Exhibit 10.1

 

FIFTH AMENDMENT TO

CREDIT AGREEMENT

 

FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of August 30, 2004 (this
“Amendment”), to the Credit Agreement referred to below by and among APPLIED
EXTRUSION TECHNOLOGIES, INC., a Delaware corporation (the “Borrower”); the other
Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (in its individual capacity, “GE Capital”), for itself, as
Lender, and as Agent for Lenders; and the other Lenders signatory hereto.

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the other Credit Parties, the Agent, and the Lenders are
parties to that certain Credit Agreement, dated as of October 3, 2003 (as
amended, supplemented or otherwise modified from time to time, prior to the date
hereof, the “Credit Agreement”);

 

WHEREAS, Borrower has requested that Agent and the Lenders agree to amend the
Credit Agreement to provide, among other things, that failure to pay the
interest on the Senior Notes due on July 1, 2004 shall not constitute a Default
or Event of Default, so long as such payment is made on or prior to the Waiver
Termination Date (as defined below); and

 

WHEREAS, the Borrower, the Agent and the Lenders have agreed to such request and
agree to amend certain provisions of the Credit Agreement in the manner, and on
the terms and conditions, provided for herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       Certain Definitions.  Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the Credit Agreement.

 

2.                                       Amendment to Annex A to the Credit
Agreement .  As of the Fifth Amendment Effective Date (as defined below), Annex
A to the Credit Agreement shall be amended as follows:

 

(a)                            by deleting the definition of “Waiver Termination
Date” therein and inserting the following definition in lieu thereof:

 

“‘Waiver Termination Date’ shall mean October 1, 2004.”; and

 

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(b)                           by inserting the following new definition therein
in appropriate alphabetical order:

 

“‘Fourth Amendment’ means the Fourth Amendment to the Credit Agreement, dated as
of July 30, 2004, among the Borrower, the other Credit Parties, the Agent and
the Lenders.”

 

3.                                       Defaults; Conditions to Funding.

 

(c)                            Agent and Requisite Lenders agree that,
notwithstanding the provisions of  (i) Section 1.5(d) of the Credit Agreement,
(ii) Section 2.2(c) of the Credit Agreement, (iii) Section 8.2 of the Credit
Agreement, and (iv) clause (c) of Annex C to the Credit Agreement to the
contrary, for purposes of (i) Section 1.5(d) of the Credit Agreement, (ii)
Section 2.2(c) of the Credit Agreement, (iii) Section 8.2 of the Credit
Agreement, and (iv) clause (c) of Annex C to the Credit Agreement, the failure
of the Borrower to make payment of interest on the Senior Notes due on July 1,
2004 shall not constitute a “Default” or “Event of Default” for the period
beginning from the Fourth Amendment Effective Date (as defined in the Fourth
Amendment) through the Waiver Termination Date), so long as such payment is made
on or prior to the Waiver Termination Date and, with respect to clause (iv)
above, prior to the payment of such interest, Borrower and AET Canada transfers
or cause to be transferred prior to the end of each business day from the AET
Canada Account and/or the Disbursement Accounts of AET Canada the aggregate
balance in (or held for the benefit of) AET Canada in the AET Canada Account and
such Disbursement Accounts in excess of CDN$1,500,000 to a Blocked Account of
Borrower (or, if established, the Concentration Account).

 

(d)                           Agent and Requisite Revolving Lenders agree that
(i) with respect to the provisions of Section 2.2(a) of the Credit Agreement,
the failure of any representation or warranty to be true in any Loan Document,
solely as a result of the Borrower’s failure to make payment of interest on the
Senior Notes due on July 1, 2004 shall not limit any Lender’s obligations to
fund any Advance, convert or continue any Loan as a LIBOR Loan or incur any
Letter of Credit Obligation and (ii) with respect to the provisions of
Section 2.2(b) of the Credit Agreement, Borrower’s failure to make payment of
interest on the Senior Notes due on July 1, 2004 shall not alone, without the
presence of any other facts, events or circumstances (whether arising as a
result of such failure or otherwise), be deemed to create a Material Adverse
Effect, in the case of each of clauses (i) and (ii) of this sentence, for the
period beginning from the Fourth Amendment Effective Date (as defined in the
Fourth Amendment) through the Waiver Termination Date) and so long as such
payment is made on or prior to the Waiver Termination Date.

 

(e)                            Agent and Requisite Lenders agree that the
execution and delivery by Borrower and its Subsidiaries of a restructuring
agreement with the holders of the Senior Notes (which shall set forth an
agreement in principal with the participating holders of the Senior Notes for
the restructuring of the Senior Notes substantially on the terms previously
disclosed by the Borrower to the Agent) shall not alone, without the presence of
any other facts, events or circumstances, constitute an Event of Default under
clause (iv) of Section 8.1(i) of the Credit Agreement, for the period beginning
on the Fifth Amendment Effective Date through the Waiver Termination Date),
provided that nothing set forth herein shall be construed to

 

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constitute the consent of Agent or any Lender to any action or transaction by
any Credit Party pursuant to, or as contemplated by, any such restructuring
agreement.

 

(f)                              This Section 3 supercedes and replaces the
provision of Section 4 of the Fourth Amendment.

 

4.                                       Ratification of Credit Agreement;
Remedies.

 

(a)                            Except as expressly provided for, and on the
terms and conditions set forth, herein, the Credit Agreement and the other Loan
Documents shall continue to be in full force and effect in accordance with their
respective terms and shall be unmodified.  In addition, this Amendment shall not
be deemed a waiver of any term or condition of any Loan Document by the Agent or
the Lenders with respect to any right or remedy which the Agent or the Lenders
may now or in the future have under the Loan Documents, at law or in equity or
otherwise or be deemed to prejudice any rights or remedies which the Agent or
the Lenders may now have or may have in the future under or in connection with
any Loan Document or under or in connection with any Default or Event of Default
which may now exist or which may occur after the date hereof.  The Credit
Agreement and all other Loan Documents are hereby in all respects ratified and
confirmed.

 

(b)                           This Amendment shall constitute a Loan Document. 
The breach by any Credit Party of any representation, warranty, covenant or
agreement in this Amendment shall constitute an immediate Event of Default
hereunder and under the other Loan Documents.

 

5.                                       Representations and Warranties.  The
Borrower and the Credit Parties hereby represent and warrant to the Agent and
Lenders that:

 

(a)                            The execution, delivery and performance of this
Amendment and the performance of the Credit Agreement as amended by this
Amendment (the “Amended Credit Agreement”) by the Borrower and the other Credit
Parties:  (i) are within their respective organizational powers; (ii) have been
duly authorized by all necessary corporate and shareholder action; (iii) are not
in contravention of any provision of their respective certificates or articles
of incorporation or by-laws or other organizational documents; (iv) do not
violate any law or regulation, or any order or decree of any court or
Governmental Authority; (v) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, agreement or other instrument to which the Borrower or any Credit
Party is a party or by which the Borrower or any Credit Party or any of its
property is bound; (vi) do not result in the creation or imposition of any Lien
upon any of the property of the Borrower or any Credit Party other than those in
favor of Agent pursuant to the Loan Documents; and (vii) do not require the
consent or approval of any Governmental Authority or any other Person.

 

(b)                           This Amendment has been duly executed and
delivered by or on behalf of the Borrower and the other Credit Parties.

 

(c)                            Each of this Amendment and the Amended Credit
Agreement constitutes a legal, valid and binding obligation of the Borrower and
the other Credit Parties enforceable

 

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against each of them in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditor’s rights generally and general equitable
principles (whether enforcement is sought by proceedings in equity or at law).

 

(d)                           No Default or Event of Default has occurred and is
continuing both before and after giving effect to this Amendment.

 

(e)                            No action, claim or proceeding is now pending or,
to the knowledge of the Borrower and the other Credit Parties, threatened
against the Borrower or the other Credit Parties, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state, or local government or of any agency or subdivision thereof, or
before any arbitrator or panel of arbitrators, (i) which challenges the
Borrower’s or the other Credit Parties’ right, power, or competence to enter
into this Amendment or, to the extent applicable, perform any of its obligations
under this Amendment, the Amended Credit Agreement or any other Loan Document,
or the validity or enforceability of this Amendment, the Amended Credit
Agreement or any other Loan Document or any action taken under this Amendment,
the Amended Credit Agreement or any other Loan Document or (ii) which, if
determined adversely, is reasonably likely to have or result in a Material
Adverse Effect.  To the knowledge of the Borrower and each Credit Party, there
does not exist a state of facts which is reasonably likely to give rise to such
proceedings.

 

(f)                              The representations and warranties of the
Borrower and the other Credit Parties contained in the Amended Credit Agreement
and each other Loan Document shall be true and correct on and as of the date
hereof and the Fifth Amendment Effective Date with the same effect as if such
representations and warranties had been made on and as of such date, except that
any such representation or warranty which is expressly made only as of a
specified date need be true only as of such date.

 

6.                                       Outstanding Indebtedness.  The Borrower
and the other Credit Parties hereby acknowledge and agree that as of August 27,
2004, (i) the aggregate outstanding amount of the Revolving Credit Advances is
$43,737,913.08, (ii) the aggregate outstanding amount of Letter of Credit
Obligations is $775,000.00, and (iii) the aggregate outstanding principal amount
of the Term Loan is $45,312,500.00, and that such principal amounts are payable
pursuant to the Credit Agreement without defense, offset, withholding,
counterclaim or deduction of any kind.

 

7.                                       Fees and Expenses  The Borrower hereby
reconfirms its obligations pursuant to Section 11.3(b) of the Credit Agreement
to reimburse Agent for all out-of-pocket fees, costs and expenses, including the
reasonable fees, costs and expenses of counsel, consultants, auditors or other
advisors, incurred in connection incurred with the negotiation, preparation,
execution and delivery of this Amendment and all other documents and instruments
delivered in connection herewith.

 

8.                                       GOVERNING LAW.  THIS AMENDMENT, IN ALL
RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK APPLICABLE TO

 

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CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.

 

9.                                       Effectiveness.  This Amendment shall
become effective as of the date hereof (the “Fifth Amendment Effective Date”)
only upon satisfaction in full in the judgment of the Agent of each of the
following conditions on or before August 30, 2004:

 

(a)                            Amendment.  Agent shall have received facsimile
copies of this Amendment duly executed and delivered by the Agent, the Requisite
Lenders, the Requisite Revolving Lenders, the Borrower and each Credit Party.

 

(b)                           Representations and Warranties.  All
representations and warranties of or on behalf of the Borrower and each Credit
Party in this Amendment and all the other Loan Documents shall be true and
correct in all respects with the same effect as though such representations and
warranties had been made on and as of the date hereof and on and as of the date
that the other conditions precedent in this Section 9 have been satisfied,
except to the extent that any such representation or warranty expressly relates
to an earlier date.

 

10.                                 Counterparts.  This Amendment may be
executed in any number of counterparts, each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment as of
date and year first written above.

 

 

BORROWER

 

 

 

 

 

 

 

APPLIED EXTRUSION TECHNOLOGIES,
INC.

 

 

 

 

By:

/s/ Brian P. Crescenzo

 

 

Name:

Brian P. Crescenzo

 

Title:

Vice President, Secretary and Chief
Financial Officer

 

 

 

 

 

 

 

GENERAL ELECTRIC CAPITAL
CORPORATION,

 

as Agent and Lender

 

 

 

 

 

 

 

By:

/s/ James H. Kaufman

 

 

 

Duly Authorized Signatory

 

 

 

 

 

 

 

By:

/s/ Christopher Cox

 

 

 

Duly Authorized Signatory

 

 

 

 

 

 

 

LENDERS

 

 

 

 

BLACK DIAMOND INTERNATIONAL
FUNDING, LTD.

 

 

 

 

 

 

 

By:

/s/ Paul Cope

 

 

Title:

Director

 

 

 

 

TRS 1, LLC

 

 

 

 

 

 

By:

/s/ Deborah O’Keeffe

 

 

Title:

Vice President

 

 

 

 

MERRILL LYNCH CAPITAL, a division of
Merrill Lynch Business Financial Services Inc.

 

 

 

 

 

 

 

By:

/s/ Steve Coley

 

 

Title:

VP, Group Credit Manager

 

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The following Persons are signatories to this Agreement in their capacity as
Credit Parties and not as Borrower.

 

 

APPLIED EXTRUSION TECHNOLOGIES
(CANADA) INC.

 

 

 

 

 

 

 

By:

/s/ Brian P. Crescenzo

 

 

 

Name:  Brian P. Crescenzo

 

 

Title:    Vice President and Treasurer

 

 

 

 

 

 

 

APPLIED EXTRUSION TECHNOLOGIES
LIMITED

 

 

 

 

 

 

 

By:

/s/ Brian P. Crescenzo

 

 

 

Name:  Brian P. Crescenzo

 

 

Title:    Vice President and Treasurer

 

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