Document:

EXHIBIT 99

EXHIBIT 10.42

 

EXECUTION

 

FOURTH AMENDED AND

RESTATED

FINANCING AGREEMENT

AND GUARANTY

 

among

 

FiberMark, Inc.

(as Guarantor)

 

FiberMark Durable

Specialties, Inc.,

 

FiberMark Filter and

Technical Products, Inc.

 

FiberMark Office

Products, LLC

 

and

 

FiberMark DSI Inc.

 

(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 January 31, 2002

 

 

FOURTH AMENDED AND RESTATED FINANCING

AGREEMENT AND GUARANTY dated as of January 31, 2002, 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, FiberMark Office Products, LLC (“FiberMark

Office”), a Vermont limited liability company, and FiberMark DSI Inc. (“DSI”),

a New York corporation, 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 1540 West Fountainhead Parkway, Tempe, Arizona  85282, the other lenders that may,

subsequent to the date hereof, purchase from the Initial Lenders a portion of

their rights and obligations under this Fourth 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, FiberMark Office and DSI are referred to as a “Borrower” and

collectively as the “Borrowers”. 

FiberMark, FiberMark Durable, FiberMark Filter, FiberMark Office and DSI

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.  References. 

Reference is made to the Third Amended and Restated Financing Agreement

and Guaranty dated as of September 30, 1999 among FiberMark, FiberMark Durable,

FiberMark Filter, FiberMark Office, CITBC, CITEF, each of the other Lenders

signatory thereto and CITBC as Agent for the Lenders as amended by a letter

agreement dated October 28, 1999 (as so amended, the “September 1999

Agreement”).

 

2.  Amendment and Restatement.  To the extent this Fourth Amended and Restated Financing

Agreement and Guaranty amends the September 1999 Agreement, the September 1999

Agreement is amended, and to the extent this Fourth Amended and Restated

Financing Agreement and Guaranty restates the September 1999 Agreement, the

September 1999 Agreement is restated, with the effect that this Fourth Amended

and Restated Financing Agreement and Guaranty amends and restates the September

1999 Agreement in its entirety.  The

intent of the parties is that this Fourth Amended and Restated Financing

Agreement and Guaranty continue in effect the credit facilities heretofore

provided under the September 1999 Agreement, on the amended and restated terms

set forth herein.  No novation of the

obligations outstanding under the September

 

 

1999 Agreement is intended to be effected, or

shall be deemed to have occurred, by reason of the execution and delivery

hereof.  All obligations accrued under

the September 1999 Agreement and unpaid as of the Closing Date shall continue

outstanding as obligations under this Fourth Amended and Restated Financing

Agreement and Guaranty.

 

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:

 

ARTICLE I.           DEFINITIONS, ACCOUNTING TERMS AND RULES OF CONSTRUCTION

 

Section 1.01.  Defined

Terms.  As used in this

Fourth 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):

 

1996 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 1996 Senior Notes are issued, as amended, modified or supplemented

from time to time.

 

1996 Indenture Limit means (a) the sum of (i) eighty-five percent

(85%) of the net book value of the accounts receivable of FiberMark and the

Restricted Subsidiaries (as defined in the 1996 Indenture), determined in

accordance with the provisions of the 1996 Indenture, and (ii) fifty percent

(50%) of the net book value of the inventory of FiberMark and such Restricted

Subsidiaries, determined in accordance with the provisions of the 1996

Indenture, less (b) any required permanent repayments of principal hereunder

that are accompanied by a permanent reduction in the aggregate Lender Loan

Commitments.

 

1996 Senior Notes means the “Securities” issued pursuant to the terms

and provisions of, and as defined in, the 1996 Indenture.

 

2001 Indenture means the Indenture dated as of April 18, 2001,

among FiberMark, Inc., the Guarantors (as defined therein) and the Trustee (as

defined therein) pursuant to which the 2001 Senior Notes are issued, as

amended, modified or supplemented from time to time.

 

2001 Senior Notes means the “Securities” issued pursuant to the

terms and provisions of, and as defined in, the 2001 Indenture.

 

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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, letters of credit, letter-of-credit rights, 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 other supporting obligations in

respect of, 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.

 

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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, 2002.

 

Applicable Brattleboro Collateral Value shall mean, at any time, the excess of (a) (i)

until the Net Realizable Valuation has been delivered to the Agent,

$25,000,000, or (ii) once the Net Realizable Valuation has been delivered to

the Agent, the lesser of (A) $25,000,000 and (B) 50% of the Net Realizable

Value, over (b) the product of $893,000 and the number of Quarterly Payment

Dates that have occurred after the Closing Date.

 

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 Borrowers as the office by which its Revolving Credit Loans of such

Type are to be made and maintained.

 

Applicable Margin means the relevant “Applicable Margin”,

determined in accordance with Schedule 1.01 based on the Leverage Ratio as of

the date of determination.

 

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 is required to be obtained in accordance with applicable Law in

connection with the ownership, operation, construction, or maintenance of its

property.

 

4

 

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:

 

(a)           Through September 30, 2002, the excess of

 

(i)            the lesser of (A) the Borrowing Base, and (B) the

Revolving Credit Facility, over

 

(ii)           the sum of (A) the outstanding aggregate amount of all

outstanding Obligations of all the Borrowers taken together, and (B) the

Availability Block; and

 

(b)           After September 30, 2002, the excess of

 

(i)            the lesser of (A) the Borrowing Base, and (B) the

Revolving Credit Facility, over

 

(ii)           the outstanding aggregate amount of all outstanding

Obligations of all the Borrowers taken together;

 

Availability Block shall mean, at any time:

 

(a)           the sum of (i) twenty-five percent (25%) of the Net

Collateral Availability from A/R and Inventory, plus (ii) 50% of Brattleboro

Collateral Availability; or

 

(b)           if cumulative Consolidated EBITDA for the period

commencing January 1, 2002, determined as of the end of the then-most-recently-ended

fiscal quarter, is less than fifty percent (50%) of the cumulative Consolidated

EBITDA for such period set forth in the then-current Projections, the sum of

(i) thirty-seven and one-half percent (37.5%) of Net Collateral Availability from

A/R and Inventory, plus (ii) seventy-five percent (75%) of Brattleboro

Collateral Availability.

 

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.

 

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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 at any time an amount equal to the lesser

of:

 

(a)           the sum of

 

(i)            ninety percent (90%) of then

outstanding Eligible Accounts Receivable;

and

 

(ii)           (A) until the earlier of the date that is forty-five (45)

days after the Closing Date and the date that the initial Net Inventory

Liquidation Valuation is delivered to the Agent, sixty percent (60%) of

Eligible Inventory, and (B) after such date, the lesser of (1) sixty percent (60%) of Eligible Inventory,

and (2) eighty-five percent (85%) of the Net Inventory Liquidation

Value; and

 

(iii)          the Brattleboro Collateral Availability; and

 

(b)           the 1996 Indenture Limit.

 

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.

 

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 (including, but not limited to, accounts, chattel paper,

commercial tort claims, deposit accounts, documents, goods, instruments,

investment property, letter-of-credit rights, letters of credit, money, oil,

gas or other minerals before extraction, and general intangibles).

 

Brattleboro Collateral Availability shall mean (a) until the earlier of the date

that is forty-five (45) days after the Closing Date and the date that the

initial Net Realizable Valuation is delivered to the Agent, the Applicable

Brattleboro Collateral Value, and (b) after such date, the lesser of (i)

the Applicable Brattleboro Collateral Value and the Net Realizable

 

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Value (and, until the Net

Realizable Valuation has been delivered to the Agent, the Net Realizable Value,

for purposes of this definition, shall be zero).

 

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.

 

CITBC means The CIT Group/Business Credit, Inc., a New

York corporation, and its successors.

 

CITEF means The CIT Group/Equipment Financing, Inc., a

New York corporation, and its successors.

 

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.

 

7

 

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 (including, but not limited to, accounts, chattel paper,

commercial tort claims, deposit accounts, documents, goods, instruments,

investment property, letter-of-credit rights, letters of credit, money, oil,

gas or other minerals before extraction, and general intangibles); and (ii) the

Brattleboro Collateral.

 

Collateral Management Fee shall mean the sum of Fifty Thousand Dollars

($50,000) 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

Debt shall mean all Indebtedness of FiberMark and

its Subsidiaries, determined on a consolidated basis, other than obligations in

respect of the deferred purchase price of property or services.

 

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) the excess of (1) Consolidated Non-cash

Charges for such period over (2) 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

 

8

 

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 either Indenture) or Asset Acquisitions (as

defined in either 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 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

 

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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 either 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, plus (iii) scheduled payments in respect of the principal of all

Indebtedness of FiberMark and its Subsidiaries for such period, including that

portion of Capitalized Lease Obligations for such period attributable to

principal amortization in accordance with GAAP (it being understood that

amortization in respect of the Brattleboro Collateral shall not be deemed to

constitute payments in respect of the principal of Indebtedness), plus (iv) all

federal, state and foreign income taxes incurred by FiberMark and its

Subsidiaries for such period, determined on a cash basis, plus (v) all Capital

Expenditures for such period, to the extent not paid with the proceeds of

Indebtedness.

 

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.

 

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 (without duplication) (a) after-tax

gains or losses from Asset Sales 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)

 

10

 

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), (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, (h) currency translation adjustments, and (i)

non-cash charges, incurred in each case on a one-time basis, relating to plant

closures (including but not limited to Fitchburg, Massachusetts).

 

Consolidated Net Worth shall mean, at any time, the excess of

Consolidated Total Assets over Consolidated Total Liabilities, but excluding

the effects on such calculation of (a) currency translation adjustments,

and (b) non-cash charges, incurred in each case on a one-time basis, relating

to plant closures (including but not limited to Fitchburg, Massachusetts).

 

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.

 

11

 

Corporate Obligors means each of FiberMark, FiberMark Durable,

FiberMark Filter and DSI.

 

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 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 designated by the

Agent for the deposit of proceeds of Collateral, in each case, at the

 

12

 

Agent’s

election, owned by, and in the name of, the Agent or over which the Agent

otherwise has “control” within the meaning of the UCC.

 

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.

 

Domestic Subsidiary  shall

mean any Subsidiary that is originated under the laws of any State, as such

term is defined in the UCC.

 

Domestic EBITDA  shall

mean, for any period, Consolidated EBITDA, as determined for such period,

adjusted to eliminate the effects of including the results of any Subsidiary

other than a Domestic Subsidiary.

 

DSI means FiberMark DSI Inc., a New York

corporation, and its successors.

 

DSI

Guarantors means each of FiberMark, FiberMark Durable, FiberMark Filter and FiberMark

Office.

 

DSI 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 DSI or to others for DSI’s account; any and all

indebtedness and obligations which may at any time be owing by DSI to the Agent

or the Lenders howsoever arising, whether now in existence or incurred by DSI

from time to time hereafter; whether secured by pledge, Lien upon or security

interest in any of DSI’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 DSI is liable to the Lenders and/or the Agent for such

indebtedness as principal, surety, endorser, guarantor or otherwise.  DSI Obligations shall also include

indebtedness owing to the Lenders and/or the Agent by DSI under this Financing

Agreement or under any other agreement or arrangement now or hereafter entered

into between DSI 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 DSI’s operation, premises or waste

 

13

 

disposal

practices or sites; DSI’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;

DSI’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

DSI’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 DSI’s account and benefit.

 

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 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;

 

14

 

(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.

 

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), (iii) goods not present in the United States of America, (iv) goods

returned or rejected by the customers of such Obligor (other than goods that

are undamaged and resalable in the normal course of business), (v) goods to be

returned to the suppliers of such Obligor, (vi) goods in transit to third

parties (other than the agents or warehouses of such Obligor), (vii) goods that

are obsolescent, and (viii) 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, or that are otherwise located at an Excluded Premises

(unless they are returned, or moved to, to a place identified on Schedule 5.04

that is not one of the

 

15

 

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 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 (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

 

16

 

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 (a) all attachments,

components, parts, equipment and accessories installed thereon or affixed

thereto, (b) all software and intellectual property used in connection with the

foregoing or that is necessary for the operation of the foregoing in the

ordinary course and in a manner that is safe and that complies with applicable

law; and (c) 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)

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 (but subject to

the condition, noted thereon, that only such premises as to which no landlord’s

waiver or warehouse acknowledgment, as the case may be, has been received by

the date that is 60 days after the Closing Date shall constitute Excluded

Premises), 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.

 

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.

 

17

 

Facility Fee shall mean the fee payable by the Borrowers to

the Initial Lenders in the amount of One Hundred Thousand Dollars ($100,000),

which fee shall be deemed fully earned,

nonrefundable and due on the Closing Date.

 

FiberMark

means FiberMark, Inc., a Delaware corporation, and its successors.

 

FiberMark

Durable means FiberMark Durable Specialties, Inc.,

a Delaware corporation, and its successors.

 

FiberMark Durable Guarantors means each of FiberMark, FiberMark Filter,

FiberMark Office, DSI and each Acquired Entity.

 

FiberMark

Filter means FiberMark Filter and Technical

Products, Inc., a Delaware corporation and its successors.

 

FiberMark Filter Guarantors means each of FiberMark, FiberMark Durable,

FiberMark Office, DSI and each Acquired Entity.

 

FiberMark Guarantors means each of FiberMark Durable, FiberMark

Filter, FiberMark Office, FiberMark DSI and each Acquired Entity.

 

FiberMark

Office means FiberMark Office Products, LLC, a

Vermont limited liability company, and its successors.

 

FiberMark Office Guarantors means each of FiberMark, FiberMark Durable,

FiberMark Filter, DSI 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

 

18

 

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 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.

 

19

 

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 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

 

20

 

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 Fourth 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.

 

German

Subsidiaries means Subsidiaries of FiberMark that

are organized under the laws of the Federal Republic of Germany.

 

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.

 

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, DSI 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

 

21

 

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.

 

Indenture means the 1996 Indenture or the 2001 Indenture.

 

Initial Lenders means CITBC and CITEF.

 

22

 

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.

 

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 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.

 

Leverage

Ratio shall mean, at any date, the ratio of (a)

Consolidated Debt as of such date to (b) Consolidated EBITDA for the period of

four consecutive fiscal quarters of FiberMark then most recently ended.

 

23

 

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.

 

Lien means any mortgage, pledge, hypothecation,

security interest, collateral assignment, Lien (statutory or other), or other

security

 

24

 

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, as amended,

modified or supplemented from time to time.

 

Net Collateral Availability from A/R and

Inventory

means the sum of the components of the Borrowing Base relating to Eligible

Accounts and Eligible Inventory, determined in accordance with paragraphs (a)

and (b) of the definition of that term.

 

Net Inventory Liquidation Percentage means the percentage of the net book value of

the Inventory of the Obligors that could be realized, net of the expenses of

liquidation, in an orderly liquidation of such Inventory, as reported in the

Net Inventory Liquidation Valuation.

 

Net Inventory Liquidation Valuation means, at any time, the then-most recent

appraisal, in form and substance satisfactory to the Agent, conducted by an appraiser

satisfactory to the Agent, of (a) the liquidation value of the Inventory of

each of the Obligors, determined net of the expenses of liquidation and on the

basis of an orderly liquidation of such Inventory and (b) the percentage of the

net book value of such Inventory that could be realized, net of the expenses of

liquidation, in an orderly liquidation of such Inventory.

 

25

 

Net Inventory Liquidation Value means, at any time, the (a) the net book value

of the Inventory of the Obligors, determined in a manner consistent with that

used to determine the 1996 Indenture Limit, times (b) the Net Inventory

Liquidation Percentage.

 

Net Realizable Valuation means, at any time, the then-most recent

appraisal, in form and substance satisfactory to the Agent, conducted by an

appraiser satisfactory to the Agent, of the realizable value, on a

going-concern basis, of the Brattleboro Collateral, determined net of the

expenses of sale.

 

Net Realizable Value means the net realizable value, on a

going-concern basis, of the Brattleboro Collateral, as reflected in the Net

Realizable Valuation.

 

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,

FiberMark Office Obligations and DSI Obligations.

 

Obligors means all of FiberMark, FiberMark Durable,

FiberMark Filter, FiberMark Office, DSI 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, FiberMark

Durable and DSI, 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.

 

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

 

26

 

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)  Customarily

Permitted Liens;

 

(c)  Liens granted

the Agent by an Obligor;

 

(d)  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);

 

(e)  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;

 

(f)  Liens granted by

any Obligor on any of its assets other than (i) the Brattleboro Collateral,

(ii) such Obligor’s Accounts, (iii) such Obligor’s Inventory, or (iv) such

Obligor’s equity interest, direct or indirect, in any of its Subsidiaries,

other than in non-Domestic Subsidiaries acquired after the date of this

Financing Agreement that own neither x) any equity interest in a Domestic

Subsidiary of any Obligor, y) any equity interest in a non-Domestic Subsidiary

of any Obligor owned as of the date of this Financing Agreement, nor z) any property

described in any of the preceding clauses (i) through (iii) of this paragraph

(f) that has been, or is, acquired from an Obligor; and

 

27

 

(g)  Purchase Money

Liens.

 

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 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;

 

(c)  deferred taxes

and other expenses incurred in the ordinary course of business;

 

(d)  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;

 

(e)  the 1996 Senior

Notes;

 

(f)  the 2001 Senior

Notes; and

 

(g)  Indebtedness

secured by Purchase Money Liens.

 

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.

 

28

 

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 3.10 of this Financing Agreement.

 

Projections means (a) initially, the projections attached

hereto as Exhibit I, and (b) upon delivery by the Borrowers of the projections

required to be delivered pursuant to Section 9.01(i) of this Financing

Agreement, such new projections.

 

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 Obligator 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 latest of (A) the final maturity date of the

1996 Senior Notes, (b) the final maturity date of the 2001 Senior Notes, and

(c) the Revolving Credit Commitment Termination Date then in effect.

 

Quarterly Payment Date means each March 31, June 30, September 30 and

December 31, commencing with the first such date to occur after the Closing

Date.

 

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, 2000 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

 

29

 

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 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

 

30

 

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 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 1996 Indenture) to the extent used to redeem either the 1996

Senior Notes or (if required under the terms of the 2001 Indenture in

connection with such Public Equity Offering) the 2001 Senior Notes; and (b)

after giving effect to such proposed Restricted Payment, there remains at least

$12,500,000 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:

 

	

  Lender

  	

   

  	

  Pro Rata Share of

  Revolving Credit

  Facility

  	

   

  	

  Amount of Revolving

  Credit Commitment

  	

   

  
	

  CITBC 

  	

   

  	

  50 

  	

  %

  	

  $

  	

  30,000,000

  	

   

  
	

  CITEF

  	

   

  	

  50

  	

  %

  	

  $

  	

  30,000,000

  	

   

  

 

Revolving Credit Commitment Termination Date shall mean September 30, 2005, 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.

 

31

 

Revolving Credit Facility shall mean Sixty Million Dollars ($60,000,000).

 

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.

 

Security Interest shall have the meaning specified in Section

5.03.

 

Settlement Date shall mean the date each week on which the Agent

and the Lenders shall settle amongst themselves so that the Agent shall not

have, as Agent, any money at risk and on such Settlement Date each of the

Lenders shall have its Pro Rata Share of all outstanding Revolving Credit

Loans, based upon its Revolving Credit Commitment.  Notwithstanding the previous sentence, upon the occurrence of an

Event of Default or a continuing decline or increase of the Revolving Credit

Loans or other Obligations, the Agent may, at its discretion, elect to settle

its and the Lenders’ accounts more often than weekly.

 

Solvency Certificate means a certificate in substantially the form of

Exhibit E, to be delivered by each Obligor pursuant to the terms of this

Financing Agreement.

 

Solvent means, when used with respect to any Person,

that (a) the fair value of the property of such Person, on a going concern

basis, is greater than the total amount of liabilities (including, without

limitation, contingent liabilities) of such Person, (b) the present fair

salable value of the assets of such Person, on a going concern basis, is not

less than the amount that will be required to pay the probable liabilities of

such Person on its debts as they become absolute and matured, (c) such Person

does not

 

32

 

intend

to, and does not believe that it will, incur debts or liabilities beyond such

Person’s ability to pay as such debts and liabilities mature, and (d) such

Person is not engaged in business or a transaction, and is not about to engage

in business or a transaction, for which such Person’s property would constitute

unreasonably small capital after giving due consideration to the prevailing

practice in the industry in which such Person is engaged.  Contingent liabilities will be computed at

the amount that, in light of all the facts and circumstances existing at such

time, represents the amount that can reasonably be expected to become an actual

or matured liability.

 

Specialty Hong Kong shall mean Specialty Paperboard (Hong Kong)

Limited, a Hong Kong corporation, and its successors.

 

Specialty Japan shall mean Specialty Paperboard Kabushiki

Kaisha, a Japanese corporation, and its successors.

 

Subsidiary shall mean, as to any Person, a corporation or

other entity of which securities or other ownership interest having ordinary

voting power (other than stock or such interest having such power only by

reason of the happening of a contingency) to elect a majority of the board of

directors or other persons performing similar functions for such corporation or

other entity are at the time owned, or the management of which is otherwise

controlled, directly, or indirectly through one or more intermediaries, or

both, by such Person.

 

Transferee shall have the meaning specified in Section

14.03.

 

Type of any Loan shall mean a Chase Manhattan Bank

Rate Loan or a Libor Rate Loan or both or either of the foregoing, all as the

context may require.

 

UCC shall mean the Uniform Commercial Code as from

time to time, in effect in the State of New York.

 

Unused Line Fee shall mean the aggregate fee due to the Agent

for the ratable benefit of the Lenders at the end of each quarter for each

Lender Loan Commitment, determined by multiplying the difference between the

Revolving Credit Facility and the average daily amount of the outstanding

Revolving Credit Loans for such quarter by the applicable rate set forth on

Schedule 1.01 for the number of days in said quarter.

 

Section 1.02.  Computation

of Time Periods.  In this

Financing Agreement unless otherwise specified, in the computation of periods

of time from a specified date to a later specified date, the word “from” means

“from and including” and the words “to” and “until” each mean “to but

excluding”.

 

33

 

Section 1.03.  Accounting

Principles and Terms.  Except

as otherwise provided in this Financing Agreement, (a) all computations and

determinations as to financial matters, and all financial statements to be

delivered under this Financing Agreement, shall be made or prepared in

accordance with GAAP and (b) all accounting terms used in this Financing

Agreement shall have the meaning ascribed to such terms by such principles.

 

Section 1.04.  Rules

of Construction.  When used

in this Financing Agreement:  (a) “or”

is not exclusive; (b) a reference to a Law includes any amendment or

modification to such Law; (c) a reference to a Person includes its permitted

successors and permitted assigns; and (d) unless otherwise provided for in this

Financing Agreement, a reference to an agreement, instrument or document shall

include such agreement, instrument or document as the same may be amended,

modified or supplemented from time to time in accordance with its terms and as

permitted by the Loan Documents.

 

ARTICLE II.          CONDITIONS

PRECEDENT

 

Section 2.01.  Conditions

Precedent to Initial Revolving Credit Loan.  The obligation of the Lenders to make an

initial Revolving Credit Loan is subject to the condition precedent that (1)

the Agent shall have received each of the following documents, in form and

substance satisfactory to the Agent and its counsel, and (2) each of the

following other requirements shall have been fulfilled:

 

(a)  Evidence of

Due Organization and all Corporate Actions by the Corporate Obligors.  A certificate of the Secretary or Assistant

Secretary of each Corporate Obligor, dated the Closing Date, attesting to the

certificate of incorporation and bylaws of such Corporate Obligor and all

amendments thereto and to all corporate actions taken by such Corporate

Obligor, including resolutions of its board of directors authorizing the

execution, delivery and performance of the Loan Documents and each other

document to be delivered pursuant to the Loan Documents.

 

(b)  Incumbency

and Signature Certificate of each Corporate Obligor.  A certificate of the Secretary or Assistant

Secretary of each Corporate Obligor, dated as of the Closing Date, certifying

the names and true signatures of the officers of such Corporate Obligor

authorized to sign the Loan Documents, and the other documents to be delivered

pursuant to the Loan Documents.

 

34

 

(c)  Good Standing

Certificates of each Corporate Obligor. 

A certificate, dated reasonably near the Closing Date, from the

Secretary of State (or other appropriate official) of the jurisdiction of

incorporation of such Corporate Obligor certifying as to the due incorporation

and good standing of such Corporate Obligor and certificates, dated reasonably

near the Closing Date, from the Secretary of State (or other appropriate

official) of each other jurisdiction where such Corporate Obligor is required

to be qualified to conduct business, certifying that such Corporate Obligor is

duly qualified to do such business and is in good standing in such state.

 

(d)  Evidence of

Due Organization and all Actions by FiberMark Office.  A certificate of the Manager of FiberMark

Office, dated the Closing Date, attesting to the certificate of formation and

operating agreement of FiberMark Office and all amendments thereto and to all

actions taken by FiberMark Office, including resolutions of its managers and

members, taken by FiberMark Office, including resolutions of its managers and

members, authorizing the execution, delivery and performance of the Loan

Documents and each other document to be delivered pursuant to the Loan

Documents.

 

(e)  Incumbency

and Signature Certificate of FiberMark Office.  A certificate of the Manager of FiberMark Office, dated as of the

Closing Date, certifying the names and true signatures of the Persons

authorized to sign the Loan Documents for FiberMark Office, and the other

documents to be delivered pursuant to the Loan Documents.

 

(f)  Good Standing

Certificates of FiberMark Office.  A

certificate, dated reasonably near the Closing Date, from the Secretary of

State (or other appropriate official) of the jurisdiction of formation of

FiberMark Office certifying as to the due formation and good standing of

FiberMark Office and certificates, dated reasonably near the Closing Date, from

the Secretary of State (or other appropriate official) of each other

jurisdiction where FiberMark Office is required to be qualified to conduct

business, certifying that FiberMark Office is duly qualified to do such business

and is in good standing in such state.

 

(g)  Revolving

Credit Notes.  A Revolving Credit

Note duly executed by each Borrower.

 

(h)  [RESERVED]

 

(i)  Lien Searches.  The Agent shall have received tax, judgment,

and Uniform Commercial Code searches satisfactory to the Agent for all

locations presently occupied or used by each Obligor.

 

35

 

(j)  UCC Filings.  Any documents (including without limitation,

financing statements) required, or reasonably requested by the Agent

(including, without limitation, in lieu initial financing statements in the

state of organization of each Obligor) to be filed in order to create, in favor

of the Agent for the ratable benefit of the Lenders, a first and exclusive

perfected security interest (except for Permitted Encumbrances) in the

Collateral with respect to which a security interest may be perfected by a

filing under the Uniform Commercial Code shall have been properly filed in each

office in each jurisdiction required in order to create in favor of the Agent

for the ratable benefit of the Lenders a perfected Lien on the Collateral.  The Agent shall have received

acknowledgement copies of all such filings (or, in lieu thereof, the Agent shall

have received other evidence satisfactory to the Agent that all such filings

have been made); and the Agent shall have received evidence that all necessary

filing fees and all taxes or other expenses related to such filings have been

paid in full.

 

(k)  Casualty

Insurance.  FiberMark shall have

delivered to the Agent evidence satisfactory to the Lenders that casualty

insurance policies listing the Agent as loss payee or mortgagee, as the case

may be, for the Brattleboro, Vermont property and for the Inventory of each

Obligor, are in full force and effect, all as set forth in Section 9.07 of this

Financing Agreement.

 

(l)  Examination

and Verification.  The Agent shall

have completed to the satisfaction of the Lenders an examination and

verification of the Accounts, Inventory, books and records of each Obligor.

 

(m) Approvals

and Permits.  Evidence satisfactory to the Agent that all

Approvals and Permits required for the operation of the business of each

Obligor are in effect.

 

(n)  Solvency Certificates. 

Solvency Certificates duly executed by each Obligor.

 

(o)  Landlord’s Waiver(s). 

From each landlord of any premises occupied by any Obligor, other than

Excluded Premises, premises listed on Schedule 2.01 as of the Closing Date or

other premises at which no Eligible Inventory is located, a landlord’s waiver

waiving any Lien such landlord has on any of the Inventory of any Obligor

pursuant to an agreement in form and substance satisfactory to the Lenders.

 

(p)  Warehouse Documents. 

From each public warehouse in which Inventory of any Obligor is stored,

other than Excluded Premises, premises listed on Schedule 2.01 as of the

Closing Date or another warehouse at which no Eligible Inventory is stored, an

acknowledgement in

 

36

 

form and

substance acceptable to the Lenders concerning the Lenders’ security interest

in such Inventory.

 

(q)  Third Party Processor Letters.  Except as set forth on Schedule 2.01, the Agent shall have

received, from each third party processor of Inventory of any Obligor, an acknowledgement

in form and substance acceptable to the Lenders concerning the Lenders’

security interest in such Inventory.

 

(r)  Fees and Expenses. 

Payment in full to the Agent and the Lenders of all fees and

Out-of-Pocket Expenses (to the extent requested by the Agent) required to be

paid to the Agent pursuant to the terms and conditions of this Financing

Agreement; and payment in full of all other fees required to be paid in

accordance with the terms of the Loan Documents.

 

(s)  Opinions of

Counsel.  Favorable opinions of

counsel to the Obligors in substantially the forms attached hereto collectively

as Exhibit F.

 

(t)  Due Diligence.  Satisfactory completion of all reasonable

due diligence items the Agent deems necessary, including but not limited to (1)

interviews with key customers and any other Persons material to the operation

of each Obligor’s business; (2) review of actual and potential liabilities of

each Obligor under Environmental Laws or in connection with Environmental

Discharges relating to all past and present real estate, properties and

operations of each Obligor and their respective predecessors, and (3) review of

the ability of the non-Domestic Subsidiaries of FiberMark to repatriate funds

to the United States.

 

(u)  Repatriation of Funds. 

The non-Domestic Subsidiaries of FiberMark shall be able, without

violating any applicable law, rule or regulation or any of their corporate

charter documents, to repay to FiberMark, in the United States, in respect of

outstanding intercompany advances, an aggregate amount equal to at least

$30,000,000.

 

(v)  Officer’s Certificate. 

The following statements shall be true and Agent shall have received an

Officer’s Certificate stating that:

 

(i)  The representations and warranties contained in this Financing

Agreement and in each of the other Loan Documents are correct on and as of the

date of this Financing Agreement, as though made on and as of such date; and

 

(ii)  No Default or

Event of Default has occurred and is continuing.

 

37

 

(w) Mortgage.  FiberMark Office shall have executed and

delivered an amendment to each document comprising the Mortgage, in

substantially the form attached hereto collectively as Exhibit D, and caused

such amendment to be recorded in the real property records of Brattleboro,

Vermont.

 

(x)  Title Insurance. 

There shall have been delivered to the Agent an ALTA lender’s title

insurance policy with respect to the Mortgage, or an appropriate endorsement to

the existing title insurance policy, indicating that the Mortgage, as amended,

secures that portion of the Obligations equal to at least Twenty-Five Million

Dollars ($25,000,000), without an exclusion from coverage for creditors’ rights

and with “last dollar,” “revolving credit” and “comprehensive” endorsements and

such other endorsements as the Agent deems appropriate, issued by a title

insurance company approved by the Agent and containing no exception to coverage

based on matters an accurate survey would show and no other exceptions to

coverage that are not approved by the Agent.

 

(y)  Disbursement Authorizations.  Each Borrower shall have delivered to the Agent all information

necessary for the Agent to issue wire transfer instructions on behalf of such

Borrower for the initial Revolving Credit Loan and subsequent Revolving Credit

Loans to be made to it under this Financing Agreement, including, but not

limited to, disbursement authorizations in form acceptable to the Agent.

 

(z)  Additional

Documentation.  Such other

approvals, opinions or documents as the Agent or any Lender shall reasonably

request.

 

Section 2.02.  Conditions

Precedent to Each Revolving Credit Loan.  The obligations of the Lenders to make each Revolving Credit Loan

(including the initial Revolving Credit Loans under this Financing Agreement),

shall be subject to the further conditions precedent that on the date of

providing such Revolving Credit Loan:

 

(a)           The following statements shall be true:

 

(i)                                     all of the representations and warranties

contained in this Financing Agreement and in each of the other Loan Documents

are correct on and as of the date of providing such Revolving Credit Loan as

though made on and as of such date; and

 

(ii)                                  no Default or Event of Default has occurred and

is continuing, or could result from providing such Revolving Credit Loan; and

 

38

 

(b)                                 The Agent shall have received such other

approvals, opinions or documents as the Agent or any Lender may reasonably

request.

 

Section 2.03.  Deemed

Representation.   Each

delivery of a Notice of Borrowing requesting a Revolving Credit Loan shall

constitute a representation and warranty that the statements contained in

Section 2.02 are true and correct both on the date of such delivery of the

Notice of Borrowing and as of the date of the providing of such Revolving

Credit Loan.

 

ARTICLE III.         AMOUNT AND

TERMS OF THE REVOLVING CREDIT LOANS.

 

Section 3.01.  Revolving

Credit Loans.  Subject to the

terms and conditions of this Financing Agreement, each Lender severally agrees

to make loans (together with all “Revolving Credit Loans,” as defined in, and

made pursuant to, the September 1999 Agreement that remain outstanding as of

the Closing Date, “Revolving Credit Loans”) to each Borrower from time to time

during the period from the Closing Date to the Revolving Credit Commitment

Termination Date, provided that, subject to Section 3.03, (a) the amount

of each Revolving Credit Loan does not exceed the then effective Availability,

and (b) the aggregate principal amount of all Revolving Credit Loans

outstanding at any time does not exceed the lesser of:  (i) the Revolving Credit Facility or (ii)

the then effective Borrowing Base (“Revolving Credit Limit”).  Within the limits of the Revolving Credit

Limit, each Borrower may borrow, make a payment pursuant to Section 3.10, and

reborrow under this Section 3.01.  The

Revolving Credit Loans may be outstanding as Chase Manhattan Bank Rate Loans or

Libor Loans.  Each Type of Revolving

Credit Loan of each Lender shall be made and maintained at such Lender’s

Applicable Lending Office for such Type of Loan.  Each “Revolving Credit Loan,” as defined in, and made pursuant

to, the September 1999 Agreement that remains outstanding as of the Closing

Date, shall constitute a “Revolving Credit Loan” for purposes of this Financing

Agreement (including, without limitation, for purposes of determining

Availability).

 

Section 3.02.  Revolving

Credit Note.  All Revolving

Credit Loans made by each Lender under this Financing Agreement shall be

evidenced by, and repaid with interest in accordance with, a promissory note of

the applicable Borrower in substantially the form of Exhibit A hereto, in the

principal amount equal to such Lender’s Lender Loan Commitment, payable to such

Lender for the account of its Applicable Lending Office and maturing as to

principal on the Revolving Credit Commitment Termination Date (the “Revolving

Credit Note”).  Each Lender is hereby

authorized by each Borrower to endorse on the schedule

 

39

 

attached to the Revolving

Credit Note of such Borrower held by it the unpaid principal balance and type,

as of the Closing Date, of each Revolving Credit Loan that constitutes a

continuation of an obligation outstanding under the 1999 Agreement as of the

Closing Date, the date of making each Revolving Credit Loan, the amount of each

Revolving Credit Loan, the type of the Revolving Credit Loan and each

Conversion, Continuation and payment of principal amount received by such Lender

for the account of its Applicable Lending Office of its Revolving Credit Loans,

which endorsement shall, in the absence of manifest error, be conclusive as to

the outstanding balance of the Revolving Credit Loans made by such Lender; provided,

however, that the failure to make such notation with respect to any

Revolving Credit Loan or Conversion, Continuation or payment shall not limit or

otherwise affect the Obligations of the applicable Borrower under this

Financing Agreement or the Revolving Credit Note of such Borrower held by such

Lender.  Each Lender agrees that prior

to any assignment of any of such Revolving Credit Notes it will endorse the

schedule attached to its Revolving Credit Note.  All outstanding principal on the Revolving Credit Loans shall be

due and payable on the Revolving Credit Commitment Termination Date.

 

Section 3.03.  Overadvances.  The Agent may, on behalf of the Lenders,

make a Revolving Credit Loan in excess of the Availability or the Revolving

Credit Facility (“Overadvances”) in 

either case, up to an aggregate amount outstanding at any time of Three

Million Dollars ($3,000,000) (“Overadvance Availability”); provided that

the Agent and the Lenders shall not be obligated to make any Overadvances

hereunder and any Overadvance made by the Agent in excess of Availability or

the Revolving Credit Facility shall be in the sole and absolute discretion of

the Agent subject to payment in the amount of such Overadvances or to any

additional terms the Agent deems necessary. 

In the event that the Agent makes Overadvances on behalf of the Lenders,

each Lender severally agrees to make a Revolving Credit Loan equal to its Pro

Rata Share of all Overadvances.

 

Section 3.04.  Information

Relating to Accounts.  In

furtherance of the continuing assignment and security interest in each

Obligor’s Accounts, each Obligor will, upon the creation of Accounts, execute

and deliver to the Agent in such form and manner as the Agent may reasonably

require, solely for the Agent’s convenience in maintaining records of

collateral, such confirmatory schedules of Accounts as the Agent may reasonably

request, and such other appropriate reports designating, identifying and

describing the Accounts as the Agent may reasonably require.  In addition, upon the Agent’s request, such

Obligor shall provide the Agent and each of the Lenders with copies of

agreements with, or purchase orders from, the Obligor’s customers, and copies

of invoices to customers, proof of shipment or delivery and such

 

40

 

other documentation and

information relating to said Accounts and other collateral as the Agent may

reasonably require.  Failure to provide

the Agents or any of the Lenders with any of the foregoing shall in no way affect,

diminish, modify or otherwise limit the security interests granted herein.  Each Obligor hereby authorizes the Agent to

regard its printed name or rubber stamp signature on assignment schedules or

invoices as the equivalent of a manual signature by one of such Obligor’s

authorized officers or agents.

 

Section 3.05.  Representations

Relating to Accounts.  Each

Obligor hereby represents and warrants that (a) each Account of such

Obligor is based on an actual and bona fide sale and delivery of goods or

rendition of services to customers, made by such Obligor in the ordinary course

of its business; (b) the goods and inventory being sold and the Accounts

created are the exclusive property of such Obligor and are not and shall not be

subject to any Lien, consignment arrangement, encumbrance, security interest or

financing statement whatsoever, other than the Permitted Encumbrances;

(c) the invoices evidencing such Accounts are in the name of such Obligor;

and (d) the customers of such Obligor have accepted the goods or services,

owe and are obligated to pay the full amounts stated in the invoices according

to their terms, without dispute, offset, defense, counterclaim or contra,

except for disputes and other matters arising in the ordinary course of

business of which such Obligor has advised the Agent pursuant to

Section 3.07.  Each Obligor

confirms to the Lenders that any and all taxes or fees relating to its

business, its sales, the Accounts of such Obligor or goods relating thereto,

are its sole responsibility and that same will be paid by such Obligor or when

due and that none of said taxes or fees represent a lien on or claim against

the Accounts.  Each Obligor also

warrants and represents that it is a duly and validly existing corporation or

limited liability company and is qualified in all states and provinces where

the failure to so qualify would have an adverse effect on the business of such

Obligor or the ability of such Obligor to enforce collection of Accounts due

from customers residing in such locations. 

Each Obligor agrees to maintain such books and records regarding

Accounts as the Agent may reasonably require and agrees that the books and

records of such Obligor will reflect the Lenders’ interest in the Accounts of

such Obligor.  All of the books and

records of such Obligor will be available to the Agent and the Lenders at

normal business hours, including any records handled or maintained for such

Obligor by any other company or entity.

 

Section 3.06.  Collection

of Accounts.  Until the Agent

has advised an Obligor to the contrary after the occurrence of an Event of

Default, such Obligor may and will enforce, collect and receive all amounts

owing on the Accounts of such Obligor for the Lenders’ benefit and on the

Lenders’ behalf, but at such Obligor’s expense; such privilege

 

41

 

shall terminate automatically

upon the institution by or against such Obligor of any proceeding under any

bankruptcy or insolvency law or, at the election of the Agent, upon the

occurrence of any other Event of Default and until such Event of Default is

waived.  Any checks, cash, notes or

other instruments or property received by such Obligor with respect to any

Accounts of such Obligor shall be held by such Obligor in trust for the

Lenders, separate from such Obligor’s own property and funds, and, following

establishment of the Depository Accounts (but subject to the immediately

following paragraph), immediately turned over to the Agent for the ratable

benefit of the Lenders with proper assignments or endorsements by deposit to

the Depository Accounts.  All amounts

received by the Agent in payment of Accounts of an Obligor will be credited to

such Obligor’s accounts upon the Agent’s receipt of “collected funds” at the

Agent’s bank account in New York, New York on the Business Day of receipt if

received no later than 1:00 p.m. (New York time) or on the next succeeding

Business Day if received after 1:00 p.m. (New York time).  No checks, drafts or other instrument

received by the Agent shall constitute final payment to the Agent or the

Lenders unless and until such instruments have actually been collected.

 

On or before March 31, 2002,

and at all times thereafter, (1) each Obligor shall have established a system

of lock box accounts, satisfactory to the Agent, for the collection of such

Obligor’s Accounts for deposit into the Depository Account of such Obligor and

shall have taken all steps necessary to insure that all Accounts Receivable of

such Obligor are delivered to the Depository Account of such Obligor, and (2)

the Agent, each institution at which a Depository Account is maintained (herein

the “Depository Banks”), and, unless the Agent is the Depository Bank’s

customer with respect to such Depository Account, each Obligor having an

interest in such Depository Account, shall have executed and delivered an

agreement pursuant to which such Depository Bank has agreed, if instructed by

the Agent as permitted hereunder, to remit funds collected and to be collected

in the Depository Account to an account specified by the Agent or otherwise in

accordance with the Agent’s instructions, without any further consent of any

Obligor.  It is hereby agreed between

the Agent and each Obligor that until either (i)  the Availability is Five Million Dollars ($5,000,000) or less or

(ii) there is then a Default or Event of Default, the Agent shall permit such

Obligor to instruct the Depository Banks to transfer any funds in the

Depository Accounts to their respective operating accounts or such other

accounts located in the United States (other than payroll accounts) as such

Obligor may designate.  If either (i)

Availability is Five Million Dollars ($5,000,000) or less or (ii) there is then

a Default or an Event of Default, the Agent shall have the right to

immediately, without notice to an Obligor, instruct such Depository Banks to

remit funds collected and to be collected in the Depository Accounts to an

account specified by the Agent

 

42

 

and with

respect to the disposition of any and all funds collected or to be collected in

such Depository Accounts.

 

Section 3.07.  Notice

Regarding Accounts.  Each

Obligor agrees to notify each of the Lenders promptly of any matters materially

affecting the value, enforceability or collectibility of any Account of such

Obligor and of all material customer disputes, offsets, defenses,

counterclaims, returns, rejections and all reclaimed or repossessed merchandise

or goods.  Each Obligor agrees that it

shall issue credit memoranda promptly (with duplicates to the Agent upon

request after the occurrence of an Event of Default) upon accepting returns or

granting allowances, and may continue to do so until the Agent has notified

such Obligor that an Event of Default has occurred and that all future credits

or allowances are to be made only after the Agent’s prior written

approval.  Upon the occurrence of an

Event of Default and until such time as such Event of Default is waived and on

notice from the Agent, each Obligor agrees that all returned, reclaimed or

repossessed merchandise or goods shall be set aside by such Obligor, marked

with the Agent’s name and held by such Obligor for the Agent’s account as owner

and assignee for the ratable benefit of the Lenders.

 

Section 3.08.  Borrowers’

Accounts.  The Agent shall

maintain a separate account on its books in each Borrower’s name in which each

Borrower will be charged with Revolving Credit Loans made by the Agent on

behalf of the Lenders to it or for such Borrower’s account, and with any other

Obligations of each such Borrower, including any and all costs, expenses and

reasonable attorney’s fees which the Lenders and/or the Agent may incur in

connection with the exercise by or for the Agent or the Lenders of any of the

rights or powers herein conferred upon the Agent or in the prosecution or

defense of any action or proceeding to enforce or protect any rights of the

Agent or the Lenders in connection with this Financing Agreement or the

Collateral assigned hereunder, or any Obligations owing to the Lenders and/or

the Agent by such Borrower.  The

applicable Borrower will be credited with all amounts received by the Agent

from such Person or from others for such Person’s account, including, as above

set forth, all amounts received by the Agent in payment of assigned Accounts

and such amounts will be applied to payment of the Obligations.  In no event shall prior recourse to any

Accounts or other security granted to or by any Borrower be a prerequisite to

the Agent’s right to demand payment of any Obligation.  Further, it is understood that the Lenders

and the Agent shall have no obligation whatsoever to perform in any respect any

of such Obligor’s contracts or obligations relating to its Accounts.

 

After the end of each month,

the Agent shall promptly send each Borrower a statement showing the accounting

for the charges,

 

43

 

Revolving

Credit Loans and other transactions occurring between the Agent and such

Borrower during that month.  The monthly

statements shall be deemed correct and binding upon such Borrower and shall

constitute an account stated among such Borrower, the Lenders and the Agent

unless the Agent receives a written statement of the exceptions within thirty

(30) days of the date of the monthly statement.

 

Section 3.09.  Application

of Payments.  Notwithstanding

anything to the contrary contained in this Article 3 or elsewhere in this

Financing Agreement, the Agent shall apply all amounts received by it in

payment of Accounts or Obligations of the applicable Borrower to Chase

Manhattan Bank Rate Revolving Credit Loans of such Borrower prior to any

application to other Types of Revolving Credit Loans of such Borrower; provided,

however, (a) upon the occurrence of an Event of Default or (b) in

the event the aggregate amount of outstanding Revolving Credit Loans of the

Borrowers which are Libor Rate Loans exceeds the Borrowing Base, the Agent may

apply all such amounts received by it to the payment of Obligations in such

manner and in such order as the Agent may elect in its reasonable business

discretion.  In the event that any such

amounts are applied to Revolving Credit Loans of any Borrower which are Libor

Rate Loans, such application shall be treated as a prepayment of such loans of

such Borrower and the Agent shall be entitled to the Libor Rate Prepayment

Premium with respect thereto.

 

Section 3.10.  Prepayments.  Subject to the limitation noted below, any

Borrower may prepay its Revolving Credit Loans upon at least one (1) Business

Day’s notice to Agent in the case of Chase Manhattan Bank Rate Loans, and at

least three (3) Business Day’s notice to Agent in the case of Libor Rate Loans,

in whole or in part with accrued interest to the date of such prepayment on the

amount prepaid, provided that (a) each partial prepayment shall be in

the case of a Libor Rate Loan, in a principal amount of not less than One

Million Dollars ($1,000,000) and integral multiples of One Hundred Thousand

Dollars ($100,000); and (b) Libor Rate Loans prepaid on any Business Day other

than the last day of the Libor Rate Period applicable for such Loan shall

require such Borrower to pay the Libor Rate Prepayment Premiums.

 

In the event that the Borrowers

shall cause the Revolving Credit Facility to be cancelled effective as of any

date prior to the then-current Revolving Credit Commitment Termination Date and

FiberMark or any Borrower shall obtain an alternative commitment from another

lender for financing, all Borrowers shall prepay all Revolving Credit Loans in

whole with accrued interest to the date of such cancellation and in addition,

unless such cancellation is in connection with (i) an offering of senior notes

registered under the Securities Exchange Act of 1934, as amended, or (ii) an

Asset Acquisition (as defined in either Indenture), the Borrowers shall pay to

 

44

 

the

Agent, for the ratable account of each Lender, a fee (“Prepayment Fee”) in the

amount of 1% of the Revolving Credit Facility.

 

To the extent the outstanding

principal amount of all the Revolving Credit Loans taken together exceeds the

Borrowing Base, the Borrowers shall prepay such Revolving Credit Loans in an

amount equal to the excess of the aggregate outstanding principal amount of

Revolving Credit Loans over the then effective Borrowing Base.

 

Section 3.11.  Funding

of Revolving Credit Loans. 

The Agent, for the account of the Lenders, shall disburse all Revolving

Credit Loans and shall handle all collections of Collateral and repayment of

Obligations.  It is understood that for

purposes of Revolving Credit Loans and for purposes of this Section 3.11, the

Agent is using the funds of the Initial Lenders.

 

On each Settlement Date, the

Agent and the Lenders shall each remit to the other, in immediately available

funds, all amounts necessary so as to ensure that, as of such Settlement

Date,  each Lender shall have its Pro

Rata Share of all outstanding Revolving Credit Loans in accordance with its

Lender Loan Commitment.

 

The Agent shall forward to each

Lender, at the end of each month, a copy of the account statement rendered by

the Agent to each Borrower.

 

Section 3.12.  Notice

and Manner of Borrowing. 

With regard to each Revolving Credit Loan, the applicable Borrower shall

deliver to the Agent and, if required by the Agent, with a copy to each Lender,

a written or telegraphic or facsimile notice substantially in the form of

Exhibit B hereto (effective upon receipt) (“Revolving Credit Notice of

Borrowing”) not later than 12:00 noon (New York time) on the day of making each

Chase Manhattan Bank Rate Revolving Credit Loan and at least three (3) Business

Days prior to the date of any Libor Rate Revolving Credit Loan.  Each Revolving Credit Notice of Borrowing

must specify: (a) the date of such Revolving Credit Loan; (b) the amount of

such Revolving Credit Loan; (c) the initial Type or Types which will comprise

the requested Revolving Credit Loan and (d) in the case of a Libor Rate

Revolving Credit Loan, the initial Libor Rate Period applicable thereto.  The Agent will promptly notify each Lender

of receipt by the Agent of a Revolving Credit Notice of Borrowing and of the

contents thereof.

 

Section 3.13.  Obligations

of Agent and Lenders.  Each

Lender is solely responsible for its Pro Rata Share of each Revolving Credit

Loan and neither Agent nor any Lender shall be responsible for, nor assume any

obligations for, the failure of any Lender to make available its

 

45

 

Pro Rata Share of any such

Revolving Credit Loans.  Should any

Lender refuse to make available its Revolving Credit Loans, then each of the

other Lenders may, but without obligation to do so, increase, unilaterally, its

portion of the Revolving Credit Loans in which event the applicable Borrower

shall be so obligated to such other Lender.

 

Nothing contained herein shall

be deemed to obligate the Agent to make available to the Borrowers the full

amount of a requested Revolving Credit Loan when the Agent has not received any

Lender’s Pro Rata Share of such Revolving Credit Loan or if the Agent otherwise

has any notice that any of the Lenders will not advance its Pro Rata Share

thereof.  The Agent, for the account of

the Lenders, shall disburse all Revolving Credit Loans and shall handle all

collections of Collateral and repayment of Obligations.  It is understood that for purposes of

Revolving Credit Loans and for purposes of this Article 3 and prior to

settlement among the Lenders on any Settlement Date the Agent is using the

funds of the Initial Lenders.

 

Unless the Agent shall have

been notified in writing by any Lender prior to any advance to a Borrower that

such Lender will not make the amount which would constitute its share of the

borrowing on such date available to the Agent, the Agent may assume that such Lender

shall make such amount available to the Agent on a Settlement Date, and the

Agent may, in reliance upon such assumption, make available to such Borrower

for the benefit of such Borrower a corresponding amount.  Absent such notice each Lender’s commitment

shall be absolute and unconditional and such Lender shall reimburse the Agent

its Pro Rata Share of such borrowing upon demand.  A certificate of the Agent submitted to any Lender with respect

to any amount owing under this subsection shall be conclusive, absent manifest

error.  If such Lender’s Pro Rata Share

of such borrowing is not in fact made available to the Agent by such Lender on

the Settlement Date, the Agent shall be entitled to charge the applicable Borrower’s

account with any such amount with interest thereon at the rate per annum

applicable to Revolving Credit Loans hereunder, on demand, from the applicable

Borrower without prejudice to any rights which the Agent may have against such

Lender hereunder.  Nothing contained in

this subsection shall relieve any Lender which has failed to make available its

Pro Rata Share of any borrowing hereunder from its obligation to do so in

accordance with the terms hereof. 

Nothing contained herein shall be deemed to obligate the Agent to make

available to the applicable Borrower the full amount of a requested advance

when the Agent has not received any Lender’s Pro Rata Share of such Revolving

Credit Loan or if the Agent has any notice that any of the Lenders will not

advance its Pro Rata Share thereof.

 

Section 3.14.  Minimum

Amounts.  The amount of all

Revolving Credit Loans borrowed on any given day and the aggregate

 

46

 

amount of all Revolving Credit

Loans with the same interest rate after giving effect to the conversions and

continuations provided for in Section 6.01 shall, in the case of Libor Rate

Loans, be in an amount at least equal to One Million Dollars ($1,000,000) or a

greater amount which is an integral multiple of One Hundred Thousand Dollars ($100,000)

(Libor Rate Loans having different Libor Rate Periods outstanding at the same

time shall be deemed separate Loans for purposes of the foregoing, one for each

Libor Rate Period).  There shall be no

minimum amount of principal applicable to a conversion or continuation of a

Chase Manhattan Bank Rate Loan.

 

Section 3.15.  Use

of Proceeds.  The proceeds of

the Revolving Credit Loans shall be used by the applicable Borrower (i) for its

working capital and general corporate purposes, and (ii) to make loans to any

Obligor for working capital purposes; provided, however, that

proceeds of Revolving Credit Loans may be used to pay all or a portion of the

consideration for the acquisition of stock or assets of another Person only if

each of the Restricted Payment Conditions is satisfied with respect to such

acquisition.  No Borrower will, directly

or indirectly, use any Revolving Credit Loan proceeds for the purpose of

purchasing or carrying any margin stock within the meaning of

Regulations T, U or X of the Board of Governors or to extend credit to any

Person for the purpose of purchasing or carrying any such margin stock.

 

Section 3.16.  Taxes.  Any and all payments by each Borrower made

hereunder shall be made free and clear of and without deduction for any and all

taxes, levies, imposts, deductions, charges or withholdings imposed by any

Governmental Authority, and all liabilities with respect thereto, excluding

taxes imposed on or measured by the net income of any of the Lenders on the

receipt or accrual of stated principal and interest payments by the

jurisdiction under the laws of which such Lender is organized or any political

subdivision thereof or in which such Lender maintains an office or conducts

business (all such non-excluded taxes, levies, imposts, deductions, charges,

withholdings and liabilities being hereinafter referred to as “Non-Excluded

Taxes”).  If any Borrower shall be

required by Law to withhold or deduct any Non-Excluded Taxes from or in respect

of any sum payable hereunder, (a) the sum payable shall be increased as may be

necessary so that after making all required deductions (including deductions

applicable to additional sums payable under this Section 3.16) Lender receives

an amount equal to the sum it would have received had no such deductions been

made, (b) such Borrower shall make such deductions, and (c) such Borrower shall

pay the full amount deducted to the relevant Governmental Authority in

accordance with applicable Law.

 

In addition, each Borrower

jointly and severally agrees to pay any present or future stamp or documentary

taxes or any other excise or

 

47

 

property

taxes, charges or similar levies that arise under the laws of the United States

of America or the State of New York or any other taxing authority from any

payment made hereunder or from the execution or delivery or otherwise with

respect to this Financing Agreement or any other Loan Document (hereinafter

referred to an “Other Taxes”).

 

Each Borrower shall jointly and

severally indemnify each Lender for the full amount of Non-Excluded Taxes and

Other Taxes (including, without limitation, any Non-Excluded Taxes or Other

Taxes imposed by any jurisdiction on amounts payable under this Section 3.16)

paid by such Lender or any liability (including penalties, interest and

expenses) arising therefrom or with respect thereto, whether or not such

Non-Excluded Taxes or Other Taxes were correctly or legally asserted.  Payments by a Borrower pursuant to this

indemnification shall be made within thirty (30) days from the date a Lender

makes written demand therefor.

 

Within thirty (30) days after

the date of any payment of Non-Excluded Taxes or Other Taxes by a Borrower,

such Borrower shall furnish to the applicable Lender the original or a

certified copy of a receipt evidencing payment thereof.  The applicable Borrower shall compensate the

applicable Lender for all losses and expenses sustained by such Lender as a

result of any failure by such Borrower to so furnish such copy of such receipt.

 

Without prejudice to the

survival of any other agreement of the Borrowers hereunder, the agreements and

obligations of the Borrowers contained in this Section 3.16 shall survive the

payment in full of the Revolving Credit Loans.

 

Each Lender that is organized

under the laws of any jurisdiction other than the United States of America or

any State thereof (including the District of Columbia) agrees, if eligible, to

furnish to FiberMark and the Agent, prior to the first Quarterly Payment Date,

two copies of either U.S. Internal Revenue Service Form 4224 or U.S. Internal

Revenue Service Form 1001 or any successor forms thereto (wherein such Lender

claims entitlement to complete exemption from U.S. federal withholding tax on

all payments made by the Obligors hereunder) and upon request of FiberMark to

provide to FiberMark and the Agent a new Form 4224 or Form 1001 or any

successor form thereto (claiming a complete exemption from U.S. federal

withholding tax on all payments made by such Person hereunder) if any

previously delivered form is found to be incomplete or incorrect in any

material respect or upon the obsolescence of any previously delivered form.

 

Section 3.17.  Additional

Costs.  The applicable

Borrower shall pay directly to the applicable Lender from time to time on

demand

 

48

 

such amounts as such Lender may

determine to be necessary to compensate it for any increased costs which such

Lender determines are attributable to its making or maintaining any Libor Rate

Loan to such Borrower, or its obligation to convert any Chase Manhattan Bank

Rate Loan to a Libor Rate Loan hereunder, or any reduction in any amount

receivable by such Lender hereunder in respect of any of such Libor Rate Loans

or such obligation (such increases in costs and reductions in amounts

receivable being herein called “Additional Costs”), resulting from any

Regulatory Change which:

 

(a)  changes the

basis of taxation of any amounts payable to such Lender under this Financing

Agreement or the Revolving Credit Loans or the Revolving Credit Note in respect

of any of such Libor Rate Loans (other than changes in the rate of net income

tax imposed on such Lender); or

 

(b)  imposes or

modifies any reserve, special deposit, deposit insurance or assessment, minimum

capital, capital ratio or similar requirements relating to any extensions of

credit or other assets of, or any deposits with or other liabilities of, such

Lender (including any Libor Rate Loans or any deposits referred to in the definition

of “Libor Rate” in Section 1.01 hereof), or the Lender Loan Commitment of

such Lender; or

 

(c)  imposes any

other condition affecting this Financing Agreement or the Revolving Credit

Loans or the Revolving Credit Note (or any of such extensions of credit or

liabilities).

 

Without limiting the effect of

the provisions of the first paragraph of this Section 3.17, in the event that,

by reason of any Regulatory Change, a Lender either (1) incurs Additional Costs

based on or measured by the excess above a specified level of the amount of a

category of deposits of other liabilities of such Lender which includes

deposits by reference to which the Libor Rate is determined as provided in this

Financing Agreement or a category of extensions of credit or other assets of

such Lender which includes Revolving Credit Loans based on the Libor Rate or

(2) becomes subject to restrictions on the amount of such a category of

liabilities or assets which it may hold, then, if such Lender so elects by

notice to the Borrowers and the Agent, the obligation of such Lender to make or

continue, or to convert Chase Manhattan Bank Rate Loans into, Libor Rate Loans

shall be suspended until such Regulatory Change ceases to be in effect (in

which case the provisions of Section 3.20 hereof shall be applicable).

 

A certificate of any Lender

claiming compensation under this Section, setting forth the additional amount

or amounts to be paid to it hereunder, shall be conclusive in the absence of

manifest error.

 

49

 

Section 3.18.  Limitation

on Types of Revolving Credit Loans. 

Anything herein to the contrary notwithstanding, if, on or prior to the

determination of a Libor Rate for any Libor Rate Period:

 

(a)  The Agent or any of the Lenders determines (which determination

shall be conclusive) that quotations of interest rates for the relevant

deposits referred to in the definition of “Libor Rate” in Section 1.01 hereof

are not being provided in the relevant amounts or for the relevant maturities

for purposes of determining rates of interest for Libor Rate Loans as provided

in this Financing Agreement; or

 

(b)  Any Lender determines (which determination shall be conclusive)

that the relevant rates of interest referred to in the definition of “Libor

Rate” in Section 1.01 hereof upon the basis of which the rate of interest for

Libor Rate Loans for such Libor Rate Period are to be determined do not

adequately cover the cost to such Lender of making or maintaining such Libor

Rate Loans for such Libor Rate Period; then Agent shall give the applicable

Borrower prompt notice thereof, and so long as such condition remains in

effect, such Lenders shall be under no obligation to make such Libor Rate

Loans, convert Chase Manhattan Bank Rate Loans into such Libor Rate Loans or

continue such Libor Rate Loans and if the applicable Borrower has outstanding

Libor Rate Loans shall, on the last day(s) of the then current Libor Rate

Period(s) for such outstanding Libor Rate Loans, either prepay such Libor Rate

Loans or convert such Libor Rate Loans into a Chase Manhattan Bank Rate Loan in

accordance with Section 6.01.

 

Section 3.19.  Illegality.  Notwithstanding any other provision of this

Financing Agreement, in the event that it becomes unlawful for any Lender to

honor its obligation to make or maintain Libor Rate Loans hereunder or convert

Chase Manhattan Bank Rate Loans into Libor Rate Loans, then such Lender shall

promptly notify the Borrowers thereof and such Lender’s obligation to make or

continue, or to convert a Chase Manhattan Bank Rate Loan into the affected

Libor Rate Loan shall be suspended until such time as such Lender may again

make and maintain such Libor Rate Loans (in which case the provisions of

Section 3.20 hereof shall be applicable).

 

Section 3.20.  Treatment

of Affected Loans.  If the

obligations of a Lender to make or continue a Libor Rate Loan, or to convert

Chase Manhattan Bank Rate Loans into Libor Rate Loans are suspended pursuant to

Section 3.17 or 3.19 hereof (Libor Rate Loans so affected being herein called

“Affected Loans”), such Lender’s Affected Loans shall be automatically

converted into Chase Manhattan Bank Rate Loans on the last day(s) of the then

current Libor Rate Period(s) for the Affected

 

50

 

Loans (or, in the case of a

conversion required by Section 3.17 or 3.19, on such earlier date as such

Lender may specify to the Borrowers).

 

To the extent that such

Lender’s Affected Loans have been so converted, all payments and prepayments of

principal which would otherwise be applied to such Lender’s Affected Loans

shall be applied instead to its Chase Manhattan Bank Rate Loans.  All Revolving Credit Loans which would

otherwise be made or continued by Lenders as Libor Rate Loans shall be made or

continued instead as Chase Manhattan Bank Rate Loans and all Chase Manhattan

Bank Rate Loans of Lenders which would otherwise be converted into Libor Rate

Loans shall remain as Chase Manhattan Bank Rate Loans.

 

Section 3.21.  Adequacy.  If any of the Lenders shall have determined

that, after the date hereof, the adoption of any applicable Law, rule or

regulation regarding capital adequacy, or any change therein, or any change in

the interpretation or administration thereof by any Governmental Authority, central

bank or comparable agency charged with the interpretation or administration

thereof, or any request or directive regarding capital adequacy (whether or not

having the force of Law) of any such Governmental Authority, central bank or

comparable agency, has or would have the effect of reducing the rate of return

on capital of such Lender (or its Parent) as a consequence of such Lender’s

obligations hereunder to a level below that which such Lender could have

achieved but for such adoption, change, request or directive (taking into

consideration its policies with respect to capital adequacy) by an amount

deemed by such Lender to be material, then from time to time, the applicable

Borrower shall pay to such Lender such additional amount or amounts as will

compensate such Lender for such reduction. 

A certificate of a Lender claiming compensation under this Section 3.21,

shall be conclusive in the absence of manifest error.

 

ARTICLE IV.         GUARANTY

 

Section 4.01.  FiberMark

Durable Guaranty.  Each

FiberMark Durable Guarantor, jointly and severally, hereby irrevocably,

absolutely and unconditionally guarantees to each Lender Party and their

successors, endorsees, transferees and assigns the prompt and complete payment

by FiberMark Durable as and when due and payable (whether at stated maturity or

by required prepayment, acceleration, demand or otherwise), of all FiberMark

Durable Obligations now existing or hereafter incurred by FiberMark Durable,

and agrees to pay on demand any and all expenses (including counsel fees and

expenses) which may be paid or incurred by any Lender Party in collecting any

or all of FiberMark Durable

 

51

 

Obligations and/or enforcing

any rights under this guaranty or under FiberMark Durable Obligations.

 

Section 4.02.  FiberMark

Durable Guarantors’ Guaranty Obligations Unconditional.  Each FiberMark Durable Guarantor hereby

jointly and severally guarantees that the FiberMark Durable Obligations will be

paid strictly in accordance with the terms of the Loan Documents and other

agreements to which FiberMark Durable is a party, regardless of any Law now or

hereafter in effect in any jurisdiction affecting any such terms or the rights

of any Lender Party with respect thereto. 

The obligations and liabilities of each FiberMark Durable Guarantor

under this guaranty shall be absolute and unconditional irrespective of: (1)

any lack of validity or enforceability of any of the FiberMark Durable

Obligations, any Loan Document, or any agreement or instrument relating

thereto; (2) any change in the time, manner or place of payment of, or in any

other term in respect of, all or any of the FiberMark Durable Obligations, or

any other amendment or waiver of or consent to any departure from any Loan

Document or any other documents or instruments executed in connection with or

related to FiberMark Durable Obligations; (3) any exchange or release of, or

non-perfection of any Lien on or in, any Collateral, or any release or

amendment or waiver of or consent to any departure from any other guaranty, for

all or any of the FiberMark Durable Obligations; or (4) any other circumstances

which might otherwise constitute a defense available to, or a discharge of,

FiberMark Durable or any guarantor in respect of FiberMark Durable Obligations

or the FiberMark Durable Guarantors in respect of this guaranty.

 

This FiberMark Durable Guaranty

is a continuing guaranty and shall remain in full force and effect until:  (1) the payment in full and indefeasible

satisfaction of all FiberMark Durable Obligations and termination of all Lender

Loan Commitments, and (2) the payment of the other expenses to be paid by

FiberMark Durable pursuant hereto.  This

FiberMark Durable Guaranty shall continue to be effective or shall be

reinstated, as the case may be, if at any time any payment, or any part

thereof, of any of the FiberMark Durable Obligations is rescinded or must

otherwise be returned by any Lender Party upon the insolvency, bankruptcy,

dissolution, liquidation or reorganization of FiberMark Durable or any

Guarantor or otherwise, all as though such payment had not been made.

 

The obligations and liabilities

of FiberMark Durable and each FiberMark Durable Guarantor under this FiberMark

Durable Guaranty shall not be conditioned or contingent upon the pursuit by any

Lender or any other Person at any time of any right or remedy against FiberMark

Durable or any FiberMark Durable Guarantor or any other Person which may be or

become liable in respect of all or any part of FiberMark Durable Obligations

 

52

 

or

against any Collateral or security or guarantee therefor or right of setoff

with respect thereto.

 

FiberMark Durable, and each

FiberMark Durable Guarantor, hereby consents that, without the necessity of any

reservation of rights against FiberMark Durable or any FiberMark Durable

Guarantor and without notice to or further assent by FiberMark Durable or any

FiberMark Durable Guarantor, any demand for payment of any of the FiberMark

Durable Obligations made by any Lender Party may be rescinded by such Lender

Party and any of the FiberMark Durable Obligations continued after such

rescission.

 

Section 4.03.  Waivers.  To the extent permitted by applicable law, FiberMark Durable and each FiberMark Durable

Guarantor hereby waives:  (1) promptness

and diligence; (2) notice of or proof of reliance by any Lender Party upon this

FiberMark Durable Guaranty or acceptance of this FiberMark Durable Guaranty;

(3) notice of the incurrence of any FiberMark Durable Obligations by FiberMark

Durable or FiberMark Durable Guaranty Obligation by any FiberMark Durable

Guarantor or the renewal, extension or accrual of any FiberMark Durable

Obligation or FiberMark Durable Guaranty Obligation; (4) notice of any actions

taken by any Lender Party, FiberMark Durable, any FiberMark Durable Guarantor

or any other party under any Loan Document, or any other agreement or

instrument relating to FiberMark Durable Obligations; (5) all other notices,

demands and protests, and all other formalities of every kind in connection

with the enforcement of FiberMark Durable Obligations or of the obligations of

FiberMark Durable or any FiberMark Durable Guarantor hereunder, the omission of

or delay in which, but for the provisions of this Section 4.03, might

constitute grounds for relieving FiberMark Durable or any FiberMark Durable

Guarantor of its obligations hereunder; and (6) any requirement that any Lender

Party protect, secure, perfect or insure any Lien on any property subject

thereto or exhaust any right or take any action against FiberMark Durable or

any FiberMark Durable Guarantor or any other Person or any Collateral.

 

Section 4.04.  Subrogation,

Etc.  FiberMark Durable, and

each FiberMark Durable Guarantor, agrees that it hereby waives and releases,

until the payment in full and indefeasible satisfaction of all FiberMark

Durable Obligations and the termination of all Lender Loan Commitments, any and

all rights of contribution, reimbursement or subrogation that it may acquire in

respect of this FiberMark Durable Guaranty, whether arising in respect of or

acquired by any payment made hereunder, any setoff or application of funds of

FiberMark Durable or any FiberMark Durable Guarantor by any Lender Party or

otherwise.

 

53

 

Section 4.05.  FiberMark

Filter Guaranty.  Each

FiberMark Filter Guarantor, jointly and severally, hereby irrevocably,

absolutely and unconditionally guarantees to each Lender Party and their

successors, endorsees, transferees and assigns the prompt and complete payment

by FiberMark Filter as and when due and payable (whether at stated maturity or

by required prepayment, acceleration, demand or otherwise), of all FiberMark

Filter Obligations now existing or hereafter incurred by FiberMark Filter, and

agrees to pay on demand any and all expenses (including counsel fees and

expenses) which may be paid or incurred by any Lender Party in collecting any

or all of FiberMark Filter Obligations and/or enforcing any rights under this guaranty

or under FiberMark Filter Obligations.

 

Section 4.06.  FiberMark

Filter Guarantors’ Guaranty Obligations Unconditional.  Each FiberMark Filter Guarantor hereby

jointly and severally guarantees that the FiberMark Filter Obligations will be

paid strictly in accordance with the terms of the Loan Documents and other

agreements to which FiberMark Filter is a party, regardless of any Law now or

hereafter in effect in any jurisdiction affecting any such terms or the rights

of any Lender Party with respect thereto. 

The obligations and liabilities of each FiberMark Filter Guarantor under

this guaranty shall be absolute and unconditional irrespective of: (1) any lack

of validity or enforceability of any of the FiberMark Filter Obligations, any

Loan Document, or any agreement or instrument relating thereto; (2) any change

in the time, manner or place of payment of, or in any other term in respect of,

all or any of the FiberMark Filter Obligations, or any other amendment or

waiver of or consent to any departure from any Loan Document or any other

documents or instruments executed in connection with or related to FiberMark

Filter Obligations; (3) any exchange or release of, or non-perfection of any

Lien on or in, any Collateral, or any release or amendment or waiver of or

consent to any departure from any other guaranty, for all or any of the

FiberMark Filter Obligations; or (4) any other circumstances which might

otherwise constitute a defense available to, or a discharge of, FiberMark

Filter or any guarantor in respect of FiberMark Filter Obligations or the

FiberMark Filter Guarantors in respect of this guaranty.

 

This FiberMark Filter Guaranty

is a continuing guaranty and shall remain in full force and effect until:  (1) the payment in full and indefeasible

satisfaction of all FiberMark Filter Obligations and the termination of all

Lender Loan Commitments, and (2) the payment of the other expenses to be paid

by FiberMark Filter pursuant hereto. 

This FiberMark Filter Guaranty shall continue to be effective or shall

be reinstated, as the case may be, if at any time any payment, or any part

thereof, of any of the FiberMark Filter Obligations is rescinded or must

otherwise be returned by any Lender Party upon the insolvency, bankruptcy,

dissolution, liquidation or reorganization of

 

54

 

FiberMark

Filter or any Guarantor or otherwise, all as though such payment had not been

made.

 

The obligations and liabilities

of FiberMark Filter and each FiberMark Filter Guarantor under this FiberMark

Filter Guaranty shall not be conditioned or contingent upon the pursuit by any

Lender or any other Person at any time of any right or remedy against FiberMark

Filter or any FiberMark Filter Guarantor or any other Person which may be or become

liable in respect of all or any part of FiberMark Filter Obligations or against

any Collateral or security or guarantee therefor or right of setoff with

respect thereto.

 

FiberMark Filter, and each

FiberMark Filter Guarantor, hereby consents that, without the necessity of any

reservation of rights against FiberMark Filter or any FiberMark Filter

Guarantor and without notice to or further assent by FiberMark Filter or any

FiberMark Filter Guarantor, any demand for payment of any of the FiberMark

Filter Obligations made by any Lender Party may be rescinded by such Lender

Party and any of the FiberMark Filter Obligations continued after such

rescission.

 

Section 4.07.  Waivers.  To the extent permitted by applicable law, FiberMark Filter and each FiberMark Filter Guarantor hereby waives:  (1) promptness and diligence; (2) notice of

or proof of reliance by any Lender Party upon this FiberMark Filter Guaranty or acceptance of this

FiberMark Filter Guaranty; (3)

notice of the incurrence of any FiberMark Filter

Obligations by FiberMark Filter or

FiberMark Filter Guaranty Obligation

by any FiberMark Filter Guarantor or

the renewal, extension or accrual of any FiberMark Filter Obligation or FiberMark Filter

Guaranty Obligation; (4) notice of any actions taken by any Lender Party,

FiberMark Filter, any FiberMark Filter Guarantor or any other party under

any Loan Document, or any other agreement or instrument relating to FiberMark Filter Obligations; (5) all other notices,

demands and protests, and all other formalities of every kind in connection

with the enforcement of FiberMark Filter

Obligations or of the obligations of FiberMark Filter or any FiberMark Filter Guarantor hereunder, the omission

of or delay in which, but for the provisions of this Section 4.07, might

constitute grounds for relieving FiberMark Filter

or any FiberMark Filter Guarantor of

its obligations hereunder; and (6) any requirement that any Lender Party

protect, secure, perfect or insure any Lien on any property subject thereto or

exhaust any right or take any action against FiberMark Filter or any FiberMark Filter

Guarantor or any other Person or any Collateral.

 

Section 4.08.  Subrogation,

Etc.  FiberMark Filter, and

each FiberMark Filter Guarantor, agrees that it hereby waives and releases,

until the payment in full and indefeasible satisfaction of all FiberMark Filter

Obligations and the termination of all Lender Loan

 

55

 

Commitments, any and all rights

of contribution, reimbursement or subrogation that it may acquire in respect of

this FiberMark Filter Guaranty, whether arising in respect of or acquired by

any payment made hereunder, any setoff or application of funds of FiberMark

Filter or any FiberMark Filter Guarantor by any Lender Party or otherwise.

 

Section 4.09.  FiberMark

Office Guaranty.  Each

FiberMark Office Guarantor, jointly and severally, hereby irrevocably,

absolutely and unconditionally guarantees to each Lender Party and their

successors, endorsees, transferees and assigns the prompt and complete payment

by FiberMark Office as and when due and payable (whether at stated maturity or

by required prepayment, acceleration, demand or otherwise), of all FiberMark

Office Obligations now existing or hereafter incurred by FiberMark Office, and

agrees to pay on demand any and all expenses (including counsel fees and

expenses) which may be paid or incurred by any Lender Party in collecting any

or all of FiberMark Office Obligations and/or enforcing any rights under this

guaranty or under FiberMark Office Obligations.

 

Section 4.10.  FiberMark

Office Guarantors’ Guaranty Obligations Unconditional.  Each FiberMark Office Guarantor hereby

jointly and severally guarantees that the FiberMark Office Obligations will be

paid strictly in accordance with the terms of the Loan Documents and other

agreements to which FiberMark Office is a party, regardless of any Law now or

hereafter in effect in any jurisdiction affecting any such terms or the rights

of any Lender Party with respect thereto. 

The obligations and liabilities of each FiberMark Office Guarantor under

this guaranty shall be absolute and unconditional irrespective of: (1) any lack

of validity or enforceability of any of the FiberMark Office Obligations, any

Loan Document, or any agreement or instrument relating thereto; (2) any change

in the time, manner or place of payment of, or in any other term in respect of,

all or any of the FiberMark Office Obligations, or any other amendment or

waiver of or consent to any departure from any Loan Document or any other

documents or instruments executed in connection with or related to FiberMark

Office Obligations; (3) any exchange or release of, or non-perfection of any

Lien on or in, any Collateral, or any release or amendment or waiver of or

consent to any departure from any other guaranty, for all or any of the

FiberMark Office Obligations; or (4) any other circumstances which might

otherwise constitute a defense available to, or a discharge of, FiberMark

Office or any guarantor in respect of FiberMark Office Obligations or the

FiberMark Office Guarantors in respect of this guaranty.

 

This FiberMark Office Guaranty

is a continuing guaranty and shall remain in full force and effect until:  (1) the payment in full and indefeasible

satisfaction of all FiberMark Office Obligations and the

 

56

 

termination

of all Lender Loan Commitments, and (2) the payment of the other expenses to be

paid by FiberMark Office pursuant hereto. 

This FiberMark Office Guaranty shall continue to be effective or shall

be reinstated, as the case may be, if at any time any payment, or any part

thereof, of any of the FiberMark Office Obligations is rescinded or must

otherwise be returned by any Lender Party upon the insolvency, bankruptcy,

dissolution, liquidation or reorganization of FiberMark Office or any Guarantor

or otherwise, all as though such payment had not been made.

 

The obligations and liabilities

of FiberMark Office and each FiberMark Office Guarantor under this FiberMark

Office Guaranty shall not be conditioned or contingent upon the pursuit by any

Lender or any other Person at any time of any right or remedy against FiberMark

Office or any FiberMark Office Guarantor or any other Person which may be or

become liable in respect of all or any part of FiberMark Office Obligations or

against any Collateral or security or guarantee therefor or right of setoff

with respect thereto.

 

FiberMark Office, and each

FiberMark Office Guarantor, hereby consents that, without the necessity of any

reservation of rights against FiberMark Office or any FiberMark Office

Guarantor and without notice to or further assent by FiberMark Office or any

FiberMark Office Guarantor, any demand for payment of any of the FiberMark

Office Obligations made by any Lender Party may be rescinded by such Lender

Party and any of the FiberMark Office Obligations continued after such

rescission.

 

Section 4.11.  Waivers.  To the extent permitted by applicable law, FiberMark Office and each FiberMark Office Guarantor hereby waives:  (1) promptness and diligence; (2) notice of

or proof of reliance by any Lender Party upon this FiberMark Office Guaranty or acceptance of this

FiberMark Office Guaranty; (3)

notice of the incurrence of any FiberMark Office

Obligations by FiberMark Office or

FiberMark Office Guaranty Obligation

by any FiberMark Office Guarantor or

the renewal, extension or accrual of any FiberMark Office Obligation or FiberMark Office

Guaranty Obligation; (4) notice of any actions taken by any Lender Party,

FiberMark Office, any FiberMark Office Guarantor or any other party under

any Loan Document, or any other agreement or instrument relating to FiberMark Office Obligations; (5) all other notices,

demands and protests, and all other formalities of every kind in connection

with the enforcement of FiberMark Office

Obligations or of the obligations of FiberMark Office or any FiberMark Office Guarantor hereunder, the omission

of or delay in which, but for the provisions of this Section 4.11, might

constitute grounds for relieving FiberMark Office

or any FiberMark Office Guarantor of

its obligations hereunder; and (6) any

 

57

 

requirement that any Lender

Party protect, secure, perfect or insure any Lien on any property subject

thereto or exhaust any right or take any action against FiberMark Office or any FiberMark Office Guarantor or any other Person or

any Collateral.

 

Section 4.12.  Subrogation,

Etc.  FiberMark Office, and

each FiberMark Office Guarantor, agrees that it hereby waives and releases,

until the payment in full and indefeasible satisfaction of all FiberMark Office

Obligations and the termination of all Lender Loan Commitments, any and all

rights of contribution, reimbursement or subrogation that it may acquire in

respect of this FiberMark Office Guaranty, whether arising in respect of or

acquired by any payment made hereunder, any setoff or application of funds of

FiberMark Office or any FiberMark Office Guarantor by any Lender Party or

otherwise.

 

Section 4.13.  FiberMark

Guaranty.  Each FiberMark

Guarantor, jointly and severally, hereby irrevocably, absolutely and

unconditionally guarantees to each Lender Party and their successors,

endorsees, transferees and assigns the prompt and complete payment by FiberMark

as and when due and payable (whether at stated maturity or by required

prepayment, acceleration, demand or otherwise), of all FiberMark Obligations

now existing or hereafter incurred by FiberMark, and agrees to pay on demand

any and all expenses (including counsel fees and expenses) which may be paid or

incurred by any Lender Party in collecting any or all of FiberMark Obligations

and/or enforcing any rights under this guaranty or under FiberMark Obligations.

 

Section 4.14.  FiberMark

Guarantors’ Guaranty Obligations Unconditional.  Each FiberMark Guarantor hereby jointly and

severally guarantees that the FiberMark Obligations will be paid strictly in

accordance with the terms of the Loan Documents and other agreements to which

FiberMark is a party, regardless of any Law now or hereafter in effect in any

jurisdiction affecting any such terms or the rights of any Lender Party with

respect thereto.  The obligations and

liabilities of each FiberMark Guarantor under this guaranty shall be absolute

and unconditional irrespective of: (1) any lack of validity or enforceability

of any of the FiberMark Obligations, any Loan Document, or any agreement or

instrument relating thereto; (2) any change in the time, manner or place of

payment of, or in any other term in respect of, all or any of the FiberMark

Obligations, or any other amendment or waiver of or consent to any departure

from any Loan Document or any other documents or instruments executed in

connection with or related to FiberMark Obligations; (3) any exchange or

release of, or non-perfection of any Lien on or in, any Collateral, or any

release or amendment or waiver of or consent to any departure from any other

guaranty, for all or any of the FiberMark Obligations; or (4) any other

circumstances which might

 

58

 

otherwise constitute a defense

available to, or a discharge of, FiberMark or any guarantor in respect of

FiberMark Obligations or the FiberMark Guarantors in respect of this guaranty.

 

This FiberMark Guaranty is a

continuing guaranty and shall remain in full force and effect until:  (1) the payment in full and indefeasible

satisfaction of all FiberMark Obligations and the termination of all Lender

Loan Commitments, and (2) the payment of the other expenses to be paid by

FiberMark pursuant hereto.  This

FiberMark Guaranty shall continue to be effective or shall be reinstated, as

the case may be, if at any time any payment, or any part thereof, of any of the

FiberMark Obligations is rescinded or must otherwise be returned by any Lender

Party upon the insolvency, bankruptcy, dissolution, liquidation or

reorganization of FiberMark or any Guarantor or otherwise, all as though such

payment had not been made.

 

The obligations and liabilities

of FiberMark and each FiberMark Guarantor under this FiberMark Guaranty shall

not be conditioned or contingent upon the pursuit by any Lender or any other

Person at any time of any right or remedy against FiberMark or any FiberMark

Guarantor or any other Person which may be or become liable in respect of all

or any part of FiberMark Obligations or against any Collateral or security or

guarantee therefor or right of setoff with respect thereto.

 

FiberMark, and each FiberMark

Guarantor, hereby consents that, without the necessity of any reservation of

rights against FiberMark or any FiberMark Guarantor and without notice to or

further assent by FiberMark or any FiberMark Guarantor, any demand for payment

of any of the FiberMark Obligations made by any Lender Party may be rescinded by

such Lender Party and any of the FiberMark Obligations continued after such

rescission.

 

Section 4.15.  Waivers.  To the extent permitted by applicable law, FiberMark and each FiberMark Guarantor hereby waives:  (1) promptness and diligence; (2) notice of or proof of reliance

by any Lender Party upon this FiberMark Guaranty

or acceptance of this FiberMark Guaranty;

(3) notice of the incurrence of any FiberMark

Obligations by FiberMark or FiberMark Guaranty Obligation by any FiberMark Guarantor or the renewal,

extension or accrual of any FiberMark Obligation

or FiberMark Guaranty Obligation;

(4) notice of any actions taken by any Lender Party, FiberMark , any FiberMark Guarantor or any other party

under any Loan Document, or any other agreement or instrument relating to FiberMark Obligations; (5) all other

notices, demands and protests, and all other formalities of every kind in

connection with the enforcement of FiberMark

Obligations or of the obligations of FiberMark

or any FiberMark Guarantor hereunder, the omission of or delay in which,

but

 

59

 

for the provisions of this

Section 4.15, might constitute grounds for relieving FiberMark or any FiberMark Guarantor

of its obligations hereunder; and (6) any requirement that any Lender Party

protect, secure, perfect or insure any Lien on any property subject thereto or

exhaust any right or take any action against FiberMark

or any FiberMark Guarantor or

any other Person or any Collateral.

 

Section 4.16.  Subrogation,

Etc.  FiberMark, and each

FiberMark Guarantor, agrees that it hereby waives and releases, until the

payment in full and indefeasible satisfaction of all FiberMark Obligations and

the termination of all Lender Loan Commitments, any and all rights of contribution,

reimbursement or subrogation that it may acquire in respect of this FiberMark

Guaranty, whether arising in respect of or acquired by any payment made

hereunder, any setoff or application of funds of FiberMark or any FiberMark

Guarantor by any Lender Party or otherwise.

 

Section 4.17.  DSI

Guaranty.  Each DSI

Guarantor, jointly and severally, hereby irrevocably, absolutely and

unconditionally guarantees to each Lender Party and their successors,

endorsees, transferees and assigns the prompt and complete payment by DSI as

and when due and payable (whether at stated maturity or by required prepayment,

acceleration, demand or otherwise), of all DSI Obligations now existing or

hereafter incurred by DSI, and agrees to pay on demand any and all expenses (including

counsel fees and expenses) which may be paid or incurred by any Lender Party in

collecting any or all of DSI Obligations and/or enforcing any rights under this

guaranty or under DSI Obligations.

 

Section 4.18.  DSI

Guarantors’ Guaranty Obligations Unconditional.  Each DSI Guarantor hereby jointly and

severally guarantees that the DSI Obligations will be paid strictly in

accordance with the terms of the Loan Documents and other agreements to which

DSI is a party, regardless of any Law now or hereafter in effect in any

jurisdiction affecting any such terms or the rights of any Lender Party with

respect thereto.  The obligations and

liabilities of each DSI Guarantor under this guaranty shall be absolute and

unconditional irrespective of: (1) any lack of validity or enforceability of

any of the DSI Obligations, any Loan Document, or any agreement or instrument

relating thereto; (2) any change in the time, manner or place of payment of, or

in any other term in respect of, all or any of the DSI Obligations, or any

other amendment or waiver of or consent to any departure from any Loan Document

or any other documents or instruments executed in connection with or related to

DSI Obligations; (3) any exchange or release of, or non-perfection of any Lien

on or in, any Collateral, or any release or amendment or waiver of or consent

to any departure from any other guaranty, for all or any of the DSI

Obligations; or (4) any other circumstances which might otherwise constitute a

defense available to, or a discharge of, DSI or any guarantor

 

60

 

in respect of DSI Obligations

or the DSI Guarantors in respect of this guaranty.

 

This DSI Guaranty is a

continuing guaranty and shall remain in full force and effect until:  (1) the payment in full and indefeasible

satisfaction of all DSI Obligations and the termination of all Lender Loan

Commitments, and (2) the payment of the other expenses to be paid by DSI

pursuant hereto.  This DSI Guaranty

shall continue to be effective or shall be reinstated, as the case may be, if

at any time any payment, or any part thereof, of any of the DSI Obligations is

rescinded or must otherwise be returned by any Lender Party upon the

insolvency, bankruptcy, dissolution, liquidation or reorganization of DSI or

any Guarantor or otherwise, all as though such payment had not been made.

 

The obligations and liabilities

of DSI and each DSI Guarantor under this DSI Guaranty shall not be conditioned

or contingent upon the pursuit by any Lender or any other Person at any time of

any right or remedy against DSI or any DSI Guarantor or any other Person which

may be or become liable in respect of all or any part of DSI Obligations or

against any Collateral or security or guarantee therefor or right of setoff with

respect thereto.

 

DSI, and each DSI Guarantor,

hereby consents that, without the necessity of any reservation of rights

against DSI or any DSI Guarantor and without notice to or further assent by DSI

or any DSI Guarantor, any demand for payment of any of the DSI Obligations made

by any Lender Party may be rescinded by such Lender Party and any of the DSI

Obligations continued after such rescission.

 

Section 4.19.  Waivers.  To the extent permitted by applicable law, DSI and each DSI Guarantor hereby waives: 

(1) promptness and diligence; (2) notice of or proof of reliance by any

Lender Party upon this DSI Guaranty

or acceptance of this DSI Guaranty;

(3) notice of the incurrence of any DSI Obligations

by DSI or DSI Guaranty Obligation by any DSI

Guarantor or the renewal, extension or accrual of any DSI Obligation or DSI Guaranty Obligation; (4) notice of any actions taken by any

Lender Party, DSI , any DSI Guarantor

or any other party under any Loan Document, or any other agreement or

instrument relating to DSI Obligations;

(5) all other notices, demands and protests, and all other formalities of every

kind in connection with the enforcement of DSI

Obligations or of the obligations of DSI

or any DSI Guarantor hereunder, the omission of or delay in which, but for

the provisions of this Section 4.15, might constitute grounds for relieving DSI or any DSI Guarantor of its obligations hereunder; and (6) any

requirement that any Lender Party protect, secure, perfect or insure any Lien

on any property subject thereto

 

61

 

or exhaust any right or take

any action against DSI or any DSI Guarantor or any other Person or any

Collateral.

 

Section 4.20.  Subrogation,

Etc.  DSI, and each DSI

Guarantor, agrees that it hereby waives and releases, until the payment in full

and indefeasible satisfaction of all DSI Obligations and the termination of all

Lender Loan Commitments, any and all rights of contribution, reimbursement or

subrogation that it may acquire in respect of this DSI Guaranty, whether

arising in respect of or acquired by any payment made hereunder, any setoff or

application of funds of DSI or any DSI Guarantor by any Lender Party or

otherwise.

 

ARTICLE V.          COLLATERAL

 

Section 5.01.  (a)  Grant of a Security Interest by FiberMark

Office.  As security for the

prompt payment in full of all FiberMark Office Obligations, FiberMark Office

hereby pledges and grants to the Agent for the ratable benefit of the Lenders a

continuing general Lien upon and security interest in all of its right, title

and interest in and to each of the following, whether now owned or hereafter

acquired, and in all proceeds of any and all of the following, in whatever form

(including, but not limited to, accounts,

chattel paper, commercial tort claims, deposit accounts, documents, goods,

instruments, investment property, letter-of-credit rights, letters of credit,

money, oil, gas or other minerals before extraction, and general intangibles):

 

(1)  Inventory;

 

(2)  Accounts; and

 

(3)  the Brattleboro Collateral.

 

Without limiting the generality

of the foregoing, the security interests granted hereunder shall extend and

attach to:

 

(i)  All Collateral which is presently in existence and which is owned

by FiberMark Office or in which FiberMark Office has any interest, whether held

by FiberMark Office or by others for its account, and, if any Brattleboro

Collateral is Equipment, whether FiberMark Office’s interest in such Equipment

is as owner or lessee or conditional vendee; and

 

(ii)  All Inventory and any portion thereof which may be returned,

rejected, reclaimed or repossessed by either the Agent or FiberMark Office from

FiberMark Office’s customers, as well as to all supplies, goods, incidentals,

packaging materials, labels and any other items which

 

62

 

contribute

to the finished goods or products manufactured or processed by FiberMark Office

or to the sale, promotion or shipment thereof.

 

(b)           Grant of a Security Interest by FiberMark.  As security for the prompt payment and

performance in full of all of the FiberMark Obligations, FiberMark hereby

pledges and grants to the Agent for the ratable benefit of the Lenders a

continuing general Lien upon and security interest in all of its

right, title and interest in and to each of the following, whether now owned or

hereafter acquired, and in all proceeds of any and all of the following, in

whatever form (including, but not limited

to, accounts, chattel paper, commercial tort claims, deposit accounts,

documents, goods, instruments, investment property, letter-of-credit rights,

letters of credit, money, oil, gas or other minerals before extraction, and

general intangibles):

 

(1)  Inventory; and

 

(2)  Accounts.

 

Without limiting the generality

of the foregoing, the security interests granted hereunder shall extend and

attach to:

 

(i)  All Collateral

which is presently in existence and which is owned by FiberMark or in which

FiberMark has any interest, whether held by FiberMark or by others for its

account; and

 

(ii)  All Inventory

and any portion thereof which may be returned, rejected, reclaimed or

repossessed by either the Agent or FiberMark from FiberMark’s customers, as

well as to all supplies, goods, incidentals, packaging materials, labels and

any other items which contribute to the finished goods or products manufactured

or processed by FiberMark or to the sale, promotion or shipment thereof.

 

(c)           Grant of a Security Interest by FiberMark Durable.  As security for the prompt payment and

performance in full of all of the FiberMark Durable Obligations, FiberMark

Durable hereby pledges and grants to the Agent for the ratable benefit of the

Lenders a continuing general Lien upon and security interest in all of its

right, title and interest in and to each of the following, whether now owned or

hereafter acquired, and in all proceeds of any and all of the following, in

whatever form (including, but not limited

to, accounts, chattel paper, commercial tort claims, deposit accounts,

documents, goods, instruments, investment property, letter-of-credit rights,

letters of credit, money, oil, gas or other minerals before extraction, and

general intangibles):

 

(1)  Inventory; and

 

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(2)  Accounts.

 

Without limiting the generality

of the foregoing, the security interests granted hereunder shall extend and

attach to:

 

(i)  All Collateral

which is presently in existence and which is owned by FiberMark Durable or in

which FiberMark Durable has any interest, whether held by FiberMark Durable or

by others for its account; and

 

(ii)  All Inventory

and any portion thereof which may be returned, rejected, reclaimed or

repossessed by either the Agent or FiberMark Durable from FiberMark Durable’s

customers, as well as to all supplies, goods, incidentals, packaging materials,

labels and any other items which contribute to the finished goods or products

manufactured or processed by FiberMark Durable or to the sale, promotion or

shipment thereof.

 

(d)           Grant of a Security Interest by FiberMark Filter.  As security for the prompt payment and

performance in full of all of the FiberMark Filter Obligations, FiberMark

Filter hereby pledges and grants to the Agent for the ratable benefit of the

Lenders a continuing general Lien upon and security interest in all of its right,

title and interest in and to each of the following, whether now owned or

hereafter acquired, and in all proceeds of any and all of the following, in

whatever form (including, but not limited

to, accounts, chattel paper, commercial tort claims, deposit accounts,

documents, goods, instruments, investment property, letter-of-credit rights,

letters of credit, money, oil, gas or other minerals before extraction, and

general intangibles):

 

(1)  Inventory; and

 

(2)  Accounts.

 

Without limiting the generality

of the foregoing, the security interests granted hereunder shall extend and

attach to:

 

(i)  All Collateral

which is presently in existence and which is owned by FiberMark Filter or in

which FiberMark Filter has any interest, whether held by FiberMark Filter or

others for its account; and

 

(ii)  All Inventory

and any portion thereof which may be returned, rejected, reclaimed or

repossessed by either the Agent or FiberMark Filter from FiberMark Filter’s

customers, as well as to all supplies, goods, incidentals, packaging materials,

labels and any other items which

 

64

 

contribute

to the finished goods or products manufactured or processed by FiberMark Filter

or to the sale, promotion or shipment thereof.

 

(e)           Grant of a Security Interest by DSI.  As security for the prompt payment and

performance in full of all of the DSI Obligations, DSI hereby pledges and

grants to the Agent for the ratable benefit of the Lenders a continuing general

Lien upon and security interest in all of its right, title and

interest in and to each of the following, whether now owned or hereafter

acquired, and in all proceeds of any and all of the following, in whatever form

(including, but not limited to, accounts,

chattel paper, commercial tort claims, deposit accounts, documents, goods,

instruments, investment property, letter-of-credit rights, letters of credit,

money, oil, gas or other minerals before extraction, and general intangibles):

 

(1)  Inventory; and

 

(2)  Accounts.

 

Without limiting the generality

of the foregoing, the security interests granted hereunder shall extend and

attach to:

 

(i)  All Collateral

which is presently in existence and which is owned by DSI or in which DSI has

any interest, whether held by DSI or others for its account; and

 

(ii)  All Inventory

and any portion thereof which may be returned, rejected, reclaimed or

repossessed by either the Agent or DSI or DSI’s customers, as well as to all

supplies, goods, incidentals, packaging materials, labels and any other items

which contribute to the finished goods or products manufactured or processed by

DSI or to the sale, promotion or shipment thereof.

 

Section 5.02.  Covenants

Regarding Inventory.  Each

Obligor agrees to safeguard, protect and hold all Inventory for the Lenders’

account and make no disposition thereof except in the regular course of the

business of such Obligor as herein provided. 

Until the Agent has given such Obligor notice to the contrary, as

provided for below, any Inventory may be sold and shipped by such Obligor to

its customers in the ordinary course of such Obligor’s business, on open

account and on terms currently being extended by such Obligor to its customers,

provided that all proceeds of all sales (including cash, accounts

receivable, checks, notes, instruments for the payment of money and similar

proceeds) are forthwith transferred, endorsed, and turned over and delivered to

the Agent for the ratable benefit of the Lenders in accordance with Section

3.06 of this Financing Agreement.  The

Agent shall have the right to withdraw this permission at any time upon the

occurrence of an Event of Default and

 

65

 

until such time as such Event

of Default is waived, in which event no further disposition shall be made of

the Inventory by such Obligor without the Agent’s prior written approval.  Cash sales or sales of Inventory in which a

Lien upon, or security interest in, Inventory is retained by such Obligor shall

be made by such Obligor only with the approval of the Agent, and the proceeds

of such sales or sales of Inventory for cash shall not be commingled with such

Obligor’s other property, but shall be segregated, held by such Obligor in

trust for the Lenders as the Lenders’ exclusive property, and shall be

delivered immediately by such Obligor to the Agent in the identical form

received by such Obligor by deposit to the Depository Accounts.  Upon the sale, exchange, or other

disposition of Inventory, as herein provided, the security interest in such

Obligor’s Inventory provided for herein shall, without break in continuity and

without further formality or act, continue in, and attach to, all proceeds,

including any instruments for the payment of money, accounts receivable,

contract rights, documents of title, shipping documents, chattel paper and all

other cash and non–cash proceeds of such sale, exchange or

disposition.  As to any such sale,

exchange or other disposition, the Agent shall have all of the rights of an

unpaid seller, including stoppage in transit, replevin, rescission and

reclamation.

 

Section 5.03.  Covenants

Regarding Equipment.  The

Equipment is and will only be used by FiberMark Office in its business and will

not be held for sale or lease, or removed from its premises, or otherwise

disposed of by FiberMark Office without the prior written approval of the

Agent.  FiberMark Office will not sell,

transfer, lease or otherwise dispose of any of the Equipment constituting a

part of the Brattleboro Collateral, or attempt, offer or contract to do so,

except for sales of assets permitted by this Financing Agreement.  Concurrently with any such permitted

disposition, the property acquired by a transferee in such disposition shall

automatically be released from the security interest created by this Financing

Agreement (the “Security Interest”).  It

is acknowledged and agreed that notwithstanding any release of property from

the Security Interest in accordance with the foregoing provisions of this

Section 5.03, the Security Interest shall in any event continue in the proceeds

of the Brattleboro Collateral.  The

Agent shall promptly execute and deliver (and, when appropriate, shall cause

any separate agent, co-agent or trustee to execute and deliver) any releases,

instruments or documents reasonably requested by FiberMark Office to accomplish

or confirm the release of the Equipment constituting a part of the Brattleboro

Collateral provided by this Section 5.03. 

Any such release of the Equipment constituting a part of the Brattleboro

Collateral provided by the Agent shall specifically describe that portion of

the Brattleboro Collateral to be released, shall be expressed to be

unconditional and shall be without recourse or warranty (other than a warranty

that the Agent has not assigned its rights and interests to any other

Person).  FiberMark Office shall

 

66

 

pay all of the Agent’s

out-of-pocket expenses in connection with any release of the Brattleboro

Collateral.

 

FiberMark Office agrees at its

own cost and expense to keep the Equipment in as good and substantial repair

and condition as the same is now or at the time the Lien and security interest

granted herein shall attach thereto, reasonable wear and tear excepted, making

any and all repairs and replacements when and where necessary.  FiberMark Office also agrees to safeguard,

protect and hold all Equipment for the Lenders’ account and make no disposition

thereof unless FiberMark Office first obtains the prior written approval of the

Agent.  Any sale, exchange or other

disposition of any Equipment shall only be made by FiberMark Office with the

prior written approval of the Agent, and the proceeds of any such sales shall

not be commingled with FiberMark Office’s other property, but shall be

segregated, held by FiberMark Office in trust for the Lenders as the Lenders’

exclusive property, and shall be delivered immediately by FiberMark Office to

the Agent in the identical form received by FiberMark Office by deposit to the

Depository Accounts.  Upon the sale,

exchange, or other disposition of the Equipment, as herein provided, the

security interest provided for herein shall, without break in continuity and

without further formality or act, continue in, and attach to, all proceeds,

including any instruments for the payment of money, accounts receivable,

contract rights, documents of title, shipping documents, chattel paper and all

other cash and non–cash proceeds of such sales, exchange or

disposition.  As to any such sale,

exchange or other disposition, the Agent shall have all of the rights of an

unpaid seller, including stoppage in transit, replevin, rescission and

reclamation.  Notwithstanding anything

hereinabove contained to the contrary, FiberMark Office may sell, exchange or

otherwise dispose of obsolete Equipment or Equipment no longer needed in

FiberMark Office’s operations, provided, however, that (a) the

then book value of the Equipment so disposed of does not exceed Five Hundred

Thousand Dollars ($500,000) in the aggregate in any Fiscal Year and (b) the

proceeds of such sales or dispositions are delivered to the Agent for the

ratable benefit of the Lenders in accordance with the foregoing provisions of

this paragraph, except that FiberMark Office may retain and use such proceeds to

purchase forthwith replacement Equipment which FiberMark Office determines in

its reasonable business judgment to have a collateral value at least equal to

the Equipment so disposed of or sold, provided, however, that the

aforesaid right shall automatically cease upon the occurrence of an Event of

Default which is not waived.

 

Section 5.04.  Collateral

Covenant.  Each Obligor

hereby covenants that, except for the Permitted Encumbrances, such Obligor is

or will be at the time additional Collateral is acquired by it, the absolute

owner of the Collateral with full right to pledge, sell, consign, transfer and

create a security interest therein, free and clear of any and all claims or

 

67

 

Liens in favor of others; that

such Obligor will at its expense forever warrant and, at the Lenders’ and/or

the Agent’s request, defend the same from any and all claims and demands of any

other person other than the Permitted Encumbrances.  Such Obligor will not grant, create or permit to exist, any Lien

upon or security interest in the Collateral, or any proceeds thereof, in favor

of any other Person other than the holders of the Permitted Encumbrances.

 

No Obligor will (a) change the

location of its principal executive office/chief place of business from that

specified in Schedule 5.04 or remove its books and records from the location

specified in Schedule 5.04, (b) move the Equipment from the Real Estate, or (c)

change its name (including the adoption of any new trade name), identity,

corporate structure or jurisdiction of organization, unless, in any of the

circumstances described in the immediately preceding clauses (a) through (c),

it shall have provided at least thirty (30) days prior written notice to the

Agent of any such change in location of its principal executive office/chief

place of business, change in name, identity, corporate structure or

jurisdiction of organization or jurisdiction or organization or change in

location of Inventory or Equipment. 

Each Obligor will from time to time notify the Agent of each location at

which any amount of the Collateral or such books and records are to be kept,

including for temporary processing, storage or similar purposes.  The Obligors shall not permit more than

$1,000,000 in aggregate book value of Inventory, regardless of by whom owned,

to be kept at a location (or locations) other than a location that is (A)

listed under the name of the Obligor that owns such Inventory  on Schedule 5.04 hereto, as amended by Agent

from time to time to reflect the addition or deletion of locations at which

Collateral is kept, stored or processed (as notified to Agent by the Obligors

from time to time pursuant to this Section 5.04), and (B) not one of the

Excluded Premises. Except as permitted by the preceding sentence, no Obligor

shall remove any amount of Collateral or such books or record to a location not

set forth on Schedule 5.04 or otherwise keep any amount of Collateral (other

than Real Estate, to the extent described in Schedule 5.04A hereto) at a

location not set forth on Schedule 5.04 unless, not less than thirty (30) days

prior to the day such removal or other change occurs such Obligor shall give

written notice to the Agent of such removal or other change and the new

location of such Collateral or such books and records.  No action requiring notice to the Agent

under this paragraph shall be effected until such filings and other measures

required under applicable Law to continue uninterrupted the first perfected

security interest and Lien of the Agent in the Collateral affected thereby

shall have been taken, and until the Agent shall have received such opinions of

counsel with respect thereto as it shall have reasonably requested.  Each Obligor also agrees to advise the Agent

promptly, in sufficient detail, of any material adverse change relating to the

type, quantity or quality of the Collateral or to the security interests

granted to the Lenders or the Agent therein. 

Each Obligor

 

68

 

as to itself,

hereby authorizes the Agent to regard its printed name or rubber stamp

signature on assignment schedules or invoices as the equivalent of a manual

signature by one of its authorized officers or agents.

 

Section 5.05.  Covenants

Regarding Accounts.  No

Obligor will (a) amend, modify, terminate or waive any provision of any

contract, license or agreement giving rise to an Account of such Obligor in any

manner which could reasonably be expected to materially adversely affect the

value of such contract, license or Account as Collateral, (b) fail to exercise

promptly and diligently each and every material right which it may have under

each material contract, license or agreement giving rise to an Account of such

Obligor (other than any right of termination), except in a manner consistent

with the ordinary and customary conduct of its business or (c) fail to deliver

to the Agent upon its reasonable request a copy of each material demand, notice

or document received by it relating in any way to any material contract,

license or agreement giving rise to an Account of such Obligor.

 

Other than in the ordinary

course of business as generally conducted by such Obligor over a period of

time, no Obligor will grant any extension of the time of payment of any of the

Accounts, compromise, compound or settle the same for less than the full amount

thereof, release, wholly or partially, any Person liable for the payment

thereof, or allow any credit or discount whatsoever thereon.

 

Section 5.06.  Continuing

Security Interest.  The

rights and security interests granted to the Agent for the ratable benefit of

the Lenders hereunder are to continue in full force and effect, notwithstanding

the termination of this Financing Agreement or the fact that the account

maintained in any Borrower’s name on the books of the Agent may from time to

time be temporarily in a credit position, until the final payment in full to

the Agent and the Lenders of all Obligations and the termination of this

Financing Agreement.  Any delay, or

omission by the Agent to exercise any right hereunder, shall not be deemed a

waiver thereof, or be deemed a waiver of any other right, unless such waiver be

in writing and signed by the Agent.  A

waiver on any one occasion shall not be construed as a bar to or waiver of any

right or remedy on any future occasion.

 

Section 5.07.  Actions

by Agent.  To the extent that

the Obligations are now or hereafter secured by any assets or property other

than the Collateral or by the guarantee, endorsement, assets or property of any

other Person, then the Agent shall have the right in its sole discretion to

determine which rights, security, Liens, security interests or remedies the

Agent shall at any time pursue, foreclose upon, relinquish, subordinate, modify

or take any other action with respect to, without in

 

69

 

any way modifying or affecting

any of them, or any of the Agent’s or the Lenders’ rights hereunder.

 

Section 5.08.  Additional

Collateral and Further Assurances. 

Upon the request of the Agent, each Obligor will, at the sole expense of

such Obligor, promptly and duly execute and deliver such further instruments

and documents and take such further action as the Agent may reasonably request

for the purpose of obtaining or preserving the full benefits of this Financing

Agreement, the Security Documents and of the rights and powers herein and

therein granted for the benefit of the Agent and the Lenders.

 

Each Obligor will comply with

the requirements of all state and federal Laws in order to grant to the Agent

for the benefit of the Lenders valid and perfected first security interests and

Liens in the Collateral, subject only to the Permitted Encumbrances.  The Agent is hereby authorized by each

Obligor to file any financing statements covering the Collateral whether or not

the Obligor’s signature appears thereon. 

Each Obligor agrees to do whatever the Agent may request, from time to

time, by way of:  filing notices of

Liens, financing statements, amendments, renewals and continuations thereof;

cooperating with the Agent; keeping stock records; and performing such further

acts as the Lenders may reasonably require in order to perfect the Liens

contemplated by this Financing Agreement in favor of the Lenders for the

benefit of the Lenders.

 

Any reserves or balances to the

credit of any Borrower and any other property or assets of an Obligor in the

possession of the Agent or any of the Lenders may be held by such holder as

security for any Obligations and applied in whole or partial satisfaction of

such Obligations when due.  The Liens

and security interests granted herein and any other Lien or security interest

the Agent or any Lender may have in any other assets of an Obligor shall secure

payment and performance of all now existing and future Obligations.  The Agent may in its discretion charge any

or all of the Obligations to the account of an Obligor when due.

 

This Financing Agreement and

the obligation of FiberMark Office to perform all of its covenants and

obligations hereunder are further secured by the Mortgage.  FiberMark Office shall give to the Agent for

the ratable benefit of the Lenders from time to time such mortgage on the Real

Estate as the Agent shall require to obtain a valid first Lien thereon subject

only to those exceptions of title as set forth in future title insurance

policies that are satisfactory to the Lenders.

 

Section 5.09.  Additional

Information.  Each Obligor

will execute and deliver to the Agent, from time to time, such written

statements and schedules as the Agent may reasonably require,

 

70

 

designating, identifying or

describing the Collateral pledged to the Lenders or the Agent hereunder,

including, without limitation, such schedules of Accounts as the Agent may

reasonably request to support or confirm any information previously given, and

such other appropriate reports designating, identifying and describing the

Accounts as the Agent may reasonably require, and changes after the date hereof

in the descriptions of the specific properties constituting its owned and

leased properties.  An Obligor’s

failure, however, to promptly give the Agent such statements or schedules shall

not affect, diminish, modify or otherwise limit the Lenders’ or the Agent’s security

interests in the Collateral.

 

Section 5.10.  Compliance

with Fair Labor Standards Act. 

Each Obligor shall comply in all material respects with all provisions

of the Fair Labor Standards Act as set forth in Sections 201 through 219 of

Title 29 of the United States Code.

 

ARTICLE VI.         INTEREST, FEES AND EXPENSES.

 

Section 6.01.  Method of Electing Interest Rates.   The Revolving Credit Loans made to the

Borrowers shall bear interest at either the Chase Manhattan Bank Rate or the

Libor Rate.  Thereafter, the applicable

Borrower may from time to time elect to change or continue the Type borne by

each Revolving Credit Loan, as follows:

 

(a)  if such Revolving

Credit Loans are Chase Manhattan Bank Rate Loans, the applicable Borrower may

elect to convert such Revolving Credit Loans to Libor Rate Loans as of any

Business Day;

 

(b)  if such Revolving

Credit Loans are Libor Rate Loans, the applicable Borrower may elect to convert

such Revolving Credit Loans to Chase Manhattan Bank Rate Loans or, or elect to

continue such Libor Rate Loans as Libor Rate Loans for an additional Libor Rate

Period, in each case effective on the last day of the then current Libor Rate

Period applicable to such Revolving Credit Loans.

 

Each such election shall be

made by delivering a notice substantially in the form of Exhibit C hereto (a

“Notice of Interest Rate Selection”) to Agent by (1) 12:00 Noon (New York City

time) at least one (1) Business Day before the conversion of a Libor Rate Loan

into a Chase Manhattan Bank Rate Loan, or (2) 12:00 Noon (New York City time)

at least three (3) Business Days before the conversion of a Chase Manhattan

Bank Rate Loan into a Libor Rate Loan or the continuation of a Libor Rate Loan

as a Libor Rate Loan.  A Notice of Loan

Interest Rate Selection may, if it so specifies, apply to only a portion of the

aggregate principal amount of the relevant Revolving Credit Loan; provided

that the portion to which such notice applies, and the 

 

71

 

remaining portion to which it

does not apply, each are sufficient to meet the minimum amount specified in

Section 3.14.

 

Each Notice of Interest Rate

Selection relating to a Chase Manhattan Bank Rate Loan or Libor Rate Loan shall

specify:

 

(i)  the Revolving

Credit Loan (or portion thereof) to which such notice applies;

 

(ii)  the

date on which the conversion or continuation selected in such notice is to be

effective, which shall comply with the applicable clause of the first paragraph

of this Section 6.01;

 

(iii)  if

the Revolving Credit Loans are to be converted, and if such new Revolving

Credit Loans are Libor Rate Loans, the duration of the initial Libor Rate

Period applicable thereto; and

 

(iv)  if

such Revolving Credit Loans are to be continued as Libor Rate Loans for an

additional Libor Rate Period, the duration of such additional Libor Rate

Period.

 

Each Libor Rate Period specified

in a Notice of Interest Rate Selection shall comply with the provisions of the

definition of Libor Rate Period.  No

conversion into a Libor Rate Loan and no continuation of a Libor Rate Loan

shall be permitted when a Default or Event of Default has occurred and is

continuing.  If the applicable Borrower

fails to deliver a timely Notice of Interest Rate Selection to the Agent for

any Libor Rate Loans to such Borrower such Revolving Credit Loans shall be

converted into Chase Manhattan Bank Rate Loans on the last day of the then

current Libor Rate Period applicable thereto.

 

Anything herein to the contrary

notwithstanding, at no time shall there be outstanding more than three (3)

different Libor Rate Periods relating to Libor Rate Loans in the aggregate for

all Borrowers.

 

Section 6.02.  Interest.   Each applicable Borrower shall pay interest on the outstanding

unpaid principal amount of its Revolving Credit Loans for each day from and

including the date such Revolving Credit Loan is made until but excluding the

date such Revolving Credit Loan is paid in full, at one of the following rates

per annum:

 

(1)  Chase

Manhattan Bank Rate Loan.  For a Chase

Manhattan Bank Rate Loan, a rate per annum equal at all times to the sum of the

Chase Manhattan Bank Rate in effect for such day plus the Applicable Margin;

and

 

72

 

(2)  Libor Rate

Loan.  For a Libor Rate Loan, a rate

per annum equal at all times during each Libor Rate Period of such Revolving

Credit Loan to the sum of the Libor Rate for such Libor Rate Period plus the

Applicable Margin.

 

All accrued and unpaid interest

on the Revolving Credit Loans (including accrued and unpaid interest under the

September 1999 Agreement as of the Closing Date) will be payable in arrears on

each Quarterly Payment Date, regardless of interest rate, and shall be

calculated based on a 360 day year.  The

Agent shall be entitled to charge the applicable Borrower’s account with the

applicable interest rate(s) until all such Obligations have been paid in full.

 

The interest rate on Chase

Manhattan Bank Rate Loans shall change when the Chase Manhattan Bank Rate

changes.  Interest on the Chase

Manhattan Bank Rate Loans and the Libor Rate Loans shall not exceed the maximum

amount permitted under applicable Law. 

Upon the occurrence of an Event of Default interest will accrue at the

Default Rate of Interest as provided in Section 12.02.

 

Agent shall determine each

interest rate applicable to the Revolving Credit Loans hereunder.  Agent shall give prompt notice to the

applicable Borrower and each Lender of each rate of interest so determined, and

its determination thereof shall be conclusive in the absence of manifest error.

 

Section 6.03.  Fees.   On the Closing Date, the Borrowers shall pay the Facility Fee to

the Initial Lenders.

 

During the period from the Closing Date to the

Revolving Credit Commitment Termination Date, the Obligors jointly and

severally agree to pay to the Agent for the account of each Lender the Unused

Line Fee.  All Unused Line Fees are

payable in arrears on each Quarterly Payment Date.  Upon receipt of any such Unused Line Fee, the Agent will promptly

thereafter cause to be distributed to each Lender its Pro Rata Share of such

Fee.

 

The Borrowers jointly and

severally shall reimburse or pay the Agent, as the case may be, for

(i) all Out-of-Pocket Expenses of the Agent and/or the Lenders, and

(ii) any applicable Documentation Fee.

 

On the Closing Date, the

Borrowers shall pay to the Agent a Collateral Management Fee (for its own

account) in the amount of Fifteen Thousand Dollars ($15,000) times a fraction,

the numerator of which is the number of days in the period from and including

the Closing Date to and including September 29, 2002, and the denominator of

which is 365.  On 

 

73

 

each September 30 thereafter, the Borrowers shall pay to

the Agent a Collateral Management Fee (for its own account) in the amount of

Fifty Thousand Dollars ($50,000).  All

the fees under this paragraph are “Collateral Management Fees” and shall be

fully earned when paid and shall not be refundable or rebateable by reason of

prepayment, acceleration upon an Event of Default, or any other circumstance

and shall survive any termination of this Financing Agreement.

 

Each Obligor shall pay the

Agent’s standard charges for, and the fees and expenses of, the Agent’s

personnel used by the Agent for reviewing the books and records of such Obligor

and for verifying, testing, protecting, safeguarding, preserving or disposing

of all or any part of the Collateral, provided, however, that the

foregoing shall not be payable until the occurrence of an Event of Default if

the Borrowers are paying a Collateral Management Fee.

 

Each Borrower hereby authorizes

the Agent to charge such Borrower’s accounts with the Agent with the amount of

all payments due hereunder as such payments become due.  Each Borrower confirms that any charges

which the Agent may so make to its account as herein provided will be made as

an accommodation to such Borrower and solely at the Agent’s discretion.

 

Section 6.04.  Payments and Computations.   Each Borrower shall make each principal and

interest payment and pay all fees not later than 12:00 Noon (New York time) on

the day when due in Dollars in immediately available funds in New York City to

Agent at its principal office.

 

All computations of interest on

Libor Rate Loans, Chase Manhattan Bank Rate Loans and fees, shall be made by

Agent on the basis of a year of three hundred sixty (360) days and paid, in

each case, for the actual number of days elapsed (including the first day but

excluding the last day).  Each

determination by Agent of an interest rate or fees hereunder shall be

conclusive and binding for all purposes absent manifest error.

 

Calculation of all amounts

payable to the Agent for the ratable benefit of the Lenders under this

Financing Agreement with regard to Libor Rate Loans shall be made as though the

Lenders had actually funded the Libor Rate Loans through the purchase of

deposits in the relevant market and currency, as the case may be, bearing

interest at the rate applicable to such Libor Rate Loans and having a maturity

comparable to the relevant Libor Period, provided, however, that

the Lenders may fund each of the Libor Rate Loans in any manner as the Agent

sees fit and the foregoing assumption shall be used only for calculation of

amounts payable under this Financing Agreement.

 

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Whenever any payment of

principal or interest (except on Libor Rate Loans) or of fees shall be due on a

day which is not a Business Day, such payment shall be made on the next

succeeding Business Day.  Whenever any

payment of principal or interest on a Libor Rate Loan shall be due on a day

which is not a Business Day, such payment shall be made on the next succeeding

Business Day unless such Business Day falls in another calendar month, in which

case the date for payment thereof shall be the next preceding Business

Day.  If the date for any payment of

principal is extended by operation of Law or otherwise, interest thereon shall

be payable for such extended time.

 

Section 6.05.  Certain Compensation.   Each Borrower hereby agrees to indemnify

the Agent and each Lender and hold the Agent and each Lender harmless from any

loss, cost or expense they may sustain or incur as a consequence of the failure

by such Borrower to complete any borrowing hereunder of a Libor Rate after

notice thereof has been given by such Borrower to the Agent, including, without

limitation, any loss, cost or expense incurred by reason of the liquidation or

re-employment of deposits or other funds acquired by the Agent to fund such

borrowing when the applicable amount of the Revolving Credit Loan, as a result

of such failure, is not made subject to such interest rates on such date.  The Agent shall certify the amount of its

and/or the Lenders’ loss, cost or expense to the applicable Borrower, and such

certification shall be final and conclusive absent manifest error.

 

Without limiting the foregoing,

such compensation shall include the Libor Rate Prepayment Premium.

 

ARTICLE VII.       POWERS.

 

Section 7.01.  Powers.   Each Obligor hereby constitutes the Agent or any person or agent

the Agent may designate as its attorney-in-fact, at such Obligor’s cost and

expense, to exercise all of the following powers, which being coupled with an

interest, shall be irrevocable until all of the Obligations to the Agent and

the Lenders have been paid in full after the termination of this Financing

Agreement:

 

(1)  To receive, take, endorse, sign, assign and deliver, all in the

name of the Agent, the Lenders, or such Obligor, any and all checks, notes,

drafts, and other documents or instruments relating to the Collateral;

 

(2)  To receive, open and dispose of all mail addressed to such

Obligor and to notify postal authorities to change the address for delivery

thereof to such address as the Agent may designate;

 

75

 

(3)  To request from customers indebted on Accounts at any time, in

the name of the Agent or such Obligor or that of the Agent’s designee,

information concerning the amounts owing on the Accounts;

 

(4)  To transmit to customers indebted on Accounts notice of the

Agent’s and the Lenders’ interest therein and to notify customers indebted on

Accounts of such Obligor to make payment directly to the Agent for such Obligor’s

account; and

 

(5)  To take or bring, in the name of the Agent, the Lenders or such

Obligor, all steps, actions, suits or proceedings deemed by the Agent necessary

or desirable to enforce or effect collection of the Accounts.

 

Notwithstanding anything

hereinabove contained to the contrary, the powers set forth in (2), (4) and (5)

above may only be exercised after the occurrence of an Event of Default and

until such time as such Event of Default is waived in writing.

 

ARTICLE VIII.      REPRESENTATIONS AND WARRANTIES

 

Each of the Obligors,

individually and jointly, represents and warrants that:

 

Section 8.01.  Incorporation, Good Standing and Due

Qualification.   Each Corporate

Obligor is duly incorporated, validly existing and in good standing under the

laws of the jurisdiction of its incorporation, has the corporate power and

authority to own its assets and to transact the business in which it is now

engaged or proposed to be engaged, and is duly qualified as a foreign

corporation and in good standing under the laws of each other jurisdiction in

which such qualification is required except to the extent that its failure to

be so qualified could not result in a Material Adverse Change.  FiberMark Office is duly formed, validly

existing and in good standing under the laws of the jurisdiction of its

formation, has the limited liability company power and authority to own its

assets and to transact the business in which it is now engaged or proposed to

be engaged, and is duly qualified as a foreign entity and in good standing

under the laws of each other jurisdiction in which such qualification is

required except to the extent that its failure to be so qualified could not

result in a Material Adverse Change.

 

Section 8.02.  Corporate Power and Authority; No

Conflicts.   The execution, delivery

and performance by such Obligor of the Loan Documents have been duly authorized

by all necessary corporate action and do not and will not: (a) in the case of

each Corporate Obligor require 

 

76

 

any

consent or approval of its stockholders and in the case of FiberMark Office

require any consent or approval of its members-managers, which consent or

approval has not already been obtained; (b) in the case of each Corporate

Obligor contravene its certificate of incorporation or by-laws and in the case

of FiberMark Office contravene its Articles of Organization or Operating

Agreement; (c) violate any provision of, or require any filing (other than the

filing of the financing statements contemplated hereby or by the Security

Documents), registration, consent or approval under any Law (including, without

limitation, Regulation U), order, writ, judgment, injunction, decree,

determination or award presently in effect having applicability to such

Obligor; (d) result in a breach of or constitute a default under or require any

consent under any indenture or loan or credit agreement or any other agreement,

lease or instrument to which such Obligor is a party or by which it or its

properties may be bound or affected; (e) result in, or require, the creation or

imposition of any Lien (other than as created hereunder or under the Security

Documents), upon or with respect to any of the properties now owned or

hereafter acquired by such Person.

 

Section 8.03.  Legally Enforceable Agreements.   Each Loan Document is a legal, valid and

binding obligation of such Obligor, enforceable against such Obligor in

accordance with its terms, except to the extent that such enforcement may be

limited by applicable bankruptcy, insolvency and other similar laws affecting

creditors’ rights generally.

 

Section 8.04.  Litigation.   Except as disclosed in Schedule 8.04 hereto, there are no

actions, suits or proceedings pending or, to the knowledge of any of the

Obligors, as the case may be, threatened, against or affecting such Obligor

before any court, governmental agency or arbitrator, which could, in any one

case or in the aggregate, result in a Material Adverse Change.

 

Section 8.05.  Financial Statements.   The consolidated balance sheet of FiberMark

and its Subsidiaries as of December 31, 1999 and December 31, 2000, the related

statements of income, statements of stockholders’ equity (deficit) and

statements of cash flows of FiberMark for the Fiscal Years then ended, and the

accompanying footnotes, together with the opinion thereon of KPMG LLP,

independent certified public accountants, copies of which have been furnished

to the Lenders, are complete and correct and fairly present the financial

condition of FiberMark and its Subsidiaries as at such dates and the results of

the operations of FiberMark and its Subsidiaries for the periods covered by

such statements, all in accordance with GAAP consistently applied.  There are no liabilities of FiberMark and

its Subsidiaries, fixed or contingent, which are material but are not reflected

in the financial statements or in 

 

77

 

the

notes thereto, other than the 2001 Senior Notes and liabilities arising in the

ordinary course of business since December 31, 2000.  No information, exhibit, or report furnished by FiberMark and its

Subsidiaries to the Agent or any Lender in connection with the negotiation of

this Financing Agreement contained any material misstatement of fact or omitted

to state a material fact or any fact necessary to make the statements contained

therein not materially misleading.

 

The consolidated unaudited

balance sheet of FiberMark and its Subsidiaries as of September 30, 2001, the

related statements of income, statements of stockholders’ equity (deficit) and

statements of cash flows of such entities for the six-month periods then ended,

and the accompanying footnotes, copies of which have been furnished to the

Lenders, are complete and correct and fairly present the financial condition of

FiberMark and its Subsidiaries, as at such dates and the results of the

operations of FiberMark and its Subsidiaries for the periods covered by such

statements, all in accordance with GAAP consistently applied.  There are no liabilities of FiberMark and

its Subsidiaries, fixed or contingent, which are material but not reflected in

the financial statements or in the notes thereto, other than liabilities

arising in the ordinary course of business since September 30, 2001.  No information, exhibit, or report furnished

by FiberMark and its Subsidiaries to the Agent or any Lender in connection with

the negotiation of this Financing Agreement contained any material misstatement

of fact or omitted to state a material fact or any fact necessary to make the

statements contained therein not materially misleading.

 

(c)  No Material Adverse Change.  Since December 31, 2000, there has been no Material Adverse

Change with respect to any Obligor.

 

Section 8.06.  Ownership and Liens; Location of

Inventory and Equipment.   No Obligor

has any fee interests in any real property or leasehold interests in real

property having an unexpired term (including any option or renewal periods) in

excess of 20 years other than the interest encumbered by the Mortgage.  Each Obligor has title to, or valid

leasehold interests in, all of its properties and assets, real and personal,

including the properties and assets, and leasehold interests reflected in the

financial statements referred to in Section 8.05 (other than any properties or

assets disposed of in the ordinary course of business), and none of the

properties and assets owned by such Obligor and none of its leasehold interests

is subject to any Lien, except Permitted Encumbrances.  The Inventory and Equipment owned or leased

by each Obligor is located at the respective facilities set forth under the

name of such Obligor on Schedule 5.04.

 

Section 8.07.  Taxes.   Each Obligor has filed all tax returns (federal, state and

local) required to be filed and has paid all taxes, 

 

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assessments

and governmental charges and levies thereon to be due, including interest and

penalties, except to the extent they are the subject of a Good Faith Contest.

 

Section 8.08.  ERISA.   Each Obligor is substantially in compliance with all applicable

provisions of ERISA and the Code.  No

Reportable Event has occurred with respect to any Pension Plan; no notice of

intent to terminate a Pension Plan has been filed nor has any Pension Plan been

terminated; no Obligor nor any other Person, including any fiduciary, has

engaged in any prohibited transaction (as defined in Section 4975 of the Code

or Section 406 of ERISA) which could subject any Obligor, or any entity which

any Obligor has an obligation to indemnify, to any tax or penalty imposed under

Section 4975 of the Code or Section 502 of ERISA; there is no lien outstanding

pursuant to Section 4068 of ERISA or Section 412 of the Code or security

interest, within the meaning of Section 401(a)(29) of the Code, given in connection

with a Pension Plan; no circumstance exists which constitutes grounds under

Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate,

or appoint a trustee to administer, a Pension Plan, nor has the PBGC instituted

any such proceedings; no Obligor, nor any ERISA Affiliate has completely or

partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer

Plan; the minimum funding requirements under ERISA and the Code have been

satisfied with respect to all Pension Plans and the aggregate unfunded

liabilities under all Pension Plans does not exceed Two Hundred Thousand

Dollars ($200,000); no Multiemployer Plan is in Reorganization or is Insolvent;

and no Obligor, nor any ERISA Affiliate has received notice that indicates the

existence of potential or contingent withdrawal liability under a Multiemployer

Plan in excess of One Million Eight Hundred Thousand Dollars ($1,800,000).  No Obligor has any liability for retiree

medical or life insurance benefits other than liability with respect to active

employees covered by the Owensboro, Kentucky location and the total FASB

liability for such group is not material to any Obligor.

 

Section 8.09.  Subsidiaries.   FiberMark has no Subsidiaries other than

FiberMark Durable, FiberMark Office, FiberMark Filter, DSI, FiberMark Limited

(organized in Hong Kong), FiberMark GmbH, FiberMark Beteiligungs GmbH,

FiberMark Gessner GmbH, FiberMark Lahnstein GmbH and FiberMark SARL.  All of the outstanding equity interests in

FiberMark Gessner GmbH and FiberMark Lahnstein GmbH are owned by FiberMark

Beteiligungs GmbH and FiberMark GmbH. 

No Borrower has any Subsidiaries.

 

Section 8.10.  Operation of Business.   Each Obligor possesses all licenses,

permits, franchises, patents, copyrights, trademarks and trade names, or rights

thereto, to conduct its business substantially as now conducted and as

presently proposed to be conducted except where 

 

79

 

failure

to so possess could not result in a Material Adverse Change and no Obligor is

in violation of any valid rights of others with respect to any of the

foregoing.

 

Section 8.11.  No Default on Outstanding Judgments or

Orders.   Each Obligor has satisfied

all judgments and no Obligor is in default with respect to any judgment, writ,

injunction, decree, rule or regulation of any court, arbitrator or federal,

state, municipal or other Governmental Authority, commission, board, bureau,

agency or instrumentality, domestic or foreign.

 

Section 8.12.  No Defaults on Other Agreements.   No Obligor is a party to any indenture,

loan or credit agreement or any lease or other agreement or instrument or

subject to any certificate of incorporation or corporate restriction which

could result in a Material Adverse Change. 

No Obligor is in default in any respect in the performance, observance

or fulfillment of any of the obligations, covenants or conditions contained in

any agreement or instrument.

 

Section 8.13.  Labor Disputes and Acts of God.   Neither the business nor the properties of

any Obligor are affected by any fire, explosion, accident, strike, lockout or

other labor dispute, drought, storm, hail, earthquake, embargo, act of God or

of the public enemy or other casualty (whether or not covered by insurance).

 

Section 8.14.  Governmental Regulation.   No Obligor is subject to regulation under

the Public Utility Holding Company Act of 1935, the Investment Company Act of

1940, the Interstate Commerce Act, the Federal Power Act or any statute or

regulation limiting its ability to incur indebtedness for money borrowed as

contemplated hereby.

 

Section 8.15.  Partnerships.   No Obligor is a partner in any partnership.

 

Section 8.16.  Environmental Protection.   (i) 

Each Obligor has obtained all Approvals and Permits required under all

Environmental Laws and such Approvals and Permits are in good standing.  Each Obligor is in compliance with all

Environmental Laws and the terms and conditions of such Approvals and Permits,

and is also in compliance with all other limitations, restrictions, conditions,

standards, prohibitions, requirements, obligations, schedules and timetables

contained in those Laws.

 

(ii)           No Environmental Lien has attached to the Brattleboro

Collateral.

 

80

 

(iii)          None of the Real Estate or any other property owned or

leased by any Obligor is listed or proposed for listing on the National

Priorities List pursuant to the Comprehensive Environmental Response,

Compensation and Liability Act, as amended, or listed on the Comprehensive

Environmental Response, Compensation and Liability Information System List or

any similar state list of sites, and FiberMark Office is not aware of any

conditions at the Real Estate which, if known to a Governmental Authority,

would qualify such Real Estate for inclusion on any such list.

 

Except as disclosed in Schedule

8.16 or for matters that, either individually or in the aggregate, cannot

reasonably be expected to affect, except to an immaterial extent, any Obligor,

or its business, results of operations, condition (financial or otherwise),

prospects, profitability, assets, operations or property:

 

(a)  No Obligor is

subject to any plan, order, writ, decree, judgment, settlement or injunction

issued, entered into, promulgated or approved under or in connection with any

Environmental Laws or any Environmental Discharges;

 

(b)  No Obligor has

received any Environmental Notice;

 

(c)  There have been

no Environmental Discharges at, to, or from the Real Estate or any Obligors

other property or facilities or operations, except such Environmental

Discharges as have occurred pursuant to and in full compliance with all

Environmental Laws and Approvals and Permits issued thereunder;

 

(d)  There are not

and, to the knowledge of each Obligor, have never been any Hazardous Materials

present at the Real Property or other properties, facilities or operations of

any Obligor, except such Hazardous Materials as are and were managed pursuant

to and in full compliance with all Environmental Laws and Approvals and Permits

issued thereunder;

 

(e)  No Obligor has

any actual or contingent liability in connection with any Environmental

Discharges at any location, including, without limitation, the Real Property,

any site to which an Obligor has transported or arranged for the transport of

Hazardous Substances, or any site at which an Obligor has disposed of Hazardous

Substances; and

 

(f)  No Obligor has

any actual or contingent liability in connection with any property, businesses,

or operations previously owned or operated by any such Obligor for (i) any

violation of any Environmental Laws, (ii) any Remedial Action, or (iii) any

Environmental Discharges at any location, including, without limitation, the

Real Property, any property, 

 

81

 

facilities or operations previously owned or operated by

an Obligor, any site to which an Obligor has transported or arranged for the

transport of Hazardous Substances, or any site at which an Obligor has disposed

of Hazardous Substances.

 

Section 8.17.  Solvency.   Each Obligor is Solvent.

 

Section 8.18.  Intellectual Property.   Except as set forth on Schedule 8.18 hereto

or for any of the following that, either individually or in the aggregate,

cannot reasonably be expected to affect (either positively or negatively),

except to an immaterial extent, any Obligor, or its business, results of

operations, condition (financial or otherwise), prospects, profitability,

assets, operations or property, no Obligor has any trademarks, patents or

copyrights or any applications pending for any trademarks, patents or

copyrights.

 

Section 8.19.  License of Intellectual Property.   Except as set forth on Schedule 8.19

hereto or for any of the following that, either individually or in the aggregate,

cannot reasonably be expected to affect (either positively or negatively),

except to an immaterial extent, any Obligor, or its business, results of

operations, condition (financial or otherwise), prospects, profitability,

assets, operations or property, no Obligor holds or has entered into any

agreement for the use of any license for any trademark, patent, copyright or

other intellectual property rights.

 

Section 8.20. 

Environmental Compliance.  Each Obligor has substantially addressed all

matters identified as non-compliance with Environmental Laws and has undertaken

all Remedial Actions identified in the August 1996 Environmental Due Diligence

Report for Custom Papers Group Mill Facilities prepared by ENSR Consulting and

Engineering for the Borrowers.

 

Section 8.21.  Projections.   The

Projections attached hereto as Exhibit I have been, and each other written

projection delivered hereafter to the Agent by or on behalf of the Borrowers in

connection with the transactions contemplated by this Financing Agreement, upon

delivery to the Agent, will be, prepared on the basis of the assumptions set

forth therein, such assumptions are (or will be, as the case may be) reasonable

in light of the financial condition and prospects of the Borrowers and their

Subsidiaries; and the Projections attached hereto as Exhibit I represent, and

each other such projections will represent, the good faith opinion of the Chief

Executive Officer and the Chief Financial Officer of FiberMark, at the time of

delivery thereof to the Agent, as to the course of business of the Borrowers

and their Subsidiaries during the period covered thereby, it being understood

and acknowledged that any and all such projections 

 

82

 

represent

estimates, based on various assumptions, of future results that may or may not

in fact occur.

 

Section 8.22.  Excluded Premises. The aggregate book value of all

Collateral located on or in the Excluded Premises does not exceed $1,000,000.

 

ARTICLE IX.        AFFIRMATIVE COVENANTS.

 

So long as any Revolving Credit

Loans are outstanding or any Lenders has any Lender Loan Commitment hereunder

or any other amount is owing to any Lender hereunder or under any Loan

Documents:

 

Section 9.01.  Reporting Requirements.   FiberMark will furnish to each Lender:

 

(a)  Annual

Reporting Requirements:  as soon as

practicable, and in any event within one hundred twenty (120) days after the

end of each Fiscal Year of FiberMark, an audited consolidated balance sheet of

FiberMark and its Subsidiaries as at the end of such Year, and audited

consolidated statements of earnings, stockholders’ equity (deficit), and cash

flow of FiberMark and its Subsidiaries for such Year, setting forth in each

case, in comparative form the figures for the previous Fiscal Year, certified

without qualification arising out of the scope of the audit by a nationally

recognized firm of independent public accountants or other independent public

accountants satisfactory to the Required Lenders, and unaudited consolidating balance

sheets of FiberMark and its Subsidiaries as at the end of such Year and

unaudited consolidating statements of earnings, stockholders’ equity (deficit)

and cash flow of FiberMark and its Subsidiaries for such Year, setting forth in

each case in comparative form the figures for the previous Fiscal Year.  FiberMark shall deliver to the Agent and

each Required Lender no later than thirty (30) days prior to the start of each

new Fiscal Year, annual consolidated and consolidating cash flow projections of

FiberMark and its Subsidiaries, including a projected consolidated and

consolidating balance sheet and statements of earnings, stockholders’ equity

(deficit), and cash flow for such Fiscal Year in form satisfactory to the

Required Lenders;

 

(b)  Quarterly Reporting

Requirements:  as soon as

practicable, and in any event within sixty (60) days, after the end of each of

the fiscal quarters of each Fiscal Year of FiberMark, in unaudited form and

including (i) consolidated information, (ii) consolidating information, and

(iii) information adjusted to include the results of the FiberMark and its

Domestic Subsidiaries only:  (1) balance

sheets of FiberMark and its Subsidiaries as at the end of such fiscal quarter,

and (2) related statements of income, 

 

83

 

stockholders’ equity (deficit), and cash flows, setting

forth in each case, in comparative form the figures of the comparable period

for the previous Fiscal Year, certified as to accuracy by FiberMark (subject to

normal year-end audit adjustments);

 

(c)  Officer’s

Certificate:  each financial

statement which FiberMark is required to submit hereunder must be accompanied

by an officer’s certificate signed by the chief financial officer of FiberMark

certifying that: (i) the financial statement(s) fairly and accurately

represent(s) the consolidated and consolidating financial condition of

FiberMark and its Subsidiaries at the end of the particular accounting period,

as well as the consolidated and consolidating operating results of FiberMark

and its Subsidiaries during such accounting period, subject to year-end audit

adjustments; (ii) during the particular accounting period, (A) there has been

no default or condition which, with the passage of time or notice, or both, would

constitute a Default or Event of Default under this Financing Agreement and

such officer has obtained no knowledge of any Default; provided, however,

that if any Executive Officer has knowledge that any Default or Event of

Default has occurred during such period, the existence of and a detailed

description of same shall be set forth in the Officer’s Certificate; and (B)

FiberMark has not received any notice of cancellation with respect to its

property insurance policies that have not been replaced; and (iii) for any

period ending after September 30, 2002, that each of the covenants set forth in

Article XI has been satisfied and setting forth, in reasonable detail,

calculations demonstrating the accuracy of such certification;

 

(d)  Management

Letter:  promptly after receipt

thereof, a copy of each report delivered to FiberMark by the independent public

accountants which certify FiberMark’s financial statements in connection with

any annual or interim audit of its books, including any management reports or letters,

if any, addressed to FiberMark or any of their respective officers by such

accountants;

 

(e)  Other

Information:  from time to time,

with reasonable promptness, such other information with respect to each Obligor

as Agent or Lender may from time to time reasonably request;

 

(f)  Accounts

Receivable Aging Summaries:  within

thirty (30) days after the end of each month, Accounts Receivable aging

summaries with respect to each Obligor and within thirty (30) days after the

end of each quarter of each Fiscal Year of such Obligor, detailed Accounts

Receivable aging schedules with respect to each Obligor, prepared in accordance

with GAAP;

 

84

 

(g)  Reports:  promptly after the sending or filing

thereof, copies of all proxy statements, financial statements and reports which

FiberMark sends to all its stockholders, and copies of all regular, periodic

and special reports, and all registration statements which FiberMark files with

the Securities and Exchange Commission or any agency which may be substituted

therefor, or with any national securities exchange;

 

(h)  Borrowing Base

Certificate:  A Borrowing Base

Certificate (i) no later than the tenth (10th) day of each month, with respect

to the last day of the immediately preceding month, and (ii) no later than the

twenty-fifth (25th) day of each month, with respect to the fifteenth (15th) day

of such month; and (iii) at such other times as Agent may require in its sole

discretion; and

 

(i)  Projections:  No later than September 30, 2002,

projections for the Borrowers and their Subsidiaries, in substantially the

format of Exhibit I or in such other format as may be reasonably acceptable to

the Agent, for the period commencing October 1, 2002 and ending September 30, 2005.

 

Section 9.02.  Notices.   FiberMark will, promptly upon obtaining knowledge of any of the

following occurrences and promptly upon the giving or receipt of any of the

following notices, deliver to Agent:

 

(a)  written notice of

the occurrence of any Default or Event of Default, specifically stating that a

Default or Event of Default, as the case may be, has occurred and describing

such Default or Event of Default;

 

(b)  written notice of

the occurrence of any casualty, damage or loss to or in respect of the

Collateral, in an amount greater than Five Hundred Thousand Dollars ($500,000),

whether or not giving rise to a claim under any insurance policy, together with

copies of any document relating thereto (including copies of any such claim) in

possession or control of FiberMark or any agent of FiberMark;

 

(c)  written notice of

any Material Adverse Change;

 

(d)  written notice of

any litigation or proceeding affecting any Obligor which if adversely

determined could result in a Material Adverse Change;

 

(e)  written notice of

the assertion of any Lien (other than Permitted Encumbrances) against the

Collateral or the occurrence of any event that could have a material adverse

effect on the value of the Collateral or the Liens created pursuant to this

Financing Agreement or any Security Document;

 

85

 

(f)  written notice of

any cancellation of any insurance policy required to be maintained by any

Obligor pursuant to Section 9.07 hereof;

 

(g)  written notice of

(i) all expenditures (actual or anticipated) in excess of Five Hundred Thousand

Dollars ($500,000) for (A) Remedial Action, (B) compliance with

Environmental Laws or (C) environmental testing and the impact of said expenses

on any Obligor’s working capital; and (ii) any Environmental Notices advising

an Obligor of any liability (real or potential), which liability could result

in a Material Adverse Change;

 

(h)  on each

Anniversary Date, a report describing material issues (not previously disclosed

to the Lenders under other provisions of this Section 9.02) which have arisen

during the prior year pertaining to Environmental Laws, Environmental

Discharges, Hazardous Materials, and Remedial Action and the action which is

proposed to be taken or being taken with respect thereto;

 

(i)  if and when an

Obligor or any ERISA Affiliate (i) gives or is required to give notice to

the PBGC of any Reportable Event with respect to any Pension Plan, a copy of

any notice of such Reportable Event given or required to be given to the PBGC;

(ii) receives notice of a complete or partial withdrawal liability under Title

IV of ERISA or that any Multiemployer Plan is in Reorganization, is Insolvent

or has been terminated, a copy of such notice; (iii) receives notice from the

PBGC under Title IV of ERISA of an intent to terminate, impose liability (other

than for premiums under Section 4007 of ERISA) in respect of, or appoint a

trustee to administer any Pension Plan or Multiemployer Plan, a copy of such

notice; (iv) applies for a waiver of the minimum funding standard under Section

412 of the Code, a copy of such application; (v) gives notice of intent to

terminate any Pension Plan under Section 4041(c) of ERISA a copy of such notice

and other information filed with the PBGC; (vi) gives notice of withdrawal from

any Pension Plan pursuant to Section 4063 of ERISA, a copy of such notice; or

(vii) fails to make any required payment or contribution to any Pension Plan or

Multiemployer Plan or makes any amendment to any Pension Plan which has resulted

or is reasonably likely to result in the imposition of a Lien, an accumulated

funding deficiency (as defined in Section 302 of ERISA or Section 412 of the

Code), whether or not waived, or the posting of a bond or other security, a

certificate of the appropriate financial officer setting forth details as to

such occurrence and action, if any which any Obligor or other ERISA Affiliate

is required or proposes to take;

 

(j)  if and when (i) a

transaction prohibited under Section 4975 of the Code or Section 406 of ERISA

occurs resulting in liability to any Obligor or any entity which any Obligor

has an obligation to indemnify, (ii) a Pension Plan intended to qualify under

Section 401(a) or 401(k) of the Code fails to 

 

86

 

so qualify or (c) liability is imposed to enforce

Section 515 of ERISA with respect to any Multiemployer Plan, a certificate of

the appropriate financial officer setting forth details as to such occurrence

and action, if any, which such Obligor or other ERISA Affiliate is required or

proposes to take;

 

(k)  written notice of

any change in the location of Collateral having a book value exceeding Five

Hundred Thousand Dollars ($500,000) in the aggregate with respect to all

Collateral whose location has been changed since the effectiveness of this

Financing Agreement, other than to locations that, as of the date hereof, are

known to the Agent and for which the Agent has filed financing statements and

otherwise perfected its Liens thereon;

 

(l)  written notice,

in sufficient detail, of any material adverse change relating to the type,

quantity or quality of the Collateral or on the security interests granted to

the Agent for the ratable benefit of the Lenders.

 

Each notice pursuant to this

Section 9.02 shall be accompanied by a statement of FiberMark furnishing such

notice setting forth details of the occurrence referred to therein and stating

what action the applicable Obligor proposes to take with respect thereto.

 

Section 9.03.  Payment of Taxes and Claims.   Each Obligor will pay, when due, all taxes,

assessments, claims and other charges (herein “taxes”) lawfully levied or

assessed upon such Obligor or the Collateral and if such taxes remain unpaid

after such date fixed for the payment thereof unless such taxes are the subject

of a Good Faith Contest or if any Lien shall be claimed thereunder (a) for

taxes due the United States of America or (b) which in the Lenders’ reasonable

opinion might create a valid obligation having priority over the rights granted

to the Lenders herein, the Agent may, on such Obligor’s behalf, pay such taxes,

and the amount thereof shall at the Agent’s option be charged to such Obligor’s

Revolving Credit Loans (or in the case of FiberMark, to the Revolving Credit

Loans of FiberMark Durable) and shall be an Obligation secured hereby.  If the amount of taxes of the Obligors paid

by the Agent pursuant to this Section 9.03 is in excess of Availability, then

the Borrowers shall be deemed to be in default of this Section 9.03.

 

Section 9.04.  Maintenance of Existence.   Each Corporate Obligor will preserve and

maintain its corporate existence and good standing in the jurisdiction of its

incorporation, and qualify and remain qualified as a foreign corporation in

each jurisdiction in which such qualification is required, except to the extent

that its failure to do so qualify could not result in a material adverse

change.  FiberMark Office will preserve

and maintain its existence as a limited liability company and its good standing

in the jurisdiction of its formation, and qualify and remain 

 

87

 

qualified

as a foreign entity in each jurisdiction in which such qualification is

required, except to the extent that its failure to do so qualify could not

result in a material adverse change.

 

Section 9.05.  Conduct of Business.   Each Obligor will continue to engage in an

efficient and economical manner in a business similar to the type of business

as conducted by it as of the date hereof.

 

Section 9.06.  Compliance with Laws.   Each Obligor will comply with all Laws,

except to the extent that failure to do so could not result in a Material

Adverse Change; provided that such Obligor may contest any acts, rules,

regulations, orders and directions of such bodies or officials in any

reasonable manner which will not, in the Lenders’ reasonable opinion,

materially and adversely effect the Lenders’ rights or priority in the

Collateral.

 

Section 9.07.  Insurance.   (a)  FiberMark Office

will maintain, with financially sound and reputable companies, acceptable to

the Agent, insurance policies (a) insuring FiberMark Office, the Agent and the

Lenders against Comprehensive General Liability and auto liability, liability

for personal injury and property damage relating to the Brattleboro Collateral

and Inventory and (b) insuring the Brattleboro Collateral and Inventory of

FiberMark Office against all risk of loss by fire, explosion, theft and auto

comprehensive/collision, and such other casualties as may be reasonably

satisfactory to the Agent, such policies to be in such amounts and on such

terms as the Agent shall reasonably require. 

All policies covering the Brattleboro Collateral and Inventory are,

subject to the rights of any holders of Permitted Encumbrances holding claims

senior to the Lenders, to be made payable to the Agent for the benefit of the

Lenders, in case of loss, under a standard non–contributory “mortgage”,

“lender” or “secured party” clause and are to contain such other provisions as

the Lenders may require to fully protect the Lenders’ interest in the Real

Estate and shall protect the Lenders’ interest in the Brattleboro Collateral

and Inventory and any payments to be made under such policies.  All original certificates of Insurance, policies

or true copies thereof are to be delivered to the Agent, premium prepaid, with

the loss payable endorsement in the Agent’s favor for the benefit of the

Lenders, and shall provide for not less than thirty (30) days prior written

notice to the Agent of the exercise of any right of cancellation.

 

In addition to the foregoing,

FiberMark Office will maintain Business Interruption and Comprehensive Boiler

and Machinery Insurance in form and amounts and with insurers acceptable to the

Agent.  In addition, Workman’s

Compensation Insurance in amounts required by applicable law and in form

acceptable to the Agent shall be maintained in connection with the Brattleboro

Collateral and Inventory.

 

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(b)  Each Corporate Obligor will maintain, with financially sound and

reputable companies, acceptable to the Agent, insurance policies (a) insuring

such Corporate Obligor, the Agent and the Lenders against Comprehensive General

Liability and auto liability, liability for personal injury and property damage

relating to the Inventory of such Corporate Obligor and (b) insuring the

Inventory of such Corporate Obligor against all risk of loss by fire,

explosion, theft and auto comprehensive/collision, and such other casualties as

may be reasonably satisfactory to the Agent, such policies to be in such

amounts and on such terms as the Agent shall reasonably require.  All policies covering the Inventory of each

such Corporate Obligor are, subject to the rights of any holders of Permitted

Encumbrances holding claims senior to the Lenders, to be made payable to the

Agent for the benefit of the Lenders, in case of loss, under a standard non–contributory

“lender” or “secured party” clause and are to contain such other provisions as

the Lenders may require to fully protect the Lenders’ interest in the Inventory

of such Corporate Obligor and any payments to be made under such policies.  All original certificates of Insurance,

policies or true copies thereof are to be delivered to the Agent, premium

prepaid, with the loss payable endorsement in the Agent’s favor for the benefit

of the Lenders, and shall provide for not less than thirty (30) days prior

written notice to the Agent of the exercise of any right of cancellation.

 

In addition to the foregoing,

each such Corporate Obligor will maintain Business Interruption and

Comprehensive Boiler and Machinery Insurance in form and amounts and with

insurers acceptable to the Agent.  In

addition, Workman’s Compensation Insurance in amounts required by applicable

law and in form acceptable to the Agent shall be maintained in connection with

the Inventory of each such Corporate Obligor.

 

(c)  At the request of FiberMark or if any Obligor fails to maintain

such insurance, the Agent may arrange for such insurance, but at the applicable

Obligor’s expense and without any responsibility on the Lenders’ part for:  obtaining the insurance, the solvency of the

insurance companies, the adequacy of the coverage, or the collection of

claims.  Upon the occurrence and during

the continuance of an Event of Default, the Agent shall, subject to the rights

of any holders of Permitted Encumbrances holding claims senior to the Lenders,

have the sole right, in the name of the Agent for the benefit of the Lenders or

the applicable Obligor, to file claims under any insurance policies, to

receive, receipt and give acquittance for any payments that may be payable

thereunder, and to execute any and all endorsements, receipts, releases,

assignments, reassignments or other documents that may be necessary to effect

the collection, compromise or settlement of any claims under any such insurance

policies.

 

89

 

In the event of any loss or

damage by fire or other casualty, insurance proceeds relating to Inventory

shall first reduce all the outstanding Revolving Credit Loans and then be paid

to the Agent to be held as cash collateral pending repair, restoration or

replacement of the insured property pursuant to the provisions below.

 

In the event any part of the

Brattleboro Collateral is damaged by fire or other casualty and the insurance

proceeds for such damage or other casualty (the “Proceeds”) is less than or

equal to One Hundred Thousand Dollars ($100,000), the Agent shall promptly apply

such Proceeds to reduce the outstanding balances of all the Revolving Credit

Loans.

 

As long as no Event of Default

shall have occurred and be continuing, FiberMark Office has sufficient business

interruption insurance to replace the lost profits of any of its facilities,

and the Proceeds are in excess of One Hundred Thousand Dollars ($100,000),

FiberMark Office may elect (by delivering written notice to the Agent) to

repair or restore the Brattleboro Collateral to substantially the equivalent

condition prior to such fire or other casualty as set forth herein, or to

replace the same with substantially the equivalent or functionally equivalent

Real Estate or Equipment.  If FiberMark

Office does not, or cannot, elect to use the Proceeds as set forth above, the

Agent may, subject to the rights of any holders of Permitted Encumbrances

holding claims senior to the Lenders and the Agent, apply the Proceeds to the

payment of the Obligations in such manner and in such order as the Agent may

reasonably elect.

 

If FiberMark Office elects to

use the Proceeds for the repair, replacement or restoration of any Real Estate

or Equipment, and there is then no Event of Default, (a) proceeds on Equipment

and Real Estate in excess of One Hundred Thousand Dollars ($100,000) will be

applied to the reduction of the Revolving Credit Loans, and (b) the Agent may

set up a reserve against Availability for an amount equal to the amount of

proceeds so allocated to the Revolving Credit Loans.  The reserves will collectively be reduced dollar-for-dollar upon

receipt of non-cancelable executed purchase orders, delivery receipts or

contracts for the replacement, repair or restoration of Equipment or the Real

Estate and disbursements in connection therewith, such reduction to be

allocated between FiberMark Office’s reserve in such proportions as the Agent

shall determine.  Prior to the

commencement of any restoration, repair or replacement of Real Estate,

FiberMark Office shall provide the Agent with a restoration plan and a total

budget certified by the chief executive officer and chief financial officer of

FiberMark Office, and, if the total budget exceeds One Million Dollars

($1,000,000), also certified by an independent third party experienced in

construction costing.  If there are

insufficient proceeds to cover the cost of restoration as so determined,

FiberMark Office shall be 

 

90

 

responsible for the amount of any such insufficiency

prior to the commencement of restoration and shall demonstrate evidence of such

before the reserve will be reduced. 

Completion of restoration shall be evidenced by a final, unqualified

certification of the design architect employed, if any, but only if the cost of

restoration exceeded One Million Dollars ($1,000,000); an unconditional

certificate of occupancy, if applicable; such other certification as may be

required by law; or if none of the above is applicable, a written good faith

determination of completion by the chief executive officer and chief financial

officer of FiberMark Office as the case may be (herein collectively the

“Completion”).  Upon Completion, any

remaining reserves as established hereunder will be automatically released.

 

All policies of insurance

required under the provisions of this Section 9.07 shall contain (a) an

endorsement by the insurer that any loss shall be payable in accordance with

the terms of such policy notwithstanding any act or negligence of any Obligor

that might otherwise give rise to a defense by the insurer to its payment of

such loss, and (b) a waiver by the insured of all rights of subrogation to any

rights of the additional insureds against the applicable Obligor, and (c) a

disclaimer of all rights of setoff, counterclaim or deduction against the

insureds other than the applicable Obligor. 

The applicable Obligor shall not take out separate insurance concurrent

in form or contributing in the event of loss with that required by this

Financing Agreement unless the same shall contain a standard non-contributory

lender’s loss payable endorsement in scope and form approved by the Required

Lenders prior to the Closing Date with loss payable to the Agent for the

benefit of the Lenders as its interests may appear.  All retentions and deductibles under policies where the Agent is

loss payee shall be the sole responsibility of the applicable Obligor

maintaining such policies subject to the Lenders’ approval.

 

Without limiting any of the

foregoing, each of the insurance policies required by this Section 9.07 which

is required to name the Agent in its capacity as agent for each of the Lenders,

as an additional insured thereunder shall provide:

 

(a)  that no

cancellation, reduction in amount or material change in coverage thereof shall

be effective until at least thirty (30) days after receipt by the Agent of

written notice thereof;

 

(b)  that the

interests of Agent and each of the Lenders will be insured regardless of any

breach by any Obligor or any other Person of any warranties, declarations or

conditions contained therein;

 

91

 

(c)  that neither

Agent nor any of the Lenders shall have any obligation or liability for

premiums, commissions, assessments or calls in connection with such insurance.

 

On or before the Closing Date

and prior to each policy expiration thereafter, each Obligor shall deliver to

the Agent an original certificate or binder signed by the insurer or its duly

authorized representative showing the insurance then maintained by such Obligor

pursuant to this Section 9.07, and stating that such insurance complies with

the terms of this Section 9.07, together with evidence that payment of the

premiums on such insurance is current. 

Each Obligor shall effect such changes in the form (but not the amount

or types) of the policies required pursuant to this Section 9.07, as may be

required by the Agent, provided such changes (a) are commercially

available at reasonable rates, which determination shall be made by Agent and

(b) the effect of such changes by FiberMark Office would not result in a

violation of the provisions of the Mortgage.

 

Section 9.08.  Books and Records; Inspection.   Each Obligor will maintain books and

records pertaining to the Collateral owned by it in such detail, form and scope

as is consistent in all material respects with current practices and agrees

that the books and records of such Obligor will reflect the Lenders’ interest

in such Collateral.  Each Obligor agrees

that all of its books and records, including records handled or maintained for

such Obligor by any other company or entity, will be available to the Agent,

the Lenders and that the Agent, the Lenders or their respective agents,

accountants and attorneys may enter upon such Obligor’s premises or any other

properties on or in which any of such Obligor’s Collateral may be located at

any time during normal business hours upon reasonable notice (provided,

that no such notice is required after the occurrence and during the continuance

of an Event of Default), and from time to time, for the purpose of inspecting

the Collateral, and any and all records pertaining thereto, including, without

limitation, copies of agreements with, or purchase orders from, such Obligor’s

customers, and copies of invoices to customers, proof of shipment or delivery

and such other documentation and information relating to said Accounts and

other Collateral as the Agent may reasonably require.  Each Obligor hereby further agrees that the Lenders may, from and

after the date hereof, request any information from, and have access to such

Obligor’s officers and its independent public accountant, and such Obligor will

cause such officers and direct such accountants to make available to the

Lenders such information.

 

Section 9.09.  ERISA Covenant.   Each Obligor will, and will cause each of

its ERISA Affiliates to, maintain all Employee Benefit Plans in compliance in

all material respects with all applicable law, including any 

 

92

 

reporting

requirements, and make all contributions due under the terms of each Employee

Benefit Plan or as required by law.  As

soon as possible following the date hereof (but in no event more than thirty

(30) days thereafter) each Obligor contributing to a Multiemployer Plan shall

request from each such Multiemployer Plan an estimate, in writing, of

withdrawal liability (contingent or otherwise) under such Multiemployer Plan

and shall provide a copy of such written withdrawal liability estimate to the

Agent.

 

Section 9.10.  Intercompany Transfer

of Funds.   Each Obligor will take

such actions as may be necessary in order to enable each other Obligor to pay

its respective Obligations, including but not limited to dividends on its

capital stock, from funds legally available therefor, or the purchase of shares

of capital stock or other equity interest, or the making of loans or advancing

of funds to the applicable Obligor.

 

Section 9.11.  Inventory and Accounts Receivable

Analysis of Acquired Entity.   In

the event of an acquisition of an Acquired Entity by an Obligor, such Obligor

shall or shall cause the Acquired Entity to afford the Agent the right to

inspect and perform an analysis within thirty days of the acquisition,

satisfactory to the Agent, of the inventory, accounts receivables and personal

property of such Acquired Entity.

 

Section 9.12.  Acquired Entities.   Each of the following conditions shall be

satisfied by the Obligors with respect to each Acquired Entity acquired on or

after the date hereof:

 

(a)  the

Acquired Entity shall have executed all documentation and taken all steps

required pursuant to which such Acquired Entity shall become a Guarantor under

this Financing Agreement and shall agree to be bound by the terms of this

Financing Agreement applicable to a Guarantor;

 

(b)  the

Acquired Entity shall have executed all documentation and take all steps

required to give the Agent a first priority perfected Lien in all of such

Acquired Entity’s Inventory and Accounts, which Lien shall not be subject to

any other financing arrangement;

 

(c)  the

Agent shall have received a certificate of the Secretary or Assistant Secretary

(or other appropriate representative) of such Acquired Entity attesting to the

organization documents (e.g. Certificate of Incorporation, Bylaws, Articles of

Organization, Operating Agreement)  of

such Acquired Entity and all amendments thereto and to all corporate action

taken by such Acquired Entity, including resolutions of its Board of Directors

(or other governing body) authorizing the execution, delivery and performance

of this 

 

93

 

Financing Agreement and any

other documents executed in connection therewith; and

 

(d)  the

Agent shall have received a favorable opinion of counsel to such Acquired

Entity covering all of the matters covered by (a), (b) and (c) above, and as to

such other matters as the Agent may reasonably request.

 

Section 9.13.  Compliance with Environmental Laws.   Each Obligor

 

(a)  will

comply with all Environmental Laws as presently existing or as adopted or amended

in the future, all Approvals and Permits issued pursuant to such Environmental

Laws, and all writs, decrees, judgments, settlements and orders issued in

connection with such Environmental Laws;

 

(b)  obtain

and renew all Approvals and Permits required pursuant to Environmental Laws;

 

(c)  conduct any Remedial Action in compliance with

Environmental Laws; provided, however, that an Obligor shall not

be required to undertake any Remedial Action to the extent that its obligation

to do so is being contested in good faith and by proper proceedings, will not

result in any non-compliance with Environmental Laws, and appropriate reserves

are being maintained with respect to such circumstances; and

 

(d)  notify

the Agent of any of the following that is likely to have a Material Adverse

Change:

 

(i)  any

Environmental Notice, including one to take or pay for any Remedial Action with

respect to any Hazardous Material 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; and

 

(ii)  any

knowledge by any Obligor of an occurrence or condition 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, that might reasonably result in

a violation of Environmental Law.

 

Section 9.14.  Appraisals; Audits.  The

Borrowers shall cooperate with the Agent in its efforts to obtain, by the date

that is forty-five (45) days after the Closing Date, and shall pay the expenses

of, (a) the initial 

 

94

 

Net Realizable Valuation (which

shall additionally include, for informational purposes, appraisals of both the

“net orderly liquidation value” of the Equipment and the fair market value of

the Real Estate, on a basis according no value to working capital), and (b) the

initial Net Inventory Liquidation Valuation. 

The Borrowers shall cooperate with the Agent in obtaining and/or conducting,

at the Borrowers’ expense, such updated appraisals and audits of the Collateral

(including, without limitation, audits of the Accounts Receivable of the

Obligors), as the Agent may reasonably request; provided  that,

unless an Event of Default has occurred and is continuing, the Borrowers shall

be obligated to pay, in any one calendar year, the expenses of only one

appraisal (or audit, as the case may be) of each of the Inventory, the

Brattleboro Collateral and the Accounts.

 

ARTICLE X.          NEGATIVE

COVENANTS

 

So long as any Revolving Credit

Loans are outstanding, or any Lender has any Lender Loan Commitment hereunder

or any other amount is owing to the Lenders hereunder or under any other Loan

Documents, neither any Obligor nor any Subsidiary shall:

 

Section 10.01.  Debt.   Create, incur or suffer to exist any Indebtedness other than (i)

Permitted Indebtedness or (ii) other Indebtedness, so long as after giving

effect to the incurrence thereof, the Consolidated Fixed Charge Coverage Ratio

is greater than 2.00 to 1.00.

 

Section 10.02.  Liens.   Create or suffer to exist or permit any Lien upon or with

respect to any of its properties except for Permitted Encumbrances.

 

Section 10.03.  Sale of Assets.   Sell, lease, assign, transfer or otherwise

dispose of (a) its now or hereafter acquired Collateral, except as

otherwise specifically permitted by this Financing Agreement or any other

document relating to the transactions contemplated hereunder or (b) all or

substantially all of its assets, which do not constitute Collateral.

 

Section 10.04.  Prohibition of Fundamental Changes.   Enter into any transaction of merger or

consolidation, or change its form of organization or business, or liquidate or

dissolve (or suffer any liquidation or dissolution), or sell, assign, lease or

otherwise dispose of (whether in one transaction or in a series of

transactions) all or substantially all of its assets (whether now owned or

hereafter acquired) to any Person or, except pursuant to a transaction effected

in compliance with Section 10.05, purchase or otherwise acquire (whether in one

transaction or in a series of related transactions) all or substantially all of

the assets of any Person; provided, however, that Specialty Japan

may be dissolved.

 

95

 

Section 10.05.

 Investments.   Make any loan or advance to any Person or

purchase or otherwise acquire any capital stock, assets, obligations or other

securities of, make any capital contribution to, or otherwise invest, or

acquire any interest, in any Person, except: 

(i) Permitted Investments, (ii) loans, advances, capital contributions

and share purchases permitted by Section 9.07 or Section 10.06 of this

Financing Agreement, and (iii) loans, advances and capital contributions made

by any Obligor in another Obligor, including any loan, advance or capital

contribution made by an Obligor in a newly formed Subsidiary which shall become

an Obligor hereunder.  Notwithstanding

the foregoing, the Obligors shall be permitted to (1) make loans, advances or

capital contributions to Subsidiaries (including newly formed Subsidiaries)

that are not Obligors, to fund their respective obligations or (2) purchase or

otherwise acquire all or substantially all of the assets or stock of any

Person, if, in any such case, each of the Restricted Payment Conditions is

satisfied with respect to the relevant loan, advance, capital contribution,

purchase or acquisition.

 

Section 10.06.  Transaction with Affiliates.   Enter into any transaction, including,

without limitation, any purchase, sale, lease, loan or exchange of property

with any Affiliate of such Obligor unless such transaction shall be on terms no

less favorable to such Obligor than would be obtainable at the time in a

comparable arm’s length transaction with an unrelated third party; provided,

that this Section 10.06 shall not apply to (a) customary fees paid by FiberMark

to members of its Board of Directors, (b) any transaction between any Obligor

and any employee of such Person that is approved by such Person’s Board of

Directors (provided that such approval shall not be required with

respect to normal compensation arrangements involving any such employee) and

(c) loans, advances, capital contributions and share purchases permitted by

Section 9.07 or Section 10.05 of this Financing Agreement.

 

Section 10.07.  Nature of Business.   Change its corporate name, principal place

of business or structure, or enter into or engage in any operation or activity

other than activities of the types conducted by each Obligor on the date hereof

or as of the date of the acquisition of an Acquired Entity and operations and

activities substantially similar thereto and logical extensions thereof.

 

Section 10.08.  Dividends.   Declare or pay any dividends; or purchase, redeem, retire, or

otherwise acquire for value any of the capital stock or securities convertible

into capital stock of such Obligor now or hereafter outstanding; or make any

distribution of assets to its stockholders as such, whether in cash, assets, or

in obligations of the Obligors, or allocate or otherwise set apart any sum for

the payment of any dividend or distribution on, or for the purchase,

redemption, or retirement of any 

 

96

 

shares

of its capital stock, except for (i) dividend payments and other distributions

by any Subsidiary to FiberMark or to another Obligor, and (ii) provided,

in each case, that each of the Restricted Payment Conditions is satisfied with

respect thereto: declarations and payments of dividends on its capital stock,

or purchases or redemptions of its capital stock, or open market purchases by

FiberMark of its outstanding common stock, $0.01 par value.

 

Section 10.09.  Leases.   Enter into any Operating Lease except to the extent permitted

under Section 10.01, treating the obligations of the lessee thereunder as

Indebtedness for purposes thereof.

 

Section 10.10.  Environmental Compliance.   Except in compliance with applicable

Environmental Laws, (a) use any of the Real Estate or other property of any

Obligor or any portion thereof for the handling, processing, storage or

disposal of Hazardous Materials, (b) cause or permit to be located on any of

the property of any Obligor any underground tank or other underground storage

receptacle for Hazardous Materials, (c) generate any Hazardous Materials on any

of the Real Estate or other property of any Obligor, (d) conduct any activity

on the Real Estate or other property of any Obligor or use any property in any

manner so as to cause an Environmental Discharge or (e) otherwise conduct any

activity on the Real Estate or any other property or use any property in any

manner that would lead to any claim under or violate any Environmental Law.

 

Section 10.11.  Fiscal Year.   Change its Fiscal Year from a period of

January 1 to December 31.

 

Section 10.12.  Subsidiary Stock Issuance.   Permit any Subsidiary of any Obligor to

issue or sell to any Person, other than such Obligor, any of such Subsidiary’s

shares, interests, participation or other equivalents (however designated

including stock appreciation rights), warrants or options to acquire capital

stock.

 

ARTICLE XI.        FINANCIAL COVENANTS

 

Section 11.01.  Consolidated Net Worth.  FiberMark and its Subsidiaries shall, as of

the last day of each fiscal quarter, commencing with the fiscal quarter ending

December 31, 2002, have a Consolidated Net Worth of not less than such amount

as the Agent may establish in good faith based on the Projections delivered by

the Borrowers pursuant to Section 9.14 hereof.

 

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Section 11.02.  Consolidated Fixed Charge Coverage Ratio.  FiberMark and its Subsidiaries shall, as of

the last day of each fiscal quarter, commencing with the fiscal quarter ending

December 31, 2002, maintain a Consolidated Fixed Charge Coverage Ratio of

greater than such ratio as the Agent may establish in good faith based on the

Projections delivered by the Borrowers pursuant to Section 9.14 hereof.

 

Section 11.03.  Domestic EBITDA.  FiberMark, its Subsidiaries shall, as of the

last day of each fiscal quarter, commencing with the fiscal quarter ending

December 31, 2002, maintain a Domestic EBITDA for such fiscal quarter of not

less than such amount as the Agent may establish in good faith based on

the Projections delivered by the Borrowers pursuant to Section 9.14 hereof.

 

ARTICLE XII.       EVENTS OF DEFAULT

 

Section 12.01.  Events of Default.   Notwithstanding anything hereinabove to the

contrary, the Agent may, and if directed to do so by the Required Lenders

shall, terminate this Financing Agreement immediately upon the occurrence of

any of the following (herein “Events of Default”):

 

(a)  failure of any Obligor to pay any of its Obligations

within five (5) business days of the due date thereof, provided that

nothing contained herein shall prohibit the Agent from charging such amounts to

any Obligor’s account on the due date thereof (if the Agent so charges such

Obligor’s account, no Event of Default relating to non-payment of Obligations

will be deemed to have occurred) and, provided  further, that if

the Agent chooses not to charge such amounts to an Obligor’s account on the due

date thereof, the Agent shall so notify the Obligor and the Obligor shall have

five (5) days from the date it receives such notice to pay such Obligations;

 

(b)  any representation or warranty of any Obligor contained

herein or in any other Loan Document, or any representation, warranty,

statement in any certificate, financial statement or other document furnished

to Agent or any of the Lenders by or on behalf of any Obligor under any Loan

Document shall, as of the time made, confirmed or furnished, prove to have been

(i) in the case of such representations and warranties which are not subject to

a Material Adverse Change exception, incorrect in any material respect or (ii)

in all cases where such representations and warranty is subject to such an

exception, incorrect;

 

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(c)  breach by any Obligor of any warranty, representation or

covenant contained herein (other than those referred to in subparagraph (d)

below) or in any other Loan Document or written agreement entered into in

connection with this Financing Agreement between any Obligor and the Lenders

and/or the Agent or delivered by such Obligor to any of the Lenders and/or the

Agent in connection herewith or the transactions contemplated hereby, if such

breach shall not have been remedied to the Required Lenders’ satisfaction

within the earlier to occur of the applicable grace period in such written

agreement or thirty (30) days from the date of such breach;

 

(d)  breach by any Obligor of any representation, warranty or

covenant contained in Sections 3.05, 3.06, 5.02, 5.03, 5.04, 5.10, 8.06, 8.17,

8.18, 9.01(g), 9.03, 9.07, Article 10 (other than Section 10.11) or Article 11;

 

(e)  if any Obligor shall (i) apply for or consent to the

appointment of, or the taking of possession by, a receiver, custodian, trustee

or liquidator of itself or of all or a substantial part of its property, (ii)

admit in writing its inability, or be generally unable, to pay its debts as

such debts become due, (iii) make a general assignment for the benefit of its

creditors, (iv) commence any case, proceeding or other action seeking to have

an order for relief entered on its behalf as debtor or to adjudicate it a

bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,

liquidation, dissolution or composition of it or its debts under any law

relating to bankruptcy, insolvency, reorganization, winding up or composition

or readjustment of debts, (v) file an answer or other pleading in any such

case, proceeding or other action admitting the material allegations of any

petition, complaint or similar pleading filed or (vi) take any corporate or

other action for the purpose of effecting any of the foregoing;

 

(f)  if a proceeding or case shall be commenced without the

application or consent of any Obligor in any court of competent jurisdiction,

seeking (i) the liquidation, reorganization, dissolution, winding-up, or the

composition or readjustment of debts of such Person, or (ii) the appointment of

a trustee, receiver, custodian, liquidator or the like of such Person under any

law relating to bankruptcy, insolvency, reorganization, winding-up, or

composition or adjustment of debts, or a warrant of attachment, execution or

similar process shall be issued against property of such Person and such 

 

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proceeding, case, warrant or

process shall continue undismissed, or any order, judgment or decree approving

or ordering any of the foregoing shall be entered, or any order for relief

against such Person shall be entered in an involuntary case under any law

relating to bankruptcy, insolvency, reorganization, winding up or composition

or readjustment of debts;

 

(g)  cessation of the business of any Obligor or the calling

of a meeting of the creditors of such Person for purposes of compromising the

debts and obligations of such Person.

 

(h)  any Obligor shall (a) fail to pay any Indebtedness in

excess of Two Hundred Fifty Thousand Dollars ($250,000) (other than with

respect to this Financing Agreement) of such Obligor, or any interest or

premium thereon, when due (whether by scheduled maturity, required prepayment,

acceleration, demand, or otherwise); or (b) fail to perform or observe any

term, covenant, or condition on its part to be performed or observed under any

agreement or instrument relating to any such Indebtedness, when required to be

performed or observed, if the effect of such failure to perform or observe is

to accelerate, or to permit the acceleration after the giving of notice or

passage of time, or both, of the maturity of such Indebtedness, whether or not

such failure to perform or observe shall be waived by the holder of such

Indebtedness, or any such Indebtedness shall be declared to be due and payable,

or required to be prepaid (other than by a regularly scheduled required

prepayment), prior to the stated maturity thereof;

 

(i)  if a judgment or judgments for the payment of money in

excess of Two Hundred Fifty Thousand Dollars ($250,000) shall be rendered

against any Obligor and the same shall remain in effect and unstayed or bonded

pending appeal for a period of thirty (30) or more consecutive days;

 

(j)  if any Loan Document shall cease, for any reason, to be

in full force and effect or shall be declared null and void, or the validity or

enforceability thereof shall be contested by any party thereto, or any party

thereof shall deny it has any further liability or obligation under or shall

fail to perform its obligations under such Loan Document;

 

(k)  if any of the following events occur or exist with

respect to any Obligor or any ERISA Affiliate: (i) any Obligor or any

other Person engages in a transaction in connection with 

 

100

 

which a Borrower, or any entity

which a Borrower has an obligation to indemnify, could be subject to liability

for either a civil penalty assessed pursuant to Section 502 of ERISA or a tax

imposed under Section 4975 of the Code; (ii) an accumulated funding deficiency

(as defined in Section 302 of ERISA or Section 412 of the Code), whether or not

waived, exists with respect to any Pension Plan; (iii) any Reportable Event, as

defined in ERISA, with respect to any Pension Plan; (iv) the giving under

Section 4041 of ERISA of a notice of intent to terminate any Pension Plan or

the termination of any Pension Plan; (v) any event or circumstance that might

constitute grounds entitling the PBGC to institute proceedings under Section

4042 of ERISA for the termination of, or for the appointment of a trustee to

administer, any Pension Plan, or the institution by the PBGC of any such

proceedings; (vi) the imposition of liability to enforce Section 515 of ERISA;

(vii) the failure of a Pension Plan intended to qualify under Section 401(a) or

401(k) of the Code to so qualify; (viii) complete or partial withdrawal under

Section 4201 or 4204 of ERISA from a Multiemployer Plan or the Reorganization,

Insolvency, or termination of any Multiemployer Plan; or (ix) the imposition of

liability in respect of any Pension Plan or Multiemployer Plan subject to Title

IV of ERISA (other than a liability to the PBGC for insurance premiums under

Title IV of ERISA, payment of which is not yet due); (x) pursuant to

Section 4068 of ERISA or Section 401(a)(29) or Section 412 of

the Code, a lien arises or security interest is granted with respect to any

Pension Plan; provided, however, that no Event of Default shall

be deemed to exist with respect to any event or condition described in clause

(i) through (ix) above unless such event or condition, individually or together

with all other such events or conditions, if any, could subject any Obligor to

any tax, penalty, or other liability to an Employee Benefit Plan, the PBGC, or

otherwise (or any combination thereof) which could result in a Material Adverse

Change;

 

(l)  if there shall occur a default which is not cured or

waived within the applicable grace period, if any, under the Mortgage; or

 

(m)  if any time the Agent for the benefit of the Lenders no

longer has a Lien on any of the Collateral; or

 

(n)  notwithstanding

any disclosure by any Obligor made in any schedule to this Agreement or

otherwise:

 

101

 

(i)            (A) receipt by any

Obligor of a written notice from any Governmental Authority indicating, (B)

service of process upon any Obligor in respect of any action commenced by any

Person alleging, or (C) the commencement of any mediation or arbitration of any

claim alleging, that any Obligor has any actual or contingent liability

(including, without limitation, liability for any Remedial Action, personal

injury or property damage), or

 

(ii)           the entry by any

Obligor into, or demand for satisfaction or performance by any Obligor under,

any agreement calling for the making of any payment or expenditure by any

Obligor in respect of any actual or contingent liability (including, without

limitation, liability for any Remedial Action, personal injury or property

damage),

 

in any case, in connection with any

Environmental Discharge at any time at, to, from or under the real property

owned, as of the date of this Agreement, by FiberMark, Inc. and located in

Lowville, New York (collectively, “Lowville Remediation Liabilities”);

provided, however, that it shall not be an Event of Default under this

provision if, within thirty (30) days following such occurrence, the Obligors

demonstrate to the reasonable satisfaction of Agent that the Obligors,

individually or collectively, will not incur during any Fiscal Year more than

$1,000,000 in costs (whether direct or indirect, and whether incurred in

connection with Remedial Action, settlement, contribution, indemnity, judgment,

or otherwise) to satisfy Lowville Remediation Liabilities.

 

Section 12.02.  Acceleration of Obligations.   Upon the occurrence of a Default and/or an

Event of Default, the Agent may (at its option) and shall at the written

direction of the Required Lenders declare that all Revolving Credit Loans

provided for in this Financing Agreement shall be thereafter in the Agent’s

sole discretion and the obligation of the Lenders to make Revolving Credit

Loans shall cease unless such Default is cured to the Required Lenders’

satisfaction or such Event of Default is waived.  If an Event of Default shall occur and be continuing, the Agent

may, and if directed to do so by the Required Lenders shall, upon notice by the

Agent to the Borrowers, (a) declare the Revolving Credit Commitments terminated,

whereupon such Revolving Credit Commitments shall forthwith terminate

immediately and any accrued fees shall forthwith become due and payable and all

Obligations, and, as liquidated damages for loss of a bargain and not as a

penalty, a lost transaction fee shall be due and payable in addition to the

accelerated amounts set forth herein and all other amounts payable under this

Financing Agreement and any other Loan Documents to be, whereupon 

 

102

 

the same

shall become, forthwith due and payable without presentment, demand or protest

of any kind, all of which are hereby waived by the Borrowers, anything

contained in this Financing Agreement to the contrary notwithstanding, equal to

the full outstanding principal amounts of the Revolving Credit Loans being

accelerated multiplied by two percent (2%); (b) charge the Borrowers the

Default Rate of Interest on all then outstanding or thereafter incurred

Obligations, provided (i) the Agent has given the Borrowers written

notice of the Event of Default, provided, however, that no notice

is required if the Event of Default is the Event listed in paragraph (e), (f)

or (g) of Section 12.01 hereof and (ii) the Borrowers have failed to cure the

Event of Default within ten (10) days after (x) the Agent deposited such notice

in the United States mail or (y) the occurrence of the Event of Default listed

in paragraph (e), (f) or (g) or Section 12.01 hereof; and (c) immediately

terminate this Financing Agreement upon notice to the Borrowers; provided,

however, that no notice of termination is required if the Event of

Default is the Event listed in paragraph (e), (f) or (g) of Section 12.01

hereof.  The exercise by the Lenders of

any option or remedy hereunder is not exclusive of any other option or remedy,

which may be exercised at any time by the Lenders, acting through the Agent.

 

Section 12.03.  Other Remedies.   Immediately upon the occurrence of any

Event of Default and so long as such Event of Default is continuing, the Agent

may to the extent permitted by Law:  (a)

remove from any premises where same may be located any and all documents,

instruments, files and records, and any receptacles or cabinets containing

same, relating to the Accounts, or the Agent may use, at the applicable

Obligor’s expense, such of the Obligor’s personnel, supplies or space at the

Obligor’s places of business or otherwise, as may be necessary to properly

administer and control the Accounts or the handling of collections and

realizations thereon; (b) bring suit, in the name of the applicable Obligor, or

the Lenders or the Agent, and generally shall have all other rights respecting

said Accounts, including without limitation the right to accelerate or extend

the time of payment, settle, compromise, release in whole or in part any amounts

owing on any Accounts and issue credits in the name of the applicable Obligor,

or the Agent; (c) sell, assign and deliver the Collateral and any returned,

reclaimed or repossessed merchandise, with or without advertisement, at public

or private sale, for cash, on credit or otherwise, at the Agent’s sole option

and discretion, and any one or more of the Lenders or the Agent may bid or

become a purchaser at any such sale, free from any right of redemption, which

right is hereby expressly waived by each Obligor; (d) foreclose the security

interests created herein by any available judicial procedure, or to take

possession of any or all of the Inventory or the Brattleboro Collateral without

judicial process, and to enter any premises where any Inventory and Equipment

comprising part of the Brattleboro Collateral may be 

 

103

 

located

for the purpose of taking possession of or removing the same and (e) exercise

any other rights and remedies provided in Law, in equity, by contract or

otherwise.  The Agent shall have the

right, without notice or advertisement, to sell, lease, or otherwise dispose of

all or any part of the Collateral whether in its then condition or after further

preparation or processing, in the name of any Obligor, any one or more of the

Lenders or the Agent, or in the name of such other party as the Agent may

designate, either at public or private sale or at any broker’s board, in lots

or in bulk, for cash or for credit, with or without warranties or

representations, and upon such other terms and conditions as the Agent in its

sole discretion may deem advisable, and the Agent and any one or more of the

Lenders shall have the right to purchase at any such sale.  If any Inventory and Equipment comprising

part of the Brattleboro Collateral shall require rebuilding, repairing,

maintenance or preparation, the Agent shall have the right, at its option, to

do such of the aforesaid as is necessary, for the purpose of putting the

Inventory and Equipment comprising part of the Brattleboro Collateral in such

saleable form as the Agent shall deem appropriate.  FiberMark Office agrees, at the request of the Agent, to assemble

the Inventory and Equipment comprising part of the Brattleboro Collateral and

to make it available to the Agent at premises of FiberMark Office or elsewhere

and to make available to the Agent the premises and facilities of FiberMark

Office for the purpose of the Agent’s taking possession of, removing or putting

the Inventory and Equipment comprising part of the Brattleboro Collateral in

saleable form.  However, if notice of

intended disposition of any Collateral is required by Law, it is agreed that

ten (10) days notice shall constitute reasonable notification and full

compliance with the law.  The net cash

proceeds resulting from the Agent’s exercise of any of the foregoing rights,

(after deducting all charges, costs and expenses, including reasonable

attorneys’ fees) shall be applied by the Agent to the payment of the Obligor’s

Obligations, whether due or to become due, in such order as the Agent may

elect, and the Obligors shall remain liable to the Agent and the Lenders for

any deficiencies, and the Agent and the Lenders in turn agree to remit to the

Obligors or their respective successors or assigns, any surplus resulting

therefrom.  The enumeration of the

foregoing rights is not intended to be exhaustive and the exercise of any right

shall not preclude the exercise of any other rights, all of which shall be

cumulative.  The Mortgage shall govern

the rights and remedies of the Agent and the Lenders thereto.

 

ARTICLE XIII.      AGENCY

 

Section 13.01.  The Agent.   Each Lender hereby irrevocably designates and appoints CITBC as

the Agent for the Lenders under this Financing Agreement and any modifications,

supplements and 

 

104

 

amendments

thereto and any other Loan Documents executed in connection therewith and

irrevocably authorizes CITBC as Agent for such Lenders, to take such action on

its behalf under the provisions of this Financing Agreement and all such

ancillary documents and to exercise such powers and perform such duties as are

expressly delegated to the Agent by the terms of this Financing Agreement and

all such ancillary documents together with such other powers as are reasonably

incidental thereto.  Notwithstanding any

provision to the contrary elsewhere in this Financing Agreement, the Agent

shall not have any duties or responsibilities, except those expressly set forth

herein, or any fiduciary relationship with any Lender and no implied covenants,

functions, responsibilities, duties, obligations or liabilities shall be read

into this Financing Agreement and such ancillary documents or otherwise exist

against the Agent.

 

Section 13.02.  Delegation of Duties.   The Agent may execute any of its duties

under this Financing Agreement and all ancillary documents by or through agents

or attorneys-in-fact and shall be entitled to the advice of counsel concerning

all matters pertaining to such duties.

 

Section 13.03.  Exculpatory Provisions.   Neither the Agent nor any of its officers,

directors, employees, agents, or attorneys-in-fact shall be (a) liable to any

Lender for any action lawfully taken or omitted to be taken by it or such

Person under or in connection with this Financing Agreement and all ancillary

documents (except for its or such Person’s own gross negligence or willful

misconduct), or (b) responsible in any manner to any of the Lenders for any

recitals, statements, representations or warranties made by any Obligor or any

officer thereof contained in this Financing Agreement and all ancillary

documents or in any certificate, report, statement or other document referred

to or provided for in, or received by the Agent under or in connection with,

this Financing Agreement and all ancillary documents or for the value,

validity, effectiveness, genuineness, enforceability or sufficiency of this

Financing Agreement and all ancillary documents or for any failure of any

Obligor to perform its obligations thereunder. 

The Agent shall not be under any obligation to any Lender to ascertain

or to inquire as to the observance or performance of any of the agreements

contained in, or conditions of, this Financing Agreement or any ancillary

document or to inspect the properties, books or records of any Obligor.

 

Section 13.04.  Reliance by Agent.   The Agent shall be entitled to rely, and

shall be fully protected in relying, upon any note, writing, resolution,

notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,

facsimile, message, statement, order or other document or conversation believed

by it to be genuine and correct and to have been signed, sent or made by the

proper Person or Persons and 

 

105

 

upon

advice and statements of legal counsel (including, without limitation, counsel

to the Obligors), independent accountants and other experts selected by the

Agent.  The Agent shall be fully

justified in failing or refusing to take any action under this Financing

Agreement and any ancillary document unless it shall first receive such advice

or concurrence of the Required Lenders as it deems appropriate or it shall

first be indemnified to its satisfaction by all of the Lenders against any and

all liability and expense which may be incurred by it by reason of taking or

continuing to take any such action.  The

Agent shall in all cases be fully protected in acting, or in refraining from

acting, under this Financing Agreement and all ancillary documents in

accordance with a request of the Required Lenders, and such request and any

action taken or failure to act pursuant thereto shall be binding upon all of

the Lenders.

 

Section 13.05.  Notice of Default.   The Agent shall not be deemed to have

knowledge or notice of the occurrence of any Default or Event of Default

hereunder unless the Agent has received notice from a Lender or a Borrower

describing such Default or Event of Default. 

In the event that the Agent receives such a notice, the Agent shall

promptly give notice thereof to the Lenders. 

The Agent shall take such action with respect to such Default or Event

of Default as shall be reasonably directed by the Required Lenders; provided

that unless and until the Agent shall have received such direction, the Agent

may in the interim (but shall not be obligated to) take such action, or refrain

from taking such action, with respect to such Default or Event of Default as it

shall deem advisable and in the best interests of the Lenders.

 

Section 13.06.  Non-Reliance on Agent and other Lenders.   Each Lender expressly acknowledges that

neither the Agent nor any of its officers, directors, employees, agents or

attorneys-in-fact has made any representations or warranties to it and that no

act by the Agent hereinafter taken, including any review of the affairs of any

Borrower shall be deemed to constitute any representation or warranty by the

Agent to any Lender.  Each Lender

represents to the Agent that it has, independently and without reliance upon the

Agent or any other Lender and based on such documents and information as it has

deemed appropriate, made its own appraisal of and investigation into the

business, operations, property, financial and other condition and

creditworthiness of the Obligors and made its own decision to enter into this

Financing Agreement.  Each Lender also

represents that it will, independently and without reliance upon the Agent or

any other Lender and based on such documents and information as it shall deem

appropriate at the time, continue to make its own credit analysis, appraisals

and decisions in taking or not taking action under this Financing Agreement and

to make such investigation as it deems necessary to inform itself as to the

business, operations, property, financial and other 

 

106

 

condition

or creditworthiness of the Obligors. 

The Agent, however, shall provide the Lenders with copies of all

financial statements, projections and business plans which come into the possession

of the Agent or any of its officers, employees, agents or attorneys-in-fact.

 

Section 13.07.  Indemnification.   The Lenders agree to indemnify the Agent in

its capacity as such (to the extent not reimbursed by any Obligor, and without

limiting the obligation of any Obligor to do so), from and against any and all

liabilities, obligations, losses, damages, penalties, actions, judgments,

suits, costs, expenses or disbursements of any kind whatsoever which may at any

time be imposed on, incurred by or asserted against the Agent in any way

relating to or arising out of this Financing Agreement on any ancillary

documents or any documents contemplated by or referred to herein or the

transactions contemplated hereby or any action taken or omitted by the Agent

under or in connection with any of the foregoing; provided that no

Lender shall be liable for the payment of any portion of such liabilities,

obligations, losses, damages, penalties, actions, judgments, suits, costs,

expenses or disbursements resulting solely from the Agent’s gross negligence or

willful misconduct.  The agreements in

this paragraph shall survive the payment of the Obligations.

 

Section 13.08.  The Agent in its Individual Capacity.   The Agent may make loans to, and generally

engage in any kind of business with any Obligor as though the Agent were not

the Agent hereunder.  With respect to

its loans made or renewed by it or Revolving Credit Loan obligations hereunder

as a Lender, the Agent shall have the same rights and powers, duties and

liabilities under this Financing Agreement as any Lender and may exercise the

same as though it were not the Agent and the terms “Lender” and “Lenders” shall

include the Agent in its individual capacity.

 

Section 13.09.  Successor Agent.   The Agent may resign as Agent upon thirty

(30) days’ prior notice to the Lenders and such resignation shall be effective

upon the appointment of a successor Agent. 

Upon receiving notice from the Agent of the Agent’s intention to resign

as Agent, the Lenders shall appoint a successor agent for the Lenders whereupon

such successor agent shall succeed to the rights, powers and duties of the

Agent and the term “Agent” shall mean such successor agent effective upon its

appointment, and the former Agent’s rights, powers and duties as Agent shall be

terminated, without any other or further act or deed on the part of such former

Agent or any of the parties to this Financing Agreement.  After any retiring Agent’s resignation

hereunder as Agent the provisions of this Article 13 shall continue to inure to

its benefit as to any actions taken or omitted to be taken by it while it was

Agent.

 

107

 

Section 13.10.  Arrangements Requiring Consent of

Lenders.   Notwithstanding anything

contained in this Financing Agreement to the contrary, the Agent will not,

without the prior written consent of all of the Lenders:  amend this Financing Agreement to (a)

increase the Revolving Credit Facility or the Overadvance Availability; (b)

reduce the interest rate; (c) reduce or waive any fees or the repayment of any

Obligations due the Lenders or the Agent; (d) extend the maturity of the

Obligations; or (e) alter or amend (i) this Section 13.10 or (ii) the

definition of Eligible Accounts Receivable and/or Eligible Inventory and the

Agent’s criteria for determining compliance therewith.  Except as otherwise hereinabove provided,

the Agent will not, without the prior written consent of the Required Lenders:  (a) amend this Financing Agreement or (b)

waive any Event of Default under this Financing Agreement.  In all other respects, the Agent is

authorized to take such actions or fail to take such actions if the Agent, in

its reasonable discretion, deems such to be advisable and in the best interest

of the Lenders, including, but not limited to, the making of an Overadvance or

the termination of the Revolving Credit Commitments and/or this Financing

Agreement upon the occurrence of an Event of Default unless it is specifically

instructed to the contrary by the written instructions of the Required Lenders.

 

Notwithstanding the foregoing,

the Agent may (in its sole discretion) and shall at the written direction of

the Required Lenders upon the occurrence of an Event of Default and upon

written notice to the Lenders and the Borrowers, accelerate the Revolving

Credit Loans, and the other Obligations of the Obligors hereunder.  In such event, the Revolving Credit Loans

shall be immediately deemed due and payable and each Lender’s interest in the

Revolving Credit Loans shall be settled in accordance with this Financing

Agreement based on the Revolving Credit Loans outstanding as of the date of

such written declaration.  Thereafter,

all collections received for application to the Revolving Credit Loans as

provided in this Financing Agreement shall be applied first to the costs and

expenses of collection and Out-of-Pocket Expenses, if any, then to the payment

of interest on the Revolving Credit Loans, then to the principal balance of the

Revolving Credit Loans.  The Lenders

acknowledge that an orderly repayment of the Revolving Credit Loans and/or

liquidation of Collateral may necessitate the making of new Revolving Credit

Loans after a declaration of acceleration by the Agent and/or the Required

Lenders and that all of the Lenders shall participate in such Revolving Credit

Loans based on their respective Pro Rata Shares.  Such new Revolving Credit Loans shall be in accordance with a

program of orderly liquidation and shall be treated as costs of collection,

Out-of-Pocket Expenses and/or liquidation with respect to the priority of

repayment as provided in this paragraph and as otherwise applicable.

 

108

 

Notwithstanding the foregoing,

the Agent in its sole discretion may:

 

(a)  cure any ambiguity, defect or inconsistency in the terms of this

Financing Agreement;

 

(b)  release

collateral in bulk (i) as required pursuant to the explicit terms of this

Financing Agreement or any of the ancillary documents thereto and (ii) in an

amount not to exceed Two Million Dollars ($2,000,000) in any Fiscal Year provided

that at the election of the Agent there is a corresponding reduction in the

Obligations to the Lenders, as applicable and as set forth in this Financing

Agreement;

 

(c)  within the

criteria specified in the definition of “Eligible Accounts Receivable” in

Section 1.01 of this Financing Agreement, make determinations of eligibility of

Collateral with such non-material temporary modification as the Agent may from

time to time implement (provided that the consent of the Lenders to any

other modifications thereof shall be implied if the Agent does not receive

notice to the contrary within ten (10) business days of sending notice of any

proposed change to the Lenders); and

 

(d)  establish

reserves.

 

Section 13.11.  Recapture of Payments.   If the Agent is required at any time to

return to any Obligor or to a trustee, receiver, liquidator, custodian or other

similar official any portion of the payments made by such Obligor to the Agent

as a result of a bankruptcy with respect to such Obligor, any guarantor or any

other person or entity or otherwise, then each Lender shall, on demand of the

Agent, forthwith return to the Agent its Pro Rata Share of any such payments

made to such Lender by the Agent, together with its Pro Rata Share of interest

or penalties, if any, payable by the Lenders. 

This provision shall survive the termination of this Financing

Agreement.

 

ARTICLE XIV.      RIGHTS AND OBLIGATIONS OF THE LENDERS

AND THE AGENT

 

Section 14.01. Adjustments Among Lenders.   Notwithstanding anything herein to the

contrary contained in this Financing Agreement, prior to the occurrence of an

Event of Default, in the event that any Lender shall obtain payment in respect

of a Revolving Credit Note, or interest thereon or upon or following on Event

of Default, in the event any Lender shall obtain payment in respect of a

Revolving Credit Note, or interest thereon, or receive any Collateral or

proceeds thereof with respect to any Revolving Credit Note, whether voluntarily

or 

 

109

 

involuntarily,

and whether through the exercise of a right of banker’s Lien, set-off or

counterclaim against the applicable Borrower or otherwise, in a greater

proportion than any such payment obtained by any other Lender in respect of the

corresponding Revolving Credit Note held by such Lender, then the Lender so

receiving such greater proportionate payment or such greater proportionate

amount of Collateral in the case of an occurrence of an Event of Default shall

purchase for cash from the other Lender or Lenders such portion of each such

other Lender or Lenders’ Revolving Credit Loan as appropriate, as shall be

necessary to cause such Lender receiving the proportionate overpayment to share

the excess payment with each Lender or shall provide the other Lenders with the

benefits of any such Collateral, or the proceeds thereof, as shall be necessary

to cause such Lender receiving the proportionate overpayment to share the

excess payment or benefits of such Collateral or proceeds ratably with each

Lender in the case of an occurrence of an Event of Default.  Upon or following an Event of Default

payments on any Revolving Credit Note received by each Lender and receipt of

Collateral by each Lender shall be in the same proportion as the proportion

of:  (a) the Obligations owing to such

Lender in respect of all Revolving Credit Notes held by such Lender; to (b) the

Obligations owing to all of the Lenders in respect of all of the Revolving Credit

Notes; provided, however, that, with respect to the two

paragraphs above, if all or any portion of such excess payment or benefits is

thereafter recovered from the Lender that received the proportionate

overpayment, such purchase of Obligations or payment of benefits, as the case

may be, shall be rescinded, and the purchase price and benefits returned, to

the extent of such recovery, but without interest.

 

Section 14.02.  Sharing of Payments.   The Agent shall, after receipt of any

interest and fees earned under this Financing Agreement, remit to each

Lender:  (a) its Pro Rata Share of all

fees, provided, however, that no Lender (other than CITBC in its

role as Agent) shall share in (i) the Collateral Management Fee or

Documentation Fee or the fees provided for in Section 6.03 of this Financing

Agreement and (ii) applicable fees, costs, expenses and Out-of-Pocket Expenses

of the Agent which shall be remitted to and retained by the Agent; and (b)

interest computed at the rate and as provided for in Section 6.02 of this

Financing Agreement on all outstanding amounts advanced by such Lender on each

Settlement Date, prior to adjustment, that were made subsequent to the last

remittance by the Agent to the Lender of such Borrower’s interest.

 

Section 14.03.  Sale of Participations.   Each Borrower acknowledges each Lender may

sell participations to one or more banks or other entities in all or a portion

of its rights and obligations under this Financing Agreement (including,

without limitation, all or a portion of its 

 

110

 

Lender

Loan Commitment, the Revolving Credit Loans owing to it, and the Revolving

Credit Note(s) held by it); provided, however, that:  (a) any such Lender’s obligations under

this Financing Agreement (including, without limitation, its Lender Loan

Commitment hereunder) shall remain unchanged, and (b) such Lender shall

remain solely responsible to the other parties hereto for the performance of

such obligations, (c) such Lender shall remain the holder of any such Revolving

Credit Note(s) executed to its order hereunder for all purposes of this

Financing Agreement, and (d) each Borrower, the Agent and the other

Lenders shall continue to deal solely and directly with such Lender in connection

with such Lender’s rights and obligations under this Financing Agreement.  Each Borrower further acknowledges that in

doing so, the Lenders may grant to such participants certain rights which would

require the participant’s consent to certain waivers, amendments and other

actions with respect to the provisions of this Financing Agreement.

 

Each Obligor authorizes each

Lender to disclose to any participant or purchasing lender (each, a

“Transferee”) and any prospective Transferee, in each case, that has agreed to

be bound by the confidentiality provisions of Section 15.10 hereof, any and all

financial information in such Lender’s possession concerning such Obligor and

their respective affiliates which has been delivered to such Lender by or on

behalf of any Obligor pursuant to this Financing Agreement or which has been

delivered to such Lender by or on behalf of any Obligor in connection with such

Lender’s credit evaluation of any Obligor and its affiliates prior to entering

into this Financing Agreement.

 

Section 14.04.  Nature of Revolving Credit Commitments.   Each Obligor hereby agrees that each Lender

is solely responsible for its Lender Loan Commitment and that neither the Agent

nor any Lender shall be responsible for, nor assume any obligations for the

failure of any Lender to make available its portion of the Revolving Credit

Loans.  Further, should any Lender

refuse to make available its portion of the Revolving Credit Loans, then any

one or more of the other Lenders may, but without obligation to do so, increase,

unilaterally, its portion of the Revolving Credit Loans in which event the

applicable Borrower is so obligated to that other Lender.

 

Section 14.05.  Sharing of Costs and Expenses.   In the event that the Agent, the Lenders or

any one of them is sued or threatened with suit by any Obligor or any one of

them, or by any receiver, trustee, creditor or any committee of creditors on

account of any preference, voidable transfer or lender liability issue, alleged

to have occurred or been received as a result of, or during the transactions

contemplated under this Financing Agreement, then in such event any money paid

in satisfaction or compromise of such suit, action, claim or demand and any 

 

111

 

expenses,

costs and attorneys’ fees paid or incurred in connection therewith, whether by

the Agent, the Lenders or any one of them, shall be shared proportionately by

the Lenders.  In addition, any costs,

expenses, fees or disbursements incurred by outside agencies or attorneys

retained by the Agent to effect collection or enforcement of any rights in the

Collateral, including enforcing, preserving or maintaining rights under this

Financing Agreement shall be shared proportionately by the Lenders to the

extent not reimbursed by any Obligor or from the proceeds of Collateral.  The provisions of this paragraph shall not

apply to any suits, actions, proceedings or claims that (a) predate the date of

this Financing Agreement or (b) are based on transactions, actions or omissions

that predate the date of this Financing Agreement.

 

Section 14.06.  Sharing of Payments.   Each Borrower hereby agrees that, in

addition to (and without limitation of) any right of set-off, banker’s Lien or

counterclaim a Lender may otherwise have, each Lender shall be entitled, at its

option, upon the occurrence and during the continuation of an Event of Default,

to offset balances held by it at any of its offices, as the case may be,

against any principal of or interest on its Revolving Credit Loans payable to

such Lender, that is not paid when due (regardless of whether such balances are

then due to such Borrower), in which case such Lender shall promptly notify

such Borrower and the Agent thereof, provided that such Lenders failure

to give such notice shall not affect the validity thereof or create any

liability on the part of such Lender whatsoever.  If a Lender shall effect payment of any principal of or interest

on Revolving Credit Loans held by such Lender under this Financing Agreement

through the exercise of any right of set-off, banker’s Lien, counterclaim or

similar right, such Lender shall promptly purchase from the other Lenders

participations in the loans and/or advances held by the other Lenders in such

amounts, and make such other adjustments from time to time as shall be

equitable, to the end that all the Lenders shall share the benefit of such

payment pro  rata in accordance with the unpaid principal and

interest on the loans and/or advances held by each of them.  To such end, all of the Lenders shall make

appropriate adjustments among themselves (by the resale of participations sold

or otherwise) if such payment is rescinded or must otherwise be restored.  Each Borrower agrees that any

Lender so purchasing a participation in the Revolving Credit Loans held by the

other Lenders may exercise all rights of set-off, banker’s Lien, counterclaim

or similar rights with respect to such participation as fully as if such Lender

were a direct holder of the Revolving Credit Loans in the amount of such

participation.  Nothing contained herein

shall require any Lender to exercise any such right or shall affect the right

of any Lender to exercise and retain the benefits of exercising, any such right

with respect to any other indebtedness or obligation of such Borrower.

 

112

 

Section 14.07.  Assignments.   Each Lender shall have the right at any

time to assign to one or more commercial banks, commercial finance lenders or

other financial institutions all or a portion of its rights and obligations

under this Financing Agreement including, without limitation, its Lender Loan

Commitment and Revolving Credit Loans; provided that, unless an Event of

Default has occurred and is continuing, any such assignment to a Transferee

that cannot claim entitlement to complete exemption from U.S. federal

withholding tax on all payments made by the Obligors hereunder may be made only

with the prior written consent of FiberMark, not to be unreasonably withheld.  Upon such assignment and provided such

assignee assumes its portion of each Lender’s obligations hereunder, (a) the

assignee thereunder shall be a party hereto and, to the extent that rights and

obligations hereunder have been assigned to it pursuant to such assignment, have

the rights and obligations of a Lender hereunder and (b) each Lender shall, to

the extent that rights and obligations hereunder have been assigned by it

pursuant to such assignment, relinquish their rights and be released from their

obligations under this Financing Agreement. 

Each Borrower shall, if necessary, execute any documents reasonably

required to effectuate the assignments.

 

In the event any Lender makes

any assignment, each such assignment shall be of a constant, and not a

varying, percentage of all of such Lender’s rights and obligations under this

Financing Agreement.  Upon the

execution, delivery, acceptance and recording, from and after the effective

date specified in an Assignment and Acceptance substantially in the form of

Exhibit G hereto (the “Assignment and Acceptance”).

 

By executing and delivering an

Assignment and Acceptance, the Lender and the assignee thereunder confirm to

and agree with each other and the other parties hereto as follows:

(a) other than as provided in such Assignment and Acceptance, such Lender

makes no representation or warranty and assumes no responsibility with respect

to any statements, warranties or representations made in or in connection with

this Financing Agreement or the execution, legality, validity, enforceability,

genuineness, sufficiency or value of this Financing Agreement or any other

instrument or document furnished pursuant hereto; (b) such Lender makes no

representation or warranty and assumes no responsibility with respect to the

financial condition of any Obligor or the performance or observance by any

Obligor of any of its obligations under this Financing Agreement or any other

instrument or document furnished pursuant hereto; (c) such assignee

confirms that it has received a copy of this Financing Agreement, together with

copies of such financial statements and such other documents and information as

it has deemed appropriate to make its own credit analysis and decision to enter

into such Assignment and Acceptance; (d) such assignee will, independently

and without reliance upon the Agent, CITBC, 

 

113

 

CITEF or any other Lender and

based on such documents and information as it shall deem appropriate at the

time, continue to make its own credit decisions in taking or not taking action

under this Financing Agreement; (e) such assignee appoints and authorizes

the Agent to take such action as agent on its behalf and to exercise such

powers under this Financing Agreement as are delegated to the Agent by the

terms hereof, together with such powers as are reasonably incidental thereto;

and (f) such assignee agrees that it will perform in accordance with their

terms all of the obligations which by the terms of this Financing Agreement are

required to be performed by it as a Lender.

 

Upon its receipt of an

Assignment and Acceptance executed by an assigning Lender, together with all

Revolving Credit Notes subject to such assignment, the Agent shall:  (a) accept such Assignment and

Acceptance, and (b) give prompt notice thereof to the Borrowers.  Within five (5) Business Days after its

receipt of such notice, each Borrower, at its own expense, shall execute and

deliver to the Agent in exchange for each surrendered Revolving Credit Note a

new Revolving Credit Notes to the order of such assignee in an amount equal to

the applicable Lender Loan Commitment and/or Revolving Credit Loans assumed by

it pursuant to such Assignment and Acceptance and, if such Lender has retained

a Lender Loan Commitment and/or Revolving Credit Loan hereunder, new Revolving

Credit Notes to the order of such Lender in amounts equal to the applicable

Lender Loan Commitment retained by it hereunder.  Such new Revolving Credit Notes shall be dated the effective date

of such Assignment and Acceptance and shall otherwise be in substantially the

form of Exhibit A.

 

Section 14.08.  Acknowledgements by Agent.   The Lenders hereby irrevocably authorize

the Agent, at its option and in its discretion and without the necessity of any

notice from the Agent to the Lenders, (a) to acknowledge that neither the Agent

nor the Lenders have a Lien on any leased property of any Borrower or any other

property in which no Borrower owns any interest; (b) to (i) acknowledge a

Purchase Money Lien that conforms to the criteria set forth in the definition

of said term in Section 1.01 of this Financing Agreement and (ii) subordinate

to any holder of such Purchase Money Lien any Lien on the Equipment subject

thereto that the Agent and the Lenders have as long as the applicable Obligor

owning such Equipment is indebted to such creditor; and (c) to release any Lien

granted to or held by the Agent upon any Collateral:  (i) upon termination of the Lender Loan Commitments and this

Financing Agreement and the payment and satisfaction of the Obligations; (ii)

constituting property sold or to be sold or disposed of as part of or in

connection with any disposition permitted hereunder; (iii) constituting

property leased to the applicable Obligor under a lease which has expired or

been terminated in a transaction permitted under this Financing Agreement or is

about to expire and which has not been, and is 

 

114

 

not

intended by the applicable Obligor to be, renewed or extended; (iv) consisting

of an instrument evidencing Indebtedness, which instrument has been pledged to

the Agent for the ratable benefit of the Lenders, if the Indebtedness evidenced

thereby has been paid in full; or (v) if approved, authorized or ratified in

writing by all the Lenders.  Upon

request by the Agent at any time, the Lenders will confirm in writing the

Agent’s authority to release particular types or items of Collateral pursuant

to this Section 14.08.

 

Section 14.09.  Termination of Financing Agreement.   The Agent, at the direction of all of the

Lenders, may terminate the Lender Loan Commitments and this Financing Agreement

on September 30, 2005 or any Anniversary Date thereafter by giving the

Borrowers at least sixty (60) days’ prior written notice of termination.  Notwithstanding the foregoing, the Agent may

terminate this Financing Agreement immediately upon the occurrence of an Event

of Default, provided, however, that if the Event of Default is an

event listed in paragraph (e), (f) or (g) of Section 12.01 hereof, the Agent

may regard this Financing Agreement as terminated and notice to that effect is

not required.

 

Any of the Lenders may terminate this Financing

Agreement on September 30, 2005 or any Anniversary Date thereafter by giving

the Agent and the other Lenders at least ninety (90) days prior written notice

of termination.  Within thirty (30) days

of receipt of such notice from any such Lender(s), the Agent shall either:  (a) give notice to the Borrowers of

termination of the Lender Loan Commitments and this Financing Agreement in

accordance with the terms hereof, in which event the obligations of the Lenders

hereunder shall terminate as of the date on which termination of this Financing

Agreement with the Borrowers shall become operative and effective or (b) if the

other Lenders so elect, they shall have the right to purchase the terminating

Lender’s Pro Rata Share of its interest hereunder for the full amount thereof,

together with any accrued interest. 

Termination of this Financing Agreement by any of the Lenders as herein

provided shall not affect the Lenders’ respective rights and obligations under

this Financing Agreement incurred prior to the effective date of termination as

set forth in the preceding sentence. 

This Financing Agreement, unless terminated as herein provided, shall

continue.

 

The Borrowers may terminate

this Financing Agreement and the Lender Loan Commitments, in whole, only upon

sixty (60) days’ prior written notice by the Borrowers to the Agent, provided

that the Borrowers pay to the Agent for the ratable benefit of the Lenders

immediately on demand the Libor Rate Prepayment Premium.  All Obligations shall become due and payable

as of any termination hereunder or under Article 12 hereof and, pending a final

accounting, the Agent may withhold any balances in the Borrowers’ accounts

(unless supplied with an indemnity 

115

satisfactory to the Agent) to

cover all of the Obligations, whether absolute or contingent.  All of the Agent’s and the Lenders’ rights,

liens and security interests shall continue after any termination until all

Obligations have been paid and indefeasibly satisfied in full.

 

ARTICLE XV.       MISCELLANEOUS

 

Section 15.01.  Waivers.   Each Obligor hereby waives diligence, demand, presentment and

protest and any notices thereof as well as notice of nonpayment.  No delay or omission of the Agent or any of

the Lenders or any Obligor to exercise any right or remedy hereunder, whether

before or after the happening of any Event of Default, shall impair any such

right or shall operate as a waiver thereof or as a waiver of any such Event of

Default.  No single or partial exercise

by the Agent or any of the Lenders of any right or remedy precludes any other

or further exercise thereof, or precludes any other right or remedy.

 

Section 15.02.  Entire Agreement.   This Financing Agreement and the documents

executed and delivered in connection therewith constitute the entire agreement

between the Obligors and the Agent and the Lenders;  supersede any prior agreements; subject to the provisions in

Section 13.10, can be changed only by a writing signed by the Obligors, the

Agent and the Required Lenders; and shall bind and benefit the Obligors, the

Agent and the Lenders and their respective successors and assigns.

 

Section 15.03.  Usury.   In no event shall any Obligor, upon demand by the Agent for

payment of any indebtedness relating hereto, by acceleration of the maturity

thereof, or otherwise, be obligated to pay interest and fees in excess of the

amount permitted by Law.  Regardless of

any provision herein or in any agreement made in connection herewith, the

Lenders shall never be entitled to receive, charge or apply, as interest on any

indebtedness relating hereto, any amount in excess of the maximum amount of

interest permissible under applicable Law. 

If the Agent or any one or more of the Lenders ever receive, collect or

apply any such excess, it shall be deemed a partial repayment of principal and

treated as such; and if principal is paid in full, any remaining excess shall

be refunded to the applicable Obligor. 

This paragraph shall control every other provision hereof and of any

other agreement made in connection herewith.

 

Section 15.04.  Payment of Expenses.   All statements, reports, certificates,

opinions and other documents or information required to be furnished by any

Obligor to Agent or any Lender under this Financing Agreement or any other Loan

Document shall be supplied without cost to 

 

116

 

Agent or

any Lenders.  FiberMark shall pay, on

demand, whether or not the Closing Date occurs, (1) all Out-of-Pocket Expenses

of Agent and Lenders, including, without limitation, the fees and disbursements

of Dewey Ballantine LLP, counsel to Agent and Lenders, incurred in connection

with (a) the negotiation, preparation, execution and delivery of the Loan

Documents, (b) any waiver of amendment of, or supplement or modification to,

the Loan Documents and (c) the review of any of the other agreements,

instruments or documents referred to in this Financing Agreement or relating to

the transactions contemplated hereby including, without limitation, ongoing

review of environmental matters; (d) all cost associated with all policies of

title insurance; (e) all costs and expenses of the Agent and Lenders (including

fees and disbursements of legal counsel) incident to the successful

enforcement, collection, protection or preservation of any right or claim of

Agent or Lenders under the Loan Documents (including in connection with any

bankruptcy of an Obligor or any appeal); (f) any assignment or participation by

a Lender, during the continuation of an Event of Default, of all or any portion

of its interests hereunder; and (g) (1) all fees and expenses incurred in

connection with the perfection of the Lenders’ Liens, all recording fees,

mortgage taxes, serving costs, and costs of searches; (2) the Collateral

Management Fee; (3) the Documentation Fee; (4) the Facility Fee; and (5) the

Unused Line Fee.

 

Section 15.05.  Indemnity.   Each Obligor hereby jointly and severally agrees to indemnify

the Lenders and the Agent and each of their affiliates, officers, directors,

employees, attorneys, consultants and agents (collectively, “Indemnitees”) and

agrees to defend and hold the Indemnitees harmless from and against any and all

loss, damage, claim, liability, injury, obligation, penalty, action, suit,

cost, or expense of whatsoever kind or nature, imposed on, incurred by or

asserted against any Indemnitee by reason of (a) any investigation, litigation

or other proceedings (including any threatened investigation, litigation or

other proceedings) relating to or arising in connection with this Financing

Agreement, any other Loan Document or the transactions contemplated hereby or

thereby (but excluding any such losses, liabilities, claims or damages incurred

by reason of the gross negligence or willful misconduct of the Person to be

indemnified) and (b) any Environmental Discharge; any handling, storage, use,

disposal, manufacture, treatment, recycling, remediation, removal, generation,

release, discharge, refining or dumping of any Hazardous Materials; any

Remedial Action; or any violation or alleged violation of Environmental Laws,

arising from or in connection with the past, present or future operations,

properties or equipment of any Obligor or its predecessors in interest.  Each Obligor hereby jointly and severally

also agrees to reimburse any Indemnitee for all expenses incurred in connection

with any such investigation, litigation or other proceedings (whether actual or

threatened), or such Environmental 

 

117

 

Discharge;

handling, storage, use, disposal, manufacture, treatment, recycling,

remediation, removal, generation, release, discharge, refining or dumping of

any Hazardous Materials; Remedial Action; or violation or alleged violation of

Environmental Laws including, without limitation, the fees and disbursements of

counsel incurred in connection with any of the foregoing.  Each Obligor further agrees that this

indemnification shall survive termination of this Financing Agreement as well

as the payment of all Obligations or amounts payable hereunder.

 

Section 15.06.  Severability.   If any provision hereof or of any other

agreement made in connection herewith is held to be illegal or unenforceable,

such provision shall be fully severable, and the remaining provisions of the

applicable agreement shall remain in full force and effect and shall not be

affected by such provision’s severance. 

Furthermore, in lieu of any such provision, there shall be added

automatically as a part of the applicable agreement a legal and enforceable

provision as similar in terms to the severed provision as may be possible.

 

Section 15.07.  Waiver of Jury Trial.   EACH OBLIGOR, THE AGENT AND EACH LENDER

EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING

ARISING OUT OF THIS FINANCING AGREEMENT. 

EACH OBLIGOR HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND

CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT

REQUESTED.

 

Section 15.08.  Notices.   Except as otherwise herein provided, any notice or other

communication required hereunder shall be in writing, and shall be deemed to

have been validly served, given or delivered when hand delivered or sent by

telegram or facsimile, or three days after deposit in the United State mails,

with proper first class postage prepaid and addressed to the party to be

notified as follows:

 

118

 

(a) if to CITBC or the Agent

at:

 

The CIT Group/Business Credit,

Inc.

1211 Avenue of the Americas

New York, New York 10036

Attn: Regional Manager

Fax (212) 536-1295

 

(b) if to CITEF at:

 

The CIT Group/Equipment

Financing, Inc.

1540 West Fountainhead Parkway

Tempe, Arizona 85282

Attn:  Frank Young, Senior Vice President

Fax                               

 

(c)  if to any party which becomes a Lender subsequent to the date

hereof, such address as appears beneath such Lender’s name on the signature

page of the Assignment and Acceptance such Lender executes in accordance with

Section 14.07 of this Financing Agreement.

 

(d)  if to FiberMark at:

 

FiberMark, Inc.

P.O. Box 498

161 Wellington Road

Brattleboro, VT 05302

Attn: Chief Financial Officer

Fax: (802) 257-5973

 

with a copy to (provided,

however, the failure to deliver such copy will not invalidate any

notices delivered to FiberMark nor create any liability on the part of the

Agent or any Lender):

 

Hale and Dorr LLP

60 State Street

Boston Massachusetts  02109

Attn:  John D. Sigel, Esq.

Fax:  (617) 526-5000

 

(e)  if to FiberMark

Durable, FiberMark Filter, FiberMark Office or DSI at:

 

c/o FiberMark, Inc.

P.O. Box 498

161 Wellington Road

Brattleboro, VT 05302

 

119

 

with a copy to (provided,

however, the failure to deliver such copy will not invalidate any

notices delivered to any Borrower nor create any liability on the part of the

Agent or any Lender):

 

Hale and Dorr LLP

60 State Street

Boston Massachusetts  02109

Attn:  John D. Sigel, Esq.

Fax:  (617) 526-5000

 

or to such other address as any

party may designate for itself by like notice.

 

Section 15.09. 

Governing Law.   THE

VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING AGREEMENT SHALL BE

GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

120

 

Section 15.10.  Confidentiality.   The Lenders shall maintain the confidential

nature of, and shall not use (except for purposes relating to this Financing

Agreement and the transactions contemplated hereby) or disclose, any Obligor’s

financial information, confidential information or trade secrets without first

obtaining such Obligors written consent. 

Nothing in this Section 15.10 shall require the Agent or the Lenders to

obtain the consent of any Obligor before exercising any of their respective

rights under the Loan Documents upon the occurrence of a Default or Event of

Default.  The obligations of the Agent

and the Lenders shall in no event apply to: 

(a) providing information about any Obligor to any financial institution

contemplated in Section 14.03 or 14.07; (b) any situation in which the Agent or

any of the Lenders is required by Law or required by any Governmental Authority

or governmental, regulatory or supervisory authority or official to disclose

information; (c) providing information to counsel to the Lenders in

connection with the transactions contemplated by the Loan Documents; (d)

providing information to independent auditors retained by the Lenders; (e) any

information that is in or becomes part of the public domain otherwise than

through a wrongful act of the Agent or any of the Lenders or any employees or

agents thereof; (f) any information that is in the possession of the Agent or

any of the Lenders prior to receipt thereof from the applicable Obligor or any

other Person known to such Lender to be acting on behalf of such Obligor; (g)

any information that is independently developed by the Agent or any of the

Lenders; and (h) any information that is disclosed to the Agent or any of the

Lenders by a third party that has no obligation of confidentiality with respect

to the information disclosed.

 

Section 15.12.  Effectiveness.  This Financing Agreement shall become

effective upon its execution and delivery by all parties to the Financing

Agreement.

 

[INTENTIONALLY LEFT BLANK]

 

 

 

 

121

 

IN WITNESS WHEREOF, the parties hereto have caused this Financing

Agreement to be executed and delivered by their proper and duly authorized

officers as of the date set forth above. 

This Financing Agreement shall take effect as of the date set forth

above after being accepted below.

 

	

   

  	

  FIBERMARK, INC., as Guarantor

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

   

  	

  Address for Notices:

  
	

   

  	

   

  	

   

  
	

   

  	

  P.O. Box 498

  
	

   

  	

  161 Wellington Road

  
	

   

  	

  Brattleboro, VT 05302

  
	

   

  	

   

  
	

   

  	

  Attn: 

  Bruce Moore

  
	

   

  	

   

  	

  Chief Financial Officer

  
	

   

  	

   

  
	

   

  	

  Telecopy: 

  (802) 257-5973

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  FIBERMARK DURABLE SPECIALTIES, INC., as Borrower and Guarantor

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

   

  	

  Address for Notices:

  
	

   

  	

   

  
	

   

  	

  P.O. Box 498

  
	

   

  	

  161 Wellington Road

  
	

   

  	

  Brattleboro, VT 05302

  
	

   

  	

   

  	

   

  
	

   

  	

  Attn: 

  Bruce Moore

  
	

   

  	

   

  	

  Chief Financial Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  Telecopy: 

  (802) 257-5973

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  FIBERMARK FILTER AND TECHNICAL PRODUCTS, INC.,  as Borrower and Guarantor

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

   

  	

  Address for Notices:

  
	

   

  	

   

  	

   

  
	

   

  	

  P.O. Box 498

  
	

   

  	

  161 Wellington Road

  
	

   

  	

  Brattleboro, VT 05302

  
	

   

  	

   

  	

   

  
	

   

  	

  Attn: 

  Bruce Moore

  
	

   

  	

   

  	

  Chief Financial Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  Telecopy: 

  (802) 257-5973

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  FIBERMARK OFFICE PRODUCTS, LLC, as Borrower and Guarantor

  
	

   

  	

   

  
	

   

  	

  BY

  	

  FIBERMARK, INC.,

  
	

   

  	

   

  	

  its sole Member

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By

  	

   

  
	

   

  	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Address for Notices:

  
	

   

  	

  P.O. Box 498

  
	

   

  	

  161 Wellington Road

  
	

   

  	

  Brattleboro, VT  05302

  
	

   

  	

   

  	

   

  
	

   

  	

  Attn: 

  Bruce Moore

  
	

   

  	

   

  	

  Chief Financial Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  Telecopy: 

  (802) 257-5973

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  FIBERMARK DSI INC., as Borrower and Guarantor

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

   

  	

  Address for Notices:

  
	

   

  	

   

  	

   

  
	

   

  	

  P.O. Box 498

  
	

   

  	

  161 Wellington Road

  
	

   

  	

  Brattleboro, VT 05302

  
	

   

  	

   

  	

   

  
	

   

  	

  Attn: 

  Bruce Moore

  
	

   

  	

   

  	

  Chief Financial Officer

  
	

   

  	

   

  	

   

  
	

   

  	

  Telecopy: 

  (802) 257-5973

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  THE CIT GROUP/BUSINESS CREDIT, INC., as Agent

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  
	

   

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  Applicable Lending Office:

  
	

   

  	

  New York

  
	

   

  	

   

  	

   

  
	

   

  	

  Address for Notices:

  
	

   

  	

   

  	

   

  
	

   

  	

  1211 Avenue of the Americas

  
	

   

  	

  New York, New York 10036

  
	

   

  	

   

  	

   

  
	

   

  	

  Attn: Steven M. Schuit

  
	

   

  	

   

  	

   

  
	

   

  	

  Telecopy: (212) 536-1295

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

   

  	

  Applicable Lending Office:

  
	

   

  	

  New York

  
	

   

  	

   

  	

   

  
	

   

  	

  Address for Notices:

  
	

   

  	

   

  	

   

  
	

   

  	

  1211 Avenue of the Americas

  
	

   

  	

  New York, New York 10036

  
	

   

  	

   

  	

   

  
	

   

  	

  Attn:

  
	

   

  	

   

  	

   

  
	

   

  	

  Telecopy: (212) [536-1295]

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  THE CIT GROUP/EQUIPMENT FINANCING, INC., as a Lender

  
	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
	

   

  	

   

  	

   

  
	

   

  	

  Applicable Lending Office:

  
	

   

  	

  Atlanta

  
	

   

  	

   

  	

   

  
	

   

  	

  Address for Notices:

  
	

   

  	

   

  	

   

  
	

   

  	

  900 Ashwood Parkway

  
	

   

  	

  Atlanta, Georgia  30338

  
	

   

  	

   

  	

   

  
	

   

  	

  Attn: 

  [Fred R. Rucker]

  
	

   

  	

   

  	

   

  
	

   

  	

  Telecopy: [(770) 551-7868]

  
									

 

122

 

EXHIBIT G

 

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

 

 

Dated                  , 200   

 

 

 

Reference is hereby made to the Fourth

Amended and Restated Financing Agreement and Guaranty, dated as of January 31,

2002 (as amended, modified or supplemented from time to time, the “Financing

Agreement”),

among FiberMark, Inc., a Delaware corporation (“FiberMark”), FiberMark Durable

Specialties, Inc., a Delaware corporation (“FiberMark Durable”), FiberMark Filter and

Technical Products, Inc., a Delaware corporation (“FiberMark Filter”),

FiberMark Office Products, LLC, a Vermont Limited Liability Company, (“FiberMark

Office”), FiberMark DSI Inc., a New York corporation (“DSI,” and together with

FiberMark, FiberMark, Office, FiberMark Durable and FiberMark Filter, the

“Borrowers”), the Lenders signatory thereto (collectively, the “Lenders”)

and The CIT Group/Business Credit, Inc. in its capacity as agent for the

Lenders (in such capacity, the “Agent”). 

Capitalized terms used herein that are defined in this Financing

Agreement that are not otherwise defined herein shall have the respective

meanings ascribed thereto in this Financing Agreement.

 

                                                    , a                                                                (the “Assignor”) and,                                                         ,

a                          , (the “Assignee”) agree as follows:

 

1.             The

Assignor hereby sells and assigns to the Assignee, and the Assignee hereby

purchases and assumes from the Assignor, a                                percent (      %) interest in and to all of the Assignor’s rights and

obligations under this Financing Agreement as of the Effective Date (as defined

below) (including, without limitation, such 

percentage interest in the Assignor’s Lender Loan Commitment as in

effect on the Effective Date, as evidenced by the Revolving Credit Notes held

by the Assignor, and the Obligations owing to the Assignor on the Effective

Date.

 

2.             The

Assignor:  (i) represents and warrants

that as of the date hereof, (in each case without giving effect to assignments

thereof that have not yet become effective) its Revolving Credit Commitment is

$                           , and the

its Lender Loan Commitment is $                

(ii) represents and warrants that it is the legal and beneficial owner

of the interest being assigned by it hereunder, and 

 

1

 

that such interest is free and clear of any

adverse claim; (iii) makes no representation or warranty and assumes no

responsibility with respect to any statements, warranties or representations

made in or in connection with this Financing Agreement or any other instrument

or document furnished pursuant thereto; and (iv) makes no representation or

warranty and assumes no responsibility with respect to the financial condition

of any Borrower or the performance or observance by any Borrower of any of its

Obligations under this Financing Agreement or any other instrument or document

furnished pursuant thereto; and (v) attaches each of the Revolving Credit Notes

referred to in Paragraph 1 above and requests that the Agent exchange each such

note for a new note as follows:  a

Revolving Credit Note of such Borrower dated the Effective Date in the

principal amount of $                        

, such Revolving Credit Note payable to the order of the Assignee; and a

Revolving Credit Note of such Borrower dated the Effective Date in the

principal amount of $                      

such Revolving Credit Note payable to the order of the Assignor.

 

3.             The

Assignee:  (i) confirms that it has

received a copy of this Financing Agreement, together with copies of such

financial statements and such other documents and information as it has deemed

appropriate to make its own credit analysis and decision to enter into this

Assignment and Acceptance; (ii) agrees that it will, independently and without

reliance upon the Agent, the Assignor or any other Lender and based on such

documents and information as it shall deem appropriate at the time, continue to

make its own credit decisions in taking or not taking action under this

Financing Agreement; (iii) appoints and authorizes the Agent to take such

action as its agent on its behalf and to exercise such powers under this

Financing Agreement as are delegated to the Agent by the terms thereof,

together with such powers as are reasonably incidental thereto; (iv) agrees

that it will perform in accordance with their terms all of the obligation which

by the terms of this Financing Agreement are required to be performed by it as

a Lender; and (vi) specifies as its address(es) and telephone numbers for

notice the office(s) set forth beneath its name on the signature pages hereof.

 

4.             The

effective date for this Assignment and Acceptance shall be                      (the “Effective

Date”).  Following the

execution of this Assignment and Acceptance, it will be delivered to the Agent

for acceptance by the Agent.

 

5.             Upon

such acceptance, as of the Effective Date: (i) the Assignee shall be a party to

this Financing Agreement and, to the extent provided in this Assignment and

Acceptance, have the rights and obligations of a Lender thereunder and (ii) the

Assignor shall, to the extent provide in this Assignment and Acceptance,

relinquish its rights and be released from its obligations under this Financing

Agreement.

 

6.             Upon

such acceptance from and after the Effective Date, the Agent shall make (except

as otherwise agreed to by the Agent, the Assignor and the Assignee) all

payments under this Financing Agreement and the Revolving 

 

2

 

Credit Note in respect of the interest

assigned hereby (including, without limitation, all payments of principal,

interest and fees with respect thereto) to the Assignee.  The Assignor and Assignee shall make all

appropriate adjustments in payments under this Financing Agreement and the

notes for periods prior to the Effective Date directly between themselves.

 

7.             This

Assignment and Acceptance shall be governed by, and construed in accordance

with, the laws of the State of New York.

 

	

   

  	

  [NAME

  OF ASSIGNOR]

  
	

   

  	

   

  	

   

  
	

   

  	

  By

  
	

   

  	

   

  	

  Title

  
	

   

  	

   

  	

   

  
	

   

  	

  [NAME

  OF ASSIGNEE]

  
	

   

  	

   

  	

   

  
	

   

  	

  By

  
	

   

  	

   

  	

  Title

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Address for Notices:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Attention:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Telephone No.:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Telex No.:

  
	

   

  	

   

  	

   

  
	

  Accepted this        day

  	

   

  	

   

  
	

  of                      

  ,                

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  THE CIT GROUP/BUSINESS CREDIT, INC, as

  Agent

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By

  	

   

  
	

   

  	

  Title

  	

   

  
						

 

3

 

Schedule 101

Applicable Margin and Unused Line Fee Terms

 

	

  Tier

  	

   

  	

  Leverage

  Ratio

  	

   

  	

  Applicable

  Margin

  	

   

  	

  Unused

  Line Fee

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Chase

  Manhattan

  Bank Rate

  Loans

  	

   

  	

  Libor Rate

  Loans

  	

   

  	

   

  	

   

  
	

  1.

  	

   

  	

  Less than or

  equal to 2.50 to 1.00

  	

   

  	

  0.50

  	

  %

  	

  2.00

  	

  %

  	

  0.375

  	

  %

  
	

  2.

  	

   

  	

  Greater than

  2.50 to 1.00, but less than or equal to 3.00 to 1.00

  	

   

  	

  0.75

  	

  %

  	

  2.25

  	

  %

  	

  0.375

  	

  %

  
	

  3.

  	

   

  	

  Greater than

  3.00 to 1.00, but less than or equal to 3.50 to 1.00

  	

   

  	

  1.00

  	

  %

  	

  2.50

  	

  %

  	

  0.375

  	

  %

  
	

  4.

  	

   

  	

  Greater than

  3.50 to 1.00, but less than or equal to 4.00 to 1.00

  	

   

  	

  1.25

  	

  %

  	

  2.75

  	

  %

  	

  0.500

  	

  %

  
	

  5.

  	

   

  	

  Greater than

  4.00 to 1.00

  	

   

  	

  1.50

  	

  %

  	

  3.00

  	

  %

  	

  0.500

  	

  %

  

 

4

 

TABLE OF

CONTENTS

 

	

  ARTICLE I.

  	

  DEFINITIONS, ACCOUNTING

  TERMS AND RULES OF CONSTRUCTION

  
	

   

  	

   

  
	

  SECTION

  1.01.

  	

  DEFINED TERMS

  
	

  SECTION

  1.02.

  	

  COMPUTATION OF TIME PERIODS

  
	

  SECTION

  1.03.

  	

  ACCOUNTING PRINCIPLES AND TERMS

  
	

  SECTION 1.04.

  	

  RULES OF CONSTRUCTION

  
	

   

  	

   

  
	

  ARTICLE II.

  	

  CONDITIONS PRECEDENT

  
	

   

  	

   

  
	

  SECTION 2.01.

  	

  CONDITIONS PRECEDENT TO INITIAL REVOLVING

  CREDIT LOAN

  
	

  SECTION 2.02.

  	

  CONDITIONS PRECEDENT TO EACH REVOLVING

  CREDIT LOAN

  
	

  SECTION 2.03.

  	

  DEEMED REPRESENTATION

  
	

   

  	

   

  
	

  ARTICLE III.

  	

  AMOUNT AND TERMS OF

  THE REVOLVING CREDIT LOANS.

  
	

   

  	

   

  
	

  SECTION 3.01.

  	

  REVOLVING CREDIT LOANS

  
	

  SECTION 3.02.

  	

  REVOLVING CREDIT NOTE

  
	

  SECTION 3.03. 

  	

  OVERADVANCES

  
	

  SECTION 3.04.

  	

  INFORMATION RELATING TO ACCOUNTS

  
	

  SECTION 3.05.

  	

  REPRESENTATIONS RELATING TO ACCOUNTS

  
	

  SECTION 3.06.

  	

  COLLECTION OF ACCOUNTS

  
	

  SECTION 3.07.

  	

  NOTICE REGARDING ACCOUNTS

  
	

  SECTION 3.08.

  	

  BORROWERS’ ACCOUNTS

  
	

  SECTION 3.09.

  	

  APPLICATION OF PAYMENTS

  
	

  SECTION 3.10.

  	

  PREPAYMENTS

  
	

  SECTION 3.11.

  	

  FUNDING OF REVOLVING CREDIT LOANS

  
	

  SECTION 3.12.

  	

  NOTICE AND MANNER OF BORROWING

  
	

  SECTION 3.13.

  	

  OBLIGATIONS OF AGENT AND LENDERS

  
	

  SECTION 3.14.

  	

  MINIMUM AMOUNTS

  
	

  SECTION 3.15.

  	

  USE OF PROCEEDS

  
	

  SECTION 3.16.

  	

  TAXES

  
	

  SECTION 3.17.

  	

  ADDITIONAL COSTS

  
	

  SECTION 3.18..

  	

  LIMITATION ON TYPES OF REVOLVING CREDIT

  LOANS

  
	

  SECTION 3.19.

  	

  ILLEGALITY

  
	

  SECTION 3.20.

  	

  TREATMENT OF AFFECTED LOANS

  
	

  SECTION 3.21.

  	

  ADEQUACY

  
	

   

  	

   

  
	

  ARTICLE IV.

  	

  GUARANTY

  
	

   

  	

   

  
	

  SECTION 4.01.

  	

  FIBERMARK DURABLE GUARANTY

  
	

  SECTION 4.02.

  	

  FIBERMARK DURABLE GUARANTORS’ GUARANTY

  OBLIGATIONS UNCONDITIONAL

  
	

  SECTION 4.03.

  	

  WAIVERS

  
	

  SECTION 4.04.

  	

  SUBROGATION, ETC

  
	

  SECTION 4.05.

  	

  FIBERMARK FILTER GUARANTY

  

 

i

 

	

  SECTION 4.06.

  	

  FIBERMARK FILTER GUARANTORS’ GUARANTY

  OBLIGATIONS UNCONDITIONAL

  
	

  SECTION 4.07.

  	

  WAIVERS

  
	

  SECTION 4.08.

  	

  SUBROGATION, ETC

  
	

  SECTION 4.09.

  	

  FIBERMARK OFFICE GUARANTY

  
	

  SECTION 4.10.

  	

  FIBERMARK OFFICE GUARANTORS’ GUARANTY

  OBLIGATIONS UNCONDITIONAL

  
	

  SECTION 4.11.

  	

  WAIVERS

  
	

  SECTION 4.12.

  	

  SUBROGATION, ETC

  
	

  SECTION 4.13.

  	

  FIBERMARK GUARANTY

  
	

  SECTION 4.14.

  	

  FIBERMARK GUARANTORS’ GUARANTY OBLIGATIONS

  UNCONDITIONAL

  
	

  SECTION 4.15.

  	

  WAIVERS

  
	

  SECTION 4.16.

  	

  SUBROGATION, ETC

  
	

  SECTION 4.17.

  	

  DSI GUARANTY

  
	

  SECTION 4.18.

  	

  DSI GUARANTORS’ GUARANTY OBLIGATIONS

  UNCONDITIONAL

  
	

  SECTION 4.19.

  	

  WAIVERS

  
	

  SECTION 4.20.

  	

  SUBROGATION, ETC

  
	

   

  	

   

  
	

  ARTICLE V.

  	

  COLLATERAL

  
	

   

  	

   

  
	

  SECTION 5.01.

  	

  (A) 

  GRANT OF A SECURITY INTEREST BY FIBERMARK OFFICE

  
	

  SECTION 5.02.

  	

  COVENANTS REGARDING INVENTORY

  
	

  SECTION 5.03.

  	

  COVENANTS REGARDING EQUIPMENT

  
	

  SECTION 5.04.

  	

  COLLATERAL COVENANT

  
	

  SECTION 5.05.

  	

  COVENANTS REGARDING ACCOUNTS

  
	

  SECTION 5.06.

  	

  CONTINUING SECURITY INTEREST

  
	

  SECTION 5.07.

  	

  ACTIONS BY AGENT

  
	

  SECTION 5.08.

  	

  ADDITIONAL COLLATERAL AND FURTHER

  ASSURANCES

  
	

  SECTION 5.09.

  	

  ADDITIONAL INFORMATION

  
	

  SECTION 5.10.

  	

  COMPLIANCE WITH FAIR LABOR STANDARDS ACT

  
	

   

  	

   

  
	

  ARTICLE VI.

  	

  INTEREST, FEES AND

  EXPENSES.

  
	

   

  	

   

  
	

  SECTION 6.01.

  	

  METHOD OF ELECTING INTEREST RATES

  
	

  SECTION 6.02.

  	

  INTEREST

  
	

  SECTION 6.03.

  	

  FEES

  
	

  SECTION 6.04.

  	

  PAYMENTS AND COMPUTATIONS

  
	

  SECTION 6.05. 

  	

  CERTAIN COMPENSATION

  
	

   

  	

   

  
	

  ARTICLE VII.

  	

  POWERS.

  
	

   

  	

   

  
	

  SECTION 7.01. 

  	

  POWERS

  
	

   

  	

   

  
	

  ARTICLE VIII.

  	

  REPRESENTATIONS AND

  WARRANTIES

  
	

   

  	

   

  
	

  SECTION 8.01.

  	

  INCORPORATION, GOOD STANDING AND DUE

  QUALIFICATION

  
	

  SECTION 8.02.

  	

  CORPORATE POWER AND AUTHORITY; NO

  CONFLICTS

  
	

  SECTION 8.03.

  	

  LEGALLY ENFORCEABLE AGREEMENTS

  
	

  SECTION 8.04.

  	

  LITIGATION

  
	

  SECTION 8.05.

  	

  FINANCIAL STATEMENTS

  
	

  SECTION 8.06.

  	

  OWNERSHIP AND LIENS; LOCATION OF

  INVENTORY AND EQUIPMENT

  

 

ii

 

	

  SECTION 8.07.

  	

  TAXES

  
	

  SECTION 8.08.

  	

  ERISA

  
	

  SECTION 8.09.

  	

  SUBSIDIARIES

  
	

  SECTION 8.10.

  	

  OPERATION OF BUSINESS

  
	

  SECTION 8.11.

  	

  NO DEFAULT ON OUTSTANDING JUDGMENTS OR

  ORDERS

  
	

  SECTION 8.12.

  	

  NO DEFAULTS ON OTHER AGREEMENTS

  
	

  SECTION 8.13.

  	

  LABOR DISPUTES AND ACTS OF GOD

  
	

  SECTION 8.14.

  	

  GOVERNMENTAL REGULATION

  
	

  SECTION 8.15.

  	

  PARTNERSHIPS

  
	

  SECTION 8.16.

  	

  ENVIRONMENTAL PROTECTION

  
	

  SECTION 8.17.

  	

  SOLVENCY

  
	

  SECTION 8.18.

  	

  INTELLECTUAL PROPERTY

  
	

  SECTION 8.19.

  	

  LICENSE OF INTELLECTUAL PROPERTY

  
	

  SECTION 8.20.

  	

  ENVIRONMENTAL COMPLIANCE.

  
	

  SECTION 8.21.

  	

  PROJECTIONS

  
	

  SECTION 8.22.

  	

  EXCLUDED PREMISES

  
	

   

  	

   

  
	

  ARTICLE IX.

  	

  AFFIRMATIVE COVENANTS.

  
	

   

  	

   

  
	

  SECTION 9.01.

  	

  REPORTING REQUIREMENTS

  
	

  SECTION 9.02.

  	

  NOTICES

  
	

  SECTION 9.03.

  	

  PAYMENT OF TAXES AND CLAIMS.

  
	

  SECTION 9.04.

  	

  MAINTENANCE OF EXISTENCE.

  
	

  SECTION 9.05.

  	

  CONDUCT OF BUSINESS.

  
	

  SECTION 9.06.

  	

  COMPLIANCE WITH LAWS.

  
	

  SECTION 9.07.

  	

  INSURANCE.

  
	

  SECTION 9.08.

  	

  BOOKS AND RECORDS; INSPECTION.

  
	

  SECTION 9.09.

  	

  ERISA COVENANT.

  
	

  SECTION 9.10.

  	

  INTERCOMPANY TRANSFER OF FUNDS.

  
	

  SECTION 9.11.

  	

  INVENTORY AND ACCOUNTS RECEIVABLE

  ANALYSIS OF ACQUIRED ENTITY.

  
	

  SECTION 9.12.

  	

  ACQUIRED ENTITIES.

  
	

  SECTION 9.13.

  	

  COMPLIANCE WITH ENVIRONMENTAL LAWS.

  
	

  SECTION

  9.14.

  	

  APPRAISALS; AUDITS

  
	

   

  	

   

  
	

  ARTICLE X.

  	

  NEGATIVE COVENANTS

  
	

   

  	

   

  
	

  SECTION 10 .01. 

  	

  DEBT.

  
	

  SECTION 10.02.

  	

  LIENS.

  
	

  SECTION 10.03.

  	

  SALE OF ASSETS.

  
	

  SECTION 10.04.

  	

  PROHIBITION OF FUNDAMENTAL CHANGES.

  
	

  SECTION 10.05.

  	

  INVESTMENTS.

  
	

  SECTION 10.06.

  	

  TRANSACTION WITH AFFILIATES.

  
	

  SECTION 10.07.

  	

  NATURE OF BUSINESS.

  
	

  SECTION 10.08.

  	

  DIVIDENDS.

  
	

  SECTION 10.09.

  	

  LEASES.

  
	

  SECTION 10.10.

  	

  ENVIRONMENTAL COMPLIANCE.

  
	

  SECTION 10.11.

  	

  FISCAL YEAR.

  
	

  SECTION 10.12.

  	

  SUBSIDIARY STOCK ISSUANCE

  

 

iii

 

	

  ARTICLE XI.

  	

  FINANCIAL COVENANTS

  
	

   

  	

   

  
	

  SECTION 11.01.

  	

  CONSOLIDATED NET WORTH

  
	

  SECTION 11.02.

  	

  CONSOLIDATED FIXED CHARGE COVERAGE RATIO

  
	

  SECTION 11.03.

  	

  DOMESTIC EBITDA

  
	

   

  	

   

  
	

  ARTICLE XII.

  	

  EVENTS OF DEFAULT

  
	

   

  	

   

  
	

  SECTION 12.01.

  	

  EVENTS OF DEFAULT.

  
	

  SECTION 12.02.

  	

  ACCELERATION OF OBLIGATIONS.

  
	

  SECTION 12.03.

  	

  OTHER REMEDIES.

  
	

   

  	

   

  
	

  ARTICLE XIII.

  	

  AGENCY

  
	

   

  	

   

  
	

  SECTION 13.01.

  	

  THE AGENT.

  
	

  SECTION 13.02.

  	

  DELEGATION OF DUTIES.

  
	

  SECTION 13.03.

  	

  EXCULPATORY PROVISIONS.

  
	

  SECTION 13.04.

  	

  RELIANCE BY AGENT.

  
	

  SECTION 13.05.

  	

  NOTICE OF DEFAULT.

  
	

  SECTION 13.06.

  	

  NON-RELIANCE ON AGENT AND OTHER LENDERS.

  
	

  SECTION 13.07.

  	

  INDEMNIFICATION.

  
	

  SECTION 13.08.

  	

  THE AGENT IN ITS INDIVIDUAL CAPACITY.

  
	

  SECTION 13.09.

  	

  SUCCESSOR AGENT.

  
	

  SECTION 13.10.

  	

  ARRANGEMENTS REQUIRING CONSENT OF

  LENDERS.

  
	

  SECTION 13.11.

  	

  RECAPTURE OF PAYMENTS.

  
	

   

  	

   

  
	

  ARTICLE XIV.

  	

  RIGHTS AND OBLIGATIONS

  OF THE LENDERS AND THE AGENT

  
	

   

  	

   

  
	

  SECTION 14.01.

  	

  ADJUSTMENTS AMONG LENDERS.

  
	

  SECTION 14.02.

  	

  SHARING OF PAYMENTS.

  
	

  SECTION 14.03.

  	

  SALE OF PARTICIPATIONS.

  
	

  SECTION 14.04.

  	

  NATURE OF REVOLVING CREDIT COMMITMENTS.

  
	

  SECTION 14.05.

  	

  SHARING OF COSTS AND EXPENSES.

  
	

  SECTION 14.06.

  	

  SHARING OF PAYMENTS.

  
	

  SECTION 14.07.

  	

  ASSIGNMENTS.

  
	

  SECTION 14.08.

  	

  ACKNOWLEDGEMENTS BY AGENT.

  
	

  SECTION 14.09.

  	

  TERMINATION OF FINANCING AGREEMENT.

  
	

   

  	

   

  
	

  ARTICLE XV.

  	

  MISCELLANEOUS

  
	

   

  	

   

  
	

  SECTION 15.01.

  	

  WAIVERS.

  
	

  SECTION 15.02.

  	

  ENTIRE AGREEMENT.

  
	

  SECTION 15.03.

  	

  USURY.

  
	

  SECTION 15.04.

  	

  PAYMENT OF EXPENSES.

  
	

  SECTION 15.05.

  	

  INDEMNITY.

  
	

  SECTION 15.06.

  	

  SEVERABILITY.

  
	

  SECTION 15.07.

  	

  WAIVER OF JURY TRIAL.

  
	

  SECTION 15.08.

  	

  NOTICES.

  
	

  SECTION 15.09.

  	

  GOVERNING LAW.

  
	

  SECTION 15.10.

  	

  CONFIDENTIALITY.

  

 

iv

 

	

  Exhibits

  
	

   

  
	

  Exhibit A - 

  	

  Form of Revolving Credit Note 

  
	

  Exhibit B - 

  	

  Form of Revolving Credit Notice of Borrowing

  
	

  Exhibit C - 

  	

  Form of Notice of Interest Rate Selection

  
	

  Exhibit D - 

  	

  Form of Amendments to Mortgage

  
	

  Exhibit E - 

  	

  Form of Solvency Certificate

  
	

  Exhibit F - 

  	

  Forms of Opinions of Counsel to Obligors

  
	

  Exhibit G - 

  	

  Form of Assignment and Acceptance

  
	

  Exhibit H - 

  	

  Form of Borrowing Base Certificate

  
	

  Exhibit I  - 

  	

  Initial Projections

  

 

	

  Schedules

  	

   

  
	

   

  	

   

  
	

  Schedule 1.01 - 

  	

  Applicable Margin and Unused Line Fee Terms

  
	

  Schedule 2.01 - 

  	

  Excluded Premises

  
	

  Schedule 5.04 - 

  	

  List of Inventory and Equipment Locations

  
	

  Schedule 5.04A - 

  	

  Real Estate

  
	

  Schedule 8.04 - 

  	

  Litigation

  
	

  Schedule 8.16 - 

  	

  Environmental Matters

  
	

  Schedule 8.18 - 

  	

  Intellectual Property

  
	

  Schedule 8.19 - 

  	

  License of Intellectual Property

  

 

vREVOLVING CREDIT NOTE

EXHIBIT

10.43

 

REVOLVING CREDIT NOTE

 

	

  $31,500,000

  	

   

  	

  New York, New York

  
	

   

  	

   

  	

  January 31, 2002

  

 

FOR VALUE RECEIVED,

FiberMark Durable Specialties, Inc. (“Borrower”) HEREBY PROMISES TO PAY to the

order of The CIT Group/Equipment Financing, Inc. at the principal office of The

CIT Group/Equipment Financing, Inc., at 1540 West Fountainhead Parkway, Tempe,

Arizona, 85282, for the account of the Applicable Lending Office of CITEF, the

principal sum of Thirty-One Million Five Hundred Thousand Dollars ($31,500,000)

or, if less, the aggregate unpaid principal amount of all Revolving Credit

Loans made by CITEF to Borrower pursuant to Section 3.01 or Section 3.03 of the

Financing Agreement referred to below, in lawful money of the United States of

America and in immediately available funds, on the Revolving Credit Commitment

Termination Date (as defined in the Financing Agreement referred to

below).  Borrower also promises to pay

interest on the unpaid principal balance hereof, for the period such balance is

outstanding, at said principal office for the account of said Applicable

Lending Office, in like money, at the rates of interest as provided in the

Financing Agreement referred to below, on the dates and in the manner provided

in said Financing Agreement.  Any amount

of principal or interest hereof which is not paid when due, whether at stated

maturity, by acceleration, or otherwise, shall bear interest from the date when

due until said principal amount is paid in full, payable on demand, at a rate

per annum equal at all times to the Default Rate of Interest (as defined in the

Financing Agreement referred to below).

 

Borrower hereby

authorizes CITEF to endorse on the Schedule annexed to this Amended and

Restated Revolving Credit Note (the “Revolving Credit Note”) the amount and

type of all Revolving Credit Loans made to the Borrower by CITEF and all

Continuations, Conversions and payments of principal amounts in respect of such

Revolving Credit Loans, which endorsements shall constitute prima facie

evidence, absent manifest error, as to the outstanding principal amount of all

Revolving Credit Loans owed to CITEF; provided, however, that the

failure to make such notation with respect to any Revolving Credit Loan or

payment shall not limit or otherwise affect the obligation of the Borrower

under the Financing Agreement or this Revolving Credit Note.

 

This is one of the

Revolving Credit Notes referred to in that certain Fourth Amended and Restated

Financing Agreement and Guaranty dated as of January 31, 2002 among FiberMark,

Inc., FiberMark Durable Specialties, Inc., FiberMark Filter and Technical

Products, Inc., FiberMark Office Products, LLC,

 

 

FiberMark DSI Inc., The

CIT Group/Business Credit, Inc. (“CITBC”), The CIT Group/Equipment Financing,

Inc. (“CITEF,” and together with CITBC, the “Initial Lenders”), the other

lenders that may, subsequent to the date hereof, purchase from the Initial

Lenders a portion of their rights and obligations under the Fourth Amended and

Restated Financing Agreement and Guaranty pursuant to, and in accordance with,

Section 14.07 thereof (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”) (as it may be hereafter amended, modified or supplemented from time to

time, the “Financing Agreement”).  All

capitalized terms used herein and not defined herein shall have the meanings

given to them in the Financing Agreement.

 

This

Revolving Credit Note is issued in replacement of the “Revolving Credit Note”

issued to CITEF by Borrower pursuant to the September 1999 Agreement (the

“Existing Note”).  It continues, and

does not constitute a novation of, the obligations evidenced by the Existing Note,

and shall evidence, in addition to the obligations otherwise described herein,

the principal outstanding under the Existing Note as of the date hereof,

together with accrued interest thereon and all other obligations relating

thereto.  CITEF is authorized to endorse

on the Schedule annexed to this Revolving Credit Note the unpaid principal

amounts and types of all “Revolving Credit Loans” made to Borrower under the

September 1999 Agreement that remain outstanding as of the date hereof;

provided, however, that the failure to make such notation with respect to any

such obligation shall not limit or otherwise affect the obligation of Borrower

under the Financing Agreement or this Revolving Credit Note.

 

The Financing Agreement

provides for the acceleration of the maturity of principal upon the occurrence

of an Event of Default and for prepayments on the terms and conditions

specified therein.  This Revolving

Credit Note is secured pursuant to certain of the Loan Documents referred to in

the Financing Agreement, reference to which is hereby made for a description of

the Collateral provided for under the above-referenced documents and the rights

of Borrower, each of the obligors, each of the Lenders, and the Agent with

respect to such Collateral.

 

Borrower hereby waives

presentment, notice of dishonor, protest and any other notice or formality with

respect to this Revolving Credit Note.

 

This Revolving Credit

Note shall be governed by, and interpreted and construed in accordance with,

the Laws of the State of New York.

 

2

 

	

   

  	

  FIBERMARK DURABLE SPECIALTIES, INC.

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Name:

  
	

   

  	

   

  	

  Title:

  
					

 

3

 

SCHEDULE TO REVOLVING

CREDIT NOTE

 

 

	

  Date Loan

  Made,

  Continued,

  Converted or

  Paid

  	

   

  	

  Type of

  Loan

  	

   

  	

  Amount of

  Loan

  	

   

  	

  Amount of

  Principal

  Prepaid

  	

   

  	

  Unpaid

  Principal

  Balance of

  Revolving

  Credit Note

  	

   

  	

  Name of

  Person

  Making

  Notation

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]