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Exhibit 10.1    
    


 
 

SEVENTH AMENDMENT TO
  CREDIT AGREEMENT    
    


        SEVENTH AMENDMENT TO CREDIT AGREEMENT, dated as of October 29, 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 Seventh Amendment Effective Date, 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 December 15, 2004."; and 


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






        "Seventh Amendment" means the Seventh Amendment to the Credit Agreement, dated as of October 29, 2004, among the Borrower, the
other Credit Parties, the Agent and the Lenders." 


        "Seventh Amendment Effective Date" means the date on which each of the conditions precedent to the effectiveness of the Seventh Amendment
have been satisfied or waived." 





        3.    Defaults; Conditions to Funding.    


        (a)   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 Sixth Amendment Effective Date 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). 


        (b)   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 Sixth Amendment Effective Date through the Waiver Termination Date and so long as such payment is made on or prior to the
Waiver Termination Date. 


        (c)   Agent
and Requisite Lenders agree that the execution and delivery of that certain Restructuring Agreement by and among Borrower and its Subsidiaries and the
Participating Holders, dated as of August 24, 2004 (the "Restructuring Agreement"), 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 Seventh Amendment Effective Date through the Waiver Termination Date, provided that nothing set forth herein shall be construed
to constitute the consent of Agent or any Lender to any action or transaction by any Credit Party pursuant to, or as contemplated by, such Restructuring Agreement, except as expressly provided to the
contrary herein. 


        (d)   Agent
and Requisite Lenders agree that the commencement by the Borrower of a solicitation of all of the beneficial holders of the Senior Notes to vote to accept the
Reorganization Plan (as such term is defined in the Restructuring Agreement) (the "Solicitation") pursuant to the terms of the Restructuring Agreement
and any actions undertaken by the Borrower in conjunction therewith, including, without limitation, the delivery by the Borrower to each such holder of the (i) Disclosure Statement (as such
term is defined in the Restructuring Agreement), including all schedules and exhibits thereto, (ii) Reorganization Plan, including all schedules and exhibits thereto, (iii) ballots to
vote to accept or reject the Reorganization Plan and (iv) other documents or materials that the Holder Representative (as such term is defined in the Restructuring Agreement) reasonably
requests be delivered in connection with the Solicitation shall not constitute an Event of Default under clause (iv) of
Section 8.1(i) of the Credit Agreement, during the period beginning on the Seventh Amendment Effective Date through the Waiver Termination Date. 



        (e)   This
Section 3 supercedes and replaces the provisions of Section 5 of the Sixth 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 


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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. (a) 


        (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 Seventh Amendment Effective Date with the same effect as if such representations and warranties had been made on and as of such date, except that 



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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
October 28, 2004, (i) the aggregate outstanding amount of the Revolving Credit Advances is $49,596,191.40, (ii) the aggregate outstanding amount of Letter of Credit Obligations is
$825,000.00, and (iii) the aggregate outstanding principal amount of the Term Loan is $43,750,000.00, 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 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
"Seventh Amendment Effective Date") only upon satisfaction in full in the judgment of the Agent or waiver of each of the following conditions on or
before October 31, 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.(a) 


        (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
	

 	
 	

AGENT
	

 	
 	
GENERAL ELECTRIC CAPITAL CORPORATION, 

as Agent and Lender
	

 	
 	

By:	
 	

/s/  CHRISTOPHER COX      
 Duly Authorized Signatory
	

 	
 	

By:	
 	

/s/  JAMES KAUFMAN      
 Duly Authorized Signatory





	

 	
 	

LENDERS
	

 	
 	
BLACK DIAMOND INTERNATIONAL FUNDING, LTD.
	

 	
 	

By:	
 	

/s/  DAVID DYER      

	 	 	Title:	 	Director/Authorized Signatory

	

 	
 	
TRS 1, LLC
	

 	
 	

By:	
 	


	 	 	Title:	 	 

	

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

 	
 	

By:	
 	

/s/  STEVE COLEY      

	 	 	Title:	 	Vice President, Group Credit MLC






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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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Exhibit 10.1


SEVENTH AMENDMENT TO CREDIT AGREEMENT

W I T N E S S E T H