MURABAHA FACILITY AGREEMENT dated as of June 22, 2006 among TCO FUNDING CORP., TENSAR HOLDINGS, INC., TTC HOLDINGS S.a.r.l. AIA LIMITED, as Agent for TTC Holdings S.a.r.l., ARCAPITA INVESTMENT FUNDING LIMITED, as Agent for TCO Funding Corp., and...
Exhibit 10.21
Execution Copy
dated as of June 22, 2006
among
TCO FUNDING CORP.,
TENSAR HOLDINGS, INC.,
TTC HOLDINGS S.a.r.l.
AIA LIMITED,
as Agent for TTC Holdings S.a.r.l.,
as Agent for TTC Holdings S.a.r.l.,
ARCAPITA INVESTMENT FUNDING LIMITED,
as Agent for TCO Funding Corp.,
as Agent for TCO Funding Corp.,
and
CREDIT SUISSE,
as Administrative Agent for TCO Funding Corp.
as Administrative Agent for TCO Funding Corp.
TABLE OF CONTENTS
Schedules |
ii | |||
ARTICLE I DEFINITIONS |
1 | |||
Section 1.1. Definitions |
1 | |||
Section 1.2. Computation of Time Periods |
5 | |||
Section 1.3. Accounting Terms |
5 | |||
ARTICLE II REVOLVING PURCHASING FACILITY |
6 | |||
Section 2.1. Revolving Purchasing Facility and Appointment of Agents |
6 | |||
Section 2.2. Transactions |
7 | |||
Section 2.3. Assignment of Warranties |
8 | |||
ARTICLE III OTHER PROVISIONS RELATING TO THE FACILITY |
8 | |||
Section 3.1. Payments |
8 | |||
Section 3.2. Termination of the Facility |
9 | |||
Section 3.3. Taxes |
9 | |||
Section 3.4. Adjustments to the Applicable Margin |
10 | |||
Section 3.4. Evidence of Obligations |
10 | |||
Section 3.5. Prepayments |
11 | |||
Section 3.7. Fees |
||||
Section 3.8. Crediting Payments |
12 | |||
ARTICLE IV CONDITIONS PRECEDENT |
12 | |||
Section 4.1. Initial Transaction |
12 | |||
Section 4.2. Each Transaction |
13 | |||
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS |
13 | |||
Section 5.1. Representations and Warranties |
13 | |||
Section 5.2. Affirmative Covenants |
13 | |||
Section 5.3. Negative Covenants |
13 | |||
ARTICLE VI EVENTS OF DEFAULT |
13 | |||
ARTICLE VII REMEDIES UPON DEFAULT |
13 | |||
ARTICLE VIII MISCELLANEOUS |
14 | |||
Section 8.1. Notices |
14 | |||
Section 8.2. Right of Set-Off; Adjustments |
16 | |||
Section 8.3. Benefit of Agreement; Assignments; Registration |
16 | |||
Section 8.4. No Waiver; Remedies Cumulative |
16 | |||
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Section 8.5. Expenses; Indemnification |
16 | ||
Section 8.6. Amendments, Waivers and Consents |
17 | ||
Section 8.7. Headings |
17 | ||
Section 8.9. Severability |
17 | ||
Section 8.10. Entirety |
18 | ||
Section 8.11. Tax Consequences |
18 | ||
Section 8.11. Governing Law |
18 | ||
Section 8.12. WAIVER OF JURY TRIAL |
18 | ||
Section 8.13. Jurisdiction; Consent to Service of Process |
|||
Section 8.14. Governing Law |
|||
Section 8.15. Counterparts |
19 | ||
Section 8.16. Conflicts |
19 |
| Schedule 1 - | Definitions | |||
| Annex 1(a) | Permitted Holders | |||
| Annex 1(b) | Subsidiary Guarantors | |||
| Annex 1(c) | EBITDA Adjustments | |||
| Annex 1(d) | Mortgaged Properties | |||
| Schedule 2 - | Representations and Warranties | |||
| Annex 4 | Post Closing Filings | |||
| Annex 5 | Projections | |||
| Annex 8 | Subsidiaries | |||
| Annex 9 | Litigation | |||
| Annex 14 | Taxes | |||
| Annex 17 | Environmental | |||
| Annex 18 | Insurance | |||
| Annex 19(a) | UCC Filing Offices | |||
| Annex 19(b) | Intellectual Property Filing Offices | |||
| Annex 19(c) | Real Property Filings | |||
| Annex 20 | Real Property | |||
| Annex 25 | Acquisition Documentation | |||
| Annex 28 | Holdings’ Xxxxxxxxx | |||
| Xxxxx 00 | Xxxxxx Xxxxxxxx’ Contracts | |||
| Annex 30 | Customer Relations | |||
| Annex 31 | Brokers and Finders Fees | |||
| Schedule 3 - | Affirmative Covenants | |||
| Annex 9 | Requirements for Mortgages | |||
| Annex 16 | Post Closing Obligations | |||
| Schedule 4 - | Negative Covenants | |||
| Annex 1 | Permitted Financing Obligations | |||
| Annex 2 | Permitted Liens | |||
| Annex 4 | Existing Investments | |||
iii
| Annex 7 | Affiliate Transactions | |||
| Annex 8 | Capital Structure | |||
| Annex 17 | Existing Operating Leases | |||
| Schedule 5 - | Events of Default | |||
| Schedule 6 - | Miscellaneous Provisions | |||
Exhibits
Exhibit A
|
Form of Purchase Request | |
Exhibit B
|
Form of Purchase Confirmation | |
Exhibit C
|
Form of Purchase Offer | |
Exhibit D
|
Form of Purchase Acceptance | |
Exhibit E-1
|
Form of Fee Mortgage | |
Exhibit E-2
|
Form of Leasehold Mortgage | |
Exhibit F
|
Form of Tensar Intercreditor Agreement | |
Exhibit G
|
Form of Affiliate Subordination Agreement | |
Exhibit H
|
Form of Tensar Holdings Subordination Agreement |
THIS MURABAHA FACILITY AGREEMENT, dated as of June 22, 2006 (as amended, modified, restated or
supplemented from time to time, this “Agreement”), is among TCO FUNDING CORP., a Delaware
corporation (“TCO”), TENSAR HOLDINGS, INC., a Delaware limited liability company (“Tensar
Holdings”), TTC HOLDINGS S.a.r.l., a company incorporated in the Grand Duchy of Luxembourg
(“Luxco”), ARCAPITA INVESTMENT FUNDING LIMITED, a Cayman Islands limited liability company
(“AIFL”), AIA LIMITED, a Cayman Islands limited liability company (“AIA”), and Credit Suisse
(“Credit Suisse”), as administrative agent for TCO (in such capacity, the “Administrative Agent”).
Section 1.1. Definitions. Capitalized terms used in this Agreement (including the schedules,
annexes and exhibits hereto) shall have the meanings assigned to them on Schedule 1 hereto
and, to the extent not defined on Schedule 1, shall have the meanings set forth below.
“Adjusted Eurodollar Rate” shall mean, for any Transaction for any Deferred Payment Period, a
rate per annum equal to the product of (a) the Eurodollar Rate in effect for such Deferred Payment
Period and (b) Eurodollar Reserves.
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“Administrative Agent” shall have the meaning specified in the preamble hereto.
“Agreed Profit” shall mean for any Transaction, an amount determined By TCO in accordance with
this Agreement to be the product of the Profit Rate multiplied By the Purchase Price of the Metals
covered By such Transaction multiplied By the actual number of days from the Value Date for such
Transaction to the Transaction Payment Date for such Transaction and dividing such product by 360.
“Agreement” shall have the meaning specified in the preamble hereto.
“Aggregate Murabaha Price” shall mean at any time the total of all unpaid Murabaha Price
amounts outstanding at such time.
“Aggregate Purchase Price” shall mean at any time the aggregate of the unpaid Purchase Price
amounts included in the Aggregate Murabaha Price outstanding at such time. Solely for the purpose
of making such computation in connection with any partial payment of a Murabaha Price, any partial
payment of a Murabaha Price shall be allocated against the Purchase Price and the Agreed Profit
components of that portion of the Murabaha Price being partially prepaid such that the amount
allocated to the Agreed Profit component equals the Agreed Profit accrued to the date of such
partial payment on the amount allocated to the Purchase Price component of such Murabaha Price.
“A/A” shall have the meaning specified in the preamble hereto.
“AIFL” shall have the meaning specified in the preamble hereto.
“Alternate Rate” shall mean, as of any date of determination, a rate per annum equal to the
greater of (a) the Base Rate in effect on such day and (b) the Federal Funds Rate in effect on such
day plus 1/2 of 1%.
“Applicable Margin” shall mean,
as of a date of determination, a percentage per annum equal to
2.75%.
“Base Rate” shall mean,
at any time, the rate per annum publicly announced from time to time
by Credit Suisse as its “prime rate” in effect at its principal office in New York City, each
change in the Base Rate shall be effective as of the opening of business on the date such change is
publicly announced as being effective.
“Deferred Payment Period” shall mean, for each Transaction, a period of three month’s duration
commencing on the Value Date for such Transaction and ending on the Transaction Payment Date for
such Transaction; provided that the initial Transaction under this Agreement shall have a Deferred
Payment Period equal to 39 days.
“Default Rate” shall mean (i) the Alternate Rate, plus (ii) two percent (2%).
“ECF Percentage” shall mean 75% or, if on the date of applicable repayment pursuant to Section
3.7(f) , the Leverage Ratio is less than 3.00 to 1.00, 50%.
3
“Effective Date” shall mean the date of this Agreement.
“Eurodollar Rate” shall mean, for any Transaction for any Deferred Payment Period, the rate
per annum determined by the Administrative Agent at approximately 11:00 a.m., London time, on the
date that is two Business Days prior to the commencement of such Deferred Payment Period by
reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars (as
set forth by the Bloomberg Information Service or any successor thereto or any other service
selected by the Administrative Agent which has been nominated by the British Bankers’ Association
as an authorized information vendor for the purpose of displaying such rates) for a period equal to
such Deferred Payment Period; provided that, to the extent that a rate is not ascertainable
pursuant to the foregoing provisions of this definition, the “Eurodollar Rate” shall be the rate
per annum determined by the Administrative Agent to be the average of the rates per annum at which
deposits in dollars are offered for such relevant Deferred Payment Period to major banks in the
London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m.
(London time) on the date that is two Business Days prior to the beginning of such Deferred Payment
Period.
“Eurodollar Reserves” shall mean a fraction (expressed as a decimal), the numerator of which
is the number one and the denominator of which is the number one minus the aggregate of the maximum
reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board of Governors of the Federal Reserve System and any other
banking authority, domestic or foreign, applicable to Eurocurrency Liabilities (as that term is
defined in Regulation D). Any change in the Eurodollar Reserves shall take effect on and as of the
effective date of any change in any reserve percentage, but shall be payable only with the first
Transaction for any Deferred Payment Period beginning after the date of such change.
“Event of Default” has the meaning set forth in Schedule 5.
“Facility” shall have the meaning specified in Section 2.1(a).
“Facility Amount” shall mean £43,457,005, as reduced by £108,643 on each of the first 22
Transaction Payment Dates following the Effective Date, and by £10,266,717 on each of the
Transaction Payment Dates thereafter.1
“Federal Funds Rate” shall mean, for any day, the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
| 1 | These dollar amounts and other dollar amounts in brackets set forth herein shall be replaced with the pounds sterling equivalents thereof calculated based on the currency hedge entered into by TCO on the Effective Date |
4
“Letters of Undertaking” shall mean, collectively, (i) that certain Letter of Understanding
Regarding Commodities Purchases and Sales dated April 20, 2000 by and between Richmond
Commodities Limited, a Cayman Islands limited liability company and First Islamic Investment
Funding Limited (now known as Arcapita Investment Funding Limited) and (ii) that certain Letter of
Understanding Regarding Commodities Purchases and Sales dated February 14, 2002 by and between FIIA
Limited (now known as AIA Limited) and Dawnay, Day & Co., Limited, a company incorporated under the
laws of England and Wales.
“Luxco” shall have the meaning specified in the preamble hereto.
“Metals” shall mean such metals as may be purchased by TCO for sale to, and acceptance by,
Luxco from time to time in accordance with this Agreement.
“Murabaha Price” shall mean, with respect to a Transaction, (i) the Purchase Price of such
Metals, plus (ii) the Agreed Profit for such Transaction, plus (iii) if applicable,
the Supplemental Profit for such Transaction, all as computed by TCO in accordance with this
Agreement.
“Payment Account” shall have the meaning assigned to that term in Section 3.1.
“Profit Rate” shall mean for any Transaction, the Adjusted Eurodollar Rate plus the Applicable
Margin; provided that if TCO determines (which determination shall be conclusive) that by reason of
circumstances affecting the relevant market, or restricting the ability of TCO to obtain
satisfactory funding to enable it to satisfy its obligations hereunder, adequate and reasonable
means do not exist for ascertaining the Adjusted Eurodollar Rate for such Transaction, the Profit
Rate shall mean the Stated Rate.
“Purchase Acceptance” shall have the meaning specified in Section 2.2(e).
“Purchase Confirmation” shall have the meaning specified in Section 2.2(b).
“Purchase Offer” shall have the meaning specified in Section 2.2(d).
“Purchase Price” shall mean, for the Metals covered by a Transaction, the total amount paid by
TCO to the Supplier for such Metals, which total amount (i) shall equal 100% of the spot market
price for such Metals prevailing on the Transaction Date, as reported
to TCO by Supplier, plus an
amount to be agreed upon between TCO and the Supplier (which amount shall not exceed $1,000 per
Transaction) plus any value added tax, sales tax, registration or transfer tax or other similar
taxes or duties (where applicable) payable by TCO on or in relation to such Transaction.
“Purchase Request” shall have the meaning specified in Section 2.2(a).
“Recovery Event” shall mean any settlement of or payment in respect of any property or
casualty insurance claim or any taking under power of eminent domain or by condemnation or similar
proceeding of or relating to any property or asset of any Tensar Party or any Subsidiary.
5
“Stated Rate” shall mean as of any date of determination, a rate per annum equal to the
Alternate Rate on such date of determination plus 1.75%.
“Sub-Agent” shall have the meaning specified in Section 2.1(c).
“Supplemental
Profit” shall mean, for any Transaction, an amount specified by TCO in a
Purchase Request Confirmation, which amount shall be added to and shall constitute a portion of the
Murabaha Price for the Metals that are covered by such Transaction. A Supplemental Profit may be
added by TCO to the Murabaha Price of the Metals covered by such Purchase Request Confirmation if,
after the date hereof, TCO suffers any cost, expense or reduction in return in providing the
Facility hereunder as a direct or indirect result of any capital adequacy requirements or the
adoption or becoming effective of any change in law or in the interpretation, administration or
application thereof. The amount of such Supplemental Profit shall be calculated by TCO to offset
such cost, expense or reduction in return and specified by TCO in the Purchase Request Confirmation
for a Transaction. Supplemental Profit may also
include amounts payable pursuant to Section 3.4. Each determination by TCO of a Supplemental
Profit amount shall be conclusive and binding on Luxco.
“Supplier” shall mean Richmond Commodities Limited, a company formed under the laws of England
and Wales, or such other metals supplier as may be agreed upon by Luxco and TCO.
“Taxes” shall have the meaning specified in Section 3.3.
“TCO” shall have the meaning specified in the preamble hereto.
“Termination Date” shall mean October 31, 2012.
“Transaction” shall have the meaning specified in Section 2.1(a).
“Transaction Confirmation” shall have the meaning specified in Section 2.2(b).
“Transaction Date” shall mean, in relation to any Transaction, the date on which Luxco and TCO
exchange a Purchase Offer and Purchase Acceptance for such Transaction in accordance with Section
2.2.
“Transaction Payment Date” shall have the meaning specified in Section 2.2(a).
“Value Date” shall mean, in relation to any Transaction, the date, which shall be a Business
Day, on which the Metals covered by such Transaction are delivered by TCO to Luxco in accordance
with this Agreement; provided, that, for all purposes hereunder, such date for a Transaction shall
be deemed to be the date that TCO funds the applicable purchase price for the purchase of such
Metals from Supplier pursuant to the terms hereof.
Section 1.2. Rules of Interpretation. Sections 2, 3 and 4 of Schedule 1 are hereby
incorporated herein by reference in their entirety.
Section 1.3. Schedules, Annexes and Exhibits. All of the schedules, annexes and
6
exhibits attached to this Agreement shall be deemed incorporated herein by reference.
ARTICLE II
7
and (ii) Luxco authorizes AIA (and without limiting AIA’s obligations hereunder) to enter into
Transactions covered by this Agreement through any Sub-Agent, which may carry out all or part of
the services to be provided by AIA under this Agreement on such terms as it thinks fit, provided,
however, that (A)any such Sub-Agent shall be a subsidiary, associate or affiliate of AIA; (B) the
appointment of any such Sub-Agent shall not relieve AIA of its obligations under this Agreement;
and (C) the appointment of and performance by any Sub-Agent shall be at the sole cost and expense
of AIA or such Sub-Agent.
(a) Luxco may from time to time propose that TCO undertake a Transaction by presenting to TCO
prior to 12:00 Noon (New York time) at least three Business Days prior to the proposed Value Date
of the requested Transaction a written request for TCO’s purchase of Metals (each a “Purchase
Request”) substantially in the form of Exhibit A hereto. by copying AIA on a Purchase
Request, Luxco authorizes AIA to act as agent of Luxco in the execution of the proposed
Transaction, including execution of the Purchase Offer for such proposed Transaction. Each Purchase
Request shall include (i) a general description of the Metals to be purchased, (ii) the total price
of the Metals to be paid by TCO to the Supplier, (iii) the Value Date, which shall be at least
three Business Days after the date of the Purchase Request, and (iv) the date on which the Murabaha
Price is to be paid by Luxco in relation to such Transaction (the “Transaction Payment Date”). TCO
and Luxco agree that the Transaction Payment Date for a Transaction shall occur on the last
Business Day of each July, October, January and April during the term of this Agreement, commencing
on July 31, 2006, and on the Termination Date; provided, however, that if any Transaction Payment
Date would occur on a day that is not a Business Day, such Transaction Payment Date shall be
extended to the next succeeding Business Day.
(b) On the Value Date for a proposed Transaction and subject, in the case of the initial
Transaction only, to the satisfaction of the conditions specified in Article IV, TCO will confirm that it
has purchased the Metals requested by Luxco in the relevant Purchase Request by executing and
delivering to Luxco a purchase request confirmation in substantially
the form of Exhibit B (the
“Purchase Confirmation”; a signed Purchase Request and a signed Purchase Confirmation being
referred to collectively as a “Transaction Confirmation”). In each Purchase Confirmation, TCO shall
(i) confirm (A) the terms on which the Metals specified in the related Purchase Request were
purchased and (B) the willingness of TCO to sell such Metals to Luxco, (ii) quote the price of the
Metals paid by TCO, the quantity of such Metals and the total Purchase
8
Price for the same, and (iii) state the Murabaha Price, as computed by TCO, to be paid by Luxco on
the Transaction Payment Date.
(c) Luxco acknowledges and agrees that the obligation of TCO to arrange for the purchase of,
and to purchase, Metals in accordance with a Transaction Confirmation, is subject to the
satisfaction of all applicable conditions precedent set forth herein.
(d) After it receives a Purchase Confirmation in accordance with Section 2.2(b), and after TCO
purchases the Metals specified in such Purchase Confirmation, Luxco covenants and agrees that it
shall submit to TCO an offer, substantially in the form of
Exhibit C (a “Purchase Offer”),
in which Luxco offers to purchase such Metals from TCO on the terms specified in the Transaction
Confirmation of which such Purchase Confirmation forms a part.
(e) On the Business Day on which TCO completes its purchase of Metals from the Supplier in
accordance with this Section 2.2 and receives the Purchase Offer, TCO covenants and agrees that it
shall issue to Luxco an acceptance, substantially in the form of
Exhibit D (a “Purchase Acceptance”) in which TCO accepts Luxco’s offer to purchase the Metals as set forth in the Purchase
Offer, subject to the satisfaction of all applicable conditions precedent set forth herein. The
Murabaha Price to be paid by Luxco for such Metals and the Value Date and Transaction Payment Date
specified in the Transaction Confirmation and Purchase Offer shall be confirmed by TCO in such
Purchase Acceptance, and Luxco hereby agrees to pay such Murabaha Price to TCO on such Transaction
Payment Date.
Section 2.3. Assignment of Warranties. TCO hereby assigns to Luxco (to the extent permitted by
applicable law) any and all warranties and indemnities of, and claims against, (i) the Supplier
that TCO may have in relation to any Metals purchased by TCO from the Supplier and resold to Luxco
hereunder, and (ii) any dealers, manufacturers, vendors, contractors or subcontractors in relation
to such Metals. If TCO is legally or contractually prohibited from assigning any such warranty,
indemnity or claim, TCO hereby grants to Luxco, to the extent permitted by applicable law, its
entire beneficial interest in such warranty, indemnity or claim. In consideration of the foregoing
assignment of warranties, indemnities and claims, Luxco hereby waives any claims it may have
against TCO in relation to the quality, quantity or other condition of any Metals, and acknowledges
and agrees that TCO shall not be deemed to have made any representation or warranty relating to the
Metals, whether arising by implication, by common law or statute or otherwise.
ARTICLE III
Section 3.1. Payments. On the Transaction Payment Date applicable to a Transaction, Luxco shall
pay to TCO the outstanding Murabaha Price (in immediately available funds) applicable to the Metals
that are the subject of such Transaction. Luxco shall make such payments to TCO before 12:00 Noon
(New York time). Luxco shall make all payments owing to TCO hereunder in English pounds sterling
and in immediately available funds, by depositing or otherwise wire transferring such payment into
such account or accounts as may be designated from time to time by TCO for such payments (each such
account, a “Payment Account”) and by
9
the applicable required time of payment. If any amount required to be paid to TCO hereunder is not
paid when due, Luxco shall pay a late fee on such amount at the Default Rate, payable on demand,
from the due date for such amount to the date it is paid in full.
Section 3.2. Termination of the Facility. The Facility shall automatically terminate on the
Termination Date, unless terminated sooner in accordance with Article VII. In addition, as set
forth in Section 3.6 hereof, Luxco shall have the right at any time and from time to time, upon 3
Business Days’ prior written notice to TCO to reduce the Facility Amount in such minimum amounts as
TCO may from time to time determine or to terminate the Facility; provided however, that the
Facility Amount shall not be reduced to an amount that is less than the sum of the Aggregate
Purchase Price, after giving effect to any payments made concurrently with such reduction of the
Facility Amount. The termination of the Facility shall not constitute a termination of this
Agreement, and such termination or reduction shall not relieve Luxco of its obligation to pay all
amounts due and payable hereunder as and when due in accordance with the terms hereof.
(a) Any and all payments by Luxco to or for the account of TCO hereunder or under any other
Luxco Commodities Purchase Facility Document shall be made free and clear of and without deduction
for any and all present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed on TCO’s net
income, and franchise taxes imposed on it, by the jurisdiction under the laws of which TCO is
organized or any political subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to as
“Taxes”). If Luxco shall be required by law to deduct or withhold any Taxes from or in respect of
any sum payable under this Agreement or any other Luxco Commodities Purchase Facility Document to
TCO, (i) the sum payable shall be increased as necessary so that after making all required
deductions and withholdings (including deductions and withholdings applicable to additional sums
payable under this Section 3.3) TCO receives an amount equal to the sum it would have received had
no such deductions been made, (ii) Luxco shall make such deductions and withholdings, (iii) Luxco
shall pay the full amount deducted or withheld to the relevant taxation authority or other
authority in accordance with applicable law, and (iv) Luxco shall furnish to TCO the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, Luxco agrees to pay any and all present or future stamp or documentary taxes
and any other excise or property taxes or charges or similar levies that arise from any payment
made under this Agreement or any other Luxco Commodities Purchase Facility Document or from the
execution or delivery of, or otherwise with respect to, this Agreement or any other Luxco
Commodities Purchase Facility Document (hereinafter referred to as “Other Taxes”).
(c) Luxco shall indemnify TCO, within 10 days after written demand therefor, for the full
amount of any Taxes or Other Taxes paid or incurred by TCO, on or with respect to any payment by or
on account of any obligation of Luxco hereunder or under any other Luxco Commodities Purchase
Facility Document (including Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section) and any penalties, interest and expenses
10
arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as
to the amount of such payment or liability delivered to Luxco by TCO or the Administrative Agent
shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Taxes or Other Taxes pursuant to this Section,
and in any event within 30 days of any such payment being due, Luxco shall deliver (or cause to be
delivered) to the Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to the Administrative Agent.
Section 3.4. Adjustments to the Applicable Margin. If, after the date hereof, the adoption or
the becoming effective of, or any change in, or any change by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration thereof in the
interpretation or administration of, any applicable law, rule or regulation, or the occurrence of
any other event or circumstance (A) shall impose on TCO any requirements or conditions relating to
capital adequacy as a consequence of its commitments or obligations hereunder, (B) shall subject
TCO to, impose on TCO, or otherwise cause TCO to suffer any tax, duty or other charge with respect
to any Transaction or the amounts owed to it hereunder, (C) shall impose, modify, or deem
applicable any reserve, special deposit, assessment or similar requirement relating to any of the
Transactions, (D) shall impose on TCO or the London interbank market any other condition affecting
this Agreement or any Transaction, and the result of any of the foregoing is to increase the cost
or expense to, or otherwise impose on or cause TCO to suffer any additional cost or expense in
connection with or otherwise relating to entering into or maintaining any Transaction, (E) shall
reduce any sum received or receivable by TCO under this Agreement or reduce the rate of return on
TCO’s capital or assets as a consequence of its commitments or obligations hereunder or (F) shall
increase the cost or expense to, or impose an additional cost or expense on, TCO or otherwise cause
TCO to suffer any additional cost or expense as a result of TCO performing its obligations under
this Agreement or any other Luxco Commodities Purchase Facility Document, TCO shall have the right
to include a Supplemental Profit amount as part of the Murabaha Price of one or more subsequent
Transactions (so as to compensate TCO for the amount of such increased cost or reduction or
additional cost or expense or additional cost or expense). Each determination by TCO under this
section shall, absent manifest error, be conclusive and binding on the parties hereto.
Section 3.5. Evidence of Obligations. AIFL shall maintain a record of all material details of
each Transaction. TCO shall maintain an account on its books in the name of Luxco in which it shall
record all material details of each Transaction. TCO will make reasonable efforts to maintain the
accuracy of such account and to update promptly such account from time to time. TCO shall render
statements regarding such account to Luxco. The entries made in such account, and the statements
rendered to Luxco with respect thereto, shall be prima facie evidence of the existence and amounts
of the obligations of Luxco therein recorded (and all such statements, absent manifest error, shall
be conclusively presumed to be correct and accurate). Failure of AIFL or any other person to keep a
record of any Transaction shall not affect the obligations of Luxco hereunder.
11
(a) Luxco covenants and agrees that at no time will the Aggregate Purchase Price exceed the
Facility Amount “such excess being an “Overage”). If at any time an Overage exists, such
event shall not constitute an Event of Default only if Luxco shall immediately prepay the Aggregate
Purchase Price so that, upon the receipt and application of such prepayment, such overage is
eliminated.
(b) Luxco may, at any time on 3 Business Days’ prior written notice to TCO, prepay all or any
portion of the Murabaha Price for a Transaction prior to the then-scheduled Transaction Payment
Date therefor (and without reduction in such Murabaha Price as a result of such prepayment) in such
minimum amounts as TCO may from time to time determine.
(c) Not later than the third Business Day following the receipt by Tensar Holdings, Luxco or
any of the Subsidiaries of Net Cash Proceeds arising from completion of any Asset Sale or the
occurrence of any Recovery Event, and to the extent that less than 100% of the Net Cash Proceeds
from such Asset Sale or Recovery Event have been applied towards the payment of the Acquisition
Cost of the Leased Assets under the Lease Agreement pursuant to an exercise of the Asset Sales
Option under the Put Option Letter, Luxco shall remit any such excess Net Cash Proceeds to TCO to
repay the Aggregate Murabaha Price at such time.
(d) In the event and on each occasion that an Equity Issuance occurs, and to the extent that
less than 100% of the Net Cash Proceeds from such Equity Issuance have been applied towards the
payment of the Acquisition Cost of the Leased Assets under the Lease Agreement pursuant to an
exercise of the Equity Issuance Option under the Put Option Letter, Luxco shall remit such excess
Net Cash Proceeds to TCO to repay the Aggregate Murabaha Price at such time.
(e) In the event that any Tensar Party receives Net Cash Proceeds from the issuance or other
incurrence of Financing Obligations of any Tensar Party (other than Financing Obligations permitted
to be incurred under Section 1.01 of Schedule 4 hereto), and to the extent that less than 100% of
the Net Cash Proceeds from the issuance or incurrence of such Financing Obligations have been
applied towards the payment of the Acquisition Cost of the Leased Assets under the Lease Agreement
pursuant to an exercise of the Financing Obligation Option under the Put Option Letter, Luxco shall
remit such excess Net Cash Proceeds to TCO to repay the Aggregate Murabaha Price at such time.
(f) Not later than the earlier of (1) 90 days after the end of each fiscal year of Tensar
Holdings, commencing with the fiscal year ending on December 31, 2006, and (2) the date which is
five Business Days after the date on which the financial statements with respect to such period are
delivered pursuant to Schedule 3 hereto, and to the extent that an amount less than (A) the
ECF Percentage times (B) the Excess Cash Flow for the fiscal year then ended has been applied
towards the payment of the Acquisition Cost of the Leased Assets under the Lease Agreement pursuant
to an exercise of the ECF Option under the Put Option Letter, Tensar Holdings shall remit such
excess amount to TCO to repay the Aggregate Murabaha Price at such time.
12
(g) Notwithstanding any other provision of this Agreement, in the event that it becomes
unlawful for TCO to enter into Transactions then TCO shall promptly notify Luxco thereof and,
effective upon such notice, TCO’s obligation to enter into Transactions hereunder shall be
suspended and the Murabaha Price shall become immediately due and payable. Upon the termination of
such situation, if at all, prior to the Termination Date, the obligation of TCO to enter into
Transactions hereunder shall be reinstated.
Section 3.8. Crediting Payments. The receipt of any payment item by TCO shall not be
considered a payment in respect of a Murabaha Price or other obligations hereunder unless such
payment item is a wire transfer of immediately available federal funds made to the applicable
Payment Account or unless and until such payment item is honored when presented for payment. Should
any payment item not be honored when presented for payment, then Luxco shall be deemed not to have
made such payment. Anything to the contrary contained herein notwithstanding, any payment item
shall be deemed received by TCO only if it is received into the applicable Payment Account on a
Business Day on or before 12:00 noon (New York time). If any payment item is received into the
applicable Payment Account on a non-Business Day or after 12:00 noon (New York time) on a Business
Day, it shall be deemed to have been received by TCO as of the opening of business on the
immediately following Business Day.
Section 4.1. Initial Transaction. Notwithstanding any other provision of this Agreement, TCO
shall have no obligation to enter into or consummate the initial Transaction, or sign any
confirmation with respect thereto, unless and until:
(a) This Agreement shall have been executed by the parties hereto.
(b) The Administrative Agent shall have received a Purchase Request in accordance with this
Agreement.
(c) The representations and warranties set forth in this Agreement and the other Luxco
Commodities Purchase Facility Documents shall be true and correct in all material respects on and
as of the time of entering into such Transaction, as the case may be, with the same effect as
though made on and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case such representations and warranties shall be
true and correct in all material respects on and as of such earlier date.
(d) Each Tensar Party shall be in compliance with all the terms and provisions set forth in
each Luxco Commodities Purchase Facility Document on its part to be observed or performed, and, at
the time of and immediately after entering into such Transaction, no Event of Default or Default
shall have occurred and be continuing.
13
Section 4.2. Each Transaction. TCO shall have no obligation to enter into or consummate any
Transaction (including the initial Transaction) unless and until the Administrative Agent shall
have received a Purchase Request in accordance with this Agreement.
Section 5.1. Representations and Warranties. In order to induce TCO to enter into this
Agreement, Tensar Holdings and Luxco make the representations and warranties set forth on
Schedule 2 hereto to TCO, which shall be true, correct, and complete, in all material
respects, as of the Effective Date, and at and as of the date of delivery of the initial Purchase
Request, the initial Purchase Offer, the initial Transaction Date and the initial Value Date, as
applicable, as though made on and as of such date (except to the extent that such representations
and warranties relate solely to an earlier date).
Section 5.2. Affirmative Covenants. Each of Tensar Holdings and Luxco hereby covenants and
agrees that so long as this Agreement is in effect or any amounts are payable hereunder and until
all commitments hereunder shall have terminated, it shall and shall cause each of its Subsidiaries
to observe and comply with the general covenants and agreements set forth in Schedule 3
hereto.
Section 5.3. Negative Covenants. Each of Tensar Holdings and Luxco hereby covenants and agrees
that so long as this Agreement is in effect or any amounts are payable hereunder and until all
commitments hereunder shall have terminated, it shall and shall cause each of its Subsidiaries to
observe and comply with the covenants and agreements set forth in Schedule 4 hereto.
ARTICLE VI
EVENTS OF DEFAULT
EVENTS OF DEFAULT
Schedule 5 is hereby incorporated herein by reference in its entirety.
The last paragraph of Schedule 5 is incorporated herein by reference in its
entirety.
14
Section 8.1. Notices. Notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by certified or registered mail
or sent by fax, as follows:
if to Luxco: |
TTC Holdings S.a.r.l. | |
| 0, xxx xxx Xxxxxx | ||
| X-0000 Xxxxxxxxxx | ||
| Xxxx: The Managers | ||
| Telephone: x000 00 00 00 00 | ||
| Telecopy: x000 00 00 00 00 | ||
with copies to: |
Arcapita, Inc. | |
| 00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx | ||
| Xxxxxxx, Xxxxxxx 00000 | ||
| Attention: Xxxxx Xxxxxxxxx | ||
| Telephone: (000) 000-0000 | ||
| Telecopy: (000) 000-0000 | ||
and: |
King & Spalding LLP | |
| 0000 Xxxxxx xx xxx Xxxxxxxx | ||
| Xxx Xxxx, Xxx Xxxx 00000 | ||
| Attention: Xxxxxx Xxxxxxx | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 | ||
if to TCO: |
TCO Funding Corp. | |
| c/o Global Securitization Services, LLC | ||
| 000 Xxxxx Xxxxxx Xxxx | ||
| Xxxxx 000 | ||
| Xxxxxxxx, Xxx Xxxx 00000 | ||
| Attn: Xxxxxx Xxxxx | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 | ||
with a copy to: |
King & Spalding LLP | |
| 0000 Xxxxxx xx xxx Xxxxxxxx | ||
| Xxx Xxxx, Xxx Xxxx 00000 | ||
| Attention: Xxxxxx Xxxxxxx | ||
| Telephone: (000) 000-0000 | ||
| Telecopy: (000) 000-0000 | ||
if to AIFL: |
Arcapita Investment Funding Limited | |
| c/o Xxxxx-Xxxxx & Company | ||
| West Xxxx Xxxxxxxx |
00
| X.X. Xxx 0000 | ||
| Xxxxxx Xxxxxxx | ||
| B.W.I. | ||
| Attn: Xx. Xxxxxx Xxxxxxx/ | ||
| Xx. Xxxxxxxx Xxxxxxxxx | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 | ||
with a copy to: |
Arcapita Investment Funding Limited | |
| P.O. Box 1406 | ||
| Manama, Bahrain | ||
| Attn: Xxxxxxx Xxxxx | ||
| Telephone: 000-000-000 | ||
| Facsimile: 000-000-000 | ||
if to AIA: |
AIA Limited | |
| c/o Xxxxx-Xxxxx & Company | ||
| West Wind Building | ||
| P.O. Box 1111 | ||
| Cayman Islands, B.W.I. | ||
| Attn: Xx. Xxxxxx Xxxxxxx/ | ||
| Xx. Xxxxxxxx Xxxxxxxxx | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 | ||
with a copy to: |
XXX Xxxxxxx | |
| X.X. Xxx 0000 | ||
| Xxxxxx, Xxxxxxx | ||
| Attn: Xxxxxxx Xxxxx | ||
| Telephone: 000-000-000 | ||
| Facsimile: 000-000-000 | ||
if to Administrative Agent: |
Credit Suisse | |
| Eleven Xxxxxxx Xxxxxx | ||
| Xxx Xxxx, XX 00000 | ||
| Attn: Xxxx Xxxxx | ||
| Telephone : (000) 000-0000 | ||
| Facsimile: (000) 000-0000 | ||
with a copy to: |
Xxxxxx & Xxxxxxx LLP | |
| 000 Xxxxx Xxxxxx, | ||
| Xxx Xxxx, Xxx Xxxx 00000 | ||
| Attention: Xxxxxxx Xxxxxx, Esq. | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 |
16
All notices and other communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by fax or on the date five Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed)
to such party as provided in this Section or in accordance with the latest unrevoked direction from
such party given in accordance with this Section.
Section 8.2. Right of Set-Off; Adjustments. Upon the occurrence and during the continuance of
any Event of Default, TCO is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits at any time held and other
indebtedness or obligations at any time owed to Luxco by TCO against any and all of the obligations
of Luxco now or hereafter existing under this Agreement or any other Luxco Commodities Purchase
Facility Document or otherwise, irrespective of whether TCO shall have made any demand hereunder or
thereunder and although such obligations may be unmatured. TCO agrees promptly to notify Luxco
after any such set-off and application made by TCO; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application. The rights of TCO under
this Section 8.2 are in addition to other rights and remedies (including, without limitation, other
rights of set-off) that TCO may have.
Section 8.3. Benefit of Agreement; Assignments. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and permitted assigns of the
parties hereto; provided, that Luxco may not assign or transfer any of its interests and
obligations hereunder without the prior written consent of TCO and any such assignment without
such consent shall be null and void. TCO shall have the right, without the consent of Tensar
Holdings or Luxco to collaterally assign and grant a security interest in its rights hereunder and
under any other documents related hereto (including under the UK Composite Debenture and the other
Security Documents) in favor of any person. Any such assignee (and its successors, assigns and
agents) shall have the right to foreclose upon any such collateral assignment or security interest,
and exercise all rights and remedies under the applicable documentation relating thereto, without
any requirement for consent from Tensar Holdings or Luxco, and Tensar Holdings and Luxco agree to
fully cooperate with any such exercise of rights or remedies by any such assignee (and its
successors, assigns and agents).
Section 8.4. No Waiver; Remedies Cumulative. No failure or delay on the part of TCO in
exercising any right, power or privilege hereunder or under any other Luxco Commodities Purchase
Facility Document and no course of dealing between TCO and Tensar Holdings or Luxco shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies that TCO would otherwise have. No notice to or demand on Tensar
Holdings or Luxco in any case shall entitle Luxco to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of TCO to any other or further
action in any circumstances without notice or demand.
17
(a) The
provisions of Schedule 6 are hereby incorporated herein by reference in their
entirety.
(b) Save where AIFL acts in bad faith or with willful or reckless indifference to the
interests of Luxco, Luxco hereby agrees to indemnify AIFL against all losses, claims, actions,
proceedings, damages, costs and expenses incurred or sustained by AIFL (or any Sub-Agent of AIFL)
as a result of the performance of its obligations hereunder or otherwise relating to this
Agreement, including, without limitation, losses, costs or expenses incurred by AIFL (or any
Sub-Agent of AIFL) as a result of Luxco’s failure to comply with Luxco’s obligations. For the
avoidance of doubt, if AIFL (or any Sub-Agent of AIFL) is required to make any payment on account
of any tax or otherwise on or in relation to any sum received or receivable by it as a result of
the performance of its obligations hereunder or any liability in respect of any such payment is
assumed, imposed, levied or assessed against AIFL (or any Sub-Agent of AIFL), Luxco shall, upon the
demand of AIFL, promptly indemnify AIFL against such payment or liability, together with any other
amounts, penalties, and expenses payable or incurred in connection therewith.
(c) Save where AIA acts in bad faith or with willful or reckless indifference to the interests
of Luxco, Luxco hereby agrees to indemnify AIA against all losses, claims, actions, proceedings,
damages, costs and expenses incurred or sustained by AIA (or any Sub-Agent of AIA) as a result of
the performance of its obligations hereunder or otherwise relating to this Agreement, including
without limitation losses, costs or expenses incurred by AIA (or any
Sub-Agent of AIA) as a result
of Luxco’s failure to comply with Luxco’s obligations. For the avoidance of doubt, if AIA (or any
Sub-Agent of AIA) is required to make any payment on account of any tax or otherwise on or in
relation to any sum received or receivable by it as a result of the performance of its obligations
hereunder or any liability in respect of any such payment is assumed, imposed, levied or assessed
against AIA (or any Sub-Agent of AIA), Luxco shall, upon the demand of AIA, promptly indemnify AIA
against such payment or liability, together with any other amounts, penalties, and expenses payable
or incurred in connection therewith.
Section 8.6. Amendments, Waivers and Consents. Neither this Agreement, any Luxco Commodities
Purchase Facility Document or any other document entered into in connection herewith or therewith
or evidencing Obligations, nor any of the terms hereof or thereof may be amended, changed, waived,
discharged or terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, TCO, the Administrative Agent and Luxco. No
express or implied waiver by TCO or the Administrative Agent of any Default or Event of Default,
shall in any way be, or be construed to be, a waiver of any future or subsequent Default or Event
of Default.
Section 8.7. Headings. The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of any provision of
this Agreement.
Section 8.8. Severability. If any provision of this Agreement is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed without giving effect to the
18
illegal, invalid or unenforceable provisions.
Section 8.9. Entirety. This Agreement represents the entire agreement of the parties hereto,
and supersedes all prior agreements and understandings, oral or written, if any, relating to
transactions contemplated herein.
Section 8.10. Tax Consequences. Luxco and TCO expressly agree that, for all income tax
purposes: (i) the transactions contemplated by this Agreement, together with the transactions
contemplated by the Letters of Undertaking, are intended to accomplish a single transaction that is
characterized as a mere financing by TCO to Luxco; (ii) the Purchase Price constitutes the
principal amount of such financing; and (iii) the amounts described in the definition of “Agreed
Profit” and “Supplemental Profit” constitute interest or fees accrued on such financing. Luxco and
TCO (and any assignee of TCO’s interest in this Agreement and any person to which a participation
is granted) shall report the tax consequences of the transactions described in clause (i) of this
Section 8.10 on their respective tax returns (to the extent same are required to be filed)
consistently and in accordance with the intended tax treatment described in this Section 8.10.
Section 8.11. Governing Law. THIS AGREEMENT AND THE OTHER LUXCO COMMODITIES PURCHASE FACILITY
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN SUCH OTHER LUXCO COMMODITIES PURCHASE FACILITY
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK.
Section 8.12.
WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER LUXCO COMMODITIES PURCHASE FACILITY DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LUXCO COMMODITIES PURCHASE FACILITY
DOCUMENTS, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12.
Section 8.13. Jurisdiction; Consent to Service of Process. (a) Each party hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction
of any New York State court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Luxco Commodities Purchase Facility Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such
19
action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Administrative Agent or TCO may otherwise have to bring any action or proceeding
relating to this Agreement or the other Luxco Commodities Purchase Facility Documents against any
Tensar Party, AIA or AIFL or their respective properties in the courts of any jurisdiction.
(b) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this Agreement or the
other Luxco Commodities Purchase Facility Documents in any New York State or Federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 8.1. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
Section 8.14. Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which shall constitute one
and the same instrument. Delivery by facsimile by any of the parties hereto of an executed
counterpart of this Agreement shall be as effective as an original executed counterpart hereof and
shall be deemed a representation that an original executed counterpart hereof will be delivered.
Section 8.15. Conflicts. To the extent that there shall exist a conflict between the terms or
provisions of this Agreement, on the one hand, and the terms of any exhibit hereto that is executed
and delivered in connection with a Transaction, the parties hereto expressly acknowledge and agree
that the terms and provisions of this Agreement shall in all events and for all purposes be
controlling.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Murabaha
Facility Agreement to be duly executed and delivered as of the date first above written.
| TTC HOLDINGS S.a.r.l. |
||||
| By | /s/ Xxxxxx X. Xxxxxx | |||
| Name: Xxxxxx X. Xxxxxx | ||||
| Title: | ||||
| TCO FUNDING CORP. |
||||
| By | /s/ Xxxx X. XxXxxx | |||
| Name: Xxxx X. XxXxxx | ||||
| Title: Vice President | ||||
| TENSAR HOLDINGS, INC. |
||||
| By | /s/ Xxxxxx X. Xxxx | |||
| Name: | Xxxxxx X. Xxxx | |||
| Title: | CEO and President | |||
| ARCAPITA INVESTMENT FUNDING LIMITED |
||||
| By | /s/ Mohd. Xxxxxxxxx | |||
| Name: Mohd. Xxxxxxxxx | ||||
| Title: Director | ||||
| AIA LIMITED |
||||
| By | /s/ Xxxxxxxxxxx Xxxx | |||
| Name: Xxxxxxxxxxx Xxxx | ||||
| Title: V. P. | ||||
[Signature Page to Murabaha Facility Agreement]
| CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent |
||||
| By | /s/ Xxxx X’XXXX | |||
| Name: | Xxxx X’XXXX | |||
| Title: | DIRECTOR | |||
| By | /s/ Xxxxxx Xxxxx | |||
| Name: | Xxxxxx Xxxxx | |||
| Title: | ASSOCIATE | |||
[Signature Page to Murabaha Facility Agreement]
SCHEDULE 1
DEFINITIONS
“Acquired Entity” shall have the meaning assigned to such term in the definition of
Permitted Acquisition.
“Acquisition” shall mean the acquisition by Tensar Holdings pursuant to the Share
Purchase Agreement of all the Equity Interests in Tensar UK from the Sellers; the aggregate amount
of consideration for the Acquisition is approximately $86,900,000 (the “Acquisition
Consideration”).
“Acquisition Cost” shall have the meaning assigned to such term in the Lease
Agreement.
“Acquisition Consideration” shall have the meaning assigned to such term in the
definition of “Acquisition”.
“Acquisition Documentation” shall mean, collectively, the Share Purchase Agreement and
all schedules, exhibits, annexes and amendments thereto and all side letters and agreements
affecting the terms thereof or entered into in connection therewith.
“Acquisition Transactions” shall mean, collectively, (a) the Acquisition, including
the payment of the Acquisition Consideration, (b) the Equity Contribution, (c) the obtaining by
Luxco of this Agreement, (d) the obtaining by Tensar Holdings of a $16,500,000 increase in the
Tensar Holdings Commodities Purchase Facility, (e) the repayment by Holdings or its Subsidiaries of
all Existing Obligations, the termination of the Existing Credit Facilities and the release of all
Liens and guarantees granted in respect thereof and any other Existing Obligations, in each case in
a manner satisfactory to TCO and the Administrative Agent and (f) the payment of fees and expenses
incurred in connection with the foregoing.
“Administrative Agent” shall mean Credit Suisse acting through its Cayman Islands
branch.
“Affiliate” shall mean, when used with respect to a specified person, another person
that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is
under common Control with the person specified; provided, however, that, for
purposes of Schedule 4, the term “Affiliate” shall also include any person that directly or
indirectly owns 5% or more of any class of Equity Interests of the person specified or that is an
officer or director of the person specified.
“Affiliate Subordination Agreement” shall mean an Affiliate Subordination Agreement in
the form of Exhibit G pursuant to which intercompany obligations and advances owed by any Tensar
Party are subordinated to the Obligations.
“Agreement” shall have the meaning assigned to such term in the preamble.
Schedule 1, Defined Terms
“Asset Purchase Agreement” shall mean the Asset Purchase Agreement, dated as of
October 31, 2005, among TCO and Tensar, as the same may be amended, supplemented or modified from
time to time in accordance with the provisions hereof.
“Asset Sale” shall mean the sale, lease, sub-lease, license, sub-license, sale and
leaseback, assignment, conveyance, transfer, issuance or other disposition (by way of merger,
casualty, condemnation or otherwise) by (x) any Tensar Party (other than Luxco and its
subsidiaries) or any Subsidiaries (other than Luxco and its subsidiaries) to any person (other than
Tensar or any US Guarantor) or (y) Luxco or any of its subsidiaries to any person (other than
Tensar or any subsidiary thereof which is a Guarantor) of (a) any Equity Interests of any of the
Subsidiaries or (b) any other assets of any Tensar Party or any of the Subsidiaries, including
Equity Interests of any person that is not a Subsidiary; provided that any asset sale or
series of related asset sales described in clause (b) above having a value not in excess of
$250,000 shall be deemed not to be an “Asset Sale” for purposes of this Agreement.
“Benefit Plan” shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Tax Code
or Section 307 of ERISA, and in respect of which Tensar or any ERISA Affiliate is (or, if such plan
were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.
“Board” shall mean the Board of Governors of the Federal Reserve System of the United
States of America.
“Business Day” shall mean any day other than a Saturday, Sunday or day on which
commercial banks in New York City, Dallas, Texas, Atlanta, Georgia and London, England are
authorized or required by law to close; provided, however, that when used in
connection with any payment to TCO or the Administrative Agent required hereunder (including with
respect to all notices and determinations in connection therewith), the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar deposits in the
London interbank market.
“Capital Expenditures” shall mean, for any period, with respect to any person, (a) the
additions to property, plant and equipment and other capital expenditures of such person and its
consolidated subsidiaries that are (or should be) set forth in a consolidated statement of cash
flows of such person for such period prepared in accordance with GAAP and (b) Capital Lease
Obligations incurred by such person and its consolidated subsidiaries during such period.
“Capital Lease Obligations” of any person shall mean the obligations of such person to
pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real
or personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP, and the amount of
such obligations at any time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
A “Change in Control” shall be deemed to have occurred if (a) at any time prior to a
Qualified IPO, the Permitted Holders shall fail to own directly or indirectly, beneficially and of
Schedule 1, Defined Terms
2
record, Equity Interests representing at least 662/3% of the aggregate ordinary voting power and
aggregate equity value represented by the issued and outstanding Equity Interests in Tensar
Holdings; (b) after a Qualified IPO, any “person” or “group” (within the meaning of Rule 13d-5 of
the Securities Exchange Act of 1934 as in effect on the date hereof) other than the Permitted
Holders shall own directly or indirectly, beneficially or of record, Equity Interests representing
either (i) more than 30% of either the aggregate ordinary voting power or the aggregate equity
value represented by the issued and outstanding Equity Interests in Tensar Holdings or (ii) a
greater percentage of either the aggregate ordinary voting power or the aggregate equity value
represented by the issued and outstanding Equity Interests in Tensar Holdings then held, directly
or indirectly, beneficially and of record, by the Permitted Holders; (c) a majority of the seats
(other than vacant seats) on the board of directors of Tensar Holdings shall at any time be
occupied by persons who are not Continuing Directors; (d) Tensar Holdings shall at any time fail to
own directly or indirectly, beneficially and of record, 100% of each class of issued and
outstanding Equity Interests in Holdings, Holdings shall fail to own directly or indirectly,
beneficially and of record, 100% of each class of issued and outstanding Equity Interests in
Tensar, or Tensar shall fail to own, directly or indirectly, beneficially and of record, 100% of
each class of issued and outstanding Equity Interests in Luxco, in each case, free and clear of all
Liens (except Liens created by the Guarantee and Collateral Agreement or by the Second Lien
Commodities Purchase Facility Documents); or (e) any change of control (or similar event, however
denominated) with respect to any Tensar Party or any Subsidiary shall occur under and as defined in
the Related Financing Documents.
“Collateral” shall mean all property and assets of the Tensar Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security Document, and
shall include the Mortgaged Properties.
“Commodities Purchase Agreement” shall mean the Working Capital Murabaha Facility
Agreement, dated as of October 31, 2005, by and between Tensar Holdings, Tensar, TCO Funding Corp.,
and Credit Suisse, as administrative agent, as the same may be amended, supplemented or otherwise
modified in accordance with the terms hereof.
“Commodities Purchase Facility Documents” shall mean (i) the Commodities Purchase
Agreement and all other instruments, agreements and other documents evidencing or governing the
foregoing or providing for any Guarantee, Lien or other right in respect thereof, including the
Reimbursement Letter and the Security Documents entered into in connection therewith, as the same
may be amended, supplemented or otherwise modified in accordance with the terms hereof
(collectively, the “US Commodities Purchase Facility Documents”) and (ii) this Agreement,
the Luxco Guarantee and all other instruments, agreements and other documents evidencing or
governing the foregoing or providing for any Guarantee, Lien or other right in respect thereof,
including the Security Documents, as the same may be amended, supplemented or otherwise modified in
accordance with the terms hereof (collectively, the “Luxco Commodities Purchase Facility
Documents”).
“Commodities Purchase Facility” shall mean the working capital Murabaha facility
provided for in the Commodities Purchase Agreement.
Schedule 1, Defined Terms
3
“Confidential Information Memorandum” shall mean the Confidential Information
Memorandum of Tensar dated May 2006.
“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such
period plus (a) without duplication and to the extent deducted in determining such Consolidated Net
Income, the sum of (i) Consolidated Financing Expense for such period, (ii) consolidated income tax
expense for such period, (iii) all amounts attributable to depreciation and amortization for such
period (including but not limited to any amortized obligation discount, amortized administrative
expense and amortized hedging transaction expense), (iv) the adjustments set forth on Annex 1(c) to
Schedule 1, (v) management fees paid to the Sponsor for such period to the extent permitted by
Section 1.07 of Schedule 4 not to exceed $1,000,000 per fiscal year, (vi) the amount of the Earnout
Payment to the extent paid in cash and not to exceed $3,000,000, (vii) any reduction to
Consolidated Net Income as a result of extraordinary losses, and (viii) any non-cash charges (other
than the write-down of current assets) for such period (provided that to the extent that
all or any portion of the income of any person is excluded from Consolidated Net Income pursuant to
the definition thereof for all or any portion of such period any amounts set forth in the preceding
clauses (i) through (viii) that are attributable to such person shall not be included for purposes
of this definition for such period or portion thereof), and minus (b) without duplication (i) all
cash payments made during such period on account of reserves, restructuring charges and other
non-cash charges added to Consolidated Net Income pursuant to clause (a)(viii) above in a previous
period and (ii) to the extent included in determining such Consolidated Net Income, any
extraordinary gains and all non-cash items of income for such period, all determined on a
consolidated basis in accordance with GAAP; provided that for purposes of calculating
Consolidated EBITDA for any period to determine the Leverage Ratio or the First Lien Leverage
Ratio, (A) the Consolidated EBITDA of any Acquired Entity acquired by Tensar or any Subsidiary
during such period pursuant to a Permitted Acquisition which has Consolidated EBITDA in excess of
$500,000 for such period, shall be included on a pro forma basis for such period (assuming the
consummation of such acquisition and the incurrence or assumption of any Financing Obligations in
connection therewith occurred as of the first day of such period) and (B) the Consolidated EBITDA
of any person or line of business sold or otherwise disposed of during such period by Tensar or any
Subsidiary which has Consolidated EBITDA in excess of $500,000 for such period shall be excluded
for such period (assuming the consummation of such sale or other disposition and the repayment of
any Financing Obligations in connection therewith occurred as of the first day of such period).
“Consolidated Financing Expense” shall mean, for any period, the sum of (a) rent or
profit expense or the Rental Rate portion of rent of Tensar Holdings and its Subsidiaries for such
period (including all Agreed Profit, Supplemental Profit and the Rental Rate portion of Rent
payable, agreed profit under the Commodities Purchase Agreement, the Second Lien Commodities
Purchase Agreement and this Agreement and all commissions, discounts and other fees and charges
owed by Tensar and the Subsidiaries with respect to Murabaha Guarantee Obligations under the
Reimbursement Letter, letters of credit and bankers’ acceptance financing), in each case determined
on a consolidated basis in accordance with GAAP, plus (b) any profit expense or the rental rate
portion of any rent of Tensar or any Subsidiary that is required to be capitalized rather than
expensed for such period in accordance with GAAP, plus (c) any other similar expense under GAAP.
Schedule 1, Defined Terms
4
“Consolidated Fixed Charges” shall mean, for any period, without duplication, the sum
of (a) Consolidated Financing Expense for such period paid in cash, (b) the aggregate amount of
scheduled Acquisition Cost payments in respect of the Leased Assets or scheduled payments (whether
or not made) during such period to reduce the unpaid stated amount in respect of long term
Financing Obligations (including Purchase Price obligations under the Luxco Commodities Purchase
Facility (to the extent the Purchase Price for any Transaction is less than the Purchase Price for
the immediately preceding Transaction), Capital Lease Obligations and Synthetic Lease Obligations,
but excluding payments applied to Purchase Price under the Commodities Purchase Facility) of
Tensar and its Subsidiaries (other than payments made by Tensar or any of its Subsidiaries to
Tensar or another Subsidiary), (c) Capital Expenditures for such period, less Capital Expenditures
incurred in connection with the new BX geogrid manufacturing line in Morrow, Georgia, and (d) the
aggregate amount of Taxes paid in cash (net of refunds received with respect to such Taxes)
payable by Tensar and its Subsidiaries during such period in accordance with Section 1.06(iii)(y)
of Schedule 4.
“Consolidated Net Income” shall mean, for any period, the net income or loss of Tensar
Holdings and its Subsidiaries for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded (a) the income of any Subsidiary of Tensar to
the extent that the declaration or payment of dividends or similar distributions by such Subsidiary
of that income is not at the time permitted by operation of the terms of any agreement, instrument,
or Requirement of Law applicable to such Subsidiary, (b) the income or loss of any person accrued
prior to the date it becomes a Subsidiary of Tensar or is merged into or consolidated with Tensar
or any of its Subsidiaries or the date that such person’s assets are acquired by Tensar or any of
its Subsidiaries, (c) the income of any person (other than a Subsidiary of Tensar) in which any
other person (other than Tensar or a wholly owned Subsidiary of Tensar or any director holding
qualifying shares in accordance with applicable law) has an interest, except to the extent of the
amount of dividends or other distributions actually paid to Tensar or a wholly owned Subsidiary
thereof by such person during such period, (d) any gains attributable to sales of assets out of the
ordinary course of business and (e) the Consolidated Net Income of the Merex Companies.
“Contech Agreement” shall mean the Amended and Restated National Sales and Marketing
Agreement, dated as of January 1, 2002, between Contech Construction Products Inc. and Tensar.
“Continuing Directors” shall mean, at any time, any member of the board of directors
of Tensar Holdings who (a) was a member of such board of directors on October 31, 2005, after
giving effect to the Acquisition, or (b) was nominated for election or elected to such board of
directors with the approval of a majority of the Continuing Directors who were members of such
board of directors at the time of such nomination or election.
“Contribution Notice” means a contribution notice issued by the UK Pensions Regulator
under Section 38 or Section 47 of the United Kingdom Pensions Xxx 0000.
“Control” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a person, whether through the ownership of
voting
Schedule 1, Defined Terms
5
securities, by contract or otherwise, and the terms “Controlling” and
“Controlled” shall have meanings correlative thereto.
“Current Assets” shall mean, at any time, the consolidated current assets (other than
cash and Permitted Investments) of Tensar Holdings and its Subsidiaries.
“Current Liabilities” shall mean, at any time, the consolidated current liabilities of
Tensar Holdings and its Subsidiaries at such time, but excluding, without duplication, (a) the
current portion of any long-term Financing Obligations and (b) outstanding obligations with respect
to Murabaha Price under the Commodities Purchase Agreement.
“Default” shall mean any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would constitute an Event of Default.
“dollars” or “$” shall mean lawful money of the United States of America.
“Domestic Subsidiaries” shall mean all Subsidiaries incorporated, formed or organized
under the laws of the United States of America, any State thereof or the District of Columbia.
“Earnout Payment” shall mean any additional payment required to be made to Xx.
Xxxxxxxxx Xxx pursuant to the Stock Purchase Agreement, dated as of July 31, 2002, between
Xxxxxxxxx Xxx and Xxxxxxx Xxx, as sellers, and Tensar and Holdings, as buyers, pertaining to the
purchase of the stock and business of Geopier Foundation, Inc. and Geotechnical Reinforcement
Company, Inc. (the “Geopier Agreement”) in an amount equal to 50% of the amount by which
the combined “EBITDA” (as defined in the Geopier Agreement) of Geopier Foundation Company, Inc., a
Georgia corporation, and Geotechnical Reinforcement Company, Inc., a Georgia corporation, for the
fiscal year 2005 exceeds $3,498,012.50.
“Effective Date” shall mean the date of this Agreement.
“Environmental Laws” shall mean all former, current and future United States Federal,
state and local laws, all applicable non-United States laws (including common law), and all
applicable treaties, regulations, rules, ordinances, codes, decrees, judgments, directives, orders
(including consent orders), and agreements in each case relating to protection of the environment,
natural resources, human health and safety or the presence, Release of, threatened Release, or
exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution, use,
treatment, storage, transport, recycling or handling of, or the arrangement for such activities
with respect to, Hazardous Materials.
“Environmental Liability” shall mean all liabilities, obligations, damages, losses,
claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including
administrative oversight costs, natural resource damages remediation costs, legal fees and
consulting costs), whether contingent or otherwise, arising out of or relating to (a) compliance or
non-compliance with any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed with respect to any
of the foregoing.
Schedule 1, Defined Terms
6
“Environmental Permit” shall mean any Permit under Environmental Law.
“Equity Contribution” shall mean, collectively, (a) the contribution by the Permitted
Holders of at least $39,900,000 in cash, to Tensar Holdings as common equity, preferred equity
and/or subordinated shareholder loans having terms reasonably satisfactory to the Administrative
Agent and (b) the contribution by Tensar Holdings through Tensar of the amount so received in
clause (a) to Luxco in cash in exchange for the issuance to Tensar of all the common stock of Luxco
and (c) the contribution by Luxco of the amount so received in clause (b) to TTC UK Holdings
Limited in cash in exchange for the issuance to Tensar of all the issued and outstanding interests
of Tensar UK.
“Equity Interests” shall mean shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a trust or other
equity interests in any person, or any obligations convertible into or exchangeable for, or giving
any person a right, option or warrant to acquire, such equity interests or such convertible or
exchangeable obligations.
“Equity Issuance” shall mean any issuance or sale by Tensar Holdings of any Equity
Interests of Tensar Holdings, or the receipt by Tensar Holdings of any capital contribution, except
in each case for (a) any issuance of directors’ qualifying shares and (b) sales or issuances of
common stock of Tensar Holdings to management or employees of Tensar Holdings, Tensar or any
Subsidiary under any employee stock option or stock purchase plan or employee benefit plan in
existence from time to time in the ordinary course of business.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that,
together with Tensar, is treated as a single employer under Section 414(b) or (c) of the Tax Code,
or solely for purposes of Section 302 of ERISA and Section 412 of the Tax Code, is treated as a
single employer under Section 414 of the Tax Code.
“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder, with respect to a Benefit Plan (other than an event for
which the 30-day notice period is waived); (b) the existence with respect to any Benefit Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Tax Code or Section 302 of
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Tax Code or Section
303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any
Benefit Plan; (d) the incurrence by Tensar or any of its ERISA Affiliates of any liability under
Title IV of ERISA with respect to the termination of any Benefit Plan or the withdrawal or partial
withdrawal of Tensar or any of its ERISA Affiliates from any Benefit Plan or Multiemployer Plan;
(e) the receipt by Tensar or any of its ERISA Affiliates from the PBGC or a plan administrator of
any notice relating to the intention to terminate any Benefit Plan or Plans or to appoint a trustee
to administer any Benefit Plan; (f) the adoption of any amendment to a Benefit Plan that would
require the provision of security pursuant to Section 401(a)(29) of the Tax Code or Section 307 of
ERISA; (g) the receipt by Tensar or any of its ERISA Affiliates of any notice, or the receipt by
any Multiemployer Plan from Tensar or any of
Schedule 1, Defined Terms
7
its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA; (h) the occurrence of a “prohibited transaction” with respect to
which Tensar or any of its Subsidiaries is a “disqualified person” (within the meaning of Section
4975 of the Tax Code) or with respect to which Tensar or any such Subsidiary could otherwise be
liable; or (i) any other event or condition with respect to a Benefit Plan or Multiemployer Plan
that could result in liability of Tensar or any Subsidiary.
“Event of Default” shall have the meaning assigned to such term in Schedule 5.
“Excess Cash Flow” shall mean, for any fiscal year of Tensar Holdings, the excess of
(a) the sum, without duplication, of (i) Consolidated EBITDA for such fiscal year and (ii) the
decrease, if any, in Current Assets minus Current Liabilities from the beginning to the end of such
fiscal year over (b) the sum, without duplication, of (i) the amount of any Taxes payable (net of
refunds received with respect to such Taxes in such fiscal year) in cash by Tensar and its
Subsidiaries with respect to such fiscal year, (ii) Consolidated Financing Expense for such fiscal
year payable in cash, (iii) Capital Expenditures made in cash in accordance with Section 1.10 of
Schedule 4 during such fiscal year, except to the extent financed with the proceeds of Financing
Obligations, equity issuances, casualty proceeds, condemnation proceeds or other proceeds that
would not be included in Consolidated EBITDA, (iv) permanent repayments of Financing Obligations
(other than mandatory prepayments of Acquisition Cost pursuant to the terms of the Put Option
Letter or mandatory prepayments of Purchase Price pursuant to Section 3.6) permitted hereunder made
by Tensar and its Subsidiaries during such fiscal year, but only to the extent that such
prepayments by their terms cannot be redrawn and do not occur in connection with a refinancing of
all or any portion of such Financing Obligations and (v) the increase, if any, in Current Assets
minus Current Liabilities from the beginning to the end of such fiscal year.
“Excluded Subsidiaries” shall mean, at any time, any Subsidiary of Luxco if the
provision of a Guarantee by such Subsidiary of Luxco’s obligations under this Agreement would (a)
result in any breach of corporate benefit, financial assistance, fraudulent preference or thin
capitalization laws or regulations (or analogous restrictions) of any applicable jurisdiction, (b)
result in a significant risk to the officers of the relevant subsidiary of contravention of their
fiduciary duties and/or imposition of civil or criminal liability or (c) result in costs that, in
the reasonable opinion of the Administrative Agent, are disproportionate to the benefit obtained.
“Existing Credit Facilities” shall mean the lending facilities of Tensar UK and its
Subsidiaries with The Governor and Company of the Bank of Scotland and China Communications Bank.
“Existing Obligations” shall mean the (i) the BOS Bank Debt (as defined in the Share
Purchase Agreement) and (ii) the China Bank Debt (as defined in the Share Purchase Agreement).
“Event of Loss” shall have the meaning assigned to such term in the Lease Agreement.
Schedule 1, Defined Terms
8
“Financial Officer” of any person shall mean the chief financial officer, principal
accounting officer, treasurer or controller of such person.
“Financial Support Direction” means a financial support direction issued by the UK
Pensions Regulator under Section 43 of the United Kingdom Pensions Xxx 0000.
“Financing Coverage Ratio” shall mean, on any date, the ratio of (a) Consolidated
EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such
date, taken as one accounting period, to (b) Consolidated Financing Expense for the period of four
consecutive fiscal quarters ended on or prior to such date, taken as one accounting period.
“Financing Obligations” of any person shall mean, without duplication, (a) all
obligations of such person in respect of any financing, including for borrowed money (including
Acquisition Cost, any Purchase Price and any Unpaid Reimbursement Obligations) or with respect to
deposits or advances of any kind or under any other Murabaha arrangements or Ijara arrangements,
(b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such person under conditional sale or other title retention agreements
relating to property or assets acquired by such person, (d) all obligations of such person in
respect of the deferred purchase price of property or services (other than current trade accounts
payable incurred in the ordinary course of business), (e) all obligations of such person,
contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any Equity
Interests in such person, (f) all Financing Obligations of others secured by (or for which the
holder of such Financing Obligations has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such person, whether or not the Financing Obligations
secured thereby has been assumed, (g) all Guarantees by such person of Financing Obligations of
others, (h) all Capital Lease Obligations or Synthetic Lease Obligations of such person, (i) all
obligations, contingent or otherwise, of such person as an account party in respect of letters of
credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such person in
respect of bankers’ acceptances. The Financing Obligations of any person shall include the
Financing Obligations of any other person (including any partnership in which such person is a
general partner) to the extent such person is liable therefor as a result of such person’s
ownership interest in, or other relationship with, such other person, except to the extent the
terms of such Financing Obligations provide that such person is not liable therefor. For the
avoidance of doubt, it is the intention of the Tensar Parties to incur only financing obligations
acceptable under Islamic Xxxxx’ah principles.
“First Lien Leverage Ratio” shall mean, on any date, the ratio of (a) Total
Obligations with respect to this Agreement, the Commodities Purchase Agreement and the Lease
Agreement on such date to (b) Consolidated EBITDA for the period of four consecutive fiscal
quarters most recently ended on or prior to such date, taken as one accounting period.
“Fixed Charge Coverage Ratio” shall mean, on any date, the ratio of (a) Consolidated
EBITDA for the period of four consecutive fiscal quarters most recently ended on or prior to such
date, taken as one accounting period, to (b) Consolidated Fixed Charges for such period, taken as
one accounting period.
“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.
Schedule 1, Defined Terms
9
“Foreign Pledge Agreements” shall mean each Security Document (other than the
Guarantee and Collateral Agreement) which purports to create a Lien on the equity interests of any
subsidiary of Tensar Holdings that is not incorporated or organized under the laws of a state of
the United States of America and is enforceable under the laws of the jurisdiction of organization
of such subsidiary.
“Foreign Security Documents” shall mean the UK Composite Debenture, the other UK
Security Documents, the Luxco Security Documents and the Foreign Pledge Agreements.
“GAAP” shall mean generally accepted accounting principles in the United States.
“Governmental Authority” shall mean the government of the United States of America or
any other nation, any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
“Guarantee” of or by any person (the “guarantor”) shall mean any obligation,
contingent or otherwise, of (a) the guarantor or (b) another person (including any bank under a
letter of credit) to induce the creation of which the guarantor has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or having the economic effect
of guaranteeing any Financing Obligations or other obligation of any other person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation,
contingent or otherwise, of the guarantor, direct or indirect, (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Financing Obligations or other obligation or
to purchase (or to advance or supply funds for the purchase of) any security for the payment of
such Financing Obligations or other obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Financing Obligations or other obligation of
the payment of such Financing Obligations or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Financing Obligations or other obligation, (iv) as an
account party in respect of any letter of credit or letter of guaranty issued to support such
Financing Obligations or obligation or (v) to otherwise assure or hold harmless the owner of such
Financing Obligations or other obligation against loss in respect thereof; provided,
however, that the term “Guarantee” shall not include endorsements for collection or deposit
in the ordinary course of business.
“Guarantee and Collateral Agreement” shall mean the First Lien Guarantee and
Collateral Agreement, dated as of October 31, 2005, among TCO, Credit Suisse, Tensar Holdings and
the Subsidiaries party thereto, as the same may be amended, supplemented or modified from time to
time in accordance with the provisions thereof.
“Guarantors” shall mean the US Guarantors and the Luxco Subsidiary Guarantors.
“Hazardous Materials” shall mean any pollutant, contaminant, chemical, compound,
constituent, or hazardous, toxic or other substances, materials or wastes defined, or regulated as
such by, or pursuant to, any Environmental Law, or requires removal, remediation or reporting
Schedule 1, Defined Terms
10
under any Environmental Law, including petroleum (including crude oil or fraction thereof),
petroleum products or byproducts asbestos, or asbestos containing material, radon or other
radioactive material, polychlorinated biphenyls and urea formaldehyde insulation.
“Hedging Agreement” shall mean any agreement with respect to any swap, forward, future
or derivative transaction, futures or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, fuel or other commodities, equity or instruments or
securities, or economic, financial or pricing indices or measures of economic, financial or pricing
risk or value or any similar transaction or any combination of these transactions;
provided, however, that no phantom stock or similar plan providing for payments and
on account of services provided by current or former directors, officers, employees or consultants
of any Tensar Party or any Subsidiary shall be a Hedging Agreement. For the avoidance of doubt, it
is the intention of the Tensar Parties to incur only such Hedging Agreements as are acceptable
under Islamic Xxxxx’ah principles.
“Holdings” shall mean The Tensar Corporation, a Delaware corporation.
“Indemnitee” shall have the meaning assigned to such term in Section 2(b) of Schedule
6
“Intellectual Property Collateral” with respect to the US Guarantors, shall have the
meaning assigned to such term in the Guarantee and Collateral Agreement and, with respect to any
other Guarantor, shall have the meaning assigned to such term in the Security Document which
purports to xxxxx x xxxx on such Guarantor’s intellectual property.
“Intellectual Property Security Agreement” shall mean all Intellectual Property
Security Agreements to be executed and delivered by the Tensar Parties, each substantially in the
applicable form required by the Guarantee and Collateral Agreement or any other applicable Security
Document.
“Intercreditor Agreement” shall mean the Tensar Intercreditor Agreement substantially
in the form of Exhibit G.
“Investments” shall have the meaning assigned to such term in Section 1.04 of Schedule
4.
“Lease Agreement” shall mean the Lease and License Financing and Purchase Option
Agreement dated as of October 31, 2005, by and among Tensar Holdings, Tensar, TCO and Credit
Suisse, as administrative agent, as the same may be amended, supplemented, or modified from time to
time in accordance with the provisions thereof.
“Lease Documents” shall mean the Lease Agreement, the Asset Purchase Agreement, the
Call Option Letter, the Put Option Letter, the Tax Matters Agreement, the Supplemental Agreement
and the US Security Documents and all other instruments, agreements and other documents evidencing
or governing the foregoing or providing for any Guarantee, Lien or other right in respect thereof,
as the same may be amended, supplemented or otherwise modified from time to time.
Schedule 1, Defined Terms
11
“Lease/Purchase Facilities Documents” shall mean, collectively, the Lease Documents
and the Commodities Purchase Facility Documents.
“Lease Obligations” shall have the meaning assigned to such term in the Guarantee and
Collateral Agreement and the other US Security Documents.
“Leverage Ratio” shall mean, on any date, the ratio of (a) Total Obligations on such
date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters most recently
ended on or prior to such date, taken as one accounting period.
“Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien
(statutory or otherwise), pledge, hypothecation, encumbrance, collateral assignment, charge or
security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a third party with
respect to such securities.
“Luxco” shall mean TTC Holdings S.à x.x., a private limited liability company (société
à responsabilité limitée), having its registered office at 0, xxx xxx Xxxxxx, X-0000 Xxxxxxxxxx,
registered with the Luxembourg Register of Commerce and Companies under number B 116.259 and having
a share capital of £10,000.00.
“Luxco Commodities Purchase Facility” shall mean the Murabaha facility provided for in
this Agreement.
“Luxco Commodities Purchase Facility Documents” shall have the meaning assigned to
such term in the definition of “Commodities Purchase Facility Documents”.
“Luxco Intercompany Note Pledge Agreement” shall mean the agreement by which Luxco
grants a security interest to TCO in any intercompany notes payable to it.
“Luxco Guarantee” shall mean the Guarantee to be executed by each Subsidiary of Luxco
that is a Luxco Subsidiary Guarantor.
“Luxco Security Documents” shall mean the share pledge over Luxco’s shares executed by
Tensar in favor of TCO, the Luxco Intercompany Notes Pledge Agreement and each of the other
security agreements, pledges, mortgages, consents and other instruments and documents with respect
to collateral located in the Grand Duchy of Luxembourg, executed and delivered pursuant to any of
the foregoing or pursuant to Section 1.09 or 1.10 of Schedule 3.
“Luxco Subsidiary Guarantor” shall mean, initially, each Subsidiary of Luxco specified
on Annex 1(b) of this Schedule 1 and, at any time thereafter, shall include each other Subsidiary
of Luxco that is not an Excluded Subsidiary.
“Luxco Transactions” shall mean, collectively, (a) the execution, delivery and
performance by the Tensar Parties of the Luxco Commodities Purchase Facility Documents and any
amendments of Lease/Purchase Facilities Documents entered into in connection therewith to
Schedule 1, Defined Terms
12
which they are a party, (b) the granting of Liens pursuant to the Luxco Commodities Purchase
Facility Documents and the Related Financing Documents, (c) the Acquisition and the other
Acquisition Transactions and (d) any other transactions related to or entered into in connection
with any of the foregoing.
“Margin Stock” shall have the meaning assigned to such term in Regulation U.
“Material Adverse Effect” shall mean a material adverse condition or material adverse
change in or materially affecting (a) the business, assets, liabilities, operations or condition
(financial or otherwise) or operating results of the Tensar Parties and the Subsidiaries, taken as
a whole, or (b) the validity or enforceability of any of the Lease/Purchase Facility Documents or
the rights and remedies of TCO or the Administrative Agent thereunder.
“Material Obligations” shall mean (i) all Financing Obligations of Tensar with respect
to any Lease Document, any US Commodities Purchase Facility Documents, any Second Lien Commodities
Purchase Facility Document or any Tensar Holdings Commodities Purchase Facility Document and (ii)
all Financing Obligations (other than the Financing Obligations described in clause (i) and the
Obligations of the Tensar Parties under the Luxco Commodities Purchase Facility Documents), or
obligations in respect of one or more Hedging Agreements, of any one or more of the Tensar Parties
or the Subsidiaries in an aggregate principal amount exceeding, in the case of clause (ii),
$2,500,000. For purposes of determining Material Obligations, the “principal amount” of the
obligations of the Tensar Parties or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements) such Tensar Party
or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time.
“Material Subsidiary” shall mean any Subsidiary which meets any of the following
conditions: (i) Tensar Holdings’ and its other Subsidiaries’ investments in and advances to such
Subsidiary exceed five percent of the total assets of Tensar Holdings and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; (ii) the total assets of
such Subsidiary exceed five percent of the total assets of Tensar Holdings and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or (iii) such Subsidiary’s
income from continuing operations before income taxes, extraordinary items and cumulative effect of
a change in accounting principles of such Subsidiary exceeds five percent of such income of Tensar
Holdings and its Subsidiaries consolidated for the most recently completed fiscal year.
“Merex Companies” shall mean Merex E.A. Company Limited, a Taiwan company limited by
shares, and Merex Limited, a United Kingdom company.
“Metals Transaction” shall have the meaning assigned to the term “Transaction” in
Article 1 of this Agreement or the term “Metals Transaction” in the Commodities Purchase
Agreement, as applicable.
“Moody’s” shall mean Xxxxx’x Investors Service, Inc.
“Mortgaged Properties” shall mean, initially, each parcel of real property and the
improvements thereto owned or leased by a Tensar Party and specified on Annex 1(d) to this
Schedule 1, Defined Terms
13
Schedule 1, and shall include each other parcel of real property and improvements thereto with
respect to which a Mortgage is granted pursuant to Section 1.09 or 1.10 of Schedule 3.
“Mortgages” shall mean the fee or leasehold mortgages or deeds of trust, assignments
of leases and rents and other security documents granting a Lien on any Mortgaged Property located
in the United States to secure the Obligations, each in the form of Exhibit E-1 or Exhibit E-2, as
the case may be, with such changes as shall be advisable under the law of the jurisdiction in which
such Mortgage is to be recorded and as are reasonably satisfactory to TCO and the Administrative
Agent, as the same may be amended, supplemented, replaced or otherwise modified from time to time
in accordance with this Agreement.
“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a) (3)
of ERISA.
“Murabaha Guarantee Obligations” shall have the meaning assigned to the term
“Guarantee Obligations” in the Commodities Purchase Agreement.
“NAG” shall mean North American Green, Inc., an Indiana corporation.
“NAG Sale-Leaseback” shall mean the substantially concurrent purchase by NAG of the
manufacturing facility and land located at 0000 Xxxxxxxxx Xxxx, Xx. Xxxxxxx, Xxxxx Xxxxxx, Xxxxxxx
(the “NAG Facility”) pursuant to the terms of the lease agreement entered into by and
between Xxx Xxxxxxx Properties, Inc., an Indiana corporation, and NAG dated as of September 24,
2004, and the sale of such NAG Facility to a non-Affiliate third party and the subsequent (and
substantially concurrent) lease back from such non-Affiliate third party.
“Net Cash Proceeds” shall mean (a) with respect to any Asset Sale or Recovery Event,
the proceeds thereof in the form of cash and Permitted Investments (including any such proceeds
subsequently received (as and when received) in respect of noncash consideration initially
received), net of (i) selling expenses (including reasonable and customary broker’s fees or
commissions, legal fees, transfer and similar taxes incurred by the Tensar Parties and the
Subsidiaries in connection therewith and Tensar’s good faith estimate of income taxes paid or
payable in connection with such sale, after taking into account any available tax credits or
deductions and any tax sharing arrangements), (ii) amounts provided as a reserve, in accordance
with GAAP, against any liabilities under any indemnification obligations or purchase price
adjustment associated with such Asset Sale (provided that, to the extent and at the time
any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds)
and (iii) all payment obligations on any Financing Obligation which is secured by the asset sold
in such Asset Sale and which is required to be repaid with such proceeds (other than (x) any such
Financing Obligations assumed by the purchaser of such asset and (y) any Financing Obligations
under the Lease/Purchase Facility Documents); provided, however, that, if (x)
Tensar delivers a certificate of a Financial Officer of Tensar to TCO and the Administrative Agent
at the time of receipt thereof setting forth Tensar’s intent to reinvest such proceeds in
productive assets of a kind then used or usable in the business of Tensar and the Subsidiaries
within 180 days of receipt of such proceeds and (y) no Default or Event of Default shall have
occurred and shall be continuing at the time of such certificate or at the proposed time of the
application of such proceeds, such proceeds shall not constitute Net Cash Proceeds except to the
extent not so used
Schedule 1, Defined Terms
14
at the end of such 180-day period, at which time such proceeds shall be deemed to be Net Cash
Proceeds; and (b) with respect to any issuance or incurrence of Financing Obligations or any
Equity Issuance, the cash proceeds thereof, net of all taxes and reasonable and customary fees,
commissions, costs and other expenses incurred by the Tensar Parties and the Subsidiaries in
connection therewith.
“Netlon License” shall mean the Consolidated Tensar License Agreement, dated June 24,
1999, by and between the Netlon Group Limited and Tensar, relating to the manufacture, sale and use
of integral polymeric grid materials or integral polymeric mesh materials in Canada, the United
States, Central and South America, and all of the islands of the Caribbean Sea, as amended.
“Obligations” shall have the meaning assigned to the term “Luxco Murabaha Obligations”
in the Guarantee and Collateral Agreement and the other Security Documents.
“Original Acquisition” shall have the meaning assigned to the term “Acquisition” in
the Lease Agreement.
“Patriot Act” shall mean Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001, Title III of Pub. L.
107-56 (signed into law October 26, 2001)).
“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.
“Perfection Certificate” shall mean the Pre-Closing Perfection Diligence Certificate
substantially in the form of Exhibit J to the Commodities Purchase Agreement or any other form
approved by TCO and the Administrative Agent.
“Permits” shall mean any and all franchises, licenses, leases, permits, approvals,
notifications, certifications, registrations, authorizations, exemptions, qualifications,
easements, rights of way, Liens and other rights, privileges and approvals required under any
Requirement of Law.
“Permitted Acquisition” shall mean the acquisition by Tensar or any of its
Subsidiaries of all or substantially all the assets of a person or line of business of such person,
or all of the Equity Interests of a person (referred to herein as the “Acquired Entity”);
provided that (i) the Acquired Entity shall be a going concern; (ii) at the time of such
transaction (A) both before and after giving effect thereto, no Event of Default or Default shall
have occurred and be continuing; and (B) Tensar would be in compliance with the covenants set forth
in Sections 1.11 and 1.13 of Schedule 4 and the Leverage Ratio would be at least 0.25 to 1.0 less
than the maximum Leverage Ratio then permitted under Section 1.12 of Schedule 4 at such time, in
each case as of the most recently completed period ending prior to such transaction for which the
financial statements and certificates required by Sections 1.04(a) and (b) of Schedule 3 were
required to be delivered, after giving pro forma effect to such transaction and to any
other event occurring after such period as to which pro forma recalculation is appropriate
(including any other transaction described in this definition occurring after such period) as if
such transaction (and the occurrence or assumption of any Financing Obligations in connection
therewith) had occurred as of the first
Schedule 1, Defined Terms
15
day of such period; and (C) after giving effect to such acquisition, Tensar would be able to
enter into a Metals Transaction pursuant to the Commodities Purchase Facility for not less than
$10,000,000; (iii) none of the Tensar Parties or the Subsidiaries shall incur or assume any
Financing Obligations in connection with such acquisition, except as permitted by Section 1.01 of
Schedule 4, and (iv) Tensar shall comply, and shall cause the Acquired Entity to comply, with the
applicable provisions of Sections 1.09 and 1.10 of Schedule 3 and the Security Documents.
“Permitted Holders” shall mean the Sponsor and each of the persons identified on Annex
1(a) to this Schedule 1.
“Permitted Investments” shall mean:
(a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s;
(c) investments in certificates of deposit, banker’s acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by any domestic office of
Credit Suisse or any commercial bank organized under the laws of the United States of
America or any State thereof that has a combined capital and surplus and undivided profits
of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution
satisfying the criteria of clause (c) above;
(e) investments in “money market funds” within the meaning of Rule 2a-7 of the
Investment Company Act of 1940, as amended, substantially all of whose assets are invested
in investments of the type described in clauses (a) through (d) above;
(f) other short-term investments utilized by Foreign Subsidiaries in accordance with
normal investment practices for cash management in investments of a type analogous to the
foregoing; and
(g) short-term Xxxxx’ah compliant investments of a type analogous to the foregoing and
reasonably acceptable to the Administrative Agent.
“Permitted Lien” shall mean, with respect to Pledged Securities, Liens created by the
Guarantee and Collateral Agreement and the Foreign Pledge Agreements and, with respect to all other
Collateral, Liens permitted to be prior to the Lien created by the Security Documents by Section
1.02 of Schedule 4.
Schedule 1, Defined Terms
16
“Permitted Refinancing Obligations” shall mean Financing Obligations issued or
incurred (including by means of the extension or renewal of existing Financing Obligations) to
refinance, refund, extend, renew or replace existing Financing Obligations (“Refinanced
Obligations”); provided that (a) the stated amount of such refinancing, refunding,
extending, renewing or replacing Financing Obligations is not greater than the stated amount of
such Refinanced Obligations plus the amount of any rent, profit, premiums or penalties and accrued
and unpaid amounts paid thereon and reasonable fees and expenses, in each case associated with such
refinancing, refunding, extension, renewal or replacement, (b) such refinancing, refunding,
extending, renewing or replacing Financing Obligations has a final maturity that is no sooner than,
and a weighted average life to maturity that is no shorter than, such Refinanced Obligations, (c)
if such Refinanced Obligations or any Guarantees thereof are subordinated to the Obligations, such
refinancing, refunding, extending, renewing or replacing Financing Obligations and any Guarantees
thereof remain so subordinated on terms no less favorable to TCO or the Administrative Agent, (d)
the obligors in respect of such Refinanced Obligations immediately prior to such refinancing,
refunding, extending, renewing or replacing are the only obligors on such refinancing, refunding
extending, renewing or replacing Financing Obligations and (e) such refinancing, refunding,
extending, renewing or replacing Financing Obligations contains covenants and events of default and
is benefited by Guarantees, if any, which, taken as a whole, are determined in good faith by a
Financial Officer of Tensar to be no less favorable to Tensar, the applicable Subsidiary, TCO or
the Administrative Agent in any material respect than the covenants and events of default or
Guarantees, if any, in respect of such Refinanced Obligations.
“person” shall mean any natural person, corporation, trust, business trust, joint
venture, joint stock company, association, company, limited liability company, partnership,
Governmental Authority or other entity.
“Pledged Securities” shall have the meaning assigned to such term in the Guarantee and
Collateral Agreement.
“Put Option Letter” shall have the meaning assigned to such term in the Lease
Agreement.
“Qualified IPO” shall mean an underwritten initial public offering of common stock of
(and by) Tensar Holdings pursuant to an effective registration statement filed with the United
States Securities and Exchange Commission in accordance with the Securities Act of 1933, as
amended, which initial public offering results in gross cash proceeds to Tensar Holdings of
$100,000,000 or more.
“Real Property” shall mean all Mortgaged Property and all other real property owned or
leased from time to time by the Tensar Parties and the Subsidiaries.
“Recovery Event” shall mean any settlement of or payment in respect of any property or
casualty insurance claim or any taking under power of eminent domain or by condemnation or similar
proceeding of or relating to any property or asset of any Tensar Party or any Subsidiary;
provided that any such settlement or payment having a value not in excess of $250,000 and
Schedule 1, Defined Terms
17
anything constituting an Event of Loss shall be deemed not to be a “Recovery Event”
for purposes of this Agreement.
“Regulation T” shall mean Regulation T of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.
“Regulation U” shall mean Regulation U of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.
“Regulation X” shall mean Regulation X of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.
“Reimbursement Letter” shall mean the Reimbursement Letter, dated as of October 31,
2005, from Tensar to TCO and the Administrative Agent, in the form attached as Exhibit M to the
Commodities Purchase Agreement.
“Related Financing Documents” shall mean the Lease Documents, the US Commodities
Purchase Facility Documents, the Second Lien Commodities Purchase Facility Documents and the Tensar
Holdings Commodities Purchase Facility Documents.
“Related Parties” shall mean, with respect to any specified person, such person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such person
and such person’s Affiliates.
“Release” shall mean any release, spill, seepage, emission, leaking, pumping,
injection, pouring, emptying, deposit, disposal, discharge, dispersal, dumping, escaping, leaching,
or migration into, onto or through the environment or within or upon any building, structure,
facility or fixture.
“Rent” shall have the meaning assigned to such term in the Lease Agreement.
“Rental Rate” shall have the meaning assigned to such term in the Lease Agreement.
“Requirement of Law” shall mean as to any person, the governing documents of such
person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such person or any of its
Real Property or personal property or to which such person or any of its property of any nature is
subject.
“Responsible Officer” of any person shall mean any executive officer or Financial
Officer of such person and any other officer or similar official thereof responsible for the
administration of the obligations of such person in respect of this Agreement.
“Restricted Obligations” shall mean Financing Obligations of any Tensar Party or any
Subsidiary, the payment, prepayment, repurchase or defeasance of which is restricted under Section
1.09(b) of Schedule 4.
Schedule 1, Defined Terms
18
“Restricted Payment” shall mean any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in any Tensar Party or any
Subsidiary, or any payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, defeasance, retirement,
acquisition, cancellation or termination of any Equity Interests in any Tensar Party or any
Subsidiary or any option, warrant or other right to acquire any such Equity Interests in any Tensar
Party or any Subsidiary.
“Restricted Stock Purchase Program” shall mean the Tensar Holdings, Inc. 2005 Stock
Incentive Plan, and any successor plan thereto containing substantially similar terms and
provisions.
“S&P” shall mean Standard & Poor’s Ratings Group, Inc., a division of McGraw Hill,
Inc.
“Second Lien Commodities Purchase Agreement” shall mean the Second Lien Murabaha
Agreement, dated of October 31, 2005, by and between Tensar and TCO Funding Corp., as the same may
be amended, supplemented or otherwise modified in accordance with the terms hereof.
“Second Lien Commodities Purchase Facility” shall mean the second lien Murabaha
facility provided for in the Second Lien Commodities Purchase Agreement.
“Second Lien Commodities Purchase Facility Documents” shall mean the Second Lien
Commodities Purchase Agreement and all other instruments, agreements and other documents evidencing
or governing the Second Lien Commodities Purchase Facility or providing for any Guarantee or other
right in respect thereof, as the same may be amended, supplemented or otherwise modified in
accordance with the terms hereof.
“Secured Parties” shall have the meaning assigned to such term in the Guarantee and
Collateral Agreement.
“Security Documents” shall mean the Guarantee and Collateral Agreement, the Mortgages,
the Intellectual Property Security Agreements, the Foreign Security Documents and each of the other
security agreements, pledges, mortgages, consents and other instruments and documents executed and
delivered pursuant to any of the foregoing or pursuant to Section 1.09 or 1.10 of Schedule 3.
“Sellers” shall have the meaning specified in the Preliminary Statements hereto.
“Share Purchase Agreement” shall mean the Share Purchase Agreement dated May 16, 2006
among Tensar Holdings, Inc., TTC UK Holdings Limited, 3i Group, Plc, Electra General Partner and
the other vendors party thereto.
“Split Dollar Insurance Documents” shall mean each of the three Split Dollar
Termination Agreements, dated as of December 30, 2003, between Tensar Earth Technologies, Inc. and
Holdings, and each of Xxxxxxx X. Xxxx, Xxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, respectively, as in
effect on the Effective Date.
Schedule 1, Defined Terms
19
“Sponsor” shall mean Arcapita Inc.
“subsidiary” shall mean, with respect to any person (herein referred to as the
“parent”), any corporation, partnership, limited liability company, association or other
entity (a) of which securities or other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned, controlled or held, or (b) that
is, at the time any determination is made, otherwise Controlled, in either case, by the parent or
one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.
“Subsidiary” shall mean any subsidiary of Tensar Holdings unless otherwise specified.
“Synthetic Lease Obligations” shall mean all monetary obligations of a person under
(a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use
or possession of any property (whether real, personal or mixed) creating obligations which do not
appear on the balance sheet of such person, but which, upon the insolvency or bankruptcy of such
person, would be characterized as Financing Obligations of such person (without regard to
accounting treatment).
“Synthetic Purchase Agreement” shall mean any swap, derivative or other agreement or
combination of agreements pursuant to which any Tensar Party or any Subsidiary is or may become
obligated to make (a) any payment in connection with a purchase by any third party from a person
other than any Tensar Party or any Subsidiary of any Equity Interest or Restricted Obligations or
(b) any payment (other than on account of a purchase by it permitted hereunder of any Equity
Interest or Restricted Obligations) the amount of which is determined by reference to the price or
value at any time of any Equity Interest or Restricted Obligations; provided that no
phantom stock or similar plan providing for payments only to current or former directors, officers
or employees of any Tensar Party or the Subsidiaries (or to their heirs or estates) shall be deemed
to be a Synthetic Purchase Agreement.
“Tax Code” shall mean the United States Internal Revenue Code of 1986, as amended from
time to time.
“Taxes” shall mean any and all present or future taxes, levies, imposts, duties,
deductions, charges, liabilities or withholdings (including interest, fines, penalties or additions
to tax) imposed by any Governmental Authority.
“TCO” shall mean TCO Funding Corp., a Delaware corporation.
“Tensar” shall mean The Tensar Corporation, LLC, a Georgia limited liability company.
“Tensar Holdings” shall mean Tensar Holdings, Inc. a Delaware corporation.
“Tensar Holdings Commodities Purchase Agreement” shall mean the Tensar Holdings
Murabaha Agreement, dated as of October 31, 2005, by and between Tensar Holdings and TCH Funding
Corp., as the same may be amended, supplemented or otherwise modified in accordance with the terms
hereof.
Schedule 1, Defined Terms
20
“Tensar Holdings Commodities Purchase Facility” shall mean the commodities purchase
facility available to Tensar Holdings pursuant to the Tensar Holdings Commodities Purchase
Agreement.
“Tensar Holdings Commodities Purchase Facility Documents” shall mean the Tensar
Holdings Commodities Purchase Agreement and all other instruments, agreements and other documents
evidencing or governing the Tensar Holdings Commodities Purchase Facility or providing any right in
respect thereof, as the same may be amended, supplemented or otherwise modified in accordance with
the terms hereof.
“Tensar Holdings Subordination Agreement” shall mean the Tensar Holdings Subordination
and Intercreditor Agreement dated as of October 31, 2005, by Tensar Holdings, TCH Funding Corp.,
TCO and the other persons party thereto, as in effect on the Effective Date, and as subsequently
amended, supplemented or otherwise modified in accordance with the terms hereof.
“Tensar Parties” shall mean Tensar Holdings, Holdings, Tensar and each Subsidiary that
is or becomes a party to a Lease/Purchase Facilities Document.
“Tensar UK” shall mean Tensar Group Limited, a company incorporated under the laws of
England and Wales.
“Total Obligations” shall mean, at any time, the aggregate amount of Financing
Obligations of Tensar Holdings and its Subsidiaries outstanding at such time, in the amount that
would be reflected on a balance sheet prepared at such time on a consolidated basis in accordance
with GAAP and, without duplication and regardless of GAAP, the aggregate amount of Financing
Obligations consisting of Acquisition Cost under the Lease Documents and Murabaha Price or Unpaid
Reimbursement Obligations (in each case, excluding Agreed Profit) under the Commodities Purchase
Facility Documents and the Second Lien Commodities Purchase Facility Documents, but excluding
Financing Obligations of Tensar Holdings under the Tensar Holdings Commodities Purchase Agreement.
“UCC” shall mean the Uniform Commercial Code in effect from time to time in any
relevant state of the United States.
“UK Composite Debenture” shall mean the UK Composite Debenture in the form of Exhibit
J, to be executed and delivered by each UK Subsidiary which provides a guarantee in respect of the
Obligations.
“UK GAAP” shall mean generally accepted accounting principles in England and Wales.
“UK Pensions Regulator” means the body corporate called the Pensions Regulator
established under Part I of the United Kingdom Pensions Xxx 0000.
“UK Security Documents” shall mean the UK Composite Debenture, any and each of the
other security agreements, pledges, consents and other instruments and documents with respect to
collateral located in England and Wales executed and delivered pursuant to any of the foregoing or
pursuant to Section 1.09 or 1.10 of Schedule 3.
Schedule 1, Defined Terms
21
“Unpaid Reimbursement Obligations” shall have the meaning assigned to such term in the
Commodities Purchase Agreement.
“US Guarantors” shall mean Tensar Holdings and each of its Domestic Subsidiaries which
has provided a Guarantee with respect to the Obligations.
“US Commodities Purchase Facility Documents” shall have the meaning assigned to such
term in the definition of “Commodities Purchase Facility Documents”.
“US Security Documents” shall mean the Security Documents other than the Foreign
Security Documents.
“wholly owned subsidiary” of any person shall mean a subsidiary of such person of
which securities (except for directors’ qualifying shares) or other ownership interests
representing 100% of the Equity Interests are, at the time any determination is being made, owned,
controlled or held by such person or one or more wholly owned subsidiaries of such person or by
such person and one or more wholly owned subsidiaries of such person; a “wholly owned
Subsidiary” shall mean any wholly owned subsidiary of Tensar Holdings, unless otherwise noted.
“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
“Working Capital Obligations” shall have the meaning assigned to such term in the
Guarantee and Collateral Agreement and the other Security Documents.
Schedule 1, Defined Terms
22
accordance with
GAAP, as in effect from time to time; provided, however, that if Tensar Holdings
notifies TCO and the Administrative Agent that Tensar Holdings wishes to amend any covenant in
Schedule 4 or any related definition to eliminate the effect of any change in GAAP occurring after
the date of this Agreement on the operation of such covenant (or if TCO or the Administrative Agent
notifies Tensar Holdings that it wishes to amend Schedule 4 or any related definition for such
purpose), then Tensar Holdings’ compliance with such covenant shall be determined on the basis of
GAAP without giving effect to the relevant change in GAAP, until either such notice is withdrawn or
such covenant is amended in a manner satisfactory to Tensar Holdings, TCO and the Administrative
Agent. For purposes of GAAP, references herein to “Rental Rate”, “Agreed Profit” or “Financing
Expense” shall be treated as interest and “Acquisition Cost” and “Purchase Price” shall be treated
as indebtedness.
Schedule 1, Defined Terms
23
Execution Copy
Schedule 2
Representations and Warranties
Tensar Holdings and Luxco jointly and severally represent and warrant to TCO and the
Administrative Agent that:
SECTION 1.01. Organization; Powers. Each of Tensar Holdings and Luxco (a) is duly
organized or formed, validly existing and with respect to Tensar Holdings, in good standing under
the laws of the jurisdiction of its organization or formation, (b) has all requisite power and
authority, and the legal right, to own and operate its property and assets, to lease the property
it operates as lessee and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in, and, with regard to Tensar Holdings, is in good
standing in, every jurisdiction where such qualification is required, except where the failure to
so qualify has not had and could not reasonably be expected to have a Material Adverse Effect, and
(d) has the power and authority, and the legal right, to execute, deliver and perform its
obligations under this Agreement, each of the other Luxco Commodities Purchase Facility Documents,
the Related Financing Documents the Acquisition Documentation and each other agreement or
instrument contemplated hereby or thereby to which it is or will be a party, including, to enter
into this Agreement, to buy and sell metals and to grant the Liens contemplated to be granted by it
under the Security Documents.
SECTION 1.02. Authorization; No Conflicts. The Luxco Transactions (a) have been
duly authorized by all requisite corporate, partnership or limited liability company and, if
required, stockholder, partner or member action and (b) (i) do not violate (A) any provision of
law, statute, rule or regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of any Tensar Party or any Subsidiary, (B) any order of any
Governmental Authority or arbitrator or (C) any provision of any indenture, agreement or other
instrument to which any Tensar Party or any Subsidiary is a party or by which any of them or any of
their property is or may be bound, (ii) are not in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under, or give rise to any
right to accelerate or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument and (iii) do not result in the creation or
imposition of any Lien upon or with respect to any property or assets now owned or hereafter
acquired by any Tensar Party or any Subsidiary (other than Liens created under the Security
Documents or the security documents with respect to the Lease Agreement, the Commodities Purchase
Facility or the Second Lien Commodities Purchase Facility).
SECTION 1.03. Enforceability. This Agreement has been duly executed and delivered by each of Tensar Holdings and Luxco
and constitutes, and each other Luxco Commodities Purchase Facility Document when executed and
delivered by each Tensar Party party thereto will constitute, a legal, valid and binding obligation
of such Tensar Party enforceable against such Tensar Party in accordance with its terms, subject to
applicable bankruptcy, insolvency,
Schedule 2, Representations and Warranties
reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.
SECTION 1.04. Governmental Approvals. No action, consent or approval of,
registration or filing with, Permit from, notice to, or any other action by, any Governmental
Authority is or will be required in connection with the Luxco Transactions, except for (a) the
filing of UCC financing statements and filings with the United States Patent and Trademark Office
and the United States Copyright Office, (b) recordation of the Mortgages (c) with respect to Luxco
and the Luxco Subsidiary Guarantors, the filings set forth on Annex 4 to this Schedule 2 and (d)
such as have been made or obtained and are in full force and effect.
SECTION 1.05. Financial Statements. (a) Holdings has heretofore furnished to
TCO and the Administrative Agent Tensar UK’s consolidated balance sheets and statements of income,
stockholder’s equity and cash flows as of and for the fiscal years ended March 31, 2005, March 31,
2004 and March 31, 2003, in each case audited by and accompanied by the opinion of
PricewaterhouseCoopers, independent public accountants. Such financial statements present fairly
in all material respects the financial condition and results of operations and cash flows of Tensar
UK and its consolidated Subsidiaries as of such dates and for such periods. Such balance sheets
and the notes thereto disclose all material liabilities, direct or contingent, of Tensar UK and its
consolidated Subsidiaries as of the dates thereof. Such financial statements were prepared in
accordance with UK GAAP applied on a consistent basis.
(b) Tensar Holdings has heretofore delivered to TCO and the Administrative Agent its
unaudited pro forma consolidated balance sheet as of March 31, 2006, prepared giving effect to the
Luxco Transactions as if they had occurred, with respect to such balance sheet, on such date. Such
pro forma financial statements (i) have been prepared in good faith by Tensar Holdings, based on
the assumptions used to prepare the pro forma financial information contained in the Confidential
Information Memorandum (which assumptions are believed by Tensar Holdings and Luxco on the
Effective Date to be reasonable), (ii) are based on the best information available to Tensar
Holdings and Luxco after due inquiry as of the date of delivery thereof, (iii) accurately reflect
all adjustments required to be made to give effect to the Luxco Transactions and (iv) present
fairly in all material respects on a pro forma basis the estimated consolidated financial position
of Tensar Holdings and its consolidated Subsidiaries as of such date, assuming that the Luxco
Transactions had actually occurred at such date.
(c) The projections delivered on the date hereof and attached as Annex 5 to this Schedule 2
have been prepared by Tensar Holdings in light of the past operation of its business and the
business of its subsidiaries, but including future payments of known contingent
liabilities, and reflect projections for the four-year period beginning on March 31, 2006 on a
month-by-month basis. Such projections are based upon estimates and assumptions stated therein,
all of which Tensar Holdings believes to be reasonable and fair in light of current conditions and
current facts known to it and, as of the Effective Date, reflect Tensar Holdings’ good faith and
reasonable estimates of the future financial performance of the Tensar Parties and of the other
information projected therein for the period set forth therein.
Schedule 2, Representations and Warranties
2
SECTION 1.06. No Material Adverse Change. No event, change or condition has
occurred since December 31, 2004, that has caused, or could reasonably be expected to cause, a
Material Adverse Effect.
SECTION 1.07. Title to Properties; Possession Under Leases. (a) Each of the
Tensar Parties and the Subsidiaries has good and marketable title to, or valid leasehold interests
in, all its material properties and assets (including all Real Property), except for defects in
title that, in the aggregate, are not substantial in amount and do not materially detract from the
value of the property subject thereto or materially interfere with its ability to conduct its
business as currently conducted or to utilize such properties and assets for their intended
purposes. Each parcel of Real Property is free from material structural defects and all building
systems contained therein are in good working order and condition, ordinary wear and tear excepted,
suitable for the purposes for which they are currently being used. No material portion of the Real
Property has suffered any material damage by fire or other casualty loss that has not heretofore
been materially repaired and restored to its original condition. Each material parcel of Real
Property and the current use thereof complies in all material respects with all applicable laws
(including building and zoning ordinances and codes) and with all insurance requirements.
(b) Each of the Tensar Parties and the Subsidiaries, and, to the knowledge of Tensar
Holdings and Luxco, each other party thereto, has complied with all material obligations under all
material leases to which it is a party and all such leases are legal, valid, binding and in full
force and effect and are enforceable in accordance with their terms. Each of the Tensar Parties
and the Subsidiaries enjoys peaceful and undisturbed possession under all such material leases. To
the knowledge of Tensar Holdings and Luxco, no landlord Lien has been filed and no material claim
is being asserted, with respect to any lease payment under any material lease. No material portion
of the Real Property is subject to any lease, sublease, license or other agreement granting to any
person (other than the Tensar Parties and their Affiliates) any right to the use, occupancy,
possession or enjoyment of such Real Property or any portion thereof. Tensar Holdings has
delivered to TCO and the Administrative Agent true, complete and correct copies of all leases
(whether as landlord or tenant) of Real Property.
(c) None of the Tensar Parties or any of the Subsidiaries has received any notice of, nor
has any knowledge of, any pending or contemplated condemnation proceeding affecting the Real
Properties or any sale or disposition thereof in lieu of condemnation.
(d) None of the Tensar Parties or any of the Subsidiaries is obligated under any right of
first refusal, option or other contractual right to sell, assign or otherwise dispose of any Real
Property or any interest therein.
(e) There are no pending or, to the knowledge of Tensar Holdings or Luxco, proposed material
special or other assessments for public improvements or otherwise affecting any material portion of
the owned Real Property, nor are there any contemplated material improvements to such owned Real
Property that may result in such special or other assessments. No Tensar Party has suffered,
permitted or initiated the joint assessment of any owned Real Property with any other real property
constituting a separate tax lot. Each owned parcel of Real Property is comprised of one or more
parcels, each of which constitutes a separate tax lot and none of which constitutes a portion of
any other tax lot.
Schedule 2, Representations and Warranties
3
(f) Each Tensar Party has obtained all material permits, licenses, variances and
certificates required by applicable law to be obtained and necessary to the use and operation of
each parcel of Real Property, except where the failure to have such permit, license, certificate or
variance would not prohibit the use of such parcel of Real Property as it is currently being used.
The use being made of each parcel of Real Property materially conforms with the certificate of
occupancy and/or such other material permits, licenses, variances and certificates for such Real
Property and any other material restrictions, covenants or conditions affecting such Real Property,
except for any such nonconformity that could not reasonably be expected to be enjoined or to result
in material fines.
(g) (i) Each parcel of Real Property has adequate rights of access to public ways to permit
the Real Property to be used for its intended purpose, and is served by installed, operating and
adequate water, electric, gas, telephone, sewer, sanitary sewer and storm drain facilities; (ii)
all public utilities necessary to the continued use and enjoyment of each parcel of Real Property
as used and enjoyed on the Effective Date are located in the public right-of-way abutting the
premises, and to the knowledge of Tensar Holdings and Luxco, all such utilities are connected so as
to serve such Real Property without passing over other property except for land of the utility
company providing such utility service or, in the case of leased Real Property, contiguous land
owned by the lessor of such leased Real Property; (iii) each parcel of Real Property, including
each leased parcel, has adequate available parking to meet legal and operating requirements; (iv)
all roads necessary for the full utilization of each parcel of Real Property for its current
purpose have been completed and dedicated to public use and accepted by all governmental
authorities or are the subject of access easements for the benefit of such Real Property; (v) no
building or structure constituting Real Property or any appurtenance thereto or equipment thereon,
or the use, operation or maintenance thereof, violates any restrictive covenant or encroaches on
any easement or on any property owned by others, which violation or encroachment interferes with
the use or could materially adversely affect the value of such building, structure or appurtenance
or which encroachment is necessary for the operation of the business at any Real Property; and (vi)
all buildings, structures, appurtenances and equipment necessary for the use of each parcel of Real
Property for the purpose for which it is currently being used are located on such real property.
SECTION 1.08. Subsidiaries. Annex 8 to this Schedule 2 sets forth as of the Effective Date a list of all Subsidiaries,
joint ventures and partnerships in which any Tensar Party has an ownership interest, in each case
after giving effect to the Acquisition, including each Subsidiary, joint venture or partnership’s
exact legal name (if applicable, and as reflected in such Subsidiary, joint venture or
partnership’s certificate or articles of incorporation or other constitutive documents) and
jurisdiction of incorporation or formation and the percentage ownership interest of each Tensar
Party (direct or indirect) therein, and identifies each Subsidiary that is a Tensar Party. The
shares of capital stock or other Equity Interests so indicated on Annex 8 to this Schedule 2 are
fully paid and non-assessable and are owned by the Tensar Parties, directly or indirectly, free and
clear of all Liens (other than Liens created under the Security Documents and the security
documents with respect to the Second Lien Commodities Purchase Facility). Except as set forth on
Annex 8 to this Schedule 2, there are no outstanding rights to purchase, options, warrants or
similar rights or agreements pursuant to which any Tensar Party may be required to issue, sell,
repurchase or redeem any of its Equity Interests or the Equity Interests of any of its
Schedule 2, Representations and Warranties
4
subsidiaries. Holdings is a wholly owned subsidiary of Tensar Holdings, Tensar is a wholly owned
subsidiary of Holdings and Luxco is a wholly-owned subsidiary of Tensar.
SECTION 1.09. Litigation; Compliance with Laws. (a) There are no actions,
suits or proceedings at law or in equity or by or before any arbitrator or Governmental Authority
now pending or, to the knowledge of Tensar Holdings or Luxco threatened against or affecting any
Tensar Party or any Subsidiary or any business, property or rights of any such person (i) that
involve any Lease Document or the Luxco Transactions or (ii) except as set forth on Annex 9 to this
Schedule 2, as to which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect.
(b) Since the date of this Agreement, there has been no change in the status of the matters
disclosed on Annex 9 to this Schedule 2 that, individually or in the aggregate, has resulted in, or
materially increased the likelihood of, a Material Adverse Effect.
(c) Neither Tensar Holdings, Luxco nor any of the Subsidiaries or any of their respective
material properties or assets is in violation of, nor will the continued operation of their
material properties and assets as currently conducted violate, any law, rule or regulation
(including any zoning, building, Environmental Law, ordinance, code or approval or any building
permits) or any restrictions of record or agreements affecting the Mortgaged Property, or is in
default with respect to any judgment, writ, injunction, decree or order of any Governmental
Authority, where such violation or default, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
SECTION 1.10. Agreements. (a) Neither Tensar Holdings, Luxco nor any of the
Subsidiaries is a party to any agreement or instrument, or subject to any corporate restriction,
that, individually or in the aggregate, has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(b) Neither Tensar Holdings, Luxco nor any of the Subsidiaries is in material default in any
manner under any provision of any material indenture or other material agreement or instrument
evidencing Material Obligations, or any other material agreement or material instrument to which it
is a party or by which it or any of its properties or assets are or may be bound. No Default has
occurred and is continuing.
SECTION 1.11. Federal Reserve Regulations. (a) Neither Tensar Holdings,
Luxco nor any of the Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of the Luxco Commodities Purchase Facility will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, for purchasing or
carrying Margin Stock or for the purpose of purchasing, carrying or trading in any securities under
such circumstances as to involve Luxco in a violation of Regulation X or to involve any broker or
dealer in a violation of Regulation T. No Financing Obligations being reduced or retired out of
the proceeds of the Luxco Commodities Purchase Facility was incurred for the purpose of purchasing
or carrying any Margin Stock. Following the application of the
Schedule 2, Representations and Warranties
5
proceeds of the Luxco Commodities
Purchase Facility, Margin Stock will not constitute more than 25% of the value of the assets of the
Tensar Parties and the Subsidiaries. None of the transactions contemplated by this Agreement will
violate or result in the violation of any of the provisions of the Regulations of the Board,
including Regulation T, U or X. If requested by TCO or the Administrative Agent, Luxco will
furnish to TCO and the Administrative Agent a statement to the foregoing effect in conformity with
the requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.
SECTION 1.12. Investment Company Act; Other Restrictions. Neither Tensar Holdings,
Luxco nor any of the Subsidiaries is (a) an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended or (b) subject to any other
federal or state statute that restricts or limits its ability in any material respect to enter into
the Lease/Purchase Facilities Documents or the Second Lien Commodities Purchase Facility Documents,
or to perform its obligations thereunder.
SECTION 1.13. Use of Proceeds. Luxco will use the proceeds of the Luxco Commodities
Purchase Facility solely to pay the Acquisition Consideration, repay the Existing Obligations and
to pay fees and expenses related to the Luxco Transactions.
SECTION 1.14. Tax Returns. Except with respect to the tax returns of Tensar UK for
the period ended September 30, 2002, each of the Tensar Parties and each of the Subsidiaries has
timely filed or timely caused to be filed all Federal, state, local and foreign tax returns or
materials required to have been filed by it and all such tax returns are correct and complete in
all material respects. Each of the Tensar Parties and each of the Subsidiaries has timely paid or
timely caused to be paid all Taxes due and
payable by it and all assessments received by it, except Taxes that are being contested in
good faith by appropriate proceedings and for which such Tensar Party or such Subsidiary, as
applicable, shall have set aside on its books adequate reserves in accordance with GAAP. Each of
the Tensar Parties and each of the Subsidiaries has made adequate provision in accordance with GAAP
for all Taxes not yet due and payable. No Tax Lien has been filed, and to the knowledge of Tensar
Holdings or Luxco, no claim is being asserted, with respect to any Tax. None of the Tensar Parties
or any of the Subsidiaries is aware of any facts or events that would result in the Luxco
Transactions on the Effective Date as being a “reportable transaction” (within the meaning of
Treasury Regulation Section 1.6011-4). Except as set forth in Annex 14 to this Schedule 2, no
Tensar Party has executed or filed with the Internal Revenue Service or any other Governmental
Authority any agreement or other document extending, or having the effect of extending, the period
for assessment or collection of any Taxes. None of the Tensar Parties and their respective
predecessors are liable for any Taxes: (i) under any agreement (including any tax sharing
agreements) or (ii) to the knowledge of Luxco or Tensar Holdings, as a transferee. As of the
Effective Date, no Tensar Party has agreed or been requested to make any adjustment under Code
Section 481(a), by reason of a change in accounting method or otherwise, which would have a
Material Adverse Effect.
SECTION 1.15. No Material Misstatements; Acquisition Documentation. (a) Each
of the Tensar Parties has disclosed to TCO and the Administrative Agent all agreements, instruments
and corporate or other restrictions to which any Tensar Party or any of the Subsidiaries is
subject, and all other matters known to any of them, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. None of (i) the
Schedule 2, Representations and Warranties
6
Confidential
Information Memorandum or (ii) any other information, report, financial statement, exhibit or
schedule furnished by or on behalf of any Tensar Party or any Subsidiary to TCO or the
Administrative Agent for use in connection with the transactions contemplated by the Luxco
Commodities Purchase Facility Documents (including any for use in connection with the financing
obtained by TCO) or in connection with the negotiation of any Luxco Commodities Purchase Facility
Document or included therein or delivered pursuant thereto contained, contains or will contain any
material misstatement of fact or omitted, omits or will omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which they were, are or
will be made, not misleading; provided that to the extent any such information, report,
financial statement, exhibit or schedule was based upon or constitutes a forecast or projection,
each of Tensar Holdings and Luxco represents only that it acted in good faith and utilized
reasonable assumptions and due care in the preparation of such information, report, financial
statement, exhibit or schedule.
(b) As of the Effective Date, the representations and warranties of the applicable Tensar
Parties and their Affiliates set forth in the Acquisition Documentation are true and correct in all
material respects.
SECTION 1.16. Employee Benefit Plans. (a) Tensar and each of its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and the Tax Code and
the regulations and published interpretations thereunder. No ERISA Event has occurred or is
reasonably expected to occur
that, when taken together with all other such ERISA Events, could reasonably be expected to result
in material liability of Tensar or any of its ERISA Affiliates. The present value of all benefit
liabilities under each Benefit Plan (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the last annual valuation date applicable
thereto, exceed by more than $500,000 the fair market value of the assets of such Benefit Plan, and
the present value of all benefit liabilities of all underfunded Benefit Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of
the last annual valuation dates applicable thereto, exceed by more than $500,000 the fair market
value of the assets of all such underfunded Benefit Plans.
(b) The pension schemes of each of Luxco’s Subsidiaries are fully funded to the extent
required by law or otherwise comply with the requirements of any law applicable in the jurisdiction
in which the relevant pension scheme is maintained, in each case, where failure to do so could
reasonably be expected to have a Material Adverse Effect.
(c) Except for the Tensar International Limited Retirement Benefits Plan (1976) (i) neither
Luxco nor any of its Subsidiaries is or has at any time been an employer (for the purposes of
Sections 38 to 51 of the United Kingdom Pensions Act 2004) of an occupational pension scheme which
is not a money purchase scheme (both terms as defined in the United Kingdom Pensions Schemes Act
1993) and (ii) neither Luxco nor any of its Subsidiaries is or has at any time been “connected”
with or an “associate” of (as those terms are used in Sections 39 and 43 of the United Kingdom
Pensions Act 2004) such an employer.
Schedule 2, Representations and Warranties
7
SECTION 1.17. Environmental Matters. (a) Except as set forth in Annex 17 to
this Schedule 2, none of the Tensar Parties or any of the Subsidiaries, individually or in the
aggregate:
(i) has failed to comply with any Environmental Law or to take, in a timely manner, all
actions necessary to obtain, maintain, renew and comply with any Environmental Permit, and
all such Environmental Permits are in full force and effect and not subject to any
administrative or judicial proceeding seeking to terminate, rescind, or modify any such
Permit except as could not reasonably be expected to result in a liability in excess of
$500,000 under any Environmental Law;
(ii) has become a party to any governmental, administrative or judicial proceeding that
could reasonably be expected to result in a liability in excess of $500,000 under any
Environmental Law or has received written notice of any such proceeding that has been
threatened under Environmental Law;
(iii) has received written notice of, become subject to, or is aware of any facts or
circumstances that could form the basis for, any Environmental Liability that could
reasonably be expected to result in a liability in excess of $500,000 other than those which
have been fully and finally resolved and for which no obligations remain outstanding;
(iv) possesses knowledge that any Mortgaged Property (A) is subject to any Lien or
restriction on ownership, occupancy, use or transferability imposed pursuant to
Environmental Law or (B) contains or previously contained Hazardous Materials of a form or
type or in a quantity or location that could reasonably be expected to result in any
Environmental Liability in excess of $500,000;
(v) possess knowledge that there has been a Release or threat of Release of Hazardous
Materials at or from the Mortgaged Properties (or from any facilities or other properties
formerly owned, leased or operated by any Tensar Party or any of the Subsidiaries) in
violation of, or in amounts or in a manner that could reasonably be expected to result in a
liability in excess of $500,000 under any Environmental Law;
(vi) has generated, treated, stored, transported, or Released Hazardous Materials from
the Mortgaged Properties (or from any other facilities or other properties currently or
formerly owned, leased or operated by any Tensar Party or any of the Subsidiaries) in
violation of, or in a manner or to a location that could reasonably be expected to result in
a liability in excess of $500,000 under any Environmental Law;
(vii) is aware of any facts, circumstances, conditions or occurrences in respect of any
of the facilities and properties owned, leased or operated by any Tensar Party or any of the
Subsidiaries that could reasonably be expected to (A) form the basis of any action, suit,
claim or other judicial or administrative proceeding relating to liability in excess of
$500,000 under or noncompliance with Environmental Law on the part of any Tensar Party or
any of the Subsidiaries or (B) or interfere with or prevent continued compliance with
Environmental Laws by the Tensar Parties or the Subsidiaries; or
Schedule 2, Representations and Warranties
8
(viii) has pursuant to any order, decree, judgment or agreement by which it is bound
become subject to any Environmental Liability that could reasonably be expected to result in
a liability in excess of $500,000, or has assumed any Environmental Liability for any person
that could reasonably be expected to result in a liability in excess of $500,000.
(b) Since the date of this Agreement, there has been no change in the status of the matters
disclosed on Annex 17 to this Schedule 2 that, individually or in the aggregate, has resulted in,
or materially increased the likelihood of, a Material Adverse Effect.
SECTION 1.18. Insurance. Annex 18 of this Schedule 2 sets forth a true, complete
and correct description of all insurance maintained by or on behalf of the Tensar Parties and the
Subsidiaries as of the Effective Date. As of the Effective Date, such insurance is in full force
and effect and all premiums have been duly paid. The Tensar Parties and the Subsidiaries are
insured by financially sound and reputable insurers and such insurance is in such amounts and
covering such risks and liabilities (and with such deductibles, retentions and exclusions) as are
in accordance with normal and prudent industry practice. None of the Tensar Parties nor any of the
Subsidiaries (a) has received written notice from any insurer (or any agent thereof) that
substantial capital improvements or other substantial expenditures will have to be made in order
to continue such insurance or (b) has any reason to believe that it will not be able to renew
its existing coverage as and when such coverage expires or to obtain similar coverage from similar
insurers at a substantially similar cost.
SECTION 1.19. Security Documents. (a) The Guarantee and Collateral
Agreement is effective to create in favor of TCO for the benefit of TCO and the Administrative
Agent, a legal, valid, binding and enforceable security interest in the Collateral described
therein and proceeds thereof and (i) in the case of the Pledged Securities described therein when
financing statements in appropriate form are filed in the offices specified on Annex 19(a) to this
Schedule 2 (as such schedule may be supplemented for any new Subsidiary in connection with the
execution of an Assumption Agreement (as defined in the Guarantee and Collateral Agreement), or
solely with respect to certificated Pledged Securities which have elected to be treated as
securities under Article 8 of the UCC, when such Pledged Securities are delivered to TCO and (ii)
in the case of all other Collateral described therein (other than Intellectual Property
Collateral), when financing statements in appropriate form are filed in the offices specified on
Annex 19 to this Schedule 2, the Lien created by the Guarantee and Collateral Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title and interest of
TCO in such Collateral and proceeds thereof, as security for the Obligations, in each case prior
and superior to the rights of any other person (except for Permitted Liens).
(b) Each US Intellectual Property Security Agreement is effective to create in favor of TCO
for the benefit of TCO and the Administrative Agent, a legal, valid, binding and enforceable
security interest in the Intellectual Property Collateral described therein and proceeds thereof.
When each US Intellectual Property Security Agreement is filed in the United States Patent and
Trademark Office and the United States Copyright Office, respectively, together with financing
statements in appropriate form filed in the offices specified in Annex 19(b) to this Schedule 2
and, with respect to Intellectual Property Collateral acquired by the US Guarantors after the
Effective Date, such other offices as may be specified by Tensar in written
Schedule 2, Representations and Warranties
9
notice to TCO and the
Administrative Agent, the Lien created by such US Intellectual Property Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title and interest of
the grantors thereunder in the Intellectual Property Collateral and proceeds thereof, as security
for the Obligations, in each case prior and superior in right to any other person (except for
Permitted Liens) (it being understood that subsequent recordings in the United States Patent and
Trademark Office and the United States Copyright Office may be necessary to perfect a lien on
registered trademarks, trademark applications and copyrights acquired by the grantors after the
date hereof).
(c) Each of the Mortgages is effective to create in favor of TCO for the benefit of TCO and
the Administrative Agent, a legal, valid, binding and enforceable Lien on, and security interest
in, all of the Tensar Parties’ right, title and interest in and to the Mortgaged Property
thereunder and proceeds thereof, and when the Mortgages are filed in the offices specified on Annex
19(c) to this Schedule 2 and, with respect to any Mortgage entered into after the Effective Date,
such other offices as may be specified by Tensar in written notice to TCO and the Administrative
Agent, the Lien created by each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the grantors thereof in such
Mortgaged Property and proceeds thereof, as security for the Obligations, in each case prior
and superior in right to any other person (except for Permitted Liens).
(d) Each of the Foreign Security Documents creates the Liens which such Foreign Security
Document purports to create and those Liens are valid and effective and no further actions,
consents, approvals, registrations or filings are required in connection with the perfection
thereof except as are set forth on Annex 4 to Schedule 2.
(e) The Lien in favor of TCO for the benefit of TCO and the Administrative Agent created
pursuant to the Foreign Security Documents has (or will have upon the taking of the actions,
consents, approvals, registrations or filings set forth on Annex 4 to Schedule 2) the first ranking
priority and it is not subject to any prior ranking or pari passu ranking Lien except for liens
permitted by Section 1.02 of Schedule 4.
SECTION 1.20. Location of Real Property. Annex 20 to this Schedule 2 lists
completely and correctly as of the Effective Date all Real Property and the addresses thereof,
indicating for each parcel whether it is owned or leased, including in the case of leased Real
Property, the landlord name, lease date and lease expiration date. The Tensar Parties and the
Subsidiaries own in fee or have valid leasehold interests in, as the case may be, all the real
property set forth on Annex 20 to this Schedule 2.
SECTION 1.21. Labor Matters. As of the Effective Date, there are no strikes,
lockouts or slowdowns against any Tensar Party or any Subsidiary pending or, to the knowledge of
Tensar Holdings or Luxco, threatened in writing. The hours worked by and payments made to
employees of the Tensar Parties and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law dealing with such
matters. All payments due from any Tensar Party or any Subsidiary, or for which any claim may be
made against any Tensar Party or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability on the books of such
Tensar Party or such Subsidiary. The consummation of the Luxco Transactions will not
Schedule 2, Representations and Warranties
10
give rise to
any right of termination or right of renegotiation on the part of any union under any collective
bargaining agreement to which any Tensar Party or any Subsidiary is bound.
SECTION 1.22. Liens. There are no Liens of any nature whatsoever on any of the
properties or assets of any Tensar Party or any of the Subsidiaries except for Liens permitted by
Section 1.02 of Schedule 4.
SECTION 1.23. Intellectual Property. Each of the Tensar Parties and each of the
Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the Tensar Parties and the
Subsidiaries does not infringe upon the rights of any other person, except for any such
infringements that, individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 1.24. Solvency. (a) Immediately after the consummation of the Luxco
Transactions to occur on the Effective Date and immediately following the effectiveness of this
Agreement and the other Related Financing Documents on the Effective Date, and after giving effect
to the application of the use of proceeds of the Luxco Transactions to be consummated on the
Effective Date, (i) the fair value of the assets of each US Guarantor, at a fair valuation, will
exceed its obligations and liabilities, subordinated, contingent or otherwise, (ii) the present
fair saleable value of the property of each US Guarantor will be greater than the amount that will
be required to pay the probable liability of its obligations and other liabilities, subordinated,
contingent or otherwise, as such obligations and other liabilities become absolute and matured,
(iii) each US Guarantor will be able to pay its obligations and liabilities, subordinated,
contingent or otherwise, as such obligations and liabilities become absolute and matured and, (iv)
no US Guarantor will have unreasonably small capital with which to conduct the business in which it
is engaged as such business is now conducted and is proposed to be conducted following the
Effective Date.
(b) No (i) corporate action, legal proceeding or other procedure or step described in
paragraph (q) of Schedule 5, or (ii) creditors’ process described in paragraph (r) of Schedule 5,
has been taken or, to the knowledge of Tensar Holdings or Luxco, threatened in relation to any
Tensar Party and none of the circumstances described in paragraphs (g), (h), (p) and (q) of
Schedule 5 applies to any Tensar Party.
SECTION 1.25. Acquisition Documentation. The Acquisition Documentation listed on
Annex 25 to this Schedule 2 constitutes all of the material agreements, instruments and
undertakings to which any of the Tensar Parties or any of the Subsidiaries is bound or by which any
of their respective property or assets is bound or affected relating to, or arising out of, the
Acquisition. None of such material agreements, instruments or undertakings has been amended,
supplemented or otherwise modified, and all such material agreements, instruments and undertakings
are in full force and effect. No party to any of the Acquisition Documentation is in default
thereunder of a material provision as of the Effective Date and no party thereto has the right to
terminate any of the material Acquisition Documentation.
SECTION 1.26. Permits. (a) Each Tensar Party has obtained and holds all
material Permits required in respect of all Real Property and for any other property otherwise
operated by
Schedule 2, Representations and Warranties
11
or on behalf of, or for the benefit of, such person and for the operation of each of
its businesses as presently conducted and as proposed to be conducted, (b) all such Permits are in
full force and effect, and each Tensar Party has performed and observed all material requirements
of such Permits, (c) no event has occurred that allows or results in, or after notice or lapse of
time would allow or result in, revocation or termination by the issuer thereof or in any other
impairment of the rights of the holder of any such Permit which revocation, termination or
impairment could reasonably be expected to have a Material Adverse Effect, (d) no such Permits
contain any restrictions, either individually or in the aggregate, that are materially burdensome
to any Tensar Party, or to the operation of any of its businesses or any property owned, leased or
otherwise operated by such
person, (e) each Tensar Party reasonably believes that each of its material Permits will be
timely renewed and complied with, without material expense, and that any additional material
Permits that may be required of such person will be timely obtained and complied with, without
material expense and (f) Tensar has no knowledge or reason to believe that any Governmental
Authority is considering limiting, suspending, revoking or renewing on materially burdensome terms
any such Permit.
SECTION 1.27. Material Contracts. The Netlon License is in full force and effect
(other than after its maturity in accordance with its terms) and, as of the Effective Date, the
Contech Agreement is in full force and effect, and the Tensar Parties are not in material breach of
their obligations under the Netlon License and, as of the Effective Date, the Contech Agreement.
SECTION 1.28. Status of Holdings. As of the Effective Date, Holdings has no
liabilities other than those permitted by Sections 1.01 and 1.08 of Schedule 4 to this Agreement.
SECTION 1.29. Status of Tensar Holdings. All contracts, agreements and intellectual
property owned by Tensar Holdings as of the Effective Date are set forth on Annex 29 to this
Schedule 2. As of the Effective Date, Tensar Holdings has no liabilities other than those
permitted by Section 1.08 of Schedule 4 to this Agreement.
SECTION 1.30. Customer Relations. Except as set forth in Annex 30 to this Schedule
2, as of the Effective Date, there exists no actual or, to the knowledge of Tensar Holdings or
Luxco, threatened termination or cancellation of, or any material adverse modification or
change in, the business relationship of any Tensar Party with (i) any customer whose purchases
during the preceding 12 months caused them to be ranked among the five largest customers of the
Tensar Parties, taken as a whole or (ii) the counterparties to the Contech Agreement.
SECTION 1.31. Broker’s or Finder’s Commissions. Except as set forth on Annex 31 to
this Schedule 2, no broker or finder brought about the transactions contemplated by this Agreement,
the Lease Agreement, the Commodities Purchase Agreement or the Second Lien Commodities Purchase
Agreement or the Acquisition Transactions, and none of Tensar Holdings, any other Tensar Party or
Affiliate thereof has any obligation to any person in respect of any finder’s or brokerage fees in
connection therewith.
SECTION 1.32. Patriot Act, Etc.
Schedule 2, Representations and Warranties
12
To the extent applicable, each Tensar Party is in compliance, in all material respects, with
the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations
of the Untied States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other
enabling legislation or executive order relating thereto, and (ii) the Patriot Act.
Schedule 2, Representations and Warranties
13
Execution Copy
Schedule 3
Each of Tensar Holdings and Luxco covenants and agrees with TCO and the Administrative Agent
that so long as this Agreement shall remain in effect and until all Obligations shall have been
paid in full and this Agreement has been terminated, each of Tensar Holdings and Luxco will, and
will cause each of their respective Subsidiaries to:
SECTION 1.01. Existence; Businesses and Properties. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect its legal existence,
except as otherwise expressly permitted under Section 1.05 of Schedule 4.
(b) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep
in full force and effect the rights, licenses, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names material to the conduct of its business; maintain and
operate such business in substantially the manner in which it is presently conducted and operated;
comply in all material respects with all applicable laws, rules, regulations and decrees and orders
of any Governmental Authority, whether now in effect or hereafter enacted; comply with the terms
of, and enforce its rights under, each material lease of real property and each other material
agreement so as to not permit any material uncured default on its part to exist thereunder, except
as otherwise expressly permitted under Section 1.05 of Schedule 4; and at all times maintain and
preserve all property material to the conduct of such business and keep such property in good
repair, working order and condition and subject to Section 10 of the Lease Agreement, from time to
time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements
and replacements thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times.
SECTION
1.02. Insurance. Subject to Section 15 of the Lease Agreement, keep
its insurable properties adequately insured at all times by financially sound and reputable
insurers; maintain such other insurance, to such extent and against such risks (and with such
deductibles, retentions and exclusions), including fire and other risks insured against by extended
coverage, as is customary for companies in the same or similar businesses operating in the same or
similar locations, including public liability insurance against claims for personal injury or death
or property damage occurring upon, in, about or in connection with the use of any properties owned,
occupied or controlled by it; maintain such other insurance as may be required by law; and maintain
such other insurance as otherwise required by the Security Documents (and comply with all covenants
in the Security Documents with respect thereto).
SECTION 1.03. Obligations and Taxes. Pay its Financing Obligations and other
obligations promptly and in accordance with their terms and pay and discharge promptly when due all
Taxes imposed upon it or upon its
income or profits or in respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or otherwise that, if
unpaid, might give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to any such Tax
so long as the validity or amount thereof shall be contested in good faith
Schedule 3, Affirmative Covenants
by appropriate
proceedings and Tensar Holdings, Luxco or the applicable Subsidiary shall have set aside on its
books adequate reserves with respect thereto in accordance with GAAP and such contest operates to
suspend collection of the contested obligation, tax, assessment or charge and enforcement of a Lien
and, in the case of a Mortgaged Property, there is no risk of forfeiture of such property. In
addition, none of the Tensar Parties or any of the Subsidiaries shall treat the Luxco Transactions
on the Effective Date as being a “reportable transaction” (within the meaning of Treasury
Regulation Section 1.6011-4).
SECTION 1.04. Financial Statements, Reports, etc. In the case of Tensar Holdings,
furnish to TCO and the Administrative Agent:
(a) within 90 days after the end of each fiscal year, its consolidated balance sheet
and related statements of income, stockholders’ equity and cash flows showing the financial
condition of Tensar Holdings and its consolidated subsidiaries as of the close of such
fiscal year and the results of its operations and the operations of such subsidiaries during
such year, together with comparative figures for the immediately preceding fiscal year, all
audited by Pricewaterhouse Coopers LLP or other independent public accountants of recognized
national standing and accompanied by an opinion of such accountants (which shall not be
qualified in any material respect) to the effect that such consolidated financial statements
fairly present in all material respects the financial condition and results of operations of
Tensar Holdings and its consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, together with all information for the final month of such fiscal
year set forth in Section 1.04(c) of this Schedule 3;
(b) within 45 days after the end of each of the first three fiscal quarters of each
fiscal year, its consolidated balance sheet and related statements of income, stockholders’
equity and cash flows showing the financial condition of Tensar Holdings and its
consolidated subsidiaries as of the close of such fiscal quarter and the results of its
operations and the operations of such subsidiaries during such fiscal quarter and the then
elapsed portion of the fiscal year, and comparative figures for the same periods in the
immediately preceding fiscal year, all certified by one of its Financial Officers as fairly
presenting in all material respects the financial condition and results of operations of
Tensar Holdings and its consolidated subsidiaries on a consolidated basis in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments and the absence of
footnotes, together with all information for the final month of such fiscal quarter set
forth in Section 1.04(c) of this Schedule 3;
(c) within 30 days after the end of the first two fiscal months of each fiscal
quarter, its consolidated balance sheet and related statements of income and cash flows
showing the financial condition of Tensar Holdings and its consolidated subsidiaries
during such fiscal month and the then elapsed portion of the fiscal year, all certified
by one of its Financial Officers as fairly presenting in all material respects, the
financial condition and results of operations of Tensar Holdings and its consolidated
subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes, together with
management’s discussion and analysis with respect to such financial statements;
Schedule 3, Affirmative Covenants
2
(d) concurrently with any delivery of financial statements under clause (a) or (b)
above, a certificate of the accounting firm (in the case of clause (a)) or Financial Officer
(in the case of clause (b)) opining on or certifying such statements (which certificate,
when furnished by an accounting firm, may be limited to accounting matters and disclaim
responsibility for legal interpretations) (i) certifying that no Event of Default or Default
has occurred and is continuing or, if such an Event of Default or Default has occurred and
is continuing, specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto and (ii) setting forth computations in reasonable
detail satisfactory to TCO and the Administrative Agent demonstrating compliance with the
covenants contained in Sections 1.11, 1.12. 1.13 and 1.14 of Schedule 4 and, in the case of
a certificate delivered with the financial statements required by clause (a) above, setting
forth Tensar Holdings’ calculation of Excess Cash Flow;
(e) Not more than 30 days after the end of each fiscal year of Tensar Holdings, a
detailed consolidated budget for the current fiscal year (including a projected consolidated
balance sheet and related statements of projected operations and cash flows as of the end of
and for such following fiscal year and setting forth the assumptions used for purposes of
preparing such budget) and, promptly when available, any significant revisions of such
budget;
(f) promptly after the same become publicly available, copies of all periodic and
other reports, proxy statements and other materials filed by Tensar Holdings, Tensar or any
Subsidiary with the United States Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of the functions of said Commission, or with any national
securities exchange, or distributed to its shareholders, as the case may be;
(g) promptly after the receipt thereof by Tensar Holdings, Tensar, Luxco or any of
the Subsidiaries, a copy of any “management letter” (whether in final or draft form)
received by any such person from its certified public accountants and the management’s
response thereto; and
(h) promptly, from time to time, such other information regarding the operations,
business affairs and financial condition of Tensar Holdings, Tensar, Luxco or any
Subsidiary, or compliance with the terms of any Lease/Purchase Facilities Document, as TCO
or the Administrative Agent may reasonably request.
SECTION 1.05. Litigation and Other Notices. Furnish to TCO and the Administrative Agent prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and extent thereof and the
corrective action (if any) taken or proposed to be taken with respect thereto;
(b) the filing or commencement of, or any written threat or written notice of
intention of any person to file or commence, any action, suit or proceeding, whether at law
or in equity or by or before any arbitrator or Governmental Authority, against any
Schedule 3, Affirmative Covenants
3
Tensar
Party or any Subsidiary that could reasonably be expected to result in a Material Adverse
Effect;
(c) the occurrence of any ERISA Event described in clause (b) of the definition
thereof or any other ERISA Event that, alone or together with any other ERISA Events that
have occurred, could reasonably be expected to result in liability of the Tensar Parties and
the Subsidiaries in an aggregate amount exceeding $500,000;
(d) any of the following environmental matters, specifying the nature and extent
thereof and the proposed response thereto, (1) any violation of Environmental Law, or
Release or threatened Release of Hazardous Materials, that could reasonably be expected to
require remedial action or give rise to Environmental Liability in excess of $500,000, (2)
any remedial action taken by any Tensar Party or its Subsidiaries or any other person in
response to any Release or threatened Release of Hazardous Materials that could reasonably
be expected to result in Environmental Liability in excess of $500,000, (3) any actions or
proceedings relating to any Environmental Liability (including any requests for information
by a Governmental Authority) that could reasonably be expected to be in excess of $500,000,
and (4) any Tensar Party’s or any Subsidiaries’ discovery of any occurrence or condition at
any Mortgaged Property, or on any adjoining or proximate real property, that could cause
such Mortgaged Property or any part thereof to be subject to any material restrictions on
the ownership, occupancy, transferability or use thereof under any Environmental Law;
(e) any Asset Sale, Equity Issuance or incurrence of Financing Obligations not
otherwise permitted by Section 1.01 of Schedule 4; and
(f) any development that has resulted in, or could reasonably be expected to result
in, a Material Adverse Effect.
SECTION 1.06. Information Regarding Collateral. (a) Furnish to TCO and the
Administrative Agent prompt written notice of any change (i) in any Tensar Party’s corporate name
or in any trade name used to identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any Tensar Party’s chief executive office, its principal place
of business, any office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral owned by it is located (including the establishment
of any such new office or facility), (iii) in any Tensar Party’s identity or corporate structure or
(iv) in any Tensar Party’s Federal Taxpayer Identification Number. Each of Tensar Holdings and
Luxco agree not to effect or permit any change referred to in the preceding sentence unless all
filings have been made under the UCC or
otherwise and all other actions have been taken that are required in order for TCO to continue
at all times following such change to have a valid, legal and perfected security interest in all
the Collateral. Each of Tensar Holdings and Luxco also agrees promptly to notify TCO and the
Administrative Agent if any material portion of the Collateral is damaged or destroyed.
(b) In the case of Tensar Holdings, each year, at the time of delivery of the annual
financial statements with respect to the preceding fiscal year pursuant to Section 1.04(a) of this
Schedule 3, deliver to TCO and the Administrative Agent a certificate of a Financial Officer
Schedule 3, Affirmative Covenants
4
setting forth the information required by the Perfection Certificate or confirming that there has
been no change in such information since the date of the Perfection Certificate delivered on the
Effective Date or the date of the most recent Perfection Certificate delivered pursuant to this
Section.
SECTION 1.07. Maintaining Records; Access to Properties and Inspections; Environmental
Assessments. (a) Keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and all requirements of law are made of all dealings and
transactions in relation to its business and activities. Each of Tensar Holdings and Luxco will,
and will cause each of their respective subsidiaries to, permit any representatives designated by
TCO or the Administrative Agent to visit and inspect the financial records and the properties of
Tensar Holdings or Luxco, as the case may be, or any of their respective subsidiaries at reasonable
times and as often as reasonably requested and to make extracts from and copies of such financial
records, and permit any such representatives designated by TCO or the Administrative Agent to
discuss the affairs, finances and condition of the Tensar Parties, as the case may be, or any of
its subsidiaries with the officers thereof and independent accountants therefor.
(b) At its election, TCO or the Administrative Agent may, at its own cost and expense,
retain an independent engineer or environmental consultant to conduct an environmental assessment
of the condition of any Mortgaged Property or facility of any Tensar Party or of any Tensar Party’s
compliance with Environmental Law. Each of Tensar Holdings and Luxco shall, and shall cause each
of their respective Subsidiaries to, cooperate in the performance of any such environmental
assessment and permit any such engineer or consultant designated by TCO or the Administrative Agent
to have full access to each property or facility at reasonable times and after reasonable notice to
Tensar Holdings and Luxco of the plans to conduct such an environmental assessment. Environmental
assessments conducted under this clause (b) shall be limited to visual inspections of the Mortgaged
Property or facility, interviews with representatives of the Tensar Parties or facility personnel,
and review of applicable records and documents pertaining to the property or facility, its
compliance with Environmental Law and any potential Environmental Liabilities.
(c) In the event that TCO or the Administrative Agent reasonably believe that (i) Hazardous
Materials have been Released or are threatened to be Released on or from any Mortgaged Property or
other facility of Tensar Holdings, Luxco or the Subsidiaries or (ii) that any such property or
facility is not being operated in material compliance with applicable Environmental Law; TCO or the
Administrative Agent may, at its election and after reasonable
notice to Tensar, retain an independent engineer or other qualified environmental consultant
to evaluate whether Hazardous Materials are present in the soil, groundwater, or surface water at
such Mortgaged Property or facility or whether the facilities or properties are being operated and
maintained in material compliance with applicable Environmental Laws. Such environmental
assessments may include detailed visual inspections of the Mortgaged Property or facility,
including any and all storage areas, storage tanks, drains, dry xxxxx and leaching areas, and the
taking of soil samples, surface water samples and groundwater samples as well as such other
reasonable investigations or analyses as are necessary. The scope of any such environmental
assessments under this Section 1.07(c) of this Schedule 3 shall be determined in the commercially
reasonable discretion of TCO and the Administrative Agent. Each of Tensar
Schedule 3, Affirmative Covenants
5
Holdings and Luxco
shall, and shall cause each of their respective Subsidiaries to, cooperate in the performance of
any such environmental assessment and permit any such engineer or consultant designated by TCO or
the Administrative Agent to have full access to each property or facility at reasonable times and
after reasonable notice to Luxco of the plans to conduct such an environmental assessment. All
environmental assessments conducted pursuant to this Section 1.07(c) of this Schedule 3 shall be at
Tensar or Luxco’s sole cost and expense.
SECTION 1.08. Use of Proceeds. Use the proceeds of the Luxco Commodities Purchase
Facility only for the purposes set forth in Section 1.13 of Schedule 2.
SECTION 1.09. Additional Collateral, etc. (a) With respect to any Collateral
acquired after the Effective Date or, in the case of inventory or equipment, any material
Collateral moved after the Effective Date by any Tensar Party (other than any Collateral described
in clauses (b), (c) or (d) of this Section) as to which TCO does not have a first priority
perfected security interest, promptly (and, in any event, within 10 days following the date of such
acquisition) (i) execute and deliver to TCO and the Administrative Agent such amendments to the
Guarantee and Collateral Agreement, the Foreign Security Documents or such other Security Documents
as TCO or the Administrative Agent deems necessary or advisable to grant to TCO a security interest
in such Collateral and (ii) take all actions necessary or advisable to grant to, or continue on
behalf of, TCO, a perfected first priority security interest in such Collateral, including entering
into landlord waivers and the filing of UCC financing statements (or other waivers, filings or
recordations) in such jurisdictions as may be required by the Guarantee and Collateral Agreement,
the Foreign Security Documents or by law or as may be reasonably requested by TCO or the
Administrative Agent.
(b) With respect to any fee interest in any Collateral consisting of Real Property or any
lease interest in Collateral consisting of Real Property with an annual rent in excess of
$1,000,000 acquired or leased after the Effective Date by any Tensar Party, promptly (and, in any
event, within 20 days following the date of such acquisition) (i) execute and deliver a first
priority Mortgage or such other Foreign Security Document reasonably requested by the
Administrative Agent in favor of TCO covering such real property and complying with the provisions
herein and in the Security Documents, (ii) with respect to Real Property owned by a US Guarantor,
provide the Secured Parties with title and extended coverage insurance in an
amount at least equal to the purchase price of any such Real Property owned by a US Guarantor
(or such other amount as TCO or the Administrative Agent shall reasonably specify), Surveys, and if
applicable, flood insurance, lease estoppel certificates, memoranda or amendments, all in
accordance with the standards for deliveries contemplated on the Effective Date, as described in
Annex 9 to this Schedule 3, (iii) deliver to TCO and the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to TCO and the Administrative Agent and (iv) deliver to TCO and
the Administrative Agent a notice identifying, and upon TCO’s or the Administrative Agent request,
provide a copy of, the consultant’s reports, environmental site assessments or other documents
relied upon by any Tensar Party to determine that any Real Property included in such Collateral
does not contain Hazardous Materials of a form or type or in a quantity or location that could
reasonably be expected to result in a material Environmental Liability or otherwise cause any of
the representatives or warranties contained in Section 1.17 of Schedule 2 to be untrue.
Schedule 3, Affirmative Covenants
6
(c) With respect to any Subsidiary (other than an Excluded Subsidiary) created or acquired
after the Effective Date (which, for the purposes of this clause (c), shall include any existing
Subsidiary that ceases to be an Excluded Subsidiary at any time after the Effective Date) by Tensar
Holdings, Luxco or any of the Subsidiaries, promptly (and, in any event, within 10 days following
such creation or the date of such acquisition) (i) execute and deliver to TCO such amendments to
the Guarantee and Collateral Agreement and the Foreign Security Documents as TCO or the
Administrative Agent deem necessary or advisable to grant to TCO a valid, perfected first priority
security interest in the Equity Interests in such new Subsidiary that are owned by any Tensar
Party, (ii) deliver to TCO the certificates, if any, representing such Equity Interests, together
with undated stock powers, in blank, executed and delivered by a duly authorized officer of such
Tensar Party, as the case may be, (iii) cause such new Subsidiary (A) to become a party to the
Guarantee and Collateral Agreement, the Foreign Security Documents or such other documentation
reasonably requested by TCO or the Administrative Agent to provide a Guarantee of the Obligations
and (B) to take such actions necessary or, in the reasonable opinion of TCO or the Administrative
Agent, advisable to grant to TCO a perfected first priority security interest in the Collateral
described in the Guarantee and Collateral Agreement and such Foreign Security Documents with
respect to such new Subsidiary, including the recording of instruments in the United States Patent
and Trademark Office and the United States Copyright Office and the filing of UCC financing
statements (or other recordations or filings) in such jurisdictions as may be required by the
Guarantee and Collateral Agreement, the Foreign Security Documents, any Intellectual Property
Security Agreement or by law or as may be reasonably requested by TCO, (iv) deliver to TCO and the
Administrative Agent legal opinions relating to the matters described above, which opinions shall
be in form and substance, and from counsel, reasonably satisfactory to TCO and the Administrative
Agent, and (v) deliver to TCO and the Administrative Agent a notice identifying, and upon TCO’s or
the Administrative Agent’s request, provide a copy of, the consultant’s reports, environmental site
assessments or other documents relied upon by any Tensar Party to determine that any such real
property owned by such Tensar Party does not contain Hazardous Materials of a form or type or in a
quantity or location that could reasonably be expected to result in a material Environmental
Liability or that acquisition of such Subsidiary will not cause any of the representations and
warranties contained in Section 1.17 of Schedule 2 to be untrue.
(d) With respect to any Excluded Subsidiary created or acquired after the Effective Date by
Tensar Holdings, Luxco or any Guarantor, promptly (and, in any event, within 10 days following such
creation or the date of such acquisition) (i) execute and deliver to TCO and the Administrative
Agent such amendments to the Guarantee and Collateral Agreement or Foreign Pledge Agreements as TCO
or the Administrative Agent deems necessary or advisable in order to grant to TCO a perfected first
priority security interest in the Equity Interests in such new Excluded Subsidiary that is owned by
any Tensar Party, (ii) deliver to TCO the certificates representing such Equity Interests, together
with undated stock powers, in blank, executed and delivered by a duly authorized officer of such
Tensar Party and take such other action as may be necessary or, in the reasonable opinion of TCO or
the Administrative Agent, desirable to perfect the security interest of TCO thereon, (iii) deliver
to TCO and the Administrative Agent legal opinions relating to the matters described above, which
opinions shall be in form and substance, and from counsel, reasonably satisfactory to TCO and the
Administrative Agent, and (iv) deliver to TCO and the Administrative Agent a notice identifying,
and upon TCO’s or the Administrative Agent’s request, provide a copy of, the consultant’s reports,
environmental site
Schedule 3, Affirmative Covenants
7
assessments or other documents relied upon by Luxco or any other Tensar Party to
determine that any real property owned by such Subsidiary does not contain Hazardous Materials of a
form or type or in a quantity or location that could reasonably be expected to result in a material
Environmental Liability or that acquisition of such Subsidiary will not cause any of the
representations and warranties contained in Section 1.17 of Schedule 2 to be untrue.
SECTION 1.10. Further Assurances. (a) From time to time duly authorize, execute and
deliver, or cause to be duly authorized, executed and delivered, such additional instruments,
certificates, financing statements, agreements or documents, and take all such actions (including
filing UCC and other financing statements), as TCO or the Administrative Agent may reasonably
request, for the purposes of implementing or effectuating the provisions of this Agreement and the
other Luxco Commodities Purchase Facility Documents, or of more fully perfecting or renewing the
rights of TCO with respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds or products thereof or with respect to any other property or assets
hereafter acquired by Tensar Holdings, Luxco or any Subsidiary which may be deemed to be part of
the Collateral) pursuant hereto or thereto. Upon the exercise by TCO or the Administrative Agent
of any power, right, privilege or remedy pursuant to this Agreement or the other Luxco Commodities
Purchase Facility Documents which requires any consent, approval, recording, qualification or
authorization of any Governmental Authority, each of Tensar Holdings and Luxco will execute and
deliver, or will cause the execution and delivery of, all applications, certifications, instruments
and other documents and papers that TCO or the Administrative Agent may be required to obtain from
either Tensar Holdings, Luxco or any of the Subsidiaries for such governmental consent, approval,
recording, qualification or authorization.
(b) Without limitation of the foregoing, with respect to any Foreign Subsidiary (other than an
Excluded Subsidiary), promptly do all such acts or execute all such documents (including
assignments, transfers, mortgages, charges, notices and instructions) as TCO or the Administrative
Agent may reasonably specify (and in such form as TCO or the Administrative Agent may reasonably
require in favor of TCO or its nominee(s), for the benefit of TCO and the Administrative Agent):
(i) to perfect the Lien created or intended to be created under or
evidenced by the Foreign Security Documents (which may include the execution of a mortgage,
charge, or assignment over all or any of the assets which are, or are intended to be, the subject
of the Foreign Security Documents) or for the exercise of any rights, powers and remedies of TCO or
the Administrative Agent provided by or pursuant to the Luxco Commodities Purchase Facility
Documents or by law; (ii) to confer on TCO or the Administrative Agent a Lien over any property and
assets of such Foreign Subsidiary located in any jurisdiction equivalent or similar to the Lien
intended to be conferred by or pursuant to the Foreign Security Documents; and/or (iii) to
facilitate the realization of the assets which are, or are intended to be, the subject of the
Foreign Security Documents. Luxco and each Foreign Subsidiary shall take all such action as is
available to it (including making all filings and registrations) as may be necessary for the
purpose of the creation, perfection, protection or maintenance of any Lien conferred or intended to
be conferred on TCO or the Administrative Agent by or pursuant to the Luxco Commodities Purchase
Facility Documents.
(c) Notwithstanding the foregoing section (a) and (b) and Section 1.09 of this Xxxxxxxx 0,
Xxxxxx Holdings and Luxco shall have no obligation to deliver a Foreign Pledge
Schedule 3, Affirmative Covenants
8
Agreement with
respect to the shares of any Subsidiary unless such Subsidiary, as of the most recently ended four
fiscal quarter period, had either net assets in excess of $1,500,000 or after tax profit in excess
of $1,500,000.
SECTION 1.11. Rent and Profit Limitation. Tensar Holdings shall ensure that, within
90 days following the Effective Date, and for at least three years following October 31, 2005 no
less than 50% of Tensar’s Financing Obligations set forth in the Lease, the Commodities Purchase
Agreement, this Agreement and the Second Lien Commodities Purchase Agreement effectively bears a
fixed rental or profit rate.
SECTION 1.12. Landlord and Storage Agreements. Provide TCO with copies of all
agreements not previously provided or made available to TCO between each Tensar Party and any
landlord or warehouseman which owns any premises at which any inventory may, from time to time, be
kept.
SECTION 1.13. Compliance with Laws. Comply with all federal, state, local and
foreign laws and regulations applicable to it, including Executive Order No. 13224 and the Patriot
Act and those laws and regulations relating to ERISA and labor matters and Environmental Laws and
Environmental Permits, except to the extent that the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
SECTION 1.14. Netlon License. Maintain at all times the Netlon License in full force
and effect.
SECTION 1.15. Patriot Act, Etc. Provide all documentation and other information
required by TCO to satisfy its obligations with respect under “know your customer” and anti-money
laundering rules and regulations, including without limitation the Patriot Act and any other
similar law, rule or regulation of any relevant jurisdiction to the extent requested by TCO or the
Administrative Agent. No part of the proceeds from the Asset Purchase Agreement or any proceeds from the
sale of Metals will be used, directly or indirectly, for any payments to any governmental official
or employee, political party, official of a political party, candidate for political office, or
anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain
any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.
SECTION 1.16. Financial Assistance. Comply in all respects with Sections 151 to
158 of the United Kingdom Companies Xxx 0000 and any equivalent legislation in other jurisdictions
including in relation to the execution of the Foreign Security Documents and payment of amounts due
under this Agreement.
SECTION 1.17. Pari Passu Ranking. Ensure that at all times any unsecured and
unsubordinated claims of TCO or the Administrative Agent against Tensar Holdings or any of its
Subsidiaries under the Luxco Commodities Purchase Facility Documents rank at least pari passu with
the claims of all unsecured and unsubordinated creditors of Tensar Holdings or such Subsidiary
except those creditors whose claims are mandatorily preferred by laws of general application to
companies.
Schedule 3, Affirmative Covenants
9
SECTION 1.18. Post Closing Obligations
Take the actions required to be taken on Annex 16 of this Schedule 3 within the time frames
set forth therein, including any extensions permitted thereunder.
SECTION 1.19. Pensions. (a) Luxco shall ensure that all pension schemes operated by or
maintained for it or its Subsidiaries and/or any of its or their employees (as the case may be) are
fully funded based on the minimum funding requirement under Section 56 of the United Kingdom
Pensions Act 1995 or the statutory funding objective under Section 222 of the United Kingdom
Pensions Act 2004 and that no action or omission is taken by either Luxco or any of its
Subsidiaries in relation to such a pension scheme which has or is reasonably likely to have a
Material Adverse Effect (including, without limitation, the termination or commencement of
winding-up proceedings of any such pension scheme or Luxco or any of its Subsidiaries ceasing to
employ any member of such a pension scheme).
(b) Except for the Tensar International Limited Retirement Benefits Plan (1976), Luxco shall
ensure that neither it nor any of its Subsidiaries is or has been at any time an employer (for the
purposes of Sections 38 to 51 of the United Kingdom Pensions Act 2004) of an occupational pension
scheme which is not a money purchase scheme (both terms as defined in the United Kingdom Pension
Schemes Act 1993) or “connected” with or an “associate” of (as those terms are under in Sections 39
or 43 of the United Kingdom Pensions Act 2004) such an employer.
(c) Luxco shall deliver to the Administrative Agent at such times as those reports are
prepared in order to comply with the then current statutory or auditing requirements (as applicable
either to the trustees of any relevant schemes or to Luxco), actuarial reports in relation to all
pension schemes mentioned in (a) above.
(d) Luxco shall promptly notify the Administrative Agent of any material change in the rate of
contributions to any pension schemes mentioned in (a) above paid or recommended to be paid (whether
by the scheme actuary or otherwise) or required (by law or otherwise).
(e) Luxco shall immediately notify the Administrative Agent of any investigation or proposed
investigation by the UK Pensions Regulator which may lead to the issue of a Financial Support
Direction or a Contribution Notice to it or any of its Subsidiaries.
(f) Luxco shall immediately notify the Administrative Agent if it or any of its Subsidiaries
receives a Financial Support Direction or a Contribution Notice from the UK Pensions Regulator.
Schedule 3, Affirmative Covenants
10
Execution
Copy
Schedule 4
Each of Tensar Holdings and Luxco covenants and agrees with TCO and the Administrative Agent
that, so long as this Agreement shall remain in effect and until all Obligations have been paid in
full and this Agreement has been terminated, neither Tensar Holdings nor Luxco will, nor will it
cause or permit any of their respective Subsidiaries to:
SECTION 1.01. Financing Obligations. Incur, create, assume or permit to exist any
Financing Obligations, or make or permit any amounts to be invested or held in financing
transactions, except:
(a) Financing Obligations existing on the date hereof and set forth in Annex 1 to
this Schedule 4 and any Permitted Refinancing Obligations in respect of any such Financing
Obligations;
(b) Financing Obligations created hereunder and under the other Luxco Commodities
Purchase Facility Documents;
(c) unsecured intercompany Financing Obligations (i) of Tensar and its Subsidiaries
to the extent permitted by Section 1.04(a) of this Schedule 4 and (ii) of Tensar Holdings
and its Subsidiaries to the extent permitted by Section 1.04(l) of this Schedule 4, so long,
in each case, as such Financing Obligations are subordinated to the Obligations pursuant to
the Affiliate Subordination Agreement or such other subordination agreement as is reasonably
acceptable to TCO and any interest of Luxco or any Guarantor thereunder is pledged to TCO
pursuant to the Security Documents;
(d) Financing Obligations secured by Liens permitted by Section 1.02(i) of this
Schedule 4 (including Capital Lease Obligations and Synthetic Lease Obligations) in an
aggregate stated amount not exceeding $4,000,000 at any time outstanding;
(e) Financing Obligations of Tensar under (i) the Lease Agreement in an aggregate
stated amount (excluding profit amount) not to exceed $147,000,000 and Financing Obligations
of the US Guarantors under any Guarantees in respect of such Financing Obligations and any
Permitted Refinancing Obligations in respect of any such Financing Obligations, (ii) under
the Commodities Purchase Agreement in an aggregate stated amount (excluding profit amount)
not to exceed $40,000,000 and Financing Obligations of the US Guarantors under any
Guarantees in respect of such Financing Obligations and any Permitted Refinancing
Obligations in respect of any such Financing Obligations, and (iii) the Second Lien
Commodities Purchase Facility in aggregate stated amount (excluding profit amount) not to
exceed $84,000,000 and Financing Obligations of the US Guarantors under any Guarantees in
respect of such Financing Obligations and any Permitted Refinancing Obligations in respect
of any such Financing Obligations;
(f) Financing Obligations of any person that becomes a Subsidiary of Tensar after the
date hereof; provided that (i) such Financing Obligations exist at the time such
person becomes a Subsidiary and is not created in contemplation of or in connection with
Schedule 4, Negative Covenants
such person becoming a Subsidiary, (ii) immediately before and after such person
becomes a Subsidiary, no Default or Event of Default shall have occurred and be continuing
and (iii) the aggregate principal amount of Financing Obligations permitted by this Section
1.01(f) shall not exceed $4,000,000 at any time outstanding;
(g) Financing Obligations under performance bonds or with respect to workers’
compensation claims, in each case incurred in the ordinary course of business;
(h) Financing Obligations arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn against insufficient
funds in the ordinary course of business; provided that such Financing Obligations
are promptly covered by Tensar Holdings or any Subsidiary;
(i) Financing Obligations of Tensar Holdings under the Tensar Holdings Commodities
Purchase Facility and any Permitted Refinancing Obligations in respect of any such Financing
Obligations, provided that any such Financing Obligations are subordinated to the
Obligations of Tensar Holdings under the Commodities Purchase Facility Documents pursuant to
the Tensar Holdings Subordination Agreement;
(j) Guarantees made in the ordinary course of business by any US Guarantor of
Financing Obligations otherwise permitted to be incurred by Tensar or any other US Guarantor
under this Section 1.01, and
(k) other unsecured Financing Obligations of Tensar Holdings or its Subsidiaries in
an aggregate principal amount not exceeding $4,000,000 at any time outstanding.
SECTION 1.02. Liens. Create, incur, assume or permit to exist any Lien on any
property or assets (including Equity Interests or other securities of any person, including any
Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect
of any thereof, except:
(a) Liens on property or assets of Tensar and its Subsidiaries existing on the date
hereof and set forth in Annex 2 of this Schedule 4; provided that such Liens shall
secure only those obligations which they secure on the date hereof and refinancings,
extensions, renewals and replacements thereof permitted hereunder;
(b) any Lien created under the Lease/Purchase Facilities Documents;
(c) any Lien securing Financing Obligations permitted by Section 1.01(f) of this
Schedule 4 existing on any property or asset prior to the acquisition thereof by Tensar or
any Subsidiary; provided that (i) such Lien is not created in contemplation of or in
connection with such acquisition, (ii) such Lien does not apply to any other property or
assets of Tensar or any of its Subsidiaries and (iii) in the case of Mortgaged Property,
such Lien does not (A) materially interfere with the use, occupancy and operation of any
Mortgaged Property, (B) materially reduce the fair market value of such Mortgaged
Property but for such Lien or (C) result in any material increase in the cost of
operating, occupying or owning or leasing such Mortgaged Property;
Schedule 4, Negative Covenants
2
(d) Liens for taxes not yet due or which are being contested in compliance with
Section 1.03 of Schedule 3;
(e) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business and securing obligations that are not due
and payable or which are being contested in compliance with Section 1.03 of Schedule 3;
(f) pledges and deposits made in the ordinary course of business in compliance with
workmen’s compensation, unemployment insurance and other social security laws or
regulations;
(g) deposits to secure the performance of bids, trade contracts (other than for
Financing Obligations), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(h) zoning restrictions, easements, rights-of-way, restrictions on use of real
property and other similar encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount and do not materially detract from the value
of the property subject thereto or interfere with the ordinary conduct of the business of
Tensar or any of its Subsidiaries or the ability of any of Tensar or any of its Subsidiaries
to utilize such property for its intended purpose;
(i) Liens securing Financing Obligations, in an amount not to exceed $4,000,000 at
any time outstanding, incurred to finance the acquisition (or construction) of fixed or
capital assets by Tensar or any of its Subsidiaries; provided that (i) such
security interests are incurred, and the Financing Obligations secured thereby is created,
within 90 days after such acquisition (or construction), (ii) such Liens do not at any time
encumber any property other than the property financed by such Financing Obligations and
(iii) the amount of Financing Obligations secured thereby is not increased;
(j) judgment Liens securing judgments not constituting an Event of Default;
(k) any interest or title of a lessor or sublessor under any lease entered into by
Tensar or any of its Subsidiaries in the ordinary course of business and covering only the
assets so leased;
(l) Liens on the collateral securing obligations under the Second Lien Commodities
Purchase Facility; provided that such Liens are subordinated to the Liens securing
the Obligations in accordance with the terms of the Intercreditor Agreement; and
(m) Liens on cash deposits and other funds maintained with a depositary institution,
in each case arising in the ordinary course of business by virtue of any statutory or common
law provision relating to banker’s liens; provided that (i) the
applicable deposit account is not a dedicated cash collateral account and is not
subject to restrictions against access by Tensar Holdings or any of its Subsidiaries in
excess of those set forth in regulations promulgated by the Board and (ii) the applicable
deposit account
Schedule 4, Negative Covenants
3
is not intended by Tensar Holdings or any of its Subsidiaries to provide
collateral or security to the applicable depositary institution or any other person.
SECTION 1.03. Sale and Lease-Back Transactions. Enter into any arrangement, other
than the transactions contemplated by the Lease Documents and the NAG Sale-Leaseback, directly or
indirectly, with any person whereby it shall sell or transfer any property, real or personal or
mixed, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent
or lease such property or other property which it intends to use for substantially the same purpose
or purposes as the property being sold or transferred unless (a) the sale of such property is
permitted by Section 1.05 of this Schedule 4 and (b) (i) the aggregate amount of any obligations of
Tensar Holdings and its Subsidiaries with respect to operating or capital leases entered into in
connection therewith does not exceed the amount which Tensar Holdings and its Subsidiaries would be
permitted to incur as Capital Lease Obligations under Section 1.01 of this Schedule 4 and (ii) the
Liens arising in connection therewith are permitted by Section 1.02 of this Schedule 4.
SECTION 1.04. Investments, Loans and Advances. Purchase, hold or acquire any Equity
Interests, evidences of obligations or other securities of, make or permit to exist any loans or
advances or capital contributions to, or make or permit any amounts to be invested or held in
financing transactions, or make or permit to exist any investment or any other interest in, any
other person (all of the foregoing, “Investments”), except:
(a) (i) Investments by Tensar Holdings, Holding, Tensar and the Subsidiaries existing
on the date hereof in the Equity Interests of Holdings, Tensar and the Subsidiaries and (ii)
additional Investments by Tensar Holdings, Holdings, Tensar and the Subsidiaries in the
Equity Interests of Holdings, Tensar and its Subsidiaries; provided that (A) any
such Equity Interests held by a Tensar Party shall be pledged pursuant to the Guarantee and
Collateral Agreement or a Foreign Pledge Agreement, (B) the aggregate amount of Investments
by Tensar Parties (other than Luxco and its subsidiaries) in Subsidiaries of Tensar that are
not US Guarantors shall not exceed $14,000,000, at any time outstanding; provided
that the aggregate amount of Investments in Subsidiaries of Tensar other than Luxco or
the Luxco Subsidiary Guarantors shall not exceed $4,000,000, at any time outstanding and (C)
if such Investment shall be in the form of a loan or advance, such loan or advance shall be
unsecured and subordinated to the Obligations pursuant to an Affiliate Subordination
Agreement and, if such loan or advance shall be made by a Tensar Party, it shall be
evidenced by a promissory note pledged to TCO pursuant to the Security Documents;
(b) Permitted Investments;
(c) Investments received in connection with the bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business;
(d) Tensar Holdings and its Subsidiaries may make loans and advances in the ordinary
course of business to their respective employees so long as the aggregate
Schedule 4, Negative Covenants
4
principal amount
thereof at any time outstanding (determined without regard to any write-downs or write-offs
of such loans and advances) shall not exceed $750,000;
(e) advances made to Xxxxxxx X. Xxxx, Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx pursuant
to the Split Dollar Insurance Documents;
(f) advances not to exceed $150,000 in the aggregate to NAG employees for the purpose
of funding payments by such employees of tax liabilities incurred by them with respect to up
to 65,000 shares of restricted common stock of Tensar Holdings in the aggregate issued to
them under the stock option and restricted stock agreements entered into pursuant to the
Tensar Holdings 2000 Incentive Plan;
(g) Tensar Holdings may hold promissory notes of employees of Tensar Holdings and its
Subsidiaries made by such employees in exchange for the purchase by such employees of Tensar
Holdings stock pursuant to the Restricted Stock Purchase Program;
(h) the Acquisition and Permitted Acquisitions; provided that the aggregate purchase
price for all Permitted Acquisitions shall not exceed (i) $40,000,000 over the term of this
Agreement or (ii) $25,000,000 for any single Permitted Acquisition;
(i) Investments, loans and advances existing on the date hereof and set forth on
Annex 4 to this Schedule 4;
(j) extensions of trade credit in the ordinary course of business;
(k) Investments made as a result of the receipt of non-cash consideration from a
sale, transfer or other disposition of any asset in compliance with Section 1.05 of this
Schedule 4;
(l) intercompany loans and advances (i) to Tensar Holdings or to Holdings to the
extent that Tensar may pay dividends to Holdings and Holdings may pay dividends to Tensar
Holdings pursuant to Section 1.06 of this Schedule 4 (and in lieu of paying such dividends)
and (ii) to Holdings in an amount not to exceed $11,000,000 per annum to pay certain
operating expenses of Holdings and its Subsidiaries incurred in the ordinary course of
business and consistent with past practice, provided that the amount of such loans shall not
exceed the amount that is required to pay such expenses and the proceeds of such
intercompany loans are used to pay such expenses within 20 days of receipt thereof;
provided further that any such intercompany loans and advances described in clause
(i) or (ii) shall be made for the purposes, and shall be subject to all the applicable
limitations set forth in, Section 1.06 of this Schedule 4 and shall be unsecured and
subordinated to the Obligations pursuant to an Affiliate Subordination Agreement; and
(m) in addition to Investments permitted by clauses (a) through (l) above, additional
Investments by Tensar and its Subsidiaries so long as the aggregate amount invested, loaned
or advanced pursuant to this clause (m) (determined without regard to any write-downs or
write-offs of such investments, loans and advances) does not exceed $4,000,000 in the
aggregate.
Schedule 4, Negative Covenants
5
SECTION 1.05. Mergers, Consolidations, Sales of Assets and Acquisitions. Enter into any
transaction of merger or consolidation or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor), license
or sub-license (as licensor or sub-licensor), exchange, transfer or otherwise dispose of (in one
transaction or in a series of transactions) all or any part of its business, assets or property of
any kind whatsoever, including the Equity Interests of a Subsidiary, whether real, personal or
mixed and whether tangible or intangible (whether now owned or hereafter acquired) or purchase,
lease or otherwise acquire (in one transaction or a series of transactions) all or any substantial
part of the assets of any other person, except for:
(a) the sale by Tensar and its Subsidiaries of inventory in the ordinary course of business;
(b) the sale or discount by Tensar or any of its Subsidiaries in each case without recourse
and in the ordinary course of business of overdue accounts receivable arising in the ordinary
course of business, but only in connection with the compromise or collection thereof consistent
with customary industry practice (and not as part of any bulk sale or financing transaction);
(c) the disposition of obsolete or worn out assets, scrap and Permitted Investments in the
ordinary course of business;
(d) the NAG Sale-Leaseback provided that the proceeds of such sale are used to pay in full
the purchase price for the NAG Facility;
(e) the purchase and sale of commodities by Luxco under this Agreement and the purchase and
sale of commodities by Tensar under the Commodities Purchase Agreement;
(f) the purchase and sale of commodities by Tensar Holdings pursuant to the Tensar Holdings
Commodities Purchase Agreement and by Tensar pursuant to the Second Lien Commodities Purchase
Agreement; and
(g) if at the time thereof and immediately after giving effect thereto no Event of Default
or Default shall have occurred and be continuing, (w) the merger or consolidation of any wholly
owned Subsidiary into or with Tensar in a transaction in which Tensar is the surviving corporation,
(x) the merger or consolidation of any wholly owned Subsidiary into or with any other wholly owned
Subsidiary in a transaction in which the surviving entity is a wholly owned Subsidiary and no
person other than Tensar or a wholly owned Subsidiary receives any consideration (provided
that if any party to any such transaction is (A) a Tensar Party, the surviving entity of such
transaction shall be a Tensar Party and (B) a Domestic Subsidiary, the surviving entity of such
transaction shall be a Domestic Subsidiary), (y) Permitted Acquisitions
by Tensar or any of its Subsidiaries (otherwise permitted by Section 1.04(h) of this Schedule
4), and (z) the sale, lease, sub-lease, license, sub-license or other disposition of any part of
its business, assets or property (except any Equity Interests of Tensar, Luxco or Tensar UK) so
long as (i) such Asset Sale is for consideration at least 80% of which is cash (and no portion of
the remaining consideration shall be in the form of Financing Obligations of Tensar or any of its
Subsidiaries), (ii) such consideration is at least equal to the fair market value of the assets
being
Schedule 4, Negative Covenants
6
sold, transferred, leased, licensed or disposed of and (iii) the fair market value of all
assets sold, transferred, leased, licensed or disposed of pursuant to this clause (z) shall not
exceed $40,000,000 in the aggregate.
SECTION 1.06.
Restricted Payments; Restrictive Agreements. (a) Declare or
make, or agree to declare or make, directly or indirectly, any Restricted Payment (including
pursuant to any Synthetic Purchase Agreement), or incur any obligation (contingent or otherwise) to
do so; provided, however, that (i) any wholly-owned Subsidiary may declare and pay
dividends or make other distributions to its equity holders, (ii) so long as no Event of Default or
Default shall have occurred and be continuing or would result therefrom, Tensar may, or may make
distributions to Holdings, and Holdings may make distributions to Tensar Holdings so that Tensar
Holdings may, repurchase its Equity Interests owned by employees of Tensar Holdings or the
Subsidiaries or make payments to employees of Tensar Holdings or the Subsidiaries upon termination
of employment in connection with the exercise of stock options, stock appreciation rights or
similar equity incentives or equity based incentives pursuant to management incentive plans or in
connection with the death or disability of such employees in an aggregate amount not to exceed
$2,000,000 in any fiscal year and (iii) Tensar may make Restricted Payments to Holdings and
Holdings may make Restricted Payments to Tensar Holdings (x) in an amount not to exceed, when taken
together with the aggregate amount of all loans or advances made pursuant to Section 1.04(l) of
this Schedule 4 for such purpose, $350,000 in any fiscal year to the extent necessary to pay
general corporate and overhead expenses incurred by Tensar Holdings in the ordinary course of
business and (y) in an amount necessary to pay the Tax liabilities of Tensar Holdings directly
attributable to (or arising as a result of) the operations of Tensar and its Subsidiaries;
provided that (A) the amount of such dividends pursuant to clause (iii)(y) shall not exceed
the amount that Tensar and its Subsidiaries would be required to pay in respect of United States
Federal, State and local Taxes were Tensar and its Subsidiaries to pay such Taxes as stand-alone
taxpayers and (B) all Restricted Payments made to Tensar Holdings pursuant to clause (iii) shall be
used by Tensar Holdings for the purpose specified herein within 20 days of the receipt thereof.
(b) Enter into, incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (i) the ability of Tensar Holdings, Tensar or any
Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (ii)
the ability of any Subsidiary to pay dividends or other distributions with respect to any of its
Equity Interests or to make or repay loans or advances to Tensar or any other Subsidiary or to
Guarantee Financing Obligations of Tensar or any other Subsidiary; provided that (A) the
foregoing shall not apply to restrictions and conditions imposed by law or by any Lease/Purchase
Facilities Document, (B) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (C) the foregoing shall not apply to restrictions and conditions imposed
on any Subsidiary that is not a Tensar Party by the terms of any Financing Obligations of such
Subsidiary permitted to be incurred hereunder, (D) clause (i) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to secured Financing Obligations
permitted by this Agreement if such restrictions or conditions apply only to the property or assets
securing such Financing Obligations, (E) clause (i) of the foregoing shall not apply to
restrictions or conditions imposed by the Related Financing Documents, as in effect on the date
hereof, and
Schedule 4, Negative Covenants
7
(F) clause (i) of the foregoing shall not apply to customary provisions in leases,
licenses and other contracts restricting the assignment thereof.
SECTION 1.07. Transactions with Affiliates. Except for transactions by or among
Tensar Parties and except as set forth on Annex 7 to this Schedule 4, sell or transfer any property
or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except that (a) Tensar and any of its Subsidiaries may
engage in any of the foregoing transactions in the ordinary course of business at prices and on
terms and conditions not less favorable to Tensar or such Subsidiary than could be obtained on an
arm’s-length basis from unrelated third parties, (b) Restricted Payments may be made to the extent
provided in Section 1.06 of this Section 4 and (c) if no Default or Event of Default has occurred
and is continuing, Tensar may pay to the Sponsor or its Affiliates (i) an annual management fee in
an amount not to exceed $1,000,000 per year and (ii) deferred merger and acquisition fees earned in
connection with the Original Acquisition, in an amount not to exceed $5,775,000 in the aggregate.
SECTION 1.08.
Business of Tensar Holdings, Holdings, Tensar and Subsidiaries; Limitation
on Hedging Agreements. (a) (i) With respect to Tensar Holdings, engage in any business
activities or have any assets or liabilities other than (A) its ownership of the Equity Interests
in Holdings, liabilities incidental thereto, including its liabilities pursuant to the
Lease/Purchase Facilities Documents, the Second Lien Commodities Purchase Facility Documents and
liabilities under the Tensar Holdings Commodities Purchase Facility Documents and (B) advances made
to employees of Holdings or its Subsidiaries to enable them to participate in the Restricted Stock
Purchase Program, provided that Tensar Holdings may also issue or sell shares of its Equity
Interests for cash so long as (x) the proceeds thereof are applied in prepayment in accordance with
this Agreement, and (y) no Change in Control occurs after giving effect thereto, and (ii) with
respect to Holdings, engage in any business activities, other than the business conducted by it as
of the date hereof, or have any assets or liabilities other than its ownership of the Equity
Interest in Tensar and liabilities incidental thereto, including its liabilities pursuant to the
Lease/Purchase Facilities Documents and the Second Lien Commodities Purchase Facility Documents and
liabilities consisting of administrative expenses of Tensar and its Subsidiaries.
(b) With respect to Tensar and its Subsidiaries, engage at any time in any business or
business activity other than the business conducted by it as of the date hereof and business
activities reasonably incidental thereto. Except as permitted under this Agreement, no Tensar
Party shall (i) make any changes in any of its business objective, purposes or operations that
could reasonably be expected to have or result in a Material Adverse Effect, (ii) make any
change in its capital structure as described in Annex 8 to this Schedule 4 (other than as
permitted or contemplated by Section 1.08(a)(i) of this Schedule 4) including the issuance or sale
of any shares of Equity Interests, warrants or other securities convertible into Equity Interests
or any revision of the terms of its outstanding Equity Interests (other than the issuance or sale
of Equity Interest in connection with intercompany Investments otherwise permitted under Section
1.04 of this Schedule 4); or (iii) amend its charter or bylaws in a manner that would adversely
affect TCO or such Tensar Party’s duty or ability to pay the Obligations.
Schedule 4, Negative Covenants
8
(c) Enter into any Hedging Agreement other than (a) any such agreement or arrangement
entered into in the ordinary course of business and consistent with prudent business practice to
hedge or mitigate risks to which Tensar or any of its Subsidiaries is exposed in the conduct of its
business or the management of its liabilities or (b) any such agreement entered into to hedge
against fluctuations in interest rates or currency incurred in the ordinary course of business and
consistent with prudent business practice; provided that in each case such agreements or
arrangements shall not have been entered into for speculative purposes.
(d) With respect to Luxco, engage in any business activities or have any assets or
liabilities other than its ownership of the Equity Interests in TTC UK Holdings Limited and
liabilities incidental thereto, including its liabilities pursuant to the Luxco Commodities
Purchase Facility Documents.
SECTION 1.09. Other Financing Obligations and Agreements; Amendments to Acquisition
Documentation. (a) (i) Permit any waiver, supplement, modification, amendment,
termination or release of any indenture, instrument or agreement pursuant to which any Material
Obligations (other than any of the Lease Documents, the US Commodities Purchase Facility
Documents, the Second Lien Commodities Purchase Facility Documents or the Tensar Holdings
Commodities Purchase Facility Documents) of Tensar Holdings, Tensar or any of the Subsidiaries is
outstanding if the effect of such waiver, supplement, modification, amendment, termination or
release would materially increase the obligations of the obligor or confer additional material
rights on the holder of such Financing Obligations in a manner adverse to Tensar Holdings, Tensar,
any of the Subsidiaries, TCO or the Administrative Agent or (ii) permit any waiver, supplement,
modification, amendment, termination or release of any Second Lien Commodities Purchase Document
except in accordance with the Intercreditor Agreement or of any Tensar Holdings Commodities
Purchase Facility Document except in accordance with the Tensar Holdings Subordination Agreement.
(b) (i) Make any distribution, payment or prepayment whether in cash, property, securities
or a combination thereof, in respect of, or pay, or offer or commit to pay, or directly or
indirectly (including pursuant to any Synthetic Purchase Agreement) redeem, repurchase, retire or
otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any Financing
Obligations (other than any Financing Obligations under the Lease/Purchase Facilities Documents),
except (A) regular scheduled payments thereunder as and when due (to the extent not prohibited by
applicable subordination provisions), (B) refinancings of Financing Obligations permitted by
Section 1.01 of this Schedule 4, (C) the payment of secured Financing Obligations that becomes due
as a result of the voluntary sale or transfer of the property or assets
securing such Financing Obligations, or (D) so long as no Event of Default or Default shall
have occurred and be continuing or would result therefrom, the payment of intercompany Financing
Obligations or (ii) pay in cash any amount in respect of any Financing Obligations or preferred
Equity Interests (including any obligations with respect to the Tensar Holdings Commodities
Purchase Facility) that may at the obligor’s option be paid in kind or in other securities.
(c) (i) Permit any waiver, supplement, modification, amendment, termination or release of,
or fail to enforce in a commercially reasonable manner the terms and conditions of, any of the
indemnities and licenses furnished to Tensar Holdings, Luxco or the Subsidiaries pursuant to the
Acquisition Documentation such that after giving effect thereto such indemnities
Schedule 4, Negative Covenants
9
or licenses shall
be materially less favorable to the interests of the Tensar Parties with respect thereto or (ii)
otherwise permit any waiver, supplement, modification, amendment, termination or release of, or
fail to enforce in a commercially reasonable manner the terms and conditions of, any of the
Acquisition Documentation except to the extent that such waiver, supplement, modification,
amendment, termination or release or failure to enforce could not reasonably be expected to have a
Material Adverse Effect.
SECTION 1.10. Capital Expenditures. Permit the aggregate amount of Capital
Expenditures made by Tensar and its Subsidiaries in any period set forth below to exceed the amount
set forth below for such period:
| Fiscal Year | Amount | |||
2006 |
$ | 25,000,000 | ||
2007 |
$ | 12,000,000 | ||
2008 and each fiscal year thereafter until 2013 |
$ | 10,000,000 | ||
The amount of permitted Capital Expenditures set forth above in respect of any fiscal year
commencing with the fiscal year ending on December 31, 2006, shall be increased (but not decreased)
by 50% of (a) the amount of unused permitted Capital Expenditures for the immediately preceding
fiscal year less (b) an amount equal to unused Capital Expenditures carried forward to such
preceding fiscal year.
SECTION 1.11. Financing Coverage Ratio. Permit the Financing Coverage Ratio during
any period set forth below to be less than the ratio set forth opposite such period below:
| Fiscal Quarter Ended: | Ratio | |||
June 30, 2006 |
1.60:1.00 | |||
September 30, 2006 |
1.60:1.00 | |||
December 31, 2006 |
1.60:1.00 | |||
March 31, 2007 |
1.60:1.00 | |||
June 30, 2007 |
1.75:1.00 | |||
September 30, 2007 |
1.75:1.00 | |||
December 31, 2007 |
2.00:1.00 | |||
March 31, 2008 |
2.00:1.00 | |||
June 30, 2008 |
2.00:1.00 | |||
September 30, 2008 |
2.00:1.00 | |||
December 31, 2008 |
2.25:1.00 | |||
March 31, 2009 |
2.25:1.00 | |||
June 30, 2009 |
2.25:1.00 | |||
September 30, 2009 |
2.25:1.00 | |||
Schedule 4, Negative Covenants
10
| Fiscal Quarter Ended: | Ratio | |||
December 31, 2009 |
2.50:1.00 | |||
March 31, 2010 |
2.50:1.00 | |||
June 30, 2010 |
2.50:1.00 | |||
September 30, 2010 |
2.50:1.00 | |||
December 31, 2010 and each fiscal quarter thereafter until 2013 |
3.00:1.00 | |||
SECTION 1.12. Leverage Ratio. Permit the Leverage Ratio during any period set forth
below to be greater than the ratio set forth opposite such period below:
| Fiscal Quarter Ended: | Ratio | |||
June 30, 2006 |
6.75:1.00 | |||
September 30, 2006 |
6.75:1.00 | |||
December 31, 2006 |
6.75:1.00 | |||
March 31, 2007 |
6.75:1.00 | |||
June 30, 2007 |
6.25:1.00 | |||
September 30, 2007 |
6.00:1.00 | |||
December 31, 2007 |
5.50:1.00 | |||
March 31, 2008 |
5.50:1.00 | |||
June 30, 2008 |
5.50:1.00 | |||
September 30, 2008 |
5.50:1.00 | |||
December 31, 2008 |
4.75:1.00 | |||
March 31, 2009 |
4.75:1.00 | |||
June 30, 2009 |
4.75:1.00 | |||
September 30, 2009 |
4.75:1.00 | |||
December 31, 2009 |
4.25:1.00 | |||
March 31, 2010 |
4.25:1.00 | |||
June 30, 2010 |
4.25:1.00 | |||
September 30, 2010 |
4.25:1.00 | |||
December 31, 2010 |
3.75:1.00 | |||
March 31, 2011 |
3.75:1.00 | |||
June 30, 2011 |
3.75:1.00 | |||
September 30, 2011 |
3.75:1.00 | |||
December 31, 2011 |
3.25:1.00 | |||
March 31, 2012 |
3.25:1.00 | |||
June 30, 2012 |
3.25:1.00 | |||
September 30, 2012 |
3.25:1.00 | |||
Schedule 4, Negative Covenants
11
| Fiscal Quarter Ended: | Ratio | |||
December 31, 2012 |
2.75:1.00 | |||
March 31, 2013 |
2.75:1.00 | |||
June 30, 2013 |
2.75:1.00 | |||
September 30, 2013 |
2.75:1.00 | |||
December 31, 2013 |
2.75:1.00 | |||
SECTION 1.13. Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio during any period
set forth below to be less than the ratio set forth opposite such period below:
| Fiscal Quarter Ended: | Ratio | |||
June 30, 2006 |
1.15:1.00 | |||
September 30, 2006 |
1.15:1.00 | |||
December 31, 2006 |
1.15:1.00 | |||
March 31, 2007 |
1.15:1.00 | |||
June 30, 2007 |
1.25:1.00 | |||
September 30, 2007 |
1.25:1.00 | |||
December 31, 2007 |
1.35:1.00 | |||
March 31, 2008 |
1.35:1.00 | |||
June 30, 2008 |
1.35:1.00 | |||
September 30, 2008 |
1.35:1.00 | |||
December 31, 2008 |
1.40:1.00 | |||
March 31, 2009 |
1.40:1.00 | |||
June 30, 2009 |
1.40:1.00 | |||
September 30, 2009 |
1.40:1.00 | |||
December 31, 2009 and each fiscal quarter thereafter
through 2013 |
1.50:1.00 | |||
SECTION 1.14. First Lien Leverage Ratio . Permit the First Lien Leverage Ratio during any period
set forth below to be greater than the ratio set forth opposite such period below:
| Fiscal Quarter Ended: | Ratio | |||
June 30, 2006 |
4.75:1.00 | |||
September 30, 2006 |
4.75:1.00 | |||
December 31, 2006 |
4.75:1.00 | |||
March 31, 2007 |
4.75:1.00 | |||
Schedule 4, Negative Covenants
12
| Fiscal Quarter Ended: | Ratio | |||
June 30, 2007 |
4.50:1.00 | |||
September 30, 2007 |
4.25:1.00 | |||
December 31, 2007 |
4.00:1.00 | |||
March 31, 2008 |
4.00:1.00 | |||
June 30, 2008 |
4.00:1.00 | |||
September 30, 2008 |
4.00:1.00 | |||
December 31, 2008 |
3.50:1.00 | |||
March 31, 2009 |
3.50:1.00 | |||
June 30, 2009 |
3.50:1.00 | |||
September 30, 2009 |
3.50:1.00 | |||
December 31, 2009 |
2.50:1.00 | |||
March 31, 2010 |
2.50:1.00 | |||
June 30, 2010 |
2.50:1.00 | |||
September 30, 2010 |
2.50:1.00 | |||
December 31, 2010 |
2.25:1.00 | |||
March 31, 2011 |
2.25:1.00 | |||
June 30, 2011 |
2.25:1.00 | |||
September 30, 2011 |
2.25:1.00 | |||
December 31, 2011 |
2.00:1.00 | |||
March 31, 2012 |
2.00:1.00 | |||
June 30, 2012 |
2.00:1.00 | |||
September 30, 2012 |
2.00:1.00 | |||
December 31, 2012 |
1.75:1.00 | |||
March 31, 2013 |
1.75:1.00 | |||
June 30, 2013 |
1.75:1.00 | |||
September 30, 2013 |
1.75:1.00 | |||
December 31, 2013 |
1.75:1.00 | |||
SECTION 1.15. Fiscal Year. With respect to Tensar Holdings , Tensar or Luxco, change its fiscal
year-end to a date other than December 31.
SECTION 1.16. Limitation on Accounting Changes. Make or permit any material change
in accounting policies or reporting practices without advising TCO, unless such changes are
required by GAAP or applicable law; provided, that (a) compliance with the covenants set
forth on this Schedule 4 shall be determined on the basis of GAAP without giving effect to the relevant change and (b) in connection with any such change Tensar Holdings will provide TCO with
guidance regarding how to reconcile financial statements prepared after the implementation
Schedule 4, Negative Covenants
13
of such material change with financial statements provided to TCO and prepared before the implementation of
such material change.
SECTION 1.17. Leases. No Tensar Party shall enter into any operating leases after
the Effective Date for equipment or real property if the aggregate of all such operating lease
payments payable in any year for all Tensar Parties on a consolidated basis would exceed the sum of
(i) $1,000,000 and (ii) the aggregate of lease payments for the leases set forth in Annex 17 to
this Schedule 4.
Schedule 4, Negative Covenants
14
Execution
copy
Schedule 5
Events of Default
Events of Default
Upon the occurrence of any of the following events (each, an “Event of Default”):
(a) any representation or warranty made or deemed made in or in connection with any Luxco
Commodities Purchase Facility Document, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other instrument furnished in
connection with or pursuant to any Luxco Commodities Purchase Facility Document, shall prove to
have been false or misleading in any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any portion of Purchase Price when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any Agreed Profit or any other Obligation (other
than an amount referred to in clause (b) above), when and as the same shall become due and payable,
and such default shall continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance by Tensar Holdings, Luxco or
any Subsidiary of any covenant, condition or agreement contained in Sections 1.01(a), 1.02, 1.05(a)
and (e), 1.08 or 1.16 of Schedule 3 or in Schedule 4;
(e) default shall be made in the due observance or performance by Tensar Holdings, Luxco or
any Subsidiary of any covenant, condition or agreement contained in any Luxco Commodities Purchase
Facility Document (other than those specified in clauses (b), (c) or (d) above) and such default
shall continue unremedied for a period of 30 days after the earlier of (i) the date on which Tensar
Holdings, Luxco or any Subsidiary has, or should have had, knowledge thereof and (ii) the date of
which TCO or the Administrative Agent notifies Tensar Holdings or Tensar of any such default;
(f) (i) any of Tensar Holdings, Tensar, Luxco or any Subsidiary shall (i) fail to pay any
amount or profit or rent due with respect thereto, regardless of amount, due in respect of any
Material Obligation, when and as the same shall become due and payable, or (ii) any other event or
condition occurs that results in any Material Obligation becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Obligation or any trustee or agent on its or their
behalf to cause any Material Obligation to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity; provided that this
clause (ii) shall not apply to any secured Financing Obligations that become due as a result of the
voluntary sale or transfer of the property or assets securing such Financing Obligations;
(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in
a court of competent jurisdiction seeking (i) relief in respect of Tensar Holdings, Holdings,
Tensar, Luxco or any Material Subsidiary, or of a substantial part of the property or
Schedule 5 Events of Default
assets of Tensar Holdings, Holdings, Tensar, Luxco or such Material Subsidiary, under Title 11
of the United States Code, as now constituted or hereafter amended, or any other Federal, state or
foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for Tensar Holdings, Holdings,
Tensar, Luxco or any Material Subsidiary or for a substantial part of the property or assets of
Tensar Holdings, Holdings, Tensar, Luxco or such Material Subsidiary or (iii) the winding-up or
liquidation of Tensar Holdings, Holdings, Tensar, Luxco or any Material Subsidiary and such
proceeding or petition shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(h) any of Tensar Holdings, Holdings, Tensar, Luxco or any Material Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Tensar Holdings, Holdings, Tensar, Luxco or any
Material Subsidiary or for a substantial part of the property or assets of Tensar Holdings,
Holdings, Tensar Luxco or any Material Subsidiary, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally
to pay its obligations as they become due or (vii) take any action for the purpose of effecting any
of the foregoing;
(i) one or more judgments for the payment of money in an aggregate amount in excess of
$4,000,000 (to the extent not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) or other judgments that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse Effect shall be
rendered against Tensar Holdings, Tensar, Luxco, any Subsidiary or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during which execution shall not
be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of Tensar Holdings, Tensar, Luxco or any Subsidiary to enforce any such
judgment;
(j) an ERISA Event described in clause (b) of the definition thereof shall have occurred or
any other ERISA Event shall have occurred that, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of Tensar and its ERISA Affiliates in
an aggregate amount exceeding $4,000,000;
(k) any Guarantee under the Guarantee and Collateral Agreement, the Luxco Guarantee or
otherwise constituting Obligations for any reason shall cease to be in full force and effect (other
than in accordance with its terms), or any Guarantor or Luxco shall deny that it has any further
liability under such Guarantee (other than as a result of the discharge of such Guarantor, or
Luxco, as the case may be, in accordance with the terms of the Lease/ Purchase Facilities
Documents);
Schedule 5, Events of Default
2
(l) any Lien purported to be created under any Security Document shall cease to be, or shall
be asserted by any Tensar Party not to be, a valid, perfected and, with respect to TCO, first
priority (except as otherwise expressly provided in this Agreement or such Security Document) Lien
on any material Collateral covered thereby, except to the extent that any such loss of perfection
or priority results from the failure of TCO (or it lenders) to maintain possession of certificates
representing Equity Interests pledged under the Guarantee and Collateral Agreement and the Foreign
Security Documents;
(m) there shall have occurred a Change in Control;
(n) a default under or breach of the Netlon License shall have occurred and be continuing that
would permit the licensor to terminate the Netlon License;
(o) the Netlon License shall terminate for any reason, other than at maturity in accordance
with its terms;
(p) (i) Luxco or any Foreign Subsidiary which is a Material Subsidiary (each a “Foreign
Material Subsidiary”) is unable or admits inability to pay its debts as they fall due or is
deemed to or declared to be unable to pay its debts under applicable law, suspends or threatens to
suspend making payments on any of its debts or, by reason of actual or anticipated financial
difficulties, commences negotiations with one or more of its creditors with a view to rescheduling
any of its indebtedness; or (ii) the value of the assets of Luxco or any Foreign Material
Subsidiary is less than its liabilities (taking into account contingent and prospective
liabilities); or (iii) a moratorium is declared in respect of any indebtedness of Luxco or any
Foreign Material Subsidiary. If a moratorium occurs, the ending of the moratorium will not remedy
any Event of Default caused by that moratorium;
(q) any corporate action, legal proceedings or other procedure or step is taken in relation to
(i) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution,
administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or
otherwise) of Luxco or any Foreign Material Subsidiary; (ii) a composition, compromise, assignment
or arrangement with any creditor of Luxco or any Foreign Material Subsidiary; (iii) the appointment
of a liquidator, receiver, administrator, administrative receiver, compulsory manager or other
similar officer in respect of Luxco or any Foreign Material Subsidiary or any of its assets; or
(iv) enforcement of any Lien over any material assets of Luxco or any Foreign Material Subsidiary,
or any analogous procedure or step is taken in any jurisdiction; provided that the
foregoing shall not apply to any winding-up petition which is frivolous or vexatious and is
discharged, stayed or dismissed within 14 days of commencement or, if earlier, the date on which it
is advertised; or
(r) Any expropriation, attachment, sequestration, distress or execution or any analogous
process in any applicable jurisdiction affects any material asset or assets of Luxco or any
Material Subsidiary thereof;
then, and in every such event (other than an event under Title 11 of the United States Code with
respect to Tensar Holdings or Luxco described in clauses (g) or (h) above), and at any time
thereafter during the continuance of such event TCO or the Administrative Agent may declare its
Schedule 5, Events of Default
3
obligation to make the Luxco Commodities Purchase Facility available to Luxco, or to enter into
Luxco Transactions at the request of Tensar, to be terminated, whereupon the same shall immediately
terminate; or may declare all Obligations payable by Luxco or Tensar Holdings under this Agreement,
including, but not limited to, the Murabaha Price, to be forthwith due and payable, whereupon all
such Obligations shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by Luxco and Tensar
Holdings, anything contained herein or in any other Luxco Commodities Purchase Facility Document to
the contrary notwithstanding; and in any event with respect to Tensar Holdings or Luxco described
in clauses (g) or (h) above under Title 11 of the United States Code with respect to Tensar
Holdings or Luxco, all obligations to make this Luxco Commodities Purchase Facility available to
Luxco, or to enter into Transactions, shall automatically terminate and all Obligations payable by
Luxco under this Agreement shall automatically become due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by Luxco and Tensar
Holdings and TCO and the Administrative Agent shall have the right to take all or any actions and
exercise any remedies available to a secured party under the Security Documents or applicable law
or in equity.
Schedule 5, Events of Default
4