating that, in their opinion, such policy (as so
modified) adequately protects the interests of the Lenders and the Agents, is in
compliance with the provisions of this Section 8.04, and is comparable in all
respects with insurance carried by responsible owners and operators of
Properties similar to those covered by the Mortgages. The Company will not
obtain or carry separate insurance concurrent in form or contributing in the
event of loss with that required by this Section 8.04 unless the Administrative
Agent is the named insured thereunder, with loss payable as provided herein. The
Company will immediately notify the Administrative Agent whenever any such
separate insurance is
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obtained and shall deliver to the Administrative Agent the certificates
evidencing the same.
Without limiting the obligations of the Company under the
foregoing provisions of this Section 8.04, in the event the Company shall fail
to maintain in full force and effect insurance as required by the foregoing
provisions of this Section 8.04, then the Administrative Agent may, but shall
have no obligation so to do, procure insurance covering the interests of the
Lenders and the Administrative Agent in such amounts and against such risks as
the Administrative Agent (or the Majority Lenders) shall deem appropriate, and
the Company shall reimburse the Administrative Agent in respect of any premiums
paid by the Administrative Agent in respect thereof.
For purposes hereof, the term "Peril" shall mean,
collectively, fire, lightning, flood, windstorm, hail, earthquake, explosion,
riot and civil commotion, vandalism and malicious mischief, damage from
aircraft, vehicles and smoke and all other perils covered by the "all-risk"
endorsement then in use in the jurisdictions where the Properties of the Company
and its Subsidiaries are located.
8.05 Prohibition of Fundamental Changes.
(a) The Company will not, nor will it permit any of its
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution).
(b) The Company will not, nor will it permit any of its
Subsidiaries to, acquire any business or Property from, or capital stock of, or
be a party to any acquisition of, any Person, except:
(i) for purchases of inventory and other Property
to be sold or used in the ordinary course of business;
(ii) Investments permitted under Section 8.08(e)
hereof;
(iii) Capital Expenditures permitted under
Section 8.11 hereof; and
(iv) the acquisition of any business or Property
provided that the aggregate purchase price of all acquisitions
under this clause (iv) shall not exceed $5,000,000 after the
Initial Closing Date.
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(c) The Company will not, nor will it permit any of its
Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, any part of its business or Property,
whether now owned or hereafter acquired (including, without limitation,
receivables and leasehold interests, but excluding:
(i) obsolete or worn-out Property, tools or equipment
no longer used or useful in its business so long as the amount
thereof sold in any single fiscal year by the Company and its
Subsidiaries shall not have a fair market value in excess of
$1,000,000; and
(ii) any inventory or other Property sold or disposed
of in the ordinary course of business and on ordinary business
terms).
8.06 Limitation on Liens. The Company will not, nor will it
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the date hereof and listed in Part B
of Schedule I hereto (excluding, however, following the making of the
initial Loans hereunder, Liens securing Indebtedness to be repaid with
the proceeds of such Loans, as indicated on said Schedule I);
(c) Liens imposed by any governmental authority for taxes,
assessments or charges that are not overdue for a period of more than
30 days or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on
the books of the Company or the affected Subsidiaries, as the case may
be, in accordance with GAAP;
(d) 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 and by appropriate proceedings and
Liens securing judgments but only to the extent for an amount and for a
period not resulting in an Event of Default under Section 9(h) hereof;
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(e) pledges or deposits under worker's compensation,
unemployment insurance and other social security
legislation;
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of Property or minor imperfections in title
thereto that, in the aggregate, are not material in amount, and that do
not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business
of the Company or any of its Subsidiaries; and
(h) Liens upon real and/or tangible personal Property acquired
after the date hereof (by purchase, construction or otherwise) by the
Company or any of its Subsidiaries, each of which Liens was created
solely for the purpose of securing Indebtedness representing, or
incurred to finance, refinance or refund, the cost (including the cost
of construction) of such Property; provided that (i) no such Lien shall
extend to or cover any Property of the Company or such Subsidiary other
than the Property so acquired and improvements thereon and (ii) the
principal amount of Indebtedness secured by any such Lien shall at no
time exceed 80% of the fair market value (as determined in good faith
by a Responsible Financial Officer) of such Property at the time it was
acquired (by purchase, construction or otherwise).
8.07 Indebtedness. The Company will not, nor will it permit
any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness outstanding on the date hereof and listed in
Part A of Schedule I hereto (excluding, however, following the making
of the initial Loans hereunder, the Indebtedness to be repaid with the
proceeds of such Loans, as indicated on said Schedule I);
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(c) Indebtedness in respect of letters of credit or
similar instruments issued or accepted by banks and other
financial institutions for account of the Company in an aggregate
amount not exceeding $1,000,000 at any one time outstanding;
(d) Indebtedness in respect of Interest Rate
Protection Agreements entered into pursuant to Section 8.12
hereof;
(e) Loans from or by one or more of the Pennsylvania
Industrial Development Authority, the Pennsylvania Department of
Commerce Sunny Day Loan Fund, the Pennsylvania Department of Commerce
Machinery & Equipment Loan Fund and Luzerne County Business Development
Loan Program in an aggregate amount not exceeding $7,000,000 at any one
time outstanding; and
(f) additional Indebtedness of the Company and its
Subsidiaries (including, without limitation, Capital Lease Obligations
and other Indebtedness secured by Liens permitted under Sections
8.06(h) hereof) up to but not exceeding $5,000,000 at any one time
outstanding.
8.08 Investments. The Company will not, nor will it permit any
of its Subsidiaries to, make or permit to remain outstanding any Investments
(provided that, notwithstanding anything in this Agreement to the contrary, the
Company will not after the date hereof form or acquire any Subsidiaries),
except:
(a) Investments outstanding on the date hereof and identified
in Schedule III hereto (as well as reinvestment and reallocation of the
amounts invested in the portfolios identified therein);
(b) operating deposit accounts with banks;
(c) Permitted Investments;
(d) Investments in the equity securities of
competitors of the Company in an amount not exceeding
$25,000 in the aggregate;
(e) loans and advances to employees of the Company to be used
for the payment of relocation expenses of such employees in an
aggregate amount not exceeding $500,000 at any one time outstanding for
all employees; and
(f) additional Investments up to but not exceeding
$1,000,000 in the aggregate.
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8.09 Dividend Payments. The Company will not, nor will it
permit any of its Subsidiaries to, declare or make any Dividend Payment at any
time, except that the Company may, during any fiscal year commencing after
October 31, 1995 and so long as no Default shall have occurred and be
continuing, declare and make Dividends Payments in cash not exceeding $750,000
for such fiscal year.
8.10 Certain Financial Covenants.
(a) Interest Coverage Ratio. The Company will not
permit at any time from and after October 31, 1995 the Interest
Coverage Ratio to be less than 3.0:1.0.
(b) Fixed Charges Ratio. The Company will not permit
at any time from and after October 31, 1996 the Fixed Charges
Ratio to be less than 1.0:1.0.
(c) Leverage Ratio. The Company will not permit the
Leverage Ratio to exceed the following respective ratios at any
time during the following respective periods:
Period Ratio
------ -----
From the Initial Closing Date
through October 30, 1996 3.90 to 1
From October 31, 1996
through October 30, 1997 3.40 to 1
From October 31, 1997
through October 30, 1998 3.00 to 1
From October 31, 1998
through October 30, 1999 2.40 to 1
From October 31, 1999
through October 30, 2000 1.75 to 1
From October 31, 2000
through October 30, 2001 1.75 to 1
From October 31, 2001
and at all times thereafter 1.50 to 1
(d) Tangible Net Worth. The Company will not permit
its Tangible Net Worth to be less than (i) at any time during the
period from October 31, 1995 through October 30, 1996, an amount
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equal to its Tangible Net Worth as of October 31, 1995 minus $500,000 (the
"Initial Tangible Net Worth Amount"), which shall in no event be less than
($3,000,000) and (ii) thereafter at any time during the following respective
periods, an amount equal to the Initial Tangible Net Worth Amount plus the sum
of (x) the amount set forth below opposite such period, (y) the amount or
amounts set forth below opposite the periods (if any) set forth below preceding
such period and (z) the cash and/or non-cash consideration received by the
Company in respect of any Equity Issuance:
Period Amount
From October 31, 1996
through October 30, 1997 $8,300,000
From October 31, 1997
through October 30, 1998 9,700,000
From October 31, 1998
through October 30, 1999 10,000,000
From October 31, 1999
through October 30, 2000 15,000,000
From October 31, 2000
through October 30, 2001 15,000,000
From October 31, 2001
through October 30, 2002 20,000,000
8.11 Capital Expenditures. The Company will not
permit the aggregate amount of Capital Expenditures by the
Company and its Subsidiaries to exceed the following respective
amounts for the following respective periods:
Period Amount
From the Initial Closing Date
through October 31, 1995 $8,000,000
From November 1, 1995
through October 31, 1996 16,000,000
From November 1, 1996
through October 31, 1997 13,000,000
From November 1, 1997 12,000,000
through October 31, 1998
From November 1, 1998 12,000,000
through October 31, 1999
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From November 1, 1999 12,000,000
through October 31, 2000
From November 1, 2000 12,000,000
through October 31, 2001
From November 1, 2001 12,000,000
and at all times thereafter
8.12 Interest Rate Protection Agreements. The Company will
within 30 days after the Tender Offer Closing Date enter into, and thereafter
maintain in full force and effect, one or more Interest Rate Protection
Agreements (in form and substance satisfactory to the Agents) with one or more
of the Lenders (and/or with a bank or other financial institution having
capital, surplus and undivided profits of at least $500,000,000), that
effectively enables the Company to protect itself against floating interest
rates as to a notional principal amount equal to at least 40% of the aggregate
principal amount of the Loans outstanding as of the Tender Offer Closing Date
for a period of at least 2 years from the Tender Offer Closing Date.
8.13 Lines of Business. The Company will not, nor will it
permit any of its Subsidiaries to, engage to any substantial extent in any line
or lines of business activity other than the business of manufacturing,
distributing and selling plastic film products manufactured from polyolefin
resin and related products.
8.14 Transactions with Affiliates. Except as expressly
permitted by this Agreement, the Company will not, nor will it permit any of its
Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
Property to an Affiliate; (c) merge into or consolidate with or purchase or
acquire Property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including,
without limitation, Guarantees and assumptions of obligations of an Affiliate);
provided that (i) any Affiliate who is an individual may serve as a director,
officer or employee of the Company or any of its Subsidiaries and receive
reasonable compensation for his or her services in such capacity and (ii) the
Company and its Subsidiaries may enter into transactions (other than extensions
of credit by the Company or any of its Subsidiaries to an Affiliate) providing
for the leasing of Property, the rendering or receipt of services or the
purchase or sale of inventory and other Property in the ordinary course of
business if the monetary
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or business consideration arising therefrom would be substantially as
advantageous to the Company and its Subsidiaries as the monetary or business
consideration that would obtain in a comparable transaction with a Person not an
Affiliate.
8.15 Use of Proceeds.
(a) The Company will use the proceeds of the Revolving Credit
Loans hereunder solely for working capital and other general corporate purposes
of the Company.
(b) The Company will use the proceeds of the Term Loans made
on the Initial Closing Date to (i) purchase up to 1,550,000 shares of common
stock of the Company held by Barba and/or his wife for a purchase price not
exceeding $21.04 per share, (ii) to refinance the revolving credit facilities
then outstanding from each of Chase and Mellon and the Company's indebtedness in
respect of its 6.59% senior notes in the aggregate principal amount of
$20,000,000 and (iii) pay all fees and expenses payable to Chase and Mellon as
of the Initial Closing Date in connection with the transactions contemplated
hereby and all prepayment penalties in respect of the refinancing of any such
indebtedness.
(c) The Company will use the proceeds of the Term Loans made
on the Tender Offer Closing Date to (i) consummate the purchase of shares of
common stock of the Company pursuant to the Tender Offer and (ii) pay fees,
commissions and expenses payable in connection therewith.
(d) Neither the Administrative Agent nor any Lender
shall have any responsibility as to the use of any of such
proceeds under this Section 8.15.
8.16 Modifications of Certain Documents. The Company will not,
and will not permit any of its Subsidiaries to, consent to any modification,
supplement or waiver of any of the provisions of (i) the charter or by-laws of
the Company or (ii) any agreement, instrument or other document evidencing or
relating to the Transactions without the prior consent of the Administrative
Agent (with the prior approval of the Majority Lenders).
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8.17 Additional Mortgages and Other Real Estate Matters.
(a) Without affecting the obligations of the Company under any
provision prohibiting such action hereunder, in the event that the Company shall
acquire any business or Property after the Initial Closing Date, the Company
shall (i) if requested by the Majority Lenders, execute and deliver one or more
Mortgages (which shall be substantially in the form of the Mortgages delivered
under Section 6.03(a) hereof, with such changes thereto as the Administrative
Agent may reasonably request), covering the real Property and/or fixtures so
acquired, (ii) execute and deliver to the Administrative Agent for filing,
appropriately completed Uniform Commercial Code financing statements or other
filings or instruments as the Administrative Agent shall request in order to
perfect the security interest in favor of the Administrative Agent for the
benefit of the Lenders in such Property so acquired and (iii) deliver such proof
of corporate action, incumbency of officers, opinions of counsel, mortgagee
title insurance, appraisals, environmental audits and other documents relating
to the foregoing as is consistent with those delivered by the Company pursuant
to Section 6.03 hereof or as any Lender or any Agent shall have reasonably
requested.
(b) Without limiting the obligations of the Company to obtain
the consent of the Majority Lenders pursuant to Section 8.05 hereof, in the
event that the Company shall not have disposed of the Property located in
Moonachie, New Jersey and referred to in Schedule IV hereto (the "New Jersey
Property") within one year after the date hereof, the Company shall (i) if
requested by the Majority Lenders, execute and deliver a Mortgage (which shall
be substantially in the form of the Mortgages delivered under Section 6.03(a)
hereof, with such changes thereto as the Administrative Agent may reasonably
request), covering the New Jersey Property, (ii) execute and deliver to the
Administrative Agent for filing, appropriately completed Uniform Commercial Code
financing statements or other filings or instruments as the Administrative Agent
shall request in order to perfect the security interest in favor of the
Administrative Agent for the benefit of the Lenders in the New Jersey Property
and (iii) deliver such proof of corporate action, incumbency of officers,
opinions of counsel, mortgagee title insurance and other documents relating to
the foregoing as is consistent with those delivered by the Company pursuant to
Section 6.03 hereof or as any Lender or any Agent shall have reasonably
requested.
(c) If requested by the Majority Lenders after
substantial completion of the construction of the facilities
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located at Mountain Top, Pennsylvania and referred to in Schedule IV hereto (the
"Pennsylvania Property"), the Company shall, within 90 days after such request,
deliver to the Administrative Agent an appraisal of a then recent date of the
Pennsylvania Property (including the facilities and other improvements located
thereon and machinery and equipment), such appraisals to be prepared by an
appraiser, and to use a methodology, acceptable to the Administrative Agent.
Section 9. Events of Default. If one or more of the
following events (herein called "Events of Default") shall occur
and be continuing:
(a) The Company shall: (i) default in the payment of any
principal of any Loan or any Reimbursement Obligation when due (whether
at stated maturity or at mandatory or optional prepayment); or (ii)
default in the payment of any interest on any Loan, any fee or any
other amount payable by it hereunder or under any other Credit Document
when due and such default shall have continued unremedied for three
days; or
(b) The Company or any of its Subsidiaries shall default in
the payment when due of any principal of or interest on any of its
other Indebtedness aggregating $500,000 or more; or any event specified
in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness shall occur if the effect of such
event is to cause, or (with the giving of any notice or the lapse of
time or both) to permit the holder or holders of such Indebtedness (or
a trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior to its
stated maturity or to have the interest rate thereon reset to a level
so that securities evidencing such Indebtedness trade at a level
specified in relation to the par value thereof; or the Company shall
default in the payment when due of any amount aggregating $500,000 or
more under any Interest Rate Protection Agreement; or any event
specified in any Interest Rate Protection Agreement shall occur if the
effect of such event is to cause, or (with the giving of any notice or
the lapse of time or both) to permit, termination or liquidation
payment or payments aggregating $500,000 or more to become due; or
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(c) Any representation, warranty or certification made or
deemed made herein or in any other Credit Document (or in any
modification or supplement hereto or thereto) by the Company, or any
certificate furnished to any Lender or the Administrative Agent
pursuant to the provisions hereof or thereof, shall prove to have been
false or misleading as of the time made or furnished in any material
respect; or
(d) The Company shall default in the performance of any of its
obligations under any of Sections 1.02(c), 8.01(f), 8.01(h), 8.05,
8.06, 8.07, 8.08, 8.09, 8.10, 8.11, 8.13, 8.14, 8.16 or 8.17 hereof or
the Company shall default in the performance of any of its obligations
under Section 4.02 or 5.02 of the Security Agreement or any material
obligations under any of the Mortgages; or the Company shall default in
the performance of any of its other obligations in this Agreement or
any other Credit Document and such default shall continue unremedied
for a period of 30 or more days after notice thereof to the Company by
the Administrative Agent or any Lender (through the Administrative
Agent); or
(e) The Company or any of its Subsidiaries shall admit in
writing its inability to, or be generally unable to, pay its debts as
such debts become due; or
(f) The Company or any of its Subsidiaries shall (i) apply for
or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, examiner or liquidator of itself or of
all or a substantial part of its Property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary
case under the Bankruptcy Code, (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the Bankruptcy Code or
(vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(g) A proceeding or case shall be commenced, without the
application or consent of the Company or any of its Subsidiaries, in
any court of competent jurisdiction, seeking (i) its reorganization,
liquidation, dissolution, arrangement or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a
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receiver, custodian, trustee, examiner, liquidator or the like of the
Company or such Subsidiary or of all or any substantial part of its
Property or (iii) similar relief in respect of the Company or such
Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or more
days; or an order for relief against the Company or such Subsidiary
shall be entered in an involuntary case under the Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money of
(i) (other than in respect of the Beta Case, as hereinafter defined),
$500,000 or more in the aggregate (exclusive of judgment amounts fully
covered by insurance where the insurer has admitted liability in
respect of such judgment) or of, (ii) (other than in respect of the
Beta Case, as so defined), $1,000,000 or more in the aggregate
(regardless of insurance coverage) or (iii) with respect to the
litigation instituted by Beta Plastics Corporation, as plaintiff,
against Azmi Karaoglu (also known as Azmi Kay), the Company and John or
Jane Doe (identities unknown) 1-5, as defendants, Civil Action
PAS-L-6434-93, filed August 10, 1993 in the Superior Court of New
Jersey, Law Division, Passaic County (the "Beta Case"), $1,000,000,
shall be rendered by one or more courts, administrative tribunals or
other bodies having jurisdiction against the Company or any of its
Subsidiaries and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall
not be procured, within 30 days from the date of entry thereof and the
Company or the relevant Subsidiary shall not, within said period of 30
days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal; or
(i) An event or condition specified in Section 8.01(e) hereof
shall occur or exist with respect to any Plan or Multiemployer Plan
and, as a result of such event or condition, together with all other
such events or conditions, the Company or any ERISA Affiliate shall
incur or in the opinion of the Majority Lenders shall be reasonably
likely to incur a liability to a Plan, a Multiemployer Plan or the PBGC
(or any combination of the foregoing) that, in the determination of the
Majority
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Lenders, would (either individually or in the aggregate)
have a Material Adverse Effect; or
(j) A reasonable basis shall exist for the assertion against
the Company or any of its Subsidiaries, or any predecessor in interest
of the Company or any of its Subsidiaries or Affiliates, of (or there
shall have been asserted against the Company or any of its
Subsidiaries) an Environmental Claim that, in the judgment of the
Majority Lenders is reasonably likely to be determined adversely to the
Company or any of its Subsidiaries, and the amount thereof (either
individually or in the aggregate) is reasonably likely to have a
Material Adverse Effect (insofar as such amount is payable by the
Company or any of its Subsidiaries but after deducting any portion
thereof that is reasonably expected to be paid by other creditworthy
Persons jointly and severally liable therefor); or
(k) Barba shall at any time cease to own beneficially and of
record at least 20% of the aggregate outstanding voting capital stock
of the Company; or any Person or group of Persons acting in concert
(other than Barba) shall at any time own or control, directly or
indirectly, 20% or more of such voting capital stock; or during any
period of 25 consecutive calendar months, a majority of the Board of
Directors of the Company shall no longer be composed of individuals (i)
who were members of said Board on the first day of such period, (ii)
whose election or nomination to said Board was approved by individuals
referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of said Board or (iii) whose
election or nomination to said Board was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of
such election or nomination at least a majority of said Board; or
(l) The Liens created by the Security Documents shall at any
time not constitute a valid and perfected Lien on the collateral
intended to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required herein or therein)
in favor of the Administrative Agent, free and clear of all other Liens
(other than Liens permitted under Section 8.06 hereof or under the
respective Security Documents), or, except for expiration in accordance
with its terms, any of the Security Documents shall for whatever reason
be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by the Company;
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THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 9 with respect to the Company, the
Administrative Agent may, by notice to the Company, terminate the Commitments
and/or declare the principal amount then outstanding of, and the accrued
interest on, the Loans, the Reimbursement Obligations and all other amounts
payable by the Company hereunder and under the Notes (including, without
limitation, any amounts payable under Section 5.05 or 5.06 hereof) to be
forthwith due and payable (provided that (x) if so requested by the Majority
Revolving Credit Lenders, the Administrative Agent shall take such action with
respect to the Revolving Credit Commitments and/or the Revolving Credit Loans,
Reimbursement Obligations and such interest and other amounts to the extent owed
to the Revolving Credit Lenders and (y) if so requested by the Majority Term
Lenders, the Administrative Agent shall take such action with respect to the
Term Loan Commitments and the Term Loans and such interest and other amounts to
the extent owed to the Term Loan Lenders), whereupon such amounts shall be
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Company; and (2) in the case of the occurrence of an Event of Default referred
to in clause (f) or (g) of this Section 9 with respect to the Company, the
Commitments shall automatically be terminated and the principal amount then
outstanding of, and the accrued interest on, the Loans, the Reimbursement
Obligations and all other amounts payable by the Company hereunder and under the
Notes (including, without limitation, any amounts payable under Section 5.05 or
5.06 hereof) shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company.
In addition, upon the occurrence and during the continuance of
any Event of Default (if the Administrative Agent has declared the principal
amount then outstanding of, and accrued interest on, the Revolving Credit Loans
and all other amounts payable by the Company hereunder and under the Notes to be
due and payable), the Company agrees that it shall, if requested by the
Administrative Agent or the Majority Revolving Credit Lenders through the
Administrative Agent (and, in the case of any Event of Default referred to in
clause (f) or (g) of this Section 9 with respect to the Company, forthwith,
without any demand or the taking of any other action by the Administrative Agent
or such Lenders) provide cover for the Letter of Credit Liabilities by paying to
the Administrative Agent immediately available funds in an amount equal to the
then aggregate undrawn face amount of all Letters of Credit, which funds shall
be held
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by the Administrative Agent in the Collateral Account as collateral security in
the first instance for the Letter of Credit Liabilities and be subject to
withdrawal only as therein provided.
Section 10. The Agents.
10.01 Appointment, Powers and Immunities. Each Lender hereby
appoints and authorizes the Administrative Agent to act as its agent hereunder
and under the other Credit Documents with such powers as are specifically
delegated to the Administrative Agent by the terms of this Agreement and of the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. The Documentation Agent, in its capacity as Documentation
Agent, shall not have any duties or responsibilities under this Agreement or any
fiduciary relationship with the Administrative Agent or any Lender, and no
implied covenants, functions, responsibilities, duties or liabilities shall be
read into this Agreement or any other Credit Document or otherwise exist against
the Documentation Agent in its capacity as Documentation Agent hereunder.
Neither Agent (which term as used in this sentence and in Section 10.05 and the
first sentence of Section 10.06 hereof shall include reference to such Agent's
affiliates and its own and its affiliates' officers, directors, employees and
agents):
(a) shall have any duties or responsibilities except those
expressly set forth in this Agreement and in the other Credit
Documents, nor shall by reason of this Agreement or any other Credit
Document be a trustee for any Lender;
(b) shall be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement
or in any other Credit Document, or in any certificate or other
document referred to or provided for in, or received by any of them
under, this Agreement or any other Credit Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, any Note or any other Credit Document or any other
document referred to or provided for herein or therein or for any
failure by the Company or any other Person to perform any of its
obligations hereunder or thereunder;
(c) shall, except to the extent expressly instructed by the
Majority Lenders with respect to collateral security under the Security
Documents, be required to initiate or
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conduct any litigation or collection proceedings hereunder
or under any other Credit Document; or
(d) shall be responsible for any action taken or omitted to be
taken by it hereunder or under any other Credit Document or under any
other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct.
The Agents may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by such Agent in good faith. The Agents may deem and treat the payee
(or Registered Holder, as the case may be) of a Note as the holder thereof for
all purposes hereof unless and until a notice of the assignment or transfer
thereof shall have been filed with the Administrative Agent.
10.02 Reliance by Administrative Agent. The Agents shall be
entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telegram or
cable) reasonably believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Agents. Each Agent shall provide each other Agent with a copy of
each certification, notice or other communication received by it under this
Agreement or any of the other Credit Documents. As to any matters not expressly
provided for by this Agreement or any other Credit Document, the Agents shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Majority Lenders or,
if provided herein, in accordance with the instructions given by the Majority
Revolving Credit Lenders, the Majority Term Lenders or all of the Lenders as is
required in such circumstance, and such instructions of such Lenders and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders.
10.03 Defaults. Neither Agent shall be deemed to have
knowledge or notice of the occurrence of a Default unless such Agent has
received notice from a Lender or the Company specifying such Default and stating
that such notice is a "Notice of Default". In the event that either Agent
receives such a notice of the occurrence of a Default, such Agent shall give
prompt notice thereof to the other Agent and the Lenders. The Administrative
Agent shall (subject to Section 10.07 hereof) take such action with respect to
such Default as shall be directed by
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the Majority Lenders or, if provided herein, the Majority Revolving Credit
Lenders or the Majority Term Lenders, provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interest of the Lenders except to the extent that this Agreement
expressly requires that such action be taken, or not be taken, only with the
consent or upon the authorization of the Majority Lenders, the Majority
Revolving Credit Lenders, the Majority Term Lenders or all of the Lenders.
10.04 Rights as a Lender. With respect to its Commitments and
the Loans made by it, each of Chase and Mellon (and any successors acting as
Administrative Agent and Documentation Agent, respectively) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as (in the case of
Chase) the Administrative Agent or (in the case of Mellon) the Documentation
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Administrative Agent and the Documentation Agent in their
individual capacities. Each of Chase and Mellon (and any successors acting as
Administrative Agent and Documentation Agent, respectively) and its affiliates
may (without having to account therefor to any Lender) accept deposits from,
lend money to, make investments in and generally engage in any kind of banking,
trust or other business with the Company (and any of its Subsidiaries or
Affiliates) as if it were not acting as the Administrative Agent or
Documentation Agent (as the case may be), and each of Chase and Mellon (and any
such successors) and their respective affiliates may accept fees and other
consideration from the Company for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders.
10.05 Indemnification. The Lenders agree to indemnify each
Agent (to the extent not reimbursed under Section 11.03 hereof, but without
limiting the obligations of the Company under said Section 11.03) ratably in
accordance with the aggregate principal amount of the Loans and Reimbursement
Obligations held by the Lenders (or, if no Loans or Reimbursement Obligations
are at the time outstanding, ratably in accordance with their respective
Commitments), for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against such Agent (including by any Lender) arising out of or by
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reason of any investigation in or in any way relating to or arising out of this
Agreement or any other Credit Document or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses that the Company is
obligated to pay under Section 11.03 hereof, but excluding, unless a Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
10.06 Non-Reliance on Agents and Other Lenders. Each
Lender agrees that it has, independently and without reliance on
the Agents or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of the Company and its Subsidiaries and decision to
enter into this Agreement and that it will, independently and
without reliance upon the Agents or any other Lender, and based
on such documents and information as it shall deem appropriate at
the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or under any
other Credit Document. Neither Agent shall be required to keep
itself informed as to the performance or observance by the
Company of this Agreement or any of the other Credit Documents or
any other document referred to or provided for herein or therein
or to inspect the Properties or books of the Company or any of
its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to
the Lenders by the Administrative Agent hereunder or under the
Security Documents, neither Agent shall have any duty or
responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or
business of the Company or any of its Subsidiaries (or any of
their affiliates) that may come into the possession of such Agent
or any of its affiliates.
10.07 Failure to Act. Except for action expressly required of
the Administrative Agent hereunder and under the other Credit Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
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10.08 Resignation or Removal of Agents. Subject to the
appointment and acceptance of a successor Agent as provided below, either Agent
may resign at any time by giving notice thereof to the Lenders and the Company,
and either the Administrative Agent or the Documentation Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent or Documentation Agent (as the case may be). If
no successor Administrative Agent or Documentation Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or the
Majority Lenders' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, that shall be a bank that has
an office in New York, New York with a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as
Administrative Agent or Documentation Agent, the provisions of this Section 10
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent or
Documentation Agent.
10.09 Consents under Other Credit Documents. Except as
otherwise provided in Section 11.04 hereof with respect to this Agreement, the
Administrative Agent may, with the prior consent of the Majority Lenders (but
not otherwise), consent to any modification, supplement or waiver under any of
the Credit Documents, provided that, without the prior consent of each Lender,
the Administrative Agent shall not (except as provided herein or in the Security
Documents) release any collateral or otherwise terminate any Lien under any
Security Document providing for collateral security, agree to additional
obligations being secured by such collateral security (unless the Lien for such
additional obligations shall be junior to the Lien in favor of the other
obligations secured by such Security Document, in which event the Administrative
Agent may consent to such junior Lien provided that it obtains the consent of
the Majority Lenders thereto), alter the relative priorities of the obligations
entitled to the benefits of the Liens created under the Security Documents or
release any guarantor under any Security Document from its guarantee obligations
thereunder, except that no such consent shall be required, and the
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Administrative Agent is hereby authorized, to release any Lien covering Property
(and to release any such guarantor) that is the subject of either a disposition
of Property permitted hereunder or a disposition to which the Majority Lenders
have consented.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Administrative
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement or
any Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement or any Note
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. The Company irrevocably waives, to
the fullest extent permitted by applicable law, any claim that any action or
proceeding commenced by the Administrative Agent or any Lender relating in any
way to this Agreement should be dismissed or stayed by reason, or pending the
resolution, of any action or proceeding commenced by the Company relating in any
way to this Agreement whether or not commenced earlier. To the fullest extent
permitted by applicable law, the Company shall take all measures necessary for
any such action or proceeding commenced by the Administrative Agent or any
Lender to proceed to judgment prior to the entry of judgment in any such action
or proceeding commenced by the Company.
11.02 Notices. All notices, requests and other communications
provided for herein and under the Security Documents (including, without
limitation, any modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including, without limitation, by
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof); or, as to any party, at
such other address as shall be designated by such party in a notice to each
other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
11.03 Expenses, Etc. The Company agrees to pay or
reimburse each of the Lenders and each Agent for: (a) all
reasonable out-of-pocket costs and expenses of each Agent
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(including, without limitation, the reasonable fees and expenses of counsel for
each Agent) in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Credit Documents and the extension of
credit hereunder and (ii) the negotiation or preparation of any modification,
supplement or waiver of any of the terms of this Agreement or any of the other
Credit Documents (whether or not consummated); (b) all reasonable out-of-pocket
costs and expenses of the Lenders and the Agents (including, without limitation,
the reasonable fees and expenses of legal counsel) in connection with (i) any
Default or any enforcement or collection proceedings resulting therefrom,
including, without limitation, all manner of participation in or other
involvement with (x) bankruptcy, insolvency, receivership, foreclosure, winding
up or liquidation proceedings, (y) judicial or regulatory proceedings and (z)
workout, restructuring or other negotiations or proceedings (whether or not the
workout, restructuring or transaction contemplated thereby is consummated) and
(ii) the enforcement of this Section 11.03; (c) all transfer, stamp, documentary
or other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any of the other Credit
Documents or any other document referred to herein or therein (or any amendments
or modifications thereof) and all costs, expenses, taxes, assessments and other
charges incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated by any Security Document or any
other document referred to therein; and (d) all costs, expenses and other
charges in respect of title insurance procured with respect to the Liens created
pursuant to the Mortgages.
The Company hereby agrees to indemnify each Agent and each
Lender and their respective directors, officers, employees, attorneys and agents
from, and hold each of them harmless against, any and all losses, liabilities,
claims, damages or expenses incurred by any of them (including, without
limitation, any and all losses, liabilities, claims, damages or expenses
incurred by any Agent to any Lender, whether or not any Agent or any Lender is a
party thereto) arising out of or by reason of the negotiation, execution,
delivery, consummation and administration of this Agreement or any investigation
or litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to the extensions of credit hereunder
or any actual or proposed use by the Company or any of its Subsidiaries of the
proceeds of any of the extensions of credit hereunder, including, without
limitation, the Transactions and the reasonable fees and disbursements of
counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims,
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damages or expenses incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). Without limiting the generality of
the foregoing, the Company will indemnify each Agent and each Lender from, and
hold each Agent and each Lender harmless against, any losses, liabilities,
claims, damages or expenses described in the preceding sentence (including any
Lien filed against any Property covered by the Mortgages in favor of any
governmental entity, but excluding, as provided in the preceding sentence, any
loss, liability, claim, damage or expense incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified) arising under
any Environmental Law as a result of the past, present or future operations of
the Company or any of its Subsidiaries (or any predecessor in interest to the
Company or any of its Subsidiaries), or the past, present or future condition of
any site or facility owned, operated or leased at any time by the Company or any
of its Subsidiaries (or any such predecessor in interest), or any Release or
threatened Release of any Hazardous Materials at or from any such site or
facility, excluding any such Release or threatened Release that shall occur
during any period when any Agent or any Lender shall be in possession of any
such site or facility following the exercise by any Agent or any Lender of any
of its rights and remedies hereunder or under any of the Security Documents, but
including any such Release or threatened Release occurring during such period
that is a continuation of conditions previously in existence, or of practices
employed by the Company and its Subsidiaries, at such site or facility.
11.04 Amendments, Etc. Except as otherwise expressly provided
in this Agreement, any provision of this Agreement may be modified or
supplemented only by an instrument in writing signed by the Company and the
Majority Lenders, or by the Company and the Administrative Agent acting with the
consent of the Majority Lenders, and any provision of this Agreement may be
waived by the Majority Lenders or by the Administrative Agent acting with the
consent of the Majority Lenders; provided that: (a) no modification, supplement
or waiver shall, unless by an instrument signed by all of the Lenders or by the
Administrative Agent acting with the consent of all of the Lenders: (i)
increase, or extend the term of any of the Commitments, or extend the time or
waive any requirement for the reduction or termination of any of the
Commitments, (ii) extend the date fixed for the payment of principal of or
interest on any Loan, the Reimbursement Obligations or any fee hereunder, (iii)
reduce the amount of any such payment of principal, (iv) reduce the rate at
which interest is payable thereon or any fee is payable hereunder, (v) alter the
rights or obligations of the Company to
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prepay Loans, (vi) alter the manner in which payments or prepayments of
principal, interest or other amounts hereunder shall be applied as between the
Lenders or Types or Classes of Loans, (vii) alter the terms of this Section
11.04, (viii) modify the definition of the term "Majority Lenders", "Majority
Revolving Credit Lenders" or "Majority Term Lenders", or modify in any other
manner the number or percentage of the Lenders required to make any
determinations or waive any rights hereunder or to modify any provision hereof,
or (ix) waive any of the conditions precedent set forth in Section 6.01, 6.02 or
6.03 hereof; and (b) any modification or supplement of Section 10 hereof, or of
any of the rights or duties of any Agent hereunder, shall require the consent of
such Agent.
11.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 Assignments and Participations.
(a) The Company may not assign any of its rights or
obligations hereunder or under the Notes without the prior consent of all of the
Lenders and the Administrative Agent.
(b) Each Lender may assign any of its Loans, its Notes, its
Commitments, and, if such Lender is a Revolving Credit Lender, its Letter of
Credit Interest (but only with the consent of, in the case of its outstanding
Commitments, the Administrative Agent and, in the case of the Revolving Credit
Commitment or a Letter of Credit Interest, the Issuing Bank); provided that:
(i) no such consent by the Administrative Agent
shall be required in the case of any assignment to another
Lender;
(ii) except to the extent the Company and the
Administrative Agent shall otherwise consent, any such partial
assignment (other than to another Lender) shall be in an amount at
least equal to $5,000,000;
(iii) each such assignment by a Lender of its Revolving
Credit Loans, Revolving Credit Note, Revolving Credit Commitment or
Letter of Credit Interest shall be made in such manner so that the same
portion of its Revolving Credit Loans, Revolving Credit Note, Revolving
Credit Commitment and Letter of Credit Interest is assigned to the
respective assignee;
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(iv) each such assignment by a Lender of its Term Loans
or Term Loan Commitment shall be made in such manner so that the same
portion of its Term Loans and Term Loan Commitment is assigned to the
respective assignee; and
(v) upon each such assignment, the assignor and
assignee shall deliver to the Company, the Administrative Agent and the
Issuing Bank a Notice of Assignment in the form of Exhibit G hereto.
Upon execution and delivery by the assignor and the assignee to the Company, the
Administrative Agent and the Issuing Bank of such Notice of Assignment, and upon
consent thereto by the Administrative Agent and the Issuing Bank to the extent
required above, the assignee shall have, to the extent of such assignment
(unless otherwise consented to by the Company, the Administrative Agent and the
Issuing Bank), the obligations, rights and benefits of a Lender hereunder
holding the Commitment(s), Loans and, if applicable, Letter of Credit Interest
(or portions thereof) assigned to it and specified in such Notice of Assignment
(in addition to the Commitment(s), Loans and Letter of Credit Interest, if any,
theretofore held by such assignee) and the assigning Lender shall, to the extent
of such assignment, be released from the Commitment(s) (or portion(s) thereof)
so assigned. Upon each such assignment the assigning Lender shall pay the
Administrative Agent an assignment fee of $3,000.
(c) A Lender may sell or agree to sell to one or more other
Persons (each a "Participant") a participation in all or any part of any Loans
or Letter of Credit Interest held by it, or in its Commitments, provided that
such Participant shall not have any rights or obligations under this Agreement
or any Note or any other Credit Document (the Participant's rights against such
Lender in respect of such participation to be those set forth in the agreements
executed by such Lender in favor of the Participant). All amounts payable by the
Company to any Lender under Section 5 hereof in respect of Loans, Letter of
Credit Interest held by it, and its Commitments, shall be determined as if such
Lender had not sold or agreed to sell any participations in such Loans, Letter
of Credit Interest and Commitments, and as if such Lender were funding each of
such Loan, Letter of Credit Interest and Commitments in the same way that it is
funding the portion of such Loan, Letter of Credit Interest and Commitments in
which no participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Credit Document except that such Lender may
agree with the Participant that it will not, without the consent of the
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Participant, agree to (i) increase or extend the term of such Lender's related
Commitment, (ii) extend the date fixed for the payment of principal of or
interest on the related Loan or Loans, Reimbursement Obligations or any portion
of any fee hereunder payable to the Participant, (iii) reduce the amount of any
such payment of principal, (iv) reduce the rate at which interest is payable
thereon, or any fee hereunder payable to the Participant, to a level below the
rate at which the Participant is entitled to receive such interest or fee or (v)
consent to any modification, supplement or waiver hereof or of any of the other
Credit Documents to the extent that the same, under Section 10.09 or 11.04
hereof, requires the consent of each Lender.
(d) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 11.06, any Lender may
(without notice to the Company, the Administrative Agent or any other Lender and
without payment of any fee) (i) assign and pledge all or any portion of its
Loans and its Notes to any Federal Reserve Bank as collateral security pursuant
to Regulation A and any Operating Circular issued by such Federal Reserve Bank
and (ii) assign all or any portion of its rights under this Agreement and its
Loans and its Notes to an affiliate. No such assignment shall release the
assigning Lender from its obligations hereunder.
(e) A Lender may furnish any information concerning the
Company or any of its Subsidiaries in the possession of such Lender from time to
time to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 11.12(b) hereof.
(f) Anything in this Section 11.06 to the contrary
notwithstanding, no Lender may assign or participate any interest in any Loan or
Reimbursement Obligation held by it hereunder to the Company or any of its
Affiliates or Subsidiaries without the prior consent of each Lender.
(g) At the request of any Lender that is not a U.S. Person and
is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, the
Company shall maintain, or cause to be maintained, a register (the "Register")
that, at the request of the Company, shall be kept by the Administrative Agent
on behalf of the Company at no charge to the Company at the address to which
notices to the Administrative Agent are to be sent hereunder, on which it enters
the name of such Lender as the registered owner of each Registered Loan held by
such Lender. A Registered Loan (and the Registered Note, if any, evidencing the
same) may be assigned or otherwise transferred in whole or in
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part by registration of such assignment or transfer on the Register (and each
Registered Note shall expressly so provide). Any assignment or transfer of all
or part of such Loan (and the Registered Note, if any, evidencing the same) may
be effected by registration of such assignment or transfer on the Register,
together with the surrender of the Registered Note, if any, evidencing the same
duly endorsed by (or accompanied by a written instrument of assignment or
transfer duly executed by) the holder of such Registered Note, whereupon, at the
request of the designated assignee(s) or transferee(s), one or more new
Registered Notes in the same aggregate principal amount shall be issued to the
designated assignee(s) or transferee(s). Prior to the registration of assignment
or transfer of any Registered Loan (and the Registered Note, if any, evidencing
the same), the Company shall treat the Person in whose name such Loan (and the
Registered Note, if any, evidencing the same) is registered as the owner thereof
for the purpose of receiving all payments thereon and for all other purposes,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Company and any Lender that is a Registered Holder at any
reasonable time upon reasonable prior notice.
11.07 Survival. The obligations of the Company under Sections
5.01, 5.05, 5.06, 5.07 and 11.03 hereof, and the obligations of the Lenders
under Section 10.05 hereof, shall survive the repayment of the Loans and
Reimbursement Obligations and the termination of the Commitments and, in the
case of any Lender that may assign any interest in its Commitments, Loans or
Letter of Credit Interest hereunder, shall survive the making of such
assignment, notwithstanding that such assigning Lender may cease to be a
"Lender" hereunder. In addition, each representation and warranty made, or
deemed to be made by a notice of any extension of credit (whether by means of a
Loan or a Letter of Credit), herein or pursuant hereto shall survive the making
of such representation and warranty, and no Lender shall be deemed to have
waived, by reason of making any extension of credit hereunder (whether by means
of a Loan or a Letter of Credit), any Default that may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that such Lender or the Administrative Agent may have had notice
or knowledge or reason to believe that such representation or warranty was false
or misleading at the time such extension of credit was made.
11.08 Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
Credit Agreement
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11.09 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
11.10 Governing Law; Submission to Jurisdiction. This
Agreement and the Notes shall be governed by, and construed in
accordance with, the law of the State of New York. The Company
hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and
of the Supreme Court of the State of New York sitting in New York
County (including its Appellate Division), and of any other
appellate court in the State of New York, for the purposes of all
legal proceedings arising out of or relating to this Agreement or
the transactions contemplated hereby. The Company hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any objection that it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
11.11 Waiver of Jury Trial. EACH OF THE COMPANY, THE AGENTS
AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
11.12 Treatment of Certain Information;
Confidentiality.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and the Company hereby authorizes each Lender to share
any information delivered to such Lender by the Company and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such subsidiary or affiliate, it being
understood that any such subsidiary or affiliate receiving such information
shall be bound by the provisions of paragraph (b) below as if it were a Lender
hereunder. Such authorization shall survive the repayment of the Loans and
Reimbursement Obligations and the termination of the Commitments.
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(b) Each Lender and each Agent agrees (on behalf of itself and
each of its affiliates, directors, officers, employees and representatives) to
use reasonable precautions to keep confidential, in accordance with their
customary procedures for handling confidential information of the same nature
and in accordance with safe and sound banking practices, any non-public
information supplied to it by the Company pursuant to this Agreement that is
identified by the Company as being confidential at the time the same is
delivered to the Lenders or the Agents, provided that nothing herein shall limit
the disclosure of any such information (i) after such information shall have
become public (other than through a violation of this Section 11.12), (ii) to
the extent required by statute, rule, regulation or judicial process, (iii) to
counsel for any of the Lenders or the Administrative Agent, (iv) to bank
examiners (or any other regulatory authority having jurisdiction over any Lender
or any Agent), or to auditors or accountants, (v) to any Agent or any other
Lender (or to Chase Securities, Inc.), (vi) in connection with any litigation to
which any one or more of the Lenders or the Agents is a party, or in connection
with the enforcement of rights or remedies hereunder or under any other Credit
Document, (vii) to a subsidiary or affiliate of such Lender as provided in
paragraph (a) above or (viii) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or prospective
assignee or participant) first executes and delivers to the respective Lender a
Confidentiality Agreement substantially in the form of Exhibit F hereto (or
executes and delivers to such Lender an acknowledgement to the effect that it is
bound by the provisions of this Section 11.12(b), which acknowledgement may be
included as part of the respective assignment or participation agreement
pursuant to which such assignee or participant acquires an interest in the Loans
or Letter of Credit Interest hereunder); provided, further, that in no event
shall any Lender or any Agent be obligated or required to return any materials
furnished by the Company. The obligations of any assignee that has executed a
Confidentiality Agreement in the form of Exhibit F hereto shall be superseded by
this Section 11.12 upon the date upon which such assignee becomes a Lender
hereunder pursuant to Section 11.06(b) hereof.
Credit Agreement
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed and delivered as of the day and year first above
written.
AEP INDUSTRIES INC.
By_________________________
Title:
Address for Notices:
125 Phillips Avenue
South Hackensack, New Jersey
07606-1546
Attention: Paul M. Feeney
Executive Vice President -
Finance
Telecopier No.: (201) 807-2447
Telephone No.: (201) 807-2330
with a copy to:
Paul Gelbard, Esq.
Bachner, Tally, Polevoy & Micher
380 Madison Avenue
New York, New York 10017-2590
Telecopier No.: (212) 682-5729
Telephone No.: (212) 687-7000
Credit Agreement
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LENDERS
Revolving Credit Commitment THE CHASE MANHATTAN BANK
$15,000,000 (NATIONAL ASSOCIATION)
Term Loan Commitment
$55,000,000
By_________________________
Title:
Lending Office for all Loans:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Address for Notices:
c/o Chase National Corporate
Services, Inc.
Heights Plaza, 3rd Floor
777 Terrace Avenue
Hasbrouck Heights, New Jersey
07604
Attention: Michele Gordon
Telecopier No.: (201) 288-8231
Telephone No.: (201) 393-7268
Credit Agreement
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Revolving Credit Commitment MELLON BANK, N.A.
$15,000,000
Term Loan Commitment
$55,000,000
By_________________________
Title:
Lending Offices:
Mellon Bank, N.A.
610 West Germantown Pike
Suite 200
Plymouth Meeting, Pennsylvania 19462
Attention: G. Richard Bertolet
First Vice President
Office for Documentation
and Payments:
Loan Administration AIM 199-5220
701 Market Street
P.O. Box 7899
Philadelphia, Pennsylvania
19101-7899
Address for Notices:
Mellon Financial Services
Raritan Plaza I, Raritan Center
Edison, New Jersey 08837
Attention: Douglas Graham
Vice President
Telecopier No.: (908) 225-4820
Telephone No.: (908) 225-4795
Credit Agreement
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ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By_________________________
Title:
Address for Notices to
Chase as Administrative Agent:
The Chase Manhattan Bank
(National Association)
4 Chase Metrotech Center-13th
Floor
Brooklyn, New York 11245
Attention: New York Agency
Telecopier No.: (718) 242-6910
Telephone No.: (718) 242-7979
Credit Agreement
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DOCUMENTATION AGENT
MELLON BANK, N.A.,
as Documentation Agent
By_________________________
Title:
Address for Notices
as Documentation Agent:
Mellon Bank, N.A.
610 West Germantown Pike
Suite 200
Plymouth Meeting, Pennsylvania 19462
Attention: G. Richard Bertolet
First Vice President
Telecopier No.: (610) 941-4136
Telephone No.: (610) 941-4187
with copies to:
Mellon Financial Services
Raritan Plaza I, Raritan Center
Edison, New Jersey 08837
Attention: Douglas Graham
Vice President
Telecopier No.: (908) 225-4820
Telephone No.: (908) 225-4795
Credit Agreement
<PAGE>
EXHIBIT A-1
[Form of Revolving Credit Note]
PROMISSORY NOTE
$_______________ August __, 1995
New York, New York
FOR VALUE RECEIVED, AEP INDUSTRIES INC., a Delaware
corporation (the "Company"), hereby promises to pay to __________________ (the
"Lender") [or registered assigns]1, for account of its respective Applicable
Lending Offices provided for by the Credit Agreement referred to below, at the
principal office of The Chase Manhattan Bank (National Association) at 1 Chase
Manhattan Plaza, New York, New York 10081, the principal sum of _______________
Dollars (or such lesser amount as shall equal the aggregate unpaid principal
amount of the Revolving Credit Loans made by the Lender to the Company under the
Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Revolving Credit Loan, at such office, in like money and funds, for
the period commencing on the date of such Revolving Credit Loan until such
Revolving Credit Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
Notwithstanding anything contained in this Note or the Credit
Agreement to the contrary, in the event that, for any reason whatsoever, the
Tender Offer Closing Date (as defined in the Credit Agreement) shall not occur
on or prior to the date 60 days after the date hereof, the principal of and
interest on the Revolving Credit Loans made by the Lender to the Company under
the Credit Agreement, and all other amounts payable to the Lender under the
Credit Agreement, shall be due and payable on such date.
[This Note and the Loans evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the register
maintained for such purpose by or on behalf of the Company as provided in
Section 11.06(g) of the Credit Agreement.]
The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Revolving Credit Loan made by the Lender to the
Company, and each payment made on account of the principal thereof, shall be
recorded by the Lender
--------
1 Bracketed language to be inserted into Registered Notes.
Revolving Credit Note
<PAGE>
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on its books and, prior to any transfer of this Note, endorsed by the Lender on
the schedule attached hereto or any continuation thereof, provided that the
failure of the Lender to make any such recordation or endorsement shall not
affect the obligations of the Company to make a payment when due of any amount
owing under the Credit Agreement or hereunder in respect of the Revolving Credit
Loans made by the Lender.
This Note is one of the Revolving Credit Notes [(constituting
a Registered Note)] referred to in the Credit Agreement dated as of August 3,
1995 (as modified and supplemented and in effect from time to time, the "Credit
Agreement") between the Company, the lenders party thereto (including the
Lender), The Chase Manhattan Bank (National Association), as Administrative
Agent and Mellon Bank, N.A., as Documentation Agent, and evidences Revolving
Credit Loans made by the Lender thereunder. Terms used but not defined in this
Note have the respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for prepayments
of Loans upon the terms and conditions specified therein.
Except as permitted by Section 11.06 of the Credit Agreement,
this Note may not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance
with, the law of the State of New York.
AEP INDUSTRIES INC.
By_________________________
Title:
Revolving Credit Note
<PAGE>
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SCHEDULE OF REVOLVING CREDIT LOANS
This Note evidences Revolving Credit Loans made, Continued or
Converted under the within-described Credit Agreement to the Company, on the
dates, in the principal amounts, of the Types, bearing interest at the rates and
having Interest Periods (if applicable) of the durations set forth below,
subject to the payments, Continuations, Conversions and prepayments of principal
set forth below:
Amount
Date Prin- Paid,
Made, cipal Duration Prepaid, Unpaid
Continued Amount Type of Continued Prin-
or of of Interest Interest or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made by
--------- ------ ---- -------- -------- --------- ------ --------
Revolving Credit Note
<PAGE>
EXHIBIT A-2
[Form of Term Loan Note]
PROMISSORY NOTE
$_______________ August __, 1995
New York, New York
FOR VALUE RECEIVED, AEP INDUSTRIES INC., a Delaware
corporation (the "Company"), hereby promises to pay to __________________ (the
"Lender") [or registered assigns]2, for account of its respective Applicable
Lending Offices provided for by the Credit Agreement referred to below, at the
principal office of The Chase Manhattan Bank (National Association) at 1 Chase
Manhattan Plaza, New York, New York 10081, the principal sum of _______________
Dollars (or such lesser amount as shall equal the aggregate unpaid principal
amount of the Term Loans made by the Lender to the Company under the Credit
Agreement), in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each
such Term Loan, at such office, in like money and funds, for the period
commencing on the date of such Term Loan until such Term Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
Notwithstanding anything contained in this Note or the Credit
Agreement to the contrary, in the event that, for any reason whatsoever, the
Tender Offer Closing Date (as defined in the Credit Agreement) shall not occur
on or prior to the date 60 days after the date hereof, the principal of and
interest on the Term Loans made by the Lender to the Company under the Credit
Agreement, and all other amounts payable to the Lender under the Credit
Agreement, shall be due and payable on such date.
[This Note and the Loans evidenced hereby may be transferred
in whole or in part only by registration of such transfer on the register
maintained for such purpose by or on behalf of the Company as provided in
Section 11.06(g) of the Credit Agreement.]
The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Term Loan made by the Lender to the Company, and
each payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, endorsed by the
Lender
--------
2 Bracketed language to be inserted into Registered Notes.
Term Loan Note
<PAGE>
- 2 -
on the schedule attached hereto or any continuation thereof, provided that the
failure of the Lender to make any such recordation or endorsement shall not
affect the obligations of the Company to make a payment when due of any amount
owing under the Credit Agreement or hereunder in respect of the Term Loans made
by the Lender.
This Note is one of the Term Loan Notes [(constituting a
Registered Note)] referred to in the Credit Agreement dated as of August 3, 1995
(as modified and supplemented and in effect from time to time, the "Credit
Agreement") between the Company, the lenders party thereto (including the
Lender), The Chase Manhattan Bank (National Association), as Administrative
Agent and Mellon Bank, N.A., as Documentation Agent, and evidences Term Loans
made by the Lender thereunder. Terms used but not defined in this Note have the
respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for prepayments
of Term Loans upon the terms and conditions specified therein.
Except as permitted by Section 11.06 of the Credit Agreement,
this Note may not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance
with, the law of the State of New York.
AEP INDUSTRIES INC.
By_________________________
Title:
Term Loan Note
<PAGE>
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SCHEDULE OF TERM LOANS
This Note evidences Term Loans made, Continued or Converted
under the within-described Credit Agreement to the Company, on the dates, in the
principal amounts, of the Types, bearing interest at the rates and having
Interest Periods (if applicable) of the durations set forth below, subject to
the payments, Continuations, Conversions and prepayments of principal set forth
below:
Amount
Date Prin- Paid,
Made, cipal Duration Prepaid, Unpaid
Continued Amount Type of Continued Prin-
or of of Interest Interest or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made by
--------- ------ ---- -------- -------- --------- ------ --------
Term Loan Note
<PAGE>
EXHIBIT B
[Form of Borrowing Base Certificate]
BORROWING BASE CERTIFICATE
The undersigned hereby certifies that he or she is an officer
of AEP Industries Inc., a Delaware corporation (the "Company"), and, as such, is
authorized to execute this Certificate on behalf of the Company, and, in
accordance with the terms of the Credit Agreement dated as of August 3, 1995
between the Company, certain lenders party thereto, The Chase Manhattan Bank
(National Association), as Administrative Agent and Mellon Bank, N.A., as
Documentation Agent (as amended and in effect from time to time, the "Credit
Agreement") and further certifies that:
BORROWING BASE:
Total Accounts Receivable: ______________
Less:
A/R over 90 days from invoice ______________
Non-domestic, non-insured A/R ______________
Government ______________
> 60 days dating (uninsured) ______________
Other ineligible A/R (as set
forth in the Credit Agreement) ______________
*Eligible Accounts Receivable ______________
Accounts Receivable Availability (85% of Eligible
Accounts Receivables) 1._______________
Total Inventory: ______________
Less:
Work-in-Process _____________
Non-U.S. Inventory ______________
*Eligible Inventory ______________
Inventory Availability (50% of Eligible Inventory): 2._______________
100% of amounts in collateral accounts under
the Security Documents: 3._______________
Borrowing Base Certificate
<PAGE>
- 2 -
TOTAL BORROWING BASE (Sum of line 1, 2 and 3) 4._______________
R/C Principal Outstanding: 5._______________
Undrawn Stated Amount of Outstanding Letters
of Credit: 6._______________
R/C Availability (Lesser of $30,000,000 or line
4 minus the sum of lines 5 and 6): 7._______________
The undersigned Company further certifies that all of the representations and
warranties contained in the Credit Agreement are true and correct as of the date
hereof and that no Default (as defined in the Credit Agreement) has occurred and
is continuing.
AEP INDUSTRIES INC.
By:____________________________
Its:____________________________
Date:__________________________
Borrowing Base Certificate
<PAGE>
EXHIBIT C
[Form of Security Agreement]
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of August 3, 1995 between AEP
INDUSTRIES INC., a corporation duly organized and validly existing under the
laws of the State of Delaware (the "Company"); and THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION), as administrative agent for the lenders or other
financial institutions or entities party, as lenders, to the Credit Agreement
referred to below (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
The Company, certain lenders, the Administrative Agent and
Mellon Bank, N.A. as the Documentation Agent are parties to a Credit Agreement
dated as of August 3, 1995 (as modified and supplemented and in effect from time
to time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit (by making of loans and issuing letters of
credit) to be made by said lenders to the Company in an aggregate principal or
face amount not exceeding $140,000,000. In addition, the Company may from time
to time be obligated to one or more of said lenders in respect of Interest Rate
Protection Agreements entered into pursuant to Section 8.12 of the Credit
Agreement (such obligations being herein referred to as the "Interest Rate
Protection Obligations").
To induce said lenders to enter into the Credit Agreement and
to extend credit thereunder and to extend credit to the Company that would
constitute Interest Rate Protection Obligations, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company has agreed to pledge and grant a security interest in the Collateral (as
hereinafter defined) as security for the Secured Obligations (as so defined).
Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit
Agreement are used herein as defined therein. In addition, as
used herein:
"Accounts" shall have the meaning ascribed thereto in
Section 3(d) hereof.
"Collateral" shall have the meaning ascribed thereto in
Section 3 hereof.
Security Agreement
<PAGE>
- 2 -
"Collateral Account" shall have the meaning ascribed
thereto in Section 4.01 hereof.
"Copyright Collateral" shall mean all Copyrights, whether now
owned or hereafter acquired by the Company, including each Copyright
identified in Annex 2 hereto.
"Copyrights" shall mean all copyrights, copyright
registrations and applications for copyright registrations, including,
without limitation, all renewals and extensions thereof, the right to
recover for all past, present and future infringements thereof, and all
other rights of any kind whatsoever accruing thereunder or pertaining
thereto.
"Documents" shall have the meaning ascribed thereto in
Section 3(j) hereof.
"Equipment" shall have the meaning ascribed thereto in
Section 3(h) hereof.
"Instruments" shall have the meaning ascribed thereto
in Section 3(e) hereof.
"Intellectual Property" shall mean, collectively, all
Copyright Collateral, all Patent Collateral and all Trademark
Collateral, together with (a) all inventions, processes, production
methods, proprietary information, know-how and trade secrets; (b) all
licenses or user or other agreements granted to the Company with
respect to any of the foregoing, in each case whether now or hereafter
owned or used including, without limitation, the licenses or other
agreements with respect to the Copyright Collateral, the Patent
Collateral or the Trademark Collateral, listed in Annex 5 hereto; (c)
all information, customer lists, identification of suppliers, data,
plans, blueprints, specifications, designs, drawings, recorded
knowledge, surveys, engineering reports, test reports, manuals,
materials standards, processing standards, performance standards,
catalogs, computer and automatic machinery software and programs; (d)
all field repair data, sales data and other information relating to
sales or service of products now or hereafter manufactured; (e) all
accounting information and all media in which or on which any
information or knowledge or data or records may be recorded or stored
and all computer programs used for the compilation or printout of such
information, knowledge, records or data; and (f) all licenses,
consents, permits, variances,
Security Agreement
<PAGE>
- 3 -
certifications and approvals of governmental agencies now or
hereafter held by the Company.
"Inventory" shall have the meaning ascribed thereto in
Section 3(f) hereof.
"Issuers" shall mean, collectively, the respective
corporations identified on Annex 1 hereto under the caption "Issuer".
"Motor Vehicles" shall mean motor vehicles, tractors, trailers
and other like property, whether or not the title thereto is governed
by a certificate of title or ownership.
"Patent Collateral" shall mean all Patents, whether now owned
or hereafter acquired by the Company, including each Patent identified
in Annex 3 hereto.
"Patents" shall mean all patents and patent applications,
including, without limitation, the inventions and improvements
described and claimed therein together with the reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof,
all income, royalties, damages and payments now or hereafter due and/or
payable under and with respect thereto, including, without limitation,
damages and payments for past or future infringements thereof, the
right to sue for past, present and future infringements thereof, and
all rights corresponding thereto throughout the world.
"Pledged Stock" shall have the meaning ascribed thereto
in Section 3(a) hereof.
"Secured Obligations" shall mean, collectively, (a) the
principal of and interest on the Loans made by the Lenders to, and the
Note(s) held by each Lender of, the Company and all other amounts from
time to time owing to the Lenders or the Agents by the Company under
the Credit Documents including, without limitation, all Reimbursement
Obligations and interest thereon, (b) all amounts owing by the Company
to one or more of the Lenders in respect of Interest Rate Protection
Obligations and (c) all obligations of the Company to the Lenders and
the Administrative Agent hereunder.
"Stock Collateral" shall mean, collectively, the Collateral
described in clauses (a) through (c) of Section 3 hereof and the
proceeds of and to any such property and, to
Security Agreement
<PAGE>
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the extent related to any such property or such proceeds, all books,
correspondence, credit files, records, invoices and other papers.
"Trademark Collateral" shall mean all Trademarks, whether now
owned or hereafter acquired by the Company, including each Trademark
identified in Annex 4 hereto. Notwithstanding the foregoing, the
Trademark Collateral does not and shall not include any Trademark that
would be rendered invalid, abandoned, void or unenforceable by reason
of its being included as part of the Trademark Collateral.
"Trademarks" shall mean all trade names, trademarks and
service marks, logos, trademark and service mark registrations, and
applications for trademark and service mark registrations, including,
without limitation, all renewals of trademark and service mark
registrations, all rights corresponding thereto throughout the world,
the right to recover for all past, present and future infringements
thereof, all other rights of any kind whatsoever accruing thereunder or
pertaining thereto, together, in each case, with the product lines and
goodwill of the business connected with the use of, and symbolized by,
each such trade name, trademark and service mark.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the State of New York.
Section 2. Representations and Warranties. The
Company represents and warrants to the Lenders and the
Administrative Agent that:
(a) The Company is the sole beneficial owner of the Collateral
and no Lien exists or will exist upon the Collateral at any time (and
no right or option to acquire the same exists in favor of any other
Person), except for Liens permitted under Section 8.06 of the Credit
Agreement and except for the pledge and security interest in favor of
the Administrative Agent for the benefit of the Lenders created or
provided for herein, which pledge and security interest constitute a
first priority perfected pledge and security interest in and to all of
the Collateral (other than Intellectual Property registered or
otherwise located outside of the United States of America).
Security Agreement
<PAGE>
- 5 -
(b) The Pledged Stock represented by the certificates
identified in Annex 1 hereto is, and all other Pledged Stock in which
the Company shall hereafter grant a security interest pursuant to
Section 3 hereof will be, duly authorized, validly existing, fully paid
and non-assessable and none of such Pledged Stock is or will be subject
to any contractual restriction, or any restriction under the charter or
by-laws of the respective Issuer of such Pledged Stock, upon the
transfer of such Pledged Stock (except for any such restriction
contained herein or in the Credit Agreement).
(c) The Pledged Stock represented by the certificates
identified in Annex 1 hereto constitutes all of the issued and
outstanding shares of capital stock of any class of the Issuers
beneficially owned by the Company on the date hereof (whether or not
registered in the name of the Company) and said Annex 1 correctly
identifies, as at the date hereof, the respective Issuers of such
Pledged Stock, the respective class and par value of the shares
comprising such Pledged Stock and the respective number of shares (and
registered owners thereof) represented by each such certificate.
(d) Annexes 2, 3 and 4 hereto, respectively, set forth a
complete and correct list of all Copyrights, Patents and Trademarks
owned by the Company on the date hereof; except pursuant to licenses
and other user agreements entered into by the Company in the ordinary
course of business, that are listed in Annex 5 hereto, the Company owns
and possesses the right to use, and has done nothing to authorize or
enable any other Person to use, any Copyright, Patent or Trademark
listed in said Annexes 2, 3 and 4, and all registrations listed in said
Annexes 2, 3 and 4 are valid and in full force and effect; except as
may be set forth in said Annex 5, the Company owns and possesses the
right to use all Copyrights, Patents and Trademarks.
(e) Annex 5 hereto sets forth a complete and correct list of
all licenses and other user agreements included in the Intellectual
Property on the date hereof.
(f) To the Company's knowledge, (i) except as set forth in
Annex 5 hereto, there is no violation by others of any right of the
Company with respect to any Copyright, Patent or Trademark listed in
Annexes 2, 3 and 4 hereto, respectively, and (ii) the Company is not
infringing in any respect upon any Copyright, Patent or Trademark of
any other Person; and no proceedings have been instituted or are
Security Agreement
<PAGE>
- 6 -
pending against the Company or, to the Company's knowledge, threatened,
and no claim against the Company has been received by the Company,
alleging any such violation, except as may be set forth in said Annex
5.
(g) The Company does not own any Trademarks registered in the
United States of America to which the last sentence of the definition
of Trademark Collateral applies.
(h) Any goods now or hereafter produced by the Company or any
of its Subsidiaries included in the Collateral have been and will be
produced in compliance with the requirements of the Fair Labor
Standards Act, as amended.
Section 3. Collateral. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, the Company hereby pledges and grants to
the Administrative Agent, for the benefit of the Lenders and the Agents as
hereinafter provided, a security interest in all of the Company's right, title
and interest in the following property, whether now owned by the Company or
hereafter acquired and whether now existing or hereafter coming into existence
(all being collectively referred to herein as "Collateral"):
(a) the shares of stock of the Issuers represented by the
certificates identified in Annex 1 hereto and all other shares of
capital stock of whatever class of the Issuers, now or hereafter owned
by the Company, in each case together with the certificates evidencing
the same (collectively, the "Pledged Stock");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Stock, or resulting
from a split-up, revision, reclassification or other like change of the
Pledged Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders of, or
otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of the Company under any
provision prohibiting such action hereunder or under the Credit
Agreement, in the event of any consolidation or merger in which an
Issuer is not the surviving corporation, all shares of each class of
the
Security Agreement
<PAGE>
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capital stock of the successor corporation (unless such successor
corporation is the Company itself) formed by or resulting from such
consolidation or merger (the Pledged Stock, together with all other
certificates, shares, securities, properties or moneys as may from time
to time be pledged hereunder pursuant to clause (a) or (b) above and
this clause (c) being herein collectively called the "Stock
Collateral");
(d) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of the Company constituting any right to
the payment of money, including (but not limited to) all moneys due and
to become due to the Company in respect of any loans or advances or for
Inventory or Equipment or other goods sold or leased or for services
rendered, all moneys due and to become due to the Company under any
guarantee (including a letter of credit) of the purchase price of
Inventory or Equipment sold by the Company and all tax refunds (such
accounts, general intangibles and moneys due and to become due being
herein called collectively "Accounts");
(e) all instruments, chattel paper or letters of credit (each
as defined in the Uniform Commercial Code) of the Company evidencing,
representing, arising from or existing in respect of, relating to,
securing or otherwise supporting the payment of, any of the Accounts,
including (but not limited to) promissory notes, drafts, bills of
exchange and trade acceptances (herein collectively called
"Instruments");
(f) all inventory (as defined in the Uniform Commercial Code)
of the Company, including Motor Vehicles held by the Company for lease
(including lease to Subsidiaries of the Company), fuel, tires and other
spare parts, all goods obtained by the Company in exchange for such
inventory, and any products made or processed from such inventory
including all substances, if any, commingled therewith or added thereto
(herein collectively called "Inventory");
(g) all Intellectual Property and all other accounts or
general intangibles not constituting Intellectual Property
or Accounts;
(h) all equipment (as defined in the Uniform
Commercial Code) of the Company, including all Motor
Vehicles (herein collectively called "Equipment");
Security Agreement
<PAGE>
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(i) each contract and other agreement of the Company
relating to the sale or other disposition of Inventory or
Equipment;
(j) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of the Company covering, evidencing
or representing Inventory or Equipment (herein collectively called
"Documents");
(k) all rights, claims and benefits of the Company against any
Person arising out of, relating to or in connection with Inventory or
Equipment purchased by the Company, including, without limitation, any
such rights, claims or benefits against any Person storing or
transporting such Inventory or Equipment;
(l) the balance from time to time in the Collateral
Account; and
(m) all other tangible and intangible personal property and
fixtures of the Company, including, without limitation, all proceeds,
products, offspring, accessions, rents, profits, income, benefits,
substitutions and replacements of and to any of the property of the
Company described in the preceding clauses of this Section 3
(including, without limitation, any proceeds of insurance thereon and
all causes of action, claims and warranties now or hereafter held by
the Company in respect of any of the items listed above) and, to the
extent related to any property described in said clauses or such
proceeds, products and accessions, all books, correspondence, credit
files, records, invoices and other papers, including without limitation
all tapes, cards, computer runs and other papers and documents in the
possession or under the control of the Company or any computer bureau
or service company from time to time acting for the Company.
Section 4. Cash Proceeds of Collateral.
4.01 Collateral Account. There is hereby established with the
Administrative Agent a cash collateral account (the "Collateral Account") in the
name and under the control of the Administrative Agent into which there shall be
deposited from time to time the cash proceeds of any of the Collateral
(including proceeds of insurance thereon) required to be delivered to the
Administrative Agent pursuant to this Agreement or the Credit Agreement and into
which the Company may from time
Security Agreement
<PAGE>
- 9 -
to time deposit any additional amounts that it wishes to pledge to the
Administrative Agent for the benefit of the Lenders as additional collateral
security hereunder. The balance from time to time in the Collateral Account
shall constitute part of the Collateral hereunder and shall not constitute
payment of the Secured Obligations until applied as hereinafter provided. Except
as expressly provided in the next sentence or in Section 2.10(b) of the Credit
Agreement, the Administrative Agent shall remit the collected balance
outstanding to the credit of the Collateral Account to or upon the order of the
Company as the Company shall from time to time instruct. However, at any time
following the occurrence and during the continuance of an Event of Default, the
Administrative Agent may (and, if instructed by the Lenders as specified in
Section 10.03 of the Credit Agreement, shall) in its (or their) discretion apply
or cause to be applied (subject to collection) the balance from time to time
outstanding to the credit of the Collateral Account to the payment of the
Secured Obligations in the manner specified in Section 5.09 hereof. The balance
from time to time in the Collateral Account shall be subject to withdrawal only
as provided herein. Notwithstanding anything in this Agreement or otherwise to
the contrary, any amounts in respect of proceeds of insurance relating to any of
the Collateral shall be available to be withdrawn by the Company as contemplated
by Section 2.10(b) of the Credit Agreement or as otherwise approved by the
Agents.
4.02 Proceeds of Accounts. At any time after the occurrence
and during the continuance of an Event of Default, the Company shall, upon the
request of the Administrative Agent (if instructed by the Lenders as specified
in Section 10.03 of the Credit Agreement), instruct all account debtors and
other Persons obligated in respect of all Accounts to make all payments in
respect of the Accounts either (a) directly to the Administrative Agent (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the control of the Administrative Agent) or (b) to one or
more other banks in the United States of America (by instructing that such
payments be remitted to a post office box which shall be in the name and under
the control of the Administrative Agent) under arrangements, in form and
substance satisfactory to the Administrative Agent pursuant to which the Company
shall have irrevocably instructed such other bank (and such other bank shall
have agreed) to remit all proceeds of such payments directly to the
Administrative Agent for deposit into the Collateral Account. All payments made
to the Administrative Agent, as provided in the preceding sentence, shall be
immediately deposited in the Collateral Account. In addition to the foregoing,
the Company agrees that, at any time after the occurrence and during the
Security Agreement
<PAGE>
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continuance of an Event of Default, if the proceeds of any Collateral hereunder
(including the payments made in respect of Accounts) shall be received by it,
the Company shall, upon the request of the Administrative Agent, as promptly as
possible deposit such proceeds into the Collateral Account. Until so deposited,
all such proceeds shall be held in trust by the Company for and as the property
of the Administrative Agent and shall not be commingled with any other funds or
property of the Company.
4.03 Investment of Balance in Collateral Account. Amounts on
deposit in the Collateral Account shall be invested from time to time in such
Permitted Investments as the Company (or, after the occurrence and during the
continuance of a Default, the Administrative Agent) shall determine, which
Permitted Investments shall be held in the name and be under the control of the
Administrative Agent, provided that at any time after the occurrence and during
the continuance of an Event of Default, the Administrative Agent may (and, if
instructed by the Lenders as specified in Section 10.03 of the Credit Agreement,
shall) in its (or their) discretion at any time and from time to time elect to
liquidate any such Permitted Investments and to apply or cause to be applied the
proceeds thereof to the payment of the Secured Obligations in the manner
specified in Section 5.09 hereof.
4.04 Cover for Letter of Credit Liabilities. Amounts deposited
into the Collateral Account as cover for Letter of Credit Liabilities under the
Credit Agreement pursuant to Section 2.10(g) or Section 9 thereof shall be held
by the Administrative Agent in a separate sub-account (designated "Letter of
Credit Liabilities Sub-Account") and all amounts held in such sub-account shall
constitute collateral security first for the Letter of Credit Liabilities
outstanding from time to time and second for the other Secured Obligations
hereunder.
Section 5. Further Assurances; Remedies. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, the
Company hereby agrees with each Lender and the Administrative Agent as follows:
5.01 Delivery and Other Perfection. The Company shall:
(a) if any of the shares, securities, moneys or
property required to be pledged by the Company under
clauses (a), (b) and (c) of Section 3 hereof are received by
Security Agreement
<PAGE>
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the Company, forthwith either (x) transfer and deliver to the
Administrative Agent such shares or securities so received by the
Company (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock
powers duly executed in blank), all of which thereafter shall be held
by the Administrative Agent, pursuant to the terms of this Agreement,
as part of the Collateral or (y) take such other action as the
Administrative Agent shall deem necessary or appropriate to duly record
the Lien created hereunder in such shares, securities, moneys or
property in said clauses (a), (b) and (c);
(b) deliver and pledge to the Administrative Agent any and all
Instruments, endorsed and/or accompanied by such instruments of
assignment and transfer in such form and substance as the
Administrative Agent may request; provided that so long as no Default
shall have occurred and be continuing, the Company may retain for
collection in the ordinary course any Instruments received by the
Company in the ordinary course of business and the Administrative Agent
shall, promptly upon request of the Company, make appropriate
arrangements for making any Instrument pledged by the Company available
to the Company for purposes of presentation, collection or renewal (any
such arrangement to be effected, to the extent deemed appropriate by
the Administrative Agent, against trust receipt or like document);
(c) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that
may be necessary or desirable (in the judgment of the Administrative
Agent) to create, preserve, perfect or validate the security interest
granted pursuant hereto or to enable the Administrative Agent to
exercise and enforce its rights hereunder with respect to such pledge
and security interest, including, without limitation, causing any or
all of the Stock Collateral to be transferred of record into the name
of the Administrative Agent or its nominee (and the Administrative
Agent agrees that if any Stock Collateral is transferred into its name
or the name of its nominee, the Administrative Agent will thereafter
promptly give to the Company copies of any notices and communications
received by it with respect to the Stock Collateral), provided that
notices to account debtors in respect of any Accounts or Instruments
shall be subject to the provisions of clause (i) below;
Security Agreement
<PAGE>
- 12 -
(d) without limiting the obligations of the Company under
Section 5.04(c) hereof, upon the acquisition after the date hereof by
the Company of any Equipment covered by a certificate of title or
ownership, cause the Administrative Agent to be listed as the
lienholder on such certificate of title and within 120 days of the
acquisition thereof deliver evidence of the same to the Administrative
Agent;
(e) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise mark such books and records in such
manner as the Administrative Agent may reasonably require in order to
reflect the security interests granted by this Agreement;
(f) furnish to the Administrative Agent from time to time
(but, unless a Default shall have occurred and be continuing, no more
frequently than quarterly) statements and schedules further identifying
and describing the Copyright Collateral, the Patent Collateral and the
Trademark Collateral, respectively, and such other reports in
connection with the Copyright Collateral, the Patent Collateral and the
Trademark Collateral, as the Administrative Agent may reasonably
request, all in reasonable detail;
(g) promptly upon request of the Administrative Agent,
following receipt by the Administrative Agent of any statements,
schedules or reports pursuant to clause (f) above, modify this
Agreement by amending Annexes 2, 3 and/or 4 hereto, as the case may be,
to include any Copyright, Patent or Trademark that becomes part of the
Collateral under this Agreement;
(h) permit representatives of the Administrative Agent, upon
reasonable notice, at any time during normal business hours to inspect
and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the Administrative Agent to
be present at the Company's place of business to receive copies of all
communications and remittances relating to the Collateral, and forward
copies of any notices or communications received by the Company with
respect to the Collateral, all in such manner as the Administrative
Agent may require; and
(i) upon the occurrence and during the continuance of any
Default, upon request of the Administrative Agent, promptly notify (and
the Company hereby authorizes the Administrative Agent so to notify)
each account debtor in
Security Agreement
<PAGE>
- 13 -
respect of any Accounts or Instruments that such Collateral has been
assigned to the Administrative Agent hereunder, and that any payments
due or to become due in respect of such Collateral are to be made
directly to the Administrative Agent.
5.02 Other Financing Statements and Liens. Except as otherwise
permitted under Section 8.06 of the Credit Agreement, without the prior written
consent of the Administrative Agent (granted with the authorization of the
Lenders as specified in Section 10.09 of the Credit Agreement), the Company
shall not file or suffer to be on file, or authorize or permit to be filed or to
be on file, in any jurisdiction, any financing statement or like instrument with
respect to the Collateral in which the Administrative Agent is not named as the
sole secured party for the benefit of the Lenders.
5.03 Preservation of Rights. The Administrative Agent shall
not be required to take steps necessary to preserve any rights to any of the
Collateral against prior parties.
5.04 Special Provisions Relating to Certain Collateral.
(a) Stock Collateral.
(i) The Company will cause the Stock Collateral to constitute
at all times 100% of the total number of shares of each class of capital stock
of each Issuer then outstanding.
(ii) So long as no Event of Default shall have occurred and be
continuing, the Company shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral for all
purposes not inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any other instrument or agreement referred to herein or
therein, provided that the Company agrees that it will not vote the Stock
Collateral in any manner that is inconsistent with the terms of this Agreement,
the Credit Agreement, the Notes or any such other instrument or agreement; and
the Administrative Agent shall execute and deliver to the Company or cause to be
executed and delivered to the Company all such proxies, powers of attorney,
dividend and other orders, and all such instruments, without recourse, as the
Company may reasonably request for the purpose of enabling the Company to
exercise the rights and powers that it is entitled to exercise pursuant to this
Section 5.04(a)(ii).
Security Agreement
<PAGE>
- 14 -
(iii) Unless and until an Event of Default has occurred and is
continuing, the Company shall be entitled to receive and retain any dividends on
the Stock Collateral paid in cash out of funds legally available therefor under
the laws of the jurisdiction of incorporation of the Issuer of such Stock
Collateral.
(iv) If any Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not the Administrative
Agent or any Lender exercises any available right to declare any Secured
Obligation due and payable or seeks or pursues any other relief or remedy
available to it under applicable law or under this Agreement, the Credit
Agreement, the Notes or any other agreement relating to such Secured Obligation,
all dividends and other distributions on the Stock Collateral shall be paid
directly to the Administrative Agent and retained by it in the Collateral
Account as part of the Stock Collateral, subject to the terms of this Agreement,
and, if the Administrative Agent shall so request in writing, the Company agrees
to execute and deliver to the Administrative Agent appropriate additional
dividend, distribution and other orders and documents to that end, provided that
if such Event of Default is cured, any such dividend or distribution theretofore
paid to the Administrative Agent shall, upon request of the Company (except to
the extent theretofore applied to the Secured Obligations), be returned by the
Administrative Agent to the Company.
(b) Intellectual Property.
(i) For the purpose of enabling the Administrative Agent to
exercise rights and remedies under Section 5.05 hereof at such time as the
Administrative Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, the Company hereby grants to the
Administrative Agent, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to the
Company) to use, assign, license or sublicense any of the Intellectual Property
now owned or hereafter acquired by the Company, wherever the same may be
located, including in such license reasonable access to all media in which any
of the licensed items may be recorded or stored and to all computer programs
used for the compilation or printout thereof.
(ii) Notwithstanding anything contained herein to the
contrary, but subject to the provisions of Section 8.05(c) of the Credit
Agreement that limit the right of the Company to dispose of its property, so
long as no Event of Default shall have
Security Agreement
<PAGE>
- 15 -
occurred and be continuing, the Company will be permitted to exploit, use,
enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of the
business of the Company. In furtherance of the foregoing, unless an Event of
Default shall have occurred and be continuing the Administrative Agent shall
from time to time, upon the request of the Company, execute and deliver any
instruments, certificates or other documents, in the form so requested, that the
Company shall have certified are appropriate (in its judgment) to allow it to
take any action permitted above (including relinquishment of the license
provided pursuant to clause (i) immediately above as to any specific
Intellectual Property). Further, upon the payment in full of all of the Secured
Obligations and cancellation or termination of the Commitments and Letter of
Credit Liabilities or earlier expiration of this Agreement or release of the
Collateral, the Administrative Agent shall grant back to the Company the license
granted pursuant to clause (i) immediately above. The exercise of rights and
remedies under Section 5.05 hereof by the Administrative Agent shall not
terminate the rights of the holders of any licenses or sublicenses theretofore
granted by the Company in accordance with the first sentence of this clause
(ii).
(c) Motor Vehicles. At any time after the occurrence and
during the continuance of an Event of Default, the Company shall, upon the
request of the Administrative Agent, deliver to the Administrative Agent
originals of the certificates of title or ownership for the Motor Vehicles owned
by it with the Administrative Agent listed as lienholder and take such other
action as the Administrative Agent shall deem appropriate to perfect the
security interest created hereunder in all such Motor Vehicles.
5.05 Events of Default, Etc. During the period during
which an Event of Default shall have occurred and be continuing:
(a) the Company shall, at the request of the Administrative
Agent, assemble the Collateral owned by it at such place or places,
reasonably convenient to both the Administrative Agent and the Company,
designated in its request;
(b) the Administrative Agent may make any reasonable
compromise or settlement deemed desirable with respect to any of the
Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, any of the Collateral;
Security Agreement
<PAGE>
- 16 -
(c) the Administrative Agent shall have all of the rights and
remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code (whether or not said Code is in effect in the
jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted, including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral
as if the Administrative Agent were the sole and absolute owner thereof
(and the Company agrees to take all such action as may be appropriate
to give effect to such right);
(d) the Administrative Agent in its discretion may, in its
name or in the name of the Company or otherwise, demand, sue for,
collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but
shall be under no obligation to do so; and
(e) the Administrative Agent may, upon ten business days'
prior written notice to the Company of the time and place, with respect
to the Collateral or any part thereof that shall then be or shall
thereafter come into the possession, custody or control of the
Administrative Agent, the Lenders or any of their respective agents,
sell, lease, assign or otherwise dispose of all or any part of such
Collateral, at such place or places as the Administrative Agent deems
best, and for cash or for credit or for future delivery (without
thereby assuming any credit risk), at public or private sale, without
demand of performance or notice of intention to effect any such
disposition or of the time or place thereof (except such notice as is
required above or by applicable statute and cannot be waived), and the
Administrative Agent or any Lender or anyone else may be the purchaser,
lessee, assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent permitted by law, at
any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of the Company, any such demand,
notice and right or equity being hereby expressly waived and released.
In the event of any sale, assignment, or other disposition of any of
the Trademark Collateral, the goodwill connected with and symbolized by
the Trademark Collateral subject to such disposition shall
Security Agreement
<PAGE>
- 17 -
be included, and the Company shall supply to the Administrative Agent
or its designee, for inclusion in such sale, assignment or other
disposition, all Intellectual Property relating to such Trademark
Collateral. The Administrative Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed
for the sale, and such sale may be made at any time or place to which
the sale may be so adjourned.
The proceeds of each collection, sale or other disposition under this Section
5.05, including by virtue of the exercise of the license granted to the
Administrative Agent in Section 5.04(b) hereof, shall be applied in accordance
with Section 5.09 hereof.
The Company recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Administrative Agent may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who will
agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Company acknowledges that any such private sales may be at prices and on terms
less favorable to the Administrative Agent than those obtainable through a
public sale without such restrictions, and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to be commercially reasonable
and that the Administrative Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Collateral for the period of
time necessary to permit the respective Issuer or issuer thereof to register it
for public sale.
5.06 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 5.05 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Company shall remain liable for any
deficiency.
5.07 Removals, Etc. Without at least 30 days' prior written
notice to the Administrative Agent, the Company shall not (i) maintain any of
its books and records with respect to the Collateral at any office or maintain
its principal place of business at any place, or permit any Inventory or
Equipment to be located anywhere, other than at the address indicated beneath
the signature of the Company to the Credit Agreement or at one of the locations
identified in Annex 6 hereto or in transit from one of
Security Agreement
<PAGE>
- 18 -
such locations to another or (ii) change its name, or the name under which it
does business, from the name shown on the signature pages hereto.
5.08 Private Sale. The Administrative Agent and the Lenders
shall incur no liability as a result of the sale of the Collateral, or any part
thereof, at any private sale pursuant to Section 5.05 hereof conducted in a
commercially reasonable manner. The Company hereby waives any claims against the
Administrative Agent or any Lender arising by reason of the fact that the price
at which the Collateral may have been sold at such a private sale was less than
the price that might have been obtained at a public sale or was less than the
aggregate amount of the Secured Obligations, even if the Administrative Agent
accepts the first offer received and does not offer the Collateral to more than
one offeree.
5.09 Application of Proceeds. Except as otherwise herein
expressly provided and except as provided below in this Section 5.09, the
proceeds of any collection, sale or other realization of all or any part of the
Collateral pursuant hereto, and any other cash at the time held by the
Administrative Agent under Section 4 hereof or this Section 5, shall be applied
by the Administrative Agent:
First, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Administrative Agent and the
fees and expenses of its agents and counsel, and all expenses incurred
and advances made by the Administrative Agent in connection therewith;
Next, to the payment in full of the Secured Obligations, in
each case equally and ratably in accordance with the respective amounts
thereof then due and owing or as the Lenders holding the same may
otherwise agree; and
Finally, to the payment to the Company, or its successors or
assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining.
Notwithstanding the foregoing, the proceeds of any cash or other amounts held in
the "Letter of Credit Liabilities Sub-Account" of the Collateral Account
pursuant to Section 4.04 hereof shall be applied first to the Letter of Credit
Liabilities outstanding from time to time and second to the other Secured
Obligations in the manner provided above in this Section 5.09.
Security Agreement
<PAGE>
- 19 -
As used in this Section 5, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Company or any issuer of or obligor on
any of the Collateral.
5.10 Attorney-in-Fact. Without limiting any rights or powers
granted by this Agreement to the Administrative Agent while no Event of Default
has occurred and is continuing, upon the occurrence and during the continuance
of any Event of Default the Administrative Agent is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out the provisions
of this Section 5 and taking any action and executing any instruments that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, so long as the
Administrative Agent shall be entitled under this Section 5 to make collections
in respect of the Collateral, the Administrative Agent shall have the right and
power to receive, endorse and collect all checks made payable to the order of
the Company representing any dividend, payment or other distribution in respect
of the Collateral or any part thereof and to give full discharge for the same.
5.11 Perfection. Prior to or concurrently with the execution
and delivery of this Agreement, the Company shall (i) file such financing
statements and other documents in such offices as the Administrative Agent may
request to perfect the security interests granted by Section 3 of this Agreement
and (ii) deliver to the Administrative Agent all certificates identified in
Annex 1 hereto, accompanied by undated stock powers duly executed in blank.
5.12 Termination. When all Secured Obligations shall have been
paid in full and the Commitments of the Lenders under the Credit Agreement and
all Letter of Credit Liabilities shall have expired or been terminated, this
Agreement shall terminate, and the Administrative Agent shall forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the Company and cause
to be released and canceled all licenses and rights referred to in Section
5.04(b) hereof. The Administrative Agent shall also execute and deliver to the
Company upon such termination such Uniform Commercial Code termination
statements, certificates for terminating the Liens on
Security Agreement
<PAGE>
- 20 -
the Motor Vehicles and such other documentation as shall be reasonably requested
by the Company to effect the termination and release of the Liens on the
Collateral.
5.13 Further Assurances. The Company agrees that, from time to
time upon the written request of the Administrative Agent, the Company will
execute and deliver such further documents and do such other acts and things as
the Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
5.14 Release of Motor Vehicles. So long as no Default shall
have occurred and be continuing, upon the request of the Company, the
Administrative Agent shall execute and deliver to the Company such instruments
as the Company shall reasonably request to remove the notation of the
Administrative Agent as lienholder on any certificate of title for any Motor
Vehicle; provided that any such instruments shall be delivered, and the release
effective only upon receipt by the Administrative Agent of a certificate from
the Company stating that the Motor Vehicle the lien on which is to be released
is to be sold or has suffered a casualty loss (with title thereto passing to the
casualty insurance company therefor in settlement of the claim for such loss).
Section 6. Miscellaneous.
6.01 No Waiver. No failure on the part of the Administrative
Agent or any Lender to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Administrative
Agent or any Lender of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
6.02 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telecopied or delivered to the intended
recipient at its "Address for Notices" specified pursuant to Section 11.02 of
the Credit Agreement and shall be deemed to have been given at the times
specified in said Section 11.02.
6.03 Expenses. The Company agrees to reimburse each
of the Lenders and the Administrative Agent for all reasonable
costs and expenses of the Lenders and the Administrative Agent
Security Agreement
<PAGE>
- 21 -
(including, without limitation, the reasonable fees and expenses of legal
counsel) in connection with (i) any Default and any enforcement or collection
proceeding resulting therefrom, including, without limitation, all manner of
participation in or other involvement with (w) performance by the Administrative
Agent of any obligations of the Company in respect of the Collateral that the
Company has failed or refused to perform, (x) bankruptcy, insolvency,
receivership, foreclosure, winding up or liquidation proceedings, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Administrative
Agent in respect thereof, by litigation or otherwise, including expenses of
insurance, (y) judicial or regulatory proceedings and (z) workout, restructuring
or other negotiations or proceedings (whether or not the workout, restructuring
or transaction contemplated thereby is consummated) and (ii) the enforcement of
this Section 6.03, and all such costs and expenses shall be Secured Obligations
entitled to the benefits of the collateral security provided pursuant to Section
3 hereof.
6.04 Amendments, Etc. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by the
Company and the Administrative Agent (with the consent of the Lenders as
specified in Section 10.09 of the Credit Agreement). Any such amendment or
waiver shall be binding upon the Administrative Agent and each Lender, each
holder of any of the Secured Obligations and the Company.
6.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Administrative Agent, the Documentation Agent, the Lenders and each
holder of any of the Secured Obligations, provided, however, that the Company
shall not assign or transfer its rights hereunder without the prior written
consent of the Administrative Agent.
6.06 Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
6.07 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and either of the parties hereto may execute this Agreement by
signing any such counterpart.
Security Agreement
<PAGE>
- 22 -
6.08 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New
York.
6.09 Administrative Agents and Attorneys-in-Fact. The
Administrative Agent may employ agents and attorneys-in-fact in connection
herewith and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it in good faith.
6.10 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(a) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Administrative
Agent and the Lenders in order to carry out the intentions of the parties hereto
as nearly as may be possible and (b) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
Security Agreement
<PAGE>
- 23 -
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed and delivered as of the day and year
first above written.
AEP INDUSTRIES INC.
By _________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By _________________________
Title:
Security Agreement
<PAGE>
ANNEX 1
PLEDGED STOCK
[See Section 2(b) and (c)]
Certificate Registered
Issuer Nos. Owner Number of Shares
------ ----------- ---------- ----------------
None.
Annex 1 to Security Agreement
<PAGE>
ANNEX 2
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
[See Section 2(d)]
Title Date Filed Registration No. Effective Date
---------------------------------------------------------------
None.
Annex 2 to Security Agreement
<PAGE>
ANNEX 3
LIST OF PATENTS AND PATENT APPLICATIONS
[See Section 2(d)]
File Patent Country Registration No. Date
---------------------------------------------------------
None.
Annex 3 to Security Agreement
<PAGE>
ANNEX 4
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
[See Section 2(d)]
U.S. Trademarks
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
AEPLEX 1276979 (R) 5/5/84 (Renewal 5/5/04)
SUNFILM 1458347 (R) 9/22/87 (Renewal 9/22/07)
SHRINKMATE 1474155 (R) 1/26/88 (8&15 Due 1/26/94)
PERFORMANCE 1550145 (R) 8/1/89 (8&15 Due 8/1/95
PLUS
OSC 1498649 (R) 8/2/88 (8&15 Due 8/2/94)
PERFORMANCE 1568369 (R) 11/28/89 (8&15 Due 11/28/95)
PLUS OSC
ONE SIDE CLING 701058 (A) 12/11/87 (Allowed to lapse)
IRT MULCH 1617637 (R) 10/16/90 (8&15 Due 10/16/96)
IRT-76 1622512 (R) 11/13/90 (8&15 Due 11/13/96)
MICRO-SEPTIC 169445 (A) 5/23/91 (Allowed to lapse)
AEP 403968 (A) 6/18/93 (Pending)
AEP INDUSTRIES 404279 (A) 6/17/93 (Pending)
INC. QUALITY-
SERVICE-RELIABILITY
Annex 4 to Security Agreement
<PAGE>
- 2 -
Foreign Trademarks
Application (A) Registration or
Mark Registration (R) Country Filing Date
---------------------------------------------------------------
SUNFILM 1879635 (A) Argentina 5/20/93
SUNFILM 729279 (A) Canada 5/19/93
SUNFILM 51413/93 (A) Japan 5/26/93
SUNFILM 1535835 (A) United 5/19/93
Kingdom
Annex 4 to Security Agreement
<PAGE>
ANNEX 5
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
[See Sections 2(d), (e) and (f)]
2(d) - No exceptions
2(e) - None
2(f) - None
Annex 5 to Security Agreement
<PAGE>
ANNEX 6
LIST OF LOCATIONS
[See Section 5.07]
Annex 6 to Security Agreement
<PAGE>
EXHIBIT D
[Form of Opinion of Counsel to the Company]
__________, 1995
To the Lenders party to the
Credit Agreement referred to
below and The Chase
Manhattan Bank (National
Association), as Administrative
Agent and Mellon Bank, N.A., as
Documentation Agent
Ladies and Gentlemen:
We have acted as counsel to AEP Industries Inc. (the
"Company") in connection with (i) the Credit Agreement (the "Credit Agreement")
dated as of August 3, 1995, between the Company, the lenders party thereto, The
Chase Manhattan Bank (National Association), as Administrative Agent and Mellon
Bank, N.A., as Documentation Agent, providing for extensions of credit to be
made by said lenders to the Company in an aggregate principal or face amount not
exceeding $140,000,000 and (ii) the various other agreements, instruments and
other documents referred to in the next following paragraph. Terms defined in
the Credit Agreement are used herein as defined therein. This opinion letter is
being delivered pursuant to Section 6.01(d) of the Credit Agreement.
In rendering the opinions expressed below, we have examined
the following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) the Notes;
(c) the Security Agreement;
(d) financing statements being executed and delivered
pursuant to Section 6.01 of the Credit Agreement
(collectively, the "Financing Statements"); and
(e) such records of the Company and such other documents
as we have deemed necessary as a basis for the
opinions expressed below.
The agreements, instruments and other documents referred to in the foregoing
lettered clauses (other than clauses (d) and (e) above) are collectively
referred to as the "Credit Documents".
Opinion of Counsel to the Company
<PAGE>
- 2 -
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all documents submitted to
us as copies. When relevant facts were not independently established, we have
relied upon statements of governmental officials and upon representations made
in or pursuant to the Credit Documents and certificates of appropriate
representatives of the Company.
In rendering the opinions expressed below, we have assumed,
with respect to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below, as to the
Company):
(i) such documents have been duly authorized by, have
been duly executed and delivered by, and constitute
legal, valid, binding and enforceable obligations of,
all of the parties to such documents;
(ii) all signatories to such documents have been duly
authorized; and
(iii) all of the parties to such documents are duly
organized and validly existing and have the power and
authority (corporate or other) to execute, deliver
and perform such documents.
We have further assumed for purposes of paragraph 10 below, that the Financing
Statements will be filed in the appropriate office(s) no later than 10 days
after the Initial Closing Date.
Based upon and subject to the foregoing and subject also to
the comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
2. The Company has all requisite corporate power to execute
and deliver, and to perform its obligations under, the Credit Documents. The
Company has all requisite corporate power to borrow under the Credit Agreement
and to incur liability in respect of Letters of Credit under the Credit
Agreement.
Opinion of Counsel to the Company
<PAGE>
- 3 -
3. The execution, delivery and performance by the Company of
each Credit Document, and the borrowings and incurrence of liability in respect
of Letters of Credit by the Company under the Credit Agreement, have been duly
authorized by all necessary corporate action on the part of the Company.
4. Each Credit Document has been duly executed and
delivered by the Company.
5. Each of the Credit Documents constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally and except as the enforceability of the Credit
Documents is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
6. No authorization, approval or consent of, and no filing or
registration with, any governmental or regulatory authority or agency of the
United States of America or the State of New York is required on the part of the
Company for the execution, delivery or performance by the Company of any of the
Credit Documents or for the borrowings or the application for and incurrence of
liability in respect of any Letter of Credit by the Company under the Credit
Agreement, except for the filing of the Financing Statements in respect of the
Liens created pursuant to the Security Documents.
7. The execution, delivery and performance by the Company of,
and the consummation by the Company of the transactions contemplated by, the
Credit Documents do not and will not (a) violate any provision of its charter or
by-laws, (b) violate any applicable law, rule or regulation, (c) violate any
order, writ, injunction or decree of any court or governmental authority or
agency or any arbitral award applicable to the Company of which we have
knowledge (after due inquiry) or (d) result in a breach of, constitute a default
under, require any consent under, or result in the acceleration or required
prepayment of any indebtedness pursuant to the terms of, any agreement or
instrument of which we have knowledge (after due inquiry) to which the Company
is a party or by which it is bound or to which it is subject, or (except for the
Liens created pursuant to the Security Documents) result in the creation or
Opinion of Counsel to the Company
<PAGE>
- 4 -
imposition of any Lien upon any Property of the Company pursuant to the terms of
any such agreement or instrument.
8. Except as set forth in Schedule V to the Credit Agreement,
we have no knowledge (after due inquiry) of any legal or arbitral proceedings,
or any proceedings by or before any governmental or regulatory authority or
agency, pending or threatened against or affecting the Company or any of its
Properties that if adversely determined could have a Material Adverse Effect.
9. The Security Agreement is effective to create, in favor of
the Administrative Agent for the benefit of the Agents and the Lenders, a valid
security interest under the Uniform Commercial Code as in effect in the State of
New York (the "Uniform Commercial Code") in all of the right, title and interest
of the Company in, to and under the Collateral (as defined in the Security
Agreement) as collateral security for the payment of the Secured Obligations (as
defined in the Security Agreement), except that (a) such security interest will
continue in Collateral after its sale, exchange or other disposition only to the
extent provided in Sections 9-306 and 9-307 of the Uniform Commercial Code and
(b) the security interest in Collateral in which the Company acquires rights
after the commencement of a case under the Bankruptcy Code in respect of the
Company may be limited by Section 552 of the Bankruptcy Code.
10. The security interest referred to in paragraph 9 above in
the types of Collateral described below will be perfected as described below:
(a) such security interest in that portion of the Collateral
consisting of (i) accounts or general intangibles (each, as defined in
Section 9-106 of the Uniform Commercial Code), (ii) trademarks or (iii)
inventory or equipment (each, as defined in Section 9-109 of the
Uniform Commercial Code) that is mobile and of a type normally used in
more than one jurisdiction and, if inventory (as so defined), leased or
held for lease to others will, upon the creation of such security
interest, be perfected by filing the Financing Statements in the
appropriate filing offices for the jurisdictions listed in Part A of
Annex 1 attached hereto; provided that, if the Company moves its chief
executive office to another jurisdiction, the effectiveness of the
Financing Statements will cease on the expiration of four months after
such change or, if earlier, when perfection would have otherwise
ceased, unless such security
Opinion of Counsel to the Company
<PAGE>
- 5 -
interest becomes perfected under the law of such other
jurisdiction prior to such expiration;
(b) such security interest in that portion of the Collateral
consisting of inventory or equipment (each, as defined in Section 9-109
of the Uniform Commercial Code) that is not of the type referred to in
clause (a) above and that is located in the States listed in Part B of
Annex 1 attached hereto will, upon the creation of such security
interest, be perfected by filing the Financing Statements in the
appropriate filing offices for the jurisdictions listed in Part B of
said Annex 1;
(c) such security interest in that portion of the Collateral
consisting of an instrument (as defined in Section 9-105(1)(i) of the
Uniform Commercial Code) or a document (as defined in Section
9-105(1)(f) of the Uniform Commercial Code), will, upon the creation of
such security interest, be perfected by the Administrative Agent's
taking and thereafter retaining possession thereof in the State of New
York;
(d) to the extent not expressly covered by paragraphs (a), (b)
or (c) above, such security interest in that portion of the Collateral
consisting of "proceeds" (as defined in Section 9-306(1) of the Uniform
Commercial Code) may be perfected as and to the extent provided in
Section 9-306 of the Uniform Commercial Code; and
(e) anything in this paragraph 10 to the contrary
notwithstanding, compliance with a statute or treaty described in
Section 9-302(3) of the Uniform Commercial Code is required in order to
perfect such security interest in any portion of the Collateral that is
subject to any such statute or treaty.
11. With respect to any portion of the Collateral consisting
of a negotiable instrument (as defined in Section 3-104 of the Uniform
Commercial Code), if such security interest therein is perfected by the
Administrative Agent in the manner specified in paragraph 10(c) above in good
faith and (in the case of any negotiable instrument) without notice that it is
overdue or has been dishonored or of any defense against or claim to it on the
part of any Person, any perfected security interest therein will have priority
over all other security interests theretofore or thereafter created under the
Uniform Commercial Code.
Opinion of Counsel to the Company
<PAGE>
- 6 -
12. The Company has no Subsidiaries as of the date hereof.
The foregoing opinions are subject to the following comments
and qualifications:
(A) The enforceability of Section 11.03 of the Credit
Agreement (and any similar provisions in any of the other Credit Documents) may
be limited by (i) laws rendering unenforceable indemnification contrary to
Federal or state securities laws and the public policy underlying such laws and
(ii) laws limiting the enforceability of provisions exculpating or exempting a
party, or requiring indemnification of a party for, liability for its own action
or inaction, to the extent the action or inaction involves gross negligence,
recklessness, willful misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Documents
to the effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of
any jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may impose,
(ii) Section 4.07(c) of the Credit Agreement, and (iii) the second sentence of
Section 11.10 of the Credit Agreement, insofar as such sentence relates to the
subject matter jurisdiction of the United States District Court for the Southern
District of New York to adjudicate any controversy related to any of the Credit
Documents.
(D) We wish to point out that the obligations of the Company,
and the rights and remedies of the Administrative Agent and the Lenders, under
the Security Agreement may be subject to possible limitations upon the exercise
of remedial or procedural provisions contained in the Security Agreement,
provided that such limitations do not, in our opinion (but subject to the other
comments and qualifications set forth in this opinion letter), make the remedies
and procedures that will be afforded to the Administrative Agent and the Lenders
inadequate for the practical realization of the substantive benefits purported
to be provided to the Administrative Agent and the Lenders by the Security
Agreement.
(E) With respect to our opinion in paragraphs 9, 10 or 11
above, we express no opinion as to the creation, perfection or priority of any
security interest in (or other lien on) any Collateral (as defined in the
Security Agreement) (i) to the
Opinion of Counsel to the Company
<PAGE>
- 7 -
extent that, pursuant to Section 9-104 of the Uniform Commercial Code, Article 9
of the Uniform Commercial Code does not apply thereto, (ii) consisting of
fixtures, timber to be cut or minerals (including oil and gas) or (iii) covered
by a certificate of title.
(F) With respect to our opinion in paragraph 10(a) above, we
have assumed that the chief executive office of the Company is located in the
State of New Jersey.
(G) We wish to point out that the acquisition by the Company
after the initial extension of credit under the Credit Agreement of an interest
in Property that becomes subject to the Lien of the Security Agreement may
constitute a voidable preference under Section 547 of the Bankruptcy Code.
(H) The effectiveness of the Financing Statements will lapse
on the expiration of a five year period from their date of filing, or (if later)
five years from the last date as to which such Financing Statements were
effective following the proper filing of continuation statements with respect
thereto, unless continuation statements are filed within six months prior to the
expiration of the applicable five year period, and, if the Company so changes
its name, identity or corporate structure that the Financing Statements become
seriously misleading, the Financing Statements will be ineffective to perfect a
security interest in Collateral (as defined in the Security Agreement) acquired
by the Company more than four months after such change.
(I) We express no opinion as to the existence of, or the
right, title or interest of the Company in, to or under, any of the Collateral
(as defined in the Security Agreement).
(J) Except as expressly provided in paragraphs 9 through 11
above, we express no opinion as to the creation, perfection or priority of any
security interest in, or other Lien on, the Collateral (as defined in the
Security Agreement).
(K) Our opinions in paragraph 10 above, and our observations
in paragraph (H) above, insofar as they relate to the perfection and the effect
of perfection and non-perfection of security interests under the law of States
listed in Annex 1 attached hereto (other than the State of New York), are based
solely upon a review of the statutory text of Articles 8 and 9 of the Uniform
Commercial Code as set forth in the volumes of the Uniform Commercial Code
Reporting Service containing the official text of the Uniform Commercial Code
and the State Variations
Opinion of Counsel to the Company
<PAGE>
- 8 -
Tables for such States as on file in our offices, in each case without regard to
the decisional law of such States.
The foregoing opinions are limited (except as otherwise
expressly provided in paragraph (K) above) to matters involving the Federal laws
of the United States, the Delaware General Corporation Law and the law of the
State of New York, and we do not express any opinion as to the laws of any other
jurisdiction.
At the request of our clients, this opinion letter is,
pursuant to Section 6.01(d) of the Credit Agreement, provided to you by us in
our capacity as counsel to the Company and may not be relied upon by any Person
(other than any Person that becomes a Lender after the date hereof pursuant to
Section 11.06(b) of the Credit Agreement) for any purpose other than in
connection with the transactions contemplated by the Credit Agreement without,
in each instance, our prior written consent.
This opinion is effective as of the date hereof and we
disclaim any obligation to advise you of any changes subsequent to the date
hereof.
Very truly yours,
Bachner, Tally, Polevoy & Misher LLP
Opinion of Counsel to the Company
<PAGE>
Annex 1
LIST OF FILING OFFICES
Part A
New Jersey
Part B
New Jersey
North Carolina
Texas
California
Illinois
Pennsylvania
Opinion of Local Counsel
<PAGE>
EXHIBIT E
[Form of Opinion of Special New York Counsel to Chase]
__________, 199_
To the Lenders party to the
Credit Agreement referred to
below and The Chase
Manhattan Bank (National
Association), as Administrative
Agent, and Mellon Bank, N.A., as
Documentation Agent
Ladies and Gentlemen:
We have acted as special New York counsel to The Chase
Manhattan Bank (National Association) ("Chase") in connection with (i) the
Credit Agreement dated as of August 3, 1995 (the "Credit Agreement") between AEP
Industries Inc. (the "Company"), the lenders party thereto, Chase, as
Administrative Agent, and Mellon Bank, N.A., as Documentation Agent, providing
for extensions of credit to be made by said lenders to the Company in an
aggregate principal or face amount not exceeding $140,000,000 and (ii) the
various other agreements, instruments and other documents referred to in the
next following paragraph. Terms defined in the Credit Agreement are used herein
as defined therein. This opinion letter is being delivered pursuant to Section
6.01(e) of the Credit Agreement.
In rendering the opinions expressed below, we have examined
the following agreements, instruments and other documents:
(a) the Credit Agreement;
(b) the Notes;
(c) the Security Agreement; and
(d) such records of the Company and such other documents
as we have deemed necessary as a basis for the
opinions expressed below.
The agreements, instruments and other documents referred to in the foregoing
lettered clauses (other than clause (d) above) are collectively referred to as
the "Credit Documents".
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with authentic original documents
Opinion of Special Counsel to Chase
<PAGE>
- 2 -
of all documents submitted to us as copies. When relevant facts were not
independently established, we have relied upon certificates of governmental
officials and appropriate representatives of the Company and upon
representations made in or pursuant to the Credit Documents.
In rendering the opinions expressed below, we have assumed,
with respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have
been duly executed and delivered by, and (except to
the extent set forth in the opinions below as to the
Company) constitute legal, valid, binding and
enforceable obligations of, all of the parties to
such documents;
(ii) all signatories to such documents have been duly
authorized; and
(iii) all of the parties to such documents are duly
organized and validly existing and have the power and
authority (corporate or other) to execute, deliver
and perform such documents.
Based upon and subject to the foregoing and subject also to
the comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. Each of the Credit Documents constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting the rights of creditors generally and except as the
enforceability of the Credit Documents is subject to the application of
general principles of equity (regardless of whether considered in a
proceeding in equity or at law), including, without limitation, (a) the
possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (b) concepts of materiality,
reasonableness, good faith and fair dealing.
2. The Security Agreement is effective to create, in
favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders, a valid security
Opinion of Special Counsel to Chase
<PAGE>
- 3 -
interest under the Uniform Commercial Code as in effect in the State of
New York (the "Uniform Commercial Code") in all of the right, title and
interest of the Company in, to and under the Collateral (as defined in
the Security Agreement) (other than any Collateral to the extent that
pursuant to Section 9-104 of the Uniform Commercial Code Article 9 of
the Uniform Commercial Code does not apply thereto), as collateral
security for the payment of the Secured Obligations (as defined in the
Security Agreement), except that (a) such security interest will
continue in Collateral after its sale, exchange or other disposition
only to the extent provided in Sections 9-306 and 9-307 of the Uniform
Commercial Code and (b) the security interest in Collateral in which
the Company acquires rights after the commencement of a case under the
Bankruptcy Code in respect of the Company may be limited by Section 552
of the Bankruptcy Code.
The foregoing opinions are subject to the following comments
and qualifications:
(A) The enforceability of Section 11.03 of the Credit
Agreement (and any similar provisions in any of the other Credit
Documents) may be limited by (i) laws rendering unenforceable
indemnification contrary to Federal or state securities laws and the
public policy underlying such laws and (ii) laws limiting the
enforceability of provisions exculpating or exempting a party, or
requiring indemnification of a party for, liability for its own action
or inaction, to the extent the action or inaction involves gross
negligence, recklessness, willful misconduct or unlawful conduct.
(B) The enforceability of provisions in the Credit Documents
to the effect that terms may not be waived or modified except in
writing may be limited under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of
any jurisdiction in which any Lender is located (other than the State
of New York) that limit the interest, fees or other charges such Lender
may impose, (ii) Section 4.07(c) of the Credit Agreement and (iii) the
second sentence of Section 11.10 of the Credit Agreement, insofar as
such sentence relates to the subject matter jurisdiction of the United
States District Court for the Southern District of New York to
adjudicate any controversy related to any of the Credit Documents.
Opinion of Special Counsel to Chase
<PAGE>
- 4 -
(D) We wish to point out that the obligations of the Company,
and the rights and remedies of the Administrative Agent and the
Lenders, under the Security Agreement may be subject to possible
limitations upon the exercise of remedial or procedural provisions
contained in the Security Agreement, provided that such limitations do
not, in our opinion (but subject to the other comments and
qualifications set forth in this opinion letter), make the remedies and
procedures that will be afforded to the Administrative Agent and the
Lenders inadequate for the practical realization of the substantive
benefits purported to be provided to the Administrative Agent and the
Lenders by the Security Agreement.
(E) We wish to point out that the acquisition by the Company
after the initial extension of credit under the Credit Agreement of an
interest in Property that becomes subject to the Lien of the Security
Agreement may constitute a voidable preference under Section 547 of the
Bankruptcy Code.
(F) We express no opinion as to the existence of, or the
right, title or interest of the Company in, to or under, any of the
Collateral (as defined in the Security Agreement).
(G) Except as expressly provided in paragraph 2 above, we
express no opinion as to the creation, perfection or priority of any
security interest in, or other Lien on, the Collateral (as defined in
the Security Agreement).
The foregoing opinions are limited to matters involving the
Federal laws of the United States and the law of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction.
At the request of our client, this opinion letter is, pursuant
to Section 6.01(e) of the Credit Agreement, provided to you by us in our
capacity as special New York counsel to Chase and may not be relied upon by any
Person (other than any Person that becomes a Lender after the date hereof
pursuant to Section 11.06(b) of the Credit Agreement) for any purpose other than
in connection with the transactions contemplated by the Credit Agreement
without, in each instance, our prior written consent.
Very truly yours,
WJM/BDR
Opinion of Special Counsel to Chase
<PAGE>
EXHIBIT F
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Credit Agreement dated as of August 3, 1995 (the
"Credit Agreement"), between AEP Industries Inc.
(the "Company"), the lenders party thereto, The
Chase Manhattan Bank (National Association), as
Administrative Agent and Mellon Bank, N.A., as
Documentation Agent.
Dear Ladies and Gentlemen:
As a Lender party to the Credit Agreement, we have agreed with
the Company pursuant to Section 11.12 of the Credit Agreement to use reasonable
precautions to keep confidential, except as otherwise provided therein, all
non-public information identified by the Company as being confidential at the
time the same is delivered to us pursuant to the Credit Agreement.
As provided in said Section 11.12, we are permitted to provide
you, as a prospective [holder of a participation in the Loans (as defined in the
Credit Agreement)] [assignee Lender], with certain of such non-public
information subject to the execution and delivery by you, prior to receiving
such non-public information, of a Confidentiality Agreement in this form. Such
information will not be made available to you until your execution and return to
us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on
behalf of yourself and each of your affiliates, directors, officers, employees
and representatives and for the benefit of us and the Company) that (A) such
information will not be used by you except in connection with the proposed
[participation][assignment] mentioned above and (B) you shall use reasonable
precautions, in accordance with your customary procedures for handling
confidential information and in accordance with safe and sound banking
practices, to keep such information confidential, provided that nothing herein
shall limit the disclosure of any such information (i) after such
Confidentiality Agreement
<PAGE>
- 2 -
information shall have become public (other than through a violation of Section
11.12 of the Credit Agreement), (ii) to the extent required by statute, rule,
regulation or judicial process, (iii) to your counsel or to counsel for any of
the Lenders or the Administrative Agent, (iv) to bank examiners (or any other
regulatory authority having jurisdiction over any Lender or the Administrative
Agent), or to auditors or accountants, (v) to the Administrative Agent, the
Documentation Agent or any other Lender (or to Chase Securities, Inc.), (vi) in
connection with any litigation to which you or any one or more of the Lenders,
the Administrative Agent or the Documentation Agent are a party, or in
connection with the enforcement of rights or remedies under the Credit Agreement
or under any other Credit Document, (vii) to a subsidiary or affiliate of yours
as provided in Section 11.12(a) of the Credit Agreement or (viii) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first executes
and delivers to you a Confidentiality Agreement substantially in the form
hereof; provided that that in no event shall you be obligated to return any
materials furnished to you pursuant to this Confidentiality Agreement.
If you are a prospective assignee, your obligations under this
Confidentiality Agreement shall be superseded by Section 11.12 of the Credit
Agreement on the date upon which you become a Lender under the Credit Agreement
pursuant to Section 11.06(b) thereof.
Confidentiality Agreement
<PAGE>
- 3 -
Please indicate your agreement to the foregoing by signing as
provided below the enclosed copy of this Confidentiality Agreement and returning
the same to us.
Very truly yours,
[INSERT NAME OF LENDER]
By_________________________
The foregoing is agreed to as of the date of this letter.
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By_________________________
Confidentiality Agreement
<PAGE>
EXHIBIT G
[Form of Notice of Assignment]
NOTICE OF ASSIGNMENT
[Date]
AEP Industries Inc.
125 Phillips Avenue
South Hackensack, New Jersey 07606-1546
Attention: Mr. Paul Feeney
The Chase Manhattan Bank
(National Association),
as Administrative Agent
4 Chase Metrotech Center -- 13th Floor
Brooklyn, New York 11245
Attention: New York Agency
[Name of Issuing Bank]
-------------------------
-------------------------
Attention: _____________
Re: Credit Agreement dated as of August 3, 1995 (the
"Credit Agreement"), between AEP Industries Inc.
(the "Company"), the lenders party thereto, The
Chase Manhattan Bank (National Association), as
Administrative Agent and Mellon Bank, N.A., as
Documentation Agent.
Dear Ladies and Gentlemen:
We hereby give notice that, effective as of the date hereof,
[Name of Assignor] (the "Assignor") has assigned its rights and obligations with
respect to % (representing $_____________) of the Assignor's outstanding
[[Revolving Credit] [Term Loan] Commitment and] [[Revolving Credit] [Term]
Loans] (such interest in such rights and obligations being hereinafter referred
to as the "Assigned Interest") under the Credit
Notice of Assignment
<PAGE>
- 2 -
Agreement to [Name of Assignee] (the "Assignee"). The Assignee hereby agrees (i)
to become a "Lender" pursuant to Section 11.06(b) of the Credit Agreement (if
not already a Lender under the Credit Agreement) and (ii) agrees to assume all
the obligations of the Assignor thereunder with respect to the Assigned
Interest.
The address for notices, lending office(s) and payment
instructions for the Assignee are as follows:
Address for Notices:
--------------------------------
--------------------------------
--------------------------------
Attention:
Telephone:
Telecopier:
Lending Office for Base Rate Loans:
--------------------------------
--------------------------------
--------------------------------
Lending Office for Loans other than Base Rate
Loans:
--------------------------------
--------------------------------
--------------------------------
Payment Instructions:
--------------------------------
--------------------------------
--------------------------------
Please sign and return the enclosed copy of this letter to the
undersigned to indicate your receipt hereof, and your consent to or notice of
(as applicable) the above-mentioned assignment and assumption, and your
agreement to the release of the Assignor from its obligations under the Credit
Agreement with respect to the Assigned Interest. As a condition to the
effectiveness of the above-mentioned assignment and assumption,
Notice of Assignment
<PAGE>
- 3 -
the Assignee hereby agrees to pay to the Administrative Agent on
the date hereof an assignment fee of $3,000.
Very truly yours,
[NAME OF ASSIGNOR]
By
-------------------------------
Title:
[NAME OF ASSIGNEE]
By
-------------------------------
Title:
ACKNOWLEDGED OR CONSENTED TO
(AS APPLICABLE):
AEP INDUSTRIES INC.
By
-------------------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Administrative Agent
By
-------------------------------
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Issuing Bank
By
-------------------------------
Title:
Notice of Assignment
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
August 2, 1995, by and between J. Brendan Barba ("Barba") and AEP Industries
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H :
WHEREAS, Barba desires to sell 1,550,000 shares of the Common
Stock, par value $.01 per share, of the Company (the "Shares") to the Company,
and the Company desires to purchase the Shares from the Barba, on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereto, intending
to be legally bound, do hereby agree as follows:
1. Sale of Shares
1.1 Sale of Shares. Pursuant to the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter defined),
Barba shall sell and deliver the Shares to the Company, and the Company shall
purchase the Shares from Barba.
1.2 Purchase Price and Payment. The aggregate
purchase price (the "Purchase Price") for the Shares shall be
$32,612,000, representing a per share amount equal to $21.04.
2. Closing
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2.1 Closing. The closing with respect to the transactions
contemplated by this Agreement (the "Closing") shall take place simultaneously
with the execution and delivery of this Agreement.
2.2 Deliveries by the Company to Barba. At the
Closing, the Company shall pay the Purchase Price to Barba by
delivery of a check.
2.3 Deliveries by Barba to the Company. At the Closing, Barba
shall deliver, or shall cause to be delivered, to the Company, certificates
evidencing the Shares, accompanied by stock powers and such other documents as
may be reasonably requested by the Company.
3. Representations and Warranties of Barba. Barba
hereby represents and warrants to the Company as follows:
3.1 Authority. Barba has full right, power and authority to
execute and deliver this Agreement and to consummate and perform the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Barba and (assuming the due authorization, execution
and delivery hereof by the Company) constitutes the legal, valid and binding
obligation of Barba, enforceable against him in accordance with its terms,
except as may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights and remedies generally, and
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subject as to enforceability to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
3.2 Consents. No consent, approval, waiver, license or authorization or
other action by or filing with any person or governmental authority is
required on the part of Barba in connection with the execution and
delivery by Barba of this Agreement or the consummation by Barba of the
transactions contemplated hereby, except for filings relating to the
ownership of the Common Stock of the Company by Barba required under the
Securities Exchange Act of 1934, as amended (the "1934 Act").
3.3 Ownership of Shares. The Shares are lawfully owned of record and
beneficially by Barba, free and clear of all liens, encumbrances,
restrictions and claims of every kind whatsoever, and upon purchase of
the Shares by the Company in accordance with the terms of this
Agreement, no person shall have any lawful and valid claim against the
Company in respect of the Shares.
3.4 No Other Representations. Other than as specifically set forth in
this Agreement, the Company has made no representations or warranties
(written or oral, express or implied) to Barba in respect of the
transactions contemplated hereby.
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4. Representations and Warranties of the Company. The Company hereby
represents and warrants to Barba as follows:
4.1 Authority. The Company has full corporate power and authority
to execute and deliver this Agreement and to consummate and perform the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation and performance of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of the Company. This
Agreement has been duly and validly executed and delivered by the
Company and (assuming the due authorization, execution and delivery
hereof by Barba) constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its
terms, except as may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights and remedies generally, and subject as
to enforceability to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.2 Consents. No consent, approval, waiver, license or
authorization or other action by or filing with any governmental
authority is required on the part of the Company in connection with the
execution and delivery by the Company of this Agreement or the
consummation by the Company of the transactions
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contemplated hereby, except for filings required under the 1934 Act or
NASDAQ rules.
4.3 No Other Representations. Other than as specifically set forth
in this Agreement, Barba has made no representations or warranties
(written or oral, express or implied) to the Company in respect of the
transactions contemplated hereby.
5. Survival. The representations and warranties made herein shall
survive the execution and delivery of this Agreement and the Closing.
6. Certain Agreements. Barba hereby agrees that none of the shares
of the common stock of the Company beneficially owned by him or any of
his affiliates or over which he otherwise exercises dispositive power
shall be tendered and sold to the Company pursuant to the Company's
proposed tender offer to purchase shares of the common stock of the
Company to be publicly announced by the Company simultaneously with the
public announcement of this Agreement.
7. Fees and Expenses. Each party shall be responsible for its costs
and expenses, including all fees and expenses of attorneys and financial
advisors, in connection with the negotiation, execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby.
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8. Further Assurances. Each party hereto shall execute and
deliver such other documents or agreements as may be necessary or
desirable for the implementation of this Agreement and the consummation
of the transactions contemplated hereby.
9. Amendment. This Agreement may not be modified, amended,
altered or supplemented, except by an agreement in writing executed by
the parties hereto.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns.
11. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given if so given) if delivered in
person, by cable, telegram, telex, or telecopy, or sent by registered or
certified mail (postage prepaid, return receipt requested), to the
respective parties as follows:
If to Barba:
J. Brendan Barba
316 Iriquois Lane
Franklin Lakes, New Jersey
If to the Company:
AEP Industries Inc.
125 Phillips Avenue
South Hackensack, New Jersey 07606
Attn: Paul M. Feeney
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or to such other address as either party may designate in writing in accordance
herewith, except that notices of changes of address shall only be effective upon
receipt.
12. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which
together shall constitute one and the same document.
13. Governing Law. This Agreement, and all matters relating
hereto, shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware as in effect from time to time,
without regard to any principles of choice of laws or conflicts of law.
14. Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
15. Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes any prior negotiations,
agreements, understandings or arrangements between the parties hereto
with respect to the subject matter hereof.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be duly executed and delivered on the day and year first above
written.
AEP INDUSTRIES INC.
By:
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Name: Paul M. Feeney
Title: Executive Vice President
-------------------------------------
J. Brendan Barba
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