Document:

exv10w1

 

Exhibit 10.1

LA QUINTA PROPERTIES, INC.

SECOND AMENDMENT

TO AMENDED AND RESTATED CREDIT AGREEMENT

               This SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment”) is dated as of November 5, 2004 and entered into by and among La
Quinta Properties, Inc., a Delaware corporation (“Borrower”), La Quinta
Corporation, a Delaware corporation (“Holdings”), the financial institutions
listed on the signature pages hereof (“Lenders”), and Canadian Imperial Bank of
Commerce, as administrative agent for Lenders (“Administrative Agent”) and for
purposes of Section 4 hereof, the other Loan Parties listed on the signature
pages hereof, and is made with reference to that certain Amended and Restated
Credit Agreement dated as of November 12, 2003, as amended by a First Amendment
dated as of July 14, 2004 (as so amended, the “Credit Agreement”), by and among
Borrower, Holdings, the lenders party thereto, Administrative Agent, Fleet
Securities Inc., as syndication agent, and Calyon New York Branch (formerly
known as Credit Lyonnais New York Branch), as documentation agent. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.

RECITALS

               WHEREAS, Borrower, Holdings and Lenders desire to amend the Credit
Agreement to (i) reduce the interest rates applicable to the Loans and (ii)
make certain other amendments as set forth below;

               NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

               Section 1.AMENDMENTS TO THE CREDIT AGREEMENT

               1.1 Amendments to Section 1. Provisions Relating to Defined Terms

               A. Applicable Margins. Subsection 1.1 of the Credit Agreement is hereby
amended by deleting the definitions of “Applicable Base Rate Margin” and
“Applicable LIBOR Margin” and substituting the following therefor:

         “
‘Applicable Base Rate Margin’ means, as at any date of
determination, with respect to Revolving Loans that are Base Rate Loans,
a percentage per annum as set forth below opposite the applicable Total
Leverage Ratio:

1

 

	 	 	 
	Total Leverage Ratio
	 	Applicable Base Rate Margin

	greater than or equal to 4.00:1.00
	 	1.00%
	less than 4.00:1.00 but greater than or equal
to 3.50:1.00
	 	0.75%
	less than 3.50:1.00
	 	0.50%

; provided that for the period prior to the occurrence of the Second
Amendment Effective Date, the Applicable Base Rate Margin for Revolving
Loans that are Base Rate Loans shall be determined in accordance with the
provisions of this Agreement as in effect immediately prior to the Second
Amendment Effective Date.

         ‘Applicable LIBOR Margin’ means, with respect to Revolving Loans
that are LIBOR Loans, a percentage per annum as set forth below opposite
the applicable Total Leverage Ratio:

	 	 	 
	Total Leverage Ratio
	 	Applicable LIBOR Margin

	greater than or equal to 4.00:1.00
	 	2.50%
	less than 4.00:1.00 but greater than or
equal to 3.50:1.00
	 	2.25%
	less than 3.50:1.00
	 	2.00%

; provided that for the period prior to the occurrence of the Second
Amendment Effective Date, the Applicable LIBOR Margin for Revolving Loans
that are LIBOR Loans shall be determined in accordance with the
provisions of this Agreement as in effect immediately prior to the Second
Amendment Effective Date.”

               B. Second Amendment Effective Date. Subsection 1.1 of the Credit
Agreement is hereby further amended by adding the following definition thereto
in appropriate alphabetical order:

         “ ‘Second Amendment Effective Date’ has the meaning assigned to that
term in that certain Second Amendment to Amended and Restated Credit
Agreement dated as of November 5, 2004, by and among Borrower, Holdings,
Lenders and the Administrative Agent, the Syndication Agent and the
Documentation Agent.”

2

 

	 	1.2	 	Amendments to Section 2. Amounts and Terms of
Commitments and Loans

               A. Commitment Fee. Subsection 2.3A of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting the following therefor:

         “A. Commitment Fee. Borrower agrees to pay to Administrative Agent,
for distribution to each Lender in proportion to that Lender’s Pro Rata
Share of the Revolving Loan Commitments, commitment fees for the period
from and including the Effective Date to and excluding the Revolving Loan
Commitment Termination Date equal to the average of the daily excess of
the Revolving Loan Commitments over the Total Utilization of Revolving
Loan Commitments multiplied by (i) 0.50% per annum, for any period that
the Total Utilization of Revolving Loan Commitments is less than 50% of
the Revolving Loan Commitments and (ii) 0.375% per annum, for any period
that the Total Utilization of Revolving Loan Commitments is equal to or
greater than 50% of the Revolving Loan Commitments; provided that for the
period prior to the occurrence of the Second Amendment Effective Date,
commitment fees shall be determined in accordance with the provisions of
this Agreement as in effect immediately prior to the Second Amendment
Effective Date; such commitment fees to be calculated on the basis of a
360-day year and the actual number of days elapsed and to be payable
quarterly in arrears on the last Business Day of each March, June,
September and December of each Fiscal Year commencing on the first such
date to occur after the Effective Date, and on the Revolving Loan
Commitment Termination Date.”

	 	1.3	 	Amendments to Section 7. Borrower’s and
Holdings’ Negative Covenants

               A. Indebtedness. Subsection 7.1 of the Credit Agreement is hereby amended
by deleting clause (v) thereof in its entirety and substituting the following
in lieu thereof:

         “(v) Borrower and Holdings may remain liable with respect to the
Senior Notes and may incur unsubordinated Indebtedness secured on the
same basis as the Indebtedness so refinanced and Subordinated
Indebtedness to refinance all or any of the Senior Notes; provided that,
except in the case where such refinancing Indebtedness consists of
Revolving Loans, (1) the obligor on such refinancing Indebtedness is the
same as the obligor on the Indebtedness so refinanced, (2)(A) in the case
where such additional Indebtedness is incurred prior to or concurrently
with the repayment, repurchase, defeasance or redemption (each, a
“repayment”) of such Senior Notes, all of the proceeds of such additional
Indebtedness (net of reasonable and customary fees, costs and expenses)
shall be applied to the repayment of such Senior Notes, (B) in the case
of a repayment of Senior Notes pursuant to subsection 7.5B(1) made using
cash on hand where such additional Indebtedness is incurred after such
repayment of Senior Notes, such incurrence of additional Indebtedness
shall constitute a “refinancing” for purposes of this subsection 7.1(v),
regardless of the time elapsed since the date of such repayment, and such
additional Indebtedness (to the extent incurred in reliance upon this
subsection 7.1(v)(2)(B)) shall be in a principal amount equal to or less
than the sum of the amount of the Senior Notes so repaid plus the amount
of reasonable and customary fees, costs and

3

 

expenses associated with such refinancing, and (C) in the case of a
repayment of Senior Notes pursuant to subsection 7.5B(1) made using
proceeds of Revolving Loans where such Revolving Loans are subsequently
refinanced with additional Indebtedness, such incurrence of additional
Indebtedness shall constitute a “refinancing” for purposes of this
subsection 7.1(v), regardless of the time elapsed since the date of such
repayment, and such additional Indebtedness (to the extent incurred in
reliance upon this subsection 7.1(v)(2)(C)) shall be in a principal
amount equal to or less than the sum of the amount of the Senior Notes so
repaid plus the amount of reasonable and customary fees, costs and
expenses associated with such refinancing, (3) the covenants of such
refinancing Indebtedness are not more restrictive in any material respect
than the covenants contained in the Indenture dated as of March 19, 2003,
by and between Borrower, Holdings and U.S. Bank Trust National
Association, as trustee, with respect to Borrower’s 8-7/8% Senior Notes
due 2011, (4) such covenants shall be on generally prevailing market
terms available to Borrower and Holdings for such refinancing
Indebtedness, (5) the maturity date thereof or any scheduled date on
which such refinancing Indebtedness may be required to be repurchased at
the option of the holder thereof shall not be earlier than April 30, 2007
and (6) notwithstanding anything to the contrary in the preceding clause
(1), Holdings may guarantee any such refinancing Indebtedness whether or
not Holdings may have previously been an obligor with respect to the
Indebtedness being refinanced (collectively, the “Refinancing
Indebtedness”);”

               B. Liens and Related Matters. Subsection 7.2A of the Credit Agreement is
hereby amended by deleting the existing clause (ii) thereof in its entirety and
substituting the following in lieu thereof:

“(ii) Liens granted pursuant to the Collateral Documents, including
without limitation, Liens which equally and ratably secure Senior
Notes outstanding on the Second Amendment Effective Date and
unsubordinated Refinancing Indebtedness;”.

               C. Restricted Payments. Subsection 7.5B of the Credit Agreement is hereby
amended by deleting it in its entirety and substituting the following therefor:

         “B. Borrower and Holdings shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, prepay, redeem,
repurchase, retire, defease or make any similar payment with respect to
any Indebtedness (other than Indebtedness under this Agreement); provided
that if no Potential Event of Default or Event of Default shall have
occurred and be continuing or would arise as a result of the proposed
payments (including all fees, call premiums or other tender costs
associated therewith), (1) Borrower and Holdings may prepay, redeem,
repurchase, retire, defease or make similar payments with respect to
Indebtedness maturing, or redeemable at the option of the holder thereof
to the extent the holder exercises such option, prior to the Revolving
Loan Commitment Termination Date, including without limitation (i)
Borrower’s 7.82% Senior Notes due September 2026, (ii) Borrower’s 7.40%
Notes due September 2005, and (iii) Borrower’s Medium Term Notes maturing
in September 2005, January 2006 and February 2007; and (2) Holdings and
its Subsidiaries may prepay, redeem, repurchase, retire, defease or make
similar payments with respect to (A) intercompany Indebtedness

4

 

permitted under this Agreement, (B) secured Indebtedness permitted
under this Agreement upon the sale or other disposition of the collateral
securing such secured Indebtedness, (C) Borrower’s Senior Notes due
August 2007 to the extent such redemption, repurchase or repayment is
made out of the proceeds of Refinancing Indebtedness permitted by
subsection 7.1(v) and at the time of and after giving effect to such
redemption, repurchase or repayment there are no outstanding Revolving
Loans and the amount of Cash and Cash Equivalents of Holdings and its
Subsidiaries is not less than the aggregate amount required to redeem,
repurchase or repay all of the Borrower’s then outstanding Senior Notes
maturing or scheduled to be redeemable at the option of the holders
thereof prior to the Revolving Loan Commitment Termination Date, and (D)
Indebtedness described in clause (viii) or (ix) of the definition of
‘Senior Notes’; provided that, with respect to this clause (D), (i) such
prepayment, redemption, repurchase, retirement, defeasance or similar
payment is made out of the proceeds of Refinancing Indebtedness permitted
by subsection 7.1(v) and (ii) at the time of such event, all Senior Notes
maturing or scheduled to be redeemable at the option of the holders
thereof prior to the Revolving Loan Commitment Termination Date shall
have been repaid in full or refinanced such that the maturity date for
such Senior Notes shall occur after the Revolving Loan Commitment
Termination Date.”

               Section 2. CONDITIONS TO EFFECTIVENESS

               Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the “Second
Amendment Effective Date”):

               A. On or before the Second Amendment Effective Date, Borrower shall
deliver to Lenders (or to Administrative Agent for Lenders) the following,
each, unless otherwise noted, dated the Second Amendment Effective Date:

               1. Signature and incumbency certificates of officers of each of the
Loan Parties executing this Amendment; and

               2. Copies of this Amendment executed by each of the Loan Parties
listed on the signature pages hereof.

               B. All Lenders shall have executed this Amendment.

               C. On or before the Second Amendment Effective Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto shall be reasonably
satisfactory in form and substance to Administrative Agent, acting on behalf of
Lenders, and its counsel, and Administrative Agent and such counsel shall have
received all such counterpart originals or certified copies of such documents
as Administrative Agent may reasonably request.

5

 

               Section 3. REPRESENTATIONS AND WARRANTIES

               In order to induce Lenders to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, each of Borrower and Holdings
represents and warrants to each Lender that the following statements are true,
correct and complete:

               A. Corporate Power and Authority. Each Loan Party has all requisite
corporate or other power and authority to enter into this Amendment and to
carry out the transactions contemplated by, and perform its obligations under,
the Credit Agreement as amended by this Amendment (the “Amended Agreement”).

               B. Authorization of Agreements. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate or other action on the part of each Loan
Party.

               C. No Conflict. The execution and delivery by each Loan Party of this
Amendment and the performance by each Loan Party of the Amended Agreement do
not and will not (i) violate any provision of any law or any governmental rule
or regulation applicable to any Loan Party, the certificate or articles of
incorporation or bylaws or other similar constitutional documents of any Loan
Party or any order, judgment or decree of any court or other agency of
government binding on any Loan Party, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of any Loan Party, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of any
Loan Party (other than Liens created under any of the Loan Documents in favor
of Administrative Agent on behalf of Lenders and the holders of the Senior
Notes), or (iv) require any approval of stockholders or any approval or consent
of any Person under any Contractual Obligation of any Loan Party, except for
such approvals or consents which will be obtained on or before the Second
Amendment Effective Date and disclosed in writing to Lenders and except where
the failure to obtain such approvals or consents, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

               D. Governmental Consents. The execution and delivery by each Loan Party
of this Amendment and the performance by each Loan Party of the Amended
Agreement do not and will not require any Filings, other than Filings of the
types described in subsection 5.2C of the Amended Agreement.

               E. Binding Obligation. This Amendment and the Credit Agreement have been
duly executed and delivered by each Loan Party, and this Amendment and the
Credit Agreement are the legally valid and binding obligations of each Loan
Party, enforceable against each Loan Party in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors’ rights generally
or by equitable principles relating to enforceability.

               F. Incorporation of Representations and Warranties From Credit Agreement.
The representations and warranties contained in Section 5 of the Amended
Agreement are and will be true, correct and complete in all material respects
on and as of the

6

 

Second Amendment Effective Date to the same extent as though made on and
as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.

               G. Absence of Default. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.

               Section 4. ACKNOWLEDGEMENT AND CONSENT

               Borrower, Holdings and certain of their Subsidiaries are party to the
Pledge Agreement and certain of the Collateral Documents, as amended through
the Second Amendment Effective Date, pursuant to which Borrower, Holdings and
certain of their Subsidiaries have created Liens in favor of Administrative
Agent on certain Collateral to secure the Obligations and certain obligations
related to the Senior Notes and the Lender Hedge Agreements. The stock of each
Subsidiary Guarantor is pledged under the Pledge Agreement, and each Subsidiary
Guarantor is a party to the Subsidiary Guaranty and certain of the Collateral
Documents, in each case as amended through the Second Amendment Effective Date,
pursuant to which each Subsidiary Guarantor has (i) guarantied the Obligations
and (ii), if applicable, created Liens in favor of Administrative Agent on
certain Collateral and pledged certain Collateral to Administrative Agent to
secure the obligations of such Subsidiary Guarantor under the Subsidiary
Guaranty. The Pledge Agreement and the Subsidiary Guaranty are collectively
referred to herein as the “Credit Support Documents”.

               Each Loan Party hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the
amendment of the Credit Agreement effected pursuant to this Amendment. Each
Loan Party hereby confirms that each Credit Support Document to which it is a
party or otherwise bound and all Collateral encumbered thereby will continue to
guaranty or secure, as the case may be, to the fullest extent possible the
payment and performance of all “Secured Obligations” and “Guarantied
Obligations,” as the case may be (in each case as such terms are defined in the
applicable Credit Support Document), including without limitation the payment
and performance of all such “Secured Obligations” and “Guarantied Obligations,”
as the case may be, in respect of the Obligations of Borrower now or hereafter
existing under or in respect of the Amended Agreement and the Notes defined
therein.

               Each Loan Party acknowledges and agrees that any of the Credit Support
Documents to which it is a party or otherwise bound shall continue in full
force and effect and that all of its obligations thereunder, as modified
hereby, shall be valid and enforceable and shall not be impaired or limited by
the execution or effectiveness of this Amendment except as expressly provided
herein. Each Loan Party represents and warrants that all representations and
warranties contained in the Amended Agreement and the Credit Support Documents
to which it is a party or otherwise bound are true, correct and complete in all
material respects on and as of the Second Amendment Effective Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in

7

 

which case they were true, correct and complete in all material respects
on and as of such earlier date.

               Each Subsidiary Guarantor acknowledges and agrees that (i) notwithstanding
the conditions to effectiveness set forth in this Amendment, such Subsidiary
Guarantor is not required by the terms of the Credit Agreement or any other
Loan Document to consent to the amendments to the Credit Agreement effected
pursuant to this Amendment and (ii) nothing in the Credit Agreement, this
Amendment or any other Loan Document shall be deemed to require the consent of
such Subsidiary Guarantor to any future amendments to the Credit Agreement.

               Section 5. MISCELLANEOUS

               A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.

         (i) On and after the Second Amendment Effective Date, each reference
in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”,
“herein” or words of like import referring to the Credit Agreement, and
each reference in the other Loan Documents to the “Credit Agreement”,
“thereunder”, “thereof” or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.

         (ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.

         (iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of
Administrative Agent or any Lender under, the Credit Agreement or any of
the other Loan Documents.

               B. Fees and Expenses. Borrower acknowledges that all actual and
reasonable costs, fees and expenses as described in subsection 11.2 of the
Credit Agreement incurred by Administrative Agent and its counsel with respect
to this Amendment and the documents and transactions contemplated hereby shall
be for the account of the Borrower.

               C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive
effect.

               D. Applicable Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

8

 

               E. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.

[Remainder of page intentionally left blank]

9

 

               IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

	 	 	 	 	 
	 
	 	BORROWER:
	 
	 	 	 	 
	 
	 	LA QUINTA PROPERTIES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven J. Flowers
	

	 	 	 	
 
	

	 	 	 	Steven J. Flowers
	

	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 
	 
	 	HOLDINGS:
	 
	 	 	 	 
	 
	 	LA QUINTA CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven J. Flowers
	

	 	 	 	
 
	

	 	 	 	Steven J. Flowers
	

	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 
	 
	 	OTHER LOAN PARTIES:
	 
	 	(for purposes of Section 4 only)
	 
	 	 	 	 
	 
	 	BAYMONT FRANCHISING LLC
	 
	 	BAYMONT MANAGEMENT SERVICES LLC
	 
	 	BAYMONT LICENSING CORPORATION
	 
	 	BUDGETEL FRANCHISING LLC
	 
	 	BUDGETEL LICENSING CORPORATION
	 
	 	LA QUINTA MANAGEMENT SERVICES LLC
	 
	 	LA QUINTA INNS, INC.
	 
	 	LA QUINTA FRANCHISING LLC
	 
	 	WOODFIELD FRANCHISING LLC

S-1

 

	 	 	 	 	 
	 
	 	WOODFIELD LICENSING CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven J. Flowers
	

	 	 	 	
 
	 
	 	On behalf of each of the entities
immediately preceding this signature
block
	 
	 	 	 	 
	

	 	Name:
	 	Steven J. Flowers
	

	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 
	 
	 	LA QUINTA INNS de MEXICO S.A. de C.V.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David L. Rea
	

	 	 	 	
 
	

	 	Name:
	 	David L. Rea
	

	 	Title:
	 	Executive Vice President and Treasurer
	 
	 	 	 	 
	 
	 	MEDITRUST MANAGEMENT COMPANY
	 
	 	 	 	 
	

	 	By:
	 	MEDITRUST HEALTHCARE

CORPORATION, its Trustee
	 
	 	 	 	 
	

	 	By:
	 	/s/ David L. Rea
	

	 	 	 	
 
	

	 	Name:
	 	David L. Rea
	

	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 
	 
	 	MEDITRUST HEALTHCARE CORPORATION
	 
	 	MEDITRUST MORTGAGE INVESTMENTS, INC.
	 
	 	MEDITRUST TRS, INC.
	 
	 	LA QUINTA TRS, INC.
	 
	 	LA QUINTA TRS II, INC.
	 
	 	LA QUINTA TRS III, INC.
	 
	 	LA QUINTA TRS IV, INC.

S-2

 

	 	 	 	 	 
	 
	 	MEDITRUST ACQUISITION COMPANY II LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ David L. Rea
	

	 	 	 	
 
	 
	 	On behalf of each of the entities
immediately preceding this signature
block
	 
	 	 	 	 
	

	 	Name:
	 	David L. Rea
	

	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 
	 
	 	LA QUINTA FRANCHISE, LLC
	 
	 	LA QUINTA LODGING INVESTMENTS LLC
	 
	 	LA QUINTA WORLDWIDE, LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven J. Flowers
	

	 	 	 	
 
	 
	 	On behalf of each of the entities
immediately preceding this signature
block
	 
	 	 	 	 
	

	 	Name:
	 	Steven J. Flowers
	

	 	Title:
	 	Vice President
	 
	 	 	 	 
	 
	 	BAYMONT PROPERTIES LLC
	 
	 	BUDGETEL INNS LLC
	 
	 	LQ-WB, LLC
	 
	 	LQC LEASING, LLC
	 
	 	LA QUINTA LEASING COMPANY
	 
	 	LA QUINTA REALTY CORP.
	 
	 	LQI ACQUISITION CORPORATION
	 
	 	LA QUINTA INVESTMENTS, INC.
	 
	 	MOC HOLDING COMPANY
	 
	 	WOODFIELD PROPERTIES LLC
	 
	 	 	 	 
	

	 	By:
	 	Steven J. Flowers
	

	 	 	 	
 
	 
	 	 	 	 
	 
	 	On behalf of each of the entities
immediately preceding this signature
block
	 
	 	 	 	 
	

	 	Name:
	 	Steven J. Flowers
	

	 	Title:
	 	Treasurer

S-3

 

	 	 	 	 	 
	 
	 	LA QUINTA TEXAS PROPERTIES, L.P.
	 
	 	LQM OPERATING PARTNERS, L.P.
	 
	 	 	 	 
	

	 	By:
	 	LA QUINTA REALTY CORP., 
its
General Partner
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven J. Flowers
	

	 	 	 	
 
	 
	 	On behalf of each of the entities
immediately preceding this signature
block
	 
	 	 	 	 
	

	 	Name:
	 	Steven J. Flowers
	

	 	Title:
	 	Treasurer
	 
	 	 	 	 
	 
	 	LQ INVESTMENTS I
	 
	 	LQ INVESTMENTS II
	 
	 	LQ-EAST IRVINE JOINT VENTURE
	 
	 	LQ-BATON ROUGE JOINT VENTURE
	 
	 	LA QUINTA DEVELOPMENT PARTNERS, L.P.
	 
	 	 	 	 
	 
	 	On behalf of each of the entities
immediately preceding this signature
block
	 
	 	 	 	 
	

	 	By:
	 	LA QUINTA PROPERTIES, INC.,

as General Partner
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven J. Flowers
	

	 	 	 	
 
	

	 	Name:
	 	Steven J. Flowers
	

	 	Title:
	 	Vice President and Treasurer
	 
	 	 	 	 
	 
	 	LQ WOODFIELD BEVERAGE SERVICES, INC.
	 
	 	WOODFIELD INNS, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ David P. Bradtke
	

	 	 	 	
 
	 
	 	on behalf of each of the entities
immediately preceding this signature
block
	 
	 	 	 	 
	

	 	Name:
	 	David P. Bradtke
	

	 	Title:
	 	Vice President

S-4

 

	 	 	 	 	 
	 
	 	LA QUINTA ARLINGTON BEVERAGE
SERVICES, INC.
	 
	 	 	 	 
	 
	 	LA QUINTA BEVERAGE SERVICES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Wayne B. Goldberg
	

	 	 	 	
 
	 
	 	On behalf of each of the entities
immediately preceding this signature
block
	 
	 	 	 	 
	

	 	Name:
	 	Wayne B. Goldberg
	

	 	Title:
	 	President and Secretary
	 
	 	 	 	 
	 
	 	ADMINISTRATIVE AGENT AND COLLATERAL AGENT:
	 
	 	 	 	 
	 
	 	CANADIAN IMPERIAL BANK OF COMMERCE,

as Administrative Agent and Collateral Agent
	 
	 	 	 	 
	

	 	By:
	 	/s/ Dean J. Decker
	

	 	 	 	
 
	

	 	 	 	Dean J. Decker
	

	 	 	 	Managing Director
	

	 	 	 	CIBC World Markets Corp.,
	

	 	 	 	AS AGENT
	 
	 	 	 	 
	 
	 	LENDERS:
	 
	 	 	 	 
	 
	 	CIBC, INC., as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Dean J. Decker
	

	 	 	 	
 
	

	 	 	 	Dean J. Decker
	

	 	 	 	Managing Director
	

	 	 	 	CIBC World Markets Corp.,
	

	 	 	 	AS AGENT

S-5

 

	 	 	 	 	 
	 
	 	MORGAN STANLEY SENIOR FUNDING, INC., as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Jaap L. Tonckens
	

	 	 	 	
 
	

	 	Name:
	 	Jaap L. Tonckens
	

	 	Title:
	 	Vice President
	

	 	 	 	Morgan Stanley Senior Funding
	 
	 	 	 	 
	 
	 	LEHMAN COMMERCIAL PAPER, INC., as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Francis Chang
	

	 	 	 	
 
	

	 	Name:
	 	Francis Chang
	

	 	Title:
	 	Authorized Signatory
	 
	 	 	 	 
	 
	 	CALYON NEW YORK BRANCH, as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Bruno Defloor
	

	 	 	 	
 
	

	 	Name:
	 	Bruno Defloor
	

	 	Title:
	 	Director
	 
	 	 	 	 
	

	 	By:
	 	/s/ Joseph Asciolla
	

	 	 	 	
 
	

	 	Name:
	 	Joseph Asciolla
	

	 	Title:
	 	Managing Director
	 
	 	 	 	 
	 
	 	FLEET NATIONAL BANK, as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Steven P. Renwick
	

	 	 	 	
 
	

	 	Name:
	 	Steven P. Renwick
	

	 	Title:
	 	Principal
	 
	 	 	 	 
	 
	 	WELLS FARGO BANK, National

Association, as a Lender
	 
	 	 	 	 
	

	 	By:
	 	/s/ Stephen P. Prinz
	

	 	 	 	
 
	

	 	Name:
	 	Stephen P. Prinz
	

	 	Title:
	 	Executive Vice President

S-6exv10w46

 

Exhibit 10.46

	 	 	 
	

	 	
	WEYERHAEUSER BUILDING MATERIALS

	 	ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.

Wood-Plastic Composite

Decking Agreement

THIS AGREEMENT (this
“Agreement”) made as of August 23, 2004, by and
between Weyerhaeuser Company, Weyerhaeuser Building Materials (“WBM”) and
Advanced Environmental Recycling Technologies, Inc. (“AERT”).

BACKGROUND

	A.	 	The parties have entered into that certain ChoiceDek® Products
Agreement dated as of December 21, 2001 (the “2001 Agreement”).
	 
	B.	 	The parties have entered into that certain Reload/Storage
Agreement for Weyerhaeuser ChoiceDek® Products dated as of
October 1, 2002 (the “Reload Agreement”), a copy of which
is attached hereto as Exhibit A.

	 
	C.	 	It is anticipated that AERT’s planned increases in production and
production capacity of wood-plastic composite decking and decking
accessories will be more than WBM’s ability to sell such products and
AERT desires to be able to sell such products to others than WBM under
brands other than ChoiceDek ®.
	 
	D.	 	While WBM desires to continue to purchase quantities of
wood-plastic composite decking and decking accessories from AERT; AERT
understands that WBM desires to be able to purchase such products from
multiple suppliers.
	 
	E.	 	Thus, the parties desire (i) to terminate the 2001 Agreement and
replace such agreement with this Agreement and (ii) for the Reload
Agreement to remain in full force and effect.

THEREFORE, the parties hereby agree as follows:

***Information confidential per Rule 406(b) and Rule 24b-2(b)

 

 

Scope.

	A.	 	Lowe’s Relationship.

	1)	 	Subject to the terms and conditions of this
Agreement, WBM agrees to buy exclusively from AERT all of WBM’s
requirements for resale to Lowe’s Companies, Inc. (“Lowe’s”) of
wood-plastic composite decking products and decking accessories
listed in Exhibit B, sold under the Weyerhaeuser ChoiceDek®
trademark (hereinafter these products so branded are referred
to as “ChoiceDek® Products”), and AERT shall manufacture and
supply such requirements.
	 
	2)	 	In the event that Lowe’s and its affiliates reduce the
volume of ChoiceDek® purchases by *** or more (of the minimum
Contract Year volume established in Section 3B of this agreement)
then the volume of ChoiceDek® Products to be purchased by WBM
under this Agreement for the Contract Year in which such action by
Lowe’s occurs shall be reduced accordingly.
	 
	3)	 	In the event that Lowe’s and its affiliates
discontinue purchasing ChoiceDek® Products from WBM for any
reason, then WBM shall be free to terminate this Agreement at
the end of the Contract year in which such action by Lowe’s
occurs.
	 
	4)	 	Should Lowe’s discontinue purchasing ChoiceDek ®
products from WBM, AERT and WBM agree to meet, without
obligation, in order to explore other ChoiceDek ® sales
options.

	B.	 	Trademark
	 
	 	 	AERT understands and agrees that ChoiceDek® is a registered
trademark owned by Weyerhaeuser Company. AERT agrees that it will not
use the ChoiceDek® mark other than as directed by Weyerhaeuser on
products sold to Weyerhaeuser. AERT further agrees that it shall not
publicize or advertise that AERT manufactures ChoiceDek® Products
except as approved by Weyerhaeuser.
	 
	C.	 	Other Markets and Products.
	 
	 	 	The parties agree that during the term of this Agreement, AERT shall
be entitled to manufacture and/or sell wood-plastic composite
decking and decking accessories, other than products bearing the
ChoiceDek® trademark, under a private label or different brand name
or label to any person or entity. The parties agree that during the
term of this Agreement, WBM shall be entitled to purchase
wood-plastic composite decking and decking accessories for sale to
customers other than Lowe’s from AERT and/or any other manufacturer.

	2.	 	Product Development.

	A.	 	AERT agrees to provide WBM exclusive colors and profiles of
ChoiceDek® Premium Products for WBM to sell to Lowe’s in the
Lowe’s territory, and such exclusive colors and profiles are
listed in Exhibit B. WBM shall have first right of refusal for
an exclusive for ChoiceDek® Products for sale to Lowe’s on any
new colors and profiles of decking products that AERT might develop
during the term of this Agreement; provided that, at such time, WBM
is not in breach of this Agreement. WBM is obligated to respond in
writing to such offers from AERT within sixty (60) days of receipt of
product design specifications, cost estimates, and prototypes.
WBM’s failure to so notify AERT within such sixty (60) day
period shall be deemed
WBM’s refusal thereof and AERT shall be entitled to sell such
products to any person or entity.
	 
	B.	 	To help ensure timely deliveries of ChoiceDek® Products to
WBM, AERT shall produce a reasonable inventory of finished
ChoiceDek® Products at its producing locations (reference the
“Reload Agreement attached hereto as Exhibit A). Said production will
be based upon a mutually agreed upon strategic inventory plan which
will be implemented and finalized by *** of each calendar year for
the following year. ChoiceDek® Products will be maintained by AERT
based upon a production schedule mutually agreed upon by AERT and
WBM, taking into consideration WBM’s minimum purchase
requirements established in accordance with the provisions of this
Agreement. Such inventories shall be shipped in good condition and
not weathered. Further, AERT will rotate inventories so that no high
volume ChoiceDek® Products item remains in inventory longer than
three (3) months.

***Information confidential per Rule 406(b) and Rule 24b-2(b)

2

 

	3.	 	Minimum Purchase Requirements.

	A.	 	During 2004 WBM shall purchase from AERT a minimum of ***
truckloads *** of ChoiceDek® Products, subject to Section 1 of this
Agreement.
	 
	B.	 	On or before September 30 of each Contract Year during the term
of this Agreement, AERT and WBM shall establish in writing the
minimum volume *** of ChoiceDek® Products to be purchased by WBM from
AERT during the next Contract Year. In the event that AERT and WBM
are unable to reach an agreement as to the minimum volume (by
truckload) of ChoiceDek® Products for any Contract Year on or before
December 31 of the immediately preceding Contract Year, the minimum
volume of ChoiceDek® Products shall be *** of ChoiceDek® Products.
WBM shall be obligated to purchase during such Contract Year the
minimum volume of ChoiceDek® Products established by AERT and WBM,
subject to the terms and conditions in Section 1 and elsewhere in
this Agreement. AERT reserves the right to manufacture and/or supply
and make available for purchase by WBM a volume of ChoiceDek®
Products which is *** in excess of the minimum volume of ChoiceDek®
Products established by AERT and WBM for such Contract Year.
	 
	C.	 	In the event WBM desires to purchase from AERT during any
Contract Year ChoiceDek® Products in excess of the volume of
ChoiceDek® Products forecast to be purchased by WBM for such Contract
Year pursuant to WBM’s strategic inventory plan delivered to AERT in
writing, AERT shall use commercially reasonable efforts to
manufacture and/or supply such excess volume of ChoiceDek® Products
to WBM. Provided, however, AERT shall not be obligated to supply an
excess volume more than *** greater than the minimum volume unless
AERT otherwise agrees. In the event AERT advises WBM in writing that
it is unable to fulfill any request by WBM for such excess volume of
ChoiceDek® Products, AERT shall have *** to provide a solution
for increasing supply or WBM shall have the right, notwithstanding
the exclusivity provisions set forth in Section 1 of this Agreement,
to purchase any such excess volume of ChoiceDek® Products from
alternate suppliers.

	4.	 	Pricing.

	A.	 	The initial prices for the ChoiceDek® Products to be purchased
under this Agreement shall be as set forth on Exhibit D attached
hereto. The prices do not include sales, use, excise or other taxes,
all of which shall be paid by WBM to AERT. If WBM is exempt from any
such taxes, it shall provide AERT with evidence of such exemptions.
	 
	B.	 	On or before *** of each Contract Year during the term
of this Agreement, AERT and WBM shall establish in writing the prices
for the ChoiceDek® Products for the next Contract Year. Pricing
shall be established through good faith discussions and reasonable
determination between the parties with the primary factors being
market demand and costs of competitive products, but also considering
costs of raw materials, additive requirements and production costs.
	 
	C.	 	AERT must give thirty (30) days notice when requesting to increase
prices to WBM, but any proposed increase is subject to written
acceptance by WBM (based upon Lowe’s acceptance of such increase).
With respect to new ChoiceDek® Products, the price shall be subject
to agreement between AERT and WBM, based upon the additional costs
involved with producing said product.
	 
	D.	 	Prices are F.O.B. AERT production plant or inventory storage
facility, as applicable, unless otherwise noted at the time of order.
Title to all ChoiceDek® Products passes to WBM upon delivery thereof
to the transportation company at the AERT production plant or
inventory storage facility, as applicable. AERT shall maintain
insurance on the ChoiceDek® Products until delivery thereof to the
transportation company. After delivery of the ChoiceDek® Products to
the transportation company, all risk of loss, damage or destruction
of the ChoiceDek® Products shall be borne by WBM.

***Information confidential per Rule 406(b) and Rule 24b-2(b)

3

 

	5.	 	Term and Termination.

	A.	 	The initial term of this Agreement shall be three (3) years,
commencing January 1, 2004 and ending on December 31, 2006, unless
earlier terminated in accordance with the terms hereof. As used in
this Agreement, a “Contract Year” shall be a calendar year. This
agreement shall automatically renew for one contract year unless
either party has notified the other part of its intention to
terminate this agreement by September 1, 2006 or by September 1 of
each succeeding contract year.
	 
	B.	 	Notwithstanding the foregoing, in the event that a party is in
default of its obligations under this Agreement, the party not in
default shall give the party in default written notice of the
default. In the event that the default is not cured within a
reasonable time (not exceeding sixty (60) days) from the notice of
default (unless the default is not susceptible to cure within such
sixty (60) days, in which case the non-defaulting party may not
terminate this Agreement if the defaulting party has commenced to
cure such default within such sixty (60) day period and thereafter
diligently pursues the same, provided that such default is cured no
later than ninety (90) days after notice thereof is delivered) or if
the party receiving the notice disputes that it is in default, the
parties shall engage senior officials of each party to meet in a good
faith effort to resolve the dispute. In the event such meetings do
not resolve the dispute, the parties agree to enter into binding
arbitration before the American Arbitration Association (AAA) under
the commercial rules of the AAA. The site of the arbitration shall be
Denver, Colorado. The award of the arbitrator shall be in writing,
shall be final and binding on the parties to this Agreement and shall
not be appealable from or contested in any court, and any judgment
upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. Each party shall bear its own costs of
arbitration and one-half of the fees and expenses of the AAA and the
Arbitrator.
	 
	C.	 	In addition, either party may terminate this Agreement at any
time upon notice to the other party of the occurrence of any of the
following:

	1)	 	The other party attempts to assign this Agreement
or any rights hereunder or any obligations hereunder, except as
permitted in this Agreement.
	 
	2)	 	The other party ceases to function as a going
concern, ceases to conduct its operations in the normal course
of business, ceases to pay its debts as they become due or
becomes insolvent.
	 
	3)	 	Any proceeding is brought or filed by or against
the other party seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief with respect to any present or future bankruptcy laws;
provided, however, that in the event any such proceeding is
brought or filed on an involuntary basis, the party shall have
ninety (90) days to cause such proceeding to be dismissed.

	D.	 	Upon termination of this Agreement, the parties shall have the
following rights and obligations:

	1)	 	Termination of this Agreement shall not release
either party from the obligation to make payment of all amounts
then or thereafter due and payable.
	 
	2)	 	All provisions of this Agreement which are either
expressly or by their nature and meaning intended to survive
the termination of this Agreement, shall survive the
termination of this Agreement.
	 
	3)	 	WBM shall be entitled to purchase any products
which are the same or substantially similar to the ChoiceDek®
Products from any other person or entity.

***Information confidential per Rule 406(b) and Rule 24b-2(b)

4

 

	4)	 	AERT shall be entitled to manufacture and/or supply any
products which are the same or substantially similar to the
ChoiceDek® Products to any other person or entity, including,
without limitation, any Weyerhaeuser Customer Service Center,
but may not use the ChoiceDek® trademark.
	 
	5)	 	The parties’ right of termination shall be in
addition to, and not in lieu of, any other rights or remedies
available to the non-defaulting party at law or in equity.

	6.	 	Force Majeure.

	A.	 	Force Majeure shall mean any event or condition, other than an
obligation of payment, not existing as of the date of execution of
this Agreement, not reasonably foreseeable as of such date and not
reasonably within the control of either party, which prevents in
whole or in material part the performance by one of the parties of
its obligations hereunder or which renders the performance of such
obligations so difficult or costly as to make such performance
commercially unreasonable. Without limiting the foregoing, the
following shall constitute events or conditions of Force Majeure:
acts of God, acts of civil or military authority, riots, disturbance,
war, strikes, lockouts, slowdowns, epidemics, fire, flood, hurricane,
typhoon, earthquake, lightning and explosion. It is in particular
expressly agreed that any refusal or failure of any governmental
authority to grant any license or authorization legally required for
the fulfillment by AERT of its obligations hereunder shall constitute
an event of Force Majeure.
	 
	B.	 	Upon giving notice to the other party, a party affected by an
event of Force Majeure shall be released without any liability on its
part from the performance of its obligations under this Agreement,
except for the obligation to pay any amounts due and owing hereunder,
but only to the extent and only for the period that its performance
of such obligations is prevented by the event of Force Majeure. Such
notice shall include a description of the nature of the event of
Force Majeure and its cause and possible consequences. The party
claiming Force Majeure shall promptly notify the other party of the
termination of such event.
	 
	C.	 	The party invoking Force Majeure shall provide to the other
party confirmation of the existence of the circumstances constituting
Force Majeure. Such evidence may consist of a statement or
certificate of an appropriate governmental department or agency where
available or a statement describing in detail the facts claimed to
constitute Force Majeure.
	 
	D.	 	During the period that the performance by one of the parties of
its obligations under this Agreement has been suspended by reason of
an event of Force Majeure, the other party may likewise suspend the
performance of all or part of its obligations hereunder to the extent
that such suspension is commercially reasonable, except the
obligation for payment of amounts then due and payable.

	7.	 	Terms of Payment.

	A.	 	Standard payment terms are as follows (subject to the special
arrangements set forth in the Reload Agreement):

	1)	 	***
	 
	2)	 	***

	B.	 	Prompt payment discounts may be taken on all payments
postmarked within the prompt payment days. When the last day of the
prompt payment period falls on a weekend or a holiday, the next
business day will be used for purposes of eligibility for prompt
payment discounts.
	 
	C.	 	Any unearned prompt payment discounts are to be re-invoiced to
WBM by AERT. Such invoices are due within three (3) business days of
receipt and are not eligible for prompt payment discounts.

***Information confidential per Rule 406(b) and Rule 24b-2(b)

5

 

	D.	 	Mailing address for WBM invoices: ***
	 
	E.	 	WBM is responsible for freight arrangements for shipments to
Vendor Managed Inventories (“VMI”) unless otherwise indicated at time
of order.
	 
	F.	 	Weyerhaeuser and AERT may agree on special terms and/or
services that may result in updated and/or revised payment terms.
Both parties acknowledge that such an agreement currently is in place
where AERT provides inventory management and storage services in
exchange for modified terms of payment from WBM.
	 
	G.	 	***

	8.	 	Co-op Marketing Funds; Samples; Merchandising.

	A.	 	WBM and AERT agree to the following co-op funding.

	1)	 	***
	 
	2)	 	***

	B.	 	Except as set forth below, ChoiceDek® Products specifically
intended for use as samples, displays, or in other merchandising
initiatives (or otherwise agreed to by AERT) shall be provided by
AERT at no cost to WBM. This material will not apply toward agreed
upon minimum purchase requirements or marketing co-op funds.
	 
	C.	 	Periodically AERT may extend special discounts, terms or other
special promotions or items to WBM. These may include, but are not
limited to, extended terms, sales incentives or seasonal purchase
opportunities. Any special discounts or terms are to be clearly
indicated on AERT’s invoices to WBM.

	9.	 	Product Quality; Warranty; Claims; Indemnification.

	A.	 	AERT warrants all products WBM purchases from AERT in
accordance with AERT’s standard warranty on such products. WBM is
authorized to pass such warranties through to its customers and WBM’s
customers are authorized to pass them through to customers and users
of such products. A copy of the AERT’s standard warranty(s) is
attached hereto as Exhibit E. AERT will not make any changes to the
warranty(s) without WBM’s prior written approval.
	 
	B.	 	AERT warrants that all products sold to WBM will be free of
defects in materials and workmanship, suitable for use in residential
and commercial decking applications, and will comply with all Quality
Assurance manuals submitted by AERT in connection with AERT’s
obtaining of building code and other relevant industry acceptances
and/or evaluations.
	 
	C.	 	AERT shall retain the services of an independent, third party
quality assurance service (such as PFS) to monitor the quality of
AERT’s production. Any reports submitted by such service shall be
available to WBM on a reasonable request basis. Such requests for
records and related Quality Assurance information will be mailed to
WBM within five (5) business days after receipt by AERT.

***Information confidential per Rule 406(b) and Rule 24b-2(b)

6

 

	D.	 	With respect to claims, the following describes the general
procedure for handling claims:

	1)	 	***
	 
	2)	 	***

	(a)	 	***
	 
	(b)	 	***
	 
	(c)	 	***
	 
	(d)	 	***
	 
	(e)	 	***
	 
	(f)	 	***

	E.	 	AERT will buy back from WBM and WBM’s customers (at delivered
cost) any products that, because of failure to conform to AERT’s
warranties, cannot be sold at full value. A buy back shall not limit
any other obligations of AERT; provided, however, that
notwithstanding the foregoing, in no event shall AERT be liable for
any liabilities, costs, expenses or damages, including, without
limitation, any buy back obligation as a result of such products not
having been properly stored, transported, handled, installed,
maintained, repaired or having been modified or altered.
	 
	F.	 	AERT shall be liable for and shall defend, indemnify and hold
WBM and its contractors, agents, and employees harmless from and
against all liabilities, costs, expenses and charges, including
reasonable attorneys’ fees, and any and all claims, suits, actions,
demands and proceedings of whatsoever nature and kind, as may be
instituted or made against WBM, its contractors, agents and
employees, arising from or relating to the quality of or any defect
in material or workmanship of any products purchased by WBM from AERT
which exists at the time of delivery to the transportation company or
that develops under normal use or any negligent or willful act or
omission of AERT its contractors, agents or employees (excluding any
claim alleging negligent or faulty installation, maintenance or
repair of such products). In the event of any litigation brought
against WBM and arising out of and in any way connected with any of
the above events or claims, against which AERT agrees to defend WBM,
AERT shall vigorously resist and defend such litigation through
counsel of its choice and WBM shall fully cooperate therewith.
	 
	G.	 	WBM shall be liable for and shall indemnify and hold AERT and
its contractors, agents and employees harmless from and against all
liabilities, costs, expenses and charges, including reasonable
attorneys’ fees, and any and all claims, suits, actions, demands and
proceedings of whatsoever nature and kind, as may be instituted or
made against AERT, its contractors, agents or employees, arising from
or relating to any negligent or willful act or omission of WBM, its
contractors, agents or employees. In the event of any litigation
brought against AERT and arising out of and in any way connected with
any of the above events or claims, against which WBM agrees to defend
AERT, WBM shall vigorously resist and defend such litigation through
counsel of its choice and AERT shall fully cooperate therewith.

***Information confidential per Rule 406(b) and Rule 24b-2(b)

7

 

	H.	 	AERT shall obtain and maintain insurance coverage as specified in
the Insurance Requirements described in Exhibit F.
	 
	I.	 	EXCEPT AS PROVIDED IN THIS SECTION 9 AND IN SECTION 10, AERT
HEREBY EXPRESSLY DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, OF
MERCHANTABILITY, QUALITY, CONDITION, TITLE, NON-INFRINGEMENT OR
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE CHOICEDEK®
PRODUCTS OR THEIR OPERATION OR PERFORMANCE. NOTWITHSTANDING ANYTHING
HEREIN TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER
FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, LOSS OF PROFITS OR BUSINESS INTERRUPTIONS) RESULTING FROM
OR ARISING OUT OF THIS AGREEMENT, ANY ORDER OR THE PERFORMANCE OF ANY
WORK OR SERVICES, HOWEVER SAME MAY BE CAUSED, INCLUDING THE
NEGLIGENCE OR FAULT OF ANY PARTY OR PARTIES AND WHETHER OR NOT WITHIN
THE CONTEMPLATION OF THE PARTIES BEFORE, AFTER OR ON THE EFFECTIVE
DATE OF THIS AGREEMENT AND/OR THE APPLICABLE ORDER.
	 
	J.	 	The liability of AERT, if any, and WBM’s sole and exclusive
remedy for damages for any claim of any kind whatsoever with respect
to any ChoiceDek® Products, regardless of legal theory, shall not be
greater than the actual purchase price for such product, except with
respect to AERT’s indemnification obligations, if any, under section
9.f as to claims of third parties.

	10.	 	Patents and Patent Indemnity.

	A.	 	AERT presently holds 16 U.S. and Canadian Patents on recycling
plastic and decking materials including:
U.S. Patent 5759680
	 
	B.	 	AERT will use commercially reasonable efforts to obtain
additional U.S. and Canadian Patents on decking materials.
	 
	C.	 	AERT represents and warrants that, to the best of its
knowledge, its products and processes do not infringe any
intellectual property rights (including, but not limited to, patent
rights, trademark rights and copyrights) of any third party which are
effective in the Lowe’s Territory. AERT will indemnify, defend and
hold harmless WBM from and against any claims that any such products
or processes so infringe. AERT’s obligations pursuant to this
Section 10 shall not apply to the extent that there would have been
no infringement or misappropriation but for the use of the ChoiceDek®
Products or process relating thereto in combination with the
equipment, materials, processes or methods of WBM, or modifications
to the ChoiceDek® Products or related processes by or at the request
of WBM. If AERT believes that the ChoiceDek® Products may or are
involved in any infringement claim or action, AERT shall, at its own
expense, use commercially reasonable efforts to: (1) procure for WBM
the right to continue using such product; or (2) modify the product
to become non-infringing; or (3) replace the product with equally
suitable, compatible and functionally equivalent non-infringing
product at no additional charge to WBM. WBM shall have the right to
participate, at its own cost and expense, in the defense of any suit
or proceeding identified in Section 10 through counsel of its own
choosing.

	11.	 	Code Evaluations and Approvals.

	A.	 	AERT is committed to secure necessary code and relevant
industry usage evaluations or approvals (as example: National
Evaluation Reports or other evaluations that meet the requirements of
model building codes and the International Building Code) so that
ChoiceDek® Products manufactured by AERT may be competitively
marketed.
	 
	B.	 	AERT will utilize internal and commercially reasonably
available external resources to provide product and technical data
required for various testing and evaluation processes.

***Information confidential per Rule 406(b) and Rule 24b-2(b)

8

 

	C.	 	WBM will make the services of its Weyerhaeuser Technology
Center and a professional engineer *** reasonably available to
support AERT’s code evaluation processes. AERT will reimburse WBM for
WBM’s reasonable cost (including loaded salary costs) of providing
these services to AERT on mutually agreed upon projects.
	 
	D.	 	AERT will also be using outside approved and certified testing
laboratories for the testing and evaluation processes.
	 
	E.	 	Application submittal and other costs associated with securing
code evaluations and/or approvals will be mutually agreed upon in
good faith during the annual planning and review session conducted by
WBM and AERT representatives during the fourth quarter of each
Contract Year.

	12.	 	“Pass-Through” Obligations.

	A.	 	As a result of programs that WBM enters into with customers,
WBM may be expected to meet specific shipping and/or delivery
requirements and/or restrictions as a basis for doing business with
that customer. AERT, in its role as the manufacturer of the
ChoiceDek® Products, to the extent commercially reasonable, agrees to
satisfy any lawful requirements of these programs applicable to the
manufacturer of such ChoiceDek® Products; provided that the foregoing
shall not apply to any ChoiceDek® Products which are not decking
products.
	 
	B.	 	All requirements of such agreements and expectations that WBM
passes through to AERT will be mutually agreed upon in good faith by
WBM and AERT in writing.
	 
	C.	 	***

	13.	 	Notices.
	 
	 	 	Any notices required or permitted to
be given hereunder shall be in
writing and sent by to the party
receiving notice by (i) US registered
mail, return receipt requested,
postage prepaid, (ii) reputable
overnight courier service (such as
FedEx or Airborne) for next business
day a.m. delivery, all fees prepaid,
or (iii) by fax transmission with
telephone verification of receipt, as
follows:
	 
	 	 	To WBM: ***
	 
	 	 	To AERT: ***

***Information confidential per Rule 406(b) and Rule 24b-2(b)

9

 

	 	 	Notices given by US registered mail shall be deemed given three (3)
business days after mailing. Notices given by overnight courier shall be
deemed given on the first business day after delivery to the courier in
time for next business day a.m. delivery. Notices given by fax shall be
deemed given the first business day after the sender obtains telephone
verification of receipt.
	 
	14.	 	Governing Law.
	 
	 	 	This Agreement shall be governed by and construed under the laws of the
State of Washington, without giving effect to its conflicts of laws and
rules.
	 
	15.	 	Collateral Assignment.
	 
	16.	 	WBM acknowledges that AERT is obligated to assign its rights to payments
hereunder to a lender, bank or trustee, including, without limitation an
assignment to Regions Bank (the “Trustee”), as trustee under an Indenture
of Trust, dated as of October 1, 1999, as amended (the “Indenture”)
between the City of Springdale, Arkansas, the First National Bank of
Springdale, as trustee, which trustee has been succeeded to in interest by
the Trustee, and WBM acknowledges and consents to such collateral
assignment. Following notice to WBM of any such assignment, this Agreement
may not be amended or modified without the express written consent of the
Trustee or any successor trustee. In addition, WBM consents to references
to this Agreement in any official statement, limited offering memorandum,
reoffering memorandum or similar document prepared in connection with the
remarketing or sale of the City of Springdale, Arkansas, Industrial
Development Revenue Bonds (Advanced Environmental Recycling Technologies,
Inc. Project) Series 1999A, issued and secured pursuant to the Indenture.
	 
	17.	 	Execution of Counterparts.
	 
	 	 	This Agreement may be executed in counterparts, each of which will be
considered an original agreement, but all of which shall constitute one
and the same instrument.
	 
	18.	 	Miscellaneous.

	A.	 	This Agreement does not make either party the employee, agent
or legal representative of the other for any purpose whatsoever.
Neither party, nor any of its directors, officers, partners,
shareholders, associates, employees, agents or affiliates is granted
any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of
the other party. In fulfilling its obligations pursuant to this
Agreement, each party, shall be acting as an independent contractor.
	 
	B.	 	Neither party shall have the right to assign or otherwise
transfer its rights or obligations under this Agreement except with
the prior written consent of the other party. Any prohibited
assignment shall be null and void. Except as expressly set forth in
this Agreement, this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and
permitted assigns.
	 
	C.	 	This Agreement, including the exhibits attached hereto and
incorporated as an integral part of this Agreement, constitutes the
entire agreement of the parties with respect to the subject matter
hereof, and supersedes all previous agreements by and between AERT
and WBM, other than the Reload Agreement, as well as all proposals,
oral or written, and all negotiations, conversations or discussions
heretofore had between the parties related to this Agreement. All of
the terms, provisions and conditions of the Reload Agreement are
hereby ratified and confirmed and shall remain unchanged and in full
force and effect. The 2001 Agreement shall terminate effective on
the 12th day of October, 2004.

***Information confidential per Rule 406(b) and Rule 24b-2(b)

10

 

	D.	 	This Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except
by written amendment signed by the parties hereto.
	 
	E.	 	This Agreement is confidential and no party shall issue press
releases or engage in other types of publicity of any nature, dealing
with the commercial and legal details of this Agreement without the
other party’s prior written approval. In such event, the publishing
party shall furnish a copy of such disclosure to the other party.
	 
	F.	 	In the event that any of the terms of this Agreement are in
conflict with any rule of law or statutory provision or are otherwise
unenforceable under the laws or regulations of any government or
subdivision thereof, such terms shall be deemed stricken from this
Agreement, but such invalidity or unenforceability shall not
invalidate any of the other terms of this Agreement and this
Agreement shall continue in force, unless the invalidity or
unenforceability of any such provisions hereof does substantial
violence to, or where the invalid or unenforceable provisions
comprise an integral part of, or are otherwise inseparable from, the
remainder of this Agreement.
	 
	G.	 	Any of the terms, covenants or provisions of this Agreement may
be waived only by a written instrument signed by the party to this
Agreement entitled to the benefit thereof waiving compliance. No
waiver by such party of any term, covenant or provision contained in
this Agreement, in any one or more instances, shall be construed as a
further or continuing waiver of any such term, condition or provision
or a waiver of any other term, covenant or provision set forth in
this Agreement.

	 	 	 	 	 	 	 
	WEYERHAEUSER COMPANY	 	ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.
	 
	 	 	 	 	 	 
	By
/s/ David T. Still

	 	
	 	By /s/ Joe G. Brooks
	 	
	Print
Name    David T. Still

	 	
	 	Print
Name    Joe G. Brooks
	 	
	Title    V.P.
Building Materials

	 	
	 	Title    Chairman
	 	

CONSENT GIVEN:

REGIONS BANK as Trustee

	 	 	 	 	 
	By
/s/ Bill Barber

	 	
	 	 

	 	 	 	 	 
	Print
Name    Bill Barber

	 	
	 	 

	 	 	 	 	 
	Title    
Vice President

	 	
	 	 

***Information confidential per Rule 406(b) and Rule 24b-2(b)

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]