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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT #1
(Mark One)
|X| Quarterly Report pursuant to Section 13 or 15 (d) 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 0-20231
FIBERMARK, INC.
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(Exact name of registrant as specified in its charter)
Delaware 82-0429330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
161 WELLINGTON ROAD
P.O. BOX 498
BRATTLEBORO, VERMONT 05302
(802) 257-0365
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.001 PAR VALUE
Indicate by check mark 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 |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date.
Class Outstanding
Common Stock September 30, 1999
$.001 par value 7,745,083
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ITEM #6 IS AMENDED TO INCLUDE THE FOLLOWING EXHIBITS:
Exhibit No. Description
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2.1 Acquisition Agreement dated September 15, 1999 by and
between SIHL Beteiligungsgesellschaft mbH and FiberMark
GmbH and FiberMark Beteiligungs GmbH
10.1 Loan Agreement dated September 15, 1999 between
FiberMark GmbH (the "Borrower") and Bayerische Hypo- und
Vereinsbank Aktiengesellschaft (Lender)
10.2 Loan Amendment Agreement dated September 15, 1999
between FiberMark GmbH (the "Borrower") and Bayerische
Hypo- und Vereinsbank Aktiengesellschaft (Lender)
10.3 Share Pledge Agreement dated September 15, 1999 between
FiberMark Beteiligungs GmbH and FiberMark GmbH (the
"Pledgors") and Bayerische Hypo- und Vereinsbank AG (the
"Pledgee")
10.4 Pledge Amendment Agreement dated September 15, 1999
between FiberMark Beteiligungs GmbH and FiberMark GmbH
(the "Pledgors") and Bayerische Hypo- und Vereinsbank AG
(the "Pledgee")
10.5 Third Amended and Restated Financing Agreement and
Guaranty dated September 30, 1999 among FiberMark, Inc.;
FiberMark Durable Specialties, Inc.; FiberMark Filter
and Technical Products, Inc. and FiberMark Office
Products, LLC (as "Borrowers and Guarantors") and The
CIT Group/Business Credit, Inc., The CIT Group/Equipment
Financing, Inc. (as "Lenders")
10.6 Termination and Release Agreement among FiberMark Office
Products, LLC; FiberMark, Inc.; FiberMark Durable
Specialties, Inc.; FiberMark Filter and Technical
Products, Inc., and The CIT Group/Equipment Financing,
Inc.
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EXHIBIT 2.1
ACQUISITION AGREEMENT
DATED SEPTEMBER 15, 1999
BY AND BETWEEN
SIHL BETEILIGUNGSGESELLSCHAFT MBH
- ON THE ONE SIDE -
AND
FIBERMARK GMBH
AND
FIBERMARK BETEILIGUNGS GMBH
- ON THE OTHER SIDE -
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ACQUISITION AGREEMENT
by and between
SIHL BETEILIGUNGSGESELLSCHAFT MBH, DUREN, GERMANY ("SELLER")
AND
FIBERMARK GMBH, BRUCKMUHL, GERMANY ("FIBERMARK GMBH I")
and
FIBERMARK BETEILIGUNGS GMBH, BRUCKMUHL, GERMANY
("FIBERMARK GMBH II"),
(FiberMark GmbH I and FiberMark GmbH II, individually and collectively, also
"PURCHASER")
WHEREAS, Seller owns all of the shares (GESCHAFTSANTEILE) of Papierfabrik
Lahnstein GmbH (the "COMPANY").
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WHEREAS, Seller intends to sell all of the shares of the Company to Purchaser
and Purchaser intends to purchase such shares pursuant to the terms and
conditions of this Agreement.
NOW, THEREFORE, the Parties have come to the
following agreement.
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms have the following meanings
unless the context requires otherwise:
"AFFILIATE". As used herein, any Person shall be an "Affiliate" of a second
Person if it controls such second Person, or is controlled by it, or is
controlled by the same Person which also controls the second Person. A Person is
deemed to be controlled by another Person if such other Person owns a majority
in the capital, exercises voting control or de facto control of the first
Person.
"AGREEMENT" shall mean this Agreement including all of its Annexes and
Schedules.
"BEST OF SELLER'S KNOWLEDGE" shall mean exclusively the knowledge of (i)
Seller's statutory present or former representatives (GESCHaftsfuhrer) Messrs.
Werner Merz, Helmuth Elkuch and Hans Gut and any proxy holders (Prokuristen) and
(ii) the Company's statutory representatives and proxy holders including Messrs.
Detlef Stoltefaut, Uwe Bacher, Herbert Schunk, Harald Pfisterer and Bernd
Rudolf.
"BUGAV" shall mean the Beherrschungs- und Gewinnabfuhrungsvertrag between Seller
and the Company dated December 24, 1991.
"CASH POOL AGREEMENT" shall have the meaning set forth in Art. 3.5.1 of this
Agreement.
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"CLAIM" shall have the meaning set forth in Art. 5.2.2 of this Agreement.
"CLEAN-UP COSTS" shall have the meaning set forth in Art. 5.6.6 (iv) of this
Agreement.
"CLEAN-UP MEASURES" shall have the meaning set forth in Art. 5.6.6 (iii) of this
Agreement.
"CLOSING" shall mean the consummation of the transactions described in Art. 2 of
this Agreement in accordance with Art. 3 of this Agreement.
"CLOSING DATE" shall mean the date of the Closing.
"COMPANY" shall mean Papierfabrik Lahnstein GmbH, D-56112 Lahnstein, registered
with the Commercial Register at the Amtsgericht Koblenz as number HRB 4553 and
having a fully paid in nominal capital (STAMMKAPITAL) of DEM 20'000'000.
"CONTRACTS" shall mean all agreements, contracts, commitments and undertakings
to which the Company is a party, an obligor or a beneficiary and (i) the
performance or non-performance of which is individually or, with respect to any
related series of agreements, in the aggregate, material to the Company or (ii)
which provide for an aggregate purchase price or payments of more than DEM
100'000 under any agreement during any one-year period or DEM 100'000 in the
aggregate, during any one-year period, in the case of any related series of
agreements.
"DEDUCTIBLE" shall mean the deductible for liability as further defined in
Art. 5.6.1 of this Agreement.
"DEM" shall mean Deutsche Mark, being the lawful currency of Germany.
"DUE DILIGENCE DOCUMENTATION" shall have the meaning set forth in Art. 4.2 of
this Agreement.
"ENVIRONMENTAL POLLUTION" shall have the meaning set forth in Art. 5.6.6 (ii) of
this Agreement.
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"ESCROW ACCOUNT" shall have the meaning set forth in Art. 3.3.1 (ii) of this
Agreement.
"ESCROW AGREEMENT" shall mean the agreement executed by the Parties
substantially in the form attached hereto as ANNEX A.
"ESCROW AMOUNT" shall mean the escrow amount as further defined in Art. 3.3.1
(ii) of this Agreement.
"EXPERT" shall have the meaning set forth in Art. 5.6.6 (vii) of this
Agreement
"FIBERMARK GMBH I" shall mean FiberMark GmbH, registered with the
Commercial Register at the Amtsgericht Traunstein as HRB number 11287 and
having a nominal capital of DEM 50'000.
"FIBERMARK GMBH II" shall mean FiberMark Beteiligungs GmbH, registered with the
Commercial Register at the Amtsgericht Traunstein as HRB number 11286 and having
a nominal capital of DEM 50'000.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Art. 4.1.4 of this
Agreement.
"MATERIAL ADVERSE EFFECT" shall mean a material and lasting adverse
effect which would prevent or materially impair the Company from conducting its
business.
"PARTIES" shall mean Seller and Purchaser.
"PARTY" shall mean, as the case may be, either Seller or Purchaser.
"PAYMENT AMOUNT" shall have the meaning set forth in Art. 3.5.2 of this
Agreement.
"PERSON" shall mean an individual, a partnership, a joint venture, a
corporation, a business trust, a limited liability company, a trust, an
unincorporated organization, a government or any department or agency thereof or
any other entity.
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"PURCHASER" shall mean, individually and collectively, FiberMark GmbH I and
FiberMark GmbH II.
"PURCHASE PRICE" shall have the meaning set forth in Art. 2.2 of this Agreement.
"PURCHASE PRICE INCREASE" shall have the meaning set forth in Art. 3.5.2 of this
Agreement.
"PURCHASE PRICE REDUCTION" shall have the meaning set forth in Art. 3.5.2 of
this Agreement.
"PURCHASER'S ACCOUNTANTS" shall have the meaning set forth in Art. 3.4.4 of this
Agreement.
"REFUND AMOUNT" shall have the meaning set forth in Art. 3.5.2 of this
Agreement.
"SELLER" shall mean SIHL Beteiligungsgesellschaft mbH, Duren, registered with
the Commercial Register at the Amtsgericht Duren as HRB number 1596 and having a
nominal capital of DEM 30'000'000.
"SELLER'S ACCOUNTANTS" shall have the meaning set forth in Art. 3.4.3 of this
Agreement.
"SHARE TRANSFER DEED" shall mean the agreement to be executed by the Parties
substantially in the form attached hereto as ANNEX B.
"SHARES" shall mean all of the shares (GESCHaftsanteile) of the Company.
"SHORT FISCAL YEAR 1999" shall mean the shortened fiscal year of the Company
which shall end on July 31, 1999.
"SHORT FISCAL YEAR FINANCIAL STATEMENTS" shall have the meaning set forth in
Art. 3.4.
"TAXES" shall mean all tax liabilities (STEUERN UND STEUERLICHE NEBENLEISTUNGEN
UND UMLAGEN) within the meaning of Section 3 AO (German Tax Code) whether actual
or deferred
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such as, but not limited to, income taxes, VAT, any turnover or cost related
taxes, withholding taxes, capital taxes, stamp duties, payroll taxes, social
security taxes (incl. SOZIALVERSICHERUNGSBEITRage) and property taxes and other
fiscal or governmental charges; comparable tax liabilities in jurisdictions
other than Germany shall be included.
ARTICLE 2
SALE AND PURCHASE OF SHARES; PURCHASE PRICE; ALLOCATION OF SHARES; SHAREHOLDER
CONSENT
2.1 SALE AND PURCHASE OF SHARES. Subject to the terms and the conditions
set forth in this Agreement, Seller hereby agrees to sell to
Purchaser and Purchaser hereby agrees to buy from Seller the Shares.
2.2 PURCHASE PRICE. The total purchase price payable by Purchaser to
Seller in consideration for the sale of all of the Shares pursuant
to Art. 2.1 of this Agreement amounts to DEM 41'593'000 (the
"PURCHASE PRICE"). The Purchase Price shall be payable and adjusted
in the manner provided in Arts. 3.3.1 and 3.5 of this Agreement.
2.3 ALLOCATION OF SHARES. The Shares held by Seller are divided into two
shares, namely (i) one share in the nominal value of DEM 50'000 and
(ii) one share in the nominal value of DEM 19'950'000.
In accordance with the terms and conditions of this Agreement, the
Shares shall be sold to and acquired by Purchaser as follows:
(i) one share in the nominal value of DEM 50'000 and a partial
share in the nominal value of DEM 70'000 shall be sold and
transferred to FiberMark GmbH II;
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(ii) the remaining partial share in the nominal value of DEM
19'880'000 shall be sold and transferred to FiberMark GmbH I.
The consent of the Company pursuant to Section 17 GmbHG to the
division of the share in the nominal value of DEM 19'950'000 into
two partial shares in the nominal amount of DEM 70'000 and
DEM 19'880'000 is attached as SCHEDULE 2.3.
2.4 SHAREHOLDER CONSENT. Waiving all requirements as to form and notice
periods, Seller hereby holds an extraordinary shareholder's meeting
of the Company and declares consent pursuant to Section 8 of the
Articles of Association of the Company to the sale and transfer of
the Shares (including the necessary partition thereof) from Seller
to Purchaser in accordance with the terms of this Agreement.
ARTICLE 3
TRANSFER OF SHARES
3.1 TRANSFER OF TITLE AND OF BENEFIT AND RISK. The transfer of title
(DINGLICHE Ubertragung) to the Shares shall become effective upon
payment of the Purchase Price by Purchaser in accordance with Art.
3.3.1 (the "CLOSING"). The Closing shall take place at the offices
of the notary public Mr. lic. iur. HSG RA Marco Bolzern,
Haldenstrasse 57, Business-Center Tivoli, 6006 Lucerne, Switzerland.
Subject to the Closing, benefit and risk with respect to the Company
and its business shall pass (WIRTSCHAFTLICHER UBERGANG) to Purchaser
as from August 01, 1999 (0.00 hours). Seller shall be entitled to
the profits of the Company for the Short Fiscal Year 1999 as further
provided in Art. 3.4 of this Agreement.
3.2 CONDITIONS PRECEDENT TO CLOSING. The Closing shall occur on
September 17, 1999 or such earlier date mutually agreed upon by the
Parties (the "CLOSING DATE"),
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subject to the satisfaction of each of the following conditions
precedent (AUFSCHIEBENDE BEDINGUNGEN):
(i) NO GOVERNMENTAL OR OTHER PROCEEDING. No action shall be
pending or threatened which seeks to enjoin, restrain or
prohibit the transfer of the Shares.
(ii) NO MATERIAL ADVERSE EFFECT. There shall not have occurred,
between the date hereof and the Closing Date, any event,
change or development which has or has had a Material Adverse
Effect on the Company.
3.3 ACTIONS AT CLOSING. At the Closing,
3.3.1 Purchaser shall, with value as of the Closing Date, pay by wire
transfer
(i) to Seller DEM 37'443'000 to the account of Seller with CREDIT
SUISSE, ZURICH, ACCOUNT NO. 0835-513791-72-3 provided,
however, that upon receipt of the said amount Credit Suisse
shall transfer the amount of DEM 17'401'000 (as further
described in Art. 3.5.1) plus amount of advance payment
pursuant to the Termination Agreement, clause (iv), attached
as SCHEDULE 3.4.9 to the Company's account with Bayerische
Hypo-und Vereinsbank AG, Rosenheim, bank code 711 200 77,
account no. 6457428. Prior to Closing Seller shall hand over
to Purchaser a written confirmation by Credit Suisse that
Credit Suisse was irrevocably instructed and agreed to the
above procedure; and
(ii) to the account with CRedit Suisse, Zurich, account
no. 0835-513791-72-5 (the "ESCROW ACCOUNT") DEM 4'150'000
(the "ESCROW AMOUNT") pursuant to the Escrow Agreement
attached hereto as ANNEX A. The Escrow Amount shall be used
exclusively for the purposes described in Art. 5 and shall
be released in accordance with the Escrow Agreement.
Each Party shall bear its own bank charges.
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3.3.2 Seller shall transfer to Purchaser title to the Shares pursuant to
the Share Transfer Deed attached hereto as ANNEX B.
3.4 ENTITLEMENT TO PROFITS FOR THE SHORT FISCAL YEAR 1999 AND AUDIT.
Seller shall be entitled to receive the profits of the Company for
the Short Fiscal Year 1999 pursuant to the BuGaV in accordance with
Art. 3.5. Such profits shall be calculated based on the audited
financial statements of the Company for the Short Fiscal Year 1999
(the "SHORT FISCAL YEAR FINANCIAL STATEMENTS").
3.4.1 The Short Fiscal Year Financial Statements shall be prepared in
accordance with past practice on the basis of the books and records
of the Company, consistent with German Commercial Law and German
generally accepted accounting principles (GRUNDSATZE
ORDNUNGSGEMASSER BUCHFUHRUNG) consistently applied
(BILANZKONTINUITAT), to present a true and fair view of the
networth, the financial position and results (FINANZ-, VERMOGENS-
UND ERTRAGSLAGE) within the meaning of Section 264 (2) HGB (German
Commercial Code) of the Company's assets, financial condition and
earnings, and the results of its operation as at the relevant date,
observing continuity in accounting and evaluation methods. For the
Short Fiscal Year 1999 the provisions for pensions will include one
third of the maximum adjustment according to the new mortality lists
(STERBETAFELN 1998 BY PROFESSOR DR. KLAUS HEUBECK). The pension
accrual will be calculated following an actuarial opinion.
3.4.2 Purchaser undertakes to procure that, as promptly as practicable,
but no later than four weeks following the Closing Date, the Company
shall prepare and deliver to Seller and Purchaser the Short Fiscal
Year Financial Statements consisting of a balance sheet (BILANZ), a
profit and loss account (GEWINN- UND VERLUSTRECHNUNG), notes to the
financial statements (ANHANG) and a report on the economic
development and position of the Company (LAGEBERICHT).
3.4.3 As promptly as practicable, but no later than within six weeks
following Purchaser's and Seller's receipt of the Short Fiscal Year
Financial Statements, KPMG Deutsche Treuhand-Gesellschaft,
Aktiengesellschaft Wirtschaftsprufungs-
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gesellschaft, Dusseldorf ("SELLER'S ACCOUNTANTS"), on behalf and at
the expense of the Company, shall complete the audit of the Short
Fiscal Year Financial Statements.
3.4.4 As promptly as practicable, but no later than within four weeks
following Purchaser's receipt of the audited Short Fiscal Year
Financial Statements, BBMS Treuhandgesellschaft mbH,
Wirtschaftsprufungsgesellschaft, Munich ("PURCHASER'S ACCOUNTANTS"),
on behalf and at the expense of Purchaser, shall complete the review
of the Short Fiscal Year Financial Statements. Purchaser's
Accountants shall also be entitled to participate in the inventory
count (INVENTUR) and to review any bookkeeping or other documents
relating to the Short Fiscal Year Financial Statements as well as
any previous Financial Statements of the Company. Purchaser's
Accountants shall in particular be entitled to have access to the
working papers of Seller's Accountants for the Short Fiscal Year
Financial Statements or previous Financial Statements of the
Company.
3.4.5 The purpose of Purchaser's Accountants' review is to determine
whether the Short Fiscal Year Financial Statements have been
prepared in accordance with the requirements set forth in this Art.
3.4.1. If Purchaser's Accountants conclude that the Short Fiscal
Year Financial Statements have been prepared in accordance with such
requirements, then the Short Fiscal Year Financial Statements shall
become final.
3.4.6 In the event of dispute between Purchaser's and Seller's Accountants
with respect to the Short Fiscal Year Financial Statements, Seller
and Purchaser shall first use their best efforts to resolve such
dispute among themselves with the assistance of their accountants.
If the dispute is settled, the Short Fiscal Year Financial
Statements will become final.
3.4.7 If Seller and Purchaser are unable to resolve their dispute
regarding the preparation of the Short Fiscal Year Financial
Statements in accordance with Art. 3.4.1 within two weeks following
either Party's written request for dispute resolution, the dispute
shall be submitted to a mutually agreed independent
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accountant whose resolution of such dispute shall be final and
binding. If Seller and Purchaser are unable to agree on an
independent accountant within four weeks following either Party's
written request for dispute resolution, such accountant shall be
determined at the request of either Seller or Purchaser by the
Institut der Wirtschaftsprufer in Deutschland, e.V. (IDW) (Institute
of Chartered Accountants in Germany); it being understood that an
independent accountant shall have discretion
(ENTSCHEIDUNGSSPIELRAUM) only in the range between the amounts in
dispute between Seller's and Purchaser's Accountants, respectively.
3.4.8 The costs of such independent accountant shall be borne by Seller
and/or Purchaser, respectively, in accordance with Sections 91 et
seq. ZPO (German Code of Civil Procedure).
3.4.9 Once the Short Fiscal Year Financial Statements have become final
and binding upon the Parties, Purchaser undertakes to pass the
corresponding shareholder resolution with respect to the approval of
the Short Fiscal Year Financial Statements without delay.
In addition to the audit of the Short Fiscal Year Financial
Statements the Parties agree that the audit shall also include the
auditing of any payments or refunds under the Cash Pool Agreement by
the Company or Seller, as the case may be, as set forth in the
Termination Agreement attached as SCHEDULE 3.4.9. The auditing
procedure described in the preceding Art. 3.4.1 to 3.4.8 shall apply
accordingly with respect to this audit.
3.5 CALCULATION OF PURCHASE PRICE AND ADJUSTMENT.
3.5.1 Pursuant to the draft financial statements as per July 31,1999
attached as SCHEDULE 3.5.1 the Company has receivables) in the
aggregate amount of DEM 17'401'000. This amount represents the
balance of the following estimated balance sheet positions, namely
(i) the repayment claim of the Company against Seller under the
inter-
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company loan (including interest), (ii) PLUS the VAT refund claim of
the Company against Seller, (iii) PLUS the repayment claim of the
Company against Seller in connection with the agreement of April 30,
1997 between Seller and some of its Affiliates, including the
Company, on the one hand and Deutsche Bank AG, Duren, on the other
hand (the "CASH POOL AGREEMENT"), (iv) MINUS settlement of the claim
of Seller against the Company for the profit for the Short Fiscal
Year 1999 according to HB I.
3.5.2 If and to the extent that the balance of (i) the repayment claim of
the Company against Seller under the inter-company loan (including
interest), (ii) PLUS the VAT refund claim of the Company against
Seller, (iii) PLUS the repayment claim of the Company against Seller
in connection with the Cash Pool Agreement, (iv) MINUS settlement of
the claim of Seller against the Company for the profit for the Short
Fiscal Year 1999 according to HB I, all as set forth in the draft
financial statements as per July 31, 1999 (SCHEDULE 3.5.1) in the
amount of DEM 17'401'000, exceeds the balance of the said items
pursuant to the final and binding Short Fiscal Year Financial
Statements, the Company is obliged to refund the balance between DEM
17'401'000 and the amount calculated on the basis of the final and
binding Short Fiscal Year Financial Statements to Seller (the
"REFUND AMOUNT"). In this case, the Purchase Price shall be reduced
by the Refund Amount (the "PURCHASE PRICE REDUCTION") as further
provided in Art. 3.5.3 below.
If and to the extent that the balance of (i) the repayment claim of
the Company against Seller under the inter-company loan (including
interest), (ii) PLUS the VAT refund claim of the Company against
Seller, (iii) PLUS the repayment claim of the Company against Seller
in connection with the Cash Pool Agreement, (iv) MINUS settlement of
the claim of Seller against the Company for the profit for the Short
Fiscal Year 1999 according to HB I, all as set forth in the draft
financial statements as per July 31, 1999 (SCHEDULE 3.5.1) in the
amount of DEM 17'401'000, falls short of the balance of the said
items pursuant to the final and binding Short Fiscal Year Financial
Statements, Seller is obligated to pay the balance between DEM
17'401'000 and the amount calculated on the basis of the
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final and binding Short Fiscal Year Financial Statements to the
Company (the "PAYMENT AMOUNT"). In this case, the Purchase Price
shall be increased by the Payment Amount (the "PURCHASE PRICE
INCREASE") as further provided in Art. 3.5.3 below.
3.5.3 Any Refund Amount to be paid by the Company to Seller and any
Purchase Price Reduction owed by Seller to Purchaser according to
Art. 3.5.2 shall be due 14 (fourteen) days after the Short Fiscal
Year Financial Statements have become final and binding. Seller
herewith assigns his claim for the Refund Amount against the Company
to Purchaser who accepts such assignment in settlement of the claim
for Purchase Price Reduction of Purchaser.
Any Payment Amount to be paid by Seller to the Company and any
Purchase Price Increase owed by Purchaser to Seller according to
Art. 3.5.2 shall be due 14 (fourteen) days after the Short Fiscal
Year Financial Statements have become final and binding. After the
Closing Date the Purchaser shall cause the Company to assign its
claim for the Payment Amount against Seller to Purchaser who accepts
such assignment in settlement of the claim for Purchase Price
Increase of Seller who accepts such set-off.
3.5.4 Upon Closing Purchaser shall cause the Company to enter into the
settlement agreement with Seller attached as SCHEDULE 3.5.4.
3.6 RIGHT TO RESCIND (RUCKTRITTSRECHT) THE AGREEMENT.
3.6.1 Should the conditions precedent to Closing set forth in Art. 3.2 of
this Agreement not be met by September 17, 1999 (24.00 hours),
Purchaser may rescind this Agreement unless Purchaser failed to use
its reasonable best efforts to procure the satisfaction of such
conditions.
3.6.2 Should the condition precedent to Closing set forth in Arts. 3.1 or
3.2 and of this Agreement not be met by September 17, 1999 (24.00
hours), Seller may rescind
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this Agreement unless Seller failed to use its reasonable best
efforts to procure the satisfaction of such conditions.
3.6.3 If this Agreement is rescinded pursuant to Arts. 3.6.1 or 3.6.2 of
this Agreement, such rescission shall be without liability of a
Party to the other Party; provided that, if such rescission results
from the willful failure of any Party to fulfill a condition to the
performance of the obligations of the other Party or to perform a
covenant of this Agreement or from a willful breach by any Party,
such Party shall be fully liable for any and all damages incurred or
suffered by the other Party as a result of such failure or breach.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants by way of an independent guarantee (SELBSTANDIGES
GARANTIEVERSPRECHEN) as of the date hereof that all of the following
statements shall be true and correct:
4.1.1 ORGANIZATION AND QUALIFICATION. The Company is duly organized and
validly existing under the laws of Germany as shown in the excerpt
of the commercial register attached hereto as SCHEDULE 4.1.1(A) and
has the full right and authority to own and to operate its
properties and to engage in the business in all jurisdictions in
which it is now engaged. All matters relating to the Company which
require registration are truly and completely reflected in Schedule
4.1.1(a) and there are no missing registrations in the Commercial
Register, except for the termination of the BuGaV.
Seller is duly organized and validly existing under the laws of
Germany as shown in the excerpt of the commercial register attached
hereto as SCHEDULE 4.1.1(B) and has full corporate power and
authority to own the Shares. Seller has all
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necessary corporate power and authority to enter into this Agreement
and has taken all corporate action necessary to consummate the
transactions contemplated hereby and to perform the obligations
hereunder. This Agreement has been duly executed and delivered by
Seller. Assuming the due execution of this Agreement by Purchaser,
this Agreement is a legal, valid and binding obligation of Seller
enforceable in accordance with its terms.
The Articles of Association of the Company in effect on the Closing
Date are attached as SCHEDULE 4.1.1(C). These Articles of
Association have not been amended and there are no side agreements
relating to the Company which would be binding upon Purchaser or
which would affect Purchaser's rights in the Company. The Company
no subsidiaries, representations or offices other than those listed
in SCHEDULE 4.1.1(D). The Company does not own directly or
indirectly any capital stock of or any equity interest in any other
Person.
No proceedings under the relevant insolvency laws have been
initiated or threatened to be initiated by or against Seller or the
Company, respectively; to the Best of Seller's Knowledge there are
no grounds for the initiation of such proceedings in the
foreseeable future.
4.1.2 CAPITAL STRUCTURE. The Company has a fully paid in nominal capital
(STAMMKAPITAL) of DEM 20'000'000 which is not diminished by any
repayment of capital or withdrawal of profit to Seller. No further
capital, partnership interests, shares or similar rights in the
Company have been or will be created or issued or agreed to be
issued by the Closing Date. All the Shares sold pursuant to Art. 2.1
of this Agreement are fully paid in in cash and non-assessable.
4.1.3 OWNERSHIP. Upon transfer of the Shares Purchaser will receive good
and valid title to the Shares with all rights pertaining thereto,
free and clear of any lien or encumbrance or any restrictions or any
rights of third parties whatsoever. The Shares represent 100 % of
the entire issued share capital of the Company. Since
<PAGE>
the formation of the Company on December 6, 1991 the Shares have
been continuously held by Seller who is a legal entity (JURISTISCHE
PERSON) entitled to corporate tax credits (aNRECHNUNGSBERECHTIGTE
JURISTISCHE PERSON).
4.1.4 FINANCIAL STATEMENTS. Seller has provided Purchaser with the audited
financial statements (JAHRESABSCHLusse) of the Company for the
fiscal years ending on December 31, 1996, 1997 and 1998, as
testified by KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft
Wirtschaftsprufungsgesellschaft, Dusseldorf, on February 7, 1997,
February 13, 1998 and February 12, 1999, (together the "FINANCIAL
STATEMENTS").
The Financial Statements
(i) were prepared in accordance with the books and records of the
Company;
(ii) were prepared consistent with German commercial law in
accordance with German generally accepted accounting
principles consistently applied; and
(iii) present a true and fair view of the net worth, the financial
position and results (FINANZ-, VERMOGENS- UND ERTRAGSLAGE)
within the meaning of Section 264 (2) HGB of the Company's
assets, financial condition and earnings, and the results of
its operations as at the relevant dates thereof and for the
periods covered thereby, observing continuity in the
accounting and evaluation methods, unless otherwise stated in
the Financial Statements.
4.1.5 ABSENCE OF ADVERSE CHANGES. In the period between January 1, 1999
and the Closing Date and except as disclosed in SCHEDULE 4.1.5, the
Company:
(i) has conducted its business in the ordinary course and has not
entered into any unusual commitment, contract or contract
amendment/termination and has not changed or terminated any
Contract other than in the ordinary course;
<PAGE>
(ii) has not incurred any obligation or liability except current
liabilities incurred in the ordinary course of business and
has not mortgaged, pledged or subjected to a lien or otherwise
encumbered any of its assets or disposed of any of its
tangible or intangible fixed assets with a value exceeding
DEM 100'000 in the individual case;
(iii) has not incurred or taken any action which in Seller's
reasonable view is likely to lead to a Material Adverse
Effect;
(iv) has not granted any loan except for any payments under the
Cash Pool Agreement, nor made any borrowing, given any
guarantee or dissolved or withdrawn any hidden reserves nor
made any declaration or setting aside or payment or any other
distribution of profit except for the profits for the fiscal
year ending on December 31, 1998; and
(v) has not incurred any material change in the financial
condition, business operations, cash flow, assets of the
Company, including, without limitation, any material change in
the purchasing patterns of any of the major customers of the
Company or the prizing of the Company's products.
4.1.6 PERMITS AND AUTHORIZATIONS. Unless otherwise disclosed in SCHEDULE
4.1.6, the Company has all the permits and authorizations which are
necessary to carry on its business as presently conducted. The fact
that this Agreement is executed and the transactions contemplated
herein are consummated will not lead to the automatic termination of
the Company's permits and authorizations and will also not give rise
to any rights of the competent authorities or other third parties to
terminate such permits and authorizations. Furthermore, the Company
is in particular, but not limited thereto,
(i) in possession of all building permits required under the
applicable laws and has in particular complied with the terms
and conditions set forth therein;
(ii) in possession of all permits required under applicable laws
required for
<PAGE>
drawing water from the wells and has in particular complied
with the terms and conditions set forth therein;
(iii) in possession of all permits required under applicable laws
for water discharge into the river Lahn and /or the sewage
system as the case may be and has in particular complied with
the terms and conditions set forth therein. The license for
water discharge of August 4, 1999 is in full force and effect
and has not been revoked. There are no reasons which would
justify a revocation of this discharge license. The Company is
in full compliance with the terms and conditions set forth in
the license and the supplementary provisions contained therein
and there are no reasons to believe that the obligations set
forth in the license will not be complied with by the Company
when due. Compliance with the terms, conditions and
supplementary provisions set forth in the license will not
cause any expenses of the Company other than those expenses
required for compliance with the terms, conditions and
supplementary provisions fixed in the previous license of
November 20, 1995 except for the costs for the planning study
(PLANUNGSSTUDIE) provided for in section II 3. of the license
for water discharge of August 4, 1999. The Company has duly
paid the water discharge fee for the time period up to
December 31, 1998 and earlier periods of time and has paid any
amounts due for the time period up to July 31, 1999.
4.1.7 CLAIMS AND LITIGATION. Except as reflected in SCHEDULE 4.1.7 there
are no actions, suits or proceedings pending or, to the Best of
Seller's Knowledge, threatened against the Company either in court
or before any administrative board, agency or commission or arbitral
tribunal which involve a claim by a third party against the Company
or by the Company against a third party in an amount exceeding DEM
100'000 and, to the Best of Seller's Knowledge, there are no grounds
or indications that any such actions, suits or proceedings are
forthcoming.
4.1.8 NO CONFLICT OR VIOLATION. Except as reflected in SCHEDULE 4.1.8,
neither the execution, delivery and performance of this Agreement
nor the consummation of
<PAGE>
the transactions contemplated hereby will result in a breach of, or
a default under, any term or provision of any contract to which the
Company is a party or by which any assets of the Company are bound,
which breach or default would interfere in any material way with the
ability of Seller to consummate the transactions contemplated by
this Agreement.
4.1.9 TITLE TO ASSETS. Except as disclosed in SCHEDULE 4.1.9 and except
for retentions of title (EIGENTUMSVORBEHALTE) and security transfers
(SICHERUNGSUBEREIGNUNGEN/-ABTRETUNGEN) incurred in the ordinary
course of business, and except for statutory landlord's liens
(VERMIETERPFANDRECHTE), the Company has good title to or the valid
right to use its fixed assets free of any lien. A true and complete
list of the fixed assets with a value exceeding DEM 100'000 in the
individual case which are owned by the Company and a separate list
of the fixed assets with a value exceeding DEM 100'000 in the
individual case which are leased by the Company are attached as
SCHEDULE 4.1.9. These assets are in a reasonable operating condition
and state of maintenance and repair (subject to normal wear and
tear) and are sufficient to conduct the business of the Company to
the same extent and in the same manner as conducted prior to the
Closing Date, unless otherwise disclosed in the SCHEDULES. Unless
disclosed in SCHEDULE 4.1.9, Seller or any of its Affiliates do not
retain or own any tangible or intangible fixed assets used
exclusively or used primarily by the Company.
4.1.10 PUBLIC INVESTMENT GRANTS, PREMIUMS AND SUBSIDIES. Except as
disclosed in SCHEDULE 4.1.10, the Company has not received any
investment grants (INVESTITIONSZULAGEN), premiums
(INVESTITIONSZUSCHUSSE) or subsidies (SUB-VENTIONEN).
4.1.11 TAXES. The Company has timely filed all tax returns for all Taxes
required by law to have been filed. The Company has paid all Taxes
which have become due by the Closing Date whether pursuant to said
returns or pursuant to any assessment and there is no further
liability for any such taxes and no interests or penalties accrued
or accruing with respect thereto, except as reflected in SCHEDULE
4.1.11; the indemnification for Taxes is separately dealt with under
Art. 5.6.4.
<PAGE>
4.1.12 LABOUR, EMPLOYMENT AND PENSIONS; AGENCY AGREEMENTS. Except as
reflected in SCHEDULE 4.1.12, the Company's pension plans, benefit
plans or similar health and welfare commitments comply with
applicable laws; except as disclosed in the Financial Statements or
the Short Fiscal Year Financial Statements or SCHEDULE 4.1.12 there
are no other pension plans, benefit plans or similar health and
welfare commitments, and the Company has made all contributions to
their pension plans, benefit plans or similar health and welfare
commitments as required by applicable law and the documents which
govern the terms of such arrangements and has in particular made
sufficient provisions in accordance with Section 6a EStG (in
accordance with Art. 3.4.1) for any such plans in the Financial
Statements. No labour complaint (ARBEITSGERICHTSVERFAHREN) other
than reflected in Schedule 4.1.12. is pending against the Company
before any federal, state or local agency or other judicial or
administrative forum and no labour strike or other labour trouble
affecting the Company is pending. No change in the compensation or
other terms of engagement of any managing director (GESCHAFTSFUHRER)
or other employee of the Company is due or has been agreed to,
except for the normal annual salary review. SCHEDULE 4.1.12(A)
contains a complete and correct list of all employees of the Company
as of the date hereof, including the respective salaries or wage
rates for each class of employees, the entrance date, their
position, their termination period and any special termination
protection. Furthermore, SCHEDULE 4.1.12(B) contains a list of each
collective bargaining agreement (TARIFVERTRAG), shop agreement
(BETRIEBSVEREINBARUNG) or comparable agreements and material
applicable usages (BETRIEBLICHE UBUNGEN), if any; and there are no
claims of the State Labour Office (LANDESARBEITSAMT), whether
absolute, accrued, contingent, due or to become due for any
liabilities pursuant to Section 128 AFG (German Act to Promote
Employment). Schedule 4.1.12(c) contains a complete and correct list
of all sales agents of the Company as of the date hereof, including
the respective compensation schemes (VERGUTUNGSREGELUNG), entrance
date, product line and territory.
4.1.13 INTELLECTUAL PROPERTY/KNOW-HOW. Except as reflected in SCHEDULE
4.1.13, the Company owns or has adequate license to use all the
know-how, patents, copyrights, trademarks, utility patents and
design patents and other intellectual
<PAGE>
property rights which are necessary for the conduct of its business
as it is now conducted. SCHEDULE 4.1.13 contains a true and complete
list of all patents, copyrights, trademarks, utility patents and
design patents and any licenses owned or used by the Company (except
for standard software licenses). To the Best of Seller's Knowledge,
the Company uses the foregoing rights without infringement of or
conflict with any rights of third parties.
4.1.14 COMPLIANCE WITH LEGAL REQUIREMENTS.
(i) The Company has not violated in any material respect
applicable laws, ordinances, regulations, decrees or orders of
any government entity in a manner that such violation could
lead to losses or remedial costs exceeding an amount of DEM
500'000 in the aggregate.
(ii) The competent authorities have not informed the Company in
writing that they will issue any order with which the Company
does not already comply where compliance with such order could
lead to losses or remedial costs exceeding an amount of DEM
500'000 in the aggregate.
4.1.15 REAL ESTATE. The Company has good and valid title to the real estate
listed in SCHEDULE 4.1.15. There are no other liens, rights of third
parties, charges or encumbrances on such real estate than those
reflected in SCHEDULE 4.1.15.
Unless disclosed in SCHEDULE 4.1.15, to the Best of Seller's
Knowledge there are no agreements, ancient rights (so-called
ALTRECHTE) or any other rights relating to such real estate which
have not been entered into the land register (GRUNDBUCH) nor any
duties (DULDUNGS-, NUTZUNGS- UND HANDLUNGSPFLICHTEN) to which the
Company is subject including, but not limited to, maintenance
obligations (INSTANDHALTUNGSPFLICHTEN), rights of way or access
(WEGERECHTE UND RECHTE ZUM BETRETEN ODER BEFAHREN) or any other
rights of use (NUTZUNGSRECHTE) with respect to such real estate.
Seller has delivered to Purchaser true, correct and complete copies,
accurate in substance with respect to the actual legal status, of
all land register extracts (GRUNDBUCHAUSZUGE) with respect to real
estate. There are no
<PAGE>
other obligations of the Company to transfer title (UBEREIGNUNG) or
to create any other rights (DINGLICHE RECHTE) in the real estate
except for those disclosed in SCHEDULE 4.1.15.
All of the buildings, fixtures and other improvements owned, leased
or otherwise used by the Company are in reasonable operating
condition and have been maintained in accordance with reasonable
industry practices.
The Company has access to all utilities, including water and sewage,
necessary to operate the business in the ordinary course and as
presently conducted. There are no condemnation (ABBRUCHSVERFUGUNG
oder ENTEIGNUNGSVERFAHREN) or appropriation (BEHORDLICHE
INBESITZNAHME-VERFUGUNGEN) proceedings pending or, to the Best of
Seller's Knowledge, threatened against any of such real property or
improvement.
None of the real estate now or heretofor owned, leased
or used by the Company, to the Best of Seller's Knowledge, is or has
been used by the Company in any manner in material violation of
applicable building, zoning, land use, administrative, occupational
or safety or health law or regulation.
4.1.16 CONTRACTS AND COMMITMENTS. SCHEDULE 4.1.16 lists all Contracts of
the Company of the following type,
(i) any agreement not to compete;
(ii) any agreement containing "change of control" or similar
provisions;
(iii) any employment agreement which has a notice period in excess
of six months or provides for a per annum salary in excess of
DEM 150'000 or provides for severance payments in excess of
DEM 150'000 other than those covered by pension plans,
reserves in the Company' balance sheets or otherwise;
(iv) any loan agreement or indenture; or
<PAGE>
(v) any distribution or supply arrangement which cannot be
canceled without penalty within twelve months.
4.1.17 CAPITAL COMMITMENTS. There are no outstanding contractual
commitments of the Company in excess of DEM 250'000 in the aggregate
to purchase equipment or to make improvements to real property,
unless disclosed in SCHEDULE 4.1.17.
4.1.18 INSURANCE COVERAGE. The Company maintains with financially sound and
reputable insurance companies, insurance in at least such amounts
and against at least such risks as are usually insured against in
the same general area by companies engaged in the same or similar
business as the Company.
4.1.19 ENVIRONMENTAL PROTECTION. The representations and warranties
relating to environmental matters and their indemnification are
dealt with separately under Art. 5.6.6.
4.1.20 YEAR 2000 COMPLIANCE. The Company has exercised due diligence in
investigating the possibility of the occurrence of Year 2000
Problems. The Company is not aware that the computer systems,
software or other processing equipment used by the Company are
likely to suffer Year 2000 Problems which cannot be cured without
extraordinary expenditure exceeding in the aggregate DEM 500'000.
For purposes of this Agreement "Year 2000 Problems" shall mean
errors or impaired performance in data processing, in the output of
data or in the operation of any equipment or software which, in the
opinion of an independent IT specialist, are connected with or
relate to the failure of any computer system, software or other
processing equipment used by the Company to give due chronological
recognition to calendar dates before, on or after January 1, 2000
when processing data.
4.1.21 PRODUCT LIABILITY. Except for claims incurred in the ordinary course
of business, the Company has not incurred any uninsured claims for
products manufactured, sold or supplied which do not comply in any
material respect with any warranties
<PAGE>
or representations expressly or impliedly made by the Company or
which do not comply with applicable law.
4.1.22 BROKER'S FEE. The Company has not employed any broker, finder or
intermediary in connection with the transactions contemplated by
this Agreement to whom it would be obligated to pay a broker's,
finder's or similar fee or commission in connection therewith or
upon the consummation thereof.
4.1.23 TRANSACTION WITH SELLER. Except for the BuGaV, the claims and
agreements mentioned in Art. 3.5 and further agreements listed in
SCHEDULE 4.1.23, there are no agreements, or claims or liabilities
(incl. inter-company loans) between Seller and the Company, or
between the Company and an Affiliate of Seller or a Person related
to Seller. Unless otherwise disclosed in SCHEDULE 4.1.23, since such
agreements can be replaced by the Company at any time by third-party
agreements with essentially the same commercial terms, the Company
is able to conduct its business on a stand-alone basis as presently
conducted even in the event of a termination of any of the
agreements listed in SCHEDULE 4.1.23.
4.1.24 BANK ACCOUNTS.
(i) SCHEDULE 4.1.24 lists the names and addresses of every bank
and other financial institution in which the Company maintains
an account (whether a check, savings or other account), lock
box or safe deposit box, and the account numbers and names of
persons having signing authority or other access thereto and
the credit or debit balance as of July 31, 1999 (24.00 hours)
and includes corresponding bank confirmations
(SALDENBESTATIGUNGEN).
(ii) Except as expressly set forth in SCHEDULE 4.1.24, there is no
outstanding financial debt of the Company towards any bank or
other financial institution.
4.1.25 CUSTOMERS AND SUPPLIERS.
<PAGE>
SCHEDULE 4.1.25 contains a true and complete list of the ten largest
customers and suppliers of the Company by sales volume for the last
three business years as well as the relevant list for the Short
Fiscal Year 1999. To the Best of Seller's Knowledge no substantial
customer of, or substantial supplier to the Company will reduce the
extent of its previous dealing with the Company to any material
degree, except for the general development of the economy or the
market. None of the principal suppliers or customers of the Company
has for the last two years given notice terminating, cancelling or,
to the Best of Seller's Knowledge, threatening to terminate or cancel
any contract or relationship with the Company, except as disclosed in
SCHEDULE 4.1.25.
4.1.26 NO OTHER WARRANTIES.
All explicit or implied representations or warranties which might
exist under statutory law or otherwise in addition to those
contained in this Art. 4 Are expressly excluded.
4.2 DUE DILIGENCE DOCUMENTATION. Prior to the execution hereof,
Purchaser has been given access to the sites and management of the
Company and to specific documentation regarding the Company (the
"DUE DILIGENCE DOCUMENTATION"). Such Due Diligence Documentation
shall operate as a limitation of Seller's liability under the
representations and warranties contained in this Art. 4 and of
Purchaser's rights under Art. 5 to the extent that Seller shall only
be released from its liability if all relevant facts on which any
such liability is based and on the possible scope of damages
(SCHADENSUMFANG) have been disclosed in the Due Diligence
Documentation in such a way that without further investigation by
merely applying the law Purchaser could have determined such
liability by its merits (DEM GRUNDE NACH); apart therefrom, the
application of Section 460 BGB to this Agreement is expressly
excluded. For evidence purposes (ZU BEWEISZWECKEN) the Due Diligence
Documentation shall be initialled on behalf of Purchaser and shall
be deposited (HINTERLEGT) with Seller and with a copy to Purchaser.
4.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER.
<PAGE>
27
4.3.1 ORGANIZATION. FiberMark GmbH I and FiberMark GmbH II are duly
organized and validly existing companies with limited liability under
the laws of Germany as shown in the EXCERPTS OF THE COMMERCIAL
REGISTER attached hereto as SCHEDULE 4.3.1 and have full corporate
power and authority to conduct their business as it is presently
being conducted.
4.3.2 LEGAL AND AUTHORIZED TRANSACTIONS. The execution and delivery by
Purchaser of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate action by Purchaser. This Agreement and all other
agreements contemplated hereby, upon execution and delivery by
Purchaser, will constitute legal, valid and binding obligations of
Purchaser enforceable in accordance with its terms.
4.3.3 NO BREACH. Neither the execution and delivery by Purchaser of, or the
performance by Purchaser of its obligations, under this Agreement,
nor the consummation by Purchaser of the transactions contemplated
hereby, will violate any provision of the charter or by-laws of
Purchaser.
4.3.4 PURCHASER'S FINANCING. As of the Closing Date, Purchaser will have
the funds necessary to pay the Purchase Price and to consummate the
transactions contemplated by this Agreement.
4.3.5 NO RETROACTIVE RESTRUCTURING. Purchaser shall not restructure the
Company with retroactive effect for the period of time prior to
August 1, 1999 under the Act Regulating Transformation Taxes of
Companies (UMWANDLUNGSSTEUERGESETZ).
<PAGE>
28
ARTICLE 5
REMEDIES
5.1 TERM OF INDEMNITIES, COVENANTS, WARRANTIES AND REPRESENTATIONS. The
claims of Purchaser against Seller under this Agreement including
claims under the indemnities, covenants, representations and
warranties set forth in this Agreement shall survive until December
31, 2000 (24.00 hours) , save that
(i) a claim pursuant to Art. 5.6.4 of this Agreement may be
asserted within six months after the assessment or
reassessment of taxes or of social security payment
obligations or comparable charges relating to any period
up to July 31, 1999 served upon the Company has become
final, unappealable and binding upon the respective
recipient;
(ii) any environmental remedies related to environmental
protection set forth in Art. 5.6.6 of this Agreement are
subject to a limitation period of four years; and
(iii) any rights or claims with regard to defects in rights
(RECHTSMANGEL) of the Shares are subject to a limitation
period of 30 years.
The claims of Purchaser against Seller shall not expire if and to the
extent Purchaser files for arbitration pursuant to Art. 9.2 prior to
the expiration of such limitation periods; ss. 209 and ss. 215 BGB
shall be applied by analogy. As regards claims of Purchaser under
Art. 5.6.6, the limitation period for any such claims shall not
expire if Purchaser provided Seller with a written statement which
corresponds to the form attached as SCHEDULE 5.1 / 5.2.1 regarding
the claim asserted by Purchaser and the facts known to Purchaser on
which such claim is based prior to the expiration of the four-year
limitation period set forth in Art. 5.1 (ii) above.
5.2 NOTICE AND OPPORTUNITY TO DEFEND.
<PAGE>
29
5.2.1 WITHIN 60 DAYS AFTER EITHER (I) PURCHASER OR THE COMPANY HAVE
OBTAINED KNOWLEDGE OF THE MATERIAL ELEMENTS OR FACTS, OR (II) RECEIPT
BY PURCHASER OR THE COMPANY OF WRITTEN NOTICE OF ANY CLAIM OR
POTENTIAL CLAIM BY ANY THIRD PARTY, WHICH COULD GIVE RISE TO A CLAIM
FOR BREACH OF REPRESENTATIONS, WARRANTIES, COVENANTS OR
INDEMNIFICATIONS PURSUANT TO THIS AGREEMENT, PURCHASER SHALL GIVE
SELLER WRITTEN NOTICE WHICH CORRESPONDS TO THE FORM ATTACHED AS
SCHEDULE 5.1 / 5.2.1 DESCRIBING THE FACTSOF SUCH CLAIM OF PURCHASER
IN REASONABLE DETAIL TO THE EXTENT THEN KNOWN. FAILURE TO GIVE NOTICE
WITHIN 60 DAYS SHALL NOT AFFECT PURCHASER'S REMEDIES HEREUNDER EXCEPT
TO THE EXTENT PROVIDED FOR IN ART. 5.5.4.
5.2.2 In case of a claim by any third party which could give rise to a
claim against Seller for breach of representations, warranties,
covenants or indemnifications pursuant to this Agreement (the
"Claim"), the Parties shall cooperate in causing the Company to use
its best efforts and shall also use their best efforts to defend
against such Claim if sued personally. Purchaser shall, in
particular, not settle such Claim and cause the Company not to settle
such Claim without the prior written consent of Seller which shall
not be unreasonably withheld. If and to the extent that Purchaser
and/or the Company settle any such Claim without the consent of
Seller (provided that such consent is not unreasonably withheld),
Seller shall not be liable pursuant to this Agreement. If Seller
acknowledges liability to Purchaser in writing and there are
important reasons for Seller, then Seller shall have the right to
defend, at its own expense and by its own counsel (who shall be
reasonably satisfactory to Purchaser), any such matter, provided that
such defense can have no ongoing material adverse effect on the
business of the Company for the period of time after the Closing
Date. If Seller undertakes to defend any such asserted liability,
Seller shall promptly notify Purchaser of its intention to do so, and
Purchaser shall cooperate fully with, and provide at the cost of
Seller appropriate documentation and support as reasonably requested
by Seller and their counsel in the defense against any such asserted
liability. Seller shall not settle any such Claim without the prior
written consent of Purchaser which shall not be unreasonably
withheld. Purchaser shall have the right, at its own expense, to
participate in the defense of such asserted liability. Purchaser may
direct Seller to agree to compromise any asserted liability against
<PAGE>
30
Purchaser or the Company at any time if it turns out that the defense
may have a material adverse effect on the business of the Company for
the period of time after the Closing Date. If and to the extent that
Purchaser so directs, Seller shall not be liable pursuant to this
Agreement, unless Purchaser would be entitled to settle such claim in
accordance with the second sentence of this Art. 5.2.2.
5.3 RELATION TO CERTAIN STATUTORY PROVISIONS. In connection with the
foregoing and without prejudice to the provisions of the first
sentence of Art. 5.2.1 of this Agreement, the Parties waive all
notification and examination requirements under ss. 377 HGB; in
particular, Purchaser may assert claims for indemnification or for
breach of representations, warranties and covenants prior to the
lapses of the periods mentioned in Art. 5.1 of this Agreement which
shall be read as extension of the applicable statutory term and such
statute of limitation shall end on the last day of the terms set
forth in Art. 5.1 of this Agreement.
5.4 PURCHASER'S REMEDIES. In case of a breach of a representation or a
warranty pursuant to Art. 4, Purchaser shall first request from
Seller to cure the breach within a reasonable time period. If such
cure is not effected by Seller within such a time period, Purchaser,
subject to the exclusions and limitations set forth in this Art. 5,
shall be entitled to claim damages by restitution in kind
(NATURALRESTITUTION) within the limits of ss. 251 (2) first sentence
BGB or to claim damages (SCHADENSERSATZ IN GELD) including lost
profits (ENTGANGENER GEWINN) and consequential damages (ERSATZ VON
MANGELFOLGESCHADEN) payable to Purchaser or, if Purchaser so directs,
to the Company, in the amount which is necessary to establish the
state described in such representation or warranty, such damages to
be payable out of the Escrow Account in accordance with the Escrow
Agreement. Unless otherwise provided in this Agreement, all other and
further reaching rights and remedies related to the representations
and warranties under Art. 4 which might exist under statutory or case
law or otherwise in addition to those expressly provided for in this
Art. 5.4 of this Agreement which would lead to a reduction of the
Purchase Price (MINDERUNG) or rescission of this Agreement
(RUCKTRITT) or avoidance on the ground of error (IRRTUMSANFECHTUNG)
are excluded, provided, however, that Purchaser shall be authorized
to rescind (ZURUCKTRETEN)
<PAGE>
31
this Agreement only if title to the Shares is not provided to
Purchaser free and clear of any restrictions or rights of third
parties and Seller fails to remedy such breach of warranty within two
months after having been notified in writing thereof.
5.5 EXCLUSION OF LIABILITY. Seller shall not be liable in respect of a
claim of Purchaser pursuant to this Agreement, including claims under
Art. 4,
5.5.1 if and to the extent that any provision, reserve or expense for the
matter giving rise to the claim was reflected in the Financial
Statements;
5.5.2 for any and all cost, damages and expenses arising out of any
misrepresentation or breach of representations, warranties or
covenants if and to the extent such cost, damages and expenses are
recoverable from a third party, including but not limited to, an
insurance company under an insurance policy taken out by Seller or
the Company prior to the date hereof;
5.5.3 if and to the extent that any Taxes for which the Company is liable
is reduced as a result of any matter giving rise to a claim of
Purchaser under the above representations and warranties;
5.5.4 if and to the extent that any damage or loss was caused by any act or
omission of Purchaser or the Company or by the fact that Purchaser or
the Company have failed to take the necessary steps to mitigate the
damage caused by a breach of a representation or warranty.
5.6 LIMITATIONS AND INDEMNIFICATIONS.
5.6.1 DEDUCTIBLE. Seller's liability for claims for breaches of
representations and warranties under Arts. 4 and 5 shall apply only
if, and to the extent, that such claims, in the aggregate, exceed DEM
415'000 (the "DEDUCTIBLE"), except, however, that any claims based on
(i) fraud (ARGLIST) or intentional misconduct (VORSATZLICHES
FEHLVERHALTEN), or (ii) claims for full and valid transfer to
Purchaser of all Shares, free of any lien, shall not be subject to
the Deductible.
<PAGE>
32
5.6.2 MAXIMUM RECOVERY. Notwithstanding anything in this Agreement to the
contrary, Seller' liability for claims for breaches of
representations and warranties under Arts. 4 and 5 hereof, shall not
exceed the balance available, from time to time, on the Escrow
Account. Any claim under Art. 5.6.6 (vi) (a) shall be charged against
the Escrow Account and shall reduce the maximum recovery amount set
forth in this Art. 5.6.2. Claims based on (i) fraud or intentional
misconduct., or (ii) claims for full and valid transfer to Purchaser
of all Shares, free of any lien, shall not be subject to this
limitation.
5.6.3 INTENTIONALLY DELETED.
5.6.4 INDEMNIFICATION FOR TAXES.
After Closing, Purchaser shall at Seller's request cause the Company
to issue all powers and authorisations necessary to enable Seller to
and Seller at its own expense shall have the right to, handle the tax
matters, including tax audits, of the Company in respect of issues
concerning the time period up to July 31, 1999. Purchaser shall cause
the Company to give Seller, at its own expense, all information,
copies, records and materials and other assistance that Seller may
reasonably require for handling such tax matters. To the extent that
Seller is directly or - as a consequence of this Agreement -
indirectly affected by any measure taken by the tax authorities,
Seller shall have the right, at its own expense, to raise objections
or to launch appeals in the name of the Company, provided Seller
presents the written drafts of the objection or appeal to the Company
and the Company agrees in written form prior to filing. The Company
may not refuse its approval in case the successful objection or
appeal cannot have any negative tax effects on the tax assessment of
the Company which is the subject of such objection or appeal.
Seller shall indemnify the Company against Taxes of any kind owed by
or leading to a liability of the Company in each case including any
interests thereon or connected therewith which relate to the time
period ending on July 31, 1999 and which by such date have not been
paid in full (excluding (i) wage taxes and social
<PAGE>
33
security contributions for July 1999, (ii) additional payments of net
assets tax (VERMOGENSTEUERNACHZAHLUNGEN) in the amount of DEM 2'664
and (iii) additional payments of real estate tax
(GRUNDSTEUERNACHZAHLUNGEN) in the amount of DEM 24'080) and which do
not merely result from a time-wise shifting of the tax basis.
The amount of any tax refunds which do not merely result from a
time-wise shifting of the tax basis and which are assessed in a
legally effective assessment (BESTANDSKRAFTIGER STEUERBESCHEID) for
periods up to July 31, 1999 shall work as a reduction of the amount
of indemnity payable by Seller hereunder. In the event that Seller
shall have made any payment in respect of this indemnity and
thereafter such tax reimbursements are obtained, the amount thereof
shall be reimbursed to Seller up to the amount of the indemnity paid
by Seller already.
The Parties agree that the tax consultants's fees in connection with
(i) tax returns for the fiscal year 1998 in an estimated amount of
DEM 10'000 and (ii) tax returns for the Short Fiscal Year 1999 shall
be borne by the Company.
5.6.5 INDEMNIFICATION FOR FINANCIAL DEBT.
Seller shall indemnify Purchaser for any financial debt owed by the
Company as of the Closing Date to banks or other financial
institutions or to Seller or any of its Affiliates, if and to the
extent such financial debt including accrued interest as of the
Closing Date and penalties or other fees for the early termination of
the loans with Eurohypo Aktiengesellschaft and Nassauische Sparkasse
exceed the maximum amount of DEM 17'615'000 in the aggregate.
5.6.6 INDEMNIFICATION FOR ENVIRONMENTAL POLLUTION.
(i) In respect of the real estate owned by the Company and/or regarding
the real estate currently or formerly used by the Company to conduct
its business on or prior to the Closing Date and/or in respect of the
real estate adversely affected by the Company's business, the Parties
agree on the following final regulation in respect of their mutual
rights and duties regarding environmental pollution. To the
<PAGE>
34
extent that rights and claims are expressed to pertain to the
Company, this Article shall be deemed to be an agreement directly for
the benefit of third parties (UNMITTELBARER VERTRAG ZUGUNSTEN
DRITTER).
(ii) "ENVIRONMENTAL POLLUTION" for purposes hereof shall mean
contamination (BELASTUNG) on or in the ground or soil, buildings and
installations thereon and the ground water, deposits of production
and other waste from industrial or business activities - whether such
deposits are above ground or subsoil - provided that such
contamination or deposits were present or caused by the Company or
its predecessor(s) prior to the Closing Date or, as regards real
estate owned by the Company or used by the Company on or prior to the
Closing Date, also such contamination or deposits which were caused
by third parties and which on the Closing Date or thereafter
constitute a danger to public safety or in respect of which clean-up
measures have to be performed with the consent of Seller or become
necessary due to justified claims of third parties. Environmental
Pollution shall in particular mean adverse changes in the soil or
contamination, areas of soil in which hazardous contamination is
suspected (VERDACHTSFLACHEN) or areas in which Environmental
Pollution is suspected (ALTLASTENVERDACHTIGE FLACHEN) as defined
inss. 2 (3) to (6) Federal Soil Protection Act
(BUNDES-BODENSCHUTZGESETZ).
(iii) "CLEAN-UP MEASURES" for purposes hereof shall mean all measures
related to Environmental Pollution to which Seller has consented or
which are required in order to comply with orders of public
authorities or court decisions or justified claims of third parties.
. This shall also include the determination of the existence of
Environmental Pollution, the examination and evaluation of the type,
scope and extent and the potential danger of the Environmental
Pollution, the investigation, planning, tendering and implementation
of the clean-up measures, the demolition and excavation measures, the
transportation and dumping of contaminated soil or debris at disposal
sites, the measures for the recycling of such contaminated soil or
debris, the technical project management as well as all engineering
and legal consultancy services. Further included are all measures
required in order to restore the ground water and surface water to a
state which complies with the applicable water law regulations.
Clean-Up Measures shall also
<PAGE>
35
include, in particular, but without limitation, measures as defined
in ss. 2(7) and (8) Federal Soil Protection Act
(BUNDES-BODENSCHUTZGESETZ).
Clean-Up Measures shall further include measures which are required
due to contamination of the ground water on the business premises in
order to secure the Company's need for water to be used for its
production and other business purposes. This can also include the
installation of new wells for water to be used (BRAUCHWASSERBRUNNEN)
- even if such wells are installed only on a temporary basis - at
other places also outside the business premises as well as the
corresponding water pipelines to the business premises. In the event
that this is not possible at a reasonable cost, the additional
drawing of water from the public water system shall constitute
Clean-Up Measures for the purposes of this Article 5.6.6.
Purchaser shall be under an obligation to notify Seller of any order
of a public authority, including any order for immediate
enforceability (ANORDNUNG DES SOFORTVOLLZUGS), and of any court
decision, which order or decision contains an obligation to carry out
Clean-Up Measures without undue delay following service of such
orders or decisions upon the Company. Upon Seller's written demand,
Purchaser shall be under an obligation to cause the Company to file
for any remedy or appeal available against such order of public
authorities or court decision, provided any such remedies or appeals
are not obviously unfounded (OFFENSICHTLICH UNBEGRUNDET). Seller
shall bear all proven costs - including the actual legal fees,
whether on the basis of usual hourly rates or the subject matter
value (GEGENSTANDSWERT) - incurred in pursuing any such remedies or
appeals in accordance with Art. 5.6.6 (vi). The Company may conclude
settlements and may give any other declarations required to end
proceedings, provided that Seller is notified in advance and in
writing of any such intention and provided that Seller does not raise
any objections thereto in writing within a period of four weeks after
notification. Seller is under an obligation to support the Company in
pursuing any of the above actions for remedy or appeal with all means
available to it.
If and to the extent the Company fails (a) to comply with its
foregoing obligation
<PAGE>
36
to file any such remedy or appeal duly demanded by Seller, or (b) to
pursue any such remedy or appeal in accordance with ordinary
professional standards, or (c) to refrain from the conclusion of a
settlement to which Seller raised objections which are not obviously
unfounded, then Seller shall be released from its liability under
this Art. 5.6.6, provided and to the extent that such failure by the
Company caused Clean-Up Costs which could have been avoided if such
failure would not have occurred.
For reasons of clarification it is noted that to the extent the
Company and/or Purchaser conclude at any time that there is
contamination (UMWELTLASTEN) which may require Clean-Up Measures they
must first consult with Seller but may decide at any time and in
their sole discretion to disclose any such circumstances to the
public authorities.
(iv) "CLEAN-UP COSTS" for purposes of this Article shall mean the costs
caused by the preparation and implementation of Clean-Up Measures and
shall further include damages for any losses suffered by the Company
due to an interruption or close-down of its business or part thereof,
provided such interruption or close-down is caused by an order of a
public authority or court decision or is a direct consequence
thereof.
Clean-Up Costs for purposes of this Article shall not include the
actual planning and construction costs (PLANUNGS- UND
BAUAUSFUHRUNGSKOSTEN) or expenses of the Company in connection with
(a) the renewal of the sewage system of the Company, (b) the
implementation of a new divider system for waste-water discharge
water, and shall further exclude any costs and expenses to the extent
that (c) such Clean-Up Costs are reflected by a provision in the
amount of DEM 452'100 set forth in the draft financial statements
attached as SCHEDULE 3.5.1, which provision was originally set up in
the first business year of the Company after the acquisition of the
assets from Feldmuhle AG or (d) any such issues are already
compensated under the representation and warranty pursuant to Art.
4.1.6 of this Agreement except for any issues which are the subject
of Art. 5.6.6 (iii) second paragraph which shall remain unaffected.
<PAGE>
37
Furthermore, Clean-Up Costs for the purposes of this Article shall
not include any costs for Clean-Up Measures which are required only
because of the construction of buildings and/or installations which
did not exist on the Company's real estate on the Closing Date to the
extent such Clean-Up Costs are directly attributable to such
construction; however, Clean-Up Costs shall include the costs for
Clean-Up Measures to the extent they go beyond the actual space
required for such buildings or installations.
(v) Seller shall fully indemnify the Company against and hold the Company
harmless from any and all Clean-Up Costs for Clean-Up Measures which
the Parties agreed upon or which the Company has to perform in
accordance with a first instance court decision (HAUPTSACHE- ODER
EILVERFAHREN) or which become necessary due to an order of the public
authorities or justified claims of third parties, in the event that
Seller does not request the Company to appeal against such order or
to object to such claims of third parties.. This indemnity covers the
responsibility of the Company or its predecessor(s) for conduct
(VERHALTENSVERANTWORTLICHKEIt) and to this extent also for facts and
circumstances outside the real estate directly used by the Company
for the business (e.g. responsibility for dangers emanating from
waste disposal sites outside the real estate required for the
business of the Company, which were operated by the Company or its
predecessor(s) or where the Company or its predecessor(s) stored or
deposited production waste or other waste) as well as the
responsibility of the Company or its predecessor(s) for the condition
of movables or immovables (ZUSTANDSVERANTWORTLICHKEIT). As between
the Parties, the aforementioned indemnification is based on the
assumption that the business as actually conducted by the Company
hitherto will continue (FORTSETZUNG DER NUTZUNGSART). To the extent a
change of the use (ANDERUNG DER NUTZUNGSART) of the real estate
referred to under Art. 5.6.6 (i) above results in a more
environmentally sensitive use (NUTZUNGSART MIT HOHEREM
SCHUTZBEDURFNIS) than the use hitherto, the aforementioned
indemnification shall only cover Clean-Up Costs which would have been
incurred by the Company if the use hitherto would have been
continued. Any additional Clean-Up Costs incurred by the Company due
to the more environmentally sensitive use shall be borne by the
Company
<PAGE>
38
alone. By reason of and to the extent of the above indemnity Seller
shall compensate the Company for Clean-Up Costs in line with the cost
allocation provisions set forth in the following Art. 5.6.6(vi). In
case of any reductions or reimbursements of Clean-Up Costs to the
Company which are subject to this indemnification, Purchaser shall
compensate Seller for such portion of the reduced or reimbursed
amount which corresponds to the amount originally borne by Seller in
accordance with Art. 5.6.6 (vi).
(vi) Any and all Clean-Up Costs under this Agreement shall be shared
between Seller and the Company in accordance with the following
formula:
(a) THE FIRST DEM 4'150'000 OF THE AGGREGATE CLEAN-UP COSTS
SHALL BE PAID OUT OF THE ESCROW ACCOUNT, TO THE EXTENT
AVAILABLE. ANY CLEAN-UP COSTS EXCEEDING THE AVAILABLE
AMOUNT ON THE ESCROW ACCOUNT SHALL BE BORNE BY THE
COMPANY. IRRESPECTIVE THEREOF, SELLER SHALL BEAR THE
CLEAN-UP COSTS PURSUANT TO THIS SUBCLAUSE (A) IN AN AMOUNT
EQUAL TO THE AMOUNT RELEASED TO SELLER FROM THE ESCROW
ACCOUNT PURSUANT TO ART. 3.1 OF THE ESCROW AGREEMENT;
(b) the aggregate Clean-Up Costs exceeding the amount of DEM
4'150'000 up to an amount of DEM 14'150'000 shall be
shared equally by Seller on the one hand and the Company
on the other hand;
(c) the aggregate Clean-Up Costs exceeding the amount of DEM
14'150'000 up to the Purchase Price shall be borne by
Seller.
(d) Any further Clean-Up Costs exceeding the amount of the
Purchase Price shall be borne by the Company.
For the purposes of subclause (a) above the determination
of the amount available on the Escrow Account shall take
place on the due date of the indemnification claim as set
forth in subsections (x) and (xi) below.
(vii) Clean-up Measures shall be agreed upon between Purchaser and Seller
prior to
<PAGE>
39
their implementation. To this effect Purchaser shall notify Seller of
the contemplated Clean-up Measures in writing and shall submit
appropriate documentation. in the event seller does not reject a
contemplated Clean-up Measure within four (4) weeks after receipt of
the notice, the Clean-up Measure shall be deemed agreed upon.
In the event the Parties cannot agree on a Clean-Up Measure required
within four (4) weeks following receipt of the notice set forth
above, the Clean-Up Measure shall be decided upon by a binding and
final expert opinion within the meaning of Section 317 German Civil
Code (BGB) (SCHIEDSGUTACHTEN). The expert shall be appointed upon the
agreement of the Parties or, if the Parties are unable to agree on an
expert within four (4) weeks following the expiry of the time limit
set forth above, upon the request of one Party by the President of
the Federal Environment Office (UMWELTBUNDESAMT). The expert shall be
an officially appointed and sworn expert who is primarily engaged in
the area of environmental pollution (the "EXPERT"). The costs of the
Expert shall be determined by the Expert in line with ss.ss. 91 et
sEQ. ZPO.
(viii) In the event that a Clean-Up Measure is carried out in connection
with an investment project of the Company Seller's obligation to
indemnify Company for the Clean-Up Costs shall be limited to the
balance between the investment costs which would have occurred in the
absence of Environmental Pollution and the investment costs actually
incurred.
(ix) In the event that Clean-Up Measures concern both, Environmental
Pollution within the meaning of Art. 5.6.6 (ii) as well as
environmental contamination (UMWELTLASTEN) which has arisen since the
Closing, the extent of Seller's obligation pursuant to Art. 5.6.6(v)
shall be determined in accordance with the ratio of Environmental
Pollution to such environmental contamination to be determined by an
Expert appointed in accordance with the procedure described under
Art. 5.6.6(vii). The findings and conclusions of the Expert shall be
a binding and final expert opinion within the meaning of Section 317
German Civil Code (BGB). (SCHIEDSGUTACHTEN). The costs of the
Expert's report shall be borne by
<PAGE>
40
Purchaser and Seller in equal shares.
(x) Clean-Up Costs shall be due for indemnification by Seller upon
service of a first-instance court decision to the Company and written
notification thereof to Seller by Purchaser; the same shall apply in
the event of a settlement between the Company and the public
authority or a third party in accordance with Art. 5.6.6 (iii). In
the event Seller does not request the Company to appeal against an
order by a public authority or a claim of a third party,
reimbursement for Clean-Up Costs shall be due in accordance with
subclause (xi). To the extent Clean-Up Costs are incurred by the
Company prior to reimbursement by Seller, such Clean-Up Costs shall
bear interest at a rate of 5 % p.a. for the time period between
payment of the Clean-Up Costs by the Company and reimbursement by
Seller.
Clean-Up Costs must be evidenced to Seller by means of vouchers which
can be audited. In the event that Seller does not notify the Company
or Purchaser within six weeks of receipt of the vouchers by Seller
that the vouchers submitted are not sufficient for an audit and does
not within said period instruct the Company or Purchaser which
further vouchers Seller requires for a final audit, Seller shall be
precluded from raising the objection against its payment obligation
pursuant to Art. 5.6.6(xi) that the vouchers are insufficient for an
audit of the Clean-Up Costs.
(xi) Clean-Up Costs are to be reimbursed to the Company or Purchaser by
Seller once the vouchers have been audited in accordance with Art.
5.6.6(x) but in any event no later than six weeks after expiry of the
audit deadline pursuant to Art. 5.6.6 (x) and in case the Seller
requested the Company to appeal against an order by a public
authority or a claim of a third party, in no event earlier than set
forth in Art. 5.6.6 (x) first sentence. The Company and/or Purchaser
shall be entitled to require reimbursement of the Clean-Up Costs on a
monthly basis to the extent the Company actually incurred such
expenses or paid such costs to the public authorities or any third
party.
(xii) Claims pursuant to Section 24 para. 2 Federal Soil Protection Act are
mutually excluded.
5.6.7 INDEMNIFICATION FOR FLEXIUM GMBH.
<PAGE>
41
Seller shall indemnify Purchaser and/or the Company against any
outstanding obligations of the Company vis-a-vis Flexium GmbH
exceeding the amount of DEM 150'000. In case Flexium GmbH is, due to
insolvency reasons, not able to meet its obligations vis-a-vis the
Company pursuant to the agreement dated March 22, 1999, Seller
undertakes to satisfy said obligations instead of Flexium GmbH at its
own expense.
5.6.8 NO LIMITATION. For reasons of clarification it is noted that any
claims of Purchaser under Arts. 5.6.4, 5.6.5, 5.6.6, 5.6.7 and 6.2
shall not be limited in any manner by the limitations set forth in
Arts. 5.6.1 and 5.6.2.
5.7 LIABILITY BY PURCHASER. Following the Closing, Purchaser shall be
liable to Seller for all costs, damages and reasonable expenses
(including reasonable attorney's fees) suffered by Seller arising out
of any misrepresentation or breach of any warranty or breach of the
covenants or other obligations of Purchaser under or in connection
with this Agreement.
ARTICLE 6
COVENANTS
6.1 CONDUCT OF BUSINESS. Seller shall secure that from the date hereof
until the Closing Date:
6.1.1 The business of the Company will be conducted in the ordinary course
and Seller will not entice away or commit to hire any employee (incl.
freelance) of the Company;
6.1.2 The Company without the consent of Purchaser will not materially
change the terms and conditions of any Contract and shall also not
terminate any such Contract and shall not enter into any agreement
with customers or suppliers which falls outside the ordinary course
of business;
<PAGE>
42
6.1.3 The Company without the consent of Purchaser will not make any
borrowing, grant any loans or make any guarantees except in the
ordinary course of business;
6.1.4 The Company without the consent of Purchaser will not change its
manner of keeping its books, records, financial accounts and
reserving practices;
6.1.5 Seller and the Company, as the case may be, without the consent of
Purchaser will not alter or amend the Company's articles of
incorporation or bylaws or other governing documents;
6.1.6 The Company without the consent of Purchaser will not make any new
capital expenditures exceeding DEM 250'000 (for each single case),
except capital expenditures already shown in the investment plan
attached as SCHEDULE 6.1.6 and shall not dispose of any fixed assets
nor engage in any activity to enter into any commitment in this
respect except in the ordinary course of business;
6.1.7 The Company without the consent of Purchaser will not terminate,
cancel or materially amend any insurance coverage maintained by the
Company with respect to any material assets of the Company;
6.1.8 Except for the transfer of the profits for the Short Fiscal Year
1999, Seller or the Company, as the case may be, shall not make any
distribution or redeem or repurchase any of the Shares and the
Company shall not declare or pay any profits or make any other
payment in cash or property to Seller or any of its Affiliates; and
6.1.9 SELLER AND THE COMPANY WILL GRANT PURCHASER AND ITS REPRESENTATIVES
FULL ACCESS TO ALL PREMISES, FILES AND BOOKKEEPING DOCUMENTS AS WELL
AS INSTRUCT ALL EMPLOYEES TO DISCLOSE ANY INFORMATION TO PURCHASER
AND ITS REPRESENTATIVES IF SUCH ACCESS OR DISCLOSURE IS MATERIAL FOR
THE FUTURE CONDUCT OF THE BUSINESS OF THE COMPANY.
<PAGE>
43
6.2 The parties are aware that Seller and the Company have taken certain
steps to terminate the BuGaV with effect as of July 31, 1999. If the
BuGaV should not be terminated in time, the parties should undertake
all measures which are required in order to terminate the BuGaV as
soon as possible. Furthermore, the parties undertake to put each
other into the position as if the BuGaV had been terminated as of
July 31, 1999.
6.3 The parties are aware that in case of a termination of the BuGaV each
creditor of the Company has the right to request from Seller within
six months after publication of the termination notice a security for
the obligations of the Company. Purchaser undertakes to indemnify
Seller fully and in time from any such claims raised by creditors of
the Company against Seller as result of or in connection with the
termination of the BuGaV.
6.4 Seller undertakes to cause the respective companies of the Sihl group
to transfer the trademarks listed in SCHEDULE 6.4.
ARTICLE 7
TRANSFER OF MANAGEMENT RESPONSIBILITIES
As of the Closing Date, Purchaser takes over full responsibility for the
Company's management and operations.
ARTICLE 8
MISCELLANEOUS
8.1 COSTS AND TAXES. Except for the German real estate transfer tax
("GRUNDERWERBSTEUER") which shall be paid by Purchaser, each Party
bears the
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44
fees of its counsel and advisor and all Taxes levied on such Party.
The costs of this Agreement, i.e. notarial fees, commercial register
fees, publication costs and filing fees of the German or any other
cartel authorities incurred in connection with this Agreement shall
be borne by Purchaser.
8.2 NOTICE. Any notice, request or instruction deemed by any Party to be
necessary or desirable to be given to the other Parties, shall be in
writing in the English language and shall be mailed by mail, courier
or telefax to the address as follows:
<TABLE>
<CAPTION>
If to Seller: with a copy to:
<S> <C>
SIHL Beteiligungsgesellschaft mbH Oppenhoff & Radler
Sihl Group Management Attn. Dr. Harald Gesell
Attn. Mr. Werner Merz Hohenstaufenring 62
Wiesenstra(beta)e 7 D- 50674 Koln
CH - 8008 Zurich Fax: 0049-221-2091 435
Fax: 0041-1-388 5229
If to Purchaser: with a copy to:
FiberMark, Inc. Beiten Burkhardt Mittl & Wegener
Attn. Bruce Moore Attn. Dr. Christoph Kuhmann, LL.M.
Chief Financial Officer Leopoldstrasse 236
P.O. Box 161 Wellington RD D - 80807 Munchen
Brattleboro, UT 05302
Fax: 001-802-257-5900 Fax: 0049-89-350 65 239
</TABLE>
Each Party may at any time change its address by giving notice to the
other Parties in the manner described above.
8.3 NO WAIVER. The waiver of any breach of this Agreement by any Party
hereto shall not be construed as a waiver of any other prior or
subsequent breach.
8.4 AMENDMENTS. This Agreement may be amended only in writing or (if
required by law) in the form of a notarial deed signed by all the
Parties hereto. This requirement shall also apply to the waiver of
this written form requirement.
<PAGE>
45
8.5 ANNOUNCEMENTS. The Parties shall consult each other before issuing
press releases or otherwise making any public statements or any
statements to the Company's employees with respect to this Agreement
and except as required by law (including Stock Exchange Regulations
applicable to Seller's parent company or to FiberMark, Inc.) shall
not issue any such press release or public statement without the
prior approval of the other Party which shall not be unreasonably
withheld.
8.6 NO ASSIGNMENT. Neither Party shall assign this Agreement or any
rights or obligations hereunder to any third party without the
written consent of the other Party hereto. Seller hereby consents to
the assignment of this Agreement and any rights or obligations
hereunder to one or more Affiliates of Purchaser, provided that
Purchaser guarantees the complete and due fulfillment of this
Agreement by such Affiliates.
8.7 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement or any other such instrument. In such case, Seller and
Purchaser shall replace the invalid, illegal or unenforceable
provision by such valid, legal or enforceable provision which is
commensurate with the commercial intent of this Agreement as of the
date hereof. The same shall apply in the event that the prohibition
to compete pursuant to Art. 8.9 is declared to be void by an
unappealable court decision due to its coverage as to time or
contents in which case such scope as to time and/or contents shall be
deemed to apply which comes closest to the void prohibition to
compete which would be considered as being effective by the competent
court.
8.8 CONFIDENTIALITY. Except as otherwise required by law (including Stock
Exchange Regulations), Seller shall keep confidential all aspects of
the business of the Company and the Parties shall keep confidential
all aspects of the terms of this Agreement.
<PAGE>
46
8.9 NON-COMPETITION CLAUSE. As from the Closing Date, Seller shall not,
and undertakes to cause its Affiliates not to, compete directly or
indirectly, for their own account, for the benefit of third parties,
as shareholder, partner or employee or in any other capacity, with
the activity of the Company as conducted at the Closing Date except
for the business of Seller and its Affiliates as conducted at the
Closing Date. Furthermore, Seller shall not, and shall cause its
Affiliates not to, attempt or effectively entice away any employees
(including the managing directors) from the Company. This
non-competition restriction shall have a duration of four years as
from the Closing Date and shall be restricted to the Federal Republic
of Germany, the United Kingdom, France, Switzerland, The Netherlands,
Belgium, Austria and Italy.
ARTICLE 9
GOVERNING LAW AND ARBITRATION
9.1 GOVERNING LAW. This Agreement shall be subject to and governed by and
interpreted in accordance with German Law.
9.2 ARBITRATION. All disputes arising under this Agreement or in
connection with this Agreement shall be solely and finally settled by
arbitration under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce with a tribunal of three
arbitrators with sufficient proficiency in both, the German and the
English language, who shall be appointed in accordance with the said
Rules, and which arbitration shall be conducted in the German
language; however, this Agreement or any other agreements or
instruments which have been signed and/or executed in the English
language shall be introduced in the arbitration proceedings in the
English language. The place of arbitration shall be (i) Zurich, if
Seller is the claimant or (ii) Munich, if Purchaser is the claimant.
In as far as the said Rules do not provide procedural regulations,
the statutory provisions of the ZPO (German Code of Civil Procedure)
shall apply. To the extent that any
<PAGE>
47
documents of or related to the Company are not in possession of the
Company, in the event of arbitration Seller shall upon request by
Purchaser disclose and, at Purchaser's expense, provide copies of any
such documents if Seller or any of its Affiliates are in possession
thereof. Competent court for matters within the meaning of ss. 1062
(1) No. 2 through 4 ZPO shall be the Higher Regional Court
(OBERLANDESGERICHT) of Frankfurt am Main.
9.3 EUROPEAN ECONOMIC AND MONETARY UNION. The European Union introduced a
single currency (the Euro) substituting the national currencies of
Member States participating in a Monetary Union. Upon introduction of
the Euro, the denomination of the national currencies is retained for
as long as this is legally permissible. Any conversions are to be
based on the official conversion rates fixed by the European Union.
NEITHER THE INTRODUCTION OF THE EURO NOR THE SUBSTITUTION OF THE
NATIONAL CURRENCIES OF THE MEMBER STATES PARTICIPATING IN SUCH
MONETARY UNION NOR THE FIXING OF THE OFFICIAL CONVERSION RATE NOR ANY
ECONOMIC CONSEQUENCES ARISING FROM ANY OF THE AFOREMENTIONED EVENTS
OR IN CONNECTION WITH SUCH MONETARY UNION SHALL GIVE RISE TO ANY
RIGHT TO TERMINATE PREMATURELY, CONTEST, CANCEL, RESCIND, MODIFY, OR
RENEGOTIATE THIS AGREEMENT OR ANY OF ITS PROVISIONS OR TO RAISE ANY
OTHER OBJECTIONS AND/OR EXCEPTIONS. THIS AGREEMENT SHALL CONTINUE IN
FULL FORCE AND EFFECT IN ACCORDANCE WITH ITS TERMS; IN PARTICULAR,
INTEREST RATES WHICH HAVE BEEN SET FOR AN INTEREST PERIOD SHALL
REMAIN UNCHANGED FOR SUCH INTEREST PERIOD, SUBJECT TO ANY MANDATORY
PROVISIONS.
Read aloud to the appeared in the presence of the notary, approved by the
appeared and signed by them and the notary as follows:
<PAGE>
48
LIST OF ANNEXES AND SCHEDULES
Annex A: Escrow Agreement
Annex B: Share Transfer Deed
Schedule 2.3: Division of Share and Consent of the Company
Schedule 3.4.9: Termination Agreement
Schedule 3.5.1: Draft Financial Statements as per July 31, 1999
Schedule 3.5.4: Settlement Agreement
Schedule 4.1.1 (a): Commercial Register Excerpt of the Company
Schedule 4.1.1 (b): Commercial Register Excerpt of Seller
Schedule 4.1.1 (c): Articles of Association of the Company
Schedule 4.1.1 (d): Subsidiaries and Participations
Schedule 4.1.5: Adverse Changes since January 1, 1999
Schedule 4.1.6: Missing Permits and Authorizations
Schedule 4.1.7: Claims and Litigation exceeding DM 100,000
Schedule 4.1.8: Terms of Agreements Infringed or Breached by
Acquisition Agreement
Schedule 4.1.9: List of Main Fixed Assets Owned and Leased;
Encumbrances on Title and/or Right to use Fixed
Assets; Exceptions from Sufficiency of Assets and
from Reasonable Operating Condition
Schedule 4.1.10: List of Public Investment Grants, Premiums and
Subsidies received
<PAGE>
49
Schedule 4.1.11: Exception from Tax Warranty
Schedule 4.1.12: List of Pension Plans, Benefit Plans, Similar Health
and Welfare Commitments and exceptions from
Compliance with applicable laws;
Labour Complaints; Strikes or other Labour Trouble
Schedule 4.1.12 (a): List of Employees including Salary Rates, Entrance
Date, Position, Termination Period and Special
Termination Protection
Schedule 4.1.12 (b): Collective Bargaining Agreements, Shop Agreements or
comparable Agreements and Material Applicable Usage;
Liabilities under ss. 128 AFG
Schedule 4.1. 12 (c): List of Sales Agents including Compensation Scheme,
Entrance Date, Product Line and Territory
Schedule 4.1.13: List of know-how, patents, copy rights, trademarks,
utility patents, design patents and/or licenses
relating thereto
Schedule 4.1.15: List of real estate and encumbrances
thereon; list of ancient rights and the like not
entered into the Land Register; Land Register
excerpts; obligations to transfer title or create
other rights
Schedule: 4.1.16: Contracts and Commitments
Schedule: 4.1.17: Outstanding Contractual Commitments
Schedule: 4.1.23: Transactions with Seller and replacement possibility
to conduct the business
<PAGE>
50
Schedule 4.1.24: List of bank accounts and signatories; outstanding
Financial Debt
Schedule 4.1.25: List of ten largest customers and suppliers 1996,
1997, 1998 and 1999; termination by customers and
suppliers or threats relating thereto
Schedule 4.3.1: Commercial Register Excerpts of Purchaser(s)
Schedule 5.1 / 5.2.1: Notice of Claim
Schedule 6.1.6: Investment Plan of the Company
Schedule 6.4: List of Trademarks to be transferred
<PAGE>
EXHIBIT 10.1
L O A N A G R E E M E N T
in the amount of
DM 28,500,000
between
FIBERMARK GMBH (THE "BORROWER")
on the one hand
and
BAYERISCHE HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT
(hereinafter referred to as "Arranger", "Lender" or "Facility Agent",
as the case may be)
on the other hand
<PAGE>
2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Art. 1 Definitions 4
Art. 2 Loan Facility 10
Art. 3 Purpose 10
Art. 4 Conditions Precedent 10
Art. 5 Drawdown 12
Art. 6 Term 13
Art. 7 Repayment 14
Art. 8 Prepayment and Cancellation 15
Art. 9 Interest 16
Art. 10 Interest Periods 16
Art. 11 Intentionally Omitted
Art. 12 Default Interest and Indemnification 17
Art. 13 Accounts 18
Art. 14 Payments 18
Art. 15 Illegality 19
Art. 16 Increased Costs 20
Art. 17 Tax Gross-Up and Mitigation 21
Art. 18 Representations and Warranties 21
Art. 19 Covenants 24
Art. 20 Additional Collateral 27
Art. 21 Events of Default 28
Art. 22 Rights and Obligations of Facility Agent 30
Art. 23 Fees 34
</TABLE>
<PAGE>
3
<TABLE>
<S> <C> <C>
Art. 24 Expenses 35
Art. 25 Stamp Duties 35
Art. 26 Waivers; Remedies Cumulative 35
Art. 27 Notices 36
Art. 28 Assignments, Transfer, Substitution 36
Art. 29 Currency Indemnity 37
Art. 30 Pro Rata Sharing 38
Art. 31 Set-off 39
Art. 32 Miscellaneous 39
</TABLE>
<TABLE>
Annexes:
<S> <C>
Drawdown Request Annex 1
Notice to Lenders of Advance Due Annex 2
Group Structure Chart Annex 3
Pledge Agreement over Shares of Papierfabrik Lahnstein Annex 4
GmbH
Pledge Amendment Agreement in relation to FiberMark Annex 5
Gessner GmbH & Co.
Loan Amendment Agreement in relation to the Loan Annex 6
Agreement between the Borrower and the Lender dated
January 7, 1998
Interest Rates Annex 7
</TABLE>
<PAGE>
4
PREAMBLE
WHEREAS, Bayerische Hypo- und Vereinsbank Aktiengesellschaft shall provide the
Borrower with a six year Loan Facility in the amount of DM 28,500,000 (in words:
Deutsche Marks twentyeight million fivehundredthousand) for the purpose of
financing the acquisition of Papierfabrik Lahnstein GmbH; and
WHEREAS, the Facility will be granted in six tranches, provided that all
tranches have to be drawn down by the Borrower on the same day and it being
understood that the tranches will have six different repayment dates
whereas, the Borrower acknowledges that Bayerische Hypo- und Vereinsbank
Aktiengesellschaft will initially grant the Facility in its capacity as
"Original Lender". The Borrower undertakes to support and assist the Original
Lender in the syndication process. References to the Arranger and the Facility
Agent in this Agreement shall be read as references to the Original Lender until
such date where another bank or financial institution becomes party to this
Agreement pursuant to Art. 27;
The parties agree as follows:
ART. 1
DEFINITIONS
In this Agreement the following terms shall have the following meaning:
1.1 "Account" shall mean the account No. 6457436 of the Borrower with
Bayerische Hypo- und Vereinsbank Aktiengesellschaft, Rosenheim Branch,
Banking Code 71120077, to which each Lender's Share of the Advance is
to be credited by the Lenders and into which monies owed from time to
time by the Borrower pursuant to this Agreement shall be paid or such
other account as shall be notified to the Borrower and the Lenders by
the Facility Agent.
1.2 "Acquisition Agreement" shall mean the sale and purchase agreement as
dated September 15, 1999 between Sihl Beteiligungsgesellschaft mbH and
the Borrower and FiberMark Beteiligungs GmbH.
1.3 "Advance" shall mean the amount drawn down by the Borrower under
Tranche 1, Tranche 2, Tranche 3, Tranche 4, Tranche 5 or Tranche 6
pursuant to the Drawdown Request under this Loan Facility or, depending
on the context and if more than one Advance has been made, the
principal sum outstanding as a result of such drawdowns.
1.4 "Agreement" shall mean this agreement including all its annexes.
1.5 "Arranger" shall mean Bayerische Hypo- und Vereinsbank
Aktiengesellschaft.
1.6 "Availability Period" shall mean the period from the date of this
Agreement until September 30, 1999.
1.7 "Borrower" shall mean FiberMark GmbH.
1.8 "Business Day" shall mean any day on which commercial banks and foreign
exchange markets in Munich and London are open for business.
<PAGE>
5
1.9 "Closing Date" shall mean the date defined as closing date in the
Acquisition Agreement.
1.10 "Deutsche Marks" or "DM" shall mean Deutsche Marks which is at the date
of this Agreement the legal tender in the Federal Republic of Germany.
1.11 "Drawdown Date" shall mean the date specified in the Drawdown Request
pursuant to Art. 5.2 on which the Lenders shall make available the
requested Advance as specified in Art. 5.4.
1.12 "Drawdown Request" shall mean a notice of borrowing substantially
in the form as attached as Annex 1.
1.13 "EBITDA" shall mean, in respect of any period, the consolidated
ordinary earnings ("Ergebnis der gewohnlichen Geschaftstatigkeit"
pursuant to Section 275 Sect. 2, Nr. 14 HGB) of the Group plus
interest ("Zinsen und ahnliche Aufwendungen" pursuant to ss. 275
Sect. 2, Nr. 13 HGB) and depreciation and amortisation
("Abschreibungen auf immaterielle Vermogensgegenstande des
Anlagevermogens und Sachanlagen sowie auf aktivierte Aufwendungen
fur die Ingangsetzung und Erweiterung des Geschaftsbetriebes"
pursuant to Section 275 Sect. 2, Nr. 7 a HGB) during such period.
1.14 "Encumbrance" shall mean any mortgage, hypothecation, pledge, lien,
charge, assignment, transfer of title or conveyance over any of the
Borrower's present or future assets for the purpose of securing any
Indebtedness of the Borrower or any other member of the Group and any
other security agreement or arrangement.
1.15 "Equity " shall mean, at any time, on a consolidated basis of the
Group the equity determined in accordance with Section 266 Sect. 3
A. HGB plus any shareholder loans (being accompanied by a
subordination and loan retention agreement addressed to the Lenders
in a form acceptable to the Facility Agent);
but adjusted by:
(a) deducting any outstanding capital ("Ausstehende
Einlagen" pursuant to Section 272 Sect. 1, S. 2 HGB)
(b) deducting any amount attributable to a revaluation (write
ups) of assets pursuant to Section 280 HGB and
(c) deducting any amount attributable to claims any member
of the Group has against the Parent and its subsidiaries
not being member of the Group, as far as those claims are
shown in the balance sheets as "Forderungen gegen
verbundene Unternehmen" or, as the case may be,
"Forderungen gegen Unternehmen, mit denen eine
Beteiligungsverhaltnis besteht" pursuant to Section 266
Sect. 2 B. II. 2 and 3 HGB as well as "Finanzanlagen"
pursuant to Section 266 Sect. 2 A. III. HGB).
1.16 "Equity Ratio" shall mean the ratio of:
(a) the amount equal to the Equity; and
(b) the amount equal to the total assets of the Group on a
consolidated basis ("Bilanzsumme").
<PAGE>
6
1.17 "Event of Default" shall have the meaning as given to it in Art. 21.
1.18 "Facility Agent" shall mean Bayerische Hypo- und Vereinsbank
Aktiengesellschaft or such other bank as may from time to time be
appointed in its place pursuant to the provisions of Art. 22.14.
1.19 "Final Maturity Date" shall mean the sixth anniversary of the
Drawdown Date
1.20 "Group" shall mean the Borrower, FiberMark Beteiligungs GmbHand their
direct and indirect material subsidiaries from time to time.
1.21 "Group Structure Chart" shall mean the chart in the form as attached as
Annex 3.
1.22 "Guarantee" means any obligation of a Person to pay the Indebtedness of
another Person, including without limitation:
(a) an obligation to pay or purchase such Indebtedness;
(b) an obligation to lend money or to purchase or subscribe shares
or other securities or to purchase assets or services in order
to provide funds for the payment of such Indebtedness; or
(c) any other agreement to be responsible for such Indebtedness.
1.23 "HGB" shall mean Handelsgesetzbuch, being the German Commercial Code.
1.24 "Increased Costs" shall have the meaning as defined in Art. 16.
1.25 "Indebtedness" ("Verschuldung")shall mean any indebtedness for borrowed
money or any Guarantee or other indemnity in respect of any
Indebtedness.
1.26 "Interest Cover Ratio" shall mean the ratio of EBITDA to Total Interest
Expenses.
1.27 "Interest Payment Date" shall mean the last day of an Interest Period
or such other date as provided for in the provisions of Art. 10.2.
1.28 "Interest Period" shall have the meaning given to it in Art. 10.
1.29 "Interest Rate" shall mean the interest rate determined for each
Tranche by the Facility Agent prior to the date of this Agreement by
concluding forward rate agreements; these interest rates are set out in
Annex 7 to this Agreement.
1.30 "Judgement Currency" shall have the meaning given to it in Art. 29.1.
1.31 "Legal Changes" shall have the meaning given to it in Art. 15, unless
otherwise specified in this Agreement.
1.32 "Lender" or "Lenders", as the case may be, shall mean Bayerische Hypo-
und Vereinsbank Aktiengesellschaft and any other bank or financial
institution to which Bayerische Hypo- und Vereinsbank
Aktiengesellschaft or any other Lender shall have assigned or
transferred all or any part of its rights, benefits and obligations
under this Agreement in accordance with Art. 28.3., it being
<PAGE>
7
understood that the choice of any lender bank by the Facility Agent
requires the Borrower's approval.
1.33 "Lender's Commitment" shall mean with respect to Bayerische Hypo- und
Vereinsbank Aktiengesellschaft, at the date of signing this Agreement,
the amount of DM 28,500,000, or, from time to time, the Lender's
commitment from time to time plus each amount assigned or transferred
to any further Lender in accordance with Art. 27.3.
1.34 "Lender's Share" shall mean the ratio of a Lender's Commitment to the
aggregate of all Lender's Commitments from time to time.
1.35 "Leverage Ratio" shall mean the ratio of Net Debt to EBITDA.
1.36 "Loan Facility" or "Facility" shall have the meaning given to it in
Art. 2.1.
1.37 "Loan Agreement I" shall mean the loan agreement entered into by
the Borrower and the Lender on January 7, 1998.
1.38 "Majority Lenders" shall, as long as no Advance has been drawn down,
mean a majority of 66 2/3 % of the Lenders, in relation to the sum
total of the Loan Facility, and, after Advance has been drawn down, a
majority of 66 2/3 % of the Lenders, in relation to the total of the
outstanding Advance. As long as Bayerische Hypo- und Vereinsbank
Aktiengesellschaft will remain the only Lender under this Agreement,
its decision will substitute the decision by the Majority Lenders if
and when required in this Agreement.
1.39 "Net Debt" shall mean on a consolidated basis of the Group Total
Debt less cash assets ("Schecks, Kassenbestand, Bundesbank- und
Postgiroguthaben, Guthaben bei Kreditinstituten" pursuant to Section
266 Sect.2 B. IV. HGB).
1.40 "Notice of Default" shall have the meaning given to it in Art. 22.6.
1.41 "Original Financial Statement" or "Original Financial Statements"
shall mean, as the case may be, the audited or, if no audit has been
made, the unaudited fiscal year-end statements including the balance
sheet, the profit and loss account and the certified auditor's
report, if any, of the Parent and Papierfabrik Lahnstein GmbH for
the fiscal years 1997 and 1998, the preliminary balance sheet and
profit and loss account as of July 31 1999 of Papierfabrik Lahnstein
GmbH and as to the Borrower and FiberMark Beteiligungs GmbH the
audited fiscal year-end statements including the balance sheet, the
profit and loss account and the certified auditor's report for the
fiscal year 1998.
1.42 "Original Lender" shall mean Bayerische Hypo- und Vereinsbank
Aktiengesellschaft
1.43 "Parent" shall mean FiberMark Inc., Brattleboro, Vermont, United States
of America.
1.44 "Permitted Encumbrances" shall mean
(i) Encumbrances in relation to Indebtedness already in existence
at the date of signing this Agreement; or
<PAGE>
8
(ii) Encumbrances arising by operation of law or in the ordinary
course of business; or
(iii) Encumbrances attaching to assets acquired subsequent to the
signing of this Agreement insofar as the Encumbrance secures
the purchase price of the asset; or
(iv) such other Encumbrances as may be created with the prior
written consent of the Majority Lenders, which consent shall
not be unreasonably withheld.
1.45 "Person" shall mean an individual, corporation, partnership, joint
venture, trust, unincorporated organisation or any other legal entity
or a national state or any agency or political subdivision thereof,
whether or not having a separate legal personality.
1.46 "Refunding Bank" shall have the meaning given to it in Art. 30.3.
1.47 "Repayment Dates" shall mean the dates as specified in the schedule
contained in Art. 7.
1.48 "Repayment Amount " shall have the meaning given to it in Art. 7.
1.49 "Share Pledge Agreement" shall mean the share pledge agreement dated
January 7, 1998 between zetaphoenicis Beteiligungs GmbH (now: FiberMark
GmbH) and thetaphoenicis Beteiligungs GmbH (now:
FiberMark Beteiligung GmbH) and the Lender.
1.50 "Taxes" (which term shall include "Taxation") shall mean all current or
future taxes, duties, charges or official fees of any kind, including
any interest, fines or penalties and all payments in relation to such
current or future taxes, duties, charges or official fees of any kind.
1.51 "Total Debt" shall mean on a consolidated basis of the Group the
total amounts of debts arising from bonds ("Anleihen" pursuant to
Section 266 Sect. 3. C. 1 HGB), bank loans including capital
expenditure facilities and working capital facilities
("Verbindlichkeiten gegenuber Kreditinstituten" pursuant to Section
266 Sect. 3. C. 2 HGB) and obligations arising under promissory
notes ("Verbindlichkeiten aus der Annahme gezogener Wechsel und der
Ausstellung eigener Wechsel" pursuant to Section 266 Sect. 3. C. Nr.
5 HGB).
1.52 "Total Interest Expenses" shall mean, in relation to any period, the
aggregate of all interest, fees, commissions and other costs, expenses
or charges accrued due from any member of the Group (other than to the
Parent or any other member of the Group) in respect of Indebtedness of
any member of the Group, including interest on shareholder loans as far
as such interests have been paid to the Parent during such period, less
interest accrued during such period on bank's deposit held by any
member of the Group.
1.53 "Tranche 1" shall mean the amount which may be drawn down by the
Borrower as an Advance pursuant to a Drawdown Request and having a term
of one year.
<PAGE>
9
1.54 "Tranche 2" shall mean the amount which may be drawn down by the
Borrower as an Advance pursuant to a Drawdown Request and having a term
of two years.
1.55 "Tranche 3" shall mean the amount which may be drawn down by the
Borrower as an Advance pursuant to a Drawdown Request and having a term
of three years.
1.56 "Tranche 4" shall mean the amount which may be drawn down by the
Borrower as an Advance pursuant to a Drawdown Request and having a term
of four years.
1.57 "Tranche 5" shall mean the amount which may be drawn down by the
Borrower as an Advance pursuant to a Drawdown Request and having a term
of five years.
1.58 "Tranche 6" shall mean the amount which may be drawn down by the
Borrower as an Advance pursuant to a Drawdown Request and having a term
of six years.
1.59 "Tranches" shall mean the sum of the Tranche 1, Tranche 2, Tranche 3,
Tranche 4, Tranche 5 and Tranche 6 and "Tranche" shall mean each one
of them.
1.60 "VAT" shall mean value added tax. (Umsatzsteuer).
<PAGE>
10
ART. 2
LOAN FACILITY
2.1 COMMITMENT
Subject to the terms and conditions of this Agreement (including the
preamble), the Lenders shall provide to the Borrower a loan facility
(hereinafter referred to as the " Loan Facility") for an aggregate
principal amount of DM 28,500,000 (in words: Deutsche Marks
twentyeightmillion fivehundredthousand) and the Lenders agree, in the
event of a Drawdown Request pursuant to Art. 5.2, to contribute during
the term of this Agreement as set out in Art. 6 to the Advances to be
provided to the Borrower hereunder an amount corresponding to its
Lender's Share, however, up to an aggregate maximum principal amount
not exceeding its Lender's Commitment.
2.2 OBLIGATIONS SEVERAL
The obligations of each Lender under this Agreement are several.
Failure of a Lender to carry out its obligations pursuant to this
Agreement in a proper manner does not relieve any other party of its
obligations under this Agreement. Save as provided for in Art. 21
below, the same shall apply in the event that a Lender terminates its
participation in this Agreement in accordance with this Agreement or
terminates its Lender's Commitment in accordance with this Agreement,
or where performance of the obligations undertaken by the Lender
pursuant to this Agreement would be invalid or illegal. No Lender is
responsible for the obligations of any other party under this
Agreement. Each Lender shall only be responsible for its Lender's
Share. Joint liability, or joint and several liability of the Lenders
is hereby excluded.
2.3 RIGHTS SEVERAL
The obligations of the Borrower to the Facility Agent, the Arranger and
the individual Lenders hereunder are created vis-a-vis each of them as
separate and independent obligations. Each Lender, Facility Agent or
Arranger may separately enforce its rights hereunder. The formation of
jointly owned assets is hereby excluded.
ART. 3
PURPOSE
The Borrower will use the Loan Facility for financing in part the purchase of
Papierfabrik Lahnstein GmbH, Lahnstein. Neither the Arranger, the Facility Agent
nor the Lenders shall be obliged to concern themselves with such application.
ART. 4
CONDITIONS PRECEDENT
4.1 The obligations of the Facility Agent and each Lender to the Borrower
under this Agreement are subject to the conditions precedent that the
Facility Agent has notified the Borrower and the Lenders that it has
received all of the following in form and substance satisfactory to it:
<PAGE>
11
(a) copy, certified to be a true copy of the articles of
association and such other corporate documents relating to the
Borrower and to FiberMark Beteiligungs GmbH as the Facility
Agent may reasonably and timely demand;
(b) extract, certified to be a true extract of the Commercial
Register relating to the Borrower and to FiberMark
Beteiligungs GmbH, of latest date;
(c) legal opinion of the Borrowers' legal counsel that this
Agreement creates legally binding and enforceable obligations
on the part of the Borrower, in form and substance acceptable
to the Arranger;
(d) copy of the Original Financial Statements and the auditor's
report regarding the Original Financial Statements and the
preliminary annual report per July 31, 1999 for Papierfabrik
Lahnstein GmbH;
(e) specimen signatures of such agents of the Borrower as shall be
authorised to sign this Agreement, the Drawdown Request and
any notices required to be given by the Borrower pursuant to
the provisions of this Agreement; and
(f) a pledge agreement over shares of Papierfabrik Lahnstein GmbH
to be entered by the Borrower with the Facility Agent securing
its obligations under this Agreement substantially in the form
of Annex 4 (hereinafter referred to as the "Pledge
Agreement");
(g) an amendment agreement to the Share Pledge Agreement
substantially in the form of Annex 5 (hereinafter referred to
as the "Pledge Amendment Agreement").
(h) evidence that the Parent has provided an amount of DM
9,500,000 as equity (including subordinated shareholder loans)
to the Borrower on an account with Bayerische Hypo- und
Vereinsbank AG and evidence that a loan in an amount which is
the balance of the purchase price being payable by the
Borrower pursuant to Sect. 2.2 of the Acquisition Agreement
and DM 38,000,000 has been provided by FiberMark Gessner GmbH
& Co.;
(i) and in the event that the equity in accordance with Art. 4.1
(g) of this Agreement has been provided by the Parent through
shareholder loans, a subordination and loan retention
agreement addressed to the Lenders in a form acceptable to the
Facility Agent;
(j) an amendment agreement to the Loan Agreement I substantially
in the form of Annex 7 (hereinafter referred to as the "Loan
Amendment Agreement").
The Facility Agent shall be entitled not to accept any documents
presented under this paragraph if the information contained therein
does materially differ from any information previously obtained from
the Borrower.
4.2 The obligations of the Facility Agent and each Lender to allow the
Borrower to make the Advance during the Availability Period are subject
to the further conditions precedent that:
<PAGE>
12
(a) the representations and warranties set out in Art. 18 are
correct and will be correct immediately after the Advance is
made; and
(b) no Event of Default set out in Art. 21 (or any event which
with the giving of notice or lapse of time might constitute an
Event of Default) has occurred and is continuing.
ART. 5
AVAILABILITY AND DRAWDOWN
5.1 AVAILABILITY PERIOD
Subject to the terms and conditions of this Agreement, the Facility may
be drawn down by the Borrower in up to six (6) drawings, provided that
(i) all drawings may only be made on one single Drawdown Date, and (ii)
that the total amount of all Advances is not exceeding the amount of
the Facility at any time during the Availability Period. Any amount of
the Facility not drawn down on the last day of the Availability Period
shall automatically be cancelled. Upon such cancellation, each Lender's
Commitment shall be reduced proportionally to each Lender's Share.
5.2 DRAWDOWN REQUEST
The request for the Drawdown of an Advance may not be delivered by the
Borrower until the Facility Agent has confirmed to the Borrower that it
has received all of the documents listed in Art. 4.1 (Conditions
Precedent) and that each is in form and substance satisfactory to the
Facility Agent. In any case, a request for the Drawdown will not be
regarded as having been duly completed, unless the following conditions
have been satisfied:
The Facility Agent has received, by no later than 1.00 p.m. Munich time
on the third (3rd) Business Day prior to the Drawdown Date the Drawdown
Request substantially in the form of Annex 1 (it being understood that
a separate Drawdown Request has to be presented for each Tranche) and
having the following minimum contents:
the proposed Drawdown Date, which must be a Business Day;
the amount of the Advance; and
the account of the Borrower or such other account as the
Borrower may determine to which the Advance is to be
transferred by the Facility Agent.
The Borrower's Drawdown Request cannot be withdrawn; it binds and
obliges the Borrower to accept the requested Advance.
5.3 LENDER'S PARTICIPATIONS
If the above conditions have been satisfied, the Facility Agent shall
by notice in writing pursuant to the provisions of Annex 2, notify by
no later than two (2) Business Days prior to the Drawdown Date each of
the Lenders of the amount of this Advance, the Drawdown Date, such
Lender's Share in the amount of the
<PAGE>
13
Advance and, in the event that payments shall not be effected to the
Account, any further information on the account to which the proceeds
of the Advance shall be paid.
5.4 PAYMENT OF PROCEEDS
Upon receipt of the written notice referred to in Art. 5.3 each Lender
shall, by no later than 10:00 a.m. Munich time on the Drawdown Date,
credit the Account of the Facility Agent with its participation in the
Advance corresponding to its Lender's Share and the Facility Agent
shall by no later than 12:00 a.m. Munich time on the Drawdown Date,
transfer the amount of the Advance to such account specified in the
Borrower's Drawdown Request.
ART. 6
TERM
The term of thesix (6) Tranches of the Facility shall lapse according to the
following schedule;
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Column A Column B
TRANCHE TERM ENDING ON
- --------------------------------------------------------------------------------
<S> <C>
Tranche 1 the date 12 months after the Drawdown
Date
- --------------------------------------------------------------------------------
Tranche 2 the date 24 months after the Drawdown
Date
- --------------------------------------------------------------------------------
Tranche 3 the date 36 months after the Drawdown
Date
- --------------------------------------------------------------------------------
Tranche 4 the date 48 months after the Drawdown
Date
- --------------------------------------------------------------------------------
Tranche 5 the date 60 months after the Drawdown
Date
- --------------------------------------------------------------------------------
Tranche 6 the Final Maturity Date.
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
14
ART. 7
REPAYMENT
The Borrower shall repay each Tranche under the Facility in full on the relevant
Repayment Date for such Tranche as set out in the following schedule:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Column A Column B
REPAYMENT DATE REPAYMENT AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
TRANCHE 1 REPAYMENT DATE DM 6,000,000
being the date 12 months after the Drawdown Date
- --------------------------------------------------------------------------------
TRANCHE 2 REPAYMENT DATE DM 6,000,000
being the date 24 months after the Drawdown Date
- --------------------------------------------------------------------------------
TRANCHE 3 REPAYMENT DATE DM 4,125,000
being the date 36 months after the Drawdown Date
- --------------------------------------------------------------------------------
TRANCHE 4 REPAYMENT DATE DM 4,125,000
being the date 48 months after the Drawdown Date
- --------------------------------------------------------------------------------
TRANCHE 5 REPAYMENT DATE DM 4,125,000
being the date 60 months after the Drawdown Date
- --------------------------------------------------------------------------------
TRANCHE 6 REPAYMENT DATE DM 4,125,000
being the Final Maturity Date
- --------------------------------------------------------------------------------
</TABLE>
If the Facility has not been drawn in full by the Borrower, the Repayment will
be reduced pro rata.
The Repayment Amount for each Tranche shall be repaid together with all other
amounts (including interest) as may be due pursuant to the provisions of this
Agreement on the Final Maturity Date and which have not been paid by the
Borrower prior to the Final Maturity Date. Each Repayment Amount made under this
Agreement shall reduce each Lender's participation accordingly and may not be
reborrowed thereafter.
<PAGE>
15
ART. 8
PREPAYMENT AND CANCELLATION
8.1 VOLUNTARY PREPAYMENT
The Borrower may, by giving not less than thirty (30) days prior notice
to the Facility Agent, prepay all Advances outstanding in whole or in
part (being DM 1,000,000 or any larger sum which is an integral
multiple of DM 1,000,000) on the last day of an Interest Period in
inverse order of maturity; it being understood that if the Borrower
prepays an Advance in full or in part prior to the Repayment Date for
such Tranche as set out in Art. 7 the Borrower shall indemnify the
Lenders for any refinancing damage related to such prepayment, if any.
In addition to that, if:
(a) the Borrower is required to pay to a Lender any amount under
Art. 16 (Increased Costs); or
(b) the Borrower is required to pay to a Lender any additional
amounts under Art. 17 (Taxes);
then, without prejudice to the obligations of the Borrower under
those provisions and the provisions under Art. 12.4, the Borrower
may, whilst the circumstances continue, serve a notice of prepayment
on that Lender through the Facility Agent. On the date falling
thirty (30) Business Days after the date of service of the notice
the Borrower shall prepay that Lender's Share of the Advance
provided that such prepayment is made together with any amount
payable by the Borrower under Art. 12.4 (iii).
8.2 MANDATORY PREPAYMENT
If, at any time while the Advance is still outstanding under the
Agreement, the Borrower after the date of this Agreement ceases to be a
majority-owned direct or indirect subsidiary of the Parent, the
Borrower shall prepay the outstanding Advance on the last day of the
then current Interest Period.
8.3 MISCELLANEOUS PROVISIONS
(a) Any notice of prepayment under this Agreement is irrevocable.
The Facility Agent shall notify the Lenders promptly of
receipt of any such notice.
(b) All prepayments under this Agreement shall be made together
with accrued interest on the amount prepaid or repaid and all
other amounts due on such date (if any) owing by the Borrower
to such Lender.
(c) No prepayment or cancellation is permitted except in
accordance with the express terms of this Agreement.
(d) No amount prepaid under this Agreement may subsequently be
reborrowed.
<PAGE>
16
ART. 9
INTEREST
9.1 INTEREST RATE
Each Advance outstanding shall bear interest payable in arrears at the
Interest Rate which shall be expressed as an annual interest rate.
9.2 DUE DATES
Save as otherwise provided herein, accrued interest for each drawing
shall be paid on the September 17, and March 17, of each calendar
year until the Final Repayment Date, the first due date to be
March 17, 2000.
9.3 BANK BASIS
Interest shall accrue from day to day and be calculated on the basis of
the actual number of days elapsed in the relevant Interest Period
divided by 360.
ART. 10
INTEREST PERIODS
10.1 INTEREST PERIODS
The period for which each Advance is outstanding shall be divided into
successive periods, each hereinafter referred to as an "Interest
Period". The Interest Periods in relation to each Advance shall be
of six months, and shall commence on the Drawdown Date and subject to
Art. 10.2 shall end on the Interest Payment Date of each Interest
Period. Each subsequent Interest Period shall commence on the last day
(24:00) of the previous Interest Period.
Notwithstanding the foregoing, if an Interest Period would end after a
Repayment Date, such Interest Period shall end on the Final Maturity
Date.
10.2 NON-BUSINESS DAY
In the event that an Interest Payment Date would fall on a day not
being a Business Day, then the following Business Day shall be the
Interest Payment Date and the Interest Period shall be extended
accordingly, unless the Interest Payment Date would therefore fall in
the next calendar month, in which case the Interest Payment Date shall
be the immediately preceding Business Day and the Interest Period shall
be shortened accordingly.
ART. 11
INTENTIONALLY OMITTED
<PAGE>
17
ART. 12
DEFAULT INTEREST AND INDEMNIFICATION
12.1 DEFAULT
In the event that any outstanding payments pursuant to this Agreement
are not made or are only partly made by their due dates, the Borrower
shall in respect of such outstanding payments and without further
notice, be in default with respect to such payments.
12.2 DEFAULT INTEREST RATE
If any sum due and payable by the Borrower hereunder is not paid on the
due date therefor, the unpaid sum shall bear interest payable in
arrears at the rate which shall be expressed as an annual rate and
shall be the sum of the Interest Rate applicable for that Tranche under
which the amounts have not been paid on their due dates and two per
cent (2.0 %).
12.3 FIRST DEMAND PAYMENT
Any interest which shall have accrued under Art. 12.2 in respect of an
unpaid sum shall be due and payable and shall be paid by the Borrower
at the end of the period by reference to which it is calculated or on
such later dates as the Facility Agent may specify by written notice to
the Borrower.
All payments on damages shall be made by the Borrower without undue
delay upon demand of the Facility Agent.
12.4 INDEMNITY
The Borrower shall compensate the Lenders for any loss, damage, costs
and outlays (including losses of margin or losses resulting from
refinancing incurred by the Lenders in the provision or maintenance of
the Advance for the relevant Interest Periods) which have been incurred
by the Lenders because:
(i) the Borrower has failed to pay a sum due pursuant to this
Agreement on the due date; or
(ii) an Event of Default described in the provisions of Art. 21 has
occurred.
If the Borrower has made payments on a day which is not an Interest
Payment Date; or the drawdown of an Advance requested by the Borrower
cannot be made because the Borrower has failed to satisfy a condition
precedent or the Borrower refuses to accept the Advance; the Borrower
shall pay to each Lender through the Facility Agent the amount by which
(a) the interest which would have been payable on the amount by the
Borrower hereunder exceeds (b) the amount of interest which would have
been payable in respect of a deposit in Deutsche Marks and equal to the
amount placed by it with a prime bank in London for a period starting
on the third Business Day following the date of the proposed borrowing
or of such receipt, as the case may be, and ending on the last day of
the Interest Period thereof.
<PAGE>
18
ART. 13
ACCOUNTS
13.1 LENDER'S ACCOUNTS
Each of the Lenders shall in its books of account, in accordance with
common banking practice, maintain an account for the Borrower from
which the principal sum, the amount of interest and other payments owed
by the Borrower to such Lender pursuant to this Agreement can be
determined.
13.2 CONTROL ACCOUNT
The Facility Agent shall in its books of account maintain a control
account from which can be determined;
(i) the sum total of the outstanding Advance and each Lender's
Share therein; and
(ii) the sum total of principal, interest and other payments owed
to the Lenders pursuant to this Agreement, as well as each
Lender's Share therein; and
(iii) the sum total of payments received from the Borrower and the
Share of each Lender therein.
Whenever an entry is made in the control account, the Facility Agent
shall prepare an account statement for the control account and shall
provide such statement to each Lender and the Borrower without undue
delay.
13.3 ACCOUNTS AS EVIDENCE
For the purposes of judicial, arbitration or other proceedings in
relation to this Agreement the above account statements shall, in the
absence of manifest error, be conclusive and binding between the
parties, unless the Borrower provides proof of the opposite.
ART. 14
PAYMENTS
14.1 FUNDS, PLACE AND CURRENCY
All payments owed by the Borrower pursuant to this Agreement plus VAT,
if applicable, shall be made in Deutsche Marks in immediately available
funds and by no later than 2:00 p.m. (Munich time) on each due date to
the Account.
14.2 NO SET-OFF, COUNTERCLAIM OR RETENTION
All payments to be made shall be made free and clear of Taxes (unless
the Borrower is compelled by law to make payment subject to Taxes),
without any deductions and to the exclusion of any set-off,
counterclaim, right of bailment,
<PAGE>
19
retention or lien, restriction or condition; unless such claims to be
set-off by the Borrower are undisputed or confirmed by a court
decision.
14.3 DISCHARGING EFFECT
The Borrower shall be released from its obligation to make any
particular payment only once the paid sum has been unconditionally
credited to the Account and only in so far as the amount paid is
sufficient to satisfy the Borrower's payment obligations on any date at
which payment is due pursuant to this Agreement.
14.4 APPROPRIATION
In the event that the Borrower makes a payment which is insufficient to
satisfy all of its payment obligations on a date on which such payment
is due pursuant to this Agreement, the Facility Agent has the right in
its reasonable discretion to apply the received sum against such
outstanding claims of the Lenders as the Facility Agent may decide. Any
contrary instruction given by the Borrower shall have no effect.
14.5 DISTRIBUTION
The Facility Agent shall, without prejudice to other provisions of this
Agreement, distribute without delay the appropriate share of principal,
interest and other payments owed pursuant to this Agreement to the
relevant individual Lender in the same proportions as their respective
participation in the Advance bear to the whole amount of the Advance,
as they are received by the Facility Agent.
ART. 15
ILLEGALITY
lf any change in or introduction of any law, regulation or treaty, or any change
in the interpretation or application thereof (hereinafter referred to as "Legal
Changes"), shall make it unlawful for any Lender to make available or fund or
maintain its Lender's Commitment or its participation in any outstanding Advance
or to give effect to its obligations as contemplated hereby, the following
provisions shall apply:
15.1 Such Lender may terminate the totality of its Lender's Commitment and
its participation in the outstanding Advance by notice to the Borrower,
such notice to be presented to the Facility Agent who will transmit it
to the Borrower without undue delay, effective as from the date of
which performance becomes unlawful or contrary to any regulation or at
the end of the applicable Interest Periods, whichever is the earlier,
such notice stating exactly which contractual obligations became
illegal, the date on which such illegality will arise and which Legal
Changes have given rise to the illegality. The Facility Agent shall
without undue delay upon receipt of such notice of termination inform
all other Lenders.
15.2 The Borrower shall repay or prepay (as the case may be) such Lender's
participation in the outstanding Advance plus accrued interest and any
other sums outstanding pursuant to this Agreement, at the end of the
applicable Interest Periods or, in the event termination is effective
pursuant to Art. 15.1 before the end of an Interest Period, at such
earlier date (unless the Borrower is notified of termination after such
earlier date in which case payment shall be made within three (3)
Business Days of the Borrower's receipt of such notice).
<PAGE>
20
Upon effective termination all obligations of the terminating Lender
pursuant to this Agreement shall end and the sum total of the Loan
Facility shall be reduced by the amount of the terminated Lender's
Commitment.
15.3 If any Lender (through the Facility Agent) gives notice to the Borrower
pursuant to Article 15.1 requiring prepayment, then, but without
prejudice to the obligations of the Borrower to effect such prepayment
pursuant to Article 15.2, the Borrower, the Facility Agent and such
Lender shall forthwith commence negotiations in good faith with a view
to agreeing on terms (which shall not in any way be prejudicial to such
Lender ) for making such Lender's participation in the Advances
available from another jurisdiction or for restructuring its
participation in the Advances on a basis which is not so unlawful,
provided that neither the Facility Agent nor such Lender shall be under
any obligation to continue such negotiations if terms have not been
agreed within 30 days after the date of such Lender's notice.
ART. 16
INCREASED COSTS
If, as a result of Legal Changes (including, for the purposes of this Art. 16,
rules, orders or directives in relation to required reserves, special deposits,
liquidity or capital adequacy requirements, any requirement relating to the
manner in which the Lender is required to allocate financial resources to
provide for the making of or in relation to the Advance or any other form of
banking or monetary controls (whether or not having the force of law), a Lender
at any time in the future in relation to its Lender's Commitment or its
participation in the outstanding Advance made to the Borrower,
(a) suffers an increase of the cost of making or funding the Advance or of
maintaining its Lender's Commitment hereunder; or
(b) suffers a reduction of any amount payable to it or to the Facility
Agent or of the effective return before taxes on income; or
(c) makes any payment, either directly or through the Facility Agent, or
forgoes any interest or other return on or calculated by reference to
any amount received or receivable by it from the Borrower hereunder;
(collectively referred to as "Increased Costs") then, without prejudice to the
provisions of Art. 17, the following provisions shall apply:
16.1 Such Lender shall have the right, upon giving notice to the Borrower,
such notice to be presented to the Facility Agent who will transmit it
to the Borrower without undue delay, to request payment from the
Borrower of a sum compensating it for its Increased Costs. Such notice
shall state the reasonably determined amount of such Increased Costs,
the date upon which such Increased Costs were or began to be incurred
and the Legal Changes which led to the Increased Costs.
16.2 The Borrower shall no more than ten days after receiving the notice
referred to in Art. 16.1 pay all of the Lender's substantiated
Increased Costs incurred prior to receipt of the said notice.
<PAGE>
21
16.3 The Borrower is entitled to defend any demand for Increased Costs by
showing that these Increased Costs as determined by the Facility Agent
were falsely calculated and/or do not reflect the Legal Changes.
ART. 17
TAX GROSS-UP
In the event that the Borrower or the Facility Agent is obliged by law
to make any deduction or withholding in respect of Taxes from any
payment under this Agreement for the account of the Arranger, the
Facility Agent or any Lender, the Borrower shall:
(i) pay any such Taxes by their due date and, no less than thirty
(30) days after such payment provide to the Facility Agent the
original or a certified copy of the receipt of the relevant
authority; and
(ii) indemnify and keep harmless the Lenders in relation to all
such Taxes; and
(iii) make such additional payments to the Lenders as may be
necessary in order that the net amount remaining after the
said deduction or retention, corresponds with the sum due to
be paid.
"Taxes" for the purpose of this paragraph shall, for the avoidance of
doubt, include all taxes levied by a German authority whether on the
basis of income or otherwise.
ART. 18
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Facility Agent, the Arranger
and each of the Lenders that on the date of this Agreement:
(A) STATUS
The Borrower is a limited liability company under the laws of the
Federal Republic of Germany, duly organised and validly existing under
the laws of the Federal Republic of Germany, has the capacity to sue
and be sued in its own name and has the power to own its property and
assets and carry on its business as it is now being conducted.
(B) POWERS AND AUTHORITY
The Borrower has the authority to enter into and execute this
Agreement, to accept the Loan Facility and to perform its obligations
pursuant to this Agreement, and in this regard all necessary decisions
and resolutions of the Borrower and its shareholders have been taken.
(C) LEGAL VALIDITY
The obligations of the Borrower created in this Agreement are legally
valid and binding obligations of the Borrower enforceable in accordance
with the terms and conditions of this Agreement; and this Agreement is
in proper form for enforcement in the courts of the Federal Republic of
Germany. The choice of the
<PAGE>
22
law of the Federal Republic of Germany as the law governing this
Agreement constitutes a valid choice of law under the law of the
Federal Republic of Germany and the courts of the Federal Republic of
Germany will observe and give effect to such choice of law.
(D) NON-CONFLICT
The entry into and the execution and performance of this Agreement does
not conflict, or result in a breach of any terms of any agreement to
which the Borrower is a party or is subject or by which it or any of
its property is bound, and does not violate any law, directive, order,
decree, arbitral- award, judgement, or any document to which the
Borrower is a party.
(E) NO DEFAULT
No event has occurred which constitutes an event of default under or in
respect of any agreement or document to which the Borrower is a party
or by which the Borrower may be bound (including inter alia, this
Agreement) and no event has occurred which, with the giving of notice
or lapse of time might constitute an event of default under or in
respect of any such agreement or document, and all of which events
might have a material adverse effect on the ability of the Borrower to
perform or discharge its obligations.
(F) CONSENTS
Under the laws of the Federal Republic of Germany, no authorisations,
approvals, consents, licences, exemptions, filings, registrations,
notarisations and other matters, official or otherwise, are required by
or advisable for the Borrower in connection with the entry into,
performance, validity and enforceability of this Agreement, other than
a shareholder`s resolution pursuant to the German ,"law for GmbH"
(Gesetz betreffend die Gesellschaften mit beschrankter Haftung).
(G) FINANCIAL STATEMENTS
The Original Financial Statements are true and convey a fair picture of
the financial position of the Borrower or, as the case may be, the
members of the Group as at that date. The Original Financial Statements
were prepared in accordance with all applicable accounting and auditing
principles, and these principles were applied in the same form and
manner as in previous years, unless otherwise stated in the Original
Financial Statements; without limitation to the foregoing it being
understood that not all Original Financial Statements were prepared by
the Borrower or on its behalf.
(H) LITIGATION
No arbitration, litigation or other proceedings against the Borrower or
any other member of the Group, the result of which, taken as a whole,
could be substantially detrimental to the financial condition or the
business activities of the Borrower, are to the best of the Borrower's
knowledge, currently in progress or threatened against the Borrower and
no liquidation or similar proceedings are, to the best of the
Borrower's knowledge, currently in progress or threatened against the
Borrower.
<PAGE>
23
(I) NO MATERIAL ADVERSE CHANGE
The financial condition of the Borrower, the Parent or the Group has
not deteriorated in comparison with the Original Financial Statements
in a manner which has or will have a material adverse effect on the
ability of the Borrower or any member of the Group to perform its
obligations pursuant to this Agreement.
(J) NO ENCUMBRANCES
Unless permitted by this Agreement, and with the exception of Permitted
Encumbrances, no Encumbrance of any asset or future asset, or the
present or future revenues of the Borrower or any member of the Group
exists and the execution and performance of this Agreement will not
result in the creation of such Encumbrances.
(K) PARI PASSU RANKING
The obligations of the Borrower hereunder rank at least pari passu with
all its other present and future obligations; save as with obligations
having priority by law.
(L) TAX LIABILITIES
The Borrower has complied on a best effort basis with all Taxation laws
in all jurisdictions in which it is subject to Taxation and has paid
all Taxes due and payable by it; no material claims are being asserted
against it with respect to Taxes, all amounts payable by the Borrower
hereunder may be made free and clear of and without deduction for or on
account of any Taxes.
(M) NO WINDING-UP
The Borrower or any member of the Group have not taken any corporate
action nor have any other steps been taken or legal proceedings been
started or threatened against them for their winding-up, dissolution,
administration or re-organisation or for the appointment of a receiver,
administrator, administrative receiver, trustee, liquidator or similar
officer of them or of any or all of their assets or revenues.
(N) GROUP STRUCTURE
The Group Structure is true, complete and accurate.
(O) REPETITION
Each of the representations and warranties of this Art. 18 other than
the representations contained in Art. 18 (a), (h), (i), and (n) will be
correct and complied with so long as any sum remains to be lent or
remains payable by the Borrower under this Agreement as if repeated by
the Borrower on the first day of each Interest Period then by reference
to the then existing circumstances.
<PAGE>
24
ART. 19
COVENANTS
The Borrower hereby covenants in relation to each Lender, and insofar as
applicable, covenants to bring about that:
19.1 FINANCIAL INFORMATION
(a) So long as any amount available under this Agreement is
outstanding or the Loan Facility or any part thereof remains
outstanding or any other sum is payable pursuant to this
Agreement, the Borrower will provide to the Facility Agent in
sufficient copies for each of the Lenders the following
statements, prepared according to generally accepted
accounting principles:
(i) as soon as available, but in any event no later than
one hundred and five (105) days after the end of each
financial year, the audited fiscal year-end and
financial statements, including the balance sheet, the
profit and loss account and the certified auditor's
report of the Parent, the Group and any individual
member of the Group, and in the event that the above
mentioned documents are not prepared within a period
of one hundred and five (105) days after the end of
each financial year, no later than one hundred and
five (105) days after the end of each financial year,
the unaudited fiscal year-end and financial
statements, including the balance sheet and the profit
and loss account of the Parent, the Group and any
individual member of the Group and no later than one
hundred eighty (180) days after the end of each
financial year, the audited fiscal year-end and
financial statements, including the balance sheet and
the profit and loss account and the certified
auditor's report of the Parent, the Group and any
individual member of the Group;
(ii) as soon as available, but in any event no later than
forty five (45) days after the end of each calendar
quarter, quarterly management financial statements of
the Group and any individual member of the Group
including profit and loss accounts as well as cash
flow calculations together with comparative
information in relation to the management financial
statements previously delivered by the Borrower in a
form agreed with the Facility Agent
(Quartalsberichte); and
(iii) as soon as available, but in any event on the date of
the signing of this Agreement, a five years budget on
a roll-over basis including capital expenditures and
cash flow projections, profit and loss accounts and
balance sheets of the Group and any individual member
of the Group in a form agreed with the Facility Agent,
and for each following five year period during the
term of this Agreement the above mentioned statements
shall be prepared until January 15 of the respective
calendar year.
The aforementioned financial statements, balance sheets and
profit and loss accounts will be prepared in accordance with
the same principles as the Original Financial Statements or,
in the case of a divergence
<PAGE>
25
therefrom, will be accompanied by a statement explaining each
changed accounting principle and its effects. All financial
information shall be presented in their original language,
being German or English.
(b) Forthwith upon receiving a request to that effect, the
Borrower will provide to the Facility Agent such additional
financial information or other information relevant to this
Agreement as the Facility Agent or a Lender through the
Facility Agent may from time to time reasonably request and
the Borrower may provide with internal staff and which
presentation will not disturb its ordinary course of business.
19.2 OTHER INFORMATION
So long as any amount available under this Agreement is outstanding or
the Loan Facility or any part thereof remains outstanding or any other
sum is payable pursuant to this Agreement, the Borrower and/or any
other member of the Group will provide to the Facility Agent in
sufficient copies for each of the Lenders:
(a) promptly, all notices or other documents in relation to the
financial condition or business of the Borrower and/or any
other member of the Group published;
(b) details of any material litigation, arbitration or
administrative proceedings which affect the Borrower and/or
any member of the Group as soon as the same are instituted or,
to the knowledge of the Borrower, threatened.
19.3 FINANCIAL COVENANTS
So long as any amount available under this Agreement is outstanding or
the Loan Facility or any part thereof remains outstanding or any other
sum is payable pursuant to this Agreement the consolidated financial
conditions of the Group, as evidenced by the financial statements
prepared on the same basis as was used for the preparation of the
Original Financial Statements, shall be such that
(i) on June 30 as well as on December 30 in each calendar year,
the Interest Cover Ratio for the preceding twelve months is
not less than 2.5, starting on December 30, 1999;
(ii) on June 30 and on December 30 in each calendar year, the
Equity Ratio is not less than 20 %, starting on December 30,
1999; and
(iii) on December 31, 1999 the Leverage Ratio is not more than 4,5,
and in each calendar year starting on December 31, 2000 not
more than 4.
In the event that the Borrower will introduce new accounting standards
the Facility Agent will consider with the Lenders whether the Lenders
are prepared to agree to new definitions for the financial covenants
and the ratios as set out in Art. 19.3 above. Furthermore, the Majority
Lenders will, upon request of the Borrower, decide whether they are
prepared to waive any other covenant as set out in Art. 19.
<PAGE>
26
19.4 FURTHER UNDERTAKINGS
(A) PARI PASSU RANKING
The Borrower undertakes for so long as any amount available under this
Agreement is outstanding or the Loan Facility or any part thereof
remains outstanding or any other sum is payable pursuant to this
Agreement that its obligations pursuant to this Agreement will rank at
least pari passu with all other present and future obligations; save
for any other obligations having priority by law.
(B) NEGATIVE PLEDGE
The Borrower or any member of the Group will not create any
Encumbrance, except for Permitted Encumbrances, on or over all or any
of its present or future assets or revenues, for the purpose of
granting a security in respect of its Indebtedness, and it will
furthermore procure that any member of the Group will not create any
encumbrances which, if created by the Borrower, would fall under the
definition of Encumbrance as stated in Art. 1.14
(C) NOTIFICATION OF DEFAULT
The Facility Agent shall without undue delay be notified of the
occurrence of any Event of Default as described in Art. 21.
(D) MAINTENANCE OF LEGAL VALIDITY
The Borrower shall obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all authorisations,
approvals, licences and consents required in or by the laws and
regulations of the Federal Republic of Germany to enable the Borrower
lawfully to enter into and perform its obligations under this Agreement
and to ensure the legality, validity, enforceability or admissibility
in evidence in the Federal Republic of Germany of this Agreement.
(E) NO MERGER AND SALE OF GROUP COMPANIES
If the Borrower or any member of the Group intends to merge or
consolidate with any other company or Person, the result of which would
(in the opinion of the Majority Lenders) materially adversely affect
the Borrower, it will inform the Facility Agent in writing and in good
time of such intention explaining if and how such merger or
consolidation might affect the Lenders' risk position. The Borrower
will furthermore inform the Facility Agent in writing and in good time
if it intends to sell or otherwise dispose of any of its material
subsidiaries which would materially adversely affect the Borrower's
ability to perform its obligations hereunder. A formentioned
information shall explain if and how these measures might affect the
Lenders' risk position. It is expressly agreed that the Borrower shall
be authorised to convert Papierfabrik Lahnstein GmbH into a partnership
("Offene Handelsgesellschaft") or a limited partnership
("Kommanditgesellschaft"), as the case may be.
(F) LIMITATION OF EXPENDITURE ("INVESTITIONSAUSGABEN")
If the Borrower or any member of the Group intends to make any payments
on account of capital expenditure which are not part of the capital
expenditure
<PAGE>
27
projection or other statements prepared in accordance with Art. 19.1
(a) (iii) of this Agreement and which exceed in total the amount of
DM 1,000,000 the Borrower will inform the Facility Agent prior to
such expenditure explaining if and how the intended expenditure
might affect the Lenders' risk position.
(G) INFORMATION ON PERMITTED ENCUMBRANCES
The Borrower or any member of the Group shall ensure that the Facility
Agent shall be informed on any such Permitted Encumbrances as soon as
they may be granted in the future in favour of any third party
creditor.
(H) PAYMENTS WITHIN THE GROUP
The Borrower shall endeavour, on a best effort basis, that any excess
cash flow by any of its subsidiaries being part of the Group is not
held within this company, but is transferred to the Borrower if and
when appropriate with respect to the obligations of the Borrower under
this Agreement.
(I) SUBSCRIPTION AND USE OF EQUITY
The Borrower undertakes to ensure that in the event that the purchase
price payable by it pursuant to Sect. 2.2 of the Acquisition Agreement
shall exceed the the amount of DM 41,593,000 (in words: Deutsche Mark
fortyone million six hundred twentytwo thousand) such exceeding amount
of the purchase price payable by the Borrower will be funded from
equity (including subordinated shareholder loans) Furthermore, the
Borrower undertakes to ensure that if pursuant to Sect. 3.5 of the
Purchase Agreement, the final purchase price will be less than the
amount as set out in sentence 1 of this sub-section, the part of the
purchase price repaid by the seller of Papierfabrik Lahnstein GmbHto
the Borrower, if any, shall be contributed as equity of the Borrower's
equity capital or shareholder loans (being accompanied by a
subordination and loan retention agreement addressed to the Lenders in
a form acceptable to the Facility Agent).
(J) LIMITATION OF INDEBTEDNESS
Ifthe Borrower or any other member of the Group intends to create any
other Indebtedness with any bank or other financial institution in the
amount exceeding DM 10,000,000 the Borrower will inform the Facility
Agent in writing and in good time of such intention explaining if and
how the creation of such other Indebtedness might affect the Lenders'
risk position.
19.5 DURATION
The undertakings in this Art. 19 shall remain in force from and after
the date hereof and so long as any amount is or may be outstanding
hereunder.
ART. 20
ADDITIONAL COLLATERAL
If any of the measures referred to in Art. 19.4 (e), (f) and /or (j) of this
Agreement when implemented would affect the risk assessment of the Lenders in
respect of the ability of the Borrower to perform ist obligations hereunder, the
Lenders shall be entitled to
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28
demand from the Borrower additional collateral within 20 (twenty) Business Days
following such demand.
ART. 21
EVENTS OF DEFAULT
21.1 EVENTS OF DEFAULT
Each of the events set out below is an Event of Default (whether or not
caused by any reason whatsoever within the control of the Borrower or
of any other Person):
(a) the Borrower fails to pay any amount payable by it hereunder
on the due date thereof and this failure is not remedied
within three (3) Business Days after written notification by
the Facility Agent; or
(b) any representation, warranty, covenant as set out in Art. 19.4
or statement made in, or in connection with, this Agreement or
in any accounts, certificate, statement or opinion delivered
by or on behalf of the Borrower hereunder or in connection
herewith is incorrect or untrue in any material respect when
made or is not complied with and such default is incapable of
remedy, or if capable of remedy, is not remedied within twenty
(20) Business Days after receipt of written notice from the
Facility Agent requesting the same and has a material adverse
effect on the Borrower's payment obligations under this
Agreement; or
(c) the Borrower fails to comply with any covenant (as set out in
Art. 19.1 to Art. 19.3) or any other provision of this
Agreement and this failure, if capable of remedy, is not
remedied within thirty (30) Business Days (respectively ninety
(90) Business Days for the covenants as set out in Art. 19.3)
after receipt of written notice from the Facility Agent; or
(d) the Borrower fails to provide additional collateral as set out
in Art. 20 of this Agreement; or
(e) (i) any other Indebtedness of the Borrower or any
other member of the Group of an aggregate amount of
not more than DM 1,000,000 (or its equivalent in any
other currency) becomes prematurely due and payable as
a result of a default thereunder, and is not paid
within a period of five (5) Business Days after its
respective due date; or
(ii) any event of default (or event which with giving of
notice or lapse of time may constitute such an event
of default) occurs under any contract or document
relating to any such Indebtedness; or
(iii) any Encumbrance over any assets of the Borrower or any
other member of the Group becomes enforceable which
has a material adverse effect on the ability of the
Borrower to perform its payment obligations under this
Agreement; or
(iv) there occurs any material adverse change in the
financial condition of the Borrower or the Group which
leads to the
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29
Borrower's incapability to perform its payment
obligations under this Agreement, provided however
that the termination right pursuant to this
Art. 21.1.e (iv) in connection with Art. 21.2. below
may be exercised only if so confirmed by the Majority
Lenders; or
(f) any order (provisional or final) is made by court resolution
passed for the general suspension of payments or dissolution,
termination of existence, liquidation, winding-up, bankruptcy,
insolvency, judicial management or administration of the
Borrower; or
(g) a moratorium in respect of all or any debts of the Borrower
exceeding the amount of DM 1,000,000, or a composition or an
arrangement with creditors of the Borrower or any similar
proceeding or arrangement by which the assets of the Borrower
are submitted to the control of its creditors is ordered or
declared; or
(h) a liquidator, trustee, administrator, receiver, arranger or
similar officer is appointed in respect of the Borrower or in
respect of all or a substantial part of its assets; or
(i) the Borrower becomes or is declared insolvent or is unable, or
admits its general inability to pay its debts as they fall due
or becomes insolvent within the terms of any applicable law;
or
(j) a distress, execution, attachment or other process affects any
asset of the Borrower which has a material adverse effect on
the ability of the Borrower to perform its obligations under
this Agreement; or
(k) the Borrower or any other member of the Group ceases or
threatens to cease, to carry on its present business or
disposes, or threatens to dispose, of a substantial part of
its business, property or assets or a substantial part of its
business, property or assets is seized, nationalised,
expropriated or compulsorily acquired, other than those
measures as described in Art. 19.4(e) last sentence; or
(l) any authorisation, approval, consent, licence, exemption,
filing, registration or notarisation or other requirement
necessary to enable the Borrower to comply with any of its
material obligations hereunder, if any, is modified, revoked
or withheld or does not remain in full force and effect; or
(m) at any time it is unlawful for the Borrower to perform any
of its material obligations hereunder; or
(n) at any time as long as 50% (fifty per cent) of this Loan
Facilty and the facility under Loan Agreement I remain
outstanding any dividend payments (excluding dividend payments
which are used to increase the equity of the Borrower
["Schutt-aus-hol-zuruck-Verfahren"] or interest payments on
shareholder loans are made by the Borrower; or
(o) at any time after more than 50% (fifty per cent) of the Loan
Facility and the facility under Loan Agreement I have been
repaid any dividend payments (excluding dividend payments
which are used to increase the equity of the Borrower
["Schutt-aus-hol-zuruck-Verfahren"]) or interest payments on
shareholder loans are made by the Borrower which are
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30
unreasonable in respect of the cash flow situation and the
earning results of the Borrower, and which would have a
material adverse effect on the Borrower's ability to perform
its obligations under this Agreement; or
(o) the Borrower ceases to be a majority-owned subsidiary of the
Parent.
(p) the share pledge agreement as attached in Annex 4, the Pledge
Amendment Agreement as attached in Annex 5 and the Loan
Amendment Agreement as attached in Annex 7 have not become
legally valid and effective on the Closing Date.
21.2 ACCELERATION
In the case of any such Event of Default, and at any time thereafter if
any such event shall then be continuing, but not later than thirty (30)
days after the Facility Agent becomes aware of the occurrence of such
an event, the Facility Agent may, and shall, if so directed by the
Majority Lenders, by written notice to the Borrower:
(a) declare that the obligations of the Lenders hereunder to allow
the Borrower to make an Advance and the Lenders' Commitments
shall be cancelled forthwith whereupon the same shall be so
cancelled forthwith; and/or
(b) declare all outstanding amounts under this Agreement
immediately due and payable whereupon the same shall become
immediately due and payable together with all interest accrued
thereon and all other amounts payable hereunder.
ART. 22
RIGHTS AND OBLIGATIONS OF FACILITY AGENT
22.1 APPOINTMENT
Bayerische Hypo- und Vereinsbank Aktiengesellschaft is hereby appointed
Facility Agent. Each Lender irrevocably authorises the Facility Agent
on such Lender's behalf to perform such duties and to exercise such
rights and powers under this Agreement as are specifically delegated to
the Facility Agent by the terms of this Agreement, together with such
rights and powers as are reasonably incidental thereto. The Facility
Agent, however, must not commence any legal action or proceedings on
behalf of any Lender without such Lender's prior written approval. The
Facility Agent shall have only those duties and powers which are
expressly specified in this Agreement. The Facility Agent's duties
hereunder are solely of a mechanical and administrative nature.
22.2 MAJORITY LENDERS' DIRECTIONS
In the exercise of any right or power and as to any matter not
expressly provided for by this Agreement, the Facility Agent may act or
refrain from acting in accordance with the instructions of the Majority
Lenders and shall be fully protected in so doing. In the absence of any
such instructions, the Facility Agent may act or refrain from acting as
it shall deem fit. Any such instructions shall be binding on all the
Lenders.
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31
22.3 RELATIONSHIP
(a) The relationship between the Facility Agent and each Lender is
that of principal and Facility Agent only. Nothing herein
shall constitute the Facility Agent a trustee or fiduciary for
any Lender, the Borrower or any other Person.
(b) The Facility Agent shall not in any respect be Facility Agent
of the Borrower by virtue of this Agreement.
(c) The Facility Agent shall not be liable to the Borrower for any
breach by the Arranger or by any Lender of this Agreement or
be liable to any Lender or the Arranger for any breach by the
Borrower hereof.
22.4 DELEGATION
The Facility Agent may act hereunder through its officers, employees or
agents.
22.5 DOCUMENTATION
Neither the Facility Agent nor the Arranger nor any of their officers,
employees or agents shall be responsible to any Lender or to each other
for
(a) the valid execution, genuineness, validity, enforceability or
sufficiency of this Agreement or any other document in
connection herewith, or
(b) the collectability of amounts payable hereunder, or
(c) the accuracy of any statements (whether written or oral) made
in or in connection with this Agreement or any other document
in connection herewith.
22.6 DUTIES
The Facility Agent shall not be required to ascertain or inquire as to
the performance or observance by the Borrower of the terms of this
Agreement or any other document in connection herewith. The Facility
Agent shall not be deemed to have knowledge of the occurrence of any
Event of Default (or event which with lapse of time, notice,
determination of materiality or other condition may constitute such an
Event of Default) other than in the case of a payment default, of which
the Facility Agent gained actual knowledge unless the Facility Agent
has received written notice from a party hereto describing such Event
of Default or event and stating that such notice is a "Notice of
Default" or unless the Facility Agent does not receive a payment from
the Borrower hereunder on its due date. If the Facility Agent receives
such a Notice of Default, the Facility Agent shall promptly give notice
thereof to the Lenders.
22.7 EXONERATION
Neither the Facility Agent nor any of its officers, employees or agents
shall be liable to any Lender for any action taken or omitted under or
in connection with this Agreement unless caused by its or their gross
negligence or wilful misconduct.
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32
22.8 RELIANCE
(a) The Facility Agent may rely on any communication or document
believed by it to be genuine and correct.
(b) The Facility Agent may engage, pay for and rely on legal or
other professional advisers selected by it and shall be
protected in so relying.
22.9 CREDIT APPROVAL
Each of the Lenders severally represents and warrants to the Facility
Agent and the Arranger that it has made its own independent
investigation and assessment of the financial condition and affairs of
the Borrower and its related entities in connection with its
participation in this Agreement and has not relied exclusively on any
information provided to such Lender by the Facility Agent or the
Arranger in connection herewith. Each Lender represents, warrants and
undertakes to the Facility Agent and the Arranger that it shall
continue to make its own independent appraisal of the creditworthiness
of the Borrower and its related entities while the Advance are
outstanding or its Lender's Commitment is in force.
22.10 INFORMATION
(a) The Facility Agent shall furnish each Lender with a copy of
any documents received by it under Art. 19.1 and Art. 19.2
(but the Facility Agent shall not be obliged to review or
check the accuracy or completeness thereof). If requested by a
Lender, the Facility Agent shall furnish to such Lender a copy
of all documents received by it under Art. 4. The Facility
Agent shall furnish each Lender with a copy of any information
received by it under Art. 19.4 (e), (f) and (j) of this
Agreement (but the Facility Agent shall not be obliged to
review or check the accuracy or completeness thereof).
(b) Neither the Facility Agent nor the Arranger shall have any
duty
(i) either initially or on a continuing basis to provide
any Lender with any credit or other information with
respect to the financial condition or affairs of the
Borrower or any related entities whether coming into
its possession or that of any related entities of the
Facility Agent or the Arranger before the entry into
this Agreement or at any time thereafter;
(ii) unless specifically requested to do so by a Lender, to
request any certificates or other documents from the
Borrower hereunder.
(c) The Facility Agent need not disclose any information relating
to the Borrower if such disclosure would or might in the
opinion of the Facility Agent constitute a breach of any law
or any duty of secrecy or confidence.
22.11 FACILITY AGENT AND ARRANGER INDIVIDUALLY
(a) Each of the Facility Agent and the Arranger shall have the
same rights and powers hereunder as any other Lender and may
exercise the same as though it were not the Facility Agent or
the Arranger.
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33
(b) The Facility Agent and the Arranger may accept deposits from,
lend money to and generally engage in any kind of banking,
trust, advisory or other business whatsoever with the Borrower
and its related entities and accept and retain any fees
payable by the Borrower or any of its related entities for its
own account in connection therewith without liability to
account therefore to any Lender.
22.12 INDEMNITY
Each Lender agrees to indemnify the Facility Agent on demand (to the
extent not reimbursed by the Borrower under this Agreement) for any and
all liabilities, losses, damages, penalties, actions, judgements,
costs, expenses or disbursements of any kind whatsoever which may be
imposed on, incurred by or asserted against the Facility Agent in any
way relating to or arising out of its acting as the Facility Agent
under this Agreement or performing its duties hereunder or any action
taken or omitted by the Facility Agent hereunder (including, without
limitation, the charges and expenses referred to in Art. 24 and all
stamp taxes on or in connection with this Agreement to the extent not
reimbursed by the Borrower). Such indemnification by each Lender shall
be pro rata to its Lender's Commitment or (as the case may be)
participation in the Advance. Notwithstanding the foregoing, no Lender
shall be liable for any portion of the foregoing resulting from the
Facility Agent's gross negligence or wilful misconduct.
22.13 LEGAL RESTRICTIONS
The Facility Agent may refrain from doing anything which would or might
in its opinion (i) be contrary to the law of any jurisdiction or any
official directive or (ii) render it liable to any Person or (iii)
violate its banker's duty of secrecy, and may do anything which in its
opinion is necessary to comply with any such law or directive.
22.14 RESIGNATION AND REMOVAL
The Facility Agent may, after prior consultation with the Borrower and
subject to the Borrower's consent, resign by giving written notice
thereof to the Lenders and the Borrower. In addition, the Majority
Lenders may, by giving at least 30 days' notice to the Facility Agent,
the other Lenders and the Borrower, as appropriate, remove the Facility
Agent. In either such event the Majority Lenders may appoint a
successor to such Facility Agent. If the Majority Lenders have not,
within 60 days after such notice of resignation or removal, appointed a
successor Facility Agent which shall have accepted such appointment,
the retiring or removed Facility Agent shall have the right to appoint
a successor Facility Agent. The resignation or removal of the retiring
or removed Facility Agent and the appointment of any successor Facility
Agent shall both become effective upon the successor notifying all the
parties thereto in writing that it accepts such appointment, whereupon
the successor Facility Agent shall succeed to the position of the
retiring or removed Facility Agent and the term "Facility Agent" herein
shall mean such successor Facility Agent. This Art. 22.14 shall
continue to benefit a retiring or removed Facility Agent in respect of
any action taken or omitted by it hereunder while it was Facility
Agent.
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34
22.15 RECOVERY OF PAYMENTS
Unless the Facility Agent shall have received written notice from a
Lender or the Borrower not less than two Business Days prior to the
date upon which such Lender or the Borrower (the "party liable") is to
pay an amount to the Facility Agent for transfer to the Borrower or any
Lender respectively (the "payee") that the party liable does not intend
to make that amount available to the Facility Agent, the Facility Agent
may assume that the party liable has paid such amount to the Facility
Agent on the due date in accordance herewith. In reliance upon such
assumption, the Facility Agent may (but shall not be obliged to) make
available a corresponding sum to the payee(s). In the event that such
payment is not made to the Facility Agent, the payee(s) shall forthwith
on demand repay such sum to the Facility Agent together with interest
on such amount until its repayment at a rate determined by the Facility
Agent reflecting its cost of funds. The provisions of this Art. 22.15
are without prejudice to any rights the Facility Agent and the payee
may have against the party liable.
22.16 ASSIGNMENTS
The Facility Agent may treat each Lender as a party as entitled to
payment hereunder until it has received written notice from the Lender
unless concerned to the contrary.
22.17 EXEMPTION FROM ART. 181 GERMAN CIVIL CODE
The Facility Agent is hereby granted exemption from the restriction of
Art. 181 of the German Civil Code or any similar restriction of the
applicable laws of any other country.
22.18 CONFIDENTIALITY
In acting as the Facility Agent for the Lenders, the Facility Agent's
agency division shall be treated as a separate entity from any other of
its divisions or departments, and, notwithstanding the foregoing
provisions of this Art. 22, in the event that the Facility Agent should
act for the Borrower in any capacity in relation to any matter other
than those directly or indirectly related to its capacity as Facility
Agent for the Lenders hereunder, then any information given by the
Borrower to the Facility Agent in such other capacity may be treated as
confidential by the Facility Agent.
ART. 23
FEES
23.1 COMMITMENT FEE
The Borrower shall pay to the Facility Agent for distribution to the
Lenders a Commitment Fee of 0.25 % p.a. on the undisbursed amount of
the Facility from the signing date of this Agreement until the end of
the Availability Period. The Commitment Fee, if any, is payable within
five Business Days after the end of the Availability Period.
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35
23.2 UNDERWRITING FEE
The Borrower shall pay to the Arranger for distribution to the Lenders
an Underwriting Fee in the amount of DM 213,715 payable within five (5)
Business Days after the signing of this Agreement..
23.3 ARRANGEMENT FEE
The Borrower shall pay to the Arranger for its own account an
Arrangement Fee in an amount to be agreed upon in a side letter of even
date payable within five (5) Business Days after the signing of this
Agreement..
23.4 VAT
Any fee referred to in this Art. 23 (Fees) is exclusive of any value
added tax or any other Tax which might be chargeable in connection with
that fee. If any value added tax or other Tax is so chargeable, it
shall be paid by the Borrower at the same time as it pays the relevant
fee.
ART. 24
EXPENSES
24.1 The Borrower shall pay to Bayerische Hypo- und Vereinsbank
Aktiengesellschaft in its capacity as Facility Agent such amount in
reimbursement of all costs, charges and expenses incurred by it in or
in connection with the execution of the Pledge Agreement (including VAT
thereon and including, but not limited to, the fees and expenses of a
notary public and travel expenses, if any; "Kosten der
Sicherheitenbestellung", but excluding any legal fees and expenses for
legal advisers). Such amount is payable within five (5) Business Days
after the date hereof.
24.2 The Borrower shall reimburse Bayerische Hypo- und Vereinsbank
Aktiengesellschaft in its capacity as Facility Agent and Arranger and
the Lenders for the reasonable charges and expenses (including value
added tax or any similar tax thereon and including the fees and
expenses of legal advisers) incurred by them in connection with the
enforcement of any rights under this Agreement and the Pledge
Agreement.
ART. 25
STAMP DUTIES
The Borrower shall pay and forthwith on demand indemnify each of the Facility
Agent, the Arranger and the Lenders against any liability it incurs in respect
of any stamp, registration and similar tax which is or becomes payable in
connection with the entry into, performance or enforcement of this Agreement.
ART. 26
WAIVERS; REMEDIES CUMULATIVE
No failure to exercise and no delay in exercising on the part of the Facility
Agent or any Lender, any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or
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36
further exercise thereof or the exercise of any other right, power or privilege.
No waiver by the Facility Agent, the Arranger or any Lender shall be effective
unless it is in writing. The rights and remedies of each of the Facility Agent,
the Arranger and the Lenders herein provided are cumulative and not exclusive of
any rights or remedies provided by law.
ART. 27
NOTICES
27.1 Any correspondence, reports, announcements, consultations,
documentation and communication between the parties to this Agreement
shall be in the German, or in the English language and shall be in
writing, by mail, or by telefax; the latter case requiring confirmation
by mail.
27.2 Without prejudice to any future change of address, all correspondence
from the Borrower to the Lenders shall be sent to the Facility Agent at
the following address:
Bayerische Hypo- und Vereinsbank Aktiengesellschaft
Am Tucherpark 1/VTW 1
80536 Munchen
Attention: Mr. Rainer Heuschneider
Fax: +49-89-37825278
All correspondence from the Lenders or the Facility Agent to the
Borrower shall be sent to the following address:
FiberMark GmbH c/o FiberMark Gessner GmbH & Co.
Weidacher Strasse 30
83620 Feldkirchen-Westerham
Attention: Dr. Walter Haegler
Fax: +49-8062-703461 (with copy to Mr. Bruce Moore,
Fax: +001-802-2575900)
27.3 Without prejudice to any future change of address or account, all
correspondence from the Facility Agent to the Lenders shall be sent and
all payments from the Facility Agent to the Lenders shall be made to
the addresses and accounts as transferred to the Facility Agent by each
Lender.
ART. 28
ASSIGNMENTS, TRANSFER, SUBSTITUTION
28.1 SUCCESSORS
This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Arranger, the Facility Agent and their
respective substitutes, successors and assignees.
28.2 NO ASSIGNMENTS BY THE BORROWER
The Borrower may not assign or transfer all or any of its rights,
benefits and obligations hereunder.
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37
28.3 ASSIGNMENTS BY THE LENDERS
At its own cost any Lender may, prior to a written consent by the
Borrower, such consent not to be unreasonably withheld, at any time
assign and transfer all or any part of its rights, benefits and
obligations (to effect a "Vertragsubernahme") hereunder, provided that
an amount of principal and the amount of interest accrued thereon may
not be assigned or transferred separately.
Unless and until an assignee has agreed with the Facility Agent and the
Lenders in writing that it shall be under the same obligations toward
each of them as it would have been under if it had been a party hereto,
neither the Facility Agent nor any Lender shall be obliged to recognise
such assignee as having the rights against it which such assignee would
have had if it had been a party hereto. For the purposes of this Art.
28.3, each Lender hereby authorises the Facility Agent to execute on
its behalf any agreement with any assignee pursuant to which such
assignee agrees that it shall be under the same obligations towards
each of the Lenders as it would have been had it been a party hereto.
For each assignment effected pursuant to the above provisions, the
Facility Agent shall receive an assignment registration fee in the
amount of DM 1,000 from the respective assignee, failing whom from the
assigning Lender, which shall become due and payable five Business Days
after the date of the agreement referred to in Art. 28.3 above.
28.4 CHANGE OF LENDING OFFICE
Each Lender may at any time and at its expense change its lending
office, but such Lender shall give the Facility Agent prior written
notice thereof and until receipt of such notice the Facility Agent may
assume that no such change has occurred.
28.5 DISCLOSURE
Each Lender may disclose to any proposed assignee, transferee or
sub-participant or any proposed substitute therefore, any information
about this Agreement and any information in the possession of such
Lender relating to the Borrower.
28.6 SYNDICATION
The Borrower acknowledges that primary syndication of the Facility may
take place and undertakes to assist and co-operate with the Facility
Agent and the Arranger in syndication by, inter alia, expediting
reasonable site visits of persons who have been invited by the Arranger
to participate in the Facility ("Invitees") and by participating in a
reasonable number of presentations to Invitees.
ART. 29
CURRENCY INDEMNITY
29.1 Payment made by the Borrower to the Lenders on the basis of any
judgement in a currency (hereinafter referred to as the "Judgement
Currency") other than Deutsche Marks shall only discharge the
Borrower's obligation to the extent of the amount in Deutsche Marks
that the Lenders, immediately upon receipt of
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38
such payment, would be able to purchase with the amount so received on
a recognised foreign exchange market. In the event that such amount in
the Judgement Currency is less than the amount due in Deutsche Marks
pursuant to the provisions of this Agreement, then the Borrower shall
be liable to pay the difference; such obligation of the Borrower being
a separate and independent obligation, forming the basis of a separate
cause of action.
29.2 The Borrower waives any rights it may have in any jurisdiction to pay
any amount hereunder in a currency other than that in which it is
expressed to be payable hereunder.
ART. 30
PRO RATA SHARING
30.1 Except for payments to a Lender from the Facility Agent which were
received by the Facility Agent for the account of such Lender in
accordance with this Agreement, if a Lender shall at any time receive
satisfaction by way of payment or foreclosure of any collateral or
security or a declaration of set-off made by such Lender of all or a
part of any amount payable by the Borrower hereunder in a proportion
which, in relation to any amounts received by any other Lender or
Lenders, represents more than its percentage participation for the time
being in the Advance, then such Lender shall promptly purchase from the
other Lenders their respective participations in the Advance including
the claims for payment of interest maintained by those other Lenders as
may be necessary to cause the purchasing Lender to share the amount in
excess of its percentage participation for the time being in the
Advance rateably with the other Lenders. Each of the Lenders hereby
agrees to sell and transfer a participation in its Advance, including
the claims for payment of interest as may be necessary to give effect
to this provision.
30.2 Notwithstanding Art. 30.1, no portion of any payment or satisfaction of
all or part of any amount payable to such Lender hereunder received in
connection with or as a result of legal proceedings brought by or in
the name of such Lender shall be payable pursuant to Art. 30.1, to any
other Lender where each other Lender has had an opportunity to join in
such proceedings yet has declined to do so. Each Lender shall give
prior written notice to each other Lender of its intention to institute
legal proceedings in any jurisdiction.
30.3 If at any time any Lender (the "Refunding Bank") shall be required to
refund any amount which has been paid to or received by it on account
of any part of any amount payable by the Borrower hereunder and in
respect of which it has paid an amount to any other Lender pursuant to
Art. 30.1, such other Lender shall against re-transfer of the purchased
participation in the Advance including the claims for payment of
interest repay a proportionate amount of the sum so refunded together
with such amount (if any) as is necessary to reimburse the Refunding
Bank the appropriate portion of any interest it shall have been obliged
to pay when refunding such amount as aforesaid for the period whilst
such other Lender held the amounts to be refunded.
30.4 If a Lender receives satisfaction as set forth in Art. 30.1, it shall
give notice thereof to the Facility Agent. The Facility Agent shall
then calculate the amount to be paid pursuant to Art. 30.1. Such Lender
shall pay this amount within the time period set forth by the Facility
Agent to the Facility Agent which will then distribute the amount among
the other Lenders. Each of the Lenders hereby
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39
authorises the Facility Agent to assign to the Lender receiving such
satisfaction and to accept the assignment of, such participations in
the Advance including claims for payment of interest on their behalf as
set forth in Art. 30.1. The Facility Agent shall confirm the
assignments to all Lenders in writing every time such assignments take
place. Art. 30.4 sentences 1 through 3 apply mutatis mutandis in case
of a refund pursuant to Art. 30.3.
ART. 31
SET-OFF
Each Lender may set off any matured obligation owed by the Borrower under this
Agreement (to the extent beneficially owned by that Lender) against any
obligation (whether or not matured) owed by the Lender to the Borrower,
regardless of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, the Lender may
convert either obligation at a market rate of exchange in its usual course of
business for the purpose of set-off.
ART. 32
MISCELLANEOUS
32.1 AMENDMENTS
Any alteration or amendment to this Agreement shall be in writing and
requires the consent of the Borrower and of the Majority Lenders
provided, however, that any alteration or amendment to Art. 1.19, 1.38,
2.2, 2.3, 4, 5, 7, 9, 12, 15, 16, 17, 19, 20, 21, 28.2, 30, 32.1 and
32.3 requires the consent of all Lenders. Verbal agreements shall have
no legal effect.
32.2 GOVERNING LAW
The form and contents of this Agreement, as well as the rights and
obligations of the Lenders, the Borrower, the Facility Agent and the
Arranger shall be construed according to the laws of the Federal
Republic of Germany in every respect.
32.3 PARTIAL INVALIDITY
Should any provision of this Agreement be or become wholly or partly,
invalid, then the remaining provisions shall remain valid. Invalid
provisions shall be construed in accordance with the intent of the
parties and the purpose of this Agreement.
32.4 PLACE OF PERFORMANCE
Place of performance of this Agreement shall be Munich.
32.5 JURISDICTION
The applicable place of jurisdiction for all disputes arising out of or
in connection with this Agreement shall be Munich. The Lenders and the
Facility Agent may
<PAGE>
40
however, at their option, commence proceedings before any other
competent court of law in the Federal Republic of Germany and/or in any
other country in which assets of the Borrower are situated. In the
latter case the laws of the Federal Republic of Germany shall, pursuant
to Art. 32.3, also be applicable.
32.6 ANNEXES
The Annexes 1 through 7 form part of this Agreement.
32.7 COUNTERPARTS
This Agreement has been executed in the English language in 3 (three)
counterparts. One copy shall be provided to the Borrower and to each of
the Arranger and Bayerische Hypo- und Vereinsbank Aktiengesellschaft as
Lender. Each executed copy shall have the effect of an original.
<PAGE>
41
September 15, 1999
Bayerische Hypo- und Vereinsbank Aktiengesellschaft
.............................................
(in its capacity as Arranger, Lender and Facility Agent)
September 15, 1999
FiberMark GmbH
.............................................
<PAGE>
42
ANNEX 1
DRAWDOWN REQUEST
[FiberMark GmbH Letterhead]
To: Bayerische Hypo- und Vereinsbank AG
FCF 1
Federal Republic of Germany
Telefax: + 49-89-37825278
Date: [ ]
Pursuant to Art. 5.2 of the Agreement dated September 15, 1999 between us and
the Lenders (the "Loan Agreement"), we hereby request the following drawdown
under the Loan Agreement:
(a) Drawdown Date: [ - ]
(b) Amount of Advance: [ - ]
(c) Interest Period: [ - ]
(d) The account to which the
Advance is to be transferred: [ - ]
WE HEREBY CONFIRM THAT:
(i) the representations and warranties set out in Art. 18 of the Loan
Agreement are correct at the date hereof; and
(ii) no Event of Default set out in Art. 21 of the Loan Agreement (or any
event which with the giving of notice or lapse of time might constitute
an Event of Default) has occurred and is continuing or might result
from the making of the Advance.
FiberMark GmbH
-----------------------------------------------
<PAGE>
43
ANNEX 2
NOTICE TO LENDERS OF ADVANCE DUE
[Bayerische Hypo- und Vereinsbank's Letterhead]
To: [Lender]
Date: [ - ]
Pursuant to Art. 5.3 of the agreement dated Septemner 15, 1999 between FiberMark
GmbH and the Lenders (the " Loan Agreement"), we hereby give notice of the
Borrower's Drawdown Request under the Loan Agreement:
(a) Drawdown Date: [ - ]
(b) Amount of Advance: [ - ]
(c) Lender's participation: [ - ]
(d) Account: [ - ]
We confirm that all conditions precedent in accordance with Art. 4 of the Loan
Agreement have been fulfilled or complied with by the Borrower.
We request that you transfer the above amount, being your Share of the Advance
to our Account No........... with..............no later than 10:00 a.m. Munich
time on the Drawdown Date.
BAYERISCHE HYPO- und VEREINSBANK AG
-------------------------
<PAGE>
44
ANNEX 3
GROUP STRUCTURE CHART
[GRAPHIC]
<PAGE>
45
ANNEX 4
PLEDGE AGREEMENT OVER SHARES OF
PAPIERFABRIK LAHNSTEIN GmbH
<PAGE>
46
ANNEX 5
PLEDGE AMENDMENT AGREEMENT IN RELATION
TO FIBERMARK GESSNER Gmbh & CO.
<PAGE>
47
ANNEX 6
LOAN AMENDMENT AGREEMENT IN RELATION
TO THE LOAN AGREEMENT BETWEEN THE BORROWER
AND THE LENDER DATED JANUARY 7, 1998
TO FIBERMARK GESSNER GMBH & CO.
<PAGE>
48
ANNEX 7
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
LOAN ACCOUNT TRANCHE MATURITY INTEREST RATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6457460 6 Mio DM 17.09.2000 5,40%
- --------------------------------------------------------------------------------
6457479 6 Mio DM 17.09.2001 6,00%
- --------------------------------------------------------------------------------
6457487 4,125 Mio DM 17.09.2002 6,40%
- --------------------------------------------------------------------------------
6457495 4,125 Mio DM 17.09.2003 6,70%
- --------------------------------------------------------------------------------
6457509 4,125 Mio DM 17.09.2004 6,95%
- --------------------------------------------------------------------------------
6457517 4,125 Mio DM 17.09.2005 7,10%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.2
L O A N A M E N D M E N T A G R E E M E N T
between
FIBERMARK GMBH (THE "BORROWER")
on the one hand
and
BAYERISCHE HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT
(hereinafter referred to as "Arranger", "Lender" or "Facility Agent", as the
case may be)
on the other hand
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Art. 1 Definitions 3
Art. 2 Amendments 3
Art. 3 Miscellaneous 6
</TABLE>
<PAGE>
PREAMBLE
WHEREAS, Bayerische Vereinsbank Aktiengesellschaft (now: Bayerische Hypo- und
Vereinsbank Aktiengesellschaft) has granted with a Loan Agreement dated January
7, 1998 a Loan Facility in the amount of DM 54,000,000 (in words: Deutsche Mark
fifty four million) to the Borrower for the purpose of financing the acquisition
of Steinbeis Gessner GmbH; and
WHEREAS, Bayerische Hypo- und Vereinsbank Aktiengesellschaft will provide the
Borrower with a further loan facility in the amount of DM 28,500,000 (in words:
Deutsche Mark twentyeight million five hundred thousand) for the purpose of
financing the acquisition of Papierfabrik Lahnstein GmbH; and
WHEREAS, the parties to the aforementioned loan agreements wish to harmonize
certain conditions of these loan agreements;
The parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Save as otherwise defined herein, terms defined in the Loan Agreement
shall have the same meaning herein.
1.2 "Loan Agreement" shall mean the loan agreement entered into by the
Borrower and the Lender on January 7, 1998.
ARTICLE 2
AMENDMENTS
With effect of the date of this agreement the Loan Agreement shall be amended as
follows:
2.1 AMENDMENT TO DEFINITIONS
"Leverage Ratio" shall mean the ratio of Net Debt to EBITDA.
"Loan Agreement II" shall mean the loan agreement entered into by the
Borrower and the Lender on or about September 15, 1999.
"Net Debt" shall mean on a consolidated basis of the Group Total Debt
less cash assets ("Schecks, Kassenbestand, Bundesbank- und
Postgiroguthaben, Guthaben bei Kreditinstituten" pursuant to Section
266 Section 2 B.IV. HGB).
2.2 AMENDMENTS TO COVENANTS
In Art. 19.3 (Financial Covenants) of the Loan Agreement item (iii)
shall be substituted by the following wording:
<PAGE>
"on December 31, 1999 the Leverage Ratio is not more than 4,5,
and in each calendar year starting on December 31, 2000 not
more than 4."
In Art. 19.4 (Further Undertakings) of the Loan Agreement lit. (e)
shall have the following wording:
(e) "NO MERGER AND SALE OF GROUP COMPANIES
If the Borrower or any member of the Group intends to
merge or consolidate with any other company or Person,
the result of which would (in the opinion of the Majority
Lenders) materially adversely affect the Borrower, it
will inform the Facility Agent in writing and in good
time of such intention explaining if and how such merger
or consolidation might affect the Lenders' risk position.
The Borrower will furthermore inform the Facility Agent
in writing and in good time if it intends to sell or
otherwise dispose of any of its material subsidiaries
which would materially adversely affect the Borrower's
ability to perform its obligations hereunder.
Aforementioned information shall explain if and how these
measures might affect the Lenders' risk position."
In Art. 19.4 (Further Undertakings) of the Loan Agreement lit. (f)
shall have the following wording:
(f) "LIMITATION OF EXPENDITURE ("INVESTITIONSAUSGABEN")
If the Borrower or any member of the Group intends to
make any payments on account of capital expenditure which
are not part of the capital expenditure projection or
other statements prepared in accordance with Art. 19.1
(a) (iii) of this Agreement and which exceed in total the
amount of DM 1,000,000 the Borrower will inform the
Facility Agent prior to such expenditure explaining if
and how the intended expenditure might affect the
Lenders' risk position."
In Art. 19.4 (Further Undertakings) of the Loan Agreement lit. (j)
shall be replaced by the following wording:
(j) "LIMITATION OF INDEBTEDNESS
If the Borrower or any other member of the Group intends
to create any other Indebtedness with any bank or other
financial institution in the amount exceeding DM
10,000,000 the Borrower will inform the Facility Agent in
writing and in good time of such intention explaining if
and how the creation of such other Indebtedness might
affect the Lenders' risk position."
After Art. 19.4 (Further Undertakings) of the Loan Agreement a new Art.
19.5 (Additional Collateral) is inserted with the following wording:
<PAGE>
"19. 5 ADDITIONAL COLLATERAL
If any of the measures referred to in Art. 19.4 (e), (f)
and /or (j) of this Agreement when implemented would
affect the risk assessment of the Lenders in respect of
the ability of the Borrower to perform ist obligations
hereunder, the Lenders shall be entitled to demand from
the Borrower additional collateral within 20 (twenty)
Business Days following such demand."
Art. 19.5 (Duration) of the original Loan Agreement shall become new
Art. 19.6 (Duration).
2.3 AMENDMENTS TO EVENTS OF DEFAULT
In Art. 20.1 (Events of Default) of the Loan Agreement lit. (m) shall
be substituted by the following wording:
"at any time as long as 50% (fifty per cent) of the Loan
Facility and the facility under the Loan Agreement II
remain outstanding any dividend payments (excluding
dividend payments which are used to increase the equity
of the Borrower ["Schutt-aus-hol-zuruck-Verfahren"] or
interest payments on shareholder loans are made by the
Borrower; or"
In Art. 20.1 (Events of Default) of the Loan Agreement lit. (n) shall
have the following wording:
"at any time after more than 50% (fifty per cent) of the
Loan Facility and the facility under Loan Agreement II
have been repaid any dividend payments (excluding
dividend payments which are used to increase the equity
of the Borrower ["Schutt-aus-hol-zuruck-Verfahren"] or
interest payments on shareholder loans are made by the
Borrower which are unreasonable in respect of the cash
flow situation and the earning results of the Borrower,
and which would have a material adverse effect on the
Borrower's ability to perform ist obligations under this
Agreement; or"
In Art. 20.1 of the original Loan Agreement lit. (n) shall become new
lit. (o) with the words "OF THE PARENT." being substituted by the words
"OF THE PARENT; OR" and lit. (o) shall become new lit. (p) with the
words "ON THE CLOSING DATE." being substituted by the words "ON THE
CLOSING DATE; OR".
Art. 20.1 (Events of Default) of the Loan Agreement shall be
supplemented by adding the following lit.
"(q) the Borrower fails to provide additional collateral
as set out in Art. 19.5 of this Agreement."
<PAGE>
2.4 AMENDMENTS TO RIGHTS AND OBLIGATIONS OF FACILITY AGENT
Art. 21.10 (Information) of the Loan Agreement shall be amended by
adding the following sentence at the end of lit. (a):
"The Facility Agent shall furnish each Lender with a copy of any
information received by it under Art. 19.4 (e), (f) and (j) of this
Agreement (but the Facility Agent shall not be obliged to review or
check the accuracy or completeness thereof)."
ARTICLE 3
MISCELLEANEOUS
Save as provided for herein all other provisions of the Loan Agreement shall
remain unchanged and in full force and effect.
The form and contents of this agreement, as well as the rights and obligations
of the Lenders, the Borrower, the Facility Agent and the Arranger shall be
construed according to the laws of the Federal Republic of Germany in every
respect.
This agreement has been executed in the English language in 3 (three)
counterparts. One copy shall be provided to the Borrower and to each of the
Arranger and Bayerische Hypo- und Vereinsbank Aktiengesellschaft as Lender. Each
executed copy shall have the effect of an original.
September 15, 1999
Bayerische Hypo- und Vereinsbank Aktiengesellschaft
........................................................
(in its capacity as Arranger, Lender and Facility Agent)
September 15, 1999
FiberMark GmbH
........................................................
<PAGE>
EXHIBIT 10.3
SHARE PLEDGE AGREEMENT
dated September 15, 1999
between
FIBERMARK BETEILIGUNGS GMBH
AND
FIBERMARK GMBH
(the "Pledgors")
on the one hand
and
BAYERISCHE HYPO- UND VEREINSBANK AG
(the "Pledgee")
on the other hand
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Art. 1 Definitions 3
Art. 2 Pledge 4
Art 3 Security Purpose 5
Art. 4 Pledgor's Rights 5
Art. 5 Pledgor's Representations 6
Art. 6 Pledgee's Right of Realisation 6
Art. 7 Expiration of Pledge 6
Art. 8 Waiver 7
Art. 9 Duration and Independence 7
Art. 10 Notices, Language 7
Art. 11 Partial Invalidity 8
Art. 12 Miscellaneous 8
</TABLE>
<PAGE>
WHEREAS, Bayerische Hypo- und Vereinsbank Aktiengesellschaft shall provide
FiberMark GmbH (the "Borrower") with a six year loan facility in the amount of
DM 28,500,000 (in words: Deutsche Marks twentyeight million fivehundredthousand)
for the purpose of financing the acquisition of Papierfabrik Lahnstein GmbH; and
WHEREAS, the Pledgors have concluded a share purchase agreement (the
"Acquisition Agreement") for the purchase of 3 (three) shares in Papierfabrik
Lahnstein GmbH with a total nominal value of DM 20,000,000 (Deutsche Marks
twenty million) and
WHEREAS, Bayerische Hypo- und Vereinsbank Aktiengesellschaft acknowledges that
the Pledgors will pursuant to the provisions of the Acquisition Agreement only
acquire full ownership of the Shares on the Closing Date (as defined in the
Acquisition Agreement); and
WHEREAS, the Pledgors shall pledge their shares in Papierfabrik Lahnstein GmbH
to Bayerische Hypo- und Vereinsbank AG as security for the Borrower's payment
obligations under the Loan Agreement I and the Loan Agreement II, and
FiberMark Beteiligungs GmbH, FiberMark GmbH and Bayerische Hypo- und Vereinsbank
AG appear before Mr. Marco Bolzern, public notary in Lucerne, Switzerland, to
execute this Share Pledge Agreement as a deed as follows:
ART. 1
DEFINITIONS
In this Agreement the following terms shall have the following meaning:
1.1 "BGB" shall mean Burgerliches Gesetzbuch, being the German Civil Code.
1.2 "Company" shall mean Papierfabrik Lahnstein GmbH.
1.3 "Declared Default" shall mean any event of default occurring under the
Loan Agreements
1.4 "Enforcement Event" shall mean the occurrence of a Declared Default which
is not, if capable of remedy, remedied within 10 Business Days after
written notice from the Pledgee to the Pledgors that it has the intention
to realise the Pledge.
1.5 "Loan Agreement I" means the loan agreement entered into by the Borrower
and the Pledgee on January 7, 1998.
1.6 "Loan Agreement II means the loan agreement entered into by the Borrower
and the Pledgee on September 15, 1999. Loan Agreement I and Loan Agreement
II shall be referred to as the Loan Agreements.
1.7 "Pledge" shall mean the pledge constituted hereunder.
1.8 "Pledgee" shall mean Bayerische Hypo- und Vereinsbank Aktiengesellschaft.
1.9 "Pledgors" shall mean FiberMark Beteiligungs GmbH and FiberMark GmbH, and
"Pledgor" shall mean each one of them.
1.10 "Proceeds" means the proceeds resulting from the enforcement of the
Pledge.
<PAGE>
1.11 "Secured Liabilities" means all present and future obligations and
liabilities (whether actual or contingent and whether owed jointly or
severally or in any other capacity whatsoever) which are now or have been
or at any time after the date hereof may be or become by way of novation
or otherwise due, owing or incurred by the Borrower to the Pledgee under
the Loan Agreements as amended, varied or supplemented from time to time.
1.12 "Shares" means the shares set out in Article 2. 1. .
1.13 All capitalised terms used herein and not otherwise defined herein shall
bear the same meaning herein as ascribed to them in the Loan Agreement II,
unless the context otherwise requires.
ARTICLE 2
PLEDGE
2.1 SHARES
The Pledgors will hold as from the Closing Date the following 3 shares in
the Company:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Column A: Column B:
Number of Shares Nominal value of Shares:
- --------------------------------------------------------------------------------
<S> <C>
1 DM 50,000
- --------------------------------------------------------------------------------
1 DM 70,000
- --------------------------------------------------------------------------------
1 DM 19,880,000
- --------------------------------------------------------------------------------
</TABLE>
2.2 CONSTITUTION OF THE PLEDGE
The Pledgors hereby pledge the Shares specified in Article 2.1 to the
Pledgee.
The Pledgors furthermore pledge to the Pledgee any and all additional
future shares in the capital of the Company they may acquire in the future
in the event of an increase of the capital of the Company or otherwise.
The Pledgee herewith accepts the pledges.
2.3 ANCILLARY RIGHTS
Subject to the provisions set forth in Article 4 below, all dividend
rights ("Ausschuttungszahlungen") and other rights and monetary claims
associated with the Shares are pledged together with the Shares to the
Pledgee as security (e.g. payment made upon the liquidation of the
company; "Liquidationserlos bei Auflosung der Papierfabrik Lahnstein
GmbH").
The Pledgee herewith accepts the pledges.
<PAGE>
2.4 ADDITIONAL SECURITY
The Pledge is in addition, and without prejudice to, any other security
the Pledgee may now or hereafter hold in respect of the Secured
Liabilities.
ARTICLE 3
SECURITY PURPOSE
The Pledge is constituted in order to secure the prompt and complete
satisfaction of any and all Secured Liabilities.
ARTICLE 4
PLEDGOR'S RIGHTS
4.1 ENTITLEMENT TO DIVIDENDS
Unless the Pledgee gives notice to the contrary which it may only do
whilst a Declared Default subsists, the Pledgors shall have the right to
receive and retain without limitation all dividend payments and all other
payments in respect of the Shares pledged by virtue of Article 2 above.
When such Declared Default no longer subsists the Pledgors shall again be
entitled to receive and retain without limitation all dividend payments
and all other payments in respect of the Shares pledged by virtue of
Article 2.
4.2 VOTING RIGHTS
The voting rights pertaining to the Shares remain with the Pledgors.
<PAGE>
ARTICLE 5
PLEDGOR'S REPRESENTATIONS
The Pledgors hereby represent and warrant to the Pledgee that as of the Closing
Date:
(a) OWNER OF THE SHARES
The Pledgors will be the sole owners of the Shares as from the Closing
Date, and are duly entitled to grant the Pledge to the Pledgee.
(b) NO THIRD PARTY RIGHTS
The Pledgors have not granted any mortgage, hypothecation, pledge, lien,
charge, assignment, transfer of title or other security rights over any of
the Shares to any other third party prior to the date of this Agreement.
ARTICLE 6
PLEDGEE'S RIGHTS OF REALISATION
6.1 REALISATION
Whilst an Enforcement Event subsists, the Pledgee may enforce the Pledge
in accordance with the relevant rules of the BGB, provided that the
Secured Liabilities have not been unconditionally and irrevocably
satisfied and discharged in full.
6.2 DUE CARE AND ATTENTION
The Pledgee will realise the Pledge only to the extent necessary to
discharge in full the Secured Liabilities. The Pledgee shall at all times
until the full and complete satisfaction of all the Secured Liabilities
take into consideration the legitimate interest of the Pledgors in
exercising its rights under this Agreement.
6.3 SURPLUS
After the complete unconditional, irrevocable and full payment and
discharge of all Secured Liabilities any remaining Proceeds resulting from
the enforcement of the Pledge shall be retransferred to the Pledgors.
ARTICLE 7
EXPIRATION OF PLEDGE
Upon the full, final, unconditional and irrevocable payment and discharge
of all Secured Liabilities the Pledge shall automatically expire
("erloschen"). The Pledgee shall, at the request and at the cost of the
Pledgors, take all such steps as the Pledgors may reasonably require in
order to effect such expiration.
<PAGE>
ARTICLE 8
WAIVER
No failure to exercise, nor any delay in exercising, on the part of the
Pledgee, any right or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right or remedy prevent
any further or other exercise thereof or the exercise of any other right
or remedy. The rights or remedies provided hereunder are cumulative and
not exclusive of any rights or remedies whether provided by law or
otherwise.
ARTICLE 9
DURATION AND INDEPENDENCE
9.1 DURATION
This Agreement shall, unless otherwise agreed between the parties, remain
in full force and effect until complete, unconditional and irrevocable
payment and discharge in full of the Secured Liabilities. The Pledge shall
not cease to exist if any payments made in satisfaction of the Secured
Liabilities have only temporarily discharged the Secured Liabilities.
9.2 INDEPENDENCE
This Agreement is independent from any other security or guarantee which
may have been or will be given to the Pledgee with respect to any
obligation of the Pledgors. None of such other securities shall prejudice,
or shall be prejudiced by, or shall be merged in any way with, this
Agreement.
ARTICLE 10
NOTICES, LANGUAGE
10.1 Any correspondence, documentation and communication between the parties to
this Agreement shall be in writing, by mail, or by telefax; the latter
case requiring confirmation by mail.
10.2 Without prejudice to any future change of address, all correspondence from
the Pledgors to the Pledgee shall be sent to the Pledgee at the following
address:
Bayerische Hypo und -Vereinsbank Aktiengesellschaft
Am Tucherpark 1/VTW 1
80536 Munchen
Attention: Mr. Rainer Heuschneider
Fax: +49-89-37825278
All correspondence from the Pledgee to the Pledgors shall be sent to the
following address:
FiberMark Beteiligungs GmbH
c/o FiberMark Gessner GmbH & Co.
Attention: Dr. Walter Haegler
Fax: +49-8062-703461 (with copy to Mr. Bruce Moore,
Fax: +001-802-2575900)
<PAGE>
FiberMark GmbH
c/o FiberMark Gessner GmbH & co.
Weidacher Strasse 30
83620 Feldkirchen-Westerham
Attention: Dr. Walter Haegler
Fax: +49-8062-703461 (with copy to Mr. Bruce Moore,
Fax: +001-802-2575900)
10.3 LANGUAGE
This Agreement is made in the English language. For the avoidance of
doubt, the English language version of this Agreement shall prevail over
any translation of this Agreement. However, where a German translation of
a word or phrase appears in the text of this Agreement, the German
translation of such word or Phrase shall prevail.
Any notice given under or in connection with this Agreement shall be in
the English language.
ART. 11
PARTIAL INVALIDITY
Should any provision of this Agreement be or become wholly or partly,
invalid, then the remaining provisions shall remain valid. Invalid
provisions shall be construed in accordance with the intent of the parties
and the purpose of this Agreement.
The Parties hereby agree to replace, to the extent possible, any provision
of this Agreement which is or becomes illegal or invalid with a legal and
valid provision which achieves to the fullest extent possible the
commercial intention of the Parties.
ART. 12
MISCELLANEOUS
12.1 AMENDMENTS
Any alteration or amendment to this Agreement shall be in writing. Verbal
agreements shall have no legal effect.
12.2 GOVERNING LAW
The form and contents of this Agreement, as well as the rights and
obligations of the Pledgor and the Pledgee shall be construed according to
the laws of the Federal Republic of Germany in every respect.
12.3 JURISDICTION
The applicable place of jurisdiction for all disputes arising out of or in
connection with this Agreement shall be Munich. The Pledgee may however,
at its option,
<PAGE>
commence proceedings before any other competent court of law in the
Federal Republic of Germany and/or in any other country in which assets of
the Pledgors are situated. In the latter case the laws of the Federal
Republic of Germany shall, pursuant to Art. 12.2, also be applicable.
12.4 COUNTERPARTS
This Agreement has been executed in the English language in 3 (three)
counterparts. One copy shall be provided to each of the Pledgors and to
the Pledgee. Each executed copy shall have the effect of an original.
<PAGE>
SEPTEMBER 15,1999
FiberMark Beteiligungs GmbH
.....................................................................
FiberMark GmbH
.....................................................................
Bayerische Hypo- und Vereinsbank Aktiengesellschaft
......................................................................
(in its capacity as Pledgee)
SEPTEMBER 15, 1999
.....................................................................
(Public notary)
<PAGE>
EXHIBIT 10.4
PLEDGE AMENDMENT AGREEMENT
dated September 15, 1999
between
FIBERMARK BETEILIGUNGS GMBH
AND
FIBERMARK GMBH
(the "Pledgors")
on the one hand
and
BAYERISCHE HYPO- UND VEREINSBANK AG
(the "Pledgee")
on the other hand
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Art. 1 Amendment 3
Art. 2 Notices, Language 3
Art- 3 Partial Invalidity 4
Art. 4 Miscellaneous 5
</TABLE>
<PAGE>
WHEREAS, Bayerische Hypo- und Vereinsbank Aktiengesellschaft have granted a loan
facility dated January 7, 1998 to FiberMark GmbH for the amount of DM 54,000,000
(in words: Deutsche Mark fifty four million) for the purpose of financing the
acquisition of Steinbeis Gessner GmbH (the "Loan Agreement I"), and
WHEREAS, Bayerische Hypo- und Vereinsbank Aktiengesellschaft shall provide
FiberMark GmbH with a six year loan facility in the amount of DM 28,500,000 (in
words: Deutsche Marks twentyeight million fivehundredthousand) for the purpose
of financing the acquisition of Papierfabrik Lahnstein GmbH (the "Loan Agreement
II, Loan Agreement I and Loan Agreement II both referred to as the "Loan
Agreements"); and
WHEREAS, the Pledgors have concluded a share pledge agreement (the "Share Pledge
Agreement") on January 7, 1998 in favour of the Pledgee to secure the prompt and
complete satisfaction of any and all Secured Liabilities as defined in the Share
Pledge Agreement, and
WHEREAS, the Pledgors shall extend the security purpose of the Share Pledge
Agreement in order to also secure the Borrower's payment obligations under the
Loan Agreement II.
NOW THEREFORE,
FiberMark Beteiligungs GmbH, FiberMark GmbH and Bayerische Hypo- and Vereinsbank
AG agree as follows:
ART. 1
AMENDMENT
1.1 The Pledgors and the Pledgee herewith confirm that by operation of law
the pledge of the shares in Steinbeis Gessner GmbH under the Share
Pledge Agreement continues in the shares of Fibermark Gessner GmbH &
Co. following the transformation of the former Steinbeis Gessner GmbH
into Fibermark Gessner GmbH & Co.
1.2 The security purpose of the Share Pledge Agreement shall be modified by
extending the meaning of Secured Liabilities as defined in the Share
Pledge Agreement as follows:
"Secured Liabilities" means all present and future obligations and
liabilities (whether actual or contingent and whether owed jointly or
severally or in any other capacity whatsoever) which are now or have
been or at any time after the date hereof may be or become by way of
novation or otherwise due, owing or incurred by the Borrower to the
Pledgee under the Loan Agreements.
All other terms and conditions of the Share Pledge Agreement shall
remain unchanged.
ARTICLE 2
NOTICES, LANGUAGE
2.1 Any correspondence, documentation and communication between the parties
to this Agreement shall be in writing, by mail, or by telefax; the
latter case requiring confirmation by mail.
<PAGE>
2.2 Without prejudice to any future change of address, all correspondence
from the Pledgors to the Pledgee shall be sent to the Pledgee at the
following address:
Bayerische Hypo- und Vereinsbank Aktiengesellschaft
Am Tucherpark 1/VTW 1
80536 Munchen
Attention: Mr. Rainer Heuschneider
Fax: +49-89-37825278
All correspondence from the Pledgee to the Pledgors shall be sent to
the following address:
FiberMark Beteiligungs GmbH
c/o FiberMark Gessner GmbH & Co.
Attention: Dr. Walter Haegler
Fax: +49-8062-703461
(with copy to Mr. Bruce Moore, Fax: +001-802-2575900)
FiberMark GmbH
c/o FiberMark Gessner GmbH & Co.
Weidacher Strasse 30
83620 Feldkirchen-Westerham
Attention: Dr. Walter Haegler
Fax: +49-8062-703461
(with copy to Mr. Bruce Moore, Fax: +001-802-2575900)
2.3 LANGUAGE
This Agreement is made in the English language. For the avoidance of
doubt, the English language version of this Agreement shall prevail
over any translation of this Agreement. However, where a German
translation of a word or phrase appears in the text of this Agreement,
the German translation of such word or Phrase shall prevail.
Any notice given under or in connection with this Agreement shall be in
the English language.
ART. 3
PARTIAL INVALIDITY
Should any provision of this Agreement be or become wholly or partly,
invalid, then the remaining provisions shall remain valid. Invalid
provisions shall be construed in accordance with the intent of the
parties and the purpose of this Agreement.
The Parties hereby agree to replace, to the extent possible, any
provision of this Agreement which is or becomes illegal or invalid with
a legal and valid provision which achieves to the fullest extent
possible the commercial intention of the Parties.
<PAGE>
ART. 4
MISCELLANEOUS
4.1 AMENDMENTS
Any alteration or amendment to this Agreement shall be in writing.
Verbal agreements shall have no legal effect.
4.2 GOVERNING LAW
The form and contents of this Agreement, as well as the rights and
obligations of the Pledgor and the Pledgee shall be construed according
to the laws of the Federal Republic of Germany in every respect.
4.3 JURISDICTION
The applicable place of jurisdiction for all disputes arising out of or
in connection with this Agreement shall be Munich. The Pledgee may
however, at its option, commence proceedings before any other competent
court of law in the Federal Republic of Germany and/or in any other
country in which assets of the Pledgors are situated. In the latter
case the laws of the Federal Republic of Germany shall, pursuant to
Art. 4.2, also be applicable.
4.4 COUNTERPARTS
This Agreement has been executed in the English language in 3 (three)
counterparts. One copy shall be provided to each of the Pledgors and to
the Pledgee. Each executed copy shall have the effect of an original.
<PAGE>
SEPTEMBER 15, 1999
FiberMark Beteiligungs GmbH
..........................................
FiberMark GmbH
..........................................
Bayerische Hypo- und Vereinsbank Aktiengesellschaft
..........................................
(in its capacity as Pledgee)
<PAGE>
EXHIBIT 10.5
THIRD AMENDED AND RESTATED
FINANCING AGREEMENT AND GUARANTY
AMONG
FIBERMARK, INC.
(as Guarantor)
FIBERMARK DURABLE SPECIALTIES, INC.,
FIBERMARK FILTER AND TECHNICAL PRODUCTS, INC.
AND
FIBERMARK OFFICE PRODUCTS, LLC
(as Borrowers and Guarantors)
THE CIT GROUP/BUSINESS CREDIT, INC.
THE CIT GROUP/EQUIPMENT FINANCING, INC.
SUCH OTHER LENDERS THAT MAY BECOME
SIGNATORY HERETO
(as Lenders)
and
THE CIT GROUP/BUSINESS CREDIT, INC.
(as Agent for the Lenders)
Dated as of September 30, 1999
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TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION.................6
SECTION 1.01. DEFINED TERMS...........................................................6
SECTION 1.02. COMPUTATION OF TIME PERIODS............................................31
SECTION 1.03. ACCOUNTING PRINCIPLES AND TERMS........................................31
SECTION 1.04. RULES OF CONSTRUCTION..................................................32
ARTICLE II. CONDITIONS PRECEDENT...................................................32
SECTION 2.01. CONDITIONS PRECEDENT TO INITIAL REVOLVING CREDIT LOAN..................32
SECTION 2.02. CONDITIONS PRECEDENT TO EACH REVOLVING CREDIT LOAN.....................35
SECTION 2.03. DEEMED REPRESENTATION..................................................36
ARTICLE III. AMOUNT AND TERMS OF THE REVOLVING CREDIT LOANS.........................36
SECTION 3.01. REVOLVING CREDIT LOANS.................................................36
SECTION 3.02. REVOLVING CREDIT NOTE..................................................37
SECTION 3.03. OVERADVANCES...........................................................37
SECTION 3.04. INFORMATION RELATING TO ACCOUNTS.......................................37
SECTION 3.05. REPRESENTATIONS RELATING TO ACCOUNTS...................................38
SECTION 3.06. COLLECTION OF ACCOUNTS.................................................38
SECTION 3.07. NOTICE REGARDING ACCOUNTS..............................................39
SECTION 3.08. BORROWERS'ACCOUNTS.....................................................40
SECTION 3.09. APPLICATION OF PAYMENTS................................................40
SECTION 3.10. PREPAYMENTS............................................................40
SECTION 3.11. FUNDING OF REVOLVING CREDIT LOANS......................................41
SECTION 3.12. NOTICE AND MANNER OF BORROWING.........................................41
SECTION 3.13. OBLIGATIONS OF AGENT AND LENDERS.......................................42
SECTION 3.14. MINIMUM AMOUNTS........................................................43
SECTION 3.15. USE OF PROCEEDS........................................................43
SECTION 3.16. TAXES..................................................................43
SECTION 3.17. ADDITIONAL COSTS.......................................................44
SECTION 3.18. LIMITATION ON TYPES OF REVOLVING CREDIT LOANS..........................45
SECTION 3.19. ILLEGALITY.............................................................46
SECTION 3.20. TREATMENT OF AFFECTED LOANS............................................46
SECTION 3.21. ADEQUACY...............................................................46
ARTICLE IV. GUARANTY...............................................................47
SECTION 4.01. FIBERMARK DURABLE GUARANTY.............................................47
SECTION 4.02. FIBERMARK DURABLE GUARANTORS' GUARANTY OBLIGATIONS UNCONDITIONAL.......47
SECTION 4.03. WAIVERS................................................................48
SECTION 4.04. SUBROGATION............................................................48
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SECTION 4.05. FIBERMARK FILTER GUARANTY..............................................49
SECTION 4.06. FIBERMARK FILTER GUARANTORS' GUARANTY OBLIGATIONS UNCONDITIONAL........49
SECTION 4.07. WAIVERS................................................................50
SECTION 4.08. SUBROGATION............................................................50
SECTION 4.09. FIBERMARK OFFICE GUARANTY..............................................50
SECTION 4.10. FIBERMARK OFFICE GUARANTORS' GUARANTY OBLIGATIONS UNCONDITIONAL........51
SECTION 4.11. WAIVERS................................................................52
SECTION 4.12. SUBROGATION............................................................52
SECTION 4.13. FIBERMARK GUARANTY.....................................................52
SECTION 4.14. FIBERMARK GUARANTORS' GUARANTY OBLIGATIONS UNCONDITIONAL...............52
SECTION 4.15. WAIVERS................................................................53
SECTION 4.16. SUBROGATION............................................................54
ARTICLE V. COLLATERAL.............................................................54
SECTION 5.01. (A) GRANT OF A SECURITY INTEREST BY FIBERMARK OFFICE..................54
SECTION 5.02. COVENANTS REGARDING INVENTORY..........................................56
SECTION 5.03. COVENANTS REGARDING EQUIPMENT..........................................57
SECTION 5.04. COLLATERAL COVENANT....................................................58
SECTION 5.05. COVENANTS REGARDING ACCOUNTS...........................................59
SECTION 5.06. CONTINUING SECURITY INTEREST...........................................59
SECTION 5.07. ACTIONS BY AGENT.......................................................60
SECTION 5.08. ADDITIONAL COLLATERAL AND FURTHER ASSURANCES...........................60
SECTION 5.09. ADDITIONAL INFORMATION.................................................61
SECTION 5.10. COMPLIANCE WITH FAIR LABOR STANDARDS ACT...............................61
ARTICLE VI. INTEREST, FEES AND EXPENSES............................................61
SECTION 6.01. METHOD OF ELECTING INTEREST RATES......................................61
SECTION 6.02. INTEREST...............................................................62
SECTION 6.03. FEES...................................................................63
SECTION 6.04. PAYMENTS AND COMPUTATIONS..............................................64
SECTION 6.05. CERTAIN COMPENSATION...................................................64
ARTICLE VII. POWERS.................................................................65
SECTION 7.01. POWERS.................................................................65
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES.........................................65
SECTION 8.01. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION.....................66
SECTION 8.02. CORPORATE POWER AND AUTHORITY; NO CONFLICTS............................66
SECTION 8.03. LEGALLY ENFORCEABLE AGREEMENTS.........................................66
SECTION 8.04. LITIGATION.............................................................66
SECTION 8.05. FINANCIAL STATEMENTS...................................................67
SECTION 8.06. OWNERSHIP AND LIENS; LOCATION OF INVENTORY AND EQUIPMENT...............67
SECTION 8.07. TAXES..................................................................68
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SECTION 8.08. ERISA..................................................................68
SECTION 8.09. SUBSIDIARIES...........................................................68
SECTION 8.10. OPERATION OF BUSINESS..................................................68
SECTION 8.11. NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS..........................69
SECTION 8.12. NO DEFAULTS ON OTHER AGREEMENTS........................................69
SECTION 8.13. LABOR DISPUTES AND ACTS OF GOD.........................................69
SECTION 8.14. GOVERNMENTAL REGULATION................................................69
SECTION 8.15. PARTNERSHIPS...........................................................69
SECTION 8.16. ENVIRONMENTAL PROTECTION...............................................69
SECTION 8.17. SOLVENCY...............................................................70
SECTION 8.18. INTELLECTUAL PROPERTY..................................................70
SECTION 8.19. LICENSE OF INTELLECTUAL PROPERTY.......................................71
SECTION 8.20. ENVIRONMENTAL COMPLIANCE...............................................71
SECTION 8.21. CPG MERGER AGREEMENT...................................................71
ARTICLE IX. AFFIRMATIVE COVENANTS..................................................71
SECTION 9.01. REPORTING REQUIREMENTS.................................................71
SECTION 9.02. NOTICES................................................................73
SECTION 9.03. PAYMENT OF TAXES AND CLAIMS............................................75
SECTION 9.04. MAINTENANCE OF EXISTENCE...............................................75
SECTION 9.05. CONDUCT OF BUSINESS....................................................75
SECTION 9.06. COMPLIANCE WITH LAWS...................................................75
SECTION 9.07. INSURANCE..............................................................75
SECTION 9.08. BOOKS AND RECORDS; INSPECTION..........................................79
SECTION 9.09. ERISA COVENANT.........................................................79
SECTION 9.10. INTERCOMPANY TRANSFER OF FUNDS.........................................80
SECTION 9.11. INVENTORY AND ACCOUNTS RECEIVABLE ANALYSIS OF ACQUIRED ENTITY..........80
SECTION 9.12. ACQUIRED ENTITIES......................................................80
SECTION 9.13. COMPLIANCE WITH ENVIRONMENTAL LAWS.....................................80
SECTION 9.14. APPRAISAL..............................................................81
ARTICLE X. NEGATIVE COVENANTS.....................................................81
SECTION 10.01. DEBT..................................................................81
SECTION 10.02. LIENS.................................................................81
SECTION 10.03. SALE OF ASSETS........................................................81
SECTION 10.04. PROHIBITION OF FUNDAMENTAL CHANGES....................................82
SECTION 10.05. INVESTMENTS...........................................................82
SECTION 10.06. TRANSACTION WITH AFFILIATES...........................................82
SECTION 10.07. NATURE OF BUSINESS....................................................82
SECTION 10.08. DIVIDENDS.............................................................82
SECTION 10.09. LEASES................................................................83
SECTION 10.10. ENVIRONMENTAL COMPLIANCE..............................................83
SECTION 10.11. FISCAL YEAR...........................................................83
SECTION 10.12. SUBSIDIARY STOCK ISSUANCE.............................................83
ARTICLE XI. FINANCIAL COVENANTS...................................................83
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SECTION 11.01. CONSOLIDATED NET WORTH................................................83
SECTION 11.02. CONSOLIDATED FIXED CHARGE COVERAGE RATIO..............................84
ARTICLE XII. EVENTS OF DEFAULT.....................................................84
SECTION 12.01. EVENTS OF DEFAULT.....................................................84
SECTION 12.02. ACCELERATION OF OBLIGATIONS...........................................87
SECTION 12.03. OTHER REMEDIES........................................................87
ARTICLE XIII. AGENCY................................................................89
SECTION 13.01. THE AGENT.............................................................89
SECTION 13.02. DELEGATION OF DUTIES..................................................89
SECTION 13.03. EXCULPATORY PROVISIONS................................................89
SECTION 13.04. RELIANCE BY AGENT.....................................................90
SECTION 13.05. NOTICE OF DEFAULT.....................................................90
SECTION 13.06. NON-RELIANCE ON AGENT AND OTHER LENDERS...............................90
SECTION 13.07. INDEMNIFICATION.......................................................91
SECTION 13.08. THE AGENT IN ITS INDIVIDUAL CAPACITY..................................91
SECTION 13.09. SUCCESSOR AGENT.......................................................91
SECTION 13.10. ARRANGEMENTS REQUIRING CONSENT OF LENDERS.............................91
SECTION 13.11. RECAPTURE OF PAYMENTS.................................................93
ARTICLE XIV. RIGHTS AND OBLIGATIONS OF THE LENDERS AND THE AGENT...................93
SECTION 14.01. ADJUSTMENTS AMONG LENDERS.............................................93
SECTION 14.02. SHARING OF PAYMENTS...................................................94
SECTION 14.03. SALE OF PARTICIPATIONS................................................94
SECTION 14.04. NATURE OF REVOLVING CREDIT COMMITMENTS................................94
SECTION 14.05. SHARING OF COSTS AND EXPENSES.........................................95
SECTION 14.06. SHARING OF PAYMENTS...................................................95
SECTION 14.07. ASSIGNMENTS...........................................................96
SECTION 14.08. ACKNOWLEDGEMENTS BY AGENT.............................................97
SECTION 14.09. TERMINATION OF FINANCING AGREEMENT....................................97
ARTICLE XV. MISCELLANEOUS.........................................................98
SECTION 15.01. WAIVERS...............................................................98
SECTION 15.02. ENTIRE AGREEMENT......................................................98
SECTION 15.03. WAIVER OF COVENANTS IN PREDECESSOR AGREEMENT..........................99
SECTION 15.04. USURY.................................................................99
SECTION 15.05. PAYMENT OF EXPENSES...................................................99
SECTION 15.06. INDEMNITY............................................................100
SECTION 15.07. SEVERABILITY.........................................................100
SECTION 15.08. WAIVER OF JURY TRIAL.................................................100
SECTION 15.09. NOTICES..............................................................101
SECTION 15.10. GOVERNING LAW........................................................102
SECTION 15.11. CONFIDENTIALITY......................................................103
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4
<PAGE>
THIRD AMENDED AND RESTATED FINANCING AGREEMENT AND GUARANTY DATED AS OF
SEPTEMBER 30, 1999, AMONG FiberMark, Inc. ("FiberMark"), a Delaware corporation,
FiberMark Durable Specialties, Inc. ("FiberMark Durable"), a Delaware
corporation, FiberMark Filter and Technical Products, Inc. ("FiberMark Filter"),
a Delaware corporation, and FiberMark Office Products, LLC ("FiberMark Office"),
a Vermont limited liability company, The CIT Group/Business Credit, Inc.
("CITBC"), a New York corporation, with offices located at 1211 Avenue of the
Americas, New York, New York, The CIT Group/Equipment Financing, Inc. ("CITEF,"
and together with CITBC, the "Initial Lenders"), a New York Corporation, with
offices located at 900 Ashwood Parkway, Atlanta, Georgia 30338, the other
lenders that may, subsequent to the date hereof, purchase from the Initial
Lenders a portion of their rights and obligations under this Third Amended and
Restated Financing Agreement and Guaranty pursuant to, and in accordance with,
Section 14.07 hereof (CITBC, CITEF and such other lenders each individually a
"Lender" and collectively the "Lenders"), and CITBC as agent for the Lenders (in
such capacity, together with its successors or assigns in such capacity, the
"Agent"). FiberMark Durable, FiberMark Filter and FiberMark Office are referred
to as a "Borrower" and collectively as the "Borrowers". FiberMark, FiberMark
Durable, FiberMark Filter and FiberMark Office and each Acquired Entity are
referred to herein as a "Guarantor" and collectively as the "Guarantors". The
Guarantors and the Borrowers are referred to herein collectively as the
"Obligors".
PRELIMINARY STATEMENTS
1. REFERENCE. Reference is made to the Second Amended and
Restated Financing Agreement and Guaranty dated December 31, 1996 among
Specialty Paperboard, Inc., Specialty Paperboard/Endura, Inc., CPG Investors,
Inc., CPG Holdings, Inc., CPG-Warren Glen Inc., Custom Papers Group Inc., Arcon
Holdings Corp., Arcon Coating Mills Inc., CITBC, each of the other Lenders
signatory thereto and CITBC, as Agent for the Lenders (the "December 1996
Agreement").
2. AMENDMENT AND RESTATEMENT. To the extent this Third Amended
and Restated Financing Agreement and Guaranty amends the December 1996
Agreement, the December 1996 Agreement is amended, and to the extent this Third
Amended and Restated Financing Agreement and Guaranty restates the December 1996
Agreement, the December 1996 Agreement is restated.
The Borrowers desire that the Lenders extend credit as
provided herein and the Lenders are prepared to extend such credit. Accordingly,
the Borrowers, the Guarantors, the Lenders and the Agent agree as follows:
5
<PAGE>
ARTICLE I. DEFINITIONS, ACCOUNTING TERMS AND RULES OF
CONSTRUCTION
Section 1.01. DEFINED TERMS. As used in this Third Amended and
Restated Financing Agreement and Guaranty the following terms have the following
meanings (terms defined in the singular to have the same meanings when used in
the plural and vice versa):
ACCOUNT DEBTOR means each Person obligated to pay on an
Account Receivable.
ACCOUNTS shall mean all of an Obligor's now existing and
future: (a) Accounts Receivable (whether or not specifically listed on schedules
furnished to the Agent), and any and all instruments, documents, contract
rights, chattel paper, investment property, rights to proceeds of letters of
credit, money and general intangibles, including, without limitation, all
accounts created by or arising from all of the Obligor's sales of goods or
rendition of services to its customers, (b) unpaid seller's rights (including
rescission, replevin, reclamation and stoppage in transit) relating to the
foregoing or arising therefrom; (c) rights to any goods represented by any of
the foregoing, including rights to returned or repossessed goods; (d) reserves
and credit balances arising hereunder; (e) guarantees or collateral for any of
the foregoing; (f) insurance policies or rights relating to any of the
foregoing; and (g) cash and non-cash proceeds of any and all the foregoing.
ACCOUNTS RECEIVABLE means any right to payment for goods sold
by or services rendered by an Obligor, including all accounts arising from sales
or rendition of services made under any of the Obligor's trade names or styles,
or through any of the Obligor's divisions; regardless of how such right is
evidenced, whether secured or unsecured, or now existing or hereafter arising.
ACQUIRED ENTITY shall mean (x) any Person acquired by any
Obligor hereunder by way of (i) the purchase of stock or assets of such Person
and all or a portion of the consideration paid for such stock or assets is paid
directly or indirectly with the proceeds of the Revolving Credit Loans or (ii)
consolidation or merger of such Person with or into any Obligor or (y) any
entity formed to acquire the assets or stock of another Person and all or a
portion of the consideration paid for such stock or assets is paid directly or
indirectly with the proceeds of the Revolving Credit Loans.
ACQUIRED INDEBTEDNESS means Indebtedness of a Person or any of
its Subsidiaries existing at the time such Person becomes a Subsidiary or at the
time it merges or consolidates with any Obligor or assumed in connection with
the acquisition of assets from such Person and in each case not incurred by such
Person in connection with, or in anticipation or contemplation of, such Person
becoming a Subsidiary or such acquisition, merger or consolidation.
ADDITIONAL COSTS shall have the meaning specified in Section
3.17.
6
<PAGE>
ADJUSTED TERMINATION DATE shall mean the date determined by
adding to the Closing Date the number of months calculated by multiplying (i)
the number of months elapsing from the Closing Date to September 30, 2002
(rounded downward to the nearest whole number of months) times (ii) a percentage
derived by dividing (x) the appraised value assigned in the Appraisal to the
Equipment by (y) Thirty Five Million Dollars (rounded downward to the nearest
whole number of months); PROVIDED that if such percentage is 100% or greater,
the Adjusted Termination Date shall be September 30, 2002.
AFFECTED LOANS shall have the meaning specified in Section
3.20.
AFFILIATE means with respect to any designated Person, any
Person which, directly or indirectly, controls or is controlled by or is under
common control with such designated Person. For purposes of this definition,
"control", "controlled by" and "under common control with", as used with respect
to any Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
AGENT means The CIT Group/Business Credit, Inc., or any
successor thereof, acting as agent for Lenders pursuant to this Financing
Agreement.
ANNIVERSARY DATE shall mean each September 30, commencing
September 30, 2000.
APPLICABLE LENDING OFFICE means, for each of the Lenders, the
lending office of such Lender (or of an Affiliate of such Lender) designated as
such for such Type of Loan on the signature page hereto or in the applicable
Assignment and Acceptance Agreement or such other office of such Lender (or of
an Affiliate of such Lender) as such Lender may from time to time specify to
Agent and the Borrower as the office by which its Revolving Credit Loans of such
Type are to be made and maintained.
APPLICABLE MARGIN means (a) with respect to the Chase
Manhattan Bank Rate one half percent (0.50%); and (b) with respect to the Libor
Rate two percent (2.00%).
APPRAISAL shall mean the appraisal, in form and substance
satisfactory to the Agent, conducted by an appraiser satisfactory to the Agent
and at Agent's expense, and appraising the Equipment on a "market value, in
place, in use" basis if sold in one year.
APPROVALS AND PERMITS means any permits, variance, permission,
authorization, consent, approval, license, franchise, ruling, permit, tariff,
rate, certification, exemption, or registration issued by any Governmental
Authority which
7
<PAGE>
is required to be obtained in accordance with applicable Law in connection with
the ownership, operation, construction, or maintenance of its property.
ASSIGNMENT AND ACCEPTANCE shall have the meaning ascribed to
such term in Section 14.07.
ASSIGNMENT OF CLAIMS ACT shall mean 31 United States Code
Annotated Section 3727 and all amendments and supplements thereto and all rules
and regulations promulgated thereunder.
AVAILABILITY shall mean the excess of
(a) the sum of
(i) ninety percent (90%) of the Eligible
Accounts Receivable of the Obligors, plus
(ii) sixty percent (60%) of the aggregate
value of Eligible Inventory of the Obligors, plus
(iii) Twenty Five Million Dollars
($25,000,000), over
(b) the outstanding aggregate amount of all outstanding
Obligations of all the Borrowers taken together.
BOARD OF DIRECTORS shall mean, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
BOARD OF GOVERNORS means the Board of Governors of the Federal
Reserve Bank or any entity succeeding to any or all of its functions.
BOARD RESOLUTION shall mean, with respect to any Person, a
copy of a resolution certified by the Secretary or an Assistant Secretary of
such Person to have been duly adopted by the Board of Directors of such Person
and to be in full force and effect on the date of such certification, and
delivered to the Agent.
BORROWING BASE means an amount equal to the sum of (a) ninety
percent (90%) of the Eligible Accounts Receivable, plus (b) sixty percent (60%)
of the aggregate value of Eligible Inventory, plus (c) Twenty Five Million
Dollars ($25,000,000).
BORROWING BASE CERTIFICATE means a Certificate substantially
in the form of Exhibit H, certified by an officer of FiberMark, with respect to
the Borrowing Base.
8
<PAGE>
BRATTLEBORO COLLATERAL shall mean all of FiberMark Office's
present and future right, title and interest in and to the Equipment and the
Real Estate, whether now owned or hereafter acquired; and, to the extent not
otherwise included, all proceeds and products of any and all of the foregoing,
in whatever form.
BUSINESS DAY shall mean (a) for all purposes other than those
covered by clause (b) below, any day that CITBC and The Chase Manhattan Bank are
open for business excluding Saturday, Sunday and any day that either is a legal
holiday under the laws of the State of New York or is a day on which banking
institutions located in such state are closed and (b) with respect to all
notices, determinations, fundings and payments in connection with the Libor
Rate, any date that is a Business Day as described in clause (a) above that is
also a day for trading by and between banks in dollar deposits in the applicable
interbank Libor market.
CAPITAL LEASE means any lease of property (real or personal or
mixed) which, in accordance with GAAP, would be required to be capitalized on a
balance sheet of the lessee.
CAPITALIZED LEASE OBLIGATIONS shall mean, as to any Person,
the obligations of such Person under a lease that are required to be classified
and accounted for as capital lease obligations under GAAP and, for purposes of
this definition, the amount of such obligation at any date shall be capitalized
amount of such obligations at such date, determined in accordance with GAAP.
CHASE MANHATTAN BANK RATE shall mean the rate of interest from
time to time announced by The Chase Manhattan Bank at its principal office in
the City of New York. (The prime rate is not intended to be the lowest rate of
interest charged by The Chase Manhattan Bank to its borrowers).
CHASE MANHATTAN BANK RATE LOANS shall mean all or any portion
of the Revolving Credit Loans for which any Borrower has elected to use the
Chase Manhattan Bank Rate for interest rate calculations.
CLOSING DATE means the date upon which the conditions set
forth in Section 2.01 shall have been fulfilled to the satisfaction of the
Agent.
CODE means The Internal Revenue Code of 1986, as thereafter
amended.
COLLATERAL shall mean, collectively, (i) all of each Obligor's
right, title and interest, whether now owned or hereafter acquired, in and to
all present and future Accounts and Inventory, wherever located, including all
rights under all permits granted in favor of FiberMark Office relating to its
facility in Brattleboro, Vermont; and, to the extent not otherwise included, all
proceeds and products of any and all of the foregoing, in whatever form; and
(ii) the Brattleboro Collateral.
9
<PAGE>
COLLATERAL MANAGEMENT FEE shall mean the sum of Thirty-Five
Thousand Dollars ($35,000) which shall be paid to the Agent for its own account
in accordance with Section 6.03 of this Financing Agreement to offset the
expenses and costs of the Agent in connection with record keeping, periodic
examinations, analyzing and evaluating the Collateral.
CONSOLIDATED AMORTIZATION OF DEFERRED BOOK GAIN shall mean the
amortization of the book gain realized from the sale of certain fixed assets to
CITEF in connection with the Lease Agreement, as recorded on the consolidated
financial statements of FiberMark and its Subsidiaries in accordance with GAAP.
CONSOLIDATED EBITDA shall mean, for any period, the sum
(without duplication) of (i) Consolidated Net Income and (ii) to the extent
Consolidated Net Income has been reduced thereby, (A) all income taxes of
FiberMark and its Subsidiaries paid or accrued in accordance with GAAP for such
period (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses or taxes attributable to sales or dispositions
outside the ordinary course of business), (B) Consolidated Interest Expense and
(C) Consolidated Non-cash Charges less any non-cash items increasing
Consolidated Net Income for such period, all as determined on a consolidated
basis for FiberMark and its Subsidiaries in accordance with GAAP.
CONSOLIDATED FIXED CHARGE COVERAGE RATIO shall mean the ratio
of (i) Consolidated EBITDA during the four full fiscal quarters (the "Four
Quarter Period") ending (A) for the purposes of Section 10.01, on or prior to
the date of the transaction giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio (the "Transaction Date"), or (B) for
purposes of Section 11.02, on any date during the term of this Financing
Agreement, to (ii) Consolidated Fixed Charges for the Four Quarter Period. In
addition to and without limitation of the foregoing, in determining the
Consolidated Fixed Charge Coverage Ratio for purposes of Section 10.01,
"Consolidated EBITDA" and "Consolidated Fixed Charges" shall be calculated after
giving effect on a pro forma (including any pro forma expense and cost
reductions calculated on a basis consistent with Regulation S-X under the
Securities Act of 1933, as amended) basis for the period of such calculation to
(1) the incurrence or repayment of any Indebtedness of FiberMark or any of its
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (2) any Asset
Sales (as defined in the Indenture) or Asset Acquisitions (as defined in the
Indenture) (including, without limitation, any Asset Acquisition giving rise to
the need to make such calculation as a result of FiberMark or one of its
Subsidiaries (including any Person who becomes an Acquired Entity as a result of
the Asset Acquisition) incurring, assuming or otherwise being liable for
Acquired Indebtedness and also including any Consolidated EBITDA attributable to
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the assets which are the subject of the Asset Acquisition or Asset Sale during
the Four Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period. If FiberMark or any of its
Subsidiaries directly or indirectly guarantee Indebtedness of a third Person,
the preceding sentence shall give effect to the incurrence of such guaranteed
Indebtedness as if FiberMark or any such Subsidiary had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of Section 10.01, in determining the
denominator (but not the numerator) of the "Consolidated Fixed Charge Coverage
Ratio", (I) interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal to
the rate of interest in such Indebtedness in effect on the Transaction Date;
(II) if interest on any Indebtedness actually incurred on the Transaction Date
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, an eurocurrency interbank offered rate, or other rates, then
the interest rate in effect on the Transaction Date will be deemed to have been
in effect during the Four Quarter Period; (III) notwithstanding clause (I)
above, interest on Indebtedness determined on a fluctuating basis, to the extent
such interest is covered by agreements relating to Interest Swap Obligations,
shall be deemed to accrue at the rate per annum resulting after giving effect to
the operation of such agreements, and (IV) there shall be added an amount equal
to the aggregate obligations with respect to all Operating Leases of the
Obligors in effect as of the Transaction Date (and, if applicable, after giving
effect to the Operating Lease being entered into) that are scheduled to become
due and payable within the twelve-month period commencing on the Transaction
Date.
CONSOLIDATED FIXED CHARGES shall mean, with respect to
FiberMark for any period, the sum, without duplication, of (i) Consolidated
Interest Expense, plus (ii) the product of (x) the amount of all dividend
payments on any series of Preferred Stock (as defined in the Indenture) of
FiberMark (other than dividends paid in Qualified Capital Stock paid, accrued or
scheduled to be paid or accrued during such period times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
CONSOLIDATED INTEREST EXPENSE shall mean, with respect to
FiberMark for any period, the sum of, without duplication: (i) the aggregate of
the interest expense of FiberMark and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount, (b) the net costs under
Interest Swap Obligations, (c) the capitalized interest and (d) the interest
portion of any deferred payment obligation; and (ii) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by FiberMark and its Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
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CONSOLIDATED NET INCOME shall mean, with respect to FiberMark,
for any period, the aggregate net income (or loss) of FiberMark and its
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; PROVIDED that there shall be excluded therefrom (a) after-tax gains
or losses from Asset Sales or abandonments or reserves relating thereto, (b)
after-tax items classified as extraordinary or nonrecurring gains or losses, (c)
the net income (or loss) of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Subsidiary or is merged or
consolidated with FiberMark or any Subsidiary, (d) the net income (but not loss)
of any Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by a contract,
operation of law or otherwise, (e) the net income of any Person, other than a
Subsidiary, except to the extent of cash dividends or distributions paid to
FiberMark or to a Subsidiary by such Person, (f) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued) and (g) in the case of a successor to FiberMark by consolidation
or merger or as a transferee of FiberMark's assets, any net income of the
successor corporation prior to such consolidation, merger or transfer of assets.
CONSOLIDATED NET WORTH shall mean, at any time, the excess of
Consolidated Total Assets over Consolidated Total Liabilities.
CONSOLIDATED NON-CASH CHARGES shall mean, with respect to
FiberMark, for any period, the aggregate depreciation, amortization and other
non-cash expenses of FiberMark and its Subsidiaries reducing Consolidated Net
Income of FiberMark for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
CONSOLIDATED TOTAL ASSETS shall mean, at any time, the total
assets of FiberMark and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
CONSOLIDATED TOTAL LIABILITIES shall mean, at any time, the
total liabilities of FiberMark and its Subsidiaries, on a consolidated basis,
determined in accordance with GAAP.
CONTINUE, CONTINUATION AND CONTINUED shall refer to the
continuation pursuant to Section 6.01 hereof of a Libor Rate Loan as a Libor
Rate Loan from one Libor Rate Period to the next Libor Rate Period.
CONVERT, CONVERSION AND CONVERTED shall refer to a conversion
pursuant to Section 6.01 hereof of Chase Manhattan Bank Rate Loans into Libor
Rate Loans or Libor Rate Loans into Chase Manhattan Bank Rate Loans, each of
which may be accompanied by the transfer by a Lender (at its sole discretion) of
a Loan from one Applicable Lending Office to another.
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CORPORATE OBLIGORS means each of FiberMark, FiberMark Durable
and FiberMark Filter.
CORPORATE REORGANIZATION shall mean the corporate
reorganization consummated in December, 1997 pursuant to which:
(a) the corporation formerly known as Specialty
Paperboard/Endura, Inc. and the corporation formerly known as Arcon Coating
Mills, Inc., a Delaware corporation, merged into the corporation formerly known
as Arcon Holdings, Inc, a Delaware corporation;
(b) the name of Arcon Holdings, Inc. was changed to FiberMark
Durable Specialties, Inc.;
(d) the corporation formerly known as Custom Papers Group,
Inc., a Virginia corporation, and the corporation formerly known as CPG
Warren-Glen, Inc., a Virginia corporation, merged into the corporation formerly
known as CPG Holdings, Inc., a Delaware corporation;
(e) subsequent to the mergers described in paragraph (d) of
this definition, CPG Holdings, Inc. was merged into the corporation formerly
known as CPG Investors, Inc., a Delaware corporation;
(f) the name of CPG Investors, Inc. was changed to FiberMark
Filter and Technical Products, Inc.; and
(g) FiberMark Office was formed as a Vermont limited liability
company with FiberMark as the sole member.
CUSTOMARILY PERMITTED LIENS shall mean:
(a) Liens of local, provincial, or state authorities for
franchise or other like taxes provided the aggregate amounts secured by such
Liens shall not exceed One Hundred Thousand Dollars ($100,000) in the aggregate
outstanding at any one time;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other like Liens imposed by Law,
created in the ordinary course of business and for amounts not yet due or which
are the subject of a Good Faith Contest;
(c) deposits made (and the Liens thereon) in the ordinary
course of business (including, without limitation, security deposits for leases,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, contracts (other than for the repayment or
guarantee of Indebtedness), statutory
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obligations and other similar obligations arising as a result of progress
payments under government contracts; and
(d) easements (including, without limitation, reciprocal
easement agreements and utility agreements), encroachments, minor defects or
irregularities in title, variation and other restrictions, charges or
encumbrances (whether or not recorded) affecting the Real Estate and which are
listed in Schedule B of the title insurance policy delivered to the Agent
herewith; PROVIDED, HOWEVER, that in no event shall any Environmental Lien be
deemed to be a Customarily Permitted Lien.
DEFAULT shall mean any event specified in Section 12.01
hereof, whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per
annum equal to the sum of: (a) four percent (4%) plus (b) the Chase Manhattan
Bank Rate, which the Agent shall be entitled to charge each Borrower on all
Obligations of such Borrower due the Lenders and not paid by such Borrower.
DEPOSITORY ACCOUNTS shall mean those accounts owned by, and in
the name of, the Agent and designated by the Agent for the deposit of proceeds
of Collateral.
DOCUMENTATION FEE shall mean (a) the sum intended to
compensate the Agent (for its own account) for the use of the Agent's internal
or outside counsel and facilities in documenting, in whole or in part, the
initial transaction solely on behalf of the Lenders, exclusive of Out-Of-Pocket
Expenses, which sum shall be included as part of the Loan Facility Fee due and
payable in accordance with Section 6.03 of this Financing Agreement, and (b) the
Agent's standard fees relating to any and all modifications, waivers, releases,
amendments or additional collateral with respect to this Financing Agreement,
the Collateral and/or the Obligations.
DOLLARS AND $ means lawful money of the United States of
America.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of
each Obligor's Accounts Receivable that conform to the warranties contained
herein and at all times continue to be acceptable to the Agent in the exercise
of its reasonable business judgment, less, without duplication, the sum of:
(a) any returns, discounts, claims, credits and allowances of
any nature (whether issued, owing, granted or outstanding); and
(b) reserves for:
(i) sales to the United States of America or to any
agency, department or division thereof except where assignment
of all resulting accounts receivable due or to become due
under a particular contract is
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made by any Obligor to the Agent and the Agent is satisfied
that all requirements for compliance with the Assignment of
Claims Act and/or other applicable statutes, rules, or
regulations have been fulfilled;
(ii) foreign sales other than sales (A) secured by
stand-by letters of credit (in form and substance satisfactory
to the Agent) issued or confirmed by, and payable at, banks
having a place of business in the United States of America and
payable in United States currency, (B) covered by policies of
foreign credit insurance that are in form and substance
satisfactory to the Agent and are issued by one or more
insurance carriers that are fully acceptable to the Agent, and
are assigned to the Agent with the Agent named as loss payee
thereunder or (C) to customers residing in Canada provided
such sales otherwise comply with all of the other criteria for
eligibility hereunder, are payable in U.S. Dollars and all
such sales do not exceed Seven Hundred Fifty Thousand Dollars
($750,000) in the aggregate at any one time;
(iii) accounts that remain unpaid more than ninety
(90) days from invoice date;
(iv) contras;
(v) sales to any Affiliate of an Obligor;
(vi) bill and hold (deferred shipment) or
consignment sales;
(vii) sales to any customer which is (w) insolvent,
(x) the debtor in any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any
federal or state law, (y) negotiating, or has called a meeting
of its creditors for purposes of negotiating, a compromise of
its debts or (z) in the Agent's reasonable business judgment,
financially unacceptable to the Agent or has a credit rating
unacceptable to the Agent;
(viii) all sales to any customer if fifty percent
(50%) or more of either (x) all outstanding invoices or (y)
the aggregate dollar amount of all outstanding invoices, are
unpaid more than ninety (90) days from invoice date;
(ix) any other reasons deemed necessary by the Agent
in its reasonable business judgment and which are customary
either in the commercial finance industry or in the lending
practices of the Agent or the Lenders; and
(x) an amount representing, historically, returns,
discounts, claims, credits and allowances.
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ELIGIBLE INVENTORY shall mean the gross amount of each
Obligor's Inventory that conforms to the warranties contained herein and which
at all times continues to be acceptable to the Agent in the exercise of its
reasonable business judgment, less any (i) work-in-process, (ii) supplies (other
than raw material), (ii) goods not present in the United States of America,
(iii) goods returned or rejected by the customers of such Obligor (other than
goods that are undamaged and resalable in the normal course of business), (iv)
goods to be returned to the suppliers of such Obligor, (v) goods in transit to
third parties (other than the agents or warehouses of such Obligor), (vi) goods
that are obsolescent, and (vii) goods, located at a place identified on Schedule
5.04 that is not one of the Excluded Premises, that are moved to one or more of
the Excluded Premises (unless they are returned to a place identified on
Schedule 5.04 that is not one of the Excluded Premises), and less any reserves
required by the Agent in its reasonable discretion for special order goods,
market value declines and bill and hold (deferred shipment) or consignment
sales; PROVIDED, HOWEVER, that (without limiting the requirement that Inventory,
to qualify as "Eligible Inventory", must satisfy each of the other components of
this definition) no Inventory located at premises that are subject to a
Warehouse Lease identified on Schedule 5.04 that is not included on Schedule
2.01 as of the Closing Date shall constitute "Eligible Inventory" until such
time as an appropriate landlord's waiver or warehouse acknowledgment is received
by Agent with respect to such premises.
EMPLOYEE BENEFIT PLAN means any plan, agreement, arrangement
or commitment which is an employee benefit plan, as defined in Section 3(3) of
ERISA, maintained by any Obligor, or any ERISA Affiliate or with respect to
which such Obligor, or any ERISA Affiliate at any relevant time has any
liability or obligation to contribute.
ENVIRONMENTAL DISCHARGE means any spill, emission, leaking,
pumping, injection, deposit, dispersal, leaching, migration, disposal, discharge
or release or threatened release of Hazardous Materials into the indoor or
outdoor environment or into or out of any property, including, without
limitation, the movement of Hazardous Materials through or in the air, soil,
surface water or groundwater.
ENVIRONMENTAL LAW means any applicable Law relating to human
health or safety or the environment and any terms and conditions of any
Approvals or Permits issued thereunder, including, without limitation, Laws
relating to noise or to Environmental Discharges or to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling or remediation of Hazardous Materials or to the transfer of
industrial or manufacturing facilities or property.
ENVIRONMENTAL LIEN means any Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by, such Governmental Authority in response to, an
Environmental Discharge.
ENVIRONMENTAL NOTICE means any written complaint, order,
claim, citation, letter, inquiry, notice or other written communication from any
Person
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(a) relating to any Obligor's compliance with or liability or potential
liability under any Environmental Law, (b) relating to the occurrence or
presence of or exposure to or possible or threatened or alleged occurrence or
presence of or exposure to Environmental Discharges or Hazardous Materials at,
to, or from any of Obligor's past, present or future locations or facilities or
Real Estate or at, to or from any other location or facility including, without
limitation: (i) the existence of any contamination or possible or threatened
contamination at any such location or facility or the Real Estate; and (ii)
Remedial Action in connection with any Environmental Discharge or Hazardous
Materials at any such location or facility or Real Estate or any part thereof;
or (c) relating to any violation or alleged violation of any Environmental Law
by any Obligor, the Real Estate, or any prior owner of operator of the Real
Estate.
EQUIPMENT shall mean all currently owned or hereafter acquired
interest of FiberMark Office in all machinery, equipment, furnishings and
fixtures, and all additions, substitutions and replacements thereof, now or at
any time hereafter located at the Real Estate (all of which shall continue to
constitute "Equipment", regardless of its removal from the Real Estate, unless
the Agent expressly releases its security interest therein), together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto and all proceeds and products of the foregoing, of whatever
sort.
ERISA means the Employee Retirement Income Security Act of
1974, as thereafter amended.
ERISA AFFILIATE means any entity required to be aggregated
with any Obligor under Section 414(b), (c), (m) or (o) of the Code.
EVENT(S) OF DEFAULT shall have the meaning provided for in
Section 12.01 of this Financing Agreement.
EXCLUDED PREMISES shall mean those premises (including
warehouses) (i) owned or leased by any Obligor, or occupied by any third-party
processor of Inventory of any Obligor, that are set forth on Schedule 2.01, as
amended by Agent from time to time to reflect Agent's receipt or non-receipt, or
the lapse or termination, of any landlord's waiver, warehouse acknowledgment,
third party processor acknowledgment or filing or other measure required to
create or maintain a first perfected security interest and Lien in favor of
Agent in the Collateral kept, stored or processed at the relevant location or
otherwise to protect Agent's and Lenders' interest therein; PROVIDED THAT any
location that is identified on Schedule 5.04 as a Warehouse Lease but is not
included on Schedule 2.01 as of the Closing Date will become an "Excluded
Premise" effective November 16, 1999, unless, on or before November 15, 1999,
Agent has received an appropriate landlord's waiver or warehouse acknowledgment
with respect to such location.
EXECUTIVE OFFICERS shall mean the Chairman, President, Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, Executive
Vice President(s), Senior Vice President(s), and Secretary of FiberMark.
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FACILITY FEE shall mean the fee payable by the Borrowers to
the Initial Lenders in the amount of One Hundred Twenty-Five Thousand Dollars
($125,000), which fee shall be deemed fully earned, nonrefundable and due on the
Closing Date.
FIBERMARK DURABLE GUARANTORS means each of FiberMark,
FiberMark Filter, FiberMark Office and each Acquired Entity.
FIBERMARK FILTER GUARANTORS means each of FiberMark, FiberMark
Durable, FiberMark Office and each Acquired Entity.
FIBERMARK GUARANTORS means each of FiberMark Durable,
FiberMark Filter and FiberMark Office.
FIBERMARK OFFICE GUARANTORS means each of FiberMark, FiberMark
Durable, FiberMark Filter and each Acquired Entity.
FIBERMARK DURABLE OBLIGATIONS shall mean all loans and
advances made or to be made by the Lenders or by the Agent on behalf of the
Lenders to FiberMark Durable or to others for FiberMark Durable's account; any
and all indebtedness and obligations which may at any time be owing by FiberMark
Durable to the Agent or the Lenders howsoever arising, whether now in existence
or incurred by FiberMark Durable from time to time hereafter; whether secured by
pledge, Lien upon or security interest in any of FiberMark Durable's assets or
property or the assets or property of any other person, firm, entity or
corporation; whether such indebtedness is absolute or contingent, joint or
several, matured or unmatured, direct or indirect and whether FiberMark Durable
is liable to the Lenders and/or the Agent for such indebtedness as principal,
surety, endorser, guarantor or otherwise. FiberMark Durable Obligations shall
also include indebtedness owing to the Lenders and/or the Agent by FiberMark
Durable under this Financing Agreement or under any other agreement or
arrangement now or hereafter entered into between FiberMark Durable and the
Lenders; indebtedness or obligations incurred by, or imposed on, the Lenders
and/or the Agent, as a result of environmental claims (other than as a result of
actions of the Lenders or the Agent) arising out of any FiberMark Durable's
operation, premises or waste disposal practices or sites; FiberMark Durable's
liability to the Lenders and/or the Agent as maker or endorser on any promissory
note or other instrument for the payment of money; FiberMark Durable's liability
to the Lenders and/or the Agent under any instrument of guaranty or indemnity,
or arising under any guaranty, endorsement or undertaking which the Lenders
and/or the Agent may make or issue to others for FiberMark Durable's account,
including any accommodation extended with respect to applications for letters of
credit, the Lenders' and/or the Agent's acceptance of drafts or the Lenders'
and/or the Agent's endorsement of notes or other instruments for FiberMark
Durable's account and benefit.
FIBERMARK FILTER OBLIGATIONS shall mean all loans and advances
made or to be made by the Lenders or by the Agent on behalf of the Lenders to
FiberMark Filter or to others for FiberMark Filter's account; any and all
indebtedness and
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obligations which may at any time be owing by FiberMark Filter to the Agent or
the Lenders howsoever arising, whether now in existence or incurred by FiberMark
Filter from time to time hereafter; whether secured by pledge, Lien upon or
security interest in any of FiberMark Filter's assets or property or the assets
or property of any other person, firm, entity or corporation; whether such
indebtedness is absolute or contingent, joint or several, matured or unmatured,
direct or indirect and whether FiberMark Filter is liable to the Lenders and/or
the Agent for such indebtedness as principal, surety, endorser, guarantor or
otherwise. FiberMark Filter Obligations shall also include indebtedness owing to
the Lenders and/or the Agent by FiberMark Filter under this Financing Agreement
or under any other agreement or arrangement now or hereafter entered into
between FiberMark Filter and the Lenders; indebtedness or obligations incurred
by, or imposed on, the Lenders and/or the Agent, as a result of environmental
claims (other than as a result of actions of the Lenders or the Agent) arising
out of any FiberMark Filter's operation, premises or waste disposal practices or
sites; FiberMark Filter's liability to the Lenders and/or the Agent as maker or
endorser on any promissory note or other instrument for the payment of money;
FiberMark Filter's liability to the Lenders and/or the Agent under any
instrument of guaranty or indemnity, or arising under any guaranty, endorsement
or undertaking which the Lenders and/or the Agent may make or issue to others
for FiberMark Filter's account, including any accommodation extended with
respect to applications for letters of credit, the Lenders' and/or the Agent's
acceptance of drafts or the Lenders' and/or the Agent's endorsement of notes or
other instruments for FiberMark Filter's account and benefit.
FIBERMARK OBLIGATIONS shall mean all loans and advances made
or to be made by the Lenders or by the Agent on behalf of the Lenders to
FiberMark or to others for FiberMark's account; any and all indebtedness and
obligations which may at any time be owing by FiberMark to the Agent or the
Lenders howsoever arising, whether now in existence or incurred by FiberMark
from time to time hereafter; whether secured by pledge, Lien upon or security
interest in any of FiberMark's assets or property or the assets or property of
any other person, firm, entity or corporation; whether such indebtedness is
absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether FiberMark is liable to the Lenders and/or the Agent for
such indebtedness as principal, surety, endorser, guarantor or otherwise.
FiberMark Obligations shall also include indebtedness owing to the Lenders
and/or the Agent by FiberMark under this Financing Agreement or under any other
agreement or arrangement now or hereafter entered into between FiberMark and the
Lenders; indebtedness or obligations incurred by, or imposed on, the Lenders
and/or the Agent, as a result of environmental claims (other than as a result of
actions of the Lenders or the Agent) arising out of any FiberMark's operation,
premises or waste disposal practices or sites; FiberMark's liability to the
Lenders and/or the Agent as maker or endorser on any promissory note or other
instrument for the payment of money; FiberMark's liability to the Lenders and/or
the Agent under any instrument of guaranty or indemnity, or arising under any
guaranty, endorsement or undertaking which the Lenders and/or the Agent may make
or issue to others for FiberMark's account, including any accommodation extended
with respect to applications for letters of credit, the Lenders' and/or the
Agent's acceptance of drafts or the Lenders' and/or the
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Agent's endorsement of notes or other instruments for FiberMark's account and
benefit.
FIBERMARK OFFICE OBLIGATIONS shall mean all loans and advances
made or to be made by the Lenders or by the Agent on behalf of the Lenders to
FiberMark Office or to others for FiberMark Office's account; any and all
indebtedness and obligations which may at any time be owing by FiberMark Office
to the Agent or the Lenders howsoever arising, whether now in existence or
incurred by FiberMark Office from time to time hereafter; whether secured by
pledge, Lien upon or security interest in any of FiberMark Office's assets or
property or the assets or property of any other person, firm, entity or
corporation; whether such indebtedness is absolute or contingent, joint or
several, matured or unmatured, direct or indirect and whether FiberMark Office
is liable to the Lenders and/or the Agent for such indebtedness as principal,
surety, endorser, guarantor or otherwise. FiberMark Office Obligations shall
also include indebtedness owing to the Lenders and/or the Agent by FiberMark
Office under this Financing Agreement or under any other agreement or
arrangement now or hereafter entered into between FiberMark Office and the
Lenders; indebtedness or obligations incurred by, or imposed on, the Lenders
and/or the Agent, as a result of environmental claims (other than as a result of
actions of the Lenders or the Agent) arising out of any FiberMark Office's
operation, premises or waste disposal practices or sites; FiberMark Office's
liability to the Lenders and/or the Agent as maker or endorser on any promissory
note or other instrument for the payment of money; FiberMark Office's liability
to the Lenders and/or the Agent under any instrument of guaranty or indemnity,
or arising under any guaranty, endorsement or undertaking which the Lenders
and/or the Agent may make or issue to others for FiberMark Office's account,
including any accommodation extended with respect to applications for letters of
credit, the Lenders' and/or the Agent's acceptance of drafts or the Lenders'
and/or the Agent's endorsement of notes or other instruments for FiberMark
Office's account and benefit.
FINANCING AGREEMENT means this Third Amended and Restated
Financing Agreement and Guaranty.
FISCAL YEAR shall mean each period from January 1 to December
31.
GAAP shall mean generally accepted accounting principles in
the United States of America as in effect from time to time and for the period
as to which such accounting principles are to apply.
GOOD FAITH CONTEST means the contest of an item if: (a) the
item is diligently contested in good faith by appropriate proceedings timely
instituted; (b) adequate reserves are established with respect to the contested
item; (c) during the period of such contest, the enforcement of the contested
item is effectively stayed; and (d) the failure to pay or comply with the
contested item during the period of such contest could not result in a Material
Adverse Change.
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<PAGE>
GOVERNMENTAL AUTHORITY means any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
GUARANTORS means all of FiberMark, FiberMark Durable,
FiberMark Filter, FiberMark Office and each Acquired Entity.
GUARANTY OBLIGATIONS shall mean, all obligations of any
Guarantor as guarantor of the obligations of a Borrower or other Guarantor under
this Financing Agreement. Guarantor Obligations shall also include indebtedness
owing to the Lenders and/or the Agent by any Guarantor under this Financing
Agreement or under any other agreement or arrangement now or hereafter entered
into between such Guarantor and the Lenders.
HAZARDOUS MATERIALS means any pollutants, contaminants, toxic
or hazardous substances or wastes, chemicals, radioactive material, medical
wastes or special waste, including, without limitation, asbestos fibers and
friable asbestos, polychlorinated biphenyls, and petroleum or hydrocarbon-based
products, derivatives wastes, or breakdown, constituent or decomposition
products thereof.
INDEBTEDNESS shall mean at any date:
(a) indebtedness or liability for borrowed money, or for the
deferred purchase price of property or services (including trade obligations);
(b) obligations as lessee under Capital Leases (and, for
purposes of determining whether any Obligor may enter into an Operating Lease,
obligations as lessee under Operating Leases);
(c) reimbursement obligations under letters of credit issued
for the account of any Person;
(d) all reimbursement obligations arising under bankers' or
trade acceptances;
(e) all guarantees, endorsements (other than for collection or
deposit in the ordinary course of business), and other contingent obligations to
purchase any of the items included in this definition, to provide funds for
payment, to supply funds to invest in any Person, or otherwise to assure a
creditor against loss;
(f) all obligations secured by any Lien on property owned by
such Person, whether or not the obligations have been assumed; and
(g) all obligations under any agreement providing for a swap,
ceiling rates, ceiling and floor rates, contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described in this definition.
21
<PAGE>
INDENTURE means the Indenture dated as of October 15, 1996
among FiberMark, Inc. (formerly known as Specialty Paperboard, Inc.), the
Guarantors (as defined therein) and the Trustee (as defined therein) pursuant to
which the Senior Notes are issued, as amended, modified or supplemented from
time to time.
INITIAL LENDERS means CITBC and CITEF.
INSOLVENCY means, at any particular time, a Multiemployer Plan
is insolvent within the meaning of Section 4245 of ERISA.
INTEREST SWAP OBLIGATIONS means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
INVENTORY of an Obligor shall mean all of such Obligor's
currently owned or hereafter acquired interests in all merchandise, inventory
and goods held for sale or lease or to be furnished under contracts of service,
and all additions, substitutions and replacements thereof, wherever located,
together with all goods and materials used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production- from raw
materials through work-in-process to finished goods - and all proceeds and
products of the foregoing, of whatever sort.
LAW means any treaty, foreign, federal, state or local
statute, law, rule, regulation, ordinance, order, code, policy, or rule of
common law, now or hereafter in effect, and in each case as amended, and any
judicial or administrative interpretation thereof by a Governmental Authority or
otherwise, including any judicial or administrative order, consent decree or
judgment.
LEASE AGREEMENT shall mean that certain Lease Agreement by and
between Specialty Paperboard, Inc., as lessee and the CIT Group/Equipment
Financing, Inc., as lessor, dated as of April 29, 1994, and as further amended
and supplemented by that certain First Amendment to Lease Agreement dated as of
September 29, 1995, as further amended and supplemented by that certain Second
Amendment to Lease Agreement dated as of December 29, 1995, as otherwise
amended, modified and supplemented from time to time, and as assigned and
assumed pursuant to the Assignment and Assumption Agreement - NY, dated as of
December 31, 1997, by and between FiberMark and FiberMark Office.
LENDER(S) shall mean CITBC, CITEF each Assignee which becomes
a Lender pursuant to Section 14.07 hereof, and their respective successors.
LENDER LOAN COMMITMENT shall mean, with respect to each
Lender's making of the Revolving Credit Loans, the obligation of such Lender to
make
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<PAGE>
Revolving Credit Loans under this Financing Agreement up to the aggregate
principal amount outstanding at any time equal to the sum of its Revolving
Credit Commitment and its Pro Rata Share of the Overadvance Availability.
LENDER PARTY shall mean the Agent and each of the Lenders.
LIBOR PERIOD shall mean a thirty (30) day, sixty (60) day, or
ninety (90) day interest period with respect to Libor Rate Loans, as selected by
a Borrower.
LIBOR RATE shall mean, at any time of determination, the then
highest prevailing London Interbank Offered Rate paid in London on thirty (30)
day, sixty (60) day, or ninety (90) day dollar deposits from other banks as
published two (2) days prior to the commencement of the applicable interest
period, under "Money Rate," in the New York City edition of The Wall Street
Journal or if there is no such publication or statement therein as to a Libor
Rate, then in any publication used in the New York City financial community
which was published two (2) days prior to the commencement of the applicable
interest period.
LIBOR RATE LOANS shall mean that portion of the Revolving
Credit Loans with respect to which a Borrower has elected to use the Libor Rate
for the interest rate calculations.
LIBOR RATE PREPAYMENT PREMIUM shall mean, for any payment of
principal of any Libor Rate Loan prior to the end of an applicable interest
period, an amount computed pursuant to the following formula:
(R - T) x P x D
---------------
360
R = interest rate applicable to the Libor Rate Loan
T = effective interest rate per annum at which any readily
marketable bonds or other obligations of the United States,
selected at the Agent's sole discretion, maturing on or near
the last day of the then applicable interest period for such
Libor Rate Loan and in approximately the same principal amount
as such Libor Rate Loan, can be purchased by the Agent on the
day of such prepayment of principal
P = the amount of principal prepaid
D = the number of days remaining in the Libor Period as of the
date of such prepayment
The applicable Borrower shall pay such amount within five (5) business
days of presentation by the Agent to such Borrower of a statement
setting forth the amount and the Agent's calculation thereof pursuant
hereto, which statement shall be conclusive on such Borrower absent
manifest error.
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<PAGE>
LIEN means any mortgage, pledge, hypothecation, security
interest, collateral assignment, Lien (statutory or other), or other security
interest or encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction (except any such filing
that is expired or that relates to an operating lease)).
LOAN DOCUMENTS shall mean each of this Financing Agreement,
the Revolving Credit Notes, and the Security Documents.
MATERIAL ADVERSE CHANGE means (a) a material adverse change in
the status of the business, results of operations, condition (financial or
otherwise), prospects, profitability, assets, operations, or property of an
Obligor, or (b) any event or occurrence of whatever nature which could have a
material adverse effect on an Obligor's ability to perform its obligations under
the Loan Documents.
MOODY'S means Moody's Investors Service, Inc. and any
successor thereto which provides credit ratings.
MORTGAGE shall mean, collectively, the Mortgage Agreement(s),
in form and substance satisfactory to the Agent, between FiberMark Office and
the Agent pursuant to which FiberMark Office grants to the Agent or to the
Agent's designee for the ratable benefit of the Lenders, a first mortgage in the
Real Estate to secure the Obligations.
NON-EXCLUDED TAXES shall have the meaning specified in Section
3.16.
NOTICE OF BORROWING shall mean a Revolving Credit Notice of
Borrowing.
OBLIGATIONS shall mean collectively the FiberMark Obligations,
FiberMark Durable Obligations, FiberMark Filter Obligations and FiberMark Office
Obligations.
OBLIGORS means all of FiberMark, FiberMark Durable, FiberMark
Filter, FiberMark Office and each Acquired Entity.
OFFICER'S CERTIFICATE shall mean a certificate signed in the
name of each Obligor by (i) with respect to FiberMark, FiberMark Filter and
FiberMark Durable, its President, Vice President, Controller or Treasurer and
(ii) with respect to FiberMark Office, FiberMark (by FiberMark's President, Vice
President, Controller or Treasurer).
OPERATING LEASES shall mean all leases of property (whether
real, personal or mixed) other than Capital Leases.
OTHER TAXES shall have the meaning specified in Section 3.16.
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<PAGE>
OUT-OF-POCKET EXPENSES shall mean all of the Lenders' and the
Agent's present and future expenses incurred relative to this Financing
Agreement, whether incurred heretofore or hereafter, which expenses shall
include, without being limited to, the cost of record searches, all costs and
expenses incurred by the Agent in opening bank accounts, depositing checks,
receiving and transferring funds, and any charges imposed on the Agent due to
"insufficient funds" of deposited checks and the Agent's standard fee relating
thereto, local counsel fees, title insurance premiums, real estate survey costs,
fees and taxes relative to the filing of financing statements, costs of
preparing and recording mortgages/deeds of trust against the Real Estate and all
expenses, costs and fees set forth in Section 3.17 of this Financing Agreement.
OVERADVANCE shall have the meaning specified in Section 3.03.
OVERADVANCE AVAILABILITY has the meaning specified in Section
3.03.
PBGC means Pension Benefit Guaranty Corporation.
PENSION PLAN means any Employee Benefit Plan which is an
employee pension benefit plan as defined in Section 3(2) of ERISA.
PERMITTED ENCUMBRANCES shall mean:
(a) Liens expressly permitted, or consented to, by the Agent;
(b) Purchase Money Liens;
(c) Customarily Permitted Liens;
(d) Liens granted the Agent by an Obligor;
(e) Liens of judgment creditors provided such Liens do not
exceed, in the aggregate, at any time, Two Hundred Fifty Thousand Dollars
($250,000) (other than Liens bonded or insured to the reasonable satisfaction of
the Agent);
(f) Liens for taxes not yet due and payable or which are the
subject of a Good Faith Contest and which Liens are not x) other than with
respect to Real Estate, senior to the Liens of the Agent or y) for taxes due the
United States of America; PROVIDED, HOWEVER, that in no event shall any
Environmental Lien be deemed to be a Permitted Encumbrance;
(g) Liens granted by any Obligor on any of its assets other
than (i) the Brattleboro Collateral, (ii) each Obligor's Accounts and (iii) each
Obligor's Inventory.
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<PAGE>
PERMITTED INDEBTEDNESS shall mean:
(a) Indebtedness incurred in the ordinary course of business
for raw materials, supplies, property, equipment, services, taxes or labor or
otherwise;
(b) Indebtedness secured by Purchase Money Liens;
(c) Indebtedness of FiberMark which is subordinated to the
prior payment and satisfaction of FiberMark's Obligations to the Lenders by
means of a subordination agreement or similar instrument, in each case in form
and substance satisfactory to the Lenders;
(d) deferred taxes and other expenses incurred in the ordinary
course of business;
(e) Indebtedness existing on the date of execution of this
Financing Agreement and listed in the most recent financial statement delivered
to the Lenders or otherwise disclosed to the Lenders in writing on or prior to
the date of execution of this Financing Agreement; and
(f) the Senior Notes.
PERMITTED INVESTMENTS means:
(a) direct obligations of the United States of America or any
agency thereof backed by the full faith and credit of the United States of
America with maturities of one (1) year or less from the date of acquisition;
(b) commercial paper with maturities of two hundred seventy
(270) days or less of (a) a Lender or any parent of a Lender, or (b) a domestic
issuer rated at least "P-1" by Moody's or "A-1" by S&P; and
(c) certificates of deposit with maturities of one (1) year or
less from the date of acquisition issued by (i) any Lender, or (ii) any
commercial bank operating within the United States of America whose outstanding
long-term debt is rated at least "A" by Moody's or "A" by S&P.
PERSON means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
PREDECESSOR AGREEMENT means the Second Amended and Restated
Financing Agreement and Guaranty, dated as of December 31, 1996, among Specialty
Paperboard, Inc., as borrower, Specialty Paperboard/Endura, Inc., CPG Investors
Inc., CPG Holdings, Inc., CPG-Warren Glen Inc., Custom Papers Group Inc., Arcon
Holdings Corp., and Arcon Coating Mills Inc., CITBC, the other lenders, if any,
that
26
<PAGE>
subsequent to the date thereof, purchased from CITBC a portion of its rights and
obligations thereunder pursuant to, and in accordance with, Section 14.07
thereof, and CITBC as agent for the lenders.
PREPAYMENT FEE shall mean the fee payable to the Agent for the
ratable benefit of the Lenders in accordance with, and pursuant to, the
provisions of Section 6.03 of this Financing Agreement.
PRO RATA SHARE means, for purposes of this Financing Agreement
and with respect to each Lender, in the case of the Revolving Credit Loans and
the Unused Line Fees and the Overadvances, a fraction, the numerator of which is
such Lender's Revolving Credit Commitment and the denominator of which is the
total of all the Lenders' Revolving Credit Commitments.
PURCHASE MONEY LIENS shall mean Liens on any item of equipment
acquired by an Obligor after the Closing Date, PROVIDED that (a) each such Lien
shall attach only to the property to be acquired, (b) a description of the
property so acquired is furnished to the Agent, and (c) the debt incurred in
connection with such acquisitions shall not exceed, in the aggregate for all
Obligors, Five Hundred Thousand Dollars ($500,000) in any Fiscal Year.
QUALIFIED CAPITAL STOCK shall mean capital stock other than
any capital stock that, by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the happening of any
event, (i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or (ii) is redeemable at the sole option of the holder
thereof on or prior to the later of (A) the final maturity date of the
Securities (as defined in the Indenture) or (b) the Revolving Credit Commitment
Termination Date then in effect.
QUARTERLY PAYMENT DATE means each March 31, June 30, September
30 and December 31.
REAL ESTATE shall mean the fee and/or leasehold interests in
the real property of FiberMark Office located at Brattleboro, Vermont.
REGULATORY CHANGE means, with respect to any Lender, any
change after December 31, 1996 in United States federal, state, municipal or
foreign Laws (including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests applying to a class of banks
including such Lender of or under any United States, federal, state, municipal
or foreign Laws or regulations (whether or not having the force of Law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
REMEDIAL ACTION means action required to (a) clean up, remove,
treat or in any other way address Hazardous Materials in the indoor or outdoor
environment; (b) prevent an Environmental Discharge or minimize any further
Environmental Discharge; or (c) investigate and determine if a remedial response
is needed, design
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<PAGE>
such a response or conduct post-remedial investigation, monitoring operation,
maintenance or care.
REORGANIZATION means with respect to any Multiemployer Plan,
the condition that such plan is in reorganization within the meaning of such
term as used in Section 4241 of ERISA.
REPORTABLE EVENT means an event described in Section 4043(b)
of ERISA or in the regulations thereunder (other than those events as to which
the thirty (30) day notice period is waived under Subsections .13, .14, .15,
.18, .19 or .20 of PBGC Regulation Section 2615).
REQUIRED LENDERS shall mean, on the date calculation of
Required Lenders is made, the Lenders having Revolving Credit Commitments to
lend at least sixty six and two thirds percent (66 2/3%) of the Revolving Credit
Loans hereunder; PROVIDED that for so long as there are only two Lenders (each
of them an Initial Lender or an assignee of the entire Pro Rata Share of the
Revolving Credit Facility initially owned by one of the Initial Lenders), each
of which has a 50% Pro Rata Share, REQUIRED LENDERS shall mean CITBC and any
assignee of CITBC's entire Pro Rata Share of the Revolving Credit Facility.
RESTRICTED PAYMENT shall mean (a) any dividend or distribution
(other than dividends or distributions payable in Qualified Capital Stock of
FiberMark or to an Obligor) on or in respect of shares of an Obligor's capital
stock to holders of such capital stock, (b) purchase, redemption, or other
acquisition or retirement for value of any capital stock of an Obligor or any
warrants, rights or options to purchase or acquire shares of any class of such
capital stock (other than from another Obligor), or (c) loan or advance to any
Person or purchase or other acquisition of any capital stock, assets,
obligations or other securities of, or any capital contribution to, or other
investment, or acquisition of any interest, in, any Person (other than Permitted
Investments or investments effected pursuant to Section 9.10).
RESTRICTED PAYMENT CONDITIONS shall mean, with respect to any
proposed Restricted Payment, that (a) both at the time of such Restricted
Payment and immediately after giving effect thereto, (i) no Default or Event of
Default shall have occurred and be continuing; (ii) the Company is able to incur
at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 10.01, and (iii) the aggregate amount of Restricted
Payments (including such proposed Restricted Payment) made subsequent to October
15, 1996 (the amount expended for such purposes, if other than in cash, being
the fair market value of such property as determined reasonably and in good
faith by the Board of Directors of the FiberMark) does not exceed the sum of:
(A) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated
Net Income shall be a loss, minus 100% of such loss) of FiberMark subsequent to
October 15, 1996 and on or prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single accounting period); plus (B)
100% of the aggregate net cash proceeds received by FiberMark from any Person
(other than a Subsidiary of
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<PAGE>
FiberMark) from the issuance and sale subsequent to October 15, 1996 and on or
prior to the Reference Date of Qualified Capital Stock of FiberMark; plus (C)
without duplication of any amounts included in clause (iii)(B) above, 100% of
the aggregate net cash proceeds of any equity contribution received by FiberMark
from a holder of FiberMark's capital stock (excluding, in the case of clauses
(iii)(B) and (C), any net cash proceeds from a Public Equity Offering (as
defined in the Indenture) to the extent used to redeem the Securities (as
defined in the Indenture); and (b) after giving effect to such proposed
Restricted Payment, there remains at least $10,000,000 of Availability.
REVOLVING CREDIT COMMITMENT shall mean, subject to the effect
of any assignment pursuant to Section 14.07, for each Lender, the amount set
forth opposite its name below:
<TABLE>
<CAPTION>
===================== ==================== ======================
Pro Rata Share of
Revolving Credit Amount of Revolving
Lender Facility Credit Commitment
- --------------------- -------------------- ----------------------
<S> <C> <C>
CITBC 50% $25,000,000
CITEF 50% $25,000,000
===================== ==================== ======================
</TABLE>
REVOLVING CREDIT COMMITMENT TERMINATION DATE shall mean the
earlier of (i) September 30, 2002 and (ii) the Adjusted Termination Date;
PROVIDED, HOWEVER, the Borrowers and the Lenders agree that such date shall be
automatically extended for an additional year on such date or on each subsequent
anniversary date thereof unless and until at least sixty (60) days prior to any
such date Borrowers or the Lenders shall have given the other notice in writing
that such date shall not be so extended.
REVOLVING CREDIT FACILITY shall mean Fifty Million Dollars
($50,000,000).
REVOLVING CREDIT LIMIT has the meaning specified in Section
3.01.
REVOLVING CREDIT LOANS shall have the meaning specified in
Section 3.01.
REVOLVING CREDIT NOTE shall have the meaning specified in
Section 3.02.
REVOLVING CREDIT NOTICE OF BORROWING shall have the meaning
specified in Section 3.12.
S&P means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. or any successor thereto which provides credit ratings.
SECURITY DOCUMENTS means the Mortgage and any other security
agreement granting a Lien on any assets of an Obligor to secure such Obligor's
Obligations.
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<PAGE>
EXHIBIT 10.6
TERMINATION AND RELEASE AGREEMENT
TERMINATION AND RELEASE AGREEMENT ("Termination Agreement"),
dated as of September _, 1999, among FiberMark Office Products, LLC, a Vermont
limited liability company ("FiberMark Office"); FiberMark, Inc., a Delaware
corporation formerly known as "Specialty Paperboard, Inc." ("FiberMark", and
references herein to "Specialty Fiberboard", used for convenience in referring
to certain documents entered into by FiberMark under that name, shall be
references to FiberMark); FiberMark Durable Specialties, Inc. a Delaware
Corporation formerly known as" Arcon Holdings, Inc." ("FiberMark Durable");
FiberMark Filter and Technical Products, Inc., a Delaware corporation formerly
known as "CPG Investors, Inc." ("FiberMark Filter"); and The CIT Group/Equipment
Financing, Inc., a New York corporation ("CITEF").
PRELIMINARY STATEMENTS.
1. Reference is made to each of the following
(i) the Assignment and Assumption Agreement - NY, dated as of
December 31, 1997, by and between FiberMark and FiberMark Office (as amended,
modified or otherwise supplemented to date, the "Assignment and Assumption -
NY"), pursuant to which FiberMark assigned to FiberMark Office, and FiberMark
Office assumed the obligations of FiberMark under, the Lease Agreement, the
Lessee Security Agreement and the Support Agreement (each as defined below).
(ii) the Assignment and Assumption Agreement - VT, dated as of
December 31, 1997, by and between FiberMark and FiberMark Office (as amended,
modified or otherwise supplemented to date, the "Assignment and Assumption -
VT"), pursuant to which FiberMark assigned to FiberMark Office, and FiberMark
Office assumed the obligations of FiberMark under, the Premises Lease and the
Premises Sublease (each as defined below).
(iii) the Lease Agreement, dated as of April 29, 1994, by and
between Specialty Paperboard as lessee and CITEF as lessor, as amended and
supplemented by that certain Lease Supplement No. 1., dated as of April 29,
1994, and as further amended and supplemented by that certain First Amendment to
Lease Agreement dated as of September 29, 1995, as further amended and
supplemented by that certain Second Amendment to Lease Agreement dated as of
December 29, 1995 (as so amended and supplemented, as further amended, modified
or otherwise supplemented to date, and as assigned to, and assumed by, FiberMark
Office pursuant to the Assignment and Assumption - NY, the "Lease Agreement"),
pursuant to which CITEF acquired all of Specialty Paperboard's right, title and
interest in the Equipment (as defined in the Lease Agreement) and is leasing the
Equipment to FiberMark Office (the "Lease");
<PAGE>
(iv) the Guaranty, dated as of December 31, 1996, initially
among CITEF, Specialty Paperboard/Endura, Inc., CPG Investors Inc., CPG
Holdings, Inc., CPG-Warren Glen Inc., Custom Papers Group, Inc., Arcon Holdings
Corp. and Arcon Coating Mills, Inc (as amended, modified or otherwise
supplemented to date, the "Guaranty"), pursuant to which each of the foregoing
entities (individually an "Original Guarantor" and collectively the "Original
Guarantors") guaranteed to CITEF the payment and performance of the obligations
of the Lessee (as defined in the Lease Agreement) under the Lease Agreement;
(v) the Amended and Restated Security Agreement, dated as of
December 31, 1996, between Specialty Paperboard and CITEF (as amended, modified
or supplemented to date, and as assigned to, and assumed by, FiberMark Office
pursuant to the Assignment and Assumption - NY, the "Lessee Security
Agreement"), pursuant to which Specialty Paperboard granted to CITEF a security
interest in all of Specialty Paperboard's interest in the Collateral (as defined
in the Lessee Security Agreement) as security for its obligations to CITEF in
respect of the Lease;
(vi) the Amended and Restated Security Agreement, dated as of
December 31, 1996, among CITEF and the Original Guarantors (as amended, modified
or supplemented to date, the "Guarantor Security Agreement"), pursuant to which
the Original Guarantors granted to CITEF a security interest in all of their
respective interests in the Collateral (as defined in the Guarantor Security
Agreement) as security for their respective obligations to CITEF in respect of
the Guaranty;
(vii) the Support Agreement, dated as of June 30, 1994,
between Specialty Paperboard and CITEF, as amended by that certain First
Amendment to Support Agreement, dated as of September 29, 1995 (as so amended,
as further amended, modified or otherwise supplemented to date, and as assigned
to, and assumed by, FiberMark Office pursuant to the Assignment and Assumption -
NY, the "Support Agreement"), pursuant to which FiberMark Office confirmed its
willingness to make available to CITEF certain facilities and services necessary
for the operation of the Equipment;
(viii) the Premises Lease, dated as of June 30, 1994, as
amended by that certain First Amendment to Premises Lease, dated as of September
29, 1995 (as so amended, as further amended, modified or otherwise supplemented
to date, and as assigned to, and assumed by, FiberMark Office pursuant to the
Assignment and Assumption - VT, the "Premises Lease"), pursuant to which
FiberMark Office is leasing the Premises to CITEF; and
(ix) the Premises Sublease, dated as of June 30, 1994, between
CITEF, as Sublessor, and Specialty Paperboard, as Sublessee (as amended,
modified or otherwise supplemented to date, and as assigned to, and assumed by,
FiberMark Office pursuant to the Assignment and Assumption Agreement - VT, the
"Premises Sublease"), pursuant to which FiberMark Office is subleasing the
Premises from CITEF.
<PAGE>
2. Since the date on which the Guaranty and the Guarantor Security Agreement
were entered into, FiberMark Durable and FiberMark Filter between them have, by
merger, become the successors to each of the other Original Guarantors.
3. Pursuant to that certain Third Amended and Restated Financing Agreement among
FiberMark, as Guarantor, FiberMark Durable, FiberMark Filter and FiberMark
Office, as Borrowers, CITEF and The CIT Group/Business Credit, Inc., a New York
Corporation (CITBC, and together with CITEF, the "Lenders"), as Lenders, and
CITBC as Agent for the Lenders (in that capacity, "Agent"), the Lenders have
agreed to make advances to the Borrowers for the purpose, among other things, of
refinancing the Lease Agreement; and, in connection therewith, the parties
hereto desire to terminate the Lease and the related obligations of each of
FiberMark, FiberMark Durable, FiberMark Filter and FiberMark Office
(individually a "FiberMark Lease Party" and collectively the "FiberMark Lease
Parties") with respect thereto,
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. TERMINATION OF LEASE. CITEF hereby acknowledges the
payment in full of all amounts now known to be due and owing to CITEF under the
Lease Agreement, the Guaranty, the Lessee Security Agreement, the Guarantor
Security Agreement, the Support Agreement, the Premises Lease and the Premises
Sublease (collectively, the "Lease Documents"), as set forth in a separate
letter delivered by CITEF to the FiberMark Lease Parties; and each of CITEF and
the FiberMark Lease Parties hereby agrees to the termination of the Lease and
waives any notice required to be delivered to CITEF or such FiberMark Lease
Party, as the case may be, under any of the Lease Documents in connection with
the transactions contemplated by this Section 1.
SECTION 2. RELEASE OF LIENS AND OBLIGATIONS; SURVIVAL OF
CERTAIN OBLIGATIONS.
(a)(i) The Lease Documents are hereby terminated;
(ii) all security interests, liens and other encumbrances granted to or created
in favor of CITEF as security for the obligations of any FiberMark Lease Party
under any of the Lease Documents are hereby forever released and discharged; and
(iii) CITEF hereby releases, assigns, transfers and delivers to the FiberMark
Lease Party granting any such security interest, lien or other encumbrance,
without representation, recourse or warranty, all of the Collateral held by
CITEF under (and as defined in) any of the Lease Documents; PROVIDED that,
notwithstanding anything to the contrary contained in the preceding Section 1 or
the foregoing clauses (i), (ii) and (iii), all indemnity and expense payment or
reimbursement obligations of any FiberMark Lease Party contained in any Lease
Document, as well as any provision contained in any Lease Document that any
Lease Document expressly provides is to survive the termination of the Lease,
shall survive the termination of the Lease and the Lease Documents, the
termination and release of the security interests, liens and other encumbrances
created thereunder, and the other transactions contemplated hereby.
<PAGE>
(b) Pursuant to a separate Bill of Sale executed and
delivered by CITEF concurrently herewith (the "Bill of Sale"), and for the
consideration recited therein, CITEF is conveying to FiberMark Office, without
representation or warranty other than as expressly set forth therein, all of
CITEF's right, title and interest in and to the Equipment.
(b) From time to time, upon the request of any
FiberMark Lease Party, CITEF shall, without further consideration other than
reimbursement for any reasonable and necessary costs and expenses, execute,
deliver and acknowledge all such further documents, agreements, certificates and
instruments, and do such further acts (all of the foregoing, collectively,
"Further Acts") as such FiberMark Lease Party may reasonably require to evidence
more effectively or to effectuate the transactions contemplated hereby,
including, but not limited to, the release and termination of all security
interests, liens and other encumbrances securing the obligations of the
FiberMark Lease Parties under the Lease Documents, unless the requested Further
Act (i) would expose CITEF or any of its officers, directors or affiliates to
personal liability or (ii) would be contrary to applicable law.
SECTION 3. MISCELLANEOUS. This Termination Agreement may not
be amended, modified or waived except in a writing signed by the party against
whom enforcement of such amendment, modification or waiver is sought. THIS
AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF LAW. This
Termination Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which, taken together, shall constitute
one and the same instrument.
SECTION 4. EFFECTIVENESS This Termination Agreement shall
become effective when all the parties hereto shall have executed and delivered a
counterpart hereof (including by the way of facsimile transmission).
<PAGE>
IN WITNESS WHEREOF , the undersigned have entered into this
Termination Agreement as of the day and year first written above.
FIBERMARK, INC.
By: _______________________________
Name:
Title:
FIBERMARK OFFICE PRODUCTS, LLC
By: FIBERMARK, INC., its sole member
By: ____________________________
Name:
Title:
FIBERMARK FILTER AND TECHNICAL PRODUCTS, INC.
By: _______________________________
Name:
Title:
FIBERMARK DURABLE SPECIALTIES, INC.
By: ______________________________
Name:
Title:
<PAGE>
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: ______________________________
Name:
Title:
