SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
(Mark One)
___ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
/ X / OF THE SECURITIES EXCHANGE ACT OF 1934
- ----
For the quarterly period ended September 30, 1999
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
/ / OF THE SECURITIES EXCHANGE ACT OF 1934
- ----
For the transition period from to
-------------------- --------------------
Commission file number 1-10258
Tredegar Corporation
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Virginia 54-1497771
- ------------------------------- -------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1100 Boulders Parkway
Richmond, Virginia 23225
- --------------------------------------- ------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (804) 330-1000
Indicate by check whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares of Common Stock, no par value, outstanding as of
October 31, 1999: 37,261,900.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
Tredegar Corporation
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
<CAPTION>
Sept. 30, Dec. 31,
1999 1998
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 19,434 $ 25,409
Accounts and notes receivable 118,962 94,341
Inventories 46,264 34,276
Deferred income taxes 8,755 8,762
Prepaid expenses and other 2,085 3,536
Total current assets 195,500 166,324
Property, plant and equipment, at cost 459,755 356,411
Less accumulated depreciation and amortization 218,715 200,380
Net property, plant and equipment 241,040 156,031
Venture capital investments 107,876 60,024
Other assets and deferred charges 39,955 41,886
Goodwill and other intangibles 153,936 32,913
--------- ---------
Total assets $ 738,307 $ 457,178
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 61,200 $ 47,551
Accrued expenses 43,604 41,071
Income taxes payable 163 243
-------- --------
Total current liabilities 104,967 88,865
Long-term debt 250,000 25,000
Deferred income taxes 25,956 24,914
Other noncurrent liabilities 7,997 8,104
-------- --------
Total liabilities 388,920 146,883
-------- --------
Shareholders' equity:
Common stock, no par value 98,972 95,893
Common stock held in trust for savings
restoration plan (1,212) (1,212)
Unrealized gain on available-for-sale security 3,125 1,376
Foreign currency translation adjustment (1,630) (2,519)
Retained earnings 250,132 216,757
-------- --------
Total shareholders' equity 349,387 310,295
-------- --------
Total liabilities and shareholders' equity $738,307 $ 457,178
======== ========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
<TABLE>
Tredegar Corporation
Consolidated Statements of Income
(In Thousands)
(Unaudited)
<CAPTION>
Third Quarter Nine Months
Ended Sept. 30 Ended Sept. 30
------------------ ---------------------
1999 1998 1999 1998
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Revenues:
Net sales $215,911 $186,638 $590,292 $513,244
Other income (expense), net (3,889) (246) (4,907) 3,055
-------- -------- -------- --------
Total 212,022 186,392 585,385 516,299
-------- -------- -------- --------
Costs and expenses:
Cost of goods sold 171,389 148,223 465,614 405,760
Selling, general and administrative 11,991 9,892 34,513 28,868
Research and development 5,969 3,374 15,819 10,321
Amortization of intangibles 1,275 86 2,144 120
Interest 3,047 266 4,853 952
Unusual items (712) - 3,916 (765)
--------- -------- --------- --------
Total 192,959 161,841 526,859 445,256
--------- -------- --------- --------
Income before income taxes 19,063 24,551 58,526 71,043
Income taxes 6,748 8,591 20,723 22,626
--------- -------- --------- --------
Income from continuing operations 12,315 15,960 37,803 48,417
Income from discontinued operations - 3,421 - 3,421
-------- -------- -------- --------
Net income $ 12,315 $19,381 $ 37,803 $ 51,838
======== ======= ======== ========
Earnings per share:
Basic:
Continuing operations $ .33 $ .44 $ 1.02 $ 1.33
Discontinued operations - .09 - .09
------- ------- -------- --------
Net income $ .33 $ .53 $ 1.02 $ 1.42
======= ======= ======== ========
Diluted:
Continuing operations $ .32 $ .41 $ .97 $ 1.24
Discontinued operations - .09 - .09
------- ------- -------- --------
Net income $ .32 $ .50 $ .97 $ 1.33
======= ======= ======== ========
Shares used to compute earnings per share:
Basic 37,098 36,351 36,893 36,483
Diluted 38,718 38,582 38,754 38,966
Dividends per share $ .04 $ .04 $ .12 $ .11
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
Tredegar Corporation
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
Ended Sept. 30
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 37,803 $ 51,838
Adjustments for noncash items:
Depreciation 20,146 15,897
Amortization of intangibles 2,144 120
Write-off of in-process R&D acquired and other intangibles 3,725l -
Deferred income taxes (1,071) 2,043
Accrued pension income and postretirement benefit (2,331) (2,833)
Loss (gain) on sale of venture capital investments 4,994 (2,041)
Loss (gain) on equipment writedowns and divestitures 458 (765)
Gain related to discontinued operations - (5,346)
Changes in assets and liabilities, net of
effects from acquisitions and divestitures:
Accounts and notes receivable (10,208) (4,197)
Inventories 4,806 (2,010)
Income taxes recoverable - 294
Prepaid expenses and other 1,624 921
Accounts payable 10,502 5,852
Accrued expenses and income taxes payable 1,347 (3,144)
Other, net (2,117) (1,870)
--------- ---------
Net cash provided by operating activities 71,822 54,759
--------- ---------
Cash flows from investing activities:
Capital expenditures (32,792) (24,269)
Acquisitions (net of cash acquired of $1,097 in
1998; excludes equity issued of $11,219 in 1998) (215,227) (60,883)
Venture capital investments (55,727) (27,121)
Proceeds from the sale of venture capital investment 2,234 2,919
Proceeds from property disposals and divestitures 905 740
Other, net (841) (1,140)
--------- ---------
Net cash used in investing activities (301,448) (109,754)
--------- ---------
Cash flows from financing activities:
Dividends paid (4,428) (3,955)
Net increase (decrease) in borrowings 225,000 (5,000)
Repurchases of Tredegar common stock - (36,460)
Tredegar common stock purchased by trust for
savings restoration plan - (192)
Proceeds from exercise of stock options (including
related income tax benefits realized) 3,079 3,824
--------- ---------
Net cash provided by (used in) financing activit 223,651 (41,783)
--------- ---------
Increase (decrease) in cash and cash equivalents (5,975) (96,778)
Cash and cash equivalents at beginning of period 25,409 120,065
--------- ---------
Cash and cash equivalents at end of period $ 19,434 $ 23,287
========= =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
TREDEGAR CORPORATION
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of management, the accompanying consolidated financial
statements of Tredegar Corporation and Subsidiaries ("Tredegar")
contain all adjustments necessary to present fairly, in all material
respects, Tredegar's consolidated financial position as of September
30, 1999, and the consolidated results of operations and cash flows for
the nine months ended September 30, 1999 and 1998. All such adjustments
are deemed to be of a normal recurring nature. These financial
statements should be read in conjunction with the consolidated
financial statements and related notes included in Tredegar's Annual
Report on Form 10-K for the year ended December 31, 1998. The results
of operations for the nine months ended September 30, 1999, are not
necessarily indicative of the results to be expected for the full year.
2. On October 20, 1999, Tredegar borrowed $250 million under a new term
loan agreement dated October 13, 1999. A portion of the term loan
proceeds ($230 million) was used to repay all of the outstanding
borrowings under our revolving credit facility. The balance ($20
million) was invested in cash equivalents, and is expected to be used
in the next twelve months to fund capital expenditures and venture
capital investment opportunities. The revolving credit facility permits
borrowings of up to $275 million (no amounts borrowed at November 12,
1999) and matures on July 9, 2002. Tredegar also has a note payable
with a remaining balance of $20 million. Total debt due and outstanding
at November 12, 1999 is summarized below:
Debt Due and Outstanding at Nov. 12, 1999
-----------------------------------------
(Dollars in Thousands)
Total
Year Note Term Debt
Due Payable Loan Due
-------- ------- -------- --------
2000 $ 5,000 $ - $ 5,000
2001 5,000 - 5,000
2002 5,000 - 5,000
2003 5,000 50,000 55,000
2004 - 75,000 75,000
2005 - 125,000 125,000
---------------------------------------
Total $20,000 $250,000 $270,000
5
<PAGE>
Interest is payable on the note semi-annually at 7.2% per
year. The term loan and revolving credit agreements provide for
interest to be charged at a base rate (generally the London Interbank
Offered Rate ("LIBOR")) plus a spread that is dependent on our
quarterly debt-to-total capitalization ratio. The fully-borrowed spread
over LIBOR charged at the various debt-to-total capitalization levels
are as follows:
Fully-Borrowed Spread Over LIBOR
Under Credit Agreements (Basis Points)
--------------------------------------
Debt-to-Total Term
Capitalization Ratio Revolver Loan
-------------------- -------- -----
Greater than 55% and less than or equal to 60% 50.0 100.0
Greater than 50% and less than or equal to 55% 50.0 87.5
Greater than 40% and less than or equal to 50% 37.5 75.0
Greater than 35% and less than or equal to 40% 37.5 62.5
Greater than 30% and less than or equal to 35% 30.0 62.5
Less than or
equal to 30% 30.0 50.0
The interest rate on the $250 million term loan for the 92-day
period from October 20, 1999 to January 20, 2000, is 7%, and will float
thereafter based on the interest period selected, LIBOR and the
applicable spread over LIBOR. Our loan agreements permit a maximum
debt-to-total capitalization ratio of 60%.
3. On September 24, 1999, Tredegar announced that its board of directors
is evaluating alternative financing and structural options for its
technology group, including a possible spin-off of the unit into an
independent company. The technology group was formed in 1992 and
includes Molecumetics, Ltd.,Therics, Inc. and Tredegar Investments,
Inc. Molecumetics, based in Seattle, Washington, is a drug discovery
company dedicated to the identification of small-molecule drug
candidates for license and development by pharmaceutical and
biotechnology company partners, which currently include Bristol-Myers
Squibb Company, Asahi Chemical Industries, Teijin Limited, ChoongWae
Pharma and Pharmacia & Upjohn Company. Therics, based in Princeton,
New Jersey, was acquired on April 8, 1999 (see Note 4), and is
developing microfabrication technology that has potential applications
in drug delivery and other medical markets. Tredegar Investments,
also based in Seattle, is our venture capital subsidiary.
The carrying value of venture capital investments was $107.9
million($110.1 million cost basis) at September 30, 1999, and $60
million ($60.6 million cost basis) at December 31, 1998. The estimated
net asset value of venture capital investments at September 30, 1999
and December 31, 1998, were as follows:
<TABLE>
<CAPTION>
(In Thousands Except Per-Share Data)
Sept. 30, Dec. 31,
1999 1998
<S> <C> <C>
Estimated fair value of venture capital investments $138,514 $ 70,841
Estimated income taxes on assumed disposal at
fair value (10,221) (3,681)
-------- --------
Net asset value of venture capital investments $128,293 $ 67,160
======== ========
Net asset value of venture capital investments
per Tredegar common share $ 3.45 $ 1.83
======== ========
</TABLE>
6
<PAGE>
The change in net asset value for venture capital investments
related to investment activities and portfolio performance for the nine
months ended September 30, 1999 and 1998, is summarized below:
<TABLE>
<CAPTION>
(In Thousands)
Nine Months
Ended Sept. 30
1999 1998
--------- ---------
<S> <C> <C>
Net realized gains, losses, writedowns and related
operating expenses for venture capital investments
reflected in consolidated statements of income $ (6,767) $ 1,104
Change in unrealized appreciation of venture
capital investments 22,554 (5,608)
Pretax change in venture capital net asset value
related to investment activities 15,787 (4,504)
Provision for income taxes 5,683 (1,621)
Net change in venture capital net asset value
related to investment activities $ 10,104 $(2,883)
</TABLE>
The venture capital portfolio is comprised of investments in
private venture capital fund limited partnerships and early-stage
technology companies, including the stock of privately held companies
and the restricted and unrestricted stock of companies that have
recently merged with other public companies or registered shares in
initial public offerings. As a result of these investments, we have
direct or indirect ownership stakes in more than 150 technology-based
start-up companies, primarily in the communications, information
technology and life sciences industries. The portfolio has an overall
weighted average age of 1.6 years. Most liquidation opportunities are
not expected for several years and will depend on many factors,
including market conditions.
The fair value of securities of public companies is determined
based on closing price quotations. We estimate the fair value of
securities of private companies using the indicative value from the
latest round of financing, and reduce this amount if events subsequent
to the financing imply a lower valuation. The fair value of ownership
interests in private venture capital funds is based on our estimate of
our distributable share of fund net assets using the general partners'
estimate of fair value of securities held by the funds and fund
formulas for allocating profits, losses and distributions. Because of
the inherent uncertainty associated with the valuation of restricted
securities or securities for which there is no public market, estimates
of fair value may differ significantly from the value that would have
been used had a ready market for the securities existed.
4. On May 17, 1999, Tredegar acquired the assets of Exxon Chemical
Company's plastic films business ("Exxon Films") for cash consideration
of approximately $205 million (including estimated transaction costs of
$2.9 million). The acquisition was funded with borrowings under our
revolving credit facility, and has since been refinanced by our new
term loan (see Note 2). During the 12 months ended March 31, 1999,
Exxon Films had pro forma revenues of $111 million and generated pro
forma EBITDA (earnings before interest, taxes, depreciation and
amortization and excluding potential synergies) of $24.6 million. The
asset-purchase structure, unlike a stock-purchase transaction, allows
Tredegar to deduct for tax purposes over time the full value of
depreciable fixed assets and intangibles (goodwill).
7
<PAGE>
Tredegar expects that, by 2001, the annual ongoing benefits
from synergies (cost reductions, efficiencies and technology
enhancements expected from the integration of Exxon Films into existing
operations) will range from $7 - $9 million.
In addition to Exxon Films, Tredegar acquired:
- - The assets of Therics, Inc. ("Therics") on April 8, 1999
- - The stock of Canadian-based Exal Aluminum Inc. ("Exal") on June 11,1998
- - Two Canadian-based aluminum extrusion and fabrication plants from
Reynolds Metals Company ("Reynolds") on February 6, 1998
The assets of Therics were acquired for cash consideration of
$13.6 million (including transaction costs). Before the acquisition,
Tredegar owned approximately 19% of Therics. Upon the final liquidation
of the former Therics, Tredegar will have paid approximately $10.2
million to effectively acquire the remaining 81% ownership interest.
Tredegar recognized a nonrecurring charge of $3.5 million (classified
in unusual items in the consolidated statements of income) in the
second quarter of 1999 related to the write-off of acquired in-process
research and development. The amount of the charge was determined
through an independent, third-party analysis.
Exal was acquired for $44.1 million (including transaction
costs), which was comprised of:
- - Cash consideration of $32.9 million($31.8 million net of cash acquired)
380,172 shares of Class I non-voting preferred shares of Tredegar's Bon
L Canada subsidiary (the "Class I Shares")
The Class I Shares are exchangeable into shares of Tredegar
common stock on a one-for-one basis. Each Class I Share is economically
equivalent to one share of Tredegar common stock and accordingly
accounted for in the same manner. Tredegar funded the cash portion of
the purchase price with available cash on hand. Exal operates aluminum
extrusion plants in Pickering, Ontario and Aurora, Ontario. Both
facilities manufacture extrusions for distribution, transportation,
electrical, machinery and equipment, and building and construction
markets. The Pickering facility also produces aluminum logs and billet
for internal use and for sale to customers.
The former Reynolds plants in Canada were acquired for cash
consideration of $29.1 million (including transaction costs) using
available cash on hand. The plants are located in Ste-Therese, Quebec,
and Richmond Hill, Ontario. Both facilities manufacture extruded and
fabricated aluminum products used primarily in building and
construction, transportation, electrical, machinery and equipment, and
consumer durables markets.
8
<PAGE>
Each acquisition was accounted for using the purchase method,
and related operating results have been included in Tredegar's
consolidated statements of income since the dates acquired. Detailed
pro forma financial information for these acquisitions through March
31, 1999, were included in our Form 8-K/A filed on June 25, 1999.
Selected historical and pro forma financial information for Tredegar
through September 30, 1999, is as follows:
<TABLE>
Tredegar Corporation
Selected Historical and Pro Forma Financial Information
(In Thousands Except Per-Share Amounts)
<CAPTION>
Third Quarter Nine Months Last 12
Ended Sept. 30 Ended Sept. 30 Months
1999 1998 1999 1998 9/30/99
-------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net sales:
Manufacturing operations $214,190 $ 185,318 $584,806 $509,228 $ 769,627
Technology operating companies 1,721 1,320 5,486 4,016 7,217
Net income:
Manufacturing operations $ 16,496 $ 16,990 $ 48,588 $ 46,792 $ 65,733
Technology Group:
Operating companies (1,808) (635) (3,948) (1,848) (4,616)
Venture capital investments (2,829) (395) (4,331) 707 (4,644)
Unusual items 456 - (2,506) 2,766 (2,931)
Discontinued operations - 3,421 - 3,421 1,292
-------- --------- -------- -------- ---------
Total $ 12,315 $ 19,381 $ 37,803 $ 51,838 $ 54,834
======== ========= ======== ======== =========
Diluted earnings per share:
Manufacturing operations $ .43 $ .44 $ 1.25 $ 1.20 $ 1.70
Technology Group:
Operating companies (.05) (.02) (.10) (.05) (.12)
Venture capital investments (.07) (.01) (.11) .02 (.12)
Unusual items .01 - (.07) .07 (.07)
Discontinued operations - .09 - .09 .03
-------- --------- -------- -------- ---------
Total $ .32 $ .50 $ .97 $ 1.33 $ 1.42
======== ========= ======== ======== =========
EBITDA - manufacturing operations $ 36,464 $ 31,547 $ 99,711 $ 86,317 $ 132,043
As a % of related net sales 17.0% 17.0% 17.1% 17.0% 17.2%
Loss before deprec. & amortiz. for
technology operating companies (2,085) (732) (4,269) (2,136) (4,805)
================================================================================================
Consolidated pro forma information for
acquisitions as if they had occurred
at the beginning of 1998:
Net sales:
Manufacturing operations $214,190 $ 212,669 $628,075 $632,753 $ 841,141
Tech. operating companies 1,721 1,344 5,512 4,056 7,268
EBITDA - manufacturing oper. 36,464 37,721 109,185 104,950 147,319
As a % of pro forma net sales 17.0% 17.7% 17.4% 16.6% 17.5%
Loss before deprec. & amortiz. for
tech. operating companies (2,085) (2,600) (6,061) (7,638) (8,589)
Manufacturing operations:
Net income 16,496 16,936 48,770 45,340 65,629
Diluted earnings per share .43 .44 1.26 1.15 1.69
Technology operating companies:
Net loss (1,808) (2,160) (5,455) (6,308) (7,764)
Diluted loss per share (.05) (.06) (.14) (.16) (.20)
</TABLE>
9
<PAGE>
Pro forma results assume that Tredegar made the acquisitions
at the beginning of 1998. Excluded from the pro forma results are
synergies expected from the integration of acquired and existing
operations. Accordingly, the pro forma financial information does not
purport to be indicative of the future results or the financial
position of Tredegar or the net income and financial position that
would actually have been attained had the pro forma transactions
occurred on the dates or for the periods indicated.
Unusual items in 1999 include:
- A third-quarter gain of $712,000 on the sale of corporate real
estate ($456,000 after income taxes)
- A second quarter charge of $3.5 million for the write-off of
in-process R&D related to the Therics acquisition ($2.2 million
after deferred income tax benefits)
- A second quarter charge of $1.2 million for the write-off of
equipment related to excess packaging film capacity ($749,000 after
income tax benefits)
Unusual items in 1998 include a first-quarter pretax gain of
$765,000 on the sale of APPX Software. Income taxes in 1998 include a
tax benefit of $2 million related to the sale, including a tax benefit
for the excess of APPX Software's income tax basis over its financial
reporting basis. Discontinued operations in 1998 include an after-tax
gain of $3.4 million related to the reversal of an accrued liability
that we established to cover future payments to the United Mine Workers
of America Combined Benefit Fund. We were relieved of this liability,
which was incurred by the divested coal business.
5. Comprehensive income, defined as net income and other comprehensive
income, was $14 million for the third quarter of 1999 and $10.7 million
for the third quarter of 1998. Comprehensive income was $40.4 million
for the first nine months of 1999 and $44.5 million for the first nine
months of 1998. Other comprehensive income includes changes in
unrealized gains and losses on available-for-sale securities and
foreign currency translation adjustments recorded net of deferred
income taxes directly in shareholders' equity.
6. The components of inventories are as follows:
(In Thousands)
Sept. 30 Dec. 31
1999 1998
-------------- --------------
Finished goods $8,130 $4,805
Work-in-process 4,202 3,751
Raw materials 24,276 17,690
Stores, supplies and other 9,656 8,030
-------------- --------------
Total $46,264 $34,276
============== ==============
10
<PAGE>
7. Basic earnings per share is computed by dividing net income by the
weighted average number of shares of common stock outstanding. Diluted
earnings per share is computed by dividing net income by the weighted
average common and potentially dilutive common equivalent shares
outstanding, determined as follows:
<TABLE>
<CAPTION>
(In Thousands)
Third Quarter Nine Months
Ended Sept. 30 Ended Sept. 30
---------------- ---------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Weighted average shares outstanding used
to compute basic earnings per share 37,098 36,351 36,893 36,483
Incremental shares issuable upon the
assumed exercise of stock options 1,620 2,231 1,861 2,483
------ ------ ------ ------
Shares used to compute diluted earnings
per share 38,718 38,582 38,754 38,966
====== ====== ====== ======
</TABLE>
Incremental shares issuable upon the assumed exercise of
outstanding stock options are computed using the average market price
during the related period.
8. The Financial Accounting Standards Board has issued a new standard
affecting the accounting for derivative instruments and hedging
activities. This standard is not expected to significantly change our
operating results, financial condition or disclosures. The new standard
will be adopted in the first quarter of 2001.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Third Quarter 1999 Compared with Third Quarter 1998
Financial results for the quarter and year-to-date are summarized on
page 9.
Earnings from manufacturing operations decreased to 43 cents per
diluted share in the third quarter of 1999 from 44 cents per diluted share in
1998. Excluding the results from the plastic films operations acquired from
Exxon Chemical Company (see Note 4 on page 7), profits in our films business
declined and continue to be adversely affected by lower volume, higher product
development costs, delays in new product introductions and weakness in
international markets. Profits were up 4% in the company's aluminum extrusion
business as continued volume growth was partially offset by higher aluminum
costs.
On September 24, 1999, Tredegar announced that its board of directors
is evaluating alternative financing and structural options for its technology
group, including a possible spin-off of the unit into an independent company.
See Note 3 on page 6 for more information.
Third-quarter 1999 net sales increased primarily due to acquisitions.
On a pro forma basis, net sales increased by 1% due to higher volume and sales
from the plastic films plants acquired from Exxon and higher volume and sales in
Aluminum Extrusions.
The consolidated gross profit margin during the third quarter of 1999
and 1998 was 20.6%.
Selling, general and administrative (SG&A) expenses in the third
quarter of 1999 were $12 million, up from $9.9 million in 1998 due primarily to
acquisitions and higher spending on new products in Film Products. As a
percentage of sales, SG&A expenses increased to 5.6% in 1999 compared with 5.3%
in 1998.
Research and development expenses increased by $2.6 million or 77% due
to the acquisition of Therics and higher spending at Molecumetics.
Interest income, which is included in "Other income (expense), net" in
the consolidated statements of income, increased slightly in the third quarter
of 1999 (up $92,000). The average tax-equivalent yield earned was approximately
5.1% in 1999 and 5.6% in 1998. Interest expense increased by $2.8 million due to
funds borrowed on a floating-rate basis under our revolving credit facility to
acquire Exxon Films (see Note 2 on page 5 and Note 4 on page 7), partially
offset by higher capitalized interest resulting from higher capital
expenditures. Average debt outstanding during the third quarter was $238.6
million (including average floating-rate debt outstanding of $218.6 million), up
from $25 million (all 7.2% fixed-rate debt) in the third quarter of last year.
The average interest rate on debt declined to 5.7% during the third quarter of
1999 from 7.2% in 1998 due to a higher proportion of floating-rate debt. The
average interest rate on floating-rate debt in the third quarter of 1999 was
5.6% (the rate as of November 12, 1999, was 7% - see Note 2 on page 5).
12
<PAGE>
The effective tax rate excluding unusual items increased to 35.4% in
the third quarter of 1999 from 35% in the third quarter of 1998.
Nine Months 1999 Compared with Nine Months 1998
The improved earnings from manufacturing operations during the first
nine months ($1.25 per diluted share in 1999 versus $1.20 per diluted share in
1998) were driven by higher volume and acquisitions in our aluminum extrusions
business and the acquisition of Exxon Films (see Note 4 on page 7). Excluding
the results from the plastic films operations acquired from Exxon, profits in
the films business declined and continue to be adversely affected by lower
volume, higher product development costs, delays in new product introductions
and weakness in international markets. See Note 3 on page 6 regarding our recent
announcement concerning the technology group.
Net sales for the first nine months of 1999 increased due to
acquisitions. On a pro forma basis, net sales declined by less than 1% due to
lower average selling prices in Film Products and Aluminum Extrusions, partially
offset by higher pro forma volume in Film Products and higher pro forma volume
and sales in Aluminum Extrusions. Lower selling prices reflect lower average
plastic resin and aluminum costs. Higher volume on a pro forma basis in Film
Products was due to the plastic films operations acquired from Exxon.
The consolidated gross profit margin for the first nine months of 1999
increased to 21.1% from 20.9% in 1998.
Selling, general and administrative (SG&A) expenses were $34.5 million
in 1999, up from $28.9 million in 1998 due primarily to acquisitions and higher
spending on new products in Film Products. As a percentage of sales, SG&A
expenses increased to 5.8% in 1999 compared with 5.6% in 1998.
Research and development expenses increased by $5.5 million or 53% due
to the acquisition of Therics and higher spending at Molecumetics.
Interest income, which is included in "Other income (expense), net" in
the consolidated statements of income, decreased by $1.1 million due to a lower
average cash equivalents balance (see Liquidity and Capital Resources on page
16) and lower yields. The average tax-equivalent yield earned was approximately
4.9% in 1999 and 5.7% in 1998. Interest expense increased by $3.9 million due to
funds borrowed on a floating-rate basis under our revolving credit facility to
acquire Exxon Films (see Note 2 on page 5 and Note 4 on page 7). Average debt
outstanding during the first nine months of 1999 was $130.8 million (including
average floating-rate debt outstanding of $107.8 million), up from $28.1 million
(all 7.2% fixed-rate debt) last year. The average interest rate on debt declined
to 5.8% in 1999 from 7.2% in 1998 due to a higher proportion of floating-rate
debt. The average interest rate on floating-rate debt in 1999 was 5.5% (the rate
as of November 12, 1999, was 7% - see Note 2 on page 5).
The effective tax rate excluding unusual items increased to 35.4% in
the first nine months of 1999 from 35% in 1998 due to lower tax exempt income.
13
<PAGE>
Segment Results
The following tables present Tredegar's net sales and operating profit
by segment for the third quarter and nine months ended September 30, 1999 and
1998.
<TABLE>
Net Sales by Segment
(In Thousands)
(Unaudited)
<CAPTION>
Third Quarter Nine Months
Ended Sept. 30 Ended Sept. 30
------------------ -----------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Film Products $ 93,548 $ 69,885 $236,567 $215,392
Fiberlux 2,620 2,993 7,098 8,598
Aluminum Extrusions 118,022 112,440 341,141 285,238
Technology:
Molecumetics 1,626 1,320 5,391 3,987
Therics 95 - 95 -
Other - - - 29
-------- --------- -------- --------
Total net sales $215,911 $ 186,638 $590,292 $513,244
======== ========= ======== ========
Operating Profit by Segment
(In Thousands)
(Unaudited)
Third Quarter Nine Months
Ended Sept. 30 Ended Sept. 30
------------------ -----------------
1999 1998 1999 1998
-------- -------- -------- --------
Film Products:
Ongoing operations $ 16,235 $ 12,621 $ 41,783 $ 39,211
Unusual items - - (1,170) -
-------- --------- -------- --------
Total Film Products 16,235 12,621 40,613 39,211
-------- --------- -------- --------
Fiberlux 160 510 19 1,052
Aluminum Extrusions 14,107 13,557 42,587 35,150
Technology:
Molecumetics (1,078) (995) (2,825) (2,460)
Therics (1,746) - (3,343) -
Venture capital investments (4,420) (618) (6,767) 1,104
Other - - - (428)
Unusual items - - (3,458) 765
-------- --------- -------- --------
Total technology (7,244) (1,613) (16,393) (1,019)
-------- --------- -------- --------
Total operating profit 23,258 25,075 66,826 74,394
Interest income 310 218 892 1,962
Interest expense 3,047 266 4,853 952
Corporate expenses, net * 1,458 476 4,339 4,361
-------- --------- -------- --------
Income before income taxes 19,063 24,551 58,526 71,043
Income taxes 6,748 8,591 20,723 22,626
-------- --------- -------- --------
Net income from continuing operations $ 12,315 $ 15,960 $ 37,803 $ 48,417
======== ========= ======== ========
</TABLE>
* Includes a pretax gain of $712 on the sale of corporate real estate in the
third quarter and nine months ended September 30, 1999.
14
<PAGE>
Selected historical and pro forma results for Film Products are
summarized below (pro forma results assume that the acquisition of Exxon Films
(see Note 4 on page 7) occurred at the beginning of 1998):
Film Products
Selected Historical and Pro Forma Financial Information
(In Thousands)
Historical Pro Forma
----------------- ----------------
1999 1998 1999 1998
------- -------- ------- --------
Third Quarter
- -------------
Net sales $ 93,548 $ 69,885 $93,548 $ 97,236
Operating profit 16,235 12,621 16,235 16,349
First Nine Months
- -----------------
Net sales 236,567 215,392 279,836 293,118
Operating profit 41,783 39,211 47,125 46,921
Sales and operating profit in Film Products were higher in 1999 due to
the acquisition of Exxon Films. Excluding the acquisition, sales volume and
operating profit were down due to the adverse effects of:
- - Higher product development spending
- - Delays in new product introductions
- - Weakness in international markets, particularly emerging markets
Selected historical and pro forma results for Aluminum Extrusions are
summarized below (pro forma results assume that acquisitions in 1998 in this
segment (see Note 4 on page 7) occurred at the beginning of 1998):
Aluminum Extrusions
Selected Historical and Pro Forma Financial Information
(In Thousands)
Historical Pro Forma
------------------ ----------------
1999 1998 1999 1998
-------- --------- -------- --------
Third Quarter
- -------------
Net sales $118,022 $ 112,440 $118,022 $112,440
Operating profit 14,107 13,557 14,107 13,557
First Nine Months
- -----------------
Net sales 341,141 285,238 341,141 331,037
Operating profit 42,587 35,150 42,587 36,680
Sales volume and operating profit in Aluminum Extrusions increased in
1999 due to acquisitions, strong demand for architectural and commercial
extrusions and a high percentage of mill finish product which maximized the
utilization of press capacity. Operating results were adversely affected by
press and furnace repairs and resulting downtime at the El Campo, Texas
facility, and expenses and disruption associated with the second phase of the
press modernization project at the Newnan, Georgia plant. Operating results in
the third quarter were hurt by a lag between selling price increases and rapidly
rising aluminum costs.
15
<PAGE>
Molecumetics operating losses increased during 1999 due to higher costs
to support related programs. See Note 4 on page 7 regarding the acquisition of
Therics, and Note 3 on page 6 for additional information concerning Tredegar's
technology group.
Liquidity and Capital Resources
Tredegar's total assets increased to $738.3 million at September 30,
1999, from $457.2 million at December 31, 1998, due to the acquisition of Exxon
Films, higher fixed assets from capital expenditures in excess of depreciation
and venture capital investments. Total liabilities increased to $388.9 million
at September 30, 1999, from $146.9 million at December 31, 1998, due mainly to
borrowings related to the acquisition of Exxon Films, capital expenditures and
venture capital investments.
Net cash provided by operating activities in excess of capital
expenditures and dividends increased to $34.6 million in the first nine months
of 1999 from $26.5 million in 1998 due to higher cash flow from operating
activities, partially offset by higher capital expenditures. Higher capital
expenditures in Film Products are related to the new facility near Budapest,
Hungary, and machinery and equipment purchased for the manufacture of new
products (breathable and elastomeric films that are partially replacing
conventional diaper backsheet and other diaper components in order to improve
comfort and fit). The Hungarian facility, which is now operational, produces
disposable films for hygiene products marketed in Eastern Europe. Higher capital
expenditures in Aluminum Extrusions relate to the second phase of a
modernization program at the plant in Newnan, Georgia (the first phase was
completed in 1996).
The reasons for the decrease in cash and cash equivalents to $19.4
million at September 30, 1999, from $25.4 million at December 31, 1998, are
summarized below:
<TABLE>
<CAPTION>
Nine Months
Ended Sept. 30
-------------------
1999 1998
-------- ---------
<S> <C> <C>
Cash and cash equivalents, beginning of period $ 25,409 $120,065
Cash provided by operating activities in excess of
capital expenditures and dividends 34,602 26,535
Proceeds from the exercise of stock options 3,079 3,824
Net increase (decrease) in borrowings 225,000 (5,000)
Acquisitions (215,227) (60,883)
Repurchases of Tredegar common stock - (36,460)
New venture capital investments, net of proceeds
from disposals (53,493) (24,202)
Other, net 64 (592)
--------- --------
Net increase (decrease) in cash and cash equivalents (5,975) (96,778)
--------- --------
Cash and cash equivalents, end of period $ 19,434 $ 23,287
========= ========
</TABLE>
16
<PAGE>
Quantitative and Qualitative Disclosures About Market Risk
Tredegar has exposure to the volatility of interest rates, polyethylene
and polypropylene resin prices, aluminum ingot and scrap prices, foreign
currencies, emerging markets and technology stocks.
See Note 2 on page 5 regarding credit agreements and interest rate
exposures.
Changes in resin prices, and the timing of those changes, could have a
significant impact on profit margins in Film Products; however, those changes
are generally followed by a corresponding change in selling prices. Profit
margins in Aluminum Extrusions are sensitive to fluctuations in aluminum ingot
and scrap prices but are also generally followed by a corresponding change in
selling prices; however, there is no assurance that higher ingot costs can be
passed along to customers.
In the normal course of business, we enter into fixed-price forward
sales contracts with certain customers for the sale of fixed quantities of
aluminum extrusions at scheduled intervals. In order to hedge our exposure to
aluminum price volatility under these fixed-price arrangements, which generally
have a duration of not more than 12 months, we enter into a combination of
forward purchase commitments and futures contracts to acquire aluminum, based on
the scheduled deliveries.
We sell to customers in foreign markets through our foreign operations
and through exports from U.S. plants. The percentage of consolidated pretax
income earned by geographic area for the first nine months of 1999 and 1998 are
presented below:
Percentage of Consolidated Pretax
Income Earned by Geographic Area*
Nine Months
Ended Sept. 30
----------------
1999 1998
------ ------
United States 57 % 68 %
Canada 19 7
Europe 9 11
Latin America 8 9
Asia 7 5
------ ------
Total 100 % 100 %
====== ======
*Based on consolidated pretax income from continuing operations
excluding venture capital activities and unusual items.
We attempt to match the pricing and cost of our products in the same
currency and generally view the volatility of foreign currencies and emerging
markets, and the corresponding impact on earnings and cash flow, as part of the
overall risk of operating in a global environment. Exports from the U.S. are
generally denominated in U.S. dollars. Our foreign operations in emerging
markets have agreements with certain customers that index the pricing of our
products to the U.S. dollar, the German mark or the euro. Our foreign currency
exposure on income from foreign operations in Europe primarily relates to the
German mark and the euro. We believe that our exposure to the Canadian dollar
has been substantially neutralized by the U.S. dollar-based spread (the
difference between selling prices and aluminum costs) generated from Canadian
casting operations and exports from Canada to the U.S. The acquisition of Exxon
Films on May 17, 1999, will increase the proportion of our income earned in the
U.S.
See Note 3 on page 6 regarding Tredegar's technology group.
17
<PAGE>
Year 2000 Information Technology Issues0
The century date compliance problem, which is commonly referred to as
the "Year 2000" problem, will affect many computers and other electronic devices
that are not programmed to properly recognize dates starting with January 1,
2000. This could result in system failures or miscalculations. The potential
impact of such failures include, among others, an inability to secure raw
materials, manufacture products, ship products and be paid for products on a
timely basis.
Since 1996, we have been actively planning and responding to the Year
2000 problem. Year 2000 reviews have been and will continue to be made to our
Executive Committee and senior management. Periodic reviews with the Board of
Directors began in August 1998.
Our Year 2000 compliance efforts are focused on internal computer-based
information systems, external electronic interfaces and communication equipment,
shop floor machines and other manufacturing and research process control
devices. Remediation of systems requiring changes was completed at the end of
1998, except for revisions to a small portion of certain software programs, the
replacement of certain software for the four aluminum extrusion plants recently
acquired in Canada, and computer systems related to the acquisition of Exxon
Films discussed below. Remediation efforts for the exceptions have extended into
1999. Testing of systems began in mid-1998 and will continue through 1999. We do
not believe contingency plans are necessary for internal systems at this time.
We are also actively evaluating the Year 2000 capabilities of parties with whom
we have key business relationships (suppliers, customers and banks, for
example). Contingency plans will be developed for these relationships as needed.
Work to fix the Year 2000 problem is being performed largely by internal
personnel and we do not track those costs. The incremental costs associated with
correcting the problem are not expected to have a material adverse effect on our
operating results, financial condition or cash flows.
The computer hardware, software systems and communications equipment
related to Exxon Films have been replaced and are now Year 2000 compliant. This
business has been integrated into the enterprise-wide systems infrastructure of
Tredegar Film Products. We estimate that the cost of all remediation efforts
related to Exxon Films is approximately $1.9 million, most of which is being
capitalized and amortized over the estimated useful life of related assets.
While we believe that we are taking the necessary steps to resolve our
Year 2000 issues in a timely manner, there can be no assurance that there will
be no Year 2000 problems. If any such problems occur, we will work to solve them
as quickly as possible. At present, we do not expect that any such problems will
have a material adverse effect on our businesses. The failure, however, of a
major customer or supplier to be Year 2000-compliant could have a material
adverse effect on our businesses.
18
<PAGE>
New Accounting Standards
The Financial Accounting Standards Board has issued a new standard
affecting the accounting for derivative instruments and hedging activities. This
standard is not expected to significantly change our operating results,
financial condition or disclosures. The new standard will be adopted in the
first quarter of 2001.
19
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit No.
4 Credit Agreement, dated October 13, 1999, among Tredegar
Corporation, the banks named therein, Bank of America,
N.A. as Administrative Agent, The Bank of New York and
Crestar Bank as Co-Documentation Agents
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed for
the quarter ended September 30, 1999.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Tredegar Corporation
(Registrant)
Date: November 12, 1999 /s/ N. A. Scher
------------------------- --------------------------------------------
Norman A. Scher
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: November 12, 1999 /s/ D. Andrew Edwards
------------------------- --------------------------------------------
D. Andrew Edwards
Vice President, Treasurer and Controller
(Principal Accounting Officer)
21
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4 Credit Agreement, dated October 13, 1999, among Tredegar
Corporation, the banks named therein, Bank of America, N.A. as
Administrative Agent, The Bank of New York and Crestar Bank as
Co-Documentation Agents
27 Financial Data Schedule
CREDIT AGREEMENT
Dated as of October 13, 1999
among
TREDEGAR CORPORATION,
THE BANKS NAMED HEREIN
and
BANK OF AMERICA, N.A.,
as Administrative Agent,
THE BANK OF NEW YORK
and
CRESTAR BANK,
as Co-Documentation Agents
Arranged by:
BANC OF AMERICA SECURITIES LLC, as Sole Lead Arranger and Sole Book Manager.
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS.....................................................1
Section 1.01.....................................Defined Terms. 1
-------------
Section 1.02...................................Terms Generally. 10
---------------
II. THE CREDITS....................................................10
Section 2.01........................................Commitment. 10
----------
Section 2.02...............................Borrowing Procedure. 10
-------------------
Section 2.03......................................Refinancings. 11
------------
Section 2.04..............................................Fees. 12
----
Section 2.05........................Repayment of the Term Loan. 12
--------------------------
Section 2.06.................................Interest on Loans. 13
-----------------
Section 2.07..................................Default Interest. 13
----------------
Section 2.08........................Alternate Rate of Interest. 13
--------------------------
Section 2.09........................................Prepayment. 14
----------
Section 2.10.....Reserve Requirements; Change in Circumstances. 14
---------------------------------------------
Section 2.11................................Change in Legality. 15
------------------
Section 2.12.........................................Indemnity. 16
---------
Section 2.13................................Pro Rata Treatment. 16
------------------
Section 2.14................................Sharing of Setoffs. 17
------------------
Section 2.15..........................................Payments. 17
--------
Section 2.16.............................................Taxes. 18
-----
III. REPRESENTATIONS AND WARRANTIES.................................20
Section 3.01.............. ...............Organization; Powers. 20
--------------------
Section 3.02.............Authorization; Governmental Approvals. 20
-------------------------------------
Section 3.03....................................Enforceability. 20
--------------
Section 3.04..............................Financial Statements. 21
--------------------
Section 3.05........................No Material Adverse Change. 21
--------------------------
Section 3.06...Title to Properties and Possession Under Leases. 21
-----------------------------------------------
Section 3.07..................The Subsidiaries and the Company. 21
--------------------------------
Section 3.08..................Litigation: Compliance with Laws. 21
--------------------------------
Section 3.09........................................Agreements. 22
----------
Section 3.10.......................Federal Reserve Regulations. 22
---------------------------
Section 3.11....Investment Company Act; Public Utility Holding
Company Act. 22
----------------------------------------------
Section 3.12...................................Use of Proceeds. 22
---------------
Section 3.13.......................................Tax Returns. 22
-----------
Section 3.14.........................No Material Misstatements. 23
-------------------------
Section 3.15............................Employee Benefit Plans. 23
----------------------
Section 3.16.............................Environmental Matters. 23
---------------------
Section 3.17..........................................Solvency. 24
--------
Section 3.18..............................Year 2000 Compliance. 24
--------------------
IV. CONDITIONS OF LENDING..................................................24
---------------------
Section 4.01....................................All Borrowings. 24
--------------
Section 4.02........................Effectiveness of Agreement. 25
--------------------------
V. AFFIRMATIVE COVENANTS............ .............................26
Section 5.01...Existence; Businesses and Properties Compliance. 26
-----------------------------------------------
Section 5.02.........................................Insurance. 26
---------
Section 5.03.............................Obligations and Taxes. 27
---------------------
Section 5.04................Financial Statements, Reports, etc. 27
-----------------------------------
Section 5.05......................Litigation and Other Notices. 28
----------------------------
Section 5.06.............................................ERISA. 28
-----
Section 5.07.........Maintaining Records; Access to Properties
and Inspections. 29
-----------------------------------------
Section 5.08...................................Use of Proceeds. 29
---------------
Section 5.09..............................Year 2000 Compliance. 29
--------------------
VI. NEGATIVE COVENANTS.............................................29
Section 6.01.............................................Liens. 29
-----
Section 6.02..................Sale and Lease-Back Transactions. 31
--------------------------------
Section 6.03.......................Obligations of Subsidiaries. 31
---------------------------
Section 6.04.......Mergers, Consolidations and Sales of Assets. 31
-------------------------------------------
Section 6.05.......................Dividends and Distributions. 32
---------------------------
Section 6.06......................Transactions with Affiliates. 32
----------------------------
Section 6.07..................Consolidated Stockholders'Equity. 33
--------------------------------
Section 6.08........................................Debt Ratio. 33
----------
VII. EVENTS OF DEFAULT..............................................33
VIII. THE ADMINISTRATIVE AGENT.......................................36
IX. MISCELLANEOUS..................................................38
Section 9.01...........................................Notices. 38
-------
Section 9.02.............................Survival of Agreement. 38
---------------------
Section 9.03....................................Binding Effect. 39
--------------
Section 9.04............................Successors and Assigns. 39
----------------------
Section 9.05...............................Expenses; Indemnity. 41
-------------------
Section 9.06...................................Right of Setoff. 42
---------------
Section 9.07....................................Applicable Law. 43
--------------
Section 9.08................................Waivers; Amendment. 43
------------------
Section 9.09..........................Interest Rate Limitation. 43
------------------------
Section 9.10..................................Entire Agreement. 44
----------------
Section 9.11..............................Waiver of Jury Trial. 44
--------------------
Section 9.12......................................Severability. 44
------------
Section 9.13......................................Counterparts. 44
------------
Section 9.14..........................................Headings. 44
--------
Section 9.15...................................Confidentiality. 44
---------------
Section 9.16.......Jurisdiction; Consent to Service of Process. 45
-------------------------------------------
Exhibit A Borrowing Request
Exhibit B Form of Term Note
Exhibit C Assignment and Acceptance
Exhibit D Form of Opinion of Company's Counsel
<PAGE>
TERM LOAN CREDIT AGREEMENT dated as of October 13, 1999, among TREDEGAR
CORPORATION, a Virginia corporation formerly known as Tredegar Industries, Inc.
(the "Company"); the banks listed in Schedule 2.01 hereto or subsequently
becoming parties hereto as provided herein (the "Banks"); BANK OF AMERICA, N.A.,
a national banking association, as administrative agent for the Banks (in such
capacity, the "Administrative Agent"); and The Bank of New York, a national
banking association, and Crestar Bank, as Co- Documentation Agents.
The Company has requested a term loan of $250 million to be used to
refinance existing indebtedness and for working capital and other general
corporate purposes, including acquisitions. The Banks are willing to extend such
credit to the Company on the terms and subject to the conditions herein set
forth.
Accordingly, the Company, the Administrative Agent and the Banks agree
as follows:
I. DEFINITIONS
Section 1.01......Defined Terms.
-------------
As used in this Agreement, the following terms shall have the meanings
specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves. For purposes
hereof, the term "LIBO Rate" shall mean the rate (rounded upwards, if necessary,
to the next 1/16 of 1%) at which dollar deposits approximately equal in
principal amount to the Administrative Agent's portion of such Eurodollar
Borrowing and for a maturity comparable to such Interest Period are offered to
the principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Administrative Fees" shall have the meaning assigned to such term in
Section 2.04(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit C hereto.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate"
shall mean the rate of interest per annum publicly announced from time to time
by the Administrative Agent as its prime rate in effect at its principal office
in Charlotte, North Carolina; each change in the Prime Rate shall be effective
on the date such change is publicly announced as effective. "Federal Funds
Effective Rate" shall mean, for any date, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for any day which is a Business
Day, the average of the quotations for the day of such transactions received by
the Administrative Agent from three Federal funds brokers of recognized standing
selected by it. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate for any reason, including
the inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate shall
be determined without regard to clause (b) of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.
"Applicable Spread" shall mean the applicable spread per annum set
forth below based upon the Company's Debt/Capitalization Ratio:
Category I Applicable Spread
- ---------- -----------------
Debt/Capitalization Ratio less than or equal to 30% 0.500%
Category II
- -----------
Debt/Capitalization Ratio greater than 30% and less 0.625%
than or equal to 40%
Category III
- ------------
Debt/Capitalization Ratio greater than 40% and less 0.750%
than or equal to 50%
Category IV
- -----------
Debt/Capitalization Ratio greater than 50% and less 0.875%
than or equal to 55%
Category V
- ----------
Debt/Capitalization Ratio greater than 55% 1.000%
For purposes of the foregoing, the Applicable Spread for any date shall
be determined by reference to the Debt/Capitalization Ratio as of the last day
of the Company's fiscal quarter most recently ended as of such date for which
financial statements have been delivered in accordance with Section 5.04, and
any change in the Applicable Spread shall become effective upon the delivery to
the Administrative Agent of a certificate of a Responsible Officer of the
Company with respect to the financial statements to be delivered, pursuant to
Section 5.04 for the fiscal quarter or year most recently ended, as the case may
be, (a) setting forth in reasonable detail the calculation of the
Debt/Capitalization Ratio for and at the end of such fiscal quarter or year and
(b) stating that the signer has reviewed the terms of this Agreement and other
Loan Documents and has made, or caused to be made under his or her supervision,
a review in reasonable detail of the transactions and condition of the Company,
during the accounting period, and that the signer does not have knowledge of the
existence as at the date of such officer's certificate of any Event of Default
or Default and shall apply to Loans outstanding on such delivery date or made on
and after such delivery date. Notwithstanding the foregoing, (i) for the period
from the Closing Date until the date of delivery of quarterly financial
statements for the fiscal quarter ending March 31, 2000 and the officer's
compliance certificate relating thereto, the Applicable Spread shall be Category
III (or higher (more expensive) level as may be indicated based on the
Debt/Capitalization Ratio), and (ii) at any time during which the Company has
failed to deliver the certificate referred to above with respect to a fiscal
quarter or year following the date that delivery of financial statements
relating to such fiscal quarter or year are required to be delivered under
Section 5.04, the Debt/Capitalization Ratio shall be deemed, solely for the
purposes of this definition, to be greater than 55% until such time as the
Company shall have delivered such certificate and financial statements.
"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Bank and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit C.
"Banks" shall have the meaning assigned to such term in the preamble to
this Agreement.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"Borrowing" shall mean a Loan or group of Loans of a single Type made
by the Banks on a single date and as to which a single Interest Period is in
effect.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or other day on which banks in Charlotte, North Carolina,
Richmond, Virginia or New York, New York are authorized or required by law to
close); provided, however, that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities and Exchange
Commission as in effect on the date hereof) other than (i) any person or group
whose beneficial ownership of common stock is reported on Schedule 13D, filed
with respect to the common stock of the Company on July 20, 1989, as amended
prior to the date of this Agreement, (ii) spouses, children and lineal
descendants of such persons, (iii) trusts created for the benefit of such
persons, or (iv) any combination of the persons described in the foregoing
subclauses (i), (ii) or (iii) (an "Exempt Person") shall own directly or
indirectly, beneficially or of record, shares representing more than 25% of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Company; (b) a majority of the seats (other than vacant
seats) on the board of directors of the Company shall at any time have been
occupied by persons who were not Continuing Directors; or (c) any person or
group other than an Exempt Person shall otherwise directly or indirectly Control
the Company.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Commitment" shall mean, with respect to each Bank, the Commitment of
such Bank hereunder as set forth in Schedule 2.01 hereto.
"Consolidated Net Income" with respect to any person for any period
shall mean (a) the aggregate net income (or net loss) of such person for such
period equal to net revenues and other proper income or gain of such person for
such period (including gains on the sale of capital assets) less, without
duplication of any items deducted in determining such net revenues, income or
gain, the aggregate for such person during such period of, (i) cost of goods
sold, (ii) interest expense, (iii) operating expense, (iv) selling, general and
administrative expenses, (v) taxes, (vi) depreciation, depletion and
amortization and (vii) any other items that are treated as expenses under GAAP,
plus (b) write-downs of assets, losses from discontinued operations and other
extraordinary losses (net of tax benefits), in each case to the extent taken
into account in determining the net revenues, income or gain referred to in (a)
above.
"Consolidated Stockholders' Equity" shall mean, at any time (a) the sum
of (i) the Company's issued capital stock taken at par or stated value at such
time, (ii) the Company's capital surplus at such time and (iii) the Company's
retained earnings at such time, less (b) the Company's treasury stock and
minority interest in Subsidiaries at such time, all determined in accordance
with GAAP.
"Consolidated Total Capitalization" shall mean, at any time, the sum of
the Company's Consolidated Total Debt and Consolidated Stockholders' Equity at
such time.
"Consolidated Total Debt" shall mean, at any time, all Indebtedness of
the Company and its consolidated Subsidiaries at such time, computed and
consolidated in accordance with GAAP.
"Continuing Director" shall mean (a) any member of the Board of
Directors of the Company on the date of this Agreement and (b) any person whose
subsequent nomination for election or election to the Board of Directors was
recommended or approved by a majority of the Continuing Directors serving as
such at the time of such nomination.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.
"Debt/Capitalization Ratio" shall mean the ratio of the Company's
Consolidated Total Debt to the Company's Consolidated Total Capitalization.
"Default" shall mean an event which upon notice or lapse of time or
both would constitute an Event of Default.
"dollars" and the symbol "$" shall mean the lawful currency of the
United States of America.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which the Company is a member and
which is treated as a single employer under Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the LIBO Rate in accordance with the provisions of
Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Fees" shall mean the Administrative Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer or Controller of such
corporation.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (c) to maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term Guarantee
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid (other than accounts payable),
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property or assets purchased by such person,
(e) all obligations of such person issued or assumed as the deferred purchase
price of property or services, (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
person, whether or not the obligations secured thereby have been assumed,
provided that the amount of such Indebtedness shall be deemed to be the lesser
of (i) the outstanding principal amount of such Indebtedness plus all accrued
and unpaid interest relating thereto and (ii) the fair market value of the
property secured by any such Lien, (g) all Guarantees by such person of
Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements and (j) all obligations of such person as an account
party in respect of letters of credit and bankers' acceptances. The Indebtedness
of any person shall include the Indebtedness of any partnership in which such
person is a general partner unless such Indebtedness is without any recourse
whatsoever to such person as a general partner of any such partnership.
"Interest Payment Date" shall mean, with respect to any Loan, the last
day of the Interest Period applicable thereto and, in the case of a Eurodollar
Loan with an Interest Period of more than three months' duration, each day that
would have been the Interest Payment Date for such Loan had successive Interest
Periods of 3 months been applicable to such Loan and, in addition, the date of
any refinancing or conversion of such Loan with or to a Loan of a different
Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in the
calendar month that is 1, 2, 3 or 6 months thereafter, as the Company may elect,
and (b) as to any ABR Borrowing, the period commencing on the date of such
Borrowing and ending on the date 90 days thereafter or the date of prepayment of
such Borrowing; provided, however, that (i) if any Interest Period would end on
a day which shall not be a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless, with respect to Eurodollar Loans
only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day.
Interest shall accrue from and including the first day of an Interest Period to
but excluding the last day of such Interest Period and (ii) in the case of
Eurodollar Loans, no Interest Period shall extend beyond the next scheduled
principal amortization payment date unless, and to the extent that, there are
other outstanding ABR Loans and Eurodollar Loans expiring prior to such
principal amortization payment date which equal or exceed the principal
amortization payment then due.
"Internal Financing Subsidiary" shall mean any Subsidiary (i) of which
securities or other ownership interests representing 100% of the equity or 100%
of the ordinary voting power are, at the time any determination is made, owned,
controlled or held, directly or indirectly, by the Company, and (ii) which has
no outstanding Indebtedness to any Person other than the Company or another
wholly-owned Subsidiary.
"Internal Financing Transaction" shall mean any incurrence of
Indebtedness or other obligations by any wholly-owned Subsidiary in favor of an
Internal Financing Subsidiary, any transfer of assets or liabilities or other
transactions between an Internal Financing Subsidiary and the Company or any
wholly-owned Subsidiary, or any other transaction reasonably related to the
foregoing; provided, however, that in connection therewith neither the Company
nor any wholly-owned Subsidiary shall incur any Indebtedness or transfer any
assets to any Person other than the Company or another wholly-owned Subsidiary."
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"Loan" means the Term Loan made hereby, whether made as a Eurodollar
Loan or an ABR Loan.
"Loan Documents" shall mean this Agreement (including all exhibits and
schedules attached hereto) and the Term Notes.
"Margin Stock" shall have the meaning given such term under Regulation
U.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of the Company and the Subsidiaries taken as a whole, (b) material
impairment of the ability of the Company to perform any of its obligations under
any Loan Document to which it is or will be a party or (c) material impairment
of the rights of or benefits available to the Banks under any Loan Document.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code which
is maintained for employees of the Company or any ERISA Affiliate.
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation D" shall mean Regulation D of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Reportable Event" shall mean any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the
Code).
"Required Banks" shall mean, at any time, Banks having Commitments
representing more than fifty percent (50%) of the Total Commitment and, for
purposes of acceleration pursuant to clause (ii) of Article VII and at any time
when no Commitment is in effect, Banks holding Loans representing more than
fifty percent (50%) of the aggregate principal amount of the Loans outstanding.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Significant Subsidiary" shall mean any Subsidiary whose gross revenues
or assets constitute 1% or more of consolidated gross revenues or consolidated
assets of the Company and its Subsidiaries.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) which is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of the Company.
"Taxes" shall have the meaning assigned such term in Section 2.16(a).
"Term Loan" means the term loan made by the Banks pursuant to Section
2.01.
"Term Note" or "Term Notes" means the promissory notes of the Borrower
in favor of each of the Banks evidencing the Term Loan in substantially the form
attached as Exhibit B, individually or collectively, as appropriate, as such
promissory notes may be amended, modified, supplemented, extended or renewed
from time to time.
"Total Commitment" shall mean at any time the aggregate amount of the
Banks' Commitments, as in effect at such time.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"Tredegar Investments" means Tredegar Investments, Inc., a Virginia
corporation, and TGI Fund I, LC, TGI Fund II, LC and TGI Fund III, LLC, and any
other limited liability company or limited partnership of which Tredegar
Investments, Inc. is the sole general manager or sole general partner, together
with the successors and assigns of any of such entities.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, "Rate" shall include the LIBO
Rate and the Alternate Base Rate.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Year 2000 Compliant" shall have the meaning given such term in Section
3.18.
"Year 2000 Problem" shall have the meaning given such term in Section
3.18.
Section 1.02......Terms Generally.
---------------
The definitions in Section 1.01 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement unless
the context shall otherwise require. Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided, however, that,
for purposes of determining compliance with any covenant set forth in Article
VI, such terms shall be construed in accordance with GAAP as in effect on the
date of this Agreement applied on a basis consistent with the application used
in the Company's audited financial statements referred to in Section 3.04.
II. THE CREDITS
Section 2.01......Commitment.
----------
At any time from the Closing Date to and until October 21, 1999,
subject to the terms and conditions hereof, each Bank severally agrees to make a
term loan to the Borrower in a single advance equal to its Commitment, and which
together with the other Banks shall represent a total term loan of TWO HUNDRED
FIFTY MILLION DOLLARS ($250,000,000) in the aggregate for the purposes
hereinafter set forth. The Term Loan may be comprised of Eurodollar Loans or ABR
Loans, or a combination thereof, as the Borrower may request. Amounts repaid on
the Term Loan may not be reborrowed.
Section 2.02......Borrowing Procedure.
-------------------
(a) In order to request a Borrowing, the Company shall give written or
telex notice (or telephone notice promptly confirmed in writing or by telex) to
the Administrative Agent in the form of Exhibit A (i) in the case of a
Eurodollar Borrowing, not later than 10:30 A.M., Charlotte, North Carolina time,
three Business Days before a proposed borrowing, and (ii) in the case of an ABR
Borrowing, not later than 10:30 A.M., Charlotte, North Carolina time, one
Business Day before a proposed borrowing. Such notice shall be irrevocable and
shall in each case refer to this Agreement and specify (i) whether the Borrowing
then being requested is to be a Eurodollar Borrowing or an ABR Borrowing; (ii)
the date of such Borrowing (which shall be a Business Day), and the amount
thereof; and (iii) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto. If no election as to the Type of Borrowing
is specified in any such notice, then the requested Borrowing shall be a
Eurodollar Borrowing. If no Interest Period with respect to any Eurodollar
Borrowing is specified in any such notice, then the Company shall be deemed to
have selected an Interest Period of one month's duration. If the Company shall
not have given notice in accordance with this Section 2.02 of its election to
refinance a Borrowing prior to the end of the Interest Period in effect for such
Borrowing, then the Company shall (unless such Borrowing is repaid at the end of
such Interest Period) be deemed to have given notice of an election to refinance
such Borrowing with a Eurodollar Borrowing with an Interest Period of one month.
The Administrative Agent shall promptly advise the Banks of any notice given
pursuant to this Section 2.02 and of each Bank's portion of the requested
Borrowing.
(b) Advances.........Subject to Section 2.05, each Bank shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds to the Administrative Agent not later
than 12:00 noon, Charlotte, North Carolina time, and the Administrative Agent
shall by 3:00 p.m., Charlotte, North Carolina time, credit the amounts so
received to a general deposit account of, and designated by, the Company or, if
a Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Banks. Unless the Administrative Agent shall have received notice
from a Bank prior to the date of any Borrowing that such Bank will not make
available to the Administrative Agent such Bank's portion of such Borrowing, the
Administrative Agent may assume that such Bank has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
this paragraph (b) and the Administrative Agent may, in reliance upon such
assumption, make available to the Company on such date a corresponding amount.
If and to the extent that such Bank shall not have made such portion available
to the Administrative Agent, such Bank and the Company (without prejudice to the
Company's rights against the defaulting Bank) severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Company until the date such amount is repaid to the Administrative Agent at
(i) in the case of the Company, the interest rate applicable at the time to the
Loans comprising such Borrowing and (ii) in the case of such Bank, the Federal
Funds Effective Rate for a period of two Business Days and thereafter the
Alternate Base Rate. If such Bank shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Bank's Loan as part of
such Borrowing for purposes of this Agreement.
(c) Each Eurodollar Borrowing shall be in a minimum principal amount of
$5 million and integral multiples of $1 million in excess thereof. There shall
be no minimum principal amount for ABR Borrowings.
(d) The Term Loan shall be comprised of no more than three (3)
Eurodollar Loans outstanding at any time. For purposes hereof, Eurodollar Loans
with separate or different Interest Periods will be considered as separate
Eurodollar Loans even if their Interest Periods expire on the same date.
Section 2.03......Refinancings.
------------
The Company may refinance all or any part of any Borrowing with a
Borrowing of the same or a different Type made pursuant to the provisions
hereof, subject to the conditions and limitations set forth herein and elsewhere
in this Agreement. Any Borrowing or part thereof so refinanced shall be deemed
to be repaid in accordance with Section 2.05 with the proceeds of a new
Borrowing hereunder and the proceeds of the new Borrowing, to the extent they do
not exceed the principal amount of the Borrowing being refinanced, shall not be
paid by the Banks to the Administrative Agent or by the Administrative Agent to
the Company.
Section 2.04......Fees.
----
(a) The Company agrees to pay to the Administrative Agent, for its own
benefit and for the benefit of the Banks, the fees identified in the fee letter
agreement dated August 4, 1999, as amended and modified (the "Fee Letter"),
among Bank of America, N.A., Banc of America Securities LLC and the Company.
(b) The Company agrees to pay to the Administrative Agent, for its own
account, the annual administrative agent's fee provided in the Fee Letter (the
"Administrative Fees").
(c) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Banks. Once paid none of the Fees shall be refundable under any
circumstances.
Section 2.05......Repayment of the Term Loan.
--------------------------
(a) The principal amount of the Term Loan is payable in twelve
(12) consecutive quarterly installments as follows:
Principal Principal
Amortization Amortization
Payment Date Payment Payment Date Payment
January 13, 2003 $12,500,000 July 13, 2004 $18,750,000
April 14, 2003 $12,500,000 October 13, 2004 $18,750,000
July 14, 2003 $12,500,000 January 13, 2005 $31,250,000
October 13, 2003 $12,500,000 April 13, 2005 $31,250,000
January 13, 2004 $18,750,000 July 13, 2005 $31,250,000
April 13, 2004 $18,750,000 October 13, 2005 $31,250,000
-----------
$250,000,000
Each Loan will bear interest from the date of such Borrowing on the
outstanding principal balance thereof as set forth in Section 2.06.
(b) The Term Loan shall be evidenced by the Term Notes.
(c) Each Bank shall, and is hereby authorized by the Company to
maintain, in accordance with its usual practice, records evidencing the
indebtedness of the Company to such Bank hereunder from time to time, including
the date, amount and Type of and the Interest Period applicable to each Loan
made by such Bank from time to time and the amounts of principal and interest
paid to such Bank from time to time in respect of each such Loan.
(d) The entries made in the records maintained pursuant to paragraph
(c) of this Section 2.05 and in the Register maintained by the Administrative
Agent pursuant to Section 9.04(d) shall be prima facie evidence of the existence
and amounts of the obligations of the Company to which such entries relate;
provided, however, that the failure of any Bank or the Administrative Agent to
maintain or to make any entry in such records or the Register, as applicable, or
any error therein shall not in any manner affect the obligation of the Company
to repay any Loans in accordance with the terms of this Agreement.
Section 2.06......Interest on Loans.
-----------------
(a) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Spread in effect at such time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each ABR Borrowing shall bear interest (if the Alternate Base Rate is based on
the Prime Rate, computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be, or if the Alternate Base Rate is
based on the Federal Funds Effective Rate, computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Alternate Base Rate.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Adjusted LIBO Rate or Alternate Base Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error.
Section 2.07......Default Interest.
----------------
If the Company shall default in the payment of the principal of or
interest on any Loan or any other amount becoming due hereunder, by acceleration
or otherwise, the Company shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount up to (but not including) the
date of actual payment (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the Alternate Base Rate plus 2%.
Section 2.08......Alternate Rate of Interest.
--------------------------
In the event, and on each occasion, that on the day two Business Days
prior to the commencement of any Interest Period for a Eurodollar Borrowing the
Administrative Agent shall have determined that dollar deposits in the principal
amounts of the Loans comprising such Borrowing are not generally available in
the London interbank market, or that the rates at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to any Bank of
making or maintaining its Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written or
telex notice of such determination to the Company and the Banks. In the event of
any such determination, until the Administrative Agent shall have advised the
Company and the Banks that the circumstances giving rise to such notice no
longer exist, any request by the Company for a Eurodollar Borrowing pursuant to
Section 2.02 shall be deemed to be a request for an ABR Borrowing in the case of
Eurodollar Borrowings. Each determination by the Administrative Agent hereunder
shall be conclusive absent manifest error.
Section 2.09......Prepayment.
----------
(a) The Company shall have the right at any time and from time to time
to prepay any Borrowing in whole or in part, upon at least three Business Days'
prior written or telex notice (or telephone notice promptly confirmed by written
or telex notice) to the Administrative Agent; provided, however, that each
partial prepayment shall be in an amount which is an integral multiple of
$1,000,000 and not less than $5,000,000.
(b) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Company to prepay such Borrowing by the amount
stated therein on the date stated therein. All prepayments under this Section
2.09 shall be subject to Section 2.12 but otherwise without premium or penalty.
All prepayments under this Section 2.09 shall be accompanied by accrued interest
on the principal amount being prepaid to the date of payment.
(c) Prepayments shall be applied ratably to the remaining scheduled
principal amortization payments.
Section 2.10......Reserve Requirements; Change in Circumstances.
---------------------------------------------
(a) Notwithstanding any other provision herein, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Bank of the
principal of or interest on any, Eurodollar Loan made by such Bank or any other
fees or amounts payable hereunder (other than changes in respect of taxes
imposed on the overall net income of such Bank by the jurisdiction in which such
Bank has its principal office or by any political subdivision or taxing
authority therein), shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of or credit extended by, such Bank (except any reserve requirement
reflected in the Adjusted LIBO Rate), or shall impose on such Bank or the London
interbank market any other condition affecting this Agreement or any Eurodollar
Loan made by such Bank, and the result of any of the foregoing shall be to
increase the cost to such Bank of making or maintaining any Eurodollar Loan or
to reduce the amount of any sum received or receivable by such Bank hereunder
(whether of principal, interest or otherwise) in respect thereof by an amount
deemed by such Bank to be material, then the Company shall pay to such Bank upon
demand such additional amount or amounts as will compensate such Bank for such
additional cost incurred or reduction suffered.
(b) If any Bank shall have determined that the applicability of any
law, rule, regulation or guideline adopted pursuant to or arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law, rule,
regulation or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or any
lending office of such Bank) or any Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Bank's capital or on the capital
of such Bank's holding company, if any, as a consequence of this Agreement or
the Loans made by such Bank pursuant hereto to a level below that which such
Bank or such Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's policies and the
policies of such Bank's holding company with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time the Company
shall pay to such Bank such additional amount or amounts as will compensate such
Bank or such Bank's holding company for any such reduction suffered.
(c) A certificate of a Bank setting forth such amount or amounts as
shall be necessary to compensate such Bank (or participating banks or other
entities pursuant to Section 9.04) as specified in paragraph (a) or (b) above,
as the case may be, shall be delivered to the Company and shall be conclusive
absent manifest error. The Company shall pay each Bank the amount shown as due
on any such certificate delivered by it within 10 days after its receipt of the
same.
(d) Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any period shall not constitute a waiver of
such Bank's right with respect to such period or any other period, provided that
a Bank is entitled to compensation only for increased costs or other amounts
incurred during the period of 90 days preceding the date of such Bank's demand
therefor. The protection of this Section shall be available to each Bank
regardless of any possible contention of invalidity or inapplicability of the
law, rule, regulation, guideline or other change or condition which shall have
been imposed.
Section 2.11......Change in Legality.
------------------
(a) Notwithstanding any other provision herein, if any change in any
law or regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Bank to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Company and to the Administrative Agent, such Bank may:
(i) declare that Eurodollar Loans will not thereafter be made
by such Bank hereunder, whereupon any request by the Company for a
Eurodollar Borrowing shall, as to such Bank only, be deemed a request
for an ABR Loan, unless such declaration shall be subsequently
withdrawn;
(ii) require that all outstanding Eurodollar Loans made by it
be converted to ABR Loans in which event all such Eurodollar Loans
shall be automatically converted to ABR Loans as of the effective date
of such notice as provided in paragraph (b) below.
In the event any Bank shall exercise its rights under (i) or (ii)
above, all payments and prepayments of principal which would otherwise have been
applied to repay the Eurodollar Loans that would have been made by such Bank or
the converted Eurodollar Loans of such Bank shall instead be applied to repay
the ABR Loans made by such Bank in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.11, a notice to the Company by any
Bank shall be effective as to each Eurodollar Loan as applicable, if lawful, on
the last day of the Interest Period currently applicable to such Eurodollar
Loan; in all other cases such notice shall be effective on the date of receipt
by the Company.
Section 2.12......Indemnity.
---------
The Company shall indemnify each Bank against any loss or expense which
such Bank may sustain or incur as a consequence of (a) any failure by the
Company to fulfill on the date of any Borrowing hereunder the applicable
conditions set forth in Article IV, (b) any failure by the Company to borrow or
to refinance or continue any Loan hereunder after irrevocable notice of such
borrowing, refinancing or continuation has been given pursuant to Section 2.02
or 2.03, (c) any payment, prepayment or conversion of a Eurodollar Loan required
by any other provision of this Agreement or otherwise made or deemed made on a
date other than the last day of the Interest Period applicable thereto, (d) any
default in payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, by irrevocable notice of prepayment or otherwise) or (e) the
occurrence of any Event of Default, including, in each such case, any loss or
reasonable expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurodollar Loan. Such loss or
reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Bank, of (i) its cost of obtaining the funds for
the Loan being paid, prepaid, converted or not borrowed (based on the Adjusted
LIBO Rate for the period from the date of such payment, prepayment, conversion
or failure to borrow to the last day of the Interest Period for such Loan (or,
in the case of a failure to borrow, the Interest Period for such Loan which
would have commenced on the date of such failure) over (ii) the amount of
interest (as reasonably determined by such Bank) that would be realized by such
Bank in reemploying the funds so paid, prepaid, converted or not borrowed for
such period or Interest Period, as the case may be. A certificate of any Bank
setting forth any amount or amounts which such Bank is entitled to receive
pursuant to this Section shall be delivered to the Company and shall be
conclusive absent manifest error.
Section 2.13......Pro Rata Treatment.
------------------
Except as required under Sections 2.10 and 2.11, each Borrowing, each
payment or prepayment of principal of any Borrowing, each payment of interest on
the Loans, and each reduction of the Commitments and each refinancing of any
Borrowing with a Borrowing of any Type, shall be allocated pro rata among the
Banks in accordance with their respective Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans). Each Bank agrees that in
computing such Bank's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Bank's percentage of
such Borrowing to the next higher or lower whole dollar amount.
Section 2.14......Sharing of Setoffs.
------------------
Each Bank agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against the Company, or pursuant to a
secured claim under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured claim, received
by such Bank under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary) in
respect of any Loan or Loans as a result of which the unpaid principal portion
of its Loans shall be proportionately less than the unpaid principal portion of
the Loans of any other Bank, it shall promptly purchase from such other Bank at
face value a participation in the Loans of such other Bank, so that the
aggregate unpaid principal amount of the Loans and participations in Loans held
by each Bank shall be in the same proportion to the aggregate unpaid principal
amount of all Loans then outstanding as the principal amount of its Loans prior
to such exercise of banker's lien, setoff or counterclaim or other event was to
the principal amount of all Loans outstanding prior to such exercise of banker's
lien, setoff or counterclaim or other event; provided, however, that, if any
such purchase or purchases or adjustments shall be made pursuant to this Section
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustment restored without interest. The
Company expressly consents to the foregoing arrangements and agrees that any
Bank holding a participation in a Loan deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Company to such Bank by reason
thereof as fully as if such Bank had made a Loan directly to the Company in the
amount of such participation.
Section 2.15......Payments.
--------
(a) The Company shall make each payment (including principal of or
interest on any Borrowing or any Fees or other amounts) hereunder and under any
other Loan Document not later than 12:00 (noon), Charlotte, North Carolina time,
on the date when due in dollars to the Administrative Agent in immediately
available funds at the address set forth below:
.........Bank of America, N.A.
.........101 N. Tryon Street
.........Independence Center, 15th Floor
.........NC1-001-15-04
.........Charlotte, North Carolina 28255
.........Attn:....Eric Szeker
..................Agency Services
.........Telephone: (704) 388-3919
.........Telecopy: (704) 409-0027
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
Section 2.16......Taxes.
-----
(a) Any and all payments by the Company hereunder shall be made, in
accordance with Section 2.15, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on the Administrative Agent's or any Bank's income, and franchise taxes imposed
on the Administrative Agent or any Bank, by the United States or any
jurisdiction under the laws of which it is organized or any political
subdivision thereof (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Company shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder to the Banks or the Administrative Agent (i) the
sum payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.16) such Bank or the Administrative Agent (as the case may
be) shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions and (iii) the
Company shall pay the full amount deducted to the relevant taxing authority or
other Governmental Authority in accordance with applicable law.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) The Company will indemnify each Bank and the Administrative Agent
for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.16) paid by
such Bank or the Administrative Agent, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Bank or the
Administrative Agent, as the case may be, makes written demand therefor. If a
Bank or the Administrative Agent shall become aware that it is entitled to
receive a refund in respect of Taxes or Other Taxes, it shall promptly notify
the Company of the availability of such refund and shall, within 30 days after
receipt of a request by the Company, apply for such refund at the Company's
expense. If any Bank or the Administrative Agent receives a refund in respect of
any Taxes or Other Taxes for which such Bank or the Administrative Agent has
received payment from the Company hereunder it shall promptly notify the Company
of such refund and shall, within 30 days after receipt of a request by the
Company (or promptly upon receipt, if the Company has requested application for
such refund pursuant hereto), repay such refund to the Company without interest,
provided that the Company, upon the request of such Bank or the Administrative
Agent, agrees to return such refund (plus penalties, interest or other charges)
to such Bank or the Administrative Agent in the event such Bank or the
Administrative Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Company in respect of any payment to any Bank or the
Administrative Agent, the Company will furnish to the Administrative Agent, at
its address referred to in Section 2.15, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.16 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(f) Each Bank which is organized outside the United States shall
promptly notify the Company of any change in its funding office and upon written
request of the Company shall, prior to the immediately following due date of any
payment by the Company hereunder, deliver to the Company such certificates,
documents or other evidence, as required by the Code or Treasury Regulations
issued pursuant thereto, including Internal Revenue Service Form 4224 and any
other certificate or statement of exemption required by Treasury Regulation
Section 1.1441-1(a) or Section 1.1441-6(c) or any subsequent version thereof,
properly completed and duly executed by such Bank establishing that such payment
is (i) not subject to withholding under the Code because such payment is
effectively connected with the conduct by such Bank of a trade or business in
the United States or (ii) totally exempt from United States tax under a
provision of an applicable tax treaty. Unless the Company and the Administrative
Agent have received forms or other documents satisfactory to them indicating
that payments hereunder are not subject to United States withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the Company
or the Administrative Agent shall withhold taxes from such payments at the
applicable statutory rate in the case of payments to or for any Bank or assignee
organized under the laws of a jurisdiction outside the United States.
(g) Any Bank claiming any additional amounts payable pursuant to this
Section 2.16 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document requested by the Company or to
change the jurisdiction of its applicable lending office if the making of such a
filing or change would avoid the need for or reduce the amount of any such
additional amounts which may thereafter accrue and would not, in the sole
determination of such Bank, be otherwise disadvantageous to such Bank.
III. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each of the Banks that:
Section 3.01......Organization; Powers.
--------------------
Each of the Company and the Subsidiaries (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority to
own its property and assets and to carry on its business as now conducted and as
proposed to be conducted, (c) is qualified to do business in every jurisdiction
where such qualification is required, except where the failure so to qualify
would not result in a Material Adverse Effect, and (d) in the case of the
Company, has the corporate power and authority to execute, deliver and perform
its obligations under each of the Loan Documents and each other agreement or
instrument contemplated thereby to which it is or will be a party and to borrow
hereunder.
Section 3.02......Authorization; Governmental Approvals.
-------------------------------------
The execution, delivery and performance by the Company of each of the
Loan Documents, the actions taken by the Company in connection with the
borrowings hereunder (the "Transactions") (a) have been duly authorized by all
requisite corporate and, if required, stockholder action and (b) will not (i)
violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of the Company or any Subsidiary, (B) any order of any Governmental
Authority applicable to the Company or (C) any provision of any indenture,
agreement or other instrument to which the Company or any Subsidiary is a party
or by which any of them or any of their property is or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under any such indenture, agreement or other
instrument or (iii) result in the creation or imposition of any Lien upon any
property or assets of the Company or any Subsidiary except Liens set forth on
Schedule 6.01. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or other person is
required for the due execution, delivery or performance by the Company of this
Agreement, or any other Loan Document to which it is a party.
Section 3.03......Enforceability.
--------------
This Agreement has been duly executed and delivered by the Company and
constitutes, and each other Loan Document when executed and delivered by the
Company will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
Section 3.04......Financial Statements.
--------------------
The Company has heretofore furnished to the Administrative Agent (a)
consolidated balance sheets and statements of income and changes in
stockholders' equity and cash flows as of and for the fiscal year ended December
31, 1998, audited by and accompanied by the opinion of PricewaterhouseCoopers
LLP, independent public accountants, and (b) its consolidated balance sheets and
statements of income and consolidated statement of cash flows as of and for the
fiscal quarter ended June 30, 1999, certified by its chief financial officer.
Such financial statements present fairly the financial condition and results of
operations of the Company and its consolidated Subsidiaries as of such dates and
for such periods. Such balance sheets and notes thereto disclose all material
liabilities, direct or contingent, of the Company and its Subsidiaries as of the
dates thereof. Such financial statements were prepared in accordance with GAAP
applied on a consistent basis.
Section 3.05......No Material Adverse Change.
--------------------------
There has been no material adverse change in the business, assets,
operations, prospects or condition, financial or otherwise, of the Company and
the Subsidiaries, taken as a whole, since December 31, 1998.
Section 3.06......Title to Properties and Possession Under Leases.
-----------------------------------------------
(a) Each of the Company and the Subsidiaries will on the Closing Date
and at all times thereafter, have good and marketable title to, or valid
leasehold interests in, all its material properties and assets, except for minor
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties and assets for their
intended purposes and except for Liens permitted by Section 6.01. All such
material properties and assets are free and clear of Liens, other than Liens
expressly permitted by Section 6.01.
(b) Each of the Company and the Subsidiaries (or their respective
predecessors) has complied with all obligations under all material leases to
which it is a party and all such leases are in full force and effect. Each of
the Company and the Subsidiaries enjoys peaceful and undisturbed possession
under all such material leases.
Section 3.07......The Subsidiaries and the Company.
--------------------------------
Schedule 3.07 sets forth as of the Closing Date a list of all
Subsidiaries and the percentage ownership interest of the Company therein.
Section 3.08......Litigation: Compliance with Laws.
--------------------------------
(a) Except as set forth in Schedule 3.08, there are not any actions,
suits or proceedings at law or in equity or by or before any Governmental
Authority now pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Subsidiary or any business, property or rights of
any such person (i) which involve any Loan Document or the Transactions or (ii)
as to which there is a reasonable possibility of an adverse determination and
which, if adversely determined, could, individually or in the aggregate, result
in a Material Adverse Effect.
(b) Neither the Company nor any of the Subsidiaries is in violation of
any law, rule or regulation, or in default with respect to any judgment, writ,
injunction or decree of any Governmental Authority, where such violation or
default could result in a Material Adverse Effect.
Section 3.09......Agreements.
----------
(a) Neither the Company nor any of the Subsidiaries is a party to any
agreement or instrument or subject to any corporate restriction that has
resulted or, in the absence of a material default by the Company or such
Subsidiary, could result in a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other material agreement or instrument to which
it is a party or by which it or any of its properties or assets are or may be
bound, where such default could result in a Material Adverse Effect.
Section 3.10......Federal Reserve Regulations.
---------------------------
(a) Neither the Company nor any of the Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, for any
purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Board, including Regulation U or X.
Section 3.11.. Investment Company Act; Public Utility Holding Company
Act.
------------------------------------------------------
Neither the Company nor any Subsidiary is (a) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
Section 3.12......Use of Proceeds.
---------------
The Company will use the proceeds of the Loans only for the purposes
specified in the preamble to this Agreement.
Section 3.13......Tax Returns.
-----------
Each of the Company and the Subsidiaries has filed or caused to be
filed all Federal, state and local tax returns required to have been filed by it
and has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, except taxes that are being
contested in accordance with Section 5.03.
Section 3.14......No Material Misstatements.
-------------------------
No information, report, financial statement, exhibit or schedule
furnished by or on behalf of the Company to the Administrative Agent or any Bank
in connection with the negotiation of any Loan Document or included therein or
delivered pursuant thereto contained, contains or will contain any material
misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading.
Section 3.15......Employee Benefit Plans.
----------------------
Each of the Company and its ERISA Affiliates is in compliance in all
material respects with the applicable provisions of ERISA and the regulations
and published interpretations thereunder. No Reportable Event has occurred as to
which the Company or any ERISA Affiliate was required to file a report with the
PBGC, and the present value of all benefit liabilities under each Plan (based on
those assumptions used to fund such Plan) did not, as of the last annual
valuation date applicable thereto, exceed by more than $1,000,000 the value of
the assets of such Plan. Neither the Company nor any ERISA Affiliate has
incurred any Withdrawal Liability that could result in a Material Adverse
Effect. Neither the Company nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be in reorganization or to be terminated where such
reorganization or termination has resulted or could reasonably be expected to
result, through increases in the contributions required to be made to such Plan
or otherwise, in a Material Adverse Effect.
Section 3.16......Environmental Matters.
---------------------
Each of the Company and the Subsidiaries, and each of their respective
businesses, has complied in all material respects with all Federal, state, local
and other statutes, ordinances, orders, judgments, rulings and regulations
relating to environmental pollution or to environmental regulation or control.
Neither the Company nor any Subsidiary has received notice of any failure so to
comply which alone or together with any other such failure could result in a
Material Adverse Effect. The Company's and the Subsidiaries', plants do not
manage any hazardous wastes, hazardous substances, hazardous materials, toxic
substances or toxic pollutants, as those terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act or the Clean Water Act, in
violation of any regulations promulgated pursuant thereto or in any other
applicable law where such violation could result, individually or together with
other violations, in a Material Adverse Effect.
Section 3.17......Solvency.
--------
On the date hereof and on the date of each Borrowing hereunder after
giving effect to each Loan to be made and the use of the proceeds thereof, (a)
the fair salable value of the assets of the Company will exceed the amount that
will be required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of the Company as they mature;
(b) the assets of the Company will not constitute unreasonably small capital to
carry out its business as conducted or as proposed to be conducted; and (c) the
Company will not intend to, and will not believe that it will, incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be received by it and the amounts to be payable on
or in respect of its obligations).
Section 3.18......Year 2000 Compliance.
--------------------
The Company has (i) initiated a review and assessment of all material
areas within its and each of its Subsidiaries' business and operations
(including those affected by key suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Company or any of its Subsidiaries (or key suppliers,
vendors and customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (ii) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implemented that plan in
accordance with that timetable. Based on the foregoing, the Company believes
that all computer applications (including those of its key suppliers, vendors
and customers) that are material to its or any of its Subsidiaries' business and
operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 Compliant"), except to the extent that a failure to do
so could not reasonably be expected to have a Material Adverse Effect.
IV. CONDITIONS OF LENDING
Section 4.01......All Borrowings.
--------------
The obligations of the Banks to make Loans hereunder on the date of
each Borrowing hereunder, including each Borrowing in which Loans are refinanced
with new Loans as contemplated by Section 2.03, shall be subject to satisfaction
of the following conditions precedent:
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.02.
(b) The representations and warranties set forth in Article
III (excluding, in the case of a refinancing of a Borrowing with a new
Borrowing that does not increase the aggregate principal amount of the
Loans of any Bank outstanding, the representations set forth in
Sections 3.05 and 3.08(a)) shall be true and correct in all material
respects on and as of the date of such Borrowing with the same effect
as if made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date.
(c) The Company shall be in compliance with all the terms and
provisions set forth herein on its part to be observed or performed
(including but not limited to, compliance with the financial ratios and
restrictions set forth in Sections 6.02, 6.04, 6.05, 6.07 and 6.08),
and at the time of and immediately after such Borrowing no Event of
Default or Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Company on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.
Section 4.02......Effectiveness of Agreement.
--------------------------
The obligations of the Banks to make Loans hereunder shall be subject
to satisfaction on the Closing Date of the following additional conditions
precedent:
(a) The Administrative Agent shall have received each Loan
Document, duly executed by each party thereto.
(b) The Administrative Agent shall have received a favorable
written opinion of Nancy M. Taylor, Esq. dated the Closing Date and
addressed to the Banks, to the effect set forth in Exhibit D hereto.
(c) All legal matters incident to this Agreement and the
borrowings hereunder shall be satisfactory to the Banks and their
counsel and to Moore & Van Allen, PLLC, counsel for the Administrative
Agent.
(d) The Administrative Agent shall have received (i) a copy of
the certificate or articles of incorporation, including all amendments
thereto, of the Company, certified as of a recent date by the Secretary
of State of the state of its organization, and a certificate as to the
good standing of the Company as of a recent date, from such Secretary
of State; (ii) a certificate of the Secretary or Assistant Secretary of
the Company dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of the Company as in
effect on the Closing Date and at all times since a date prior to the
date of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of the Company authorizing the
execution, delivery and performance of the Loan Documents and the
borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that the
certificate or articles of incorporation of the Company have not been
amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i) above,
and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in
connection herewith on behalf of the Company; (iii) a certificate of
another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to
(ii) above; and (iv) such other documents as the Banks or their counsel
or Moore & Van Allen, PLLC, counsel for the Administrative Agent, may
reasonably request.
(e) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of the Company, confirming compliance with the conditions precedent set
forth in paragraphs (b) and (c) of Section 4.01.
(f) The Administrative Agent shall have received payment of
the fees then due set forth in the Engagement Letter dated August 4,
1999, among the Administrative Agent, Bank of America Securities, LLC
and the Company in the amounts set forth therein.
V. AFFIRMATIVE COVENANTS
The Company covenants and agrees with each Bank and the Administrative
Agent that so long as this Agreement shall remain in effect or the principal of
or interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Banks shall otherwise
consent in writing, the Company will, and will cause each of the Subsidiaries
to:
Section 5.01......Existence; Businesses and Properties Compliance.
-----------------------------------------------
(a) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence, except as
otherwise expressly permitted under Section 6.04.
(b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights,
licenses, permits, franchises, authorizations, patents, copyrights,
trademarks and trade names material to the conduct of its business;
maintain and operate such business in substantially the manner in which
it is presently conducted and operated; comply in all material respects
with all applicable laws, rules, regulations and orders of any
Governmental Authority, whether now in effect or hereafter enacted; and
at all times maintain and preserve all property material to the conduct
of such business and keep such property in good repair, working order
and condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
Section 5.02......Insurance.
---------
Keep its insurable properties adequately insured at all times by
financially sound and reputable insurers; maintain such other insurance, to such
extent and against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses, including public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it; and maintain
such other insurance as may be required by law.
Section 5.03......Obligations and Taxes.
---------------------
Pay its Indebtedness and other obligations promptly and in accordance
with their terms and pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
in respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, might give rise to a Lien upon such properties or
any part thereof; provided, however, that such payment and discharge shall not
be required with respect to any such tax, assessment, charge, levy or claim so
long as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and the Company shall have set aside on its books
adequate reserves with respect thereto.
Section 5.04......Financial Statements, Reports, etc.
-----------------------------------
In the case of the Company, furnish to the Administrative Agent and
each Bank:
(a) within 90 days after the end of each fiscal year, its
consolidated balance sheets and related statements of income and cash
flows, showing the financial condition of the Company and its
consolidated Subsidiaries as of the close of such fiscal year and the
results of its operations and the operations of such Subsidiaries
during such year, all audited by PricewaterhouseCoopers LLP or other
independent public accountants of recognized national standing
acceptable to the Required Banks and accompanied by an opinion of such
accountants (which shall not be qualified in any material respect) to
the effect that such consolidated financial statements fairly present
the financial condition and results of operations of the Company on a
consolidated basis in accordance with GAAP;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated balance sheets
and related statements of income and cash flows, showing the financial
condition of the Company and its consolidated Subsidiaries as of the
close of such fiscal quarter and the results of its operations and the
operations of such Subsidiaries during such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by one of its
Financial Officers as fairly presenting the financial condition and
results of operations of the Company on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements
under (a) or (b) above, a certificate of the accounting firm or
Financial Officer opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal
interpretations) (i) certifying that no Event of Default or Default has
occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and (ii) setting
forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the covenants
contained in Sections 6.05, 6.07 and 6.08;
(d) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by it with the Securities and Exchange Commission, or any
governmental authority succeeding to any of or all the functions of
said Commission, or with any national securities exchange, or
distributed to its shareholders, as the case may be; and
(e) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Company or any Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Bank may reasonably
request.
Section 5.05......Litigation and Other Notices.
----------------------------
Furnish to the Administrative Agent and each Bank prompt written notice
of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) proposed to be taken
with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Company or any Affiliate thereof
which, if adversely determined, could result in a Material Adverse
Effect;
(c) any development that has resulted in, or could reasonably
be anticipated to result in, a Material Adverse Effect.
Section 5.06......ERISA.
-----
(a) Comply in all material respects with the applicable
provisions of ERISA and (b) furnish to the Administrative Agent and
each Bank (i) as soon as possible, and in any event within 30 days
after any Responsible Officer of the Company or any ERISA Affiliate
either knows or has reason to know that any Reportable Event has
occurred that alone or together with any other Reportable Event could
reasonably be expected to result in liability of the Company to the
PBGC in an aggregate amount exceeding $5,000,000, a statement of a
Financial Officer setting forth details as to such Reportable Event and
the action proposed to be taken with respect thereto, together with a
copy of the notice, if any, of such Reportable Event given to the PBGC,
(ii) promptly after receipt thereof, a Copy of any notice the Company
or any ERISA Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other than a Plan
maintained by an ERISA Affiliate which is considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 412 of the Code) or
to appoint a trustee to administer any Plan or Plans, (iii) within 20
days after the due date for filing with the PBGC pursuant to Section
412(n) of the Code of a notice of failure to make a required
installment or other payment with respect to a Plan, a statement of a
Financial Officer setting forth details as to such failure and the
action proposed to be taken with respect thereto, together with a copy
of such notice given to the PBGC and (iv) promptly and in any event
within 30 days after receipt thereof by the Company or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each
notice received by the Company or any ERISA Affiliate concerning (A)
the imposition of Withdrawal Liability or (B) a determination that a
Multiemployer Plan is, or is expected to be, terminated or in
reorganization, in each case within the meaning of Title IV of ERISA.
Section 5.07.Maintaining Records; Access to Properties and Inspections.
---------------------------------------------------------
Maintain all financial records in accordance with GAAP and permit any
representatives designated by any Bank to visit and inspect the financial
records and the properties of the Company or any Subsidiary at reasonable times
and as often as requested and to make extracts from and copies of such financial
records, and permit any representatives designated by any Bank to discuss the
affairs, finances and condition of the Company or any Subsidiary with the
officers thereof and independent accountants therefor.
Section 5.08......Use of Proceeds.
---------------
Use the proceeds of the Loans only for the purposes set forth in the
preamble to this Agreement.
Section 5.09......Year 2000 Compliance.
--------------------
The Borrower will promptly notify the Administrative Agent in the event
the Company discovers or determines that any computer application (including
those of its key suppliers, vendors and customers) that is material to its or
any of its Subsidiaries' business and operations will not be Year 2000
Compliant, except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect.
VI. NEGATIVE COVENANTS
The Company covenants and agrees with each Bank and the Administrative Agent
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Loan, any Fees or any other expenses or amounts payable under
any Loan Document shall be unpaid, unless the Required Banks shall otherwise
consent in writing, the Company will not, and will not cause or permit any of
the Subsidiaries to:
Section 6.01......Liens.
-----
Create, incur, assume or permit to exist any Lien on any property or
assets (including stock or other securities of any person, including any
Subsidiary, but excluding Margin Stock to the extent that the value of such
Margin Stock, determined in accordance with Regulation U, exceeds 25% of the
value (as so determined) of the assets and properties that would be subject to
this Section 6.01 without giving effect to this parenthetical, or such other
maximum amount or percentage as is then provided for or permitted under
Regulation U or any successor regulation in order that no Loan shall be deemed
"indirectly secured" by Margin Stock for purposes of such regulation), now owned
or hereafter acquired by it or on any income or rights in respect of any
thereof, except:
(a) Liens on property or assets of the Company and its
Subsidiaries existing on the date hereof and set forth in Schedule
6.0l; provided that such Liens shall secure only those obligations
which they secure on the date hereof;
(b) any Lien existing on any property or asset prior to the
acquisition thereof by the Company or any Subsidiary; provided that (i)
such Lien is not created in contemplation of or in connection with such
acquisition and (ii) such Lien does not apply to any other property or
assets of the Company or any Subsidiary;
(c) Liens for taxes not yet due or which are being contested
in compliance with Section 5.03;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and securing obligations which are not due or which are being
contested in compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations;
(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital
Lease Obligations), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and do not 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;
(h) purchase money security interests in real property,
improvements thereto or equipment hereafter acquired (or, in the case
of improvements, constructed) by the Company or any Subsidiary;
provided that (i) such security interests are incurred, and the
Indebtedness secured thereby is created, within 90 days after such
acquisition (or construction), (ii) the Indebtedness secured thereby
does not exceed 80% of the lesser of the cost or the fair market value
of such real property, improvements or equipment at the time of such
acquisition (or construction) and (iii) such security interests do not
apply to any other property or assets of the Company or any Subsidiary;
and
(i) Liens other than those referred to in subparagraphs (a)
through (h) above, provided that the sum of the aggregate amount of all
Indebtedness or other obligations which are secured or evidenced by
Liens other than those referred to in subparagraphs (a) through (h)
above plus the fair market value in the aggregate of properties sold by
the Company in the sale and lease-back transactions permitted under
Section 6.02, does not at any time exceed an amount equal to 10% of
Consolidated Stockholders' Equity.
Section 6.02......Sale and Lease-Back Transactions.
--------------------------------
Enter into any arrangement, directly or indirectly, with any person
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereafter acquired, and thereafter rent or
lease such property or other property which it intends to use for substantially
the same purpose or purposes as the property being sold or transferred;
provided, however, that the Company shall be permitted to enter into any such
arrangements to the extent that the sum of the fair market value in the
aggregate of properties sold by the Company pursuant to all such arrangements,
plus the aggregate amount of indebtedness secured by Liens under paragraph (i)
of Section 6.01, is not greater than 10% of Consolidated Stockholders' Equity.
Section 6.03......Obligations of Subsidiaries.
---------------------------
Permit the Subsidiaries to incur Indebtedness, except for:
(a) Indebtedness to the Company incurred by the Subsidiaries in
the ordinary course of business;
(b) Indebtedness incurred in connection with Internal Financing
Transactions; and
(c) Indebtedness which in the aggregate for all the Subsidiaries,
exclusive of Indebtedness incurred in connection with Internal
Financing Transactions to the Company or other wholly-owned
Subsidiaries, constitutes not more than 10% of Consolidated
Stockholders' Equity at any time.
Section 6.04......Mergers, Consolidations and Sales of Assets.
-------------------------------------------
(a) Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets (whether now owned or hereafter acquired) or
any capital stock of any Subsidiary (other than any Margin Stock to the extent
the value of such Margin Stock, determined in accordance with Regulation U,
together with the value of other Margin Stock owned by the Company and its
Subsidiaries, exceeds 25% of the aggregate value of the assets of the Company
and its Subsidiaries), or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part of the
assets or capital stock of any other person; provided that nothing in the
foregoing shall prohibit:
(i) the Company and any of its Subsidiaries from
purchasing or selling inventory in the ordinary course of business in arm's-
length transactions;
(ii) if at the time thereof and immediately after giving
effect thereto no Event of Default or Default shall have occurred and
be continuing (i) any entity from merging into the Company or any
wholly owned Subsidiary in a transaction in which the Company or such
wholly owned Subsidiary, as the case may be, is the surviving
corporation, and (ii) the Company and any Subsidiary from acquiring all
or any substantial part of the assets or capital stock of any other
person;
(iii) the Company and any of its Subsidiaries (other than
Tredegar Investments ) from selling, transferring, leasing or otherwise
disposing of (in one transaction or in a series of transactions) during
any fiscal year in arm's-length transactions (i) assets the fair market
value of which is not more than 10% of the consolidated assets of the
Company calculated in accordance with GAAP, determined as of the
beginning of such fiscal year and (ii) any other assets to the extent
the Term Loan is repaid, or the commitments under existing revolving
credit facilities are permanently reduced, by the amount of the
proceeds received by the Company from the sale of such assets; and
(iv) Tredegar Investments from selling, transferring, leasing
or otherwise disposing of (in one transaction or in a series of
transactions) any or all of its assets at any time; and
(v) any Internal Financing Transaction.
(b) Notwithstanding anything contained in clause (a) above, transfer
operating assets from the Company or any of its Subsidiaries (other than
Tredegar Investments) to Tredegar Investments.
Section 6.05......Dividends and Distributions.
---------------------------
Declare or pay, directly or indirectly, any dividend or make any other
distribution (by reduction of capital or otherwise), whether in cash, property,
securities or a combination thereof, with respect to any shares of its capital
stock or set aside any amount for any such purpose; provided, however, that (a)
any Subsidiary may declare and pay dividends or make other distributions to the
Company, and any Internal Financing Subsidiary may declare and pay dividends or
make other distributions to the Company or other wholly-owned Subsidiaries and
(b) if no Event of Default or Default shall have occurred and be continuing, the
Company may at any time declare and pay dividends in an aggregate amount not at
any time to exceed $48,003,000 plus the Company's Consolidated Net Income for
the period (which shall be treated as a single accounting period) beginning on
April 1, 1994 and ending on the last day of the fiscal quarter for which
financial statements of the Company shall at such time most recently have been
delivered pursuant to Section 5.04.
Section 6.06......Transactions with Affiliates.
----------------------------
Sell or transfer any property or assets to, or purchase or acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except that as long as no Default or Event of Default shall
have occurred and be continuing, the Company or any Subsidiary may engage in any
of the foregoing transactions (a) in the ordinary course of business at prices
and on terms and conditions not less favorable to the Company or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties, or
(b) in connection with Internal Financing Transactions.
Section 6.07......Consolidated Stockholders' Equity.
---------------------------------
Permit Consolidated Stockholders' Equity of the Company to be less than
$100,000,000 at any time.
Section 6.08......Debt Ratio.
----------
Permit the Debt/Capitalization Ratio to exceed 0.60 to 1.00 at any
time.
VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or
in connection with any Loan Document or the borrowings hereunder, or
any representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made,
deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or any Fee or any other amount (other than an amount referred
to in (b) above) due under any Loan Document, when and as the same
shall become due and payable, and such default shall continue
unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance
by the Company or any Subsidiary of any covenant, condition or
agreement contained in Section 5.01(a) or 5.05 or in Article VI;
(e) default shall be made in the due observance or performance
by the Company or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in
(b), (c) or (d) above) and such default shall continue unremedied for a
period of ten Business Days after notice thereof from the
Administrative Agent or any Bank to the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in an aggregate principal amount in excess of $5,000,000,
when and as the same shall become due and payable, or (ii) fail to
observe or perform any other term, covenant, condition or agreement on
its part to be performed under any agreement or instrument evidencing
or governing any such Indebtedness if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or
holders of such Indebtedness or a trustee on its or their behalf (with
or without the giving of notice, the lapse of time or both) to cause,
such Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company or any
Subsidiary, or of a substantial part of the property or assets of the
Company or a Subsidiary, under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or any Subsidiary or
for a substantial part of the property or assets of the Company or a
Subsidiary or (iii) the winding-up or liquidation of the Company or any
Subsidiary; and such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
(h) the Company or any Significant Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking relief
under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal or state bankruptcy,
insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner,
any proceeding or the filing of any petition described in (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the
Company or such Significant Subsidiary or for a substantial part of the
property or assets of the Company or such Significant Subsidiary, (iv)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding,
(i) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to
pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing;
(j) one or more judgments for the payment of money in an
aggregate amount in excess of $1,000,000 shall be rendered against the
Company, any Subsidiary or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties
of the Company or any Subsidiary to enforce any such judgment;
(k) a Reportable Event or Reportable Events, or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code), shall have occurred with respect to any
Plan or Plans that reasonably could be expected to result in liability
of the Company to the PBGC or to a Plan in an aggregate amount
exceeding $5,000,000 and, within 30 days after the reporting of any
such Reportable Event to the Administrative Agent or after the receipt
by the Administrative Agent of the statement required pursuant to
Section 5.06, the Administrative Agent shall have notified the Company
in writing that (i) the Required Banks have made a determination that,
on the basis of such Reportable Event or Reportable Events or the
failure to make a required payment, there are reasonable grounds (A)
for the termination of such Plan or Plans by the PBGC, (B) for the
appointment by the appropriate United States District Court of a
trustee to administer such Plan or Plans or (C) for the imposition of a
lien in favor of a Plan and (ii) as a result thereof an Event of
Default exists hereunder; or a trustee shall be appointed by a United
States District Court to administer any such Plan or Plans; or the PBGC
shall institute proceedings to terminate any Plan or Plans;
(l) the Company or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) the Company or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability or is not in fact contesting such Withdrawal
Liability in a timely and appropriate manner and (iii) the amount of
the Withdrawal Liability specified in such notice, when aggregated with
all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date or
dates of such notification), exceeds $5,000,000 or requires payments
exceeding $1,000,000 in any year;
(m) the Company or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if solely as a result of such reorganization or
termination the aggregate annual contributions of the Company and its
ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or have been or are being terminated have been or will
be increased over the amounts required to be contributed to such
Multiemployer Plans for their most recently completed plan years by an
amount exceeding $1,000,000; or
(n) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the Company
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, with the consent of the
Required Banks, and at the request of the Required Banks shall, by notice to the
Company, take either or both of the following actions, at the same or either or
both of different times: (i) terminate forthwith the Commitments and (ii)
declare the Loans then outstanding to be forthwith due and payable, whereupon
the principal of the Loans, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Company accrued hereunder
and under any other Loan Document, shall become forthwith due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Company, anything contained herein or
in any other Loan Document to the contrary notwithstanding; and in any event
with respect to the Company described in paragraph (g) or (h) above, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of the Company accrued hereunder and under any other
Loan Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Company, anything contained herein or in any other Loan
Document to the contrary notwithstanding.
VIII. THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this Agreement,
Bank of America, N.A. is hereby appointed to act as sole Administrative Agent on
behalf of the Banks. Each of the Banks, and each subsequent Bank, hereby
irrevocably authorizes the Administrative Agent to take such actions on behalf
of such Bank or holder and to exercise such powers as are specifically delegated
to the Administrative Agent by the terms and provisions hereof, together with
such actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Banks, without hereby limiting any
implied authority, (a) to receive on behalf of the Banks all payments of
principal of and interest on the Loans and all other amounts due to the Banks
hereunder, and promptly to distribute to each Bank its proper share of each
payment so received; (b) to give notice on behalf of each of the Banks to the
Company of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its agency
hereunder; and (c) to distribute to each Bank copies of all notices, financial
statements and other materials delivered by the Company pursuant to this
Agreement as received by the Administrative Agent.
Neither the Administrative Agent nor any of its directors, officers,
employees or administrative agents shall be liable as such for any action taken
or omitted by any of them except for its or his own gross negligence or willful
misconduct, or be responsible for any statement, warranty or representation
herein or the contents of any document delivered in connection herewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by the Company of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Administrative Agent shall not be
responsible to the Banks or any subsequent Bank for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement or any
other Loan Documents or other instruments or agreements. The Administrative
Agent shall in all cases be fully protected in acting, or refraining from
acting, in accordance with written instructions signed by the Required Banks
and, except as otherwise specifically provided herein, such instructions and any
action or inaction pursuant thereto shall be binding on all the Banks and each
subsequent Bank. The Administrative Agent shall, in the absence of knowledge to
the contrary, be entitled to rely on any instrument or document believed by it
in good faith to be genuine and correct and to have been signed or sent by the
proper person or persons. Neither the Administrative Agent nor any of its
directors, officers, employees or agents shall have any responsibility to the
Company on account of the failure of or delay in performance or breach by any
Bank of any of its obligations hereunder or to any Bank on account of the
failure of or delay in performance or breach by any other Bank or the Company of
any of their respective obligations hereunder or under any other Loan Document
or in connection herewith or therewith. The Administrative Agent may execute any
and all duties hereunder by or through administrative agents or employees and
shall be entitled to rely upon the advice of legal counsel selected by it with
respect to all matters arising hereunder and shall not be liable for any action
taken or suffered in good faith by it in accordance with the advice of such
counsel.
The Banks hereby acknowledge that the Administrative Agent shall be
under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Banks.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, the Administrative Agent may resign at any time by
notifying the Banks and the Company. If no successor shall have been appointed
by the Required Banks and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, which shall be a bank having a combined capital
and surplus of at least $500,000,000 or an Affiliate of any such bank. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
bank, such successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent and the
retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After the Administrative Agent's resignation hereunder,
the provisions of this Article and Section 9.05 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 Administrative Agent.
With respect to the Loans made by it hereunder, the Administrative
Agent and its individual capacity and not as Administrative Agent shall have the
same rights and powers as any other Bank and may exercise the same as though it
were not the Administrative Agent, and the Administrative Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Company or any Subsidiary or other Affiliate thereof
as if it were not the Administrative Agent.
Each Bank agrees (i) to reimburse the Administrative Agent, on demand,
in the amount of its pro rata share (based on its Commitment hereunder) of any
expenses incurred for the benefit of the Banks by the Administrative Agent,
including counsel fees and compensation of administrative agents and employees
paid for services rendered on behalf of the Banks, which shall not have been
reimbursed by the Company and (ii) to indemnify and hold harmless the
Administrative Agent and any of its directors, officers, employees or
administrative agents, on demand, in the amount of such pro rata share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against it in
its capacity as the Administrative Agent or any of them in any way relating to
or arising out of this Agreement or any other Loan Document or any action taken
or omitted by it or any of them under this Agreement or any other Loan Document,
to the extent the same shall not have been reimbursed by the Company; provided
that no Bank shall be liable to the Administrative Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Administrative Agent or any of its directors, officers,
employees or administrative agents.
Each Bank acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Bank and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Bank and based on such documents and information as it shall from time to time
deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement or any other Loan Document, any
related agreement or any document furnished hereunder or thereunder.
IX. MISCELLANEOUS
Section 9.01......Notices.
-------
Notices and other communications provided for herein shall be in
writing and shall be delivered by hand or overnight courier service, mailed or
sent by telex, graphic scanning or other telegraphic communications equipment of
the sending party, as follows:
(a) if to the Company,to it at 1100 Boulders Parkway,Richmond,
Virginia 3225, Attention of Norman A. Scher (Telecopy No.(804)330-1777);
(b) if to the Administrative Agent, to it at Bank of America,
N.A., 101 N. Tryon Street, Independence Center, 15th Floor,
NC1-001-15-04, Charlotte, North Carolina 28255, Attn: Eric Szeker,
Agency Services (Telecopy No. (704) 409-0027); and
(c) if to a Bank, to it at its address (or telecopy number)
set forth in Schedule 2.01.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telex, graphic scanning or other telegraphic communications equipment
of the sender, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
Section 9.02......Survival of Agreement.
---------------------
All covenants, agreements, representations and warranties made by the
Company herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Banks and shall
survive the making by the Banks of the Loans, regardless of any investigation
made by the Banks or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
Fee or any other amount payable under this Agreement or any other Loan Document
is outstanding and unpaid and so long as the Commitments have not been
terminated.
Section 9.03......Binding Effect.
--------------
This Agreement shall become effective when it shall have been executed
by the Company and the Administrative Agent and when the Administrative Agent
shall have received copies hereof which, when taken together, bear the
signatures of each Bank, and thereafter shall be binding upon and inure to the
benefit of the Company, the Administrative Agent and each Bank and their
respective successors and assigns, except that the Company shall not have the
right to assign its obligations or rights hereunder or any interest herein
without the prior written consent of all the Banks.
Section 9.04......Successors and Assigns.
----------------------
(a) Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and (to the extent
permitted by Section 9.04) assigns of such party; and all covenants, promises
and agreements by or on behalf of the Company, the Administrative Agent or the
Banks that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.
(b) Each Bank may assign to one or more assignees all or a portion of
its interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment by a Bank to an Affiliate
of such Bank or another existing Bank (or its Affiliate), the Company and the
Administrative Agent must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld), (ii) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Bank's rights and obligations under this Agreement, (iii) the amount of the
commitment of the assigning Bank subject to each such assignment (determined as
of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $10,000,000 or
such assigning Bank's entire Commitment if such Commitment is less than
$10,000,000 and the amount of the Commitment of such Bank remaining after such
assignment shall not be less than $10,000,000 or shall be zero and (iv) the
parties to each such assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance and a processing and recordation fee of
$3,500. Upon acceptance and recording pursuant to paragraph (e) of this Section
9.04, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof, (A) the assignee thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank under this Agreement and (B) the assigning Bank thereunder
shall, to the extent provided in such assignment, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such assigning Bank shall cease to be a
party hereto). Upon the consummation of any assignment pursuant to this Section
9.04(b), the assignor, the Administrative Agent and the Company shall make
appropriate arrangements so that, if required, new Term Notes are issued to the
assignor and the assignee, and the assignor shall return to the Company its old
Term Note.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Bank thereunder and the assignee thereunder shall be deemed to confirm
to and agree with each other and the other parties hereto as follows: (i) other
than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned thereby free and clear of any adverse claim, such
assigning Bank makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto;
(ii) such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or any
Subsidiary or the performance or observance by the Company of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 5.04 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will independently and without reliance upon the Administrative Agent,
such assigning Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Bank.
(d) The Administrative Agent shall maintain at one of its offices in
Charlotte, North Carolina a copy of each Assignment and Acceptance delivered to
it and a register for the recordation of the names and addresses of the Banks,
and the Commitment of, and principal amount of the Loans owing to, each Bank
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive in the absence of manifest error and the
Company, the Administrative Agent and the Banks may treat each person whose name
is recorded in the Register pursuant to the terms hereof as a Bank hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Company and any Bank, at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Bank and an assignee, the processing and recordation
fee referred to in paragraph (b) above and, if required, the written consent of
the Company to such assignment, the Administrative Agent shall (subject to the
consent of the Administrative Agent to such assignment, if required), (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Banks.
(f) Each Bank may without the consent of the Company or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Bank's obligations under this Agreement shall
remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.10 and 2.12 and to the indemnification
provisions contained in Section 9.05 to the same extent as if they were Banks
and (iv) the Company, the Administrative Agent and the other Banks shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement, and such Bank shall retain
the sole right to enforce the obligations of the Company relating to the Loans
and to approve any amendment, modification or waiver of any provision of this
Agreement (other than amendments, modifications or waivers with respect to any
fees payable hereunder or the amount of principal of or the rate at which
interest is payable on the Loans, or the dates fixed for payments of principal
of or interest on the Loans).
(g) Any Bank or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Company furnished to such Bank by or
on behalf of the Company; provided that, prior to any such disclosure, each such
assignee or participant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of any confidential information
relating to the Company received from such Bank.
(h) Notwithstanding any other provision set forth in this Agreement,
any Bank may, at any time, assign or pledge all or any portion of its Loans and
rights under this Agreement to any Federal Reserve Bank as collateral security
pursuant to Regulation A of the Federal Reserve Board, provided, that no such
pledge or assignment shall release the assigning Bank from any of its
obligations hereunder or substitute any such pledge or assignee for such Bank as
a party hereto.
(i) The Company shall not assign or delegate any of its respective
rights and duties hereunder.
Section 9.05......Expenses; Indemnity.
-------------------
(a) The Company agrees to pay all reasonable out-of-pocket expenses
incurred by the Administrative Agent in connection with the preparation of this
Agreement and the other Loan Documents (including those set forth in the
Engagement Letter dated August 4, 1999, among the Administrative Agent, Bank of
America Securities, LLC and the Company) or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions hereby contemplated shall be consummated) or incurred by the
Administrative Agent or any Bank in connection with the enforcement or
protection of their rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made hereunder, including the fees and
disbursements of Moore & Van Allen, PLLC, counsel for the Administrative Agent,
and, in connection with any such amendment, modification or waiver or any such
enforcement or protection, the fees and disbursements of any other counsel for
the Administrative Agent or any Bank. The Company further agrees that it shall
indemnify the Banks from and hold them harmless against any documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution and delivery of this Agreement or any of the other Loan Documents.
(b) The Company agrees to indemnify the Administrative Agent, each Bank
and its directors, officers, employees and agents (each such person being called
an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder or the consummation of the Transactions, (ii)
the use of the proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent or any Bank. All amounts due
under this Section 9.05 shall be payable on written demand therefor.
Section 9.06......Right of Setoff.
---------------
If an Event of Default shall have occurred and be continuing and any
Bank shall have requested the Administrative Agent to declare the Loans
immediately due and payable pursuant to Article VII, each Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank to or for the credit or the account of the Company
against any of and all the obligations of the Company now or hereafter existing
under this Agreement and other Loan Documents held by such Bank, irrespective of
whether or not such Bank shall have made any demand under this Agreement or such
other Loan Document and although such obligations may be unmatured. The rights
of each Bank under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Bank may have.
Section 9.07......Applicable Law.
--------------
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 9.08......Waivers; Amendment.
------------------
(a) No failure or delay of the Administrative Agent or any Bank in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent and the
Banks hereunder and under the other Loan Documents are cumulative and exclusive
of any rights or remedies which they would otherwise have. No waiver of any
provision of this Agreement or any other Loan Document or consent to any
departure by the Company therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Company in any case shall entitle the Company
to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Company and the Required Banks; provided, however, that no
such agreement shall (i) decrease the principal amount (other than on account of
payment or prepayment) of, or extend or advance the maturity of or any date for
the payment of any principal of or interest on, any Loan, or waive or excuse any
such payment or any part thereof, or decrease the rate of interest on any Loan,
without the prior written consent of each Bank affected thereby, (ii) change the
Commitment of any Bank without the prior written consent of such Bank, or (iii)
amend or modify the provisions of Section 2.12, the provisions of this Section
or the definition of the "Required Banks", without the prior written consent of
each Bank; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative Agent.
Section 9.09......Interest Rate Limitation.
------------------------
Notwithstanding anything herein to the contrary, if at any time the
applicable interest rate, together with all fees and charges which are treated
as interest under applicable law (collectively, the "Charges") as provided for
herein or in any other document executed in connection herewith, or otherwise
contracted for, charged, received, taken or reserved by any Bank, shall exceed
the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by such Bank in accordance with applicable
law, the rate of interest payable on such Loan, together with all Charges
payable to such Bank, shall be limited to the Maximum Rate.
Section 9.10......Entire Agreement.
----------------
This Agreement, the other Loan Documents and the Fee Letter constitute
the entire contract between the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the subject matter
hereof is superseded by this Agreement and the other Loan Documents. Nothing in
this Agreement or in the other Loan Documents, expressed or implied, is intended
to confer upon any party other than the parties hereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the other
Loan Documents.
Section 9.11......Waiver of Jury Trial.
--------------------
Each party hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
litigation directly or indirectly arising out of, under or in connection with
this Agreement or any of the other Loan Documents. Each party hereto (a)
certifies that no representative, administrative agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement and the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications in this Section 9.11.
Section 9.12......Severability.
------------
In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
Section 9.13......Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute but one contract, and shall become effective as provided in Section
9.03.
Section 9.14......Headings.
--------
Article and Section headings and the Table of Contents used herein are
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
Section 9.15......Confidentiality.
---------------
Any information obtained by the Administrative Agent or any of the
Banks from the Company shall not be disclosed by the Administrative Agent or
such Bank to any other person if such information is not otherwise in the public
domain except (i) to its officers, directors, employees, administrative agents,
independent accountants, Affiliates and legal counsel (it being understood that
the persons to whom such disclosure is made will be informed of the confidential
nature of such information and instructed to keep such information
confidential), (ii) pursuant to statutory and regulatory requirements or
requests of regulatory authorities, (iii) pursuant to any mandatory court order,
subpoena or other legal process, (iv) to the Administrative Agent or any other
Bank, (v) pursuant to any agreement heretofore or hereafter made between such
Bank and the Company which permits such disclosure, (vi) in connection with the
exercise of any remedy under or litigation in connection with the Loan Documents
or (vii) subject to Section 9.04(g), to any participant in or assignee of, or
prospective participant in or assignee of, any Loan or Commitment.
Section 9.16......Jurisdiction; Consent to Service of Process.
-------------------------------------------
(a) The Company hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any Bank may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against the
Company or its properties in the courts of any jurisdiction.
(b) The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this agreement or the other Loan Documents in any
New York State court or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
<PAGE>
IN WITNESS WHEREOF, the Company, the Administrative Agent and the Banks
have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
BORROWER: TREDEGAR CORPORATION
By: /s/ N. A. Scher
Name: Norman Scher
Title: Executive Vice President and CFO
BANKS: BANK OF AMERICA, N.A., individually as
a Bank and as Administrative Agent
By:
Name:
Title:
<PAGE>
<TABLE>
Schedule 2.01
Banks and Commitments
<CAPTION>
- ---------------------------- -------------------------- -------------------------------- --------------------
Bank Credit Contact Operations Contact Commitment
- ---------------------------- -------------------------- -------------------------------- --------------------
<S> <C> <C> <C>
Bank of America, N.A. Bank of America, N.A. Bank of America, N.A. $55,000,000
101 N. Tryon Street, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attn: Eric Szeker
Telephone: (704) 388-3919
Facsimile: (704) 409-0027
Crestar Bank Crestar Bank Crestar Bank $45,000,000
919 East Main Street 1001 Semmes Avenue
Richmond, Virginia 23219 Richmond, Virginia 23260
Attn: Chris B. Werner Attn: John C. Cary
Telephone: (804) 782-5998 Telephone: (804) 319-1734
Facsimile: (804) 782-5413 Facsimile: (804) 319-1736
The Bank of New York The Bank of New York The Bank of New York $45,000,000
One Wall Street, 22nd Floor One Wall Street, 22nd Floor
New York, New York 10286 New York, New York 10286
Attn: Ann Marie Hughes Attn: Trudy Hoo-Fong
Telephone: (212) 635-1339 Telephone: (212) 635-6734
Facsimile: (212) 635-6434 Facsimile: (212) 635-6877
Wachovia Bank, N.A. Wachovia Bank, N.A. Wachovia Bank, N.A. $30,000,000
1021 E. Cary Street 100 N. Main Street
Richmond, Virginia 23219 Winston-Salem, NC 27150
Attn: Chris Borin Attn: Greg Asbelle
Telephone: (804) 697-6820 Telephone: (336) 732-6911
Facsimile: (804) 697-7581 Facsimile: (336) 732-3257
First Union National Bank First Union National Bank First Union National Bank $25,000,000
301 South College Street, DC-5 201 South College Street
Charlotte, NC 28288-0737 Charlotte, NC 28288-0737
Attn: David J.C. Silander Attn: Gary Burkart
Telephone: (704) 383-5124 Telephone: (704) 374-6613
Facsimile: (704) 374-4793 Facsimile: (704) 383-7999
Firstar Bank Milwaukee, N.A. Firstar Bank Milwaukee, N.A. Firstar Bank Milwaukee, N.A. $25,000,000
777 E. Wisconsin Avenue 1850 Osborn Avenue
Milwaukee, Wisconsin 53202 Oshkosh, Wisconsin 54901
Attn: John Franceschi Attn: Connie Sweeney
Telephone: (414) 765-5656 Telephone: (920) 426-7604
Facsimile: (414) 765-5367 Facsimile: (920) 426-7655
Bank of Tokyo-Mitsubishi Bank of Tokyo-Mitsubishi Trust Bank of Tokyo-Mitsubishi Trust $15,000,000
Trust Company 1251 Avenue of the Americas, 1251 Avenue of the Americas
12th Floor 12th Floor
New York, NY 10020-1104 New York, NY 10020-1104
Attn: David H. Place Attn: Rolando Uv
Telephone: (212) 782-5654 Telephone: (212) 413-8570
Facsimile: (212) 782-6440 Facsimile: (212) 521-2304
The Sumitomo Bank, Limited The Sumitomo Bank, Limited The Sumitomo Bank, Limited $10,000,000
277 Park Avenue 277 Park Avenue
New York, New York 10172 New York, New York 10172
Attn: Rohn Laudenschlager Attn: Rohn Laudenschlager
Telephone: (212) 224-4226 Telephone: (212) 224-4226
Facsimile: (212) 224-4384 Facsimile: (212) 224-4384
</TABLE>
<PAGE>
SCHEDULE 3.07
Part I
Part I
UNITED STATES SUBSIDIARIES
Percentage of
Common Stock
Owned Directly
or Indirectly
by the Company
--------------
BLC G.P., Inc. 100%
Bon L Campo Limited Partnership 100%
The William L. Bonnell Company, Inc. 100%
Capitol Products Corporation 100%
Fiberlux, Inc. 100%
Idlewood Properties, Inc. 100%
Molecumetics Institute, Ltd.(1) 90.5%
Molecumetics, Ltd. 90.5%
TGI Fund I, LC 100%
TGI Fund II, LC 100%
TGI Fund III, LLC 100%
Therics, Inc. 100%
Tredegar Development Corporation 100%
Tredegar Exploration, Inc. 100%
Tredegar Film Products (Japan) Ltd. 100%
Tredegar Film Products - Lake Zurich, Inc. 100%
Tredegar Film Products - Pottsville, Inc. 100%
Tredegar Films Development, Inc. 100%
Tredegar Holdings Corporation 100%
Tredegar Investments, Inc. 100%
Tredegar Reserves, Inc. 100%
Virginia Techport, Inc. 100%
WLB L.P., Inc. 100%
- --------
(1)1This company is a wholly-owned subsidiary of Molecumetics, Ltd., of
which the Company owns 90.5% of the outstanding common stock.
<PAGE>
SCHEDULE 3.07
Part II
Part II
NON-UNITED STATES SUBSIDIARIES
Percentage of
Common Stock
Owned Directly
or Indirectly
by the Company
Bon L Canada Inc. 100%
Guangzhou Tredegar Films Company Limited 98%
Tredegar Brasil Industria de Plasticos Ltda. 100%
Tredegar Film Products Argentina S.A. 99.99%
Tredegar Film Products, B.V. 100%
Tredegar Film Products Kft. 100%
Tredegar Foreign Sales Corporation 100%
<PAGE>
SCHEDULE 3.08
LITIGATION
None.
<PAGE>
SCHEDULE 6.01
LIENS
None.
<PAGE>
Exhibit A
FORM OF BORROWING REQUEST
Bank of America, N.A.,
as Administrative Agent
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Eric Szeker
Agency Services
[Date]
Dear Sirs:
The undersigned, TREDEGAR CORPORATION (the "Company"), refers to the
Credit Agreement dated as of October 13, 1999 (as the same may be modified,
amended, extended or restated from time to time, the "Credit Agreement"), among
the Company, the Banks named therein and Bank of America, N.A., as
Administrative Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
The Company hereby gives you notice pursuant to Section 2.02 of the Credit
Agreement that it requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such Borrowing is requested to be
made:
(A) Date of Borrowing
(which is a Business Day) -----------------------
(B) Principal Amount of
Borrowing(1) -----------------------
(C) Interest rate basis(2) -----------------------
(D) Interest Period and the last
day thereof(3) -----------------------
- --------------------
(1)Not less than $5,000,000 and in integral multiples of $1,000,000.
(2)Eurodollar Loan or ABR Loan.
(3)Which shall be subject to the definition of "Interest Period".
Upon acceptance of any or all of the Loans made by the Banks in
response to this request, the Company shall be deemed to have represented and
warranted that the conditions to lending specified in Section 4.01(b) and (c) of
the Credit Agreement have been satisfied.
Very truly yours,
TREDEGAR CORPORATION,
By
------------------------------------
Title: [Responsible Officer]
<PAGE>
EXHIBIT B
FORM OF TERM NOTE
$ October 13, 1999
-------
FOR VALUE RECEIVED, TREDEGAR CORPORATION, a Virginia
corporation (the "Company"), hereby promises to pay to the order of
_________________, its successors and assigns (the "Bank"), in such amounts and
on such dates as set forth in the Credit Agreement to the office of the
Administrative Agent in immediately available funds as provided in the Credit
Agreement, $__________, together with interest thereon at the rates and as
provided in the Credit Agreement.
This Term Note is one of the Term Notes referred to in the Credit
Agreement dated as of the date hereof (as amended and modified, the "Credit
Agreement") among the Company, the Banks identified therein and Bank of America,
N.A. as Administrative Agent. Terms used but not otherwise defined herein shall
have the meanings provided in the Credit Agreement.
The holder may endorse and attach a schedule to reflect borrowings
evidenced by this Term Note and all payments and prepayments thereon; provided
that any failure to endorse such information shall not affect the obligation of
the Company to pay amounts evidenced hereby.
Upon the occurrence of an Event of Default, all amounts evidenced by
this Term Note may, or shall, become immediately due and payable as provided in
the Credit Agreement without presentment, demand, protest or notice of any kind,
all of which are waived by the Company. In the event payment of amounts
evidenced by this Term Note is not made at any stated or accelerated maturity,
the Company agrees to pay, in addition to principal and interest, all costs of
collection, including reasonable attorneys' fees.
This Term Note and the Loans and amounts evidenced hereby may be
transferred only as provided in the Credit Agreement.
This Term Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the Company has caused this Term Note to be duly
executed by its duly authorized officer as of the day and year first above
written.
TREDEGAR CORPORATION,
a Virginia corporation
By:
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated ___________________, 19___
Reference is made to the Credit Agreement dated as of October 13, 1999
(as the same may be modified, amended, extended or restated from time to time,
the "Credit Agreement"), among Tredegar Corporation, a Virginia corporation (the
"Company"), the Banks named therein and Bank of America, N.A., as Administrative
Agent. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Credit Agreement.
__________(the "Assignor") and _____________(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, ______% interest in and
to all the Assignor's rights and obligations under the Credit Agreement as of
the Assignment Date (as defined below) (including, without limitation, such
percentage interest in the Commitment of the Assignor on the Assignment Date and
such percentage interest in the Loans owing to the Assignor outstanding on the
Assignment Date together with such percentage interest in all unpaid interest
with respect to such Loans, and Facility Fees accrued to the Assignment Date).
2. The Assignor (i) represents that as of the date hereof, its
Commitment (without giving effect to assignments thereof which have not yet
become effective) is $_______ and the outstanding balance of its Loans
(unreduced by any assignments thereof which have not yet become effective) is
$________; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto, other
than that it is the legal and beneficial owner of the interest being assigned by
it hereunder and that such interest is free and clear of any adverse claim; and
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company or the performance or
observance by the Company of any of its obligations under the Credit Agreement
or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 3.04 or 5.04 thereof
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Assignment and
Acceptance; (iii) agrees that it will, independently and without reliance upon
the Administrative Agent, the Assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iv) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees that
it will perform in accordance with their terms all the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Bank; and
(vi) agrees that it, will keep confidential all information with respect to the
Company furnished to it by the Company or the Assignor (other than information
generally available to the public or otherwise available to the Assignor on a
nonconfidential basis and other than disclosures to bank regulatory authorities
and otherwise as required by law or in connection with the enforcement of the
Loan Documents) [; and (vii) attaches the forms prescribed by the Internal
Revenue Service of the United States certifying as to the Assignee's exemption
from United States withholding taxes with respect to all payments to be made to
the Assignee under the Credit Agreement or such other documents as are necessary
to indicate that all such payments are subject to such tax at a rate reduced by
an applicable tax treaty.](1)
4. The effective date for this Assignment and Acceptance shall be
(the "Assignment Date").(2)
Following the execution of this Assignment and Acceptance, it will be delivered
to the Administrative Agent for acceptance and recording by the Administrative
Agent pursuant to Section 9.04 (e) of the Credit Agreement.
5. Upon such acceptance and recording, from and after the Assignment
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording, from and after the Assignment
Date, the Administrative Agent shall make all payments in respect of the
interest assigned hereby (including payments of principal, interest, fees and
other amounts) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments for periods prior to the Assignment Date by
the Administrative Agent or with respect to the making of this assignment
directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
- --------------------
(1)If the Assignee is organized under the laws of a jurisdiction outside the
United States.
(2)See Section 9.04. Such date shall be at least five Business Days after the
execution of this Assignment and Acceptance and delivery thereof to the
administrative Agent.
<PAGE>
[NAME OF ASSIGNOR],
By:
Name:
Title:
[NAME OF ASSIGNEE],
By:
Name:
Title:
Accepted this day
of , 19
BANK OF AMERICA, N.A.
as Administrative Agent
By:
---------------------------
Name:
Title:
<PAGE>
Exhibit D
Tredegar Letterhead
October 13, 1999
To the Banks party to the Credit Agreement
referred to below
In care of Bank of
America, N.A.,
as Administrative Agent
101 N. Tryon Street
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Gentlemen:
I am General Counsel to Tredegar Corporation, a Virginia corporation
(the "Company"), and have acted as counsel to the Company in connection with the
Credit Agreement (as the same may be modified, amended, extended or restated
from time to time, the "Credit Agreement") dated as of October 13, 1999 among
the Company, the Banks named in the Credit Agreement and Bank of America, N.A.,
as Administrative Agent, providing for loans to be made to the Company in the
aggregate principal amount of $250,000,000. Unless otherwise noted, terms
defined in the Credit Agreement are used herein as defined therein.
In connection with the foregoing, I have reviewed the Credit Agreement.
I have also examined and relied upon copies, certified or otherwise
authenticated to my satisfaction, of documents reflecting corporate action of
the Company with respect to the Credit Agreement and certificates of public
officials, and have reviewed such other documents and matters of law as I have
deemed necessary to enable me to express the opinions set forth herein. As to
questions of fact material to my opinion, I have relied upon certificates of
officers of the Company and representations in the Credit Agreement by the
Company.
I do not purport to express an opinion on any laws other than those of
the Commonwealth of Virginia and the United States of America, except that I
have assumed that the laws of the State of New York are the same as the
Commonwealth of Virginia with respect to the opinions expressed in Paragraph 3
below.
Based upon and subject to the foregoing, and to the further limitations
and qualifications stated below, I am of the opinion that:
1. Each of the Company and the Subsidiaries of the Company listed on
Schedule 3.07 (Part I) of the Credit Agreement (the "United States Subsidiaries"
and each a "United States Subsidiary") (a) is a corporation, partnership or
limited liability company duly incorporated or organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization, and is duly qualified to transact business in each state where the
failure to so qualify would have a material effect on the business or financial
condition of the Company and the Subsidiaries taken as a whole and (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted. The Company has the
necessary corporate power to enter into and perform its obligations under the
Credit Agreement and to borrow under the Credit Agreement.
2. The execution and delivery by the Company of, and the performance by
the Company of its obligations under, the Credit Agreement, the borrowings by
the Company under the Credit Agreement (a) have been duly authorized by all
necessary corporate action of the Company and all requisite stockholder action,
and do not and will not violate any provision of the articles of incorporation
or by-laws of the Company or any United States Subsidiary or any provision of
law or regulation, including Regulations U and X, (b) do not, to the best of my
knowledge, result in the breach of, or constitute a default or require any
consent under, or result in the creation of any Lien upon any of its properties,
revenues or assets pursuant to, any indenture or other agreement or instrument
to which the Company or any United States Subsidiary is a party or by which the
Company or any United States Subsidiary or their properties may be bound, or (c)
result in the creation or imposition of any Lien upon property or assets of the
Company or any United States Subsidiary except Liens permitted by Section 6.01
of the Credit Agreement.
3. The Credit Agreement constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except, in
each case, as such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other 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).
4. To the best of my knowledge, there are no legal or arbitral
proceedings, and no proceedings by or before any Governmental Authority, pending
or threatened against or affecting the Company or any properties or rights of
the Company that, if adversely determined, would have a Material Adverse Effect.
5. No authorizations, consents, approvals, licenses, filings or
registrations, with any Governmental Authority are required in connection with
the execution, delivery or performance by the Company of its obligations under
the Credit Agreement, other than those the failure of which to obtain would not
give rise to a Material Adverse Effect.
6. To the best of my knowledge, neither the Company nor any of the
United States Subsidiaries is in violation of any law, rule or regulation, or in
default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default could result in a
Material Adverse Effect.
7. Neither the Company nor any United States Subsidiary is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
I have not been asked to and do not express any opinion with respect to
any matters except as expressly set forth above. This opinion is solely for your
benefit and may not be distributed to or relied upon by any other person, quoted
in whole or in part or otherwise reproduced in any other document without my
prior written consent.
Very truly yours,
Nancy M. Taylor
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS UNADUITED SUMMARY FINANCIAL INFORMATION FOR TREDEGAR
CORPORATION AND SUBSIDIARIES EXTRACTED FROM THE BALANCE SHEET FOR THE PERIOD
ENDED SEPTEMBER 30, 1999 AND THE STATEMENT OF INCOME FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 19,434
<SECURITIES> 0
<RECEIVABLES> 122,990
<ALLOWANCES> 4,028
<INVENTORY> 46,264
<CURRENT-ASSETS> 195,500
<PP&E> 459,755
<DEPRECIATION> 218,715
<TOTAL-ASSETS> 738,307
<CURRENT-LIABILITIES> 104,947
<BONDS> 250,000
0
0
<COMMON> 98,972
<OTHER-SE> 250,415
<TOTAL-LIABILITY-AND-EQUITY> 738,307
<SALES> 590,292
<TOTAL-REVENUES> 585,385
<CGS> 465,614
<TOTAL-COSTS> 465,614
<OTHER-EXPENSES> 55,209
<LOSS-PROVISION> 1,183
<INTEREST-EXPENSE> 4,853
<INCOME-PRETAX> 58,526
<INCOME-TAX> 20,723
<INCOME-CONTINUING> 37,803
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,803
<EPS-BASIC> 1.02
<EPS-DILUTED> .97
</TABLE>
