Exhibit 10.2

 

FIRST AMENDMENT TO
CREDIT AGREEMENT

 

FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of November 7, 2003 (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”); and

 

WHEREAS, the Borrower, the Agent and the Lenders have agreed 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.                                       Amendments to Credit Agreement.  As of
the Amendment Effective Date, the Credit Agreement shall be amended as follows:

 

(a)                                  Amendment to Section 1.3(e) of the Credit
Agreement.  Section 1.3(e) of the Credit Agreement shall be amended and restated
in its entirety as follows:

 

“(e)                            To the extent consistent with Sections 1.3(c)
and (d), amounts to be applied pursuant to Sections 1.3(b) and (d) to the
prepayment of Loans shall be applied, as applicable, first to prepay outstanding
Index Rate Loans, and then any amounts remaining after each such application
shall, at the option of Borrower, be applied to prepay LIBOR Loans, and/or shall
be deposited in the Prepayment Account (as defined below).  The Agent shall
apply any cash deposited in the Prepayment Account (i) allocable to Term Loans
to prepay Term Loans which are LIBOR Loans and (ii) allocable to Revolving Loans
to prepay Revolving Loans which are LIBOR Loans in each case on the last day of
their respective LIBOR Periods (or, at the direction of Borrower, on any earlier
date) until all outstanding Term Loans or Revolving Loans, as the case may be,
have been prepaid or until all the allocable cash on deposit with respect to
such Loans has been fully applied.  For purposes of this Agreement, the term

 

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“Prepayment Account” shall mean a cash collateral account maintained at a bank
or financial institution acceptable to Agent.  The Prepayment Account shall be
in the name of Borrower and shall be pledged to, and subject to the control of,
Agent, for the benefit of Agent and Lenders, in manner satisfactory to Agent. 
Borrower hereby pledges and grants to Agent, on behalf of itself and Lenders, a
security interest in all funds held in the Prepayment Account from time to time
and all proceeds thereof, as security for the payment of all Obligations,
whether or not then due.  The Agreement, including this Section 1.3(e), shall
constitute a security agreement under applicable law.  After the occurrence of
and during the continuance of an Event of Default, Agent will apply funds then
held in the Prepayment Account to the payment of Term Loans and Revolving Loans
(allocated to such Loans as provided above in this Section 1.3(e)), and any
remaining funds shall, subject to Section 1.11(b), be applied, in such order as
Agent may elect, to any other Obligations then due and payable.  Neither
Borrower nor any Person claiming on behalf of or through Borrower shall have any
right to withdraw any of the funds held in the Prepayment Account, except as
provided above in this Section 1.3(e).  Interest earned on deposits in the
Prepayment Account shall be for the account of Lenders ratably based upon their
Pro Rata Shares of all of the Loans.”

 

(b)                                 Amendment to Section 1.11(b) of the Credit
Agreement.  Section 1.11(b) of the Credit Agreement shall be amended to add a
new sentence at the end thereof to read as follows:

 

“Agent shall use commercially reasonable efforts to apply, promptly upon
receipt, as provided herein, all payments and proceeds of Collateral which are
required to be paid to a Lender or applied to a Loan under this Agreement.”

 

(c)                                  Amendment to Section 1.14 of the Credit
Agreement.  Section 1.14 of the Credit Agreement shall be amended and restated
in its entirety as follows:

 

“1.14                     Access.  Each Credit Party that is a party hereto
shall, during normal business hours, from time to time upon one Business Day’s
prior notice as frequently as Agent or any Lender reasonably determines to be
appropriate: (a) provide Agent or such Lender (at such Lender’s own cost and
expense), as applicable, and any of its officers, employees and agents access to
its properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent or such Lender (at such
Lender’s own cost and expense), as applicable, and any of its officers,
employees and agents, to inspect, audit and make extracts from any Credit
Party’s books and records, and (c) permit Agent, and its officers, employees and
agents, to inspect, review, evaluate and make test verifications and counts of
the Accounts, Inventory and other Collateral of any Credit Party.  If a Default
or Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice.  Furthermore, so long as any Event of Default has
occurred and is continuing, Borrower shall provide Agent and each Lender with
access to their suppliers and customers.  Each Credit Party shall make available
to Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records that Agent may reasonably request. 
Each Credit Party shall deliver any document or instrument necessary for Agent,
as it may from time to time reasonably request, to obtain records from any
service bureau or other Person that maintains records for such Credit Party, and
shall maintain

 

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duplicate records or supporting documentation on media, including computer tapes
and discs owned by such Credit Party.  Agent will give Lenders at least 5 days’
prior written notice of regularly scheduled audits.  Representatives of other
Lenders may (at their own cost and expense) accompany Agent’s representatives on
regularly scheduled audits at no charge to Borrower.  Each Lender shall give
Agent at least 5 days’ prior written notice of its intention to exercise access
rights under this Section 1.14 and Agent’s representatives may accompany
Lender’s representatives in exercising such access rights.”

 

(d)                                 Amendment to Section 9.9(e) of the Credit
Agreement.  Section 9.9(e) of the Credit Agreement shall be amended and restated
in its entirety as follows:

 

“(e)                            Dissemination of Information.  Agent shall use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Agent from, or delivered by Agent to, any Credit Party, with
notice of any Event of Default of which Agent has actually become aware and with
notice of any action taken by Agent following any Event of Default; provided,
that Agent shall not be liable to any Lender for any failure to do so, except to
the extent that such failure is attributable to Agent’s gross negligence or
willful misconduct.  Lenders acknowledge that Borrower is required to provide
Collateral Reports to Agent in accordance with Annex F hereto and agree that
Agent shall have no duty to provide the same to Lenders; provided, that Agent
shall, upon request of any Lender, provide to such Lender copies of the
Borrowing Base Certificates delivered to Agent (and upon Agent’s request
Borrower shall provide to Agent sufficient copies thereof for each such
requesting Lender).”

 

3.                                       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.

 

4.                                       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

 

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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 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 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 dated need be true only as of such date.

 

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5.                                       Outstanding Indebtedness; Waiver of
Claims.  The Borrower and the other Credit Parties hereby acknowledge and agree
that as of November 5, 2003, (i) the aggregate outstanding amount of the
Revolving Credit Advances is $20,197,829.12, (ii) the aggregate outstanding
amount of Letter of Credit Obligations is $0, and (iii) the aggregate
outstanding principal amount of the Term Loan is $50,000,000, and that such
principal amounts are payable pursuant to the Credit Agreement without defense,
offset, withholding, counterclaim or deduction of any kind.

 

6.                                       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.

 

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

 

8.                                       Effectiveness.  This Amendment shall
become effective as of November 7, 2003 (the “Amendment Effective Date”) only
upon satisfaction in full in the judgment of the Agent of each of the following
conditions on or before November 8, 2003:

 

(a)                                  Amendment.  Agent shall have received
facsimile copies of this Amendment duly executed and delivered by the Agent, the
Requisite 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 8 have been satisfied,
except to the extent that any such representation or warranty expressly relates
to an earlier date.

 

9.                                       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 and Treasurer

 

 

 

 

 

GENERAL ELECTRIC CAPITAL
CORPORATION,

 

as Agent and Lender

 

 

 

By:

/s/ James H. Kaufman

 

 

Duly Authorized Signatory

 

 

 

 

 

By:

/s/ Christopher Cox

 

 

Duly Authorized Signatory

 

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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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