United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012 | ||||
OR |
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[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-11846
AptarGroup, Inc.
DELAWARE | 36-3853103 |
475 WEST TERRA COTTA AVENUE, SUITE E, CRYSTAL LAKE, ILLINOIS 60014
815-477-0424
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class
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Name of each exchange on which registered
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Common Stock $.01 par value Preferred Stock Purchase Rights |
New York Stock Exchange New York Stock Exchange |
Securities Registered Pursuant to Section 12 (g) of the Act:
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ý | No o |
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o | No ý |
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý | No o |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ý | No o |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Act. (Check one):
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o | No ý |
The aggregate market value of the common stock held by non-affiliates as of June 30, 2012 was $3,275,207,521.
The number of shares outstanding of common stock, as of February 21, 2013, was 66,213,433 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to stockholders in connection with the Annual Meeting of Stockholders to be held May 8, 2013 are incorporated by reference into Part III of this report.
AptarGroup, Inc.
FORM 10-K
For the Year Ended December 31, 2012
INDEX
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2012 Form 10-K
We are a leading global solution provider of a broad range of innovative packaging delivery solutions primarily for the beauty, personal care, home care, pharmaceutical, food and beverage markets. Our creative packaging solutions enhance the convenience, safety and security of consumers around the globe and allow our customers to differentiate their products in the market.
Our business was started in the late 1940's, manufacturing and selling aerosol valves in the United States, and has grown primarily through the acquisition of relatively small companies and internal expansion. We were incorporated in Delaware in 1992. In this report, we may refer to AptarGroup, Inc. and its subsidiaries as "AptarGroup" or the "Company".
We have manufacturing facilities located throughout the world including North America, Europe, Asia and South America. We have over 5,000 customers with no single customer accounting for greater than 6% of our 2012 net sales.
Sales of our dispensing systems have traditionally grown at a faster rate than the overall packaging industry as consumers' preference for convenience has increased and product differentiation through packaging design has become more important to our customers. Consumer product marketers have converted many of their products to packages with dispensing systems that offer the benefit of enhanced shelf appeal, convenience, cleanliness or accuracy of dosage. We expect this trend to continue.
Pumps are finger-actuated dispensing systems that dispense a spray or lotion from non-pressurized containers. The style of pump used depends largely on the nature of the product being dispensed, from small, fine mist pumps used with perfume and pharmaceutical products to lotion pumps for more viscous formulas.
Closures are primarily dispensing closures but to a lesser degree can include non-dispensing closures. Dispensing closures are plastic caps, primarily for plastic containers such as bottles and tubes, which allow a product to be dispensed without removing the cap.
Aerosol valves dispense product from pressurized containers. The majority of the aerosol valves that we sell are continuous spray valves, with the balance being metered dose inhaler valves.
Our periodic and current reports are available, free of charge, through a link on the Investors page of our website (www.aptar.com), as soon as reasonably practicable after the material is electronically filed with, or furnished to, the SEC. Also posted on our website are the charters for our Audit, Compensation, Governance and Executive Committees, our Governance Principles, our Code of Business Conduct & Ethics and our Director Independence Standards. Within the time period required by the SEC and the New York Stock Exchange ("NYSE"), we will post on our website any amendment to or waiver to the Code of Business Conduct & Ethics applicable to any executive officer or director. The information provided on our website is not part of this report and is therefore not incorporated herein by reference.
DESCRIPTION OF APTARGROUP'S REPORTING SEGMENTS
FINANCIAL INFORMATION ABOUT SEGMENTS
The Company operates in the packaging components industry, which includes the development, manufacture and sale of consumer product dispensing systems. AptarGroup's organizational structure consists of three market-focused business segments which are Beauty + Home, Pharma and Food + Beverage. This is a strategic structure which allows us to be more closely aligned with our customers and the markets in which they operate. Operations that sell dispensing systems primarily to the beauty, personal care and home care markets form the Beauty + Home segment. Operations that sell dispensing systems or primary packaging components to the prescription drug and consumer health care markets form the Pharma segment. Operations that sell dispensing systems to the food and beverage markets form the Food + Beverage segment. Each of these three business segments is described more fully below. A summary of revenue, by segment, from external customers, profitability and total assets based upon this reporting structure for each of the last three years is shown in Note 15 to the Consolidated Financial Statements in Item 8 (which is incorporated by reference herein).
BEAUTY + HOME
The Beauty + Home segment is our largest segment in terms of net sales and total assets representing 63% and 53% of AptarGroup's Net Sales and Total Assets, respectively. The Beauty + Home segment primarily sells pumps, closures, aerosol valves and accessories to the personal care and home care markets and pumps and decorative components to the beauty market. We believe we are the leading supplier of beauty and personal care fine mist spray pumps worldwide and the second largest supplier of personal care lotion pumps worldwide. We believe we are also one of the largest continuous spray aerosol
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2012 Form 10-K
valve suppliers worldwide. We believe we are the largest supplier of dispensing closures in the United States, and the second largest supplier in Europe.
Beauty. Sales to the beauty market accounted for approximately 46% of the segment's total net sales in 2012. The beauty market requires a broad range of spray pumps and sampling dispensing systems to meet functional as well as aesthetic requirements. A considerable amount of research, time and coordination with our customers is required to qualify a pump for use with their products. Within the market, we expect the use of pumps to continue to increase, particularly in the cosmetics and sampling sectors of this market. In the cosmetic sector, packaging for certain products such as natural and organic cosmetics and anti-aging lotions continue to provide us with growth opportunities. Our cosmetic lotion pumps, airless dispensing systems and lotion sampling devices, and decorative capabilities will also provide growth opportunities. We have experienced significant growth in recent years in South America particularly in the sales of our products to the fragrance market and we believe there are significant opportunities for growth in the sale of our products for cosmetic applications in Asia.
Personal Care. Sales to the personal care market accounted for approximately 44% of the segment's total net sales in 2012. Personal care products include fine mist spray pumps, lotion pumps, closures and continuous spray aerosol valves. Typical personal care spray pump applications include hair care, body care and sun care products. Typical lotion pump applications include skin moisturizers, hand sanitizers and soap. Typical personal care closures applications include shampoos and conditioners. Typical personal care continuous aerosol valve applications include hair care products, deodorants, shaving creams and sun care products. Our research and development teams continue to design unique accessories that increase the value of our continuous aerosol valve offerings.
Home Care. Sales to the home care market accounted for approximately 8% of the segment's total net sales in 2012. Home care products primarily use continuous or metered dose spray aerosol valves, closures and to a lesser degree spray and lotion pumps. Applications for continuous spray valves include disinfectants, spray paints, insecticides and automotive products. Metered dose valves are used for air fresheners. Closure applications include liquid detergents and household cleansers. Spray and lotion pump applications primarily include household and industrial cleaners.
PHARMA
The Pharma segment is our second largest segment in terms of net sales and total assets, accounting for 25% and 29% of AptarGroup's Net Sales and Total Assets, respectively, and is our most profitable segment. We believe we are the leading supplier of pumps and metered dose inhaler valves ("MDI's") to the pharmaceutical market worldwide and we believe we are the number three supplier of elastomer primary packaging components worldwide. Characteristics of this market include (i) governmental regulation of our pharmaceutical customers, (ii) contaminant-controlled manufacturing environments, and (iii) a significant amount of time and research from initially working with pharmaceutical companies at the molecular development stage of a medication through the eventual distribution to the market. We have clean-room manufacturing facilities in Argentina, China, France, Germany, India, Switzerland and the United States. We believe that the conversion from traditional medication forms such as pills to value-added, convenient dispensing systems will continue to offer opportunities for our business.
Prescription. Sales to the prescription market accounted for approximately 72% of the segment's total net sales in 2012. Pumps sold to the prescription market deliver medications nasally, orally or topically. Currently the majority of our pumps sold are for nasal allergy treatments. Recently, our nasal dispensing pumps were also sold on pain management products primarily for post-operative pain management. Potential opportunities for conversion from pills to pump dispensing systems include treatment for vaccines, additional cold and flu treatments and hormone replacement therapies.
MDI's are used for dispensing precise amounts of medication. This aerosol technology allows medication to be broken up into very fine particles, which enables the drug to be delivered typically via the pulmonary system. Currently the majority of our MDI's sold are used for respiratory ailments.
We continue to develop new dispensing systems and accessories in this segment. Our innovative dose indicator for use with MDI's lets patients know how many doses are left in a container. This dose indicator recently launched in the market on two different productsa European asthma medication and a U.S. allergy treatment. We also developed new delivery device technologies featuring lock-out capabilities. We are also entering new categories such as sleep aids and hormone replacement therapies. While we expect that these new products will come to market in the future, it is difficult to estimate when, as the rigors of pharmaceutical regulations affect the timing of product introductions by our pharmaceutical customers which use our dispensing systems.
On July 3, 2012, the Company completed its acquisition of RumplerTechnologies S.A., together with its direct and indirect subsidiaries ("Stelmi") for approximately $188 million. Stelmi is a producer of elastomer primary packaging components for injectable drug delivery and operates two manufacturing plants located in the Normandy region of France and also has a research and development facility located near Paris.
During 2011, we acquired a minority investment in Oval Medical Technologies Limited (Oval Medical) for approximately $3.2 million. Oval Medical has broad expertise in the design and development of injectable drug delivery devices. This
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2012 Form 10-K
acquisition represents a significant opportunity for the Pharma segment to enter a new category and broaden our product portfolio and customer reach.
Consumer Health Care. Sales to the consumer health care market accounted for approximately 28% of the segment's total net sales in 2012. Applications for this market are similar to the pharmaceutical market; however these applications are sold over the counter without a prescription. Typical consumer health care spray pump applications include nasal decongestants, nasal salines and cough and cold applications. Typical consumer health care valve applications include nasal saline using our bag-on valve technology. Other products sold to this market include dispensing closures primarily for ophthalmic liquid products and lotion and airless systems for dermal applications.
FOOD + BEVERAGE
The Food + Beverage segment is our smallest segment in terms of net sales and total assets representing 12% and 10% of AptarGroup's Net Sales and Total Assets, respectively, but is our fastest growing segment. We primarily sell dispensing closures and to a lesser degree, non-dispensing closures, spray pumps and aerosol valves to the food and beverage markets.
Sales of dispensing closures have grown as consumers worldwide have demonstrated a preference for a package utilizing the convenience of a dispensing closure. At the same time, consumer marketers are trying to differentiate their products by incorporating performance enhancing features such as no-drip dispensing, inverted packaging and directional flow to make packages simpler to use, cleaner and more appealing to consumers.
Food. Sales to the food market accounted for approximately 56% of the segment's total net sales in 2012. Food products primarily use dispensing closures and to a lesser degree, non-dispensing closures, spray pumps and aerosol valves. Applications for dispensing closures include sauces, condiment and powdered infant formula closures while non-dispensing closures include granular and powder additives. Applications for continuous spray valves include cooking sprays. Spray pump applications primarily include butter or salad dressing sprays.
Beverage. Sales to the beverage market accounted for approximately 41% of the segment's total net sales in 2012. Beverage products primarily utilize dispensing closure technologies. Sales of dispensing closures to the beverage market have increased significantly over the last several years as we continue to see an increase of interest from marketers using dispensing closures for their products. Examples of beverage products currently utilizing dispensing closures include bottled water, sport and energy drinks, juices and recently concentrated water flavorings.
We believe there are good growth opportunities in the food and beverage markets reflecting the continued and growing acceptance in this market of our dispensing technology, and additional conversion from traditional packages to packages using dispensing closure systems, in particular for the single and multi-serve non-carbonated beverage industry. We expanded our North American presence in 2011 by investing in a facility in Lincolnton, North Carolina which primarily serves our Food + Beverage customers. During 2010, we acquired assets related to a licensed technology that bonds aluminum to plastic (BAPTM). This technology allows for a liner with a pull ring to be bonded directly to the container providing added convenience for the consumer in the removal of the liner and is being used in certain powdered infant formula and fruit preservative closures.
GROWTH STRATEGY
We seek to enhance our position as a leading global solution provider of innovative packaging delivery solutions by (i) expanding geographically, (ii) converting non-convenient, non-dispensing applications to convenient dispensing systems, (iii) replacing current dispensing applications with more value-added dispensing products and (iv) developing or acquiring new dispensing, safety or security technologies.
We are committed to expanding geographically to serve local and multinational customers in existing and emerging areas. Targeted areas include Asia, South America, and Eastern Europe. During 2011, we acquired a producer of dispensing closures and added a separate pharmaceutical manufacturing facility, both in India, to expand our geographic presence in the country. We continue to invest increasing amounts of our capital expenditures in these areas to be able to produce locally and increase our product offerings.
We believe significant opportunities exist to introduce our dispensing systems to replace non-dispensing applications. Examples of these opportunities include potential conversion in the food and beverage markets for single and multi-serve non-carbonated beverages, condiments, cooking oils and infant formula. In the beauty market, potential conversion includes creams and lotions currently packaged in jars or tubes using removable non-dispensing closures, converting to lotion pumps or dispensing closures. We have developed and patented a thin sprayable dispensing system that can be inserted into magazines to replace the traditional scent strips. We believe this innovative system offers growth opportunities, particularly for fragrance samples. We have also developed a similar miniature flat sample for viscous creams as well as a small pump for use on vials for cosmetic lotions.
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2012 Form 10-K
In addition to introducing new dispensing applications, we believe there are significant growth opportunities in converting existing pharmaceutical delivery systems to our more convenient dispensing pump or MDI systems. Examples of opportunities in the pharmaceutical market include ways to dispense vaccines, cold and flu treatments, hormone replacement therapies, breakthrough pain medication, sleep aids and ophthalmic applications. Examples of opportunities in the beauty and home care markets include replacing closures on sun care applications with our bag-on valve technology and replacing finger actuators on fragrance applications with bulb atomizers.
We are committed to developing or acquiring new dispensing technologies that can lead to the development of completely new dispensing systems or can complement our existing product offerings. In 2012, we acquired Stelmi which produces elastomer primary packaging components for injectable drug delivery. We also manufacture decorative packaging components primarily for the high end of the beauty market. This technology includes advanced molding capabilities as well as decoration (vacuum metallization and varnishing) of plastic components. We have also acquired assets related to the BAPTM technology that provides opportunities for additional product applications requiring a liner. In 2011, we acquired a minority investment in Oval Medical for their broad expertise in the design and development of injectable drug delivery devices. This investment along with the acquisition of Stelmi, represents a significant opportunity for the Pharma segment to enter a new category and broaden our product portfolio and customer reach.
RESEARCH AND DEVELOPMENT
One of our competitive strengths is our commitment to innovation. Our commitment to innovation has resulted in an emphasis on research and development. Our research and development activities are directed toward developing affordable new innovative packaging delivery solutions and adapting existing products for new markets or customer requirements. Our research and development personnel are primarily located in the United States, France, Germany and Italy. In certain cases, our customers share in the research and development expenses of customer initiated projects. Occasionally, we acquire or license from third parties technologies or products that are in various stages of development. Expenditures for research and development activities, net of certain research and development credits, were $65.4 million, $67.0 million and $51.4 million in 2012, 2011 and 2010, respectively.
PATENTS AND TRADEMARKS
We customarily seek patent and trademark protection for our products and brands. We own and currently have numerous applications pending for patents and trademarks in many regions of the world. In addition, certain of our products are produced under patent licenses granted by third parties. We believe that we possess certain technical capabilities in making our products that make it difficult for a competitor to duplicate.
TECHNOLOGY
We have technical expertise regarding injection molding and high-speed assembly. We also have expertise regarding the formulation and finish of elastomer and silicone components. In addition, we offer a variety of sterilization options for elastomer components for the pharmaceutical industry. Pumps and aerosol valves require the assembly of several different plastic, metal and rubber components using high-speed equipment. When molding dispensing closures, or plastic components to be used in pump or aerosol valve products, we use advanced plastic injection molding technology, including large cavitation plastic injection molds. We are able to mold within tolerances as small as one one-thousandth of an inch and we assemble products in a high-speed, cost-effective manner. Our injection molding capabilities include recent advances such as spin-stack and cube molding which utilize high-efficiency rotating molds. We are also utilizing In-Molding Assembly Technology (IMAT) which allows us to assemble products within the molding process. We are experts in molding liquid silicone rubber that is used in certain dispensing closures and certain pumps as well as rubber gasket formulation and production primarily for the pharmaceutical markets. We also have technology to decorate plastic and metal components sold primarily to the beauty and personal care markets.
MANUFACTURING AND SOURCING
More than half of our worldwide production is located outside of the United States. In order to augment capacity and to maximize internal capacity utilization (particularly for plastic injection molding), we use subcontractors to supply certain plastic, metal and rubber components. Certain suppliers of these components have unique technical abilities that make us dependent on them, particularly for aerosol valve and pump production. The principal raw materials used in our production are plastic resins, rubber and certain metal products. We believe an adequate supply of such raw materials is available from existing and alternative sources. We attempt to offset cost increases through improving productivity and increasing selling prices over time, as allowed by market conditions or contractual commitments. Our pharmaceutical products often use resin and rubber components specifically approved by our customers. Significant delays in receiving components from these suppliers or discontinuance of an approved raw material would require us to seek alternative sources, which could result in higher costs as well as impact our ability to supply products in the short term.
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SALES AND DISTRIBUTION
Sales of products are primarily through our own sales force. To a limited extent, we also use the services of independent representatives and distributors who sell our products as independent contractors to certain smaller customers and export markets.
BACKLOG
Our sales are primarily made pursuant to standard purchase orders for delivery of products. While most orders placed with us are ready for delivery within 120 days, we continue to experience a trend towards shorter lead times requested by our customers. Some customers place blanket orders, which extend beyond this delivery period. However, deliveries against purchase orders are subject to change, and only a small portion of the order backlog is noncancelable. The dollar amount associated with the noncancelable portion is not material. Therefore, we do not believe that backlog as of any particular date is an accurate indicator of future results.
CUSTOMERS
The demand for our products is influenced by the demand for our customers' products. Demand for our customers' products may be affected by general economic conditions and liquidity, government regulations, tariffs and other trade barriers. Our customers include many of the largest beauty, personal care, pharmaceutical, home care, food and beverage marketers in the world. We have over 5,000 customers with no single customer accounting for greater than 6% of 2012 net sales. A consolidation of our customer base has occurred and this trend is expected to continue. A concentration of customers presents opportunities for increasing sales due to the breadth of our product line, our international presence and our long-term relationships with certain customers. However, this situation also may result in pricing pressures or a loss of volume.
INTERNATIONAL BUSINESS
Typically, we produce our products close to where our customers fill their finished product. Sales in Europe for the years ended December 31, 2012, 2011 and 2010 were approximately 54%, 57% and 57%, respectively, of net sales. We manufacture the majority of units sold in Europe at facilities in the Czech Republic, England, France, Germany, Ireland, Italy, Russia, Spain and Switzerland. Other countries in which we operate include Argentina, Brazil, China, India, Indonesia, Japan, Mexico and Thailand which when aggregated represented approximately 18%, 16% and 14% of our consolidated sales for the years ended December 31, 2012, 2011 and 2010, respectively. Export sales from the United States were $152.9 million, $150.4 million and $143.4 million in 2012, 2011 and 2010, respectively. For additional financial information about geographic areas, please refer to Note 15 in the Notes to the Consolidated Financial Statements in Item 8 (which is incorporated by reference herein).
FOREIGN CURRENCY
Because of our international presence, movements in exchange rates may have a significant impact on the translation of the financial statements of our foreign entities. Our primary foreign exchange exposure is to the Euro, but we have foreign exchange exposure to the Brazilian Real, British Pound, Swiss Franc and South American and Asian currencies, among others. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge recorded transactions and firm purchase and sales commitments denominated in foreign currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial statements. Conversely, a weakening U.S. dollar has an additive effect. In some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Changes in exchange rates on such inter-country sales could materially impact our results of operations.
WORKING CAPITAL PRACTICES
Collection and payment periods tend to be longer for our operations located outside the United States due to local business practices. We have also seen an increasing trend in pressure from certain customers to lengthen their payment terms. As the majority of our products are made to order, we have not needed to keep significant amounts of finished goods inventory to meet customer requirements.
EMPLOYEE AND LABOR RELATIONS
AptarGroup has approximately 12,000 full-time employees. Of the full-time employees, approximately 6,700 are located in Europe, 3,100 are located in Asia and South America and the remaining 2,200 are located in North America. The majority of our European employees are covered by collective bargaining arrangements made at either the local or national level in their respective countries and approximately 200 of the North American employees are covered by a collective bargaining agreement. Termination of employees at certain of our international operations could be costly due to local regulations regarding severance benefits. There were no material work stoppages in 2012 and management considers our employee relations to be satisfactory.
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COMPETITION
All of the markets in which we operate are highly competitive and we continue to experience price competition in all product lines and markets. Competitors include privately and publicly held entities. Our competitors range from regional to international companies. We expect the market for our products to remain competitive. We believe our competitive advantages are consistent high levels of innovation, quality and service, geographic diversity and breadth of products. Our manufacturing strength lies in the ability to mold complex plastic components and formulate and finish elastomer and silicone components in a cost-effective manner and to assemble products at high speeds. Our business is capital intensive and it is becoming more important to our customers to have global manufacturing capabilities. Both of these serve as barriers to entry for new competitors wanting to enter our business.
While we have experienced some competition from low cost Asian suppliers particularly in the low-end beauty and personal care market, this has not been significant. Indirectly, some fragrance marketers are sourcing their manufacturing requirements, including filling of their product in Asia and importing the finished product back into the United States or Europe. However, some customers who had bought dispensing packaging products from low cost Asian suppliers in the past have reverted to purchasing our dispensing products, citing the higher quality offered by our products and the logistical advantage of being closer to the customer.
ENVIRONMENT
Our manufacturing operations primarily involve plastic injection molding, automated assembly processes, elastomer and silicone formulation and finishing and, to a limited degree, metal anodization and vacuum metallization of plastic components. Historically, the environmental impact of these processes has been minimal, and we believe we meet current environmental standards in all material respects. To date, our manufacturing operations have not been significantly affected by environmental laws and regulations relating to the environment.
Recently there is increased interest and awareness from the public and our customers in sustainability or producing sustainable products and measuring carbon footprints. We are focused on becoming more energy efficient and improving our carbon footprint. We are also designing products that improve recyclability and use less material. Future regulations on environmental matters regarding recycling or sustainability policies could impact our business.
GOVERNMENT REGULATION
Certain of our products are indirectly affected by government regulation. Demand for aerosol and pump packaging is affected by government regulations regarding the release of volatile organic compounds ("VOCs") into the atmosphere. Certain states within the United States have regulations that require the reduction in the amount of VOCs that can be released into the atmosphere and the potential exists for this type of regulation to expand worldwide. These regulations required our customers to reformulate certain aerosol and pump products, which may have affected the demand for such products. We own patents and have developed systems to function with alternative propellant and product formulations.
Future government regulations could include medical cost containment policies. For example, reviews by various governments to determine the number of drugs, or prices thereof, that will be paid by their insurance systems could affect future sales to the pharmaceutical industry. Such regulation could adversely affect prices of and demand for our pharmaceutical products. We believe that the focus on the cost effectiveness of the use of medications as compared to surgery and hospitalization provides us with an opportunity to expand sales to the pharmaceutical market. In general, government regulation of our customers' products could impact our sales to them of our dispensing systems.
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EXECUTIVE OFFICERS
Our executive officers as of February 28, 2013:
Name |
Age |
Position with the Company |
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Stephen Hagge | 61 | President and Chief Executive Officer, AptarGroup, Inc. | |||
Mr. Hagge has been President and Chief Executive Officer since January 2012. Prior to this, Mr. Hagge was Chief Operating Officer from 2008 to 2011, Executive Vice President from 1993 through 2011, Secretary from 1993 to June 2011 and Chief Financial Officer of AptarGroup from 1993 to 2007. | |||||
Robert Kuhn |
50 |
Executive Vice President, Chief Financial Officer and Secretary, AptarGroup, Inc. |
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Mr. Kuhn has been Executive Vice President and Chief Financial Officer since September 2008. Mr. Kuhn has been Secretary since June 2011. Prior to this, Mr. Kuhn was Vice President Financial Reporting from 2000 to 2008. | |||||
Patrick Doherty |
57 |
President, Aptar Beauty + Home |
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Mr. Doherty has been President of Aptar Beauty + Home since October 2010. Prior to this, Mr. Doherty was Co-President of Aptar Beauty + Home since January 2010 and served as President of SeaquistPerfect Dispensing Group from 2000 to 2009. | |||||
Olivier Fourment |
55 |
President, Aptar Pharma |
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Mr. Fourment has been President of Aptar Pharma since January 2008. Prior to this, Mr. Fourment was Co-President of Valois Group from 2000 to 2007. | |||||
Eldon Schaffer |
47 |
President, Aptar Food + Beverage |
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Mr. Schaffer has been President of Aptar Food + Beverage since January 2012. Prior to this, Mr. Schaffer was President of Aptar Beauty + Home North America from 2010 to 2011 and was Seaquist Closures' General Manager of North America from 2004 to 2009. | |||||
Ursula Saint-Léger |
49 |
Vice President of Human Resources |
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Ms. Saint-Léger has been Vice President of Human Resources since October 2010. Prior to joining AptarGroup in 2010, Ms. Saint-Léger was Sr. Group Vice President Human Resources at TAQA (industrialization and energy services) from 2009 to 2010 and was Senior Vice President Human Resources at Umicore (materials technology) from 2004 to 2009. |
There were no arrangements or understandings between any of the executive officers and any other person(s) pursuant to which such officers were elected.
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Set forth below and elsewhere in this report and in other documents we file with the Securities and Exchange Commission are risks and uncertainties that could cause our actual results to materially differ from the results contemplated by the forward-looking statements contained in this report and in other documents we file with the Securities and Exchange Commission. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations. You should carefully consider the following factors in addition to other information contained in this report on Form 10-K before purchasing any shares of our common stock.
FACTORS AFFECTING OPERATIONS OR OPERATING RESULTS
If there is a deterioration in economic conditions in one of our significant regions such as Europe or the U.S., our business and operating results could be materially adversely impacted. Due to our strong balance sheet, diverse product offerings, various end-markets served, and our broad geographic presence, we are well positioned to withstand slowness in any one particular region or market. However, economic uncertainties affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. A tightening of credit in financial markets or other factors may lead consumers and businesses to postpone spending, which may cause our customers to cancel, decrease or delay their existing and future orders with us. In addition, financial difficulties experienced by our suppliers, customers or distributors could result in product delays, increased accounts receivable defaults and inventory or supply challenges. An interruption in supply may also impact our ability to meet customer demands. Consumer demand for our customers' products and shifting consumer preferences are unpredictable and could have a negative impact on our customers and our customers' demand for our products. A disruption in the credit markets could also restrict our access to capital.
If our expansion initiatives are unsuccessful, our operating results and reputation may suffer. We are expanding our operations in a number of new and existing markets and jurisdictions, including facilities expansions in the U.S., India, Russia and Latin America. Expansion of our operations will continue to require a significant amount of time and attention from our senior management and capital investment. Our expansion activities present considerable challenges and risks, including the general economic and political conditions existing in new markets and jurisdictions that we enter, attracting, training and retaining qualified and talented employees, infrastructure and labor disruptions, fluctuations in currency exchange rates, the imposition of restrictions by governmental authorities, compliance with current, new and changing governmental laws and regulations and the cost of such compliance activities. We may have limited or no prior experience in certain of these new markets and there is no assurance any of our expansion efforts will be successful. If any of our expansion efforts are unsuccessful, our operating results and reputation may suffer.
Higher raw material costs and other inputs and an inability to increase our selling prices may materially adversely affect our operating results and financial condition. The cost of raw materials and other inputs (particularly resin, rubber, metal, anodization costs and transportation and energy costs) are volatile and susceptible to rapid and substantial changes due to factors beyond our control, such as changing economic conditions, currency fluctuations, weather conditions, political unrest and instability in energy-producing nations, and supply and demand pressures. Raw material costs are expected to increase in the coming years and we have generally been able to increase selling prices to cover increased costs. In the future, market conditions may prevent us from passing these increased costs on to our customers through timely price increases. In addition, we may not be able to improve productivity or realize savings from our cost reduction programs sufficiently enough to offset the impact of increased raw material costs. As a result, higher raw material costs could result in declining margins and operating results.
The timing and completion of our European Operations Optimization ("EOO") plan may negatively impact our results. On November 1, 2012, the Company announced a plan to optimize certain capacity in Europe. Due to increased production efficiencies and to better position the Company for future growth in Europe, AptarGroup will transfer and consolidate production capacity involving twelve facilities. Two facilities, one in Italy and one in Switzerland, are expected to close and will impact approximately 170 employees. If we fail to execute the established plan as intended, we risk creating longer lead times to our customers and our results could be negatively impacted.
In difficult market conditions, our high fixed costs combined with potentially lower revenues may negatively impact our results. Our business is characterized by high fixed costs and, notwithstanding our utilization of third-party manufacturing capacity, most of our production requirements are met by our own manufacturing facilities. In difficult environments, we are generally faced with a decline in the utilization rates of our manufacturing facilities due to decreases in product demand. During such periods, our plants do not operate at full capacity and the costs associated with this excess capacity are charged directly to cost of sales. Difficult market conditions in the future may adversely affect our utilization rates and consequently our future gross margins, and this, in turn, could have a material negative impact on our business, financial condition and results of operations.
8 /ATR
2012 Form 10-K
We face strong global competition and our market share could decline. All of the markets in which we operate are highly competitive and we continue to experience price competition in all product lines and segments. Competitors include privately and publicly held entities. Our competitors range from regional to international companies. While we have experienced some competition from low cost Asian suppliers in some of our markets, particularly in the low-end beauty and personal care market, this has not been significant. Indirectly, some fragrance marketers are sourcing their manufacturing requirements including filling of their product in Asia and importing the finished product back into the United States or Europe. If we are unable to compete successfully, our market share may decline, which could materially adversely affect our results of operations and financial condition.
We have foreign currency translation and transaction risks that may materially adversely affect our operating results. A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial statements of our foreign entities. Our primary foreign exchange exposure is to the Euro, but we have foreign exchange exposure to Swiss, South American and Asian currencies, among others. We manage our exposures to foreign exchange principally with forward exchange contracts to economically hedge certain transactions and firm purchase and sales commitments denominated in foreign currencies. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial statements. Conversely, a weakening U.S. dollar has an additive translation effect. In some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. The volatility of currency exchange rates may materially affect our operating results.
If our unionized employees were to engage in a strike or other work stoppage, our business and operating results and financial condition could be materially adversely affected. The majority of our European employees are covered by collective bargaining arrangements made either at the local or national level in their respective countries and approximately 200 of our North American employees are covered by a collective bargaining agreement. Although we believe that our relations with our employees are satisfactory, no assurance can be given that this will continue. If disputes with our unions arise, or if our unionized workers engage in a strike or other work stoppage, we could incur higher labor costs or experience a significant disruption of operations, which could have a material adverse effect on our business, financial position and results of operations.
If we were to incur a significant product liability claim above our current insurance coverage, our operating results and financial condition could be materially adversely affected. Approximately 25% of our net sales are made to customers in the pharmaceutical industry. If our devices fail to operate as intended, medication prescribed for patients may be under administered, or may be over administered. The failure of our devices to operate as intended may result in a product liability claim against us. We believe we maintain adequate levels of product liability insurance coverage. A product liability claim or claims in our Pharma segment or our other segments in excess of our insurance coverage may materially adversely affect our business, financial position and results of operations.
The success or failure of our customers' products, particularly in the pharmaceutical market, may materially affect our operating results and financial condition. In the pharmaceutical market, the proprietary nature of our customers' products and the success or failure of their products in the market using our dispensing systems may have a material impact on our operating results and financial condition. We may potentially work for years on modifying our dispensing device to work in conjunction with a customer's drug formulation. If the customer's pharmaceutical product is not approved by regulatory bodies or it is not successful on the market, the associated costs may not be recovered.
Single sourced materials and manufacturing sites could risk our ability to deliver product. The Company sources certain materials, especially some resins and rubber components for our pharmaceutical segment, from a single source. Any disruption in the supply of these materials could adversely impact our ability to deliver product to our customers. Similarly, we have certain components and / or products that are manufactured at a single location or from a single machine or mold. Any disruption to the manufacturing process could also impact our ability to deliver product to our customers.
We have approximately $352 million in recorded goodwill and changes in future business conditions could cause this asset to become impaired, requiring write-downs that would reduce our operating income. We evaluate the recoverability of goodwill amounts annually, or more frequently when evidence of potential impairment exists. The impairment test is based on several factors requiring judgment. A decrease in expected reporting unit cash flows or changes in market conditions may indicate potential impairment of recorded goodwill and, as a result, our operating results could be materially adversely affected. See "Critical Accounting Estimates" in Part II, Item 7 (which is incorporated by reference herein).
Government regulation on environmental matters regarding recycling or sustainability policies could impact our business. Future government regulations mandating the use of certain materials could impact our manufacturing processes or the technologies we use forcing us to reinvest in alternative materials or assets used in the production of our products.
9 /ATR
2012 Form 10-K
FACTORS AFFECTING APTARGROUP STOCK
Ownership by Certain Significant Shareholders. Currently, Aptar has five shareholders who each own between 5% and 10% of our outstanding common stock. If one of these significant shareholders decides to sell significant volumes of our stock, this could put downward pressure on the price of the stock.
Certain Anti-takeover Factors. Our preferred stock purchase rights plan and certain provisions of our Certificate of Incorporation and Bylaws may inhibit changes in control of AptarGroup not approved by the Board of Directors. These provisions include (i) special voting requirements for business combinations, (ii) a classified board of directors, (iii) a prohibition on stockholder action through written consents, (iv) a requirement that special meetings of stockholders be called only by the board of directors, (v) advance notice requirements for stockholder proposals and nominations, (vi) limitations on the ability of stockholders to amend, alter or repeal our bylaws and (vii) provisions that require the vote of 70% of the whole Board of Directors in order to take certain actions. The Board of Directors of Aptar intends to let the preferred stock purchase rights plan expire on April 7, 2013.
ITEM 1B. UNRESOLVED STAFF COMMENTS
The Company has no unresolved comments from the SEC.
We lease or own our principal offices and manufacturing facilities. None of the owned principal properties is subject to a lien or other encumbrance material to our operations. We believe that existing operating leases will be renegotiated as they expire, will be acquired through purchase options or that suitable alternative properties will be leased on acceptable terms. We consider the condition and extent of utilization of our manufacturing facilities and other properties to be generally good, and the capacity of our plants to be adequate for the needs of our business. The locations of our principal manufacturing facilities, by country, are set forth below:
ARGENTINA Florencio Varela (1 & 2) Tortuguitas (1 & 3) BRAZIL Sao Paulo (1 & 3) Maringá Paraná (1 & 3) CHINA Suzhou (1, 2 & 3) CZECH REPUBLIC Ckyne (1 & 3) FRANCE Annecy (1) Brecey (2) Charleval (1) Granville (2) Le Neubourg (1) Le Vaudreuil (2) Oyonnax (1) Poincy (1 & 3) Verneuil Sur Avre (1) |
GERMANY Böhringen (1) Dortmund (1) Eigeltingen (2) Freyung (1 & 3) Menden (1) INDIA Himachal Pradesh (1 & 2) Hyderabad (1 & 3) Mumbai (2) INDONESIA Cikarang, Bekasi (1) IRELAND Ballinasloe, County Galway (1) ITALY Manoppello (1) San Giovanni Teatino (Chieti) (1) MEXICO Queretaro (1 & 3) RUSSIA Vladimir (1 & 3) |
SPAIN Madrid (1) Torello (1 & 3) SWITZERLAND Messovico (2) Neuchâtel (1 & 2) THAILAND Chonburi (1) UNITED KINGDOM Leeds, England (1 & 3) UNITED STATES Cary, Illinois (1, 2 & 3) Congers, New York (2) Libertyville, Illinois (1, 2 & 3) Lincolnton, North Carolina (3) McHenry, Illinois (1 & 2) Midland, Michigan (3) Mukwonago, Wisconsin (1, 2 & 3) Stratford, Connecticut (1 & 3) Torrington, Connecticut (1 & 3) Watertown, Connecticut (1 & 3) |
We also have sales personnel in Canada and Japan. Our corporate office is located in Crystal Lake, Illinois.
10 /ATR
2012 Form 10-K
Claims in the product liability and patent infringement areas, even if without merit, could result in the significant expenditure of our financial and managerial resources. It is possible that future results of operations or cash flows for any particular quarterly or annual period could be materially affected by an unfavorable resolution of such a claim.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, ISSUER PURCHASES OF EQUITY SECURITIES AND SHARE PERFORMANCE
MARKET FOR REGISTRANT'S COMMON EQUITY
Information regarding market prices of our Common Stock and dividends declared may be found in Note 17 to the Consolidated Financial Statements in Item 8 (which is incorporated by reference herein). Our Common Stock is traded on the New York Stock Exchange under the symbol ATR. As of February 15, 2013, there were approximately 300 registered holders of record.
RECENT SALES OF UNREGISTERED SECURITIES
The employees of AptarGroup S.A.S. and Aptar France S.A.S., our subsidiaries, are eligible to participate in the FCP Aptar Savings Plan (the "Plan"). All eligible participants are located outside of the United States. An independent agent purchases shares of Common Stock available under the Plan for cash on the open market and we do not issue shares. We do not receive any proceeds from the purchase of Common Stock under the Plan. The agent under the Plan is Banque Nationale de Paris Paribas Fund Services. No underwriters are used under the Plan. All shares are sold in reliance upon the exemption from registration under the Securities Act of 1933 provided by Regulation S promulgated under that Act. During the quarter ended December 31, 2012, the Plan purchased 7,152 shares of our common stock on behalf of the participants at an average price of $48.27 per share, for an aggregate amount of $345 thousand, and sold 2,318 shares of our Common Stock on behalf of the participants at an average price of $49.10 per share, for an aggregate amount of $114 thousand. At December 31, 2012, the Plan owned 34,888 shares of our Common Stock.
ISSUER PURCHASES OF EQUITY SECURITIES
The following table summarizes the Company's purchases of its securities for the quarter ended December 31, 2012:
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Period |
Total Number Of Shares Purchased |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs |
|||||||||
|
|||||||||||||
10/1 - 10/31/12 | | $ | | | 2,790,691 | ||||||||
11/1 - 11/30/12 | 519,452 | 47.64 | 519,452 | 2,271,239 | |||||||||
12/1 - 12/31/12
|
297,548
|
47.55
|
297,548
|
1,973,691
|
|||||||||
Total | 817,000 | $ | 47.61 | 817,000 | 1,973,691 |
The Company announced the existing repurchase program on July 19, 2011. There is no expiration date for this repurchase program.
11 /ATR
2012 Form 10-K
The following graph shows a five year comparison of the cumulative total stockholder return on AptarGroup's common stock as compared to the cumulative total return of the Standard & Poor's 500 Composite Stock Price Index and to an index of peer group companies we selected. The companies included in the peer group are: AEP Industries Inc., Bemis Company, Inc., Boise Inc., Buckeye Technologies Inc., Crown Holdings, Inc., Graphic Packaging Holding Company, Greif Inc., MeadWestvaco Corporation, Owen's-Illinois, Inc., Packaging Corporation of America, Rock-Tenn Company, Sealed Air Corporation, Silgan Holdings, Inc., Sonoco Products Company, and West Pharmaceutical Services Inc.
Comparison of 5 Year Cumulative Stockholder Returns
The graph and other information furnished in the section titled "Share Performance" under this Part II, Item 5 of this Form 10-K shall not be deemed to be "soliciting" material or to be "filed" with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
12 /ATR
2012 Form 10-K
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA
In millions of dollars, except per share data | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||||||||
Years Ended December 31, |
2012 |
2011 |
2010 |
2009 |
2008 |
|||||||||||
|
||||||||||||||||
Statement of Income Data: |
||||||||||||||||
Net Sales |
$ | 2,331.0 | $ | 2,337.2 | $ | 2,076.7 | $ | 1,841.6 | $ | 2,071.7 | ||||||
Cost of sales (exclusive of depreciation and amortization shown below) |
1,590.4 | 1,568.3 | 1,378.8 | 1,225.7 | 1,411.3 | |||||||||||
% of Net Sales |
68.2 | % | 67.1 | % | 66.4 | % | 66.6 | % | 68.1 | % | ||||||
Selling, research & development and administrative |
341.6 | 347.6 | 296.9 | 276.9 | 295.1 | |||||||||||
% of Net Sales |
14.7 | % | 14.9 | % | 14.3 | % | 15.0 | % | 14.2 | % | ||||||
Depreciation and amortization (1) |
137.0 | 134.2 | 133.0 | 133.0 | 131.1 | |||||||||||
% of Net Sales |
5.9 | % | 5.7 | % | 6.4 | % | 7.2 | % | 6.3 | % | ||||||
Restructuring initiatives |
3.1 | (0.1 | ) | 0.1 | 7.6 | | ||||||||||
% of Net Sales |
0.1 | % | | | 0.4 | % | | |||||||||
Operating Income |
258.9 | 287.1 | 268.0 | 198.4 | 234.2 | |||||||||||
% of Net Sales |
11.1 | % | 12.3 | % | 12.9 | % | 10.8 | % | 11.3 | % | ||||||
Net Income |
162.4 | 183.6 | 173.6 | 124.6 | 153.5 | |||||||||||
% of Net Sales |
7.0 | % | 7.9 | % | 8.4 | % | 6.8 | % | 7.4 | % | ||||||
Net Income Attributable to AptarGroup, Inc. |
162.6 | 183.7 | 173.5 | 124.6 | 153.5 | |||||||||||
% of Net Sales |
7.0 | % | 7.9 | % | 8.4 | % | 6.8 | % | 7.4 | % | ||||||
Net Income Attributable to AptarGroup, Inc. per Common Share: |
||||||||||||||||
Basic |
2.45 | 2.76 | 2.58 | 1.84 | 2.26 | |||||||||||
Diluted |
2.38 | 2.65 | 2.48 | 1.79 | 2.18 | |||||||||||
Balance Sheet and Other Data: |
||||||||||||||||
Capital Expenditures |
$ | 174.1 | $ | 179.7 | $ | 118.8 | $ | 144.9 | $ | 203.6 | ||||||
Total Assets |
2,324.4 | 2,159.3 | 2,032.7 | 1,956.2 | 1,831.8 | |||||||||||
Long-Term Obligations |
352.9 | 254.9 | 258.8 | 209.6 | 226.9 | |||||||||||
Net Debt (2) |
197.8 | 61.0 | (22.1 | ) | 5.0 | 99.4 | ||||||||||
AptarGroup, Inc. Stockholders' Equity |
1,379.9 | 1,289.8 | 1,278.9 | 1,252.8 | 1,131.0 | |||||||||||
Capital Expenditures % of Net Sales |
7.5 | % | 7.7 | % | 5.7 | % | 7.9 | % | 9.8 | % | ||||||
Interest Bearing Debt to Total Capitalization (3) |
23.7 | % | 25.4 | % | 21.7 | % | 21.2 | % | 20.4 | % | ||||||
Net Debt to Net Capitalization (4) |
12.5 | % | 4.5 | % | (1.8 | %) | 0.4 | % | 8.1 | % | ||||||
Cash Dividends Declared per Common Share |
.8 | 8 | .8 | 0 | .6 | 6 | .6 | 0 | .5 | 6 |
13 /ATR
2012 Form 10-K
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(In thousands, except per share amounts or otherwise
indicated)
The objective of the following Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition ("MD&A") is to help the reader understand the financial performance of AptarGroup, Inc. MD&A is presented in eight sections: Overview, Results of Operations, Liquidity and Capital Resources, Off-Balance Sheet Arrangements, Overview of Contractual Obligations, Recently Issued Accounting Pronouncements, Critical Accounting Estimates, Operations Outlook and Forward-Looking Statements. MD&A should be read in conjunction with our consolidated financial statements and accompanying Notes to Consolidated Financial Statements contained elsewhere in this Report on Form 10-K.
In MD&A, "we," "our," "us," "AptarGroup," "AptarGroup, Inc." and "the Company" refer to AptarGroup, Inc. and its subsidiaries.
GENERAL
We are a leading global provider of a broad range of innovative packaging delivery systems primarily for the beauty, personal care, home care, pharmaceutical, food and beverage markets. Our creative packaging solutions enhance the convenience, safety and security of consumers around the globe and allow our customers to differentiate their products in the market.
We consider sales excluding acquisitions and changes in foreign currency rates as core sales. Our diverse product offering, broad global reach and deep penetration in multiple markets drove core growth in 2012. In spite of difficult conditions in certain markets, we were able to grow core sales by 3% over last year's very strong performance. It was particularly challenging most of the year for our largest segment Beauty + Home primarily due to the economic situation in Europe causing customers to reduce orders. We also experienced a slowdown in our most profitable segment, Pharma, in the second half of 2012. Our Food + Beverage segment had a good year driven by the strength of our beverage closure business which more than offset a flat performance in the food market. On a geographic basis excluding currency effects and the Aptar Stelmi acquisition, Europe was softer than the prior year, primarily due to softness in the beauty and personal care markets. While our business in the U.S. was up slightly from the prior year, we continued to grow at a strong rate in Latin America and Asia.
2012 HIGHLIGHTS
14 /ATR
2012 Form 10-K
The following table sets forth the consolidated statements of income and the related percentages of net sales for the periods indicated:
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Years Ended December 31, |
2012 | 2011 | 2010 | ||||||||||||||||
|
Amount in $ Thousands |
% of Net Sales |
Amount in $ Thousands |
% of Net Sales |
Amount in $ Thousands |
% of Net Sales |
|||||||||||||
|
|||||||||||||||||||
Net sales |
$ | 2,331,036 | 100.0 | % | $ | 2,337,183 | 100.0 | % | $ | 2,076,719 | 100.0 | % | |||||||
Cost of sales (exclusive of depreciation shown below) |
1,590,365 | 68.2 | 1,568,286 | 67.1 | 1,378,792 | 66.4 | |||||||||||||
Selling, research & development and administrative |
341,634 | 14.7 | 347,629 | 14.9 | 296,861 | 14.3 | |||||||||||||
Depreciation and amortization |
137,022 | 5.9 | 134,243 | 5.7 | 132,959 | 6.4 | |||||||||||||
Restructuring initiatives |
3,102 | 0.1 | (71 | ) | | 93 | | ||||||||||||
Operating income |
258,913 | 11.1 | 287,096 | 12.3 | 268,014 | 12.9 | |||||||||||||
Other expense |
(17,540 | ) | (0.8 | ) | (12,154 | ) | (0.5 | ) | (13,629 | ) | (0.7 | ) | |||||||
Income before income taxes |
241,373 | 10.3 | 274,942 | 11.8 | 254,385 | 12.2 | |||||||||||||
Net Income |
162,420 | 7.0 | 183,630 | 7.9 | 173,589 | 8.4 | |||||||||||||
Effective tax rate |
32.7%
|
33.2%
|
31.8%
|
NET SALES
Reported net sales of $2.3 billion were basically unchanged compared to $2.3 billion recorded in 2011. Stelmi sales contributed $56.8 million and represented a positive impact of 2% on our reported sales growth. The average U.S. dollar exchange rate strengthened relative to the Euro and other foreign currencies, such as the Brazilian Real and Swiss Franc, in 2012 compared to 2011, and as a result, changes in exchange rates had a negative impact of 5% on our reported sales growth. The 3% core sales growth was due to increased demand for our innovative dispensing systems across each of our business segments.
In 2011, reported net sales increased approximately 13% to $2.3 billion compared to $2.1 billion recorded in 2010. The U.S. dollar weakened against several currencies including the Euro (our primary foreign currency exposure) in 2011 compared to 2010, and as a result, changes in exchange rates positively impacted sales by approximately 4%. Core sales growth was 9% due to strong demand for our innovative dispensing systems across each of our business segments.
For further discussion on net sales by reporting segment, please refer to the segment analysis of net sales and operating income on the following pages.
The following table sets forth, for the periods indicated, net sales by geographic location:
|
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Years Ended December 31, |
2012 |
% of Total |
2011 |
% of Total |
2010 |
% of Total |
|||||||||||||
|
|||||||||||||||||||
Domestic |
$ | 650,637 | 28% | $ | 636,060 | 27% | $ | 594,467 | 29% | ||||||||||
Europe |
1,269,289 | 54% | 1,340,036 | 57% | 1,191,039 | 57% | |||||||||||||
Other Foreign |
411,110 | 18% | 361,087 | 16% | 291,213 | 14% |
COST OF SALES (EXCLUSIVE OF DEPRECIATION SHOWN BELOW)
Our cost of sales as a percentage of net sales increased in 2012 to 68.2% compared to 67.1% in 2011. Excluding Stelmi, 2012 cost of sales represented 68.1% of net sales:
The following factors negatively impacted our cost of sales percentage in 2012:
Increased Raw Material Costs. Raw material costs, primarily the cost of plastic resin, increased in 2012 compared to 2011. While the majority of resin cost increases are passed along to our customers in our selling prices, we typically experience a lag in the timing of passing on these cost increases. Other material costs also increased such as the cost of aluminum, steel and rubber.
Mix of Products Sold. Excluding acquisitions and foreign currency, our Pharma segment sales represented a slightly lower percentage of our overall sales. This negatively impacts our cost of sales percentage as margins on our pharmaceutical products typically are higher than the overall company average.
Lincolnton Start-up Costs. Start-up activities associated with our new facility in Lincolnton, North Carolina have led to under-absorption of costs. For the year, we have recognized $3.5 million of under-absorption in our results.
15 /ATR
2012 Form 10-K
The following factor positively impacted our cost of sales percentage in 2012:
Strengthening of the U.S. Dollar. We are a net importer from Europe into the U.S. of products produced in Europe with costs denominated in Euros. As a result, when the U.S. dollar or other currencies strengthen against the Euro, products produced in Europe (with costs denominated in Euros) and sold in currencies that are stronger compared to the Euro, have a positive impact on cost of sales as a percentage of net sales.
In 2011, our cost of sales as a percentage of net sales increased to 67.1% compared to 66.4% in 2010.
The following factor positively impacted our cost of sales percentage in 2011:
Mix of Products Sold. Compared to the prior year, our Pharma segment sales represented a higher percentage of our overall sales. This positively impacts our cost of sales percentage as margins on our pharmaceutical products typically are higher than the overall company average.
The following factors negatively impacted our cost of sales percentage in 2011:
Increased Raw Material Costs. Raw material costs, primarily the cost of plastic resin, increased in 2011 compared to 2010. While the majority of resin cost increases are passed along to our customers in our selling prices, we typically experience a lag in the timing of passing on these cost increases. Other material costs also increased such as the cost of aluminum, steel and rubber.
Increased Sales of Custom Tooling. Sales of custom tooling increased $12.9 million in 2011 compared to 2010. Traditionally, sales of custom tooling generate lower margins than our regular product sales and thus, an increase in sales of custom tooling negatively impacted cost of sales as a percentage of sales.
Weakening of the U.S. Dollar. We are a net importer from Europe into the U.S. of products produced in Europe with costs denominated in Euros. As a result, when the U.S. dollar or other currencies weaken against the Euro, products produced in Europe (with costs denominated in Euros) and sold in currencies that are weaker compared to the Euro, have a negative impact on cost of sales as a percentage of net sales.
Last in First Out ("LIFO") Inventory Valuation. Some of our U.S. operations use LIFO as their inventory valuation method. As some material costs, mainly resins, increased during the year, the increase to the LIFO reserve in 2011 was approximately $1.7 million, thus negatively impacting our cost of sales percentage in 2011.
SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE
Our Selling, Research & Development and Administrative expenses ("SG&A") decreased approximately 2% or $6.0 million in 2012. Excluding changes in foreign currency rates, SG&A increased by approximately $11.8 million for the year. Increases due to Stelmi operational costs of $7.7 million and transaction costs of $5.9 million were offset by lower professional fees as higher legal costs were incurred in 2011. For 2012, SG&A as a percentage of net sales decreased to 14.7% compared to 14.9% of net sales in the same period of the prior year.
In 2011, our SG&A increased approximately 17% or $50.8 million in 2011. Excluding changes in foreign currency rates, the increase was approximately $39.6 million for the year. The increase was primarily due to higher compensation expenses (including salary and wage inflation and additional personnel associated with our realigned market-focused organization) and higher professional fees. SG&A as a percentage of net sales increased to 14.9% compared to 14.3% of net sales in 2010 primarily due to the items noted above.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense increased approximately 2% or $2.8 million in 2012. Excluding changes in foreign currency rates, depreciation and amortization increased $10.0 million. Stelmi represented $5.6 million and accelerated depreciation related to our EOO plan represented $1.6 million of the increase in 2012. The remaining increase is related to the additional investments in our new facilities in Lincolnton, North Carolina and Mumbai, India, and general capital investment increases across all three business segments. Depreciation and amortization expense increased to 5.9% of net sales in 2012 compared to 5.7% in 2011 primarily due to the items mentioned above.
In 2011, depreciation and amortization expense increased approximately 1% or $1.3 million in 2011. Excluding changes in foreign currency rates, depreciation and amortization decreased $3.7 million primarily due to lapsing of certain software and patent related costs. Depreciation and amortization expense decreased to 5.7% of net sales in 2011 compared to 6.4% in 2010 primarily due to the strong increase in sales in 2011.
16 /ATR
2012 Form 10-K
RESTRUCTURING INITIATIVES
On November 1, 2012, the Company announced a plan to optimize certain capacity in Europe (EOO). Due to increased production efficiencies and to better position the Company for future growth in Europe, AptarGroup will transfer and consolidate production capacity involving twelve facilities. Two facilities, one in Italy and one in Switzerland, are expected to close and will impact approximately 170 employees. During 2012, we recognized $3.3 million of restructuring expenses along with the accelerated depreciation of assets mentioned above. Using current exchange rates, we expect to recognize approximately $14 million in additional costs, most of which will be incurred in 2013. Annual savings are estimated to be approximately €9 million (approximately $12 million using current exchange rates) beginning in late 2013.
During 2009, the Company announced a plan to consolidate two French dispensing closure manufacturing facilities and several sales offices in North America and Europe and has subsequently expanded the program to include additional headcount reductions. During 2012, 2011 and 2010, we recognized ($0.2) million, ($0.1) million and $0.1 million, respectively, of restructuring expenses due to the settlement of several reserve balances. The total costs associated with this consolidation/severance programs were $7.4 million. The plan has been substantially completed, subject to the settlement of remaining immaterial reserve balances.
OPERATING INCOME
Operating income decreased approximately $28.2 million or 10% to $258.9 million in 2012. Excluding changes in foreign currency rates, operating income decreased by approximately $10.8 million in 2012 compared to the same period a year ago. Stelmi contributed a $4.6 million operating loss in 2012 and costs related to our EOO plan contributed $4.9 million. Excluding Stelmi, the EOO plan and the changes in foreign currency rates, operating income decreased by approximately $1.4 million in 2012 compared to the same period a year ago due to the higher cost of sales percentage and the incremental depreciation related to our capital investments. Operating income as a percentage of sales decreased to 11.1% in 2012 compared to 12.3% in 2011 also due to the higher percentage of cost of sales and depreciation cost compared to prior year as discussed above.
In 2011, operating income increased approximately $19.1 million or 7% to a record $287.1 million in 2011 on the strong increases in sales volumes at each segment. Operating income as a percentage of sales decreased to 12.3% in 2011 compared to 12.9% in 2010 mainly due to the higher percentage of cost of sales and SG&A cost compared to prior year as discussed above.
NET OTHER EXPENSES
Net other expenses in 2012 increased to $17.5 million compared to $12.2 million in 2011. This increase is mainly due to $2.7 million of lower interest income and $1.7 million higher interest expense related to converting part of our short-term borrowing to long-term in order to lock in the historically low interest rates.
In 2011, net other expenses decreased to $12.2 million compared to $13.6 million in 2010 due primarily to lower foreign currency losses of $2.1 million. A $2.9 million increase in interest expense was mostly offset by an increase in interest income of $2.5 million.
EFFECTIVE TAX RATE
The reported effective tax rate on net income for 2012 and 2011 was 32.7% and 33.2%, respectively. The lower tax rate for 2012 is primarily the mix of earnings and lower tax expense associated with earnings repatriated to the U.S. during 2012. These benefits were partially offset by tax increases resulting from law changes enacted in 2012 in France.
The reported effective tax rate on net income for 2011 and 2010 was 33.2% and 31.8%, respectively. The higher tax rate for 2011 is primarily due to a 5% income tax surcharge enacted in France.
NET INCOME ATTRIBUTABLE TO APTARGROUP, INC.
We reported net income of $162.6 million in 2012 compared to $183.7 million reported in 2011 and $173.5 million reported in 2010.
BEAUTY + HOME SEGMENT
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Years Ended December 31, |
2012 |
2011 |
2010 |
% Change 2012 vs. 2011 |
% Change 2011 vs. 2010 |
|||||||||||
|
||||||||||||||||
Net Sales |
$ | 1,453,940 | $ | 1,516,305 | $ | 1,380,065 | (4.1 | )% | 9.9 | % | ||||||
Segment Income (1) |
123,527 | 130,818 | 132,218 | (5.6 | ) | (1.1 | ) | |||||||||
Segment Income as a percentage of Net Sales |
8.5%
|
8.6%
|
9.6%
|
17 /ATR
2012 Form 10-K
Net sales decreased approximately 4% in 2012 to $1.45 billion compared to $1.52 billion in 2011. The strengthening U.S. dollar compared to the Euro negatively impacted sales by 6%. Excluding changes in exchange rates, sales increased 2% from the prior year. Sales of our products, excluding foreign currency changes, to the beauty market increased approximately 1% while sales to the personal care market increased approximately 3% in 2012 compared to 2011 mainly due to sales growth in Asia and Latin America. Sales of our home care products, excluding foreign currency changes, decreased approximately 5% due to lower tooling sales compared to the prior year.
In 2011, net sales increased approximately 10% to $1.5 billion compared to $1.4 billion in 2010. The weakening U.S. dollar compared to the Euro positively impacted sales by 4% while the impact from acquisitions was not significant. Excluding changes in exchange rates, sales increased 6% from the prior year, of which 1% came from increased tooling sales. Sales of our products, excluding foreign currency changes, to the beauty, personal care and home care markets increased approximately 6%, 4% and 10%, respectively, in 2011 compared to 2010. We experienced increased demand in the beauty and personal care markets in Europe, Latin America and Asia, which offset some softness in the U.S. While a smaller part of our business, demand from the home care markets increased in all regions.
Segment income for 2012 decreased approximately 6% to $123.5 million from $130.8 million reported in 2011. The decrease in segment income in 2012 compared to 2011 was primarily due to foreign currency changes and lower sales volumes in Europe. Sales growth in Asia and Latin America helped to offset some of this decrease.
In 2011, segment income decreased approximately 1% to $130.8 million from $132.2 million reported in 2010. Acquisitions did not materially impact segment income during the year. Profitability decreased primarily due to increased raw material costs, underutilized capacity, increased legal and consulting fees, and higher tooling sales which typically carry lower margins than normal product sales.
PHARMA SEGMENT
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Years Ended December 31, |
2012 |
2011 |
2010 |
% Change 2012 vs. 2011 |
% Change 2011 vs. 2010 |
|||||||||||
|
||||||||||||||||
Net Sales |
$ | 588,693 | $ | 553,930 | $ | 476,247 | 6.3 | % | 16.3 | % | ||||||
Segment Income |
141,912 | 164,390 | 134,531 | (13.7) | 22.2 | |||||||||||
Segment Income as a percentage of Net Sales |
24.1%
|
29.7%
|
28.2%
|
Net sales to the Pharma segment increased 6% in 2012 to $588.7 million compared to $553.9 million in 2011. Stelmi sales were $56.8 million and represented 10% of the increase. The strengthening U.S. dollar compared to the Euro negatively impacted sales by 5%. Excluding acquisitions and changes in exchange rates, sales increased 1% in 2012 compared to the same period of the prior year. Sales excluding acquisitions and foreign currency changes to the prescription market increased 3% while sales to the consumer health care market decreased 2%. The growth in sales to the prescription market is primarily due to an increase in sales of our nasal pumps to the allergy/rhinitis market. The decrease in sales of our products to the consumer health care market is due primarily to slowing sales of our customers in Eastern Europe and Russia and also last year was an all-time record for sales of our products to the consumer health care market.
In 2011, net sales to the Pharma segment increased 16% to $553.9 million compared to $476.2 million in 2010. The weakening U.S. dollar compared to the Euro positively impacted sales by 6%. Excluding changes in exchange rates, sales increased 10% in 2011 compared to the same period of the prior year. Sales excluding foreign currency changes to the prescription market and consumer health care markets increased 5% and 23%, respectively. Sales to the prescription market increased primarily due to the strength of our nasal allergy pumps sold in the U.S. market to pharmaceutical companies offering generic allergy formulations. For consumer health care, we experienced increased demand in Eastern Europe for over the counter symptomatic relief treatments such as nasal decongestant.
Segment income decreased 14% to $141.9 million in 2012 compared to $164.4 million in 2011. This decrease is due to Stelmi fair value and other acquisition adjustments along with Stelmi transaction costs of $5.9 million and the negative impact of changes in exchange rates. These expenses are offset somewhat by the increased profits from higher prescription sales during 2012.
In 2011, segment income increased 22% to $164.4 million compared to $134.5 million in 2010. Segment income grew faster than sales primarily due to product mix which included increased nasal pump sales to the generic allergy market compared to the prior year.
18 /ATR
2012 Form 10-K
FOOD + BEVERAGE SEGMENT
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Years Ended December 31, |
2012 |
2011 |
2010 |
% Change 2012 vs. 2011 |
% Change 2011 vs. 2010 |
|||||||||||
|
||||||||||||||||
Net Sales |
$ | 288,403 | $ | 266,948 | $ | 220,402 | 8.0 | % | 21.1 | % | ||||||
Segment Income |
30,415 | 27,801 | 27,843 | 9.4 | (0.2) | |||||||||||
Segment Income as a percentage of Net Sales |
10.5%
|
10.4%
|
12.6%
|
Net sales to the Food + Beverage segment increased by approximately 8% in 2012 to $288.4 million compared to $266.9 million in 2011. The strengthening U.S. dollar compared to the Euro negatively impacted sales by approximately 3%. Sales, excluding changes in foreign currency rates, increased 11%. Sales excluding foreign currency changes to the food market were flat while the beverage markets increased approximately 32%. Demand for our beverage dispensing closures increased from 2011 due to growth of functional drinks in Asia as well as growth of water flavoring products and new juice projects in North America.
In 2011, net sales to the Food + Beverage segment increased by approximately 21% to $266.9 million compared to $220.4 million in 2010. The weakening U.S. dollar compared to the Euro positively impacted sales by approximately 3%. Therefore sales, excluding changes in foreign currency rates, increased 18%. Tooling sales represented 6% of this increase. Sales of our products excluding foreign currency changes to the food market increased 4% while sales of our products to the beverage markets increased approximately 66% (of which 23% relates to increased tooling sales). Demand for our food dispensing closures increased due to stronger demand in the U.S. and Europe. Demand for our dispensing closures to the beverage market increased due to sales of our dispensing closures used on bottled water in Asia and the water flavoring products in the U.S.
Segment income increased 9% to $30.4 million in 2012 compared to $27.8 million in 2011. Increased volumes and better product mix helped to offset increases in selling, research and development, and administrative costs of approximately $2.1 million and Lincolnton start-up costs of approximately $3.5 million.
In 2011, segment income was flat at $27.8 million compared to 2010. Segment income growth in 2011 was restrained by higher input costs, including raw materials, higher personnel costs related to this new segment, as well as start-up costs associated with our new Lincolnton facility.
CORPORATE & OTHER
In addition to our three operating business segments, AptarGroup assigns certain costs to "Corporate & Other," which is presented separately in Note 15. Corporate & Other primarily includes certain corporate compensation and information system costs which are not allocated directly to our operating segments.
Corporate & Other expense decreased to $33.8 million for 2012 compared to $36.6 million in the prior year. Corporate & Other includes a LIFO adjustment as the segments report on a FIFO basis for consistency. $1.4 million of the current year decrease is due to a decrease in our LIFO adjustment compared to the prior year.
Corporate & Other expense for 2011 increased to $36.6 million compared to $29.0 million reported in 2010. The increase is mainly due to higher professional fees and personnel costs related to the change in our organizational structure.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of liquidity are cash flows provided by our operations and our revolving credit facility. In 2012, our operations provided a strong level of cash flow that totaled $313.9 million compared to $261.0 million in 2011 and $278.7 million in 2010. The increase in cash flow from operations in 2012 relates to a decrease in working capital in 2012 compared to 2011 because of an increase in accounts receivable and a decrease in accounts payable. The decrease in cash flow from operations in 2011 relates to a stronger increase in working capital in 2011 compared to 2010 because of an increase in prepaid customer tooling projects and a decrease in accounts payable.
We used $359.5 million in cash for investing activities during 2012, compared to $195.8 million during 2011 and $121.0 million in 2010. This increase in cash used for investing activities in 2012 is primarily due to the Stelmi acquisition in July of 2012 which resulted in approximately $173 million more cash being spent for acquisitions in 2012 compared to 2011.
Comparing 2011 to 2010, the increase in cash used for investing activities is primarily due to increased capital expenditures of approximately $61 million as we invested more than $45 million in facilities expansion in the U.S., India, Russia and Latin America and due to the carryover of projects from 2010 into 2011. In addition, $15 million more cash was spent for acquisition of businesses in 2011 compared to 2010. In 2011, we purchased an injection molding operation in India, and a minority interest in a medical device company in the U.K. We estimate that we will spend approximately $165 million (assuming current exchange rates) on capital expenditures in 2013.
19 /ATR
2012 Form 10-K
Our net cash used for financing activities in 2012 was $99.4 million compared to $28.5 million in 2011 and $79.6 million in 2010. In 2012, the increase in cash used for financing activities was primarily due to reduced borrowings compared to 2011. In 2011, the decrease in cash used for financing activities was primarily due to an increase in our borrowings under our revolving credit facility which was used in part to fund our increased dividend payments and the increase in the amount spent on share repurchases. In 2010, we refinanced some of our short term variable rate debt with a $100 million fixed rate private placement debt. $16 million of the private placement debt has a five year maturity and a fixed interest rate of 2.33% while the remaining $84 million matures in ten years and carries a 3.78% fixed interest rate. In 2012, we again refinanced short term variable rate debt with a $125 million fixed rate private placement debt. $75 million of the private placement debt has a ten year maturity and a fixed interest rate of 3.25% while the remaining $50 million matures in twelve years and carries a 3.40% fixed interest rate.
Cash and equivalents decreased $147.9 million to $229.8 million at the end of 2012 from $377.6 million at the end of 2011. The decrease is primarily related to the Stelmi acquisition. Total short and long-term interest bearing debt decreased to $427.5 million at the end of 2012 from $438.6 million at the end of 2011. The ratio of our Net Debt (interest bearing debt less cash and cash equivalents) to Net Capital (Stockholders' Equity plus Net Debt) increased to 12.5% compared to 4.5% as of December 31, 2011.
On January 31, 2012, we entered into a new revolving credit facility that provides for unsecured financing of up to $300 million. On January 31, 2013, we amended the new revolving credit facility to, among other things, add a swingline loan sub-facility and extend the maturity date for the revolving credit facility by one year, to January 31, 2018. This new facility replaces a previously existing $200 million unsecured financing facility that would have matured in 2012 and was cancelled without any early termination penalty on January 31, 2012. We initially drew $185 million in borrowings from the new credit facility, of which $165 was used to repay in full the outstanding obligations under the previous credit facility. At December 31, 2011, approximately $165 million had been borrowed under the previous credit facility. Each borrowing under the new credit facility will bear interest at rates based on LIBOR, prime and other similar rates, in each case plus an applicable margin. A facility fee on the total amount of the facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the new credit facility and the facility fee percentage may change from time to time depending on changes in AptarGroup's consolidated leverage ratio. The outstanding balance under the new credit facility was $25 million at December 31, 2012 and we incurred approximately $1.2 million in interest and fees related to this credit facility during 2012. The representations, covenants and events of default in the new credit facility are substantially similar to the representations, covenants and events of default contained in the previous credit facility.
Our revolving credit facility and certain long-term obligations require us to satisfy certain financial and other covenants including:
|
Requirement |
Level at December 31, 2012 |
||
---|---|---|---|---|
Debt to total capital ratio |
Maximum of 55% | 23.7% |
Based upon the above debt to total capital ratio covenant we would have the ability to borrow approximately an additional $1.3 billion before the 55% requirement was exceeded.
Our foreign operations have historically met cash requirements with the use of internally generated cash or borrowings. These foreign subsidiaries have financing arrangements with several foreign banks to fund operations located outside the U.S., but all these lines are uncommitted. Cash generated by foreign operations has generally been reinvested locally. The majority of our $229.8 million in cash and equivalents is located outside of the U.S. We manage our global cash requirements considering (i) available funds among the many subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation of non-U.S. cash balances from certain subsidiaries could have adverse tax consequences as we may be required to pay and record income tax expense on those funds. Historically, the tax consequences associated with repatriating current year earnings to the U.S. has been between 10% and 14% of the repatriated amount. We would not expect future impacts to be materially different.
We believe we are in a strong financial position and have the financial resources to meet our business requirements in the foreseeable future. We have historically used cash flow from operations as our primary source of liquidity. Our primary uses of liquidity are to invest in equipment and facilities that are necessary to support our growth and to make acquisitions that will contribute to the achievement of our strategic objectives. Other uses of liquidity include paying dividends to shareholders and repurchasing shares of our common stock. In the event that customer demand would decrease significantly for a prolonged period of time and negatively impact cash flow from operations, we would have the ability to restrict and significantly reduce capital expenditure levels, as well as evaluate our acquisition strategy and dividend and share repurchase programs. A prolonged and significant reduction in capital expenditure levels could increase future repairs and maintenance costs as well as have a negative impact on operating margins if we were unable to invest in new innovative products.
OFF-BALANCE SHEET ARRANGEMENTS
We lease certain warehouse, plant and office facilities as well as certain equipment under noncancelable operating leases expiring at various dates through the year 2029. Most of the operating leases contain renewal options and certain equipment
20 /ATR
2012 Form 10-K
leases include options to purchase during or at the end of the lease term. Other than operating lease obligations, we do not have any off-balance sheet arrangements. See the following section "Overview of Contractual Obligations" for future payments relating to operating leases.
OVERVIEW OF CONTRACTUAL OBLIGATIONS
Below is a table of our outstanding contractual obligations and future payments as of December 31, 2012:
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Payment Due by Period |
Total |
2013 |
2014-2015 |
2016-2017 |
2018 and After |
|||||||||||
|
||||||||||||||||
Long-term debt (1) |
$ | 379,410 | $ | 29,068 | $ | 16,342 | $ | 50,000 | $ | 284,000 | ||||||
Capital lease obligations (1) |
2,938 | 420 | 1,018 | 1,038 | 462 | |||||||||||
Operating leases |
71,563 | 15,522 | 21,660 | 12,837 | 21,544 | |||||||||||
Interest obligations (2) |
108,756 | 16,480 | 30,819 | 25,863 | 35,594 | |||||||||||
Required minimum pension contribution (3) |
| | | | | |||||||||||
Other liabilities reflected on the balance sheet under GAAP (4) |
| | | | | |||||||||||
Total Contractual Obligations |
$ | 562,667 | $ | 61,490 | $ | 69,839 | $ | 89,738 | $ | 341,600 | ||||||
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In January 2013, the Financial Accounting Standards Board ("FASB") issued clarification related to new disclosure requirements regarding the nature of an entity's rights of setoff and related arrangements associated with its financial instruments and derivative instruments. The new disclosure requirements are effective for us in the first quarter of 2013 with retrospective application required. We do not expect the adoption of the new disclosure requirements to have a material effect on our financial condition, results of operations or cash flows.
In February 2013, the FASB issued a new standard related to the reclassification adjustments from accumulated other comprehensive income that requires entities to present, either on their income statement or in a footnote to their financial statements, the effects on earnings from items that are reclassified out of other comprehensive income. The new accounting rule is effective in the first quarter of 2013. We do not expect the adoption of the new accounting rule to have a material effect on our financial condition, results of operations or cash flows.
The preparation of the financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, inventories, intangible assets, income taxes, pensions and contingencies. We base our estimates on historical experience and on a variety of other assumptions believed to be reasonable in order to make judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in preparation of our Consolidated Financial Statements. Management has discussed the development and selection of these critical accounting estimates with the audit committee of our Board of
21 /ATR
2012 Form 10-K
Directors and the audit committee has reviewed our disclosure relating to it in this Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition ("MD&A").
IMPAIRMENT OF GOODWILL
In accordance with current accounting standards, we evaluate our goodwill for impairment on an annual basis, or whenever indicators of impairment exist. Accounting standards require that if the carrying value of a reporting unit for which goodwill exists exceeds its fair value, an impairment loss is recognized to the extent that the carrying value of the reporting unit goodwill exceeds the "implied fair value" of reporting unit goodwill.
As discussed in Note 3 to the Consolidated Financial Statements, we have evaluated our goodwill for impairment and have determined that the fair value of our reporting units exceeds their carrying value, so we did not recognize an impairment of goodwill. Goodwill of approximately $351.6 million is shown on our balance sheet as of December 31, 2012. Of this amount, $111.0 million relates to the acquisition of Stelmi. Based on our review, we have determined that Stelmi qualifies as a separate reporting unit for goodwill impairment testing and has been independently evaluated as a separate reporting unit during 2012.
We believe that the accounting estimate related to determining the fair value of our reporting units is a critical accounting estimate because: (1) it is highly susceptible to change from period to period because it requires Company management to make assumptions about the future cash flows for each reporting unit over several years in the future, and (2) the impact that recognizing an impairment would have on the assets reported on our balance sheet as well as our results of operations could be material. Management's assumptions about future cash flows for the reporting units require significant judgment and actual cash flows in the future may differ significantly from those forecasted today. The estimate for future cash flows and its impact on the impairment testing of goodwill is a critical accounting estimate for all the segments of our business.
In estimating future cash flows, we use internally generated budgets developed from our reporting units and reviewed by management. We develop our budgets based upon recent sales trends for the reporting units, discussions with our customers, planned timing of new product launches, forecasted capital expenditure needs, working capital needs, costing factors and many other variables. From these internally generated budgets, a projection of cash flows is made based upon expected sales growth rates and fixed asset and working capital requirements based upon historical needs. Starting with our 2013 budget figures we have used sales growth rates of 5% for both the Pharma and Beauty + Home reporting units, 9% for the Stelmi reporting unit and 15% for the Food + Beverage reporting unit. We have assumed that operating income will grow by 8% for the Beauty + Home reporting unit, 12% for the Stelmi reporting unit and 16% for the Food + Beverage reporting unit. The Pharma reporting unit's operating income growth rate used was the same as the sales growth rate. Capital expenditures, working capital needs, and taxes and depreciation are based on historical trends and what is necessary to support the business in the future. We forecast our cash flows for 4 years and use a terminal value growth rate of 3%. A discounted cash flow model is used to discount the future cash flows back to the present using our weighted-average cost of capital as the discount rate. Our weighted average cost of capital calculation takes into consideration market risk premiums in the current equity and debt markets supplied by third party sources. We perform one calculation using our current debt to equity ratio. Due to our strong balance sheet and low debt levels, our weighted average cost of capital is 8.1%, which is a higher rate than if we used our targeted debt to equity ratio. We have used the same weighted average cost of capital for all our reporting units. The fair value for the reporting unit is then corroborated by comparing it with a market multiple analysis of the reporting unit. The market multiple analysis is calculated by using AptarGroup's overall EBITDA (earnings before interest, taxes and depreciation) multiple and applying it to the reporting unit EBITDA for the current year.
The $351.6 million of goodwill is allocated as follows: approximately $43.0 million of the goodwill is allocated to the Pharma reporting unit, $111.0 million is allocated to the Stelmi reporting unit, $179.9 million is allocated to the Beauty + Home reporting unit and $17.7 million is allocated to the Food + Beverage reporting unit. The Pharma, Stelmi and Beauty + Home reporting units have fair values, which substantially exceed their carrying values. The Food + Beverage reporting unit has the smallest excess of fair value over carrying value of the four reporting units.
We believe our assumptions used in discounting future cash flows are appropriate. Any increase in estimated cash flows would have no impact on the reported carrying amount of goodwill. However, if our current estimates of cash flow for the Food + Beverage reporting unit had been 41% lower, the fair value of the reporting unit would have been lower than the carrying value thus requiring us to perform an impairment test to determine the "implied value" of goodwill. The excess of the approximately $17.7 million in carrying value of goodwill over the "implied value" of goodwill would need to be written down for impairment. Without performing the second step of the goodwill impairment test, it would be difficult to determine the actual amount of impairment to be recorded, but theoretically, the full $17.7 million of goodwill would be at risk for impairment. A full $17.7 million impairment loss would have reduced Total Assets as of December 31, 2012 by approximately 1% and would have reduced Income Before Income Taxes in 2012 by approximately 7%.
If we had been required to recognize an impairment loss of the full $17.7 million, it would likely not have significantly affected our liquidity and capital resources because, in spite of any such impairment loss, we would have been within the terms of our debt covenants.
22 /ATR
2012 Form 10-K
ALLOWANCE FOR DOUBTFUL ACCOUNTS
We record an allowance for doubtful accounts as an estimate of the inability of our customers to make their required payments. We determine the amount of our allowance for doubtful accounts by looking at a variety of factors. First, we examine an aging report of the accounts receivable in each entity within the Company. The aging report lists past due amounts according to invoice terms. In addition, we consider the current economic environment, the credit rating of the customers and general overall market conditions. In some countries we maintain credit insurance, which can be used in certain cases of non-payment.
We believe that the accounting estimate related to the allowance for doubtful accounts is a critical accounting estimate because: (1) it requires management to make assumptions about the ability to collect amounts owed from customers in the future, and (2) changes to these assumptions or estimates could have a material impact on our results of operations. The estimate for the allowance for doubtful accounts is a critical accounting estimate for all of our segments.
When we determine that a customer is unlikely to pay, we record a charge to bad debt expense in the income statement and an increase to the allowance for doubtful accounts. When it becomes certain the customer cannot pay (typically driven by the customer filing for bankruptcy) we write off the receivable by removing the accounts receivable amount and reducing the allowance for doubtful accounts accordingly. In 2012, we reduced the allowance for doubtful accounts by approximately $595 thousand and we wrote off doubtful accounts of $911 thousand. Please refer to Schedule IIValuation and Qualifying Accounts for activity in the allowance for doubtful accounts over the past three years.
We had approximately $396.8 million in net accounts receivable at December 31, 2012. At December 31, 2012, we had approximately $6.8 million recorded in the allowance for doubtful accounts to cover potential future customer non-payments net of any credit insurance reimbursement we would potentially recover. We believe our allowance for doubtful accounts is adequate to cover future non-payments of our customers. However, if economic conditions deteriorate significantly or one of our large customers was to declare bankruptcy, a larger allowance for doubtful accounts might be necessary. It is extremely difficult to estimate how much of an additional reserve would be necessary, but we expect the largest potential customer balance at any one time would not exceed $22 million. An additional loss of $22 million would reduce our Total Assets as of December 31, 2012 by approximately 1% and would have reduced Income Before Income Taxes by approximately 9%.
If we had been required to recognize an additional $22 million in bad debt expense, it would likely not have significantly affected our liquidity and capital resources because, in spite of any such additional expense, we would have been within the terms of our debt covenants.
VALUATION OF PENSION BENEFITS
The benefit obligations and net periodic pension cost associated with our domestic and foreign noncontributory pension plans are determined using actuarial assumptions. Such assumptions include discount rates to reflect the time value of money, rate of employee compensation increases, demographic assumptions to determine the probability and timing of benefit payments, and the long-term rate of return on plan assets. The actuarial assumptions are based upon management's best estimates, after consulting with outside investment advisors and actuaries. Because assumptions and estimates are used, actual results could differ from expected results.
The discount rate is utilized principally in calculating our pension obligations, which are represented by the Accumulated Benefit Obligation (ABO) and the Projected Benefit Obligation (PBO), and in calculating net periodic benefit cost. In establishing the discount rate for our foreign plans, we review a number of relevant interest rates including Aa corporate bond yields. In establishing the discount rate for our domestic plans, we match the hypothetical duration of our plans, using a weighted average duration that is based upon projected cash payments, to a simulated bond portfolio (Citigroup Pension Index Curve). At December 31, 2012, the discount rates for our domestic and foreign plans were 3.80% and 3.19%, respectively.
We believe that the accounting estimates related to determining the valuation of pension benefits are critical accounting estimates because: (1) changes in them can materially affect net income, and (2) we are required to establish the discount rate and the expected return on fund assets, which are highly uncertain and require judgment. The estimates for the valuation of pension benefits are critical accounting estimates for all of our segments.
To the extent the discount rates increase (or decrease), our PBO and net periodic benefit cost will decrease (or increase) accordingly. The estimated effect of a 1% decrease in each discount rate would be a $42.3 million increase in the PBO ($29.9 million for the domestic plans and $12.4 million for the foreign plans) and a $4.7 million increase in net periodic benefit cost ($3.8 million for the domestic plans and $0.9 million for the foreign plans). To the extent the PBO increases, the after-tax effect of such increase could reduce Other Comprehensive Income and Stockholders' Equity. The estimated effect of a 1% increase in each discount rate would be a $33.2 million decrease in the PBO ($23.1 million for the domestic plans and $10.1 million for the foreign plans) and a $3.9 million decrease in net periodic benefit cost ($3.1 million for the domestic plans and $0.8 million for the foreign plans). A decrease of this magnitude in the PBO would eliminate a substantial portion of the related reduction in Other Comprehensive Income and Stockholders' Equity.
The assumed expected long-term rate of return on assets is the average rate of earnings expected on the funds invested to provide for the benefits included in the PBO. Of domestic plan assets, approximately 60% was invested in equities, 30% was invested in fixed income securities and 10% was invested in infrastructure securities at December 31, 2012. Of foreign
23 /ATR
2012 Form 10-K
plan assets, approximately 76% was invested in investment funds, 7% was invested in fixed income securities, 6% was invested in equity securities and 11% was invested in cash at December 31, 2012.
The expected long-term rate of return assumptions are determined based on our investment policy combined with expected risk premiums of equities and fixed income securities over the underlying risk-free rate. This rate is utilized principally in calculating the expected return on the plan assets component of the net periodic benefit cost. To the extent the actual rate of return on assets realized over the course of a year is greater or less than the assumed rate, that year's net periodic benefit cost is not affected. Rather, this gain (or loss) reduces (or increases) future net periodic benefit cost over a period of approximately 15 to 20 years. To the extent the expected long-term rate of return on assets increases (or decreases), our net periodic benefit cost will decrease (or increase) accordingly. The estimated effect of a 1% decrease (or increase) in each expected long-term rate of return on assets would be a $1.2 million increase (or decrease) in net periodic benefit cost.
The average rate of compensation increase is utilized principally in calculating the PBO and the net periodic benefit cost. The estimated effect of a 0.5% decrease in each rate of expected compensation increase would be a $5.3 million decrease in the PBO ($1.6 million for the domestic plans and $3.7 million for the foreign plans) and a $0.9 million decrease to the net periodic benefit cost. The estimated effect of a 0.5% increase in each rate of expected compensation increase would be a $5.7 million increase in the PBO ($1.6 million for the domestic plans and $4.1 million for the foreign plans) and a $1.0 million increase to the net periodic benefit cost.
Our primary pension related assumptions as of December 31, 2012 and 2011 were as follows:
|
|||||||
---|---|---|---|---|---|---|---|
Actuarial Assumptions as of December 31, |
2012 |
2011 |
|||||
|
|||||||
Discount rate: |
|||||||
Domestic plans |
3.80% | 4.40% | |||||
Foreign plans |
3.19% | 5.10% | |||||
Expected long-term rate of return on plan assets: |
|||||||
Domestic plans |
7.00% | 7.00% | |||||
Foreign plans |
3.78% | 3.83% | |||||
Rate of compensation increase: |
|||||||
Domestic plans |
4.00% | 4.00% | |||||
Foreign plans |
3.00% | 3.00% |
In order to determine the 2013 net periodic benefit cost, the Company expects to use the December 31, 2012 discount rates, December 31, 2012 rates of compensation increase assumptions and expected long-term returns on domestic and foreign plan assets assumptions used for the 2012 net periodic benefit cost. The estimated impact of the changes to the assumptions as noted in the table above on our 2013 net periodic benefit cost is expected to be an increase of $4.1million.
SHARE-BASED COMPENSATION
The Company uses the Black-Scholes option-valuation model to value stock options, which requires the input of subjective assumptions. These assumptions include the length of time employees will retain their vested stock options before exercising them ("expected term"), the estimated volatility of the Company's stock price, risk-free interest rate, the expected dividend yield and stock price. The expected term of the options is based on historical experience of similar awards, giving consideration to the contractual terms, vesting schedules and expectations of future employee behavior. The expected term determines the period for which the risk-free interest rate and volatility must be applied. The risk-free interest rate is based on the expected U.S. Treasury rate over the expected term. Expected stock price volatility is based on historical volatility of the Company's stock price. Dividend yield is management's long-term estimate of annual dividends to be paid as a percentage of share price.
For 2012, expense related to share-based compensation was $12.7 million and represented approximately $0.12 per diluted share. Future changes in the subjective assumptions used in the Black-Scholes option-valuation model or estimates associated with forfeitures could impact our share-based compensation expense. For example, a one year reduction in the expected term of the options would decrease the Black-Scholes valuation and reduce share-based compensation by approximately $0.4 million. On the contrary, a one year increase in the expected term of the option would increase the Black-Scholes valuation and increase share-based compensation by approximately $0.3 million. In addition, changes in the stock price at the date of the grant would impact our share-based compensation expense. For example, a $5 decrease in the stock price would decrease the Black-Scholes valuation and reduce share-based compensation by approximately $0.7 million. On the contrary, a $5 increase in the stock price would increase the Black-Scholes valuation and increase share-based compensation by approximately $0.7 million.
While we expect economic conditions to begin to show improvement in 2013, we continue to see a challenging business environment because of uncertainties surrounding fluctuating currency rates, inflation rates in certain of our developing regions, and potentially higher input costs. Nevertheless, we expect our capital investments, along with new product offerings to contribute to our growth.
Significant increases in U.S. raw material costs, particularly plastic resin, will create headwinds in the first quarter due to the timing of the pass-through of these increases to our customers. We are optimistic that both the U.S. and Europe will improve as the year progresses but we are somewhat cautious on the speed of those recoveries going into the first quarter. Also, we expect continued good growth in Latin America and Asia.
Our first quarter guidance does not include any impact from our EOO plan. Currently, we anticipate diluted earnings per share for the first quarter of 2013 to be in the range of $0.64 to $0.69 per share compared to $0.64 per share reported in the first quarter of 2012.
24 /ATR
2012 Form 10-K
Certain statements in Management's Discussion and Analysis and other sections of this Form 10-K are forward-looking and involve a number of risks and uncertainties, including certain statements set forth in the Liquidity and Capital Resources, Off Balance Sheet Arrangements, and Operations Outlook sections of this Form 10-K. Words such as "expects," "anticipates," "believes," "estimates," and other similar expressions or future or conditional verbs such as "will," "should," "would" and "could" are intended to identify such forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on our beliefs as well as assumptions made by and information currently available to us. Accordingly, our actual results may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist in our operations and business environment, including but not limited to:
Although we believe that our forward-looking statements are based on reasonable assumptions, there can be no assurance that actual results, performance or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to Item 1A ("Risk Factors") of Part I included in this Form 10-K for additional risk factors affecting the Company.
25 /ATR
2012 Form 10-K
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of our entities. Our primary foreign exchange exposure is to the Euro, but we also have foreign exchange exposure to the Brazilian Real, British Pound, Swiss Franc and South American and Asian currencies, among others. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on our financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive effect.
Additionally, in some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales may impact our results of operations.
We manage our exposures to foreign exchange principally with forward exchange contracts to hedge certain firm purchase and sales commitments and intercompany cash transactions denominated in foreign currencies.
The table below provides information, as of December 31, 2012, about our forward currency exchange contracts. The majority of the contracts expire before the end of the first quarter of 2013.
In thousands | ||||||||
---|---|---|---|---|---|---|---|---|
|
||||||||
Year Ended December 31, 2012 Buy/Sell |
Contract Amount |
Average Contractual Exchange Rate |
Min/Max Notional Volumes |
|||||
|
||||||||
Swiss Franc/Euro |
$ | 34,982 | 0.8282 | 28,813-36,938 | ||||
Euro/Brazilian Real |
20,512 | 3.0250 | 2,563-20,512 | |||||
Euro/U.S. Dollar |
8,456 | 1.3121 | 8,456-190,851 | |||||
Euro/Mexican Peso |
7,897 | 18.7680 | 6,336-7,897 | |||||
Czech Koruna/Euro |
7,138 | 0.0396 | 6,226-7,922 | |||||
U.S. Dollar/Chinese Yuan |
2,290 | 6.2789 | 2,290-7,264 | |||||
U.S. Dollar/Euro |
2,019 | 0.7592 | 278-48,213 | |||||
Euro/Chinese Yuan |
1,957 | 8.1576 | 1,439-4,280 | |||||
Euro/Argentinian Peso |
1,867 | 6.4930 | 0-1,867 | |||||
British Pound/Euro |
1,725 | 1.2303 | 1,365-11,090 | |||||
Euro/Russian Rouble |
1,689 | 45.3677 | 0-1,689 | |||||
Euro/Swiss Franc |
1,514 | 1.2075 | 0-3,961 | |||||
U.S. Dollar/Brazilian Real |
1,291 | 2.1123 | 0-4,320 | |||||
Other |
2,125 | |||||||
Total |
$ | 95,462 | ||||||
As of December 31, 2012, the Company has recorded the fair value of foreign currency forward exchange contracts of $0.3 million in prepayments and other, $1.0 million in miscellaneous other assets, $2.1 million in accounts payable and accrued liabilities and $0.2 million in deferred and other non-current liabilities in the balance sheet.
The Company maintained an interest rate swap to convert a portion of its fixed-rate debt into variable-rate debt until May 31, 2011. Under the interest rate swap contract, the Company exchanged, at specified intervals, the difference between fixed-rate and floating-rate amounts, which was calculated based on an agreed upon notional amount. On May 31, 2011, this interest rate swap contract matured and was not renewed. No gain or loss was recorded in the income statement in 2012, 2011 or 2010 as any hedge ineffectiveness for the periods was immaterial.
The Company had one foreign currency cash flow hedge until March 15, 2012. A French subsidiary of AptarGroup, AptarGroup Holding SAS, had hedged the risk of variability in Euro equivalent associated with the cash flows of an intercompany loan granted in Brazilian Real. The forward contracts utilized were designated as a hedge of the changes in the cash flows relating to the changes in foreign currency rates relating to the loan and related forecasted interest. On March 15, 2012, the loan and foreign currency forward contracts were repaid. During the year ended December 31, 2012, the Company did not recognize any net gain (loss) as any hedge ineffectiveness for the period was immaterial, and the Company did not recognize any net gain (loss) related to the portion of the hedging instrument excluded from the assessment of hedge effectiveness.
26 /ATR
2012 Form 10-K
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per share amounts |
|
|
|
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||
Years Ended December 31, |
2012 |
2011 |
2010 |
|||||||
|
||||||||||
Net Sales |
$ | 2,331,036 | $ | 2,337,183 | $ | 2,076,719 | ||||
Operating Expenses: |
||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) |
1,590,365 | 1,568,286 | 1,378,792 | |||||||
Selling, research & development and administrative |
341,634 | 347,629 | 296,861 | |||||||
Depreciation and amortization |
137,022 | 134,243 | 132,959 | |||||||
Restructuring initiatives |
3,102 | (71 | ) | 93 | ||||||
|
2,072,123 | 2,050,087 | 1,808,705 | |||||||
Operating Income |
258,913 | 287,096 | 268,014 | |||||||
Other Income (Expense): |
||||||||||
Interest expense |
(18,950 | ) | (17,300 | ) | (14,371 | ) | ||||
Interest income |
2,996 | 5,722 | 3,248 | |||||||
Equity in results of affiliates |
(457 | ) | (17 | ) | 15 | |||||
Miscellaneous, net |
(1,129 | ) | (559 | ) | (2,521 | ) | ||||
|
(17,540 | ) | (12,154 | ) | (13,629 | ) | ||||
Income before Income Taxes |
241,373 | 274,942 | 254,385 | |||||||
Provision for Income Taxes |
78,953 |
91,312 |
80,796 |
|||||||
Net Income |
$ | 162,420 | $ | 183,630 | $ | 173,589 | ||||
Net Loss (Income) Attributable to Noncontrolling Interests |
192 | 53 | (108 | ) | ||||||
Net Income Attributable to AptarGroup, Inc. |
$ | 162,612 | $ | 183,683 | $ | 173,481 | ||||
Net Income Attributable to AptarGroup, Inc. per Common Share: |
||||||||||
Basic |
$ | 2.45 | $ | 2.76 | $ | 2.58 | ||||
Diluted |
$ | 2.38 | $ | 2.65 | $ | 2.48 | ||||
See accompanying notes to consolidated financial statements.
27 /ATR
2012 Form 10-K
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
In thousands, except per share amounts |
|
|
|
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||
Years Ended December 31, |
2012 |
2011 |
2010 |
|||||||
|
||||||||||
Net Income |
$ | 162,420 | $ | 183,630 | $ | 173,589 | ||||
Other Comprehensive Income/(Loss): |
||||||||||
Foreign currency translation adjustments |
19,507 | (47,411 | ) | (56,741 | ) | |||||
Changes in treasury locks, net of tax |
209 | 56 | 84 | |||||||
Net (loss) gain on derivatives, net of tax |
(7 | ) | 3 | | ||||||
Defined benefit pension plan, net of tax |
||||||||||
Prior Service Cost, net of tax |
| | (130 | ) | ||||||
Actuarial Loss, net of tax |
(22,316 | ) | (18,032 | ) | (6,404 | ) | ||||
Amortization of prior service cost included in net income, net of tax |
239 | 327 | 570 | |||||||
Amortization of net loss included in net income, net of tax |
2,737 | 1,634 | 240 | |||||||
Total defined benefit pension plan, net of tax |
(19,340 | ) | (16,071 | ) | (5,724 | ) | ||||
Total other comprehensive income/(loss) |
369 | (63,423 | ) | (62,381 | ) | |||||
Comprehensive Income |
162,789 | 120,207 | 111,208 | |||||||
Comprehensive Income/(Loss) Attributable to Noncontrolling Interests |
188 | 28 | (60 | ) | ||||||
Comprehensive Income Attributable to AptarGroup, Inc. |
$ | 162,977 | $ | 120,235 | $ | 111,148 | ||||
See accompanying notes to consolidated financial statements.
28 /ATR
2012 Form 10-K
CONSOLIDATED BALANCE SHEETS
In thousands, except per share amounts |
|
|
|||||
---|---|---|---|---|---|---|---|
|
|||||||
December 31, |
2012 |
2011 |
|||||
Assets |
|||||||
Current Assets: |
|||||||
Cash and equivalents |
$ | 229,755 | $ | 377,616 | |||
Accounts and notes receivable, less allowance for doubtful accounts of $6,751 in 2012 and $8,257 in 2011 |
396,788 | 389,020 | |||||
Inventories |
321,885 | 285,155 | |||||
Prepayments and other |
90,505 | 92,159 | |||||
|
1,038,933 | 1,143,950 | |||||
Property, Plant and Equipment: |
|||||||
Buildings and improvements |
364,704 | 342,146 | |||||
Machinery and equipment |
1,857,347 | 1,687,521 | |||||
|
2,222,051 | 2,029,667 | |||||
Less: Accumulated depreciation |
(1,397,575 | ) | (1,295,185 | ) | |||
|
824,476 | 734,482 | |||||
Land |
23,757 | 20,233 | |||||
|
848,233 | 754,715 | |||||
Other Assets: |
|||||||
Investments in affiliates |
3,693 | 3,812 | |||||
Goodwill |
351,552 | 233,689 | |||||
Intangible assets |
51,960 | 4,374 | |||||
Miscellaneous |
30,041 | 18,755 | |||||
|
437,246 | 260,630 | |||||
Total Assets |
$ | 2,324,412 | $ | 2,159,295 | |||
See accompanying notes to consolidated financial statements.
29 /ATR
2012 Form 10-K
AptarGroup, Inc.
CONSOLIDATED BALANCE SHEETS
In thousands, except per share amounts |
|
|
|||||
---|---|---|---|---|---|---|---|
|
|||||||
December 31, |
2012 |
2011 |
|||||
Liabilities and Stockholders' Equity |
|||||||
Current Liabilities: |
|||||||
Notes payable |
$ | 45,166 | $ | 179,552 | |||
Current maturities of long-term obligations |
29,488 | 4,116 | |||||
Accounts payable and accrued liabilities |
380,669 | 335,181 | |||||
|
455,323 | 518,849 | |||||
Long-Term Obligations |
352,860 | 254,910 | |||||
Deferred Liabilities and Other: |
|||||||
Deferred income taxes |
33,451 | 27,390 | |||||
Retirement and deferred compensation plans |
95,872 | 58,930 | |||||
Deferred and other non-current liabilities |
6,408 | 8,644 | |||||
Commitments and contingencies |
| | |||||
|
135,731 | 94,964 | |||||
Stockholders' Equity: |
|||||||
AptarGroup, Inc. stockholders' equity |
|||||||
Preferred stock, $.01 par value, 1 million shares authorized, none outstanding |
| | |||||
Common stock, $.01 par value, 199 million shares authorized, and 84.1 and 82.8 million issued at 2012 and 2011, respectively |
840 | 827 | |||||
Capital in excess of par value |
430,210 | 364,855 | |||||
Retained earnings |
1,513,558 | 1,409,388 | |||||
Accumulated other comprehensive income |
60,683 | 60,318 | |||||
Less: Treasury stock at cost, 18.2 million and 16.9 million shares in |
|||||||
2012 and 2011, respectively |
(625,401 | ) | (545,612 | ) | |||
Total AptarGroup, Inc. Stockholders' Equity |
1,379,890 | 1,289,776 | |||||
Noncontrolling interests in subsidiaries |
608 | 796 | |||||
Total Stockholders' Equity |
1,380,498 | 1,290,572 | |||||
Total Liabilities and Stockholders' Equity |
$ | 2,324,412 | $ | 2,159,295 | |||
See accompanying notes to consolidated financial statements.
30 /ATR
2012 Form 10-K
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands |
|
|
|
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||
Years Ended December 31, |
2012 |
2011 |
2010 |
|||||||
|
||||||||||
Cash Flows from Operating Activities: |
||||||||||
Net income |
$ | 162,420 | $ | 183,630 | $ | 173,589 | ||||
Adjustments to reconcile net income to net cash provided by operations: |
||||||||||
Depreciation |
133,845 | 132,048 | 129,339 | |||||||
Amortization |
3,177 | 2,195 | 3,620 | |||||||
Stock option based compensation |
12,695 | 13,753 | 11,215 | |||||||
Provision for/(recoveries of) bad debts |
(595 | ) | 1,642 | (252 | ) | |||||
Deferred income taxes |
(9,015 | ) | 2,004 | 503 | ||||||
Defined benefit plan expense |
14,611 | 10,908 | 8,622 | |||||||
Equity in results of affiliates in excess of cash distributions received |
457 | 17 | (15 | ) | ||||||
Changes in balance sheet items, excluding effects from foreign currency adjustments and impact of acquisition: |
||||||||||
Accounts and other receivables |
16,689 | (44,997 | ) | (50,143 | ) | |||||
Inventories |
(19,712 | ) | (22,332 | ) | (47,388 | ) | ||||
Prepaid and other current assets |
10,124 | (34,252 | ) | 4,390 | ||||||
Accounts payable and accrued liabilities |
(824 | ) | 5,271 | 59,147 | ||||||
Income taxes payable |
2,969 | (9,615 | ) | 9,306 | ||||||
Retirement and deferred compensation plan liabilities |
9,985 | 9,747 | (5,657 | ) | ||||||
Other changes, net |
(22,934 | ) | 11,023 | (17,581 | ) | |||||
Net cash provided by operations |
313,892 | 261,042 | 278,695 | |||||||
Cash Flows from Investing Activities: |
||||||||||
Capital expenditures |
(174,053 | ) | (179,692 | ) | (118,804 | ) | ||||
Disposition of property and equipment |
2,629 | 1,838 | 1,398 | |||||||
Intangible assets |
| | (459 | ) | ||||||
Acquisition of business, net of cash acquired |
(187,840 | ) | (14,883 | ) | (3,014 | ) | ||||
Investment in unconsolidated affiliate |
(279 | ) | (3,145 | ) | | |||||
Notes receivable, net |
84 | 59 | (120 | ) | ||||||
Net cash used by investing activities |
(359,459 | ) | (195,823 | ) | (120,999 | ) | ||||
Cash Flows from Financing Activities: |
||||||||||
Proceeds from notes payable |
| 134,563 | | |||||||
Repayments of notes payable |
(134,034 | ) | | (57,860 | ) | |||||
Proceeds from long-term obligations |
125,000 | 10,773 | 101,618 | |||||||
Repayments of long-term obligations |
(3,042 | ) | (50,490 | ) | (26,766 | ) | ||||
Dividends paid |
(58,442 | ) | (53,308 | ) | (44,485 | ) | ||||
Credit facility costs |
(1,518 | ) | | | ||||||
Proceeds from stock option exercises |
44,637 | 26,078 | 28,820 | |||||||
Purchase of treasury stock |
(79,793 | ) | (102,595 | ) | (86,473 | ) | ||||
Excess tax benefit from exercise of stock options |
7,809 | 6,433 | 5,555 | |||||||
Net cash used by financing activities |
(99,383 | ) | (28,546 | ) | (79,591 | ) | ||||
Effect of Exchange Rate Changes on Cash |
(2,911 |
) |
(35,484 |
) |
(34,642 |
) |
||||
Net (decrease)/increase in Cash and Equivalents |
(147,861 |
) |
1,189 |
43,463 |
||||||
Cash and Equivalents at Beginning of Period |
377,616 | 376,427 | 332,964 | |||||||
Cash and Equivalents at End of Period |
$ | 229,755 | $ | 377,616 | $ | 376,427 | ||||
Supplemental Cash Flow Disclosure: |
||||||||||
Interest paid |
$ | 17,464 | $ | 17,120 | $ | 15,701 | ||||
Income taxes paid |
64,523 | 79,367 | 77,101 |
See accompanying notes to consolidated financial statements.
31 /ATR
2012 Form 10-K
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years Ended December 31, 2012, 2011 and 2010
In thousands |
|
|
|
|
|
|
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||||||||||||||
|
AptarGroup, Inc. Stockholders' Equity | |
|
|||||||||||||||||||
|
Retained Earnings |
Accumulated Other Comprehensive Income/(Loss) |
Common Stock Par Value |
Treasury Stock |
Capital in Excess of Par Value |
Non- Controlling Interest |
Total Equity |
|||||||||||||||
|
|
|
|
|
|
|||||||||||||||||
Balance December 31, 2009: |
$ | 1,150,017 | $ | 186,099 | $ | 806 | $ | (356,548 | ) | $ | 272,471 | $ | 791 | $ | 1,253,636 | |||||||
Net income |
173,481 | 108 | 173,589 | |||||||||||||||||||
Foreign currency translation adjustments |
(56,693 | ) | (48 | ) | (56,741 | ) | ||||||||||||||||
Changes in unrecognized pension gains/losses and related amortization, net of tax |
(5,724 | ) | (5,724 | ) | ||||||||||||||||||
Changes in treasury locks, net of tax |
84 | 84 | ||||||||||||||||||||
Net gain on derivatives, net of tax |
| | ||||||||||||||||||||
Stock option exercises & restricted stock vestings |
11 | 2 | 45,875 | 45,888 | ||||||||||||||||||
Cash dividends declared on common stock |
(44,485 | ) | (44,485 | ) | ||||||||||||||||||
Treasury stock purchased |
(86,473 | ) | (86,473 | ) | ||||||||||||||||||
Balance December 31, 2010: |
$ | 1,279,013 | $ | 123,766 | $ | 817 | $ | (443,019 | ) | $ | 318,346 | $ | 851 | $ | 1,279,774 | |||||||
Net income |
183,683 | (53 | ) | 183,630 | ||||||||||||||||||
Foreign currency translation adjustments |
(47,436 | ) | 25 | (47,411 | ) | |||||||||||||||||
Changes in unrecognized pension gains/losses and related amortization, net of tax |
(16,071 | ) | (16,071 | ) | ||||||||||||||||||
Changes in treasury locks, net of tax |
56 | 56 | ||||||||||||||||||||
Net gain on derivatives, net of tax |
3 | 3 | ||||||||||||||||||||
Stock option exercises & restricted stock vestings |
10 | 2 | 46,509 | 46,521 | ||||||||||||||||||
Cash dividends declared on common stock |
(53,308 | ) | (53,308 | ) | ||||||||||||||||||
Non-controlling interests distribution |
(27 | ) | (27 | ) | ||||||||||||||||||
Treasury stock purchased |
(102,595 | ) | (102,595 | ) | ||||||||||||||||||
Balance December 31, 2011: |
$ | 1,409,388 | $ | 60,318 | $ | 827 | $ | (545,612 | ) | $ | 364,855 | $ | 796 | $ | 1,290,572 | |||||||
Net income |
162,612 | (192 | ) | 162,420 | ||||||||||||||||||
Foreign currency translation adjustments |
19,503 | 4 | 19,507 | |||||||||||||||||||
Changes in unrecognized pension gains/losses and related amortization, net of tax |
(19,340 | ) | (19,340 | ) | ||||||||||||||||||
Changes in treasury locks, net of tax |
209 | 209 | ||||||||||||||||||||
Net loss on derivatives, net of tax |
(7 | ) | (7 | ) | ||||||||||||||||||
Stock option exercises & restricted stock vestings |
13 | 4 | 65,355 | 65,372 | ||||||||||||||||||
Cash dividends declared on common stock |
(58,442 | ) | (58,442 | ) | ||||||||||||||||||
Treasury stock purchased |
(79,793 | ) | (79,793 | ) | ||||||||||||||||||
Balance December 31, 2012: |
$ | 1,513,558 | $ | 60,683 | $ | 840 | $ | (625,401 | ) | $ | 430,210 | $ | 608 | $ | 1,380,498 | |||||||
See accompanying notes to consolidated financial statements.
32 /ATR
2012 Form 10-K
AptarGroup, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands unless otherwise indicated)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
We create dispensing solutions that enhance the convenience, safety and security of consumers around the globe and allow our customers to differentiate their products in the market. The Company focuses on providing value-added packaging delivery systems to a variety of global consumer product marketers in the beauty, personal care, home care, pharmaceutical, food and beverage industries. The Company has manufacturing facilities located throughout the world including North America, Europe, Asia and South America.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of AptarGroup, Inc. and its subsidiaries. The terms "AptarGroup" or "Company" as used herein refer to AptarGroup, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Certain previously reported amounts have been reclassified to conform to the current period presentation.
AptarGroup's organizational structure consists of three market-focused lines of business which are Beauty + Home, Pharma and Food + Beverage. This is a strategic structure which allows us to be more closely aligned with our customers and the markets in which they operate.
On November 1, 2012, the Company initiated our European Operations Optimization ("EOO") plan (see Note 19 Restructuring Initiatives for further details). During the fourth quarter of 2012, the Company recognized approximately $4.9 million of expense related to the plan, of which $1.6 million was accelerated depreciation. For presentation purposes, the accelerated depreciation related to this plan is reported in Depreciation and Amortization within the Consolidated Statements of Income.
ACCOUNTING ESTIMATES
The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). This process requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
CASH MANAGEMENT
The Company considers all investments which are readily convertible to known amounts of cash with an original maturity of three months or less when purchased to be cash equivalents.
INVENTORIES
Inventories are stated at cost, which is lower than market. Costs included in inventories are raw materials, direct labor and manufacturing overhead. The costs of certain domestic and foreign inventories are determined by using the last-in, first-out ("LIFO") method, while the remaining inventories are valued using the first-in, first-out ("FIFO") method.
INVESTMENTS IN AFFILIATED COMPANIES
The Company accounts for its investments in 20% to 50% owned affiliated companies using the equity method. There were no dividends received from affiliated companies in 2012, 2011 and 2010.
PROPERTY AND DEPRECIATION
Properties are stated at cost. Depreciation is determined on a straight-line basis over the estimated useful lives for financial reporting purposes and accelerated methods for income tax reporting. Generally, the estimated useful lives are 25 to 40 years for buildings and improvements, 3 to 10 years for machinery and equipment, and 3 to 7 years for software.
FINITE-LIVED INTANGIBLE ASSETS
Finite-lived intangibles, consisting of patents, non-compete agreements and license agreements acquired in purchase transactions, are capitalized and amortized over their useful lives which range from 3 to 20 years.
GOODWILL AND INDEFINITE-LIVED INTANGIBLE ASSETS
Management believes the excess purchase price over the fair value of the net assets acquired ("Goodwill") in purchase transactions has continuing value. Goodwill must be tested annually, or more frequently as circumstances dictate, for impairment. Management has performed an analysis of the fair values of its reporting units at December 31, 2012. The fair values of the reporting units exceeded the carrying values in 2012, 2011 and 2010 and, therefore, no impairment of goodwill was recorded in the three years.
33 /ATR
2012 Form 10-K
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets, such as property, plant and equipment and finite-lived intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset (if any) are less than the carrying value of the asset. When impairment is identified, the carrying amount of the asset is reduced to its fair value. There were no such triggering events identified during 2012.
DERIVATIVES INSTRUMENTS AND HEDGING ACTIVITIES
Derivative financial instruments are recorded in the consolidated balance sheets at fair value as either assets or liabilities. Changes in the fair value of derivatives are recorded in each period in earnings or accumulated other comprehensive income, depending on whether a derivative is designated and effective as part of a hedge transaction.
RESEARCH & DEVELOPMENT EXPENSES
Research and development costs, net of any customer funded research and development or government research and development credits, are expensed as incurred. These costs amounted to $65.4 million, $67.0 million and $51.4 million in 2012, 2011 and 2010, respectively.
INCOME TAXES
The Company computes taxes on income in accordance with the tax rules and regulations of the many taxing authorities where the income is earned. The income tax rates imposed by these taxing authorities may vary substantially. Taxable income may differ from pretax income for financial accounting purposes. To the extent that these differences create differences between the tax basis of an asset or liability and its reported amount in the financial statements, an appropriate provision for deferred income taxes is made.
In its determination of which foreign earnings are permanently reinvested in foreign operations, the Company considers numerous factors, including the financial requirements of the U.S. parent company and those of its foreign subsidiaries, the U.S. funding needs for dividend payments and stock repurchases, and the tax consequences of remitting earnings to the U.S. From this analysis, current year repatriation decisions are made in an attempt to provide a proper mix of debt and shareholder capital both within the U.S. and for non-U.S. operations. The Company's policy is to permanently reinvest its accumulated foreign earnings and only will make a distribution out of current year earnings to meet the cash needs at the parent company. As such, the Company does not provide taxes on earnings that are deemed to be permanently reinvested.
The Company provides a liability for the amount of tax benefits realized from uncertain tax positions. This liability is provided whenever the Company determines that a tax benefit will not meet a more-likely-than-not threshold for recognition. See Note 5 for more information.
TRANSLATION OF FOREIGN CURRENCIES
The functional currencies of all the Company's foreign operations are the local currencies. Assets and liabilities are translated into U.S. dollars at the rates of exchange on the balance sheet date. Sales and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are accumulated in a separate section of Stockholders' Equity. Realized and unrealized foreign currency transaction gains and losses are reflected in income, as a component of miscellaneous income and expense, and represented a gain of $1.6 million in 2012, a loss of $1.5 million in 2011, and a loss of $0.6 million in 2010.
STOCK BASED COMPENSATION
Accounting standards require the application of the non-substantive vesting approach which means that an award is fully vested when the employee's retention of the award is no longer contingent on providing subsequent service. Under this approach, compensation costs are recognized over the requisite service period of the award instead of ratably over the vesting period stated in the grant. As such, costs are recognized immediately if the employee is retirement eligible on the date of grant or over the period from the date of grant until retirement eligibility if retirement eligibility is reached before the end of the vesting period stated in the grant. See Note 13 for more information.
REVENUE RECOGNITION
Product Sales. The Company's policy is to recognize revenue from product sales when the title and risk of loss has transferred to the customer, when the Company has no remaining obligations regarding the transaction and when collection is reasonably assured. The majority of the Company's products shipped from the U.S. transfers title and risk of loss when the goods leave the Company's shipping location. The majority of the Company's products shipped from non-U.S. operations transfer title and risk of loss when the goods reach their destination. Tooling revenue is also recognized when the title and risk of loss transfers to the customer.
Services and Other. The Company occasionally invoices customers for certain services. The Company also receives revenue from other sources such as license or royalty agreements. Revenue is recognized when services are rendered or rights to use assets can be reliably measured and when collection is reasonably assured. Service and other revenue is not material to the Company's results of operations for any of the years presented.
34 /ATR
2012 Form 10-K
ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB amended the guidance on fair value measurement and disclosure requirements. The amended guidance results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between GAAP and International Financial Reporting Standards ("IFRS"). The adoption of this standard in 2012 had no impact on the Consolidated Financial Statements other than disclosure.
In June 2011, the FASB amended the guidance for the presentation of comprehensive income. The objective of this update is to improve the comparability, consistency, and transparency of financial reporting by increasing the prominence of items reported in other comprehensive income. This update requires that all non-owner changes in stockholders' equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The adoption of this standard resulted in the presentation of a new statement of comprehensive income. The Company adopted the new guidance beginning January 2012.
Other accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.
NOTE 2 INVENTORIES
At December 31, 2012 and 2011, approximately 19% and 21%, respectively, of the total inventories are accounted for by the LIFO method. Inventories, by component, consisted of:
|
||||||
---|---|---|---|---|---|---|
|
2012 |
2011 |
||||
|
||||||
Raw materials |
$ | 125,889 | $ | 116,751 | ||
Work in process |
75,261 | 69,676 | ||||
Finished goods |
127,393 | 105,095 | ||||
Total |
328,543 | 291,522 | ||||
Less LIFO reserve |
(6,658) | (6,367) | ||||
Total |
$ | 321,885 | $ | 285,155 | ||
NOTE 3 GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amount of goodwill for the year ended December 31, 2012, are as follows by reporting segment:
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Beauty + Home |
Pharma |
Food + Beverage |
Corporate & Other |
Total |
|||||||||||
|
||||||||||||||||
Goodwill |
$ | 171,515 | $ | 37,678 | $ | 17,836 | $ | 1,615 | $ | 228,644 | ||||||
Accumulated impairment losses |
| | | (1,615 | ) | (1,615 | ) | |||||||||
Balance as of December 31, 2010 |
$ | 171,515 | $ | 37,678 | $ | 17,836 | $ | | $ | 227,029 | ||||||
Acquisition (See note 16) |
10,938 | | | | 10,938 | |||||||||||
Foreign currency exchange effects |
(3,358 | ) | (669 | ) | (251 | ) | | (4,278 | ) | |||||||
Goodwill |
$ | 179,095 | $ | 37,009 | $ | 17,585 | $ | 1,615 | $ | 235,304 | ||||||
Accumulated impairment losses |
| | | (1,615 | ) | (1,615 | ) | |||||||||
Balance as of December 31, 2011 |
$ | 179,095 | $ | 37,009 | $ | 17,585 | $ | | $ | 233,689 | ||||||
Acquisition (See note 16) |
| 111,031 | | | 111,031 | |||||||||||
Foreign currency exchange effects |
795 | 5,938 | 99 | | 6,832 | |||||||||||
Goodwill |
$ | 179,890 | $ | 153,978 | $ | 17,684 | $ | 1,615 | $ | 353,167 | ||||||
Accumulated impairment losses |
| | | (1,615 | ) | (1,615 | ) | |||||||||
Balance as of December 31, 2012 |
$ | 179,890 | $ | 153,978 | $ | 17,684 | $ | | $ | 351,552 | ||||||
The Company has also completed its annual analysis of the fair value of its reporting units as of December 31, 2012 using both a discounted cash flow analysis and market multiple approach, resulting in no impairment.
35 /ATR
2012 Form 10-K
The table below shows a summary of intangible assets for the years ended December 31, 2012 and 2011.
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|
|
2012 | 2011 | ||||||||||||||||||
Weighted Average Amortization Period (Years) |
Gross Carrying Amount |
Accumulated Amortization |
Net Value |
Gross Carrying Amount |
Accumulated Amortization |
Net Value |
|||||||||||||||
|
|||||||||||||||||||||
Amortization intangible assets: |
|||||||||||||||||||||
Patents |
11 | $ | 19,570 | $ | (18,894 | ) | $ | 676 | $ | 19,030 | $ | (17,962 | ) | $ | 1,068 | ||||||
Acquired Technology |
15 | 38,928 | (1,298 | ) | 37,630 | | | | |||||||||||||
License agreements and other |
5 | 35,780 | (22,126 | ) | 13,654 | 23,840 | (20,534 | ) | 3,306 | ||||||||||||
Total intangible assets |
10 | $ | 94,278 | $ | (42,318 | ) | $ | 51,960 | $ | 42,870 | $ | (38,496 | ) | $ | 4,374 | ||||||
Aggregate amortization expense for the intangible assets above for the years ended December 31, 2012, 2011 and 2010 was $3,177, $2,195, and $3,620, respectively.
Estimated amortization expense for the years ending December 31 is as follows:
2013 | $ | 4,883 | |||
2014 | 4,882 | ||||
2015 | 4,706 | ||||
2016 | 4,077 | ||||
2017 and thereafter | 33,412 |
Future amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of December 31, 2012.
NOTE 4 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
At December 31, 2012 and 2011, accounts payable and accrued liabilities consisted of the following:
|
||||||
---|---|---|---|---|---|---|
|
2012 |
2011 |
||||
|
||||||
Accounts payable, principally trade |
$ | 136,941 | $ | 108,973 | ||
Accrued employee compensation costs |
120,694 | 114,721 | ||||
Customer deposits and other unearned income |
42,148 | 25,326 | ||||
Other accrued liabilities |
80,886 | 86,161 | ||||
Total |
$ | 380,669 | $ | 335,181 | ||
36 /ATR
2012 Form 10-K
NOTE 5 INCOME TAXES
Income before income taxes consists of:
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Years Ended December 31, |
2012 |
2011 |
2010 |
|||||||
|
||||||||||
United States |
$ | 58,250 | $ | 54,161 | $ | 43,485 | ||||
International |
183,123 | 220,781 | 210,900 | |||||||
Total |
$ | 241,373 | $ | 274,942 | $ | 254,385 | ||||
The provision for income taxes is comprised of:
Years Ended December 31, |
2012 |
2011 |
2010 |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Current: |
||||||||||
U.S. Federal |
$ | 17,027 | $ | 21,974 | $ | 24,371 | ||||
State/Local |
491 | 1,008 | (501 | ) | ||||||
International |
70,450 | 66,326 | 56,423 | |||||||
|
$ | 87,968 | $ | 89,308 | $ | 80,293 | ||||
Deferred: |
||||||||||
U.S. Federal/State |
$ | 8,757 | $ | 2,976 | $ | (3,055 | ) | |||
International |
(17,772 | ) | (972 | ) | 3,558 | |||||
|
$ | (9,015 | ) | $ | 2,004 | $ | 503 | |||
Total |
$ | 78,953 | $ | 91,312 | $ | 80,796 | ||||
The difference between the actual income tax provision and the tax provision computed by applying the statutory federal income tax rate of 35.0% in 2012, 2011 and 2010 to income before income taxes is as follows:
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Years Ended December 31, |
2012 |
2011 |
2010 |
|||||||
|
||||||||||
Income tax at statutory rate |
$ | 84,481 | $ | 96,230 | $ | 89,035 | ||||
State income taxes, net of federal benefit |
717 | 1,074 | (469 | ) | ||||||
Provision for distribution of current foreign earnings |
9,552 | 10,325 | 9,037 | |||||||
Rate differential on earnings of foreign operations |
(14,865 | ) | (14,497 | ) | (14,440 | ) | ||||
Other items, net |
(932 | ) | (1,820 | ) | (2,367 | ) | ||||
Actual income tax provision |
$ | 78,953 | $ | 91,312 | $ | 80,796 | ||||
Effective income tax rate |
32.7 | % | 33.2 | % | 31.8 | % |
The tax provision for 2012 reflects the benefit of $0.7 million in Brazil related to claims filed under a program to encourage equity funding of Brazilian entities and deferred tax benefits of $1.8 million, due in part to the merger of some of the company's Indian operations. These benefits were partially offset by $0.7 million of additional expense created by tax law changes enacted in 2012 in France.
The tax provision for 2011 reflects the benefit of $0.7 million in Brazil related to claims filed under a program to encourage equity funding of Brazilian entities. An income tax surcharge enacted in France in December 2011 resulted in additional tax expense of $1.2 million in 2011.
The tax provision for 2010 reflects the benefit of $2.0 million in Brazil related to claims filed under a program intended to encourage equity funding of Brazilian entities. Additional U.S. state R&D credits of $1.4 million were also realized during 2010 as a result of increased profitability.
37 /ATR
2012 Form 10-K
Significant deferred tax assets and liabilities as of December 31, 2012 and 2011 are comprised of the following temporary differences:
|
2012 |
2011 |
|||||
---|---|---|---|---|---|---|---|
Deferred Tax Assets: |
|||||||
Pension liabilities |
$ | 36,376 | $ | 23,005 | |||
Stock options |
15,700 | 6,704 | |||||
Net operating loss carryforwards |
7,084 | 6,631 | |||||
Vacation |
5,325 | 4,449 | |||||
Inventory |
4,567 | 3,718 | |||||
Workers compensation |
4,511 | 3,405 | |||||
U.S. state tax credits |
3,441 | 2,697 | |||||
Accruals |
2,502 | 3,104 | |||||
Other |
8,213 | 5,495 | |||||
Total gross deferred tax assets |
87,719 | 59,208 | |||||
Less valuation allowance |
(7,033 | ) | (6,326 | ) | |||
Net deferred tax assets |
80,686 | 52,882 | |||||
Deferred Tax Liabilities: |
|||||||
Depreciation and amortization |
50,683 | 40,063 | |||||
Acquisition related intangibles |
19,346 | 2,288 | |||||
Leases |
7,904 | 7,559 | |||||
Total gross deferred tax liabilities |
77,933 | 49,910 | |||||
Net deferred tax assets |
$ | 2,753 | $ | 2,972 | |||
There is no expiration date on $5.4 million of the tax-effected net operating loss carryforwards. Of the remaining net operating loss carryforwards, $1.7 million (tax effected) will expire in the years 2013 to 2023. The U.S. state tax credit carryforwards of $3.4 million (tax effected) will expire in the years 2014 to 2027.
The Company evaluates the deferred tax assets and records a valuation allowance when it is believed it is more likely than not that the benefit will not be realized. The Company has established a valuation allowance of $4.8 million of the $7.1 million of tax effected net operating loss carry forwards. These losses are in start-up jurisdictions or locations that have not produced an operating profit to date. A valuation allowance of $1.2 million has been established against the $3.4 million of U.S. state tax credit carry forwards. A valuation allowance of $1.0 million has been established related to other future tax deductions in non-U.S. jurisdictions, the benefit of which management believes will not be realized.
The Company repatriated a portion of non-U.S. subsidiary earnings in 2012, 2011, and 2010 in the amounts of $79 million, $82 million, and $81 million, respectively. All of these amounts were received from our European operations except for $1.3 million from Canada in 2012. All repatriations from Europe were from current year earnings and not from funds previously considered permanently reinvested. The $1.3 million of Canadian funds were distributed as completion of our 2009 restructuring activities within Canada. The tax effects related to these repatriations were recorded in the period the repatriation decision was made.
As of December 31, 2012, the Company had $1.1 billion of undistributed earnings from non-U.S. subsidiaries which have been designated as permanently reinvested. The Company has not made a provision for U.S. or additional foreign taxes on this amount as it is not practical to estimate the amount of additional tax that might be payable on these undistributed non-U.S. earnings. These earnings will continue to be reinvested indefinitely and could become subject to additional tax if they were remitted as dividends or lent to a U.S. affiliate, or if the Company should sell its stock in the subsidiaries.
The Company has not provided for taxes on certain tax-deferred income of a foreign operation. The income arose predominately from government grants. Taxes of approximately $2.4 million would become payable in the event the terms of the grant are not fulfilled.
In January 2013, the United States Congress passed The American Taxpayer Relief Act of 2012. Among other changes, this Act extended the federal research and development tax credit through December 31, 2013. The income tax provision for the first quarter of 2013 will include a discrete net tax benefit for the changes associated with the law changes. The Company does not expect the changes to have a material effect on the first quarter or annual effective tax rate.
38 /ATR
2012 Form 10-K
INCOME TAX UNCERTAINTIES
The Company provides a liability for the amount of tax benefits realized from uncertain tax positions. A reconciliation of the beginning and ending amount of income tax uncertainties is as follows:
|
2012 |
2011 |
2010 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
|
|||||||||||
Balance at January 1 |
$ | 9,071 | $ | 10,893 | $ | 10,806 | |||||
Increases based on tax positions for the current year |
245 | 150 | 643 | ||||||||
Increases based on tax positions of prior years |
107 | 128 | 2,309 | ||||||||
Decreases based on tax positions of prior years |
(257 | ) | (1,090 | ) | (1,362 | ) | |||||
Settlements |
(21 | ) | (457 | ) | (381 | ) | |||||
Lapse of statute of limitations |
(681 | ) | (553 | ) | (1,122 | ) | |||||
Balance at December 31 |
$ | 8,464 | $ | 9,071 | $ | 10,893 | |||||
The amount of income tax uncertainties that, if recognized, would impact the effective tax rate is $8.1 million. The Company estimates that it is reasonably possible that the liability for uncertain tax positions will decrease no more than $5 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of income taxes. As of December 31, 2012, 2011 and 2010, the Company had approximately $1.3 million, $1.4 million and $1.6 million, respectively, accrued for the payment of interest and penalties, of which approximately ($0.1) million, ($0.2) million and ($0.2) million was recognized in income tax expense in the years ended December 31, 2012, 2011 and 2010, respectively.
The Company or its subsidiaries file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. The major tax jurisdictions the Company files in, with the years still subject to income tax examinations, are listed below:
Major Tax Jurisdiction |
Tax Years Subject to Examination |
||
---|---|---|---|
United States Federal | 2009 2012 | ||
United States State | 2004 2012 | ||
France | 2009 2012 | ||
Germany | 2011 2012 | ||
Italy | 2007 2012 | ||
Switzerland | 2002 2012 |
NOTE 6 DEBT
Average borrowings under unsecured lines of credit were $110.3 million and $112.8 million for 2012 and 2011, respectively, and the average annual interest rate on short-term notes payable, which is included in the notes payable caption under current liabilities of the balance sheet was approximately 2.1% for 2012 and 0.7% for 2011. There are no compensating balance requirements associated with short-term borrowings.
On January 31, 2012, the Company entered into a new revolving credit facility that provides for unsecured financing of up to $300 million. This new facility replaces a previously existing $200 million unsecured financing facility that would have matured in 2012 and was cancelled without any early termination penalty on January 31, 2012. The Company initially drew $185 million in borrowings from the new credit facility, of which $165 million was used to repay in full the outstanding obligations under the previous credit facility. Each borrowing under the new credit facility will bear interest at rates based on LIBOR, prime and other similar rates, in each case plus an applicable margin. A facility fee on the total amount of the facility is also payable quarterly, regardless of usage. The applicable margins for borrowings under the new credit facility and the facility fee percentage may change from time to time depending on changes in our consolidated leverage ratio. The representations, covenants and events of default in the new credit facility are substantially similar to the representations, covenants and events of default contained in the previous credit facility. On January 31, 2013, the Company amended the new revolving credit facility to, among other things, add a swingline loan sub-facility and extend the maturity date for the revolving credit facility by one year, to January 31, 2018.
The revolving credit and the senior unsecured debt agreements contain covenants, with which the Company is in compliance, that include certain financial tests.
39 /ATR
2012 Form 10-K
At December 31, the Company's long-term obligations consisted of the following:
|
2012 |
2011 |
|||||
---|---|---|---|---|---|---|---|
Notes payable 2.1% 12.6%, due in monthly and annual installments through 2014 |
$ | 4,410 | $ | 5,654 | |||
Senior unsecured notes 5.4%, due in 2013 |
25,000 | 25,000 | |||||
Senior unsecured notes 2.3%, due in 2015 |
16,000 | 16,000 | |||||
Senior unsecured notes 6.0%, due in 2016 |
50,000 | 50,000 | |||||
Senior unsecured notes 6.0%, due in 2018 |
75,000 | 75,000 | |||||
Senior unsecured notes 3.8%, due in 2020 |
84,000 | 84,000 | |||||
Senior unsecured notes 3.2%, due in 2022 |
75,000 | | |||||
Senior unsecured notes 3.4%, due in 2024 |
50,000 | | |||||
Capital lease obligations |
2,938 | 3,372 | |||||
|
382,348 | 259,026 | |||||
Current maturities of long-term obligations |
(29,488 | ) | (4,116 | ) | |||
Total long-term obligations |
$ | 352,860 | $ | 254,910 | |||
Aggregate long-term maturities, excluding capital lease obligations, which is discussed in Note 7, due annually for the five years beginning in 2013 are $29,068, $342, $16,000, $50,000, $0 and $284,000 thereafter.
NOTE 7 LEASE COMMITMENTS
The Company leases certain warehouse, plant, and office facilities as well as certain equipment under noncancelable operating and capital leases expiring at various dates through the year 2029. Most of the operating leases contain renewal options and certain leases include options to purchase during or at the end of the lease term.
Amortization expense related to capital leases is included in depreciation expense. Rent expense under operating leases (including taxes, insurance and maintenance when included in the rent) amounted to $26,911, $27,558 and $23,382 in 2012, 2011 and 2010, respectively.
Assets recorded under capital leases consist of:
|
2012 |
2011 |
|||||
---|---|---|---|---|---|---|---|
Buildings |
$ | 14,557 | $ | 16,861 | |||
Accumulated depreciation |
(10,825 | ) | (10,255 | ) | |||
|
$ | 3,732 | $ | 6,606 | |||
Future minimum payments, by year and in the aggregate, under the capital leases and noncancelable operating leases with initial or remaining terms of one year or more consisted of the following at December 31, 2012:
|
|||||||
---|---|---|---|---|---|---|---|
|
|||||||
|
Capital Leases |
Operating Leases |
|||||
2013 |
$ | 588 | $ | 15,522 | |||
2014 |
676 | 12,061 | |||||
2015 |
666 | 9,599 | |||||
2016 |
676 | 7,559 | |||||
2017 |
541 | 5,278 | |||||
Subsequent to 2017 |
1,105 | 21,544 | |||||
Total minimum lease payments |
4,252 | $ | 71,563 | ||||
Amounts representing interest |
(1,314 | ) | |||||
Present value of future minimum lease payments |
2,938 | ||||||
Lease amount due in one year |
(420 | ) | |||||
Total |
$ | 2,518 | |||||
40 /ATR
2012 Form 10-K
NOTE 8 RETIREMENT AND DEFERRED COMPENSATION PLANS
The Company has various noncontributory retirement plans covering certain of its domestic and foreign employees. Benefits under the Company's retirement plans are based on participants' years of service and annual compensation as defined by each plan. Annual cash contributions to fund pension costs accrued under the Company's domestic plans are generally at least equal to the minimum funding amounts required by the Employee Retirement Income Security Act of 1974, as amended (ERISA). Certain pension commitments under its foreign plans are also funded according to local requirements or at the Company's discretion.
The following table presents the changes in the benefit obligations and plan assets for the most recent two years for the Company's domestic and foreign plans.
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|
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Domestic Plans | Foreign Plans | |||||||||||
|
2012 |
2011 |
2012 |
2011 |
|||||||||
Change in benefit obligation: |
|||||||||||||
Benefit obligation at beginning of year |
$ | 111,947 | $ | 86,186 | $ | 48,754 | $ | 46,673 | |||||
Service cost |
7,217 | 5,436 | 2,244 | 2,018 | |||||||||
Interest cost |
4,913 | 4,504 | 2,658 | 2,518 | |||||||||
Business Acquired |
| | 9,148 | | |||||||||
Curtailment/Settlement |
| | | (1,052 | ) | ||||||||
Actuarial loss |
18,743 | 18,873 | 17,905 | 1,984 | |||||||||
Benefits paid |
(6,499 | ) | (3,052 | ) | (2,075 | ) | (1,509 | ) | |||||
Foreign currency translation adjustment |
| | 1,976 | (1,878 | ) | ||||||||
Benefit obligation at end of year |
$ | 136,321 | $ | 111,947 | $ | 80,610 | $ | 48,754 | |||||
|
Domestic Plans | Foreign Plans | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2012 |
2011 |
2012 |
2011 |
|||||||||
Change in plan assets: |
|||||||||||||
Fair value of plan assets at beginning of year |
$ | 68,537 | $ | 60,442 | $ | 39,835 | $ | 38,383 | |||||
Actual return on plan assets |
8,342 | (1,141 | ) | 1,547 | (310 | ) | |||||||
Employer contribution |
14,207 | 12,288 | 7,381 | 5,478 | |||||||||
Business Acquired |
| | 389 | | |||||||||
Settlements |
| | | (1,052 | ) | ||||||||
Benefits paid |
(6,499 | ) | (3,052 | ) | (2,075 | ) | (1,509 | ) | |||||
Foreign currency translation adjustment |
| | 799 | (1,155 | ) | ||||||||
Fair value of plan assets at end of year |
$ | 84,587 | $ | 68,537 | $ | 47,876 | $ | 39,835 | |||||
Funded status at end of year |
$ | (51,734 | ) | $ | (43,410 | ) | $ | (32,734 | ) | $ | (8,919 | ) |
The following table presents the funded status amounts recognized in the Company's Consolidated Balance Sheets as of December 31, 2012 and 2011.
|
Domestic Plans | Foreign Plans | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2012 |
2011 |
2012 |
2011 |
|||||||||
Current liabilities |
$ | (369 | ) | $ | (1,053 | ) | $ | (1,187 | ) | $ | (79 | ) | |
Non-current liabilities |
(51,365 | ) | (42,357 | ) | (31,547 | ) | (8,840 | ) | |||||
|
$ | (51,734 | ) | $ | (43,410 | ) | $ | (32,734 | ) | $ | (8,919 | ) | |
The following table presents the amounts not recognized as components of periodic benefit cost that are recognized in accumulated other comprehensive loss as of December 31, 2012 and 2011.
|
Domestic Plans | Foreign Plans | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2012 |
2011 |
2012 |
2011 |
|||||||||
Net actuarial loss |
$ | 58,580 | $ | 46,428 | $ | 29,265 | $ | 11,434 | |||||
Net prior service cost |
3 | 7 | 4,157 | 4,518 | |||||||||
Tax effects |
(21,969 | ) | (17,414 | ) | (10,788 | ) | (5,066 | ) | |||||
|
$ | 36,614 | $ | 29,021 | $ | 22,634 | $ | 10,886 | |||||
41 /ATR
2012 Form 10-K
Changes in benefit obligations and plan assets recognized in other comprehensive income in 2012 are as follows:
|
Domestic Plans | Foreign Plans | |||||
---|---|---|---|---|---|---|---|
Current year actuarial loss |
$ | (16,006 | ) | $ | (18,306 | ) | |
Amortization of loss |
3,854 | 475 | |||||
Amortization of prior service cost |
4 | 361 | |||||
|
$ | (12,148 | ) | $ | (17,470 | ) | |
The following table presents the amounts in accumulated other comprehensive loss as of December 31, 2012 expected to be recognized as components of periodic benefit cost in 2013.
|
Domestic Plans | Foreign Plans | |||||
---|---|---|---|---|---|---|---|
Amortization of net loss |
$ | 5,081 | $ | 1,405 | |||
Amortization of prior service cost |
3 | 371 | |||||
|
$ | 5,084 | $ | 1,776 | |||
Components of net periodic benefit cost:
|
|
|
|
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
Domestic Plans | |||||||||
|
2012 |
2011 |
2010 |
|||||||
Service cost |
$ | 7,217 | $ | 5,436 | $ | 4,675 | ||||
Interest cost |
4,913 | 4,504 | 4,106 | |||||||
Expected return on plan assets |
(5,604 | ) | (4,790 | ) | (4,037 | ) | ||||
Amortization of net loss |
3,854 | 1,652 | 628 | |||||||
Amortization of prior service cost |
4 | 4 | 4 | |||||||
Net periodic benefit cost |
$ | 10,384 | $ | 6,806 | $ | 5,376 | ||||
Settlement |
| | | |||||||
Total Net periodic benefit cost |
$ | 10,384 | $ | 6,806 | $ | 5,376 | ||||
|
Foreign Plans | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2012 |
2011 |
2010 |
|||||||
Service cost |
$ | 2,244 | $ | 2,018 | $ | 1,677 | ||||
Interest cost |
2,658 | 2,518 | 2,369 | |||||||
Expected return on plan assets |
(1,538 | ) | (1,753 | ) | (1,414 | ) | ||||
Amortization of net loss |
475 | 836 | 255 | |||||||
Amortization of prior service cost |
361 | 455 | 359 | |||||||
Net periodic benefit cost |
$ | 4,200 | $ | 4,074 | $ | 3,246 | ||||
Curtailment |
| | | |||||||
Total Net periodic benefit cost |
$ | 4,200 | $ | 4,074 | $ | 3,246 | ||||
The accumulated benefit obligation ("ABO") for the Company's domestic defined benefit pension plans was $118.8 million and $99.1 million at December 31, 2012 and 2011, respectively. The accumulated benefit obligation for the Company's foreign defined benefit pension plans was $63.6 million and $40.5 million at December 31, 2012 and 2011, respectively.
The following table provides the projected benefit obligation ("PBO"), ABO, and fair value of plan assets for all pension plans with an ABO in excess of plan assets as of December 31, 2012 and 2011.
|
Domestic Plans | Foreign Plans | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2012 |
2011 |
2012 |
2011 |
|||||||||
Projected benefit obligation |
$ | 136,321 | $ | 111,947 | $ | 77,663 | $ | 32,896 | |||||
Accumulated benefit obligation |
118,804 | 99,091 | 60,703 | 25,064 | |||||||||
Fair value of plan assets |
84,587 | 68,537 | 44,930 | 24,280 |
42 /ATR
2012 Form 10-K
The following table provides the PBO, ABO, and fair value of plan assets for all pension plans with a PBO in excess of plan assets as of December 31, 2012 and 2011.
|
Domestic Plans | Foreign Plans | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2012 |
2011 |
2012 |
2011 |
|||||||||
Projected benefit obligation |
$ | 136,321 | $ | 111,947 | $ | 77,663 | $ | 34,104 | |||||
Accumulated benefit obligation |
118,804 | 99,091 | 60,703 | 25,923 | |||||||||
Fair value of plan assets |
84,587 | 68,537 | 44,930 | 25,140 |
Assumptions:
|
|
|
|
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Domestic Plans | Foreign Plans | |||||||||||
|
2012 |
2011 |
2012 |
2011 |
|||||||||
|
|||||||||||||
Weighted-average assumptions used to determine benefit obligations at December 31: |
|||||||||||||
Discount rate |
3.80% | 4.40% | 3.19% | 5.10% | |||||||||
Rate of compensation increase |
4.00% | 4.00% | 3.00% | 3.00% | |||||||||
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31: |
|||||||||||||
Discount rate |
4.40% | 5.40% | 5.10% | 5.15% | |||||||||
Expected long-term return on plan assets |
7.00% | 7.00% | 3.83% | 4.40% | |||||||||
Rate of compensation increase |
4.00% | 4.00% | 3.00% | 3.00% |
The Company develops the expected long-term rate of return assumptions based on historical experience and by evaluating input from the plans' asset managers, including the managers' review of asset class return expectations and benchmarks, economic indicators and long-term inflation assumptions.
In order to determine the 2013 net periodic benefit cost, the Company expects to use the December 31, 2012 discount rates, December 31, 2012 rates of compensation increase assumptions and the same assumed long-term returns on domestic and foreign plan assets used for the 2012 net periodic benefit cost.
The Company's domestic and foreign pension plan weighted-average asset allocations at December 31, 2012 and 2011 by asset category are as follows:
Plan Assets:
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Domestic Plans Assets at December 31, |
Foreign Plans Assets at December 31, |
|||||||||||
|
2012 |
2011 |
2012 |
2011 |
|||||||||
|
|
|
|
|
|||||||||
Equity securities |
60% | 60% | 6% | | |||||||||
Fixed income securities |
30% | 32% | 7% | 12% | |||||||||
Infrastructure |
10% | 8% | | | |||||||||
Money market |
| | 11% | 15% | |||||||||
Investment Funds |
| | 76% | 73% | |||||||||
Total |
100% | 100% | 100% | 100% | |||||||||
The Company's investment strategy for its domestic and foreign pension plans is to maximize the long-term rate of return on plan assets within an acceptable level of risk. The investment policy strives to have assets sufficiently diversified so that adverse or unexpected results from one security type will not have an unduly detrimental impact on the entire portfolio and accordingly, establishes a target allocation for each asset category within the portfolio. The domestic plan asset allocation is reviewed on a quarterly basis and the foreign plan asset allocation is reviewed annually. Rebalancing occurs as needed to comply with the investment strategy. The domestic plan target allocation for 2013 is 60% equity securities and 40% fixed income securities and infrastructure. The foreign plan target allocation for 2013 is 70% investment funds, 26% fixed income securities, and 4% money market.
43 /ATR
2012 Form 10-K
Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
|
Domestic Fair Value Measurement at December 31, 2012 |
Foreign Fair Value Measurement at December 31, 2012 |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In Thousands $) |
Total |
(Level 1) |
(Level 2) |
(Level 3) |
Total |
(Level 1) |
(Level 2) |
(Level 3) |
|||||||||||||||||
Cash and Short Term Securities (a) |
$ | 887 | $ | 887 | $ | | $ | | $ | 5,560 | $ | 5,560 | $ | | $ | | |||||||||
USD |
| 887 | | | | | | | |||||||||||||||||
EUR |
| | | | | 5,560 | | | |||||||||||||||||
Equity Securities (a) |
$ | 42,523 | $ | 42,523 | | | $ | 2,739 | $ | 2,739 | | | |||||||||||||
US Large Cap Equities |
| 17,142 | | | | | | | |||||||||||||||||
US Small Cap Equities |
| 12,523 | | | | | | | |||||||||||||||||
International Equities |
| 12,858 | | | | 2,739 | | | |||||||||||||||||
Core Fixed Income (a) |
$ | 24,587 | $ | 24,587 | | | | | | | |||||||||||||||
Corporate debts securities |
| | | | $ | 3,187 | $ | 3,187 | | | |||||||||||||||
Emerging Market (a) |
| | | | | 3,187 | | | |||||||||||||||||
Hedge Fund (c) |
$ | 8,575 | | | $ | 8,575 | | | | | |||||||||||||||
Investment Funds |
| | | | $ | 36,390 | $ | 15,163 | $ | 21,227 | | ||||||||||||||
Mutual Funds in Equities (a) |
| | | | | 5,872 | | | |||||||||||||||||
Mutual Funds Diversified (a&b) |
| | | | | 9,291 | 21,227 | | |||||||||||||||||
Infrastructure (c) |
$ | 8,015 | | | $ | 8,015 | | | | | |||||||||||||||
Total Investments |
$ | 84,587 | $ | 67,997 | $ | | $ | 16,590 | $ | 47,876 | $ | 26,649 | $ | 21,227 | $ | | |||||||||
|
Domestic Fair Value Measurement at December 31, 2011 |
Foreign Fair Value Measurement at December 31, 2011 |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In Thousands $) |
Total |
(Level 1) |
(Level 2) |
(Level 3) |
Total |
(Level 1) |
(Level 2) |
(Level 3) |
|||||||||||||||||
Cash and Short Term Securities (a) |
$ | 96 | $ | 96 | $ | | $ | | $ | 5,781 | $ | 5,781 | $ | | $ | | |||||||||
USD |
| 96 | | | | | | | |||||||||||||||||
EUR |
| | | | | 5,781 | | | |||||||||||||||||
Equity Securities (a) |
$ | 33,264 | $ | 33,264 | | | | | | | |||||||||||||||
US Large Cap Equities |
| 14,215 | | | | | | | |||||||||||||||||
US Small Cap Equities |
| 10,077 | | | | | | | |||||||||||||||||
International Equities |
| 8,972 | | | | | | | |||||||||||||||||
Core Fixed Income (a) |
$ | 22,010 | $ | 22,010 | | | | | | | |||||||||||||||
Corporate debts securities |
| | | | $ | 4,812 | $ | 4,812 | | | |||||||||||||||
Euro Corporate Bonds (a) |
| | | | | 4,812 | | | |||||||||||||||||
Hedge Fund (c) |
$ | 7,497 | | | $ | 7,497 | | | | | |||||||||||||||
Investment Funds |
| | | | $ | 29,242 | $ | 14,076 | $ | 15,166 | | ||||||||||||||
Mutual Funds in Equities (a) |
| | | | | 5,482 | | | |||||||||||||||||
Mutual Funds Diversified (a&b) |
| | | | | 8,594 | 15,166 | | |||||||||||||||||
Infrastructure (c) |
$ | 5,670 | | | $ | 5,670 | | | | | |||||||||||||||
Total Investments |
$ | 68,537 | $ | 55,370 | $ | | $ | 13,167 | $ | 39,835 | $ | 24,669 | $ | 15,166 | $ | | |||||||||
44 /ATR
2012 Form 10-K
The following table sets forth a summary of changes in fair value of the pension plan investments classified as Level 3 for the year ended December 31, 2012.
|
Infrastructure Fund |
Hedge Fund |
||||||
---|---|---|---|---|---|---|---|---|
|
||||||||
Balance, 12/31/10 |
$ | 5,472 | $ | 5,508 | ||||
Purchases, sales and settlements, net |
| 1,800 | ||||||
Return on assets held |
347 | 189 | ||||||
Admin fees and other |
(149 | ) | | |||||
Balance, 12/31/11 |
$ | 5,670 | $ | 7,497 | ||||
Purchases, sales and settlements, net |
1,800 | 1,000 | ||||||
Return on assets held |
696 | 78 | ||||||
Admin fees and other |
(151 | ) | | |||||
Balance, 12/31/12 |
$ | 8,015 | $ | 8,575 | ||||
CONTRIBUTIONS
Annual cash contributions to fund pension costs accrued under the Company's domestic plans are generally at least equal to the minimum funding amounts required by ERISA. The Company contributed $14.2 million to its domestic defined benefit plans in 2012 and although the Company has no minimum funding requirement for 2013, we plan to contribute between $10 million and $15 million in 2013. Contributions to fund pension costs accrued under the Company's foreign plans are made in accordance with local laws or at the Company's discretion. The Company contributed approximately $7.4 million to its foreign defined benefit plan in 2012 and expects to contribute approximately $4.3 million in 2013.
ESTIMATED FUTURE BENEFIT PAYMENTS
As of December 31, 2012, the Company expects the plans to make the following estimated benefit payments relating to its defined benefit plans over the next ten years:
|
|
|
|||||
---|---|---|---|---|---|---|---|
|
Domestic Plans |
Foreign Plans |
|||||
2013 |
$ | 8,194 | $ | 2,249 | |||
2014 |
7,652 | 1,766 | |||||
2015 |
7,332 | 2,705 | |||||
2016 |
7,763 | 2,975 | |||||
2017 |
10,272 | 3,513 | |||||
2018 2022 |
54,495 | 23,030 |
OTHER PLANS
The Company has a non-qualified supplemental pension plan for domestic employees which provides for pension amounts that would have been payable from the Company's principal domestic pension plan if it were not for limitations imposed by income tax regulations. The liability for this plan, which is not funded, was $6.4 million and $4.3 million at December 31, 2012 and 2011, respectively. This amount is included in the liability for domestic plans shown above.
The Company has a defined contribution 401(k) employee savings plan available to substantially all domestic employees. Company matching contributions are made in cash up to a maximum of 3% of the participating employee's salary subject to income tax regulations. For each of the years ended December 31, 2012, 2011 and 2010, total contributions made by the Company to these plans were approximately $2.6 million, $2.4 million and $2.1 million, respectively.
The Company has several foreign defined contribution plans, which require the Company to contribute a percentage of the participating employee's salary according to local regulations. For each of the years ended December 31, 2012, 2011 and 2010, total contributions made by the Company to these plans were approximately $1.8 million, $1.9 million and $1.7 million, respectively.
The Company has no additional postretirement or postemployment benefit plans.
NOTE 9 DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company maintains a foreign exchange risk management policy designed to establish a framework to protect the value of the Company's non-functional denominated transactions from adverse changes in exchange rates. Sales of the Company's products can be denominated in a currency different from the currency in which the related costs to produce the product are denominated. Changes in exchange rates on such inter-country sales can impact the Company's results of operations. The Company's policy is not to engage in speculative foreign currency hedging activities, but to minimize its net foreign currency transaction exposure defined as firm commitments and transactions recorded and denominated in
45 /ATR
2012 Form 10-K
currencies other than the functional currency. The Company may use foreign currency forward exchange contracts, options and cross currency swaps to hedge these risks.
The Company maintains an interest rate risk management strategy to minimize significant, unanticipated earnings fluctuations that may arise from volatility in interest rates.
For derivative instruments designated as hedges, the Company formally documents the nature and relationships between the hedging instruments and the hedged items, as well as the risk management objectives, strategies for undertaking the various hedge transactions, and the method of assessing hedge effectiveness. Additionally, in order to designate any derivative instrument as a hedge of an anticipated transaction, the significant characteristics and expected terms of any anticipated transaction must be specifically identified, and it must be probable that the anticipated transaction will occur.
FAIR VALUE HEDGES
The Company maintained an interest rate swap to convert a portion of its fixed-rate debt into variable-rate debt until May 31, 2011. Under the interest rate swap contract, the Company exchanged, at specified intervals, the difference between fixed-rate and floating-rate amounts, which was calculated based on an agreed upon notional amount. On May 31, 2011, this interest rate swap contract matured and was not renewed. No gain or loss was recorded in the income statement in 2011 or 2010 as any hedge ineffectiveness for the periods was immaterial.
CASH FLOW HEDGES
The Company had one foreign currency cash flow hedge until March 15, 2012. A French subsidiary of AptarGroup, AptarGroup Holding SAS, had hedged the risk of variability in Euro equivalent associated with the cash flows of an intercompany loan granted in Brazilian Real. The forward contracts utilized were designated as a hedge of the changes in the cash flows relating to the changes in foreign currency rates relating to the loan and related forecasted interest. On March 15, 2012, the loan and foreign currency forward contracts were repaid.
During the year ended December 31, 2012, the Company did not recognize any net gain (loss) as any hedge ineffectiveness for the period was immaterial, and the Company did not recognize any net gain (loss) related to the portion of the hedging instrument excluded from the assessment of hedge effectiveness.
HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS
A significant number of the Company's operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of the Company's foreign entities. A strengthening U.S. dollar relative to foreign currencies has a dilutive translation effect on the Company's financial condition and results of operations. Conversely, a weakening U.S. dollar has an additive effect. The Company in some cases maintains debt in these subsidiaries to offset the net asset exposure. The Company does not otherwise actively manage this risk using derivative financial instruments. In the event the Company plans on a full or partial liquidation of any of its foreign subsidiaries where the Company's net investment is likely to be monetized, the Company will consider hedging the currency exposure associated with such a transaction.
46 /ATR
2012 Form 10-K
OTHER
As of December 31, 2012, the Company has recorded the fair value of foreign currency forward exchange contracts of $0.3 million in prepayments and other, $1.0 million in miscellaneous other assets, $2.1 million in accounts payable and accrued liabilities and $0.2 million in deferred and other non-current liabilities in the balance sheet. All forward exchange contracts outstanding as of December 31, 2012 had an aggregate contract amount of $95 million.
Fair Value of Derivative Instruments in the Consolidated Balance Sheets as of December 31, 2012 and December 31, 2011
Derivative Contracts Designated as Hedging Instruments |
Balance Sheet Location |
December 31, 2012 |
December 31, 2011 |
||||||
---|---|---|---|---|---|---|---|---|---|
Derivative Liabilities | |||||||||
Foreign Exchange Contracts | Accounts payable and accrued liabilities | $ | | $ | 302 | ||||
$ | | $ | 302 | ||||||
Derivative Contracts Not Designated as Hedging Instruments |
|||||||||
Derivative Assets | |||||||||
Foreign Exchange Contracts | Prepayments and other | $ | 332 | $ | 520 | ||||
Foreign Exchange Contracts | Miscellaneous Other Assets | 982 | | ||||||
$ | 1,314 | $ | 520 | ||||||
Derivative Liabilities | |||||||||
Foreign Exchange Contracts | Accounts payable and accrued liabilities | $ | 2,097 | $ | 8,383 | ||||
Foreign Exchange Contracts | Deferred and other non-current liabilities | 164 | 2,005 | ||||||
$ | 2,261 | $ | 10,388 | ||||||
The Effect of Derivative Instruments on the Consolidated Statements of Income
for the Fourth Quarters Ended December 31, 2012 and December 31, 2011
Derivatives in Cash Flow Hedging Relationships |
|
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) |
|||||||
---|---|---|---|---|---|---|---|---|---|
|
|
2012 |
2011 |
||||||
Foreign Exchange Contracts | $ | | $ | 1 | |||||
$ | | $ | 1 | ||||||
Derivatives Not Designated as Hedging Instruments |
Location of Gain or (Loss) Recognized in Income on Derivative |
Amount of Gain Recognized in Income on Derivative |
|||||||
---|---|---|---|---|---|---|---|---|---|
|
|
2012 |
2011 |
||||||
Foreign Exchange Contracts | Other Income (Expense) Miscellaneous, net |
$ | 859 | $ | 368 | ||||
$ | 859 | $ | 368 | ||||||
47 /ATR
2012 Form 10-K
The Effect of Derivative Instruments on the Consolidated Statements of Income
for the Fiscal Years Ended December 31, 2012 and December 31, 2011
Derivatives in Cash Flow Hedging Relationships |
|
Amount of Gain Recognized in OCI on Derivative (Effective Portion) |
|||||||
---|---|---|---|---|---|---|---|---|---|
|
|
2012 |
2011 |
||||||
Foreign Exchange Contracts | $ | | $ | 7 | |||||
$ | | $ | 7 | ||||||
Derivatives Not Designated as Hedging Instruments |
Location of Gain or (Loss) Recognized in Income on Derivative |
Amount of Gain or (Loss) Recognized in Income on Derivative |
|||||||
---|---|---|---|---|---|---|---|---|---|
|
|
2012 |
2011 |
||||||
Foreign Exchange Contracts | Other Income (Expense) Miscellaneous, net |
$ | (457 | ) | $ | (2,992 | ) | ||
$ | (457 | ) | $ | (2,992 | ) | ||||
NOTE 10 COMMITMENTS AND CONTINGENCIES
The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature including the proceeding noted below. While management believes the resolution of these claims and lawsuits will not have a material adverse effect on the Company's financial position or results of operations or cash flows, claims and legal proceedings are subject to inherent uncertainties, and unfavorable outcomes could occur that could include amounts in excess of any accruals which management has established. Were such unfavorable final outcomes to occur, it is possible that they could have a material adverse effect on our financial positions, results of operations and cash flows.
In 2010, a competitor filed a lawsuit against certain AptarGroup, Inc. subsidiaries alleging that certain processes performed by a supplier of a specific type of diptube utilized by the AptarGroup, Inc. subsidiaries in the manufacture of a specific type of pump infringes patents owned by the counterparty. This lawsuit sought an injunction barring the manufacture, use, sale and importation of this specific pump for use in fragrance containers. In April 2012, the Company's United States subsidiary was found to have infringed on patents owned by the counterparty within the United States. The ruling does not apply to manufacture or sales of pumps in countries outside the United States and no damages were assessed. The Company has appealed this ruling.
Under its Certificate of Incorporation, the Company has agreed to indemnify its officers and directors for certain events or occurrences while the officer or director is, or was serving, at its request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a directors and officers liability insurance policy that covers a portion of its exposure. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. The Company has no liabilities recorded for these agreements as of December 31, 2012.
NOTE 11 PREFERRED STOCK PURCHASE RIGHTS
The Company has a preferred stock purchase rights plan (the "Rights Plan") and each share of common stock has one-half of a preferred share purchase right (a "Right"). Under the terms of the Rights Plan, if a person or group acquires 15% or more of the outstanding common stock, each Right will entitle its holder (other than such person or members of such group) to purchase, at the Right's then current exercise price, a number of shares of the Company's common stock having a market value of twice such price. In addition, under certain circumstances if the Company is acquired in a merger or other business combination transaction, each Right will entitle its holder to purchase, at the Right's then current exercise price, a number of the acquiring company's common shares having a market value of twice such price.
Each Right entitles the holder under certain circumstances to buy one one-thousandth of a share of Series B junior participating preferred stock, par value $.01 per share, at an exercise price of $150. Each share of Series B junior participating preferred stock will entitle its holder to 2,000 votes and will have a minimum preferential quarterly dividend payment equal to the greater of $1 per share or 2,000 times the amount paid to holders of common stock. Currently, 99,000 shares of Series B junior participating preferred stock have been reserved. The Rights will expire on April 7, 2013, unless previously exercised or redeemed at the option of the Board of Directors for $.01 per Right. As of the date of this report, the Board of Directors does not intend to renew or replace such plan.
48 /ATR
2012 Form 10-K
NOTE 12 STOCK REPURCHASE PROGRAM
The Company repurchased approximately 1.6 million and 2.1 million shares of its outstanding common stock in 2012 and 2011, respectively, at a total cost of $79.8 million and $102.6 million in 2012 and 2011, respectively. Shares repurchased are returned to Treasury Stock. The Company has a remaining authorization at December 31, 2012 to repurchase 2.0 million additional shares. The timing of and total amount expended for the share repurchase program will depend upon market conditions.
NOTE 13 STOCK-BASED COMPENSATION
The Company issues stock options and restricted stock units to employees under Stock Awards Plans approved by shareholders. Stock options are issued to non-employee directors for their services as directors under Director Stock Option Plans approved by shareholders. Options are awarded with the exercise price equal to the market price on the date of grant and generally become exercisable over three years and expire 10 years after grant. Restricted stock units generally vest over three years.
Compensation expense recorded attributable to stock options for the year ended December 31, 2012 was approximately $12.7 million ($8.5 million after tax), or $0.13 per share basic and $0.12 per share diluted. The income tax benefit related to this compensation expense was approximately $4.2 million. Approximately $11.3 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. Compensation expense recorded attributable to stock options for the year ended December 31, 2011 was approximately $13.7 million ($9.6 million after tax), or $0.14 per share basic and diluted. The income tax benefit related to this compensation expense was approximately $4.1 million. Approximately $12.5 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. Compensation expense recorded attributable to stock options for the year ended December 31, 2010 was approximately $11.2 million ($8.0 million after tax), or $0.12 per share basic and $0.11 per share diluted. The income tax benefit related to this compensation expense was approximately $3.2 million. Approximately $9.9 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales.
The Company uses historical data to estimate expected life and volatility. The weighted-average fair value of stock options granted under the Stock Awards Plans was $10.35, $11.36 and $9.18 per share in 2012, 2011 and 2010, respectively. These values were estimated on the respective dates of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Stock Awards Plans: Years ended December 31, |
2012 |
2011 |
2010 |
|||||||
|
||||||||||
Dividend Yield |
1.8% | 1.7% | 1.8% | |||||||
Expected Stock Price Volatility |
22.9% | 23.3% | 22.7% | |||||||
Risk-free Interest Rate |
1.3% | 2.7% | 3.6% | |||||||
Expected Life of Option (years) |
6.9 | 6.9 | 6.9 |
The fair value of stock options granted under the Director Stock Option Plan in 2012 was $10.59. The fair value of stock options granted under the Director Stock Option Plan in 2011 and 2010 was $12.00 and $10.07, respectively. These values were estimated on the respective date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Director Stock Option Plans: Years ended December 31, |
2012 |
2011 |
2010 |
|||||||
|
||||||||||
Dividend Yield |
1.7% | 1.6% | 1.7% | |||||||
Expected Stock Price Volatility |
22.5% | 22.9% | 22.6% | |||||||
Risk-free Interest Rate |
1.3% | 2.5% | 3.4% | |||||||
Expected Life of Option (years) |
6.9 | 6.9 | 6.9 |
49 /ATR
2012 Form 10-K
A summary of option activity under the Company's stock option plans as of December 31, 2012, and changes during the period then ended is presented below:
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Stock Awards Plans | Director Stock Option Plans | |||||||||||
|
Shares |
Weighted Average Exercise Price |
Shares |
Weighted Average Exercise Price |
|||||||||
|
|||||||||||||
Outstanding, January 1, 2012 |
8,345,917 | $ | 32.90 | 270,000 | $ | 37.98 | |||||||
Granted |
1,245,300 | 51.81 | 85,500 | 53.72 | |||||||||
Exercised |
(1,613,616 | ) | 25.26 | (69,833 | ) | 26.24 | |||||||
Forfeited or expired |
(98,404 | ) | 47.44 | (9,000 | ) | 48.02 | |||||||
Outstanding at December 31, 2012 |
7,879,197 | $ | 37.27 | 276,667 | $ | 45.48 | |||||||
Exercisable at December 31, 2012 |
5,474,974 | $ | 32.49 | 121,834 | $ | 38.09 | |||||||
Weighted-Average Remaining Contractual Term (Years): |
|||||||||||||
Outstanding at December 31, 2012 |
6.0 | 7.8 | |||||||||||
Exercisable at December 31, 2012 |
4.9 | 6.6 | |||||||||||
Aggregate Intrinsic Value: |
|||||||||||||
Outstanding at December 31, 2012 |
$ | 87,889 | $ | 1,412 | |||||||||
Exercisable at December 31, 2012 |
$ | 83,577 | $ | 1,274 | |||||||||
Intrinsic Value of Options Exercised During the Years Ended: |
|||||||||||||
December 31, 2012 |
$ | 42,226 | $ | 1,674 | |||||||||
December 31, 2011 |
$ | 32,782 | $ | 970 | |||||||||
December 31, 2010 |
$ | 31,217 | $ | 1,151 |
The fair value of shares vested during the years ended December 31, 2012, 2011 and 2010 was $12.1 million, $11.1 million and $11.7 million, respectively. Cash received from option exercises was approximately $44.6 million and the tax deduction from option exercises was approximately $11.7 million in the year ended December 31, 2012. As of December 31, 2012, the remaining valuation of stock option awards to be expensed in future periods was $8.7 million and the related weighted-average period over which it is expected to be recognized is 1.4 years.
The fair value of restricted stock grants is the market price of the underlying shares on the grant date. A summary of restricted stock unit activity as of December 31, 2012, and changes during the period then ended is presented below:
|
|||||||
---|---|---|---|---|---|---|---|
|
Shares |
Weighted-Average Grant-Date Fair Value |
|||||
|
|||||||
Nonvested at January 1, 2012 |
17,293 | $ | 39.21 | ||||
Granted |
17,592 | 52.52 | |||||
Vested |
(8,440 | ) | 37.47 | ||||
Forfeited |
(583 | ) | 42.56 | ||||
Nonvested at December 31, 2012 |
25,862 | $ | 48.76 | ||||
Compensation expense recorded attributable to restricted stock unit grants for the years ended December 31, 2012, 2011 and 2010 was approximately $501 thousand, $267 thousand and $467 thousand, respectively. The fair value of units vested during the years ended December 31, 2012, 2011 and 2010 was $316 thousand, $346 thousand and $298 thousand, respectively. The intrinsic value of units vested during the years ended December 31, 2012, 2011 and 2010 was $448 thousand, $492 thousand and $330 thousand, respectively. As of December 31, 2012, there was $502 thousand of total unrecognized compensation cost relating to restricted stock unit awards which is expected to be recognized over a weighted average period of 1.6 years.
50 /ATR
2012 Form 10-K
NOTE 14 EARNINGS PER SHARE
The reconciliation of basic and diluted earnings per share for the years ended December 31, 2012, 2011 and 2010 are as follows:
|
Income (Numerator) |
Shares (Denominator) |
Per Share Amount |
||||||
---|---|---|---|---|---|---|---|---|---|
For the Year Ended December 31, 2012 |
|||||||||
Basic EPS |
|||||||||
Income available to common stockholders |
$ | 162,612 | 66,392 | $ | 2.45 | ||||
Effect of Dilutive Securities |
|||||||||
Stock options |
1,990 | ||||||||
Restricted stock |
| 13 | |||||||
Diluted EPS |
|||||||||
Income available to common stockholders |
$ | 162,612 | 68,395 | $ | 2.38 | ||||
For the Year Ended December 31, 2011 |
|||||||||
Basic EPS |
|||||||||
Income available to common stockholders |
$ | 183,683 | 66,553 | $ | 2.76 | ||||
Effect of Dilutive Securities |
|||||||||
Stock options |
2,714 | ||||||||
Restricted stock |
| 7 | |||||||
Diluted EPS |
|||||||||
Income available to common stockholders |
$ | 183,683 | 69,274 | $ | 2.65 | ||||
For the Year Ended December 31, 2010 |
|||||||||
Basic EPS |
|||||||||
Income available to common stockholders |
$ | 173,481 | 67,344 | $ | 2.58 | ||||
Effect of Dilutive Securities |
|||||||||
Stock options |
2,458 | ||||||||
Restricted stock |
| 13 | |||||||
Diluted EPS |
|||||||||
Income available to common stockholders |
$ | 173,481 | 69,815 | $ | 2.48 | ||||
NOTE 15 SEGMENT INFORMATION
The Company operates in the packaging components industry, which includes the development, manufacture and sale of consumer product dispensing systems. The Company is organized into three reporting segments. Operations that sell dispensing systems primarily to the personal care, beauty and home care markets form the Beauty + Home segment. Operations that sell dispensing systems to the prescription drug and consumer health care markets form the Pharma segment. Operations that sell dispensing systems primarily to the food and beverage markets form the Food + Beverage segment.
The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies. The Company evaluates performance of its business segments and allocates resources based upon segment income. Segment income is defined as earnings before interest expense in excess of interest income, certain corporate expenses, restructuring initiatives and income taxes.
51 /ATR
2012 Form 10-K
Financial information regarding the Company's reportable segments is shown below:
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Years Ended December 31, |
2012 |
2011 |
2010 |
|||||||
|
||||||||||
Total Sales: |
||||||||||
Beauty + Home |
$ | 1,468,599 | $ | 1,531,479 | $ | 1,391,335 | ||||
Pharma |
588,853 | 554,708 | 476,376 | |||||||
Food + Beverage |
288,995 | 269,968 | 222,629 | |||||||
Corporate & Other |
| 7 | 170 | |||||||
Total Sales |
$ | 2,346,447 | $ | 2,356,162 | $ | 2,090,510 | ||||
Less: Intersegment Sales: |
||||||||||
Beauty + Home |
$ | 14,659 | $ | 15,174 | $ | 11,270 | ||||
Pharma |
160 | 778 | 129 | |||||||
Food + Beverage |
592 | 3,020 | 2,227 | |||||||
Corporate & Other |
| 7 | 165 | |||||||
Total Intersegment Sales |
$ | 15,411 | $ | 18,979 | $ | 13,791 | ||||
Net Sales: |
||||||||||
Beauty + Home |
$ | 1,453,940 | $ | 1,516,305 | $ | 1,380,065 | ||||
Pharma |
588,693 | 553,930 | 476,247 | |||||||
Food + Beverage |
288,403 | 266,948 | 220,402 | |||||||
Corporate & Other |
| | 5 | |||||||
Net Sales |
$ | 2,331,036 | $ | 2,337,183 | $ | 2,076,719 | ||||
Segment Income (1): |
||||||||||
Beauty + Home |
$ | 123,527 | $ | 130,818 | $ | 132,218 | ||||
Pharma |
141,912 | 164,390 | 134,531 | |||||||
Food + Beverage |
30,415 | 27,801 | 27,843 | |||||||
Restructuring Initiatives |
(4,678 | ) | 71 | (93 | ) | |||||
Corporate & Other |
(33,849 | ) | (36,560 | ) | (28,991 | ) | ||||
Income before interest and taxes |
$ | 257,327 | $ | 286,520 | $ | 265,508 | ||||
Interest expense, net |
(15,954 | ) | (11,578 | ) | (11,123 | ) | ||||
Income before income taxes |
$ | 241,373 | $ | 274,942 | $ | 254,385 | ||||
Depreciation and Amortization (1): |
||||||||||
Beauty + Home |
$ | 82,828 | $ | 90,038 | $ | 91,891 | ||||
Pharma |
33,122 | 28,084 | 26,638 | |||||||
Food + Beverage |
15,605 | 13,413 | 12,065 | |||||||
Restructuring Initiatives |
1,576 | | | |||||||
Corporate & Other |
3,891 | 2,708 | 2,365 | |||||||
Depreciation and Amortization |
$ | 137,022 | $ | 134,243 | $ | 132,959 | ||||
Capital Expenditures: |
||||||||||
Beauty + Home |
$ | 97,010 | $ | 101,913 | $ | 75,659 | ||||
Pharma |
24,953 | 26,911 | 19,401 | |||||||
Food + Beverage |
32,282 | 47,135 | 15,421 | |||||||
Corporate & Other |
19,808 | 3,733 | 8,323 | |||||||
Capital Expenditures |
$ | 174,053 | $ | 179,692 | $ | 118,804 | ||||
Total Assets: |
||||||||||
Beauty + Home |
$ | 1,240,101 | $ | 1,232,009 | $ | 1,180,928 | ||||
Pharma |
659,132 | 404,939 | 354,512 | |||||||
Food + Beverage |
233,553 | 199,170 | 140,931 | |||||||
Corporate & Other |
191,626 | 323,177 | 356,347 | |||||||
Total Assets |
$ | 2,324,412 | $ | 2,159,295 | $ | 2,032,718 |
52 /ATR
2012 Form 10-K
and income taxes. Restructuring Initiatives and related Depreciation includes the following income/(expense) items for the twelve months ended December 31, 2012, 2011 and 2010 as follows:
Years Ended December 31, |
2012 |
2011 |
2010 |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||
EOO Plan |
||||||||||
Depreciation |
$ | 1,576 | $ | | $ | | ||||
Employee Severance and Other Costs |
3,314 | | | |||||||
Prior Year Initiatives |
(212 | ) | (71 | ) | 93 | |||||
Total Depreciation and Restructuring Initiatives Expense |
$ | 4,678 | $ | (71 | ) | $ | 93 | |||
Depreciation and Restructuring Initiatives Expense by Segment |
||||||||||
Beauty + Home |
$ | 4,787 | $ | (70 | ) | $ | 46 | |||
Pharma |
| | | |||||||
Food + Beverage |
(109 | ) | (1 | ) | 47 | |||||
Total Depreciation and Restructuring Initiatives Expense |
$ | 4,678 | $ | (71 | ) | $ | 93 | |||
GEOGRAPHIC INFORMATION
The following are net sales and long-lived asset information by geographic area and product information for the years ended December 31, 2012, 2011 and 2010:
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
2012 |
2011 |
2010 |
|||||||
|
||||||||||
Net Sales to Unaffiliated Customers (1): |
||||||||||
United States |
$ | 650,637 | $ | 636,060 | $ | 594,467 | ||||
Europe: |
||||||||||
France |
650,226 | 630,172 | 557,595 | |||||||
Germany |
311,205 | 308,847 | 255,013 | |||||||
Italy |
144,163 | 168,885 | 152,138 | |||||||
Other Europe |
163,695 | 232,132 | 226,293 | |||||||
Total Europe |
1,269,289 | 1,340,036 | 1,191,039 | |||||||
Other Foreign Countries |
411,110 | 361,087 | 291,213 | |||||||
Total |
$ | 2,331,036 | $ | 2,337,183 | $ | 2,076,719 | ||||
Plant, Property & Equipment: |
||||||||||
United States |
$ | 191,697 | $ | 174,029 | $ | 174,831 | ||||
Europe: |
||||||||||
France |
251,015 | 199,975 | 202,954 | |||||||
Germany |
137,203 | 136,136 | 138,027 | |||||||
Italy |
65,743 | 68,684 | 73,353 | |||||||
Other Europe |
72,404 | 64,921 | 59,859 | |||||||
Total Europe |
526,365 | 469,716 | 474,193 | |||||||
Other Foreign Countries |
130,171 | 110,970 | 75,960 | |||||||
Total |
$ | 848,233 | $ | 754,715 | $ | 724,984 | ||||
Product Net Sales Information: |
||||||||||
Pumps |
$ | 1,044,226 | $ | 1,114,276 | $ | 1,011,992 | ||||
Closures |
605,493 | 615,243 | 527,772 | |||||||
Valves |
327,251 | 316,900 | 299,042 | |||||||
Other |
354,066 | 290,764 | 237,913 | |||||||
Total |
$ | 2,331,036 | $ | 2,337,183 | $ | 2,076,719 | ||||
No single customer represents 10% or more of the Company's net sales in 2012, 2011 or 2010.
53 /ATR
2012 Form 10-K
NOTE 16 ACQUISITIONS
On July 3, 2012, the Company completed its acquisition of RumplerTechnologies S.A., together with its direct and indirect subsidiaries ("Stelmi"). Stelmi is a producer of elastomer primary packaging components for injectable drug delivery and operates two manufacturing plants located in the Normandy region of France and also has a research and development facility located near Paris. The Company acquired all of the shares of Stelmi. The purchase price paid for Stelmi (net of cash acquired) was approximately $188 million and was funded by cash on hand.
Stelmi contributed net sales of $56.8 million and pretax income of $1.5 million (including $6.6 million of fair value and other acquisition adjustments) for the year ended December 31, 2012. The results of the acquired business for the period from the acquisition date are included in the accompanying consolidated financial statements and are reported in the Pharma reporting segment.
For the year ended December 31, 2012, we recognized $5.9 million in transaction costs related to the acquisition of Stelmi. These costs are reflected in the selling, research & development and administrative section of the Consolidated Statements of Income.
The following table summarizes the assets acquired and liabilities assumed as of the acquisition date at estimated fair value. If additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), the Company may refine its estimates of fair value to allocate the purchase price more accurately. During the fourth quarter the Company recorded insignificant measurement period adjustments related to changes in estimates of fair value. These adjustments are included in the amounts presented in the table below.
|
||||
---|---|---|---|---|
|
July 3, 2012 |
|||
|
||||
Assets |
||||
Cash and equivalents |
$ | 68,335 | ||
Accounts receivable |
23,540 | |||
Inventories |
16,826 | |||
Prepaid and other |
3,256 | |||
Property, plant and equipment |
42,073 | |||
Goodwill |
111,031 | |||
Intangible assets |
47,134 | |||
Other miscellaneous assets |
6,092 | |||
Liabilities |
||||
Current maturities of long-term obligations |
675 | |||
Accounts payable and accrued liabilities |
26,064 | |||
Long-term obligations |
885 | |||
Deferred income taxes |
22,440 | |||
Retirement and deferred compensation plans |
12,049 | |||
Net assets acquired |
$ | 256,174 | ||
The following table is a summary of the fair value estimates of the acquired identifiable intangible assets and weighted-average useful lives as of the acquisition date:
|
||||||
---|---|---|---|---|---|---|
|
Weighted-Average Useful Life (in years) |
Estimated Fair Value of Asset |
||||
|
||||||
Customer relationships |
15 | $ | 7,438 | |||
Technology |
15 | 37,191 | ||||
Trademark |
4 | 2,505 | ||||
Total |
$ | 47,134 | ||||
Goodwill in the amount of $111.0 million was recorded for the acquisition of Stelmi and is included in the Pharma segment. Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill largely consists of leveraging the Company's commercial presence in selling the Stelmi line of products in markets where Stelmi didn't previously operate and the ability of Stelmi to maintain its competitive advantage from a technical viewpoint. Goodwill will not be amortized, but will be tested for impairment at least annually. We do not expect any of the goodwill will be deductible for tax purposes.
54 /ATR
2012 Form 10-K
The unaudited pro forma results presented below include the effects of the Stelmi acquisition as if it had occurred as of January 1, 2011. The unaudited pro forma results reflect certain adjustments related to the acquisition, such as the amortization associated with estimates for the acquired intangible assets and fair value adjustments for inventory. The 2012 supplemental pro forma earnings were adjusted to exclude $4.2 million (after tax) of transaction costs, including consulting, legal, and advisory fees. The 2012 supplemental pro forma earnings were adjusted to exclude $2.5 million (after tax) of nonrecurring expense related to the fair value adjustment to acquisition-date inventory. The 2011 supplemental pro forma earnings were adjusted to include these adjustments.
The pro forma results do not include any synergies or other expected benefits of the acquisition. Accordingly, the unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been completed on the dates indicated.
|
|||||||
---|---|---|---|---|---|---|---|
|
Year Ended December 31, |
||||||
|
2012 |
2011 |
|||||
|
|||||||
Net Sales |
$ | 2,395 | $ | 2,453 | |||
Net Income Attributable to AptarGroup Inc. |
174 | 188 | |||||
Net Income per common share basic |
2.62 | 2.82 | |||||
Net Income per common share diluted |
2.54 | 2.71 | |||||
In November 2011, the Company acquired a 20% minority investment in Oval Medical Technologies Limited (Oval Medical) for approximately $3.2 million. In February 2012, the Company acquired an additional 2% minority investment for approximately $0.3 million. Oval Medical has broad expertise in the design and development of injectable drug delivery devices. This investment represents an opportunity for the Pharma segment to enter a new category and broaden our product portfolio and customer reach. This investment is being accounted for under the equity method of accounting from the date of acquisition.
In October 2011, the Company acquired TKH Plastics Pvt Ltd ("TKH"), a leading provider of injection molded dispensing closures in India for approximately $17 million in cash and approximately $1 million in assumed debt. The acquisition will allow the Company to expand its geographical presence in India. After allocating a portion of the purchase price to fixed and intangible assets, goodwill of approximately $10.9 million was recorded on the transaction. The results of operations subsequent to the acquisition are included in the reported income statement. TKH is included in the Beauty + Home reporting segment.
In March 2010, the Company acquired certain equipment, inventory and intellectual property rights related to sealing and pull-ring technology for approximately $3.0 million in cash. No debt was assumed in the transaction. The purchase price approximated the fair value of the assets acquired and therefore no goodwill was recorded. The results of operations subsequent to the acquisition are included in the statement of income. The assets acquired are included in the Food+ Beverage reporting segment.
The Oval Medical and TKH acquisitions described above did not have a material impact on the results of operations in 2012, 2011 or 2010 and therefore pro forma information is not presented.
55 /ATR
2012 Form 10-K
NOTE 17 QUARTERLY DATA (UNAUDITED)
Quarterly results of operations and per share information for the years ended December 31, 2012 and 2011 are as follows:
|
|
|
|
|
|
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Quarter | |
||||||||||||||
|
Total for Year |
|||||||||||||||
|
First |
Second |
Third |
Fourth |
||||||||||||
Year Ended December 31, 2012: |
||||||||||||||||
Net sales |
$ | 592,498 | $ | 577,503 | $ | 589,598 | $ | 571,437 | $ | 2,331,036 | ||||||
Gross profit (1) |
159,223 | 154,998 | 148,214 | 144,391 | 606,826 | |||||||||||
Net Income |
43,813 | 41,652 | 42,101 | 34,854 | 162,420 | |||||||||||
Net Income Attributable to AptarGroup, Inc. |
43,809 | 41,686 | 42,127 | 34,990 | 162,612 | |||||||||||
Per Common Share 2012: |
||||||||||||||||
Net Income Attributable to AptarGroup, Inc. |
||||||||||||||||
Basic |
$ | .66 | $ | .63 | $ | .63 | $ | .53 | $ | 2.45 | ||||||
Diluted |
.64 | .61 | .62 | .52 | 2.38 | |||||||||||
Dividends declared |
.22 | .22 | .22 | .22 | .88 | |||||||||||
Stock price high (2) |
55.00 | 55.49 | 53.19 | 53.36 | 55.49 | |||||||||||
Stock price low (2) |
51.01 | 49.36 | 47.56 | 45.19 | 45.19 | |||||||||||
Average number of shares outstanding: |
||||||||||||||||
Basic |
66,196 | 66,580 | 66,541 | 66,249 | 66,392 | |||||||||||
Diluted |
68,785 | 68,758 | 68,353 | 67,846 | 68,395 | |||||||||||
Year Ended December 31, 2011: |
||||||||||||||||
Net sales |
$ | 576,518 | $ | 614,929 | $ | 601,196 | $ | 544,540 | $ | 2,337,183 | ||||||
Gross profit (1) |
160,948 | 171,568 | 161,109 | 143,224 | 636,849 | |||||||||||
Net Income |
44,468 | 51,287 | 49,243 | 38,632 | 183,630 | |||||||||||
Net Income Attributable to AptarGroup, Inc. |
44,477 | 51,289 | 49,297 | 38,620 | 183,683 | |||||||||||
Per Common Share 2011: |
||||||||||||||||
Net Income Attributable to AptarGroup, Inc. |
||||||||||||||||
Basic |
$ | .66 | $ | .77 | $ | .74 | $ | .59 | $ | 2.76 | ||||||
Diluted |
.64 | .74 | .72 | .57 | 2.65 | |||||||||||
Dividends declared |
.18 | .18 | .22 | .22 | .80 | |||||||||||
Stock price high (2) |
50.19 | 53.80 | 54.66 | 52.87 | 54.66 | |||||||||||
Stock price low (2) |
46.50 | 48.85 | 44.66 | 41.98 | 41.98 | |||||||||||
Average number of shares outstanding: |
||||||||||||||||
Basic |
66,926 | 66,939 | 66,381 | 65,976 | 66,553 | |||||||||||
Diluted |
69,914 | 69,438 | 68,677 | 68,159 | 69,274 |
56 /ATR
2012 Form 10-K
NOTE 18 FAIR VALUE
Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:
As of December 31, 2012, the fair values of our financial assets and liabilities were categorized as follows:
|
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Assets |
|||||||||||||
Forward exchange contracts (1) |
$ | 1,314 | $ | | $ | 1,314 | $ | | |||||
Total assets at fair value |
$ | 1,314 | $ | | $ | 1,314 | $ | | |||||
Liabilities |
|||||||||||||
Forward exchange contracts (1) |
$ | 2,261 | $ | | $ | 2,261 | $ | | |||||
Total liabilities at fair value |
$ | 2,261 | $ | | $ | 2,261 | $ | | |||||
As of December 31, 2011, the fair values of our financial assets and liabilities were categorized as follows:
|
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Assets |
|||||||||||||
Forward exchange contracts (1) |
$ | 520 | $ | | $ | 520 | $ | | |||||
Total assets at fair value |
$ | 520 | $ | | $ | 520 | $ | | |||||
Liabilities |
|||||||||||||
Forward exchange contracts (1) |
$ | 10,690 | $ | | $ | 10,690 | $ | | |||||
Total liabilities at fair value |
$ | 10,690 | $ | | $ | 10,690 | $ | | |||||
The carrying amounts of the Company's other current financial instruments such as cash and equivalents, notes payable and current maturities of long-term obligations approximate fair value due to the short-term maturity of the instrument. The Company considers its long-term obligations a Level 2 liability and utilizes the market approach valuation technique based on interest rates that are currently available to the Company for issuance of debt with similar terms and maturities. The estimated fair value of the Company's long-term obligations was $382 million as of December 31, 2012 and $283 million as of December 31, 2011.
NOTE 19 RESTRUCTURING INITIATIVES
On November 1, 2012, the Company announced a plan to optimize certain capacity in Europe (EOO). Due to increased production efficiencies and to better position the Company for future growth in Europe, AptarGroup will transfer and consolidate production capacity involving twelve facilities. Two facilities, one in Italy and one in Switzerland, are expected to close and will impact approximately 170 employees. The locations involved in the operations optimization plan are facilities that are serving the beauty, personal care, food, beverage, and consumer health care markets. The total costs associated with the plan are estimated to be approximately €14 million (approximately $19 million using current exchange rates) of which approximately €4 million (approximately $6 million using current exchange rates) relates to non-cash expenses and will be
57 /ATR
2012 Form 10-K
included in depreciation and amortization in the Consolidated Statements of Income. As of December 31, 2012 we have recorded the following activity associated with our EOO plan:
|
Beginning Reserve at 12/31/11 |
Net Charges for the Year Ended 12/31/12 |
Cash Paid |
FX Impact |
Ending Reserve at 12/31/12 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||||||||
Employee severance |
$ | | $ | 3,142 | $ | | $ | 16 | $ | 3,158 | ||||||
Other costs |
| 172 | (172 | ) | | | ||||||||||
Totals |
$ | | $ | 3,314 | $ | (172 | ) | $ | 16 | $ | 3,158 | |||||
In addition to the above charges, $1.6 million of accelerated depreciation was incurred in the fourth quarter of 2012. This, as well as future amounts, will be included within depreciation and amortization in the Consolidated Statements of Income.
In the second quarter of 2009, the Company announced a plan to consolidate two French dispensing closure manufacturing facilities and several sales offices in North America and Europe and has subsequently expanded the program to include additional headcount reductions. The total costs associated with this consolidation/severance program are $7.4 million. The plan has been substantially completed, subject to the settlement of remaining reserve balances.
As of December 31, 2012 we have recorded the following activity associated with our above consolidation/severance programs:
|
Beginning Reserve at 12/31/11 |
Net Charges for the Year Ended 12/31/12 |
Cash Paid |
FX Impact |
Ending Reserve at 12/31/12 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||||||||
Employee severance |
$ | 1,130 | $ | (247 | ) | $ | (785 | ) | $ | 1 | $ | 99 | ||||
Other costs |
17 | 35 | (51 | ) | (1 | ) | | |||||||||
Totals |
$ | 1,147 | $ | (212 | ) | $ | (836 | ) | $ | | $ | 99 | ||||
NOTE 20 CAPITAL STOCK
We have 199 million authorized shares of common stock. The number of shares of common stock and treasury stock and the share activity were as follows:
|
Common Shares |
Treasury Shares |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2012 |
2011 |
2012 |
2011 |
|||||||||
Balance at the beginning of the year |
82,773,322 | 81,796,938 | 16,921,022 | 15,047,020 | |||||||||
Employee option exercises |
1,234,163 | 933,175 | (379,453 | ) | (196,817 | ) | |||||||
Director option exercises |
69,833 | 34,500 | | | |||||||||
Restricted stock vestings |
9,023 | 8,709 | | | |||||||||
Common stock repurchases |
| | 1,616,433 | 2,070,819 | |||||||||
Balance at the end of the year |
84,086,341 | 82,773,322 | 18,158,002 | 16,921,022 | |||||||||
The cash dividends paid on the common stock for the years ended December 31, 2012, 2011, and 2010 aggregated $58.4 million, $53.3 million and $44.5 million, respectively.
58 /ATR
2012 Form 10-K
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of AptarGroup, Inc.:
In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of AptarGroup, Inc. and its subsidiaries at December 31, 2012 and December 31, 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in "Management's Report on Internal Control over Financial Reporting", under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As described in the Management Report on Internal Control Over Financial Reporting, management has excluded Stelmi from its assessment of internal control over financial reporting as of December 31, 2012 because it was acquired by the Company in a purchase business combination during 2012. We have also excluded Stelmi from our audit of internal control over financial reporting. Stelmi is a wholly-owned subsidiary, whose total assets and total revenues represent 12% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2012.
/s/ PRICEWATERHOUSECOOPERS LLP
Chicago,
Illinois
February 28, 2013
59 /ATR
2012 Form 10-K
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
The Company's management has evaluated, with the participation of the chief executive officer and chief financial officer of the Company, the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of December 31, 2012. Based on that evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures were effective as of such date.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. On July 3, 2012, the Company completed its acquisition of Stelmi as discussed in the Acquisitions footnote to the Company's Consolidated Financial Statements. Management excluded Stelmi from its assessment of the Company's internal control over financial reporting as it was acquired during the fiscal year. Stelmi is a wholly-owned subsidiary; whose total assets and total revenues represent 12% and 2%, respectively, of the Consolidated Financial Statement amounts as of and for the year ended December 31, 2012. The Company's management has evaluated, with the participation of the chief executive officer and chief financial officer of the Company, the effectiveness of our internal control over financial reporting as of December 31, 2012 based on the framework in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation under the framework in Internal ControlIntegrated Framework, management has concluded that our internal control over financial reporting was effective as of December 31, 2012.
PricewaterhouseCoopers LLP, independent registered public accounting firm, has issued an attestation report on the effectiveness of our internal control over financial reporting. This report appears on page 59.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the quarter ended December 31, 2012, the Company implemented an enterprise resource planning system at one entity located in the United States. Consequently, the control environment has been modified at these locations. Other than this item, no other changes in the Company's internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the Company's fiscal quarter ended December 31, 2012 that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
None.
Certain information required to be furnished in this part of the Form 10-K has been omitted because the Company will file with the Securities and Exchange Commission a definitive proxy statement pursuant to Regulation 14A under the Securities Exchange Act of 1934 no later than April 30, 2013.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information with respect to directors may be found under the caption "Proposal 1Election of Directors" in the Company's Proxy Statement for the Annual Meeting of Stockholders to be held on May 8, 2013 (the "2013 Proxy Statement") and is incorporated herein by reference.
Information with respect to executive officers may be found under the caption "Executive Officers" in Part I of this report and is incorporated herein by reference.
60 /ATR
2012 Form 10-K
Information with respect to audit committee members and audit committee financial experts may be found under the caption "Corporate GovernanceAudit Committee" in the 2013 Proxy Statement and is incorporated herein by reference.
Information with respect to the Company's Code of Business Conduct and Ethics may be found under the caption "Corporate GovernanceCode of Business Conduct and Ethics" in the 2013 Proxy Statement and is incorporated herein by reference. Our Code of Business Conduct and Ethics is available through the Corporate Governance link on the Investor Relations page of our website (www.aptar.com).
The information set forth under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" in the 2013 Proxy Statement is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the headings "Board Compensation", "Executive Officer Compensation" and "Compensation Committee Report" in the 2013 Proxy Statement is incorporated herein by reference. The information included under the heading "Compensation Committee Report" in the 2013 Proxy Statement shall not be deemed to be "soliciting" material or to be "filed" with the Securities and Exchange Commission or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information set forth under the heading "Security Ownership of Certain Beneficial Owners, Directors and Management" and "Equity Compensation Plan Information" in the 2013 Proxy Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information set forth under the heading "Transactions with Related Persons" and "Corporate GovernanceIndependence of Directors" in the 2013 Proxy Statement is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information with respect to the independent registered public accounting firm fees and services may be found under the caption "Proposal 3Ratification of the Appointment of PricewaterhouseCoopers LLP as the Independent Registered Public Accounting Firm for 2013" in the 2013 Proxy Statement. Such information is incorporated herein by reference.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Description | |||||
1) |
All Financial Statements |
||||
The financial statements are set forth under Item 8 of this report on Form 10-K | |||||
Consolidated Statements of Income | 27 | ||||
Consolidated Statements of Comprehensive Income | 28 | ||||
Consolidated Balance Sheets | 29 | ||||
Consolidated Statements of Cash Flows | 31 | ||||
Consolidated Statements of Changes in Equity | 32 | ||||
Notes to Consolidated Financial Statements | 33 | ||||
Report of Independent Registered Public Accounting Firm | 59 | ||||
2) | II Valuation and Qualifying Accounts | 63 | |||
All other schedules have been omitted because they are not applicable or not required. |
61 /ATR
2012 Form 10-K
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized in the City of Crystal Lake, State of Illinois on this 28th day of February 2013.
AptarGroup, Inc. (Registrant) |
||||||
By |
/s/ ROBERT W. KUHN |
|||||
Robert W. Kuhn Executive Vice President, Chief Financial Officer and Secretary |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the date indicated.
Signature |
Title |
Date |
|||
---|---|---|---|---|---|
/s/ KING HARRIS King Harris |
Chairman of the Board and Director | February 28, 2013 | |||
/s/ STEPHEN J. HAGGE Stephen J. Hagge |
President and Chief Executive Officer and Director (Principal Executive Officer) |
February 28, 2013 |
|||
/s/ ROBERT W. KUHN Robert W. Kuhn |
Executive Vice President, Chief Financial Officer and Secretary (Principal Accounting and Financial Officer) |
February 28, 2013 |
|||
/s/ ALAIN CHEVASSUS Alain Chevassus |
Director |
February 28, 2013 |
|||
/s/ LESLIE DESJARDINS Leslie Desjardins |
Director |
February 28, 2013 |
|||
/s/ GEORGE L. FOTIADES George L. Fotiades |
Director |
February 28, 2013 |
|||
/s/ LEO A. GUTHART Leo A. Guthart |
Director |
February 28, 2013 |
|||
/s/ GIOVANNA KAMPOURI-MONNAS Giovanna Kampouri-Monnas |
Director |
February 28, 2013 |
|||
/s/ PETER PFEIFFER Peter Pfeiffer |
Director |
February 28, 2013 |
|||
/s/ DR. JOANNE C. SMITH Dr. Joanne C. Smith |
Director |
February 28, 2013 |
|||
/s/ RALF WUNDERLICH Ralf Wunderlich |
Director |
February 28, 2013 |
62 /ATR
2012 Form 10-K
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 2012, 2011 and 2010
Dollars in thousands |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
|
||||||||||||
|
Balance at Beginning Of Period |
Charged to Costs and Expenses |
Deductions from Reserve (a) |
Balance at End of Period |
||||||||
|
||||||||||||
2012 |
||||||||||||
Allowance for doubtful accounts |
$ | 8,257 | $ | (595) | $ | (911) | $ | 6,751 | ||||
Deferred tax valuation allowance |
6,326 | 1,362 | (655) | 7,033 | ||||||||
2011 |
||||||||||||
Allowance for doubtful accounts |
$ | 8,560 | $ | 1,642 | $ | (1,945) | $ | 8,257 | ||||
Deferred tax valuation allowance |
5,619 | 1,020 | (313) | 6,326 | ||||||||
2010 |
||||||||||||
Allowance for doubtful accounts |
$ | 9,923 | $ | (252) | $ | (1,111) | $ | 8,560 | ||||
Deferred tax valuation allowance |
5,480 | 1,344 | (1,205) | 5,619 |
INDEX TO EXHIBITS
Exhibit Number |
Description |
|
---|---|---|
2.1 | Share Purchase Agreement, dated as of May 30, 2012, between Mr. Jean-Jacques Rumpler, Mr. Gérard Rumpler, Ms. Annette Pomerat, Ms. Evelyne Fournier Rumpler and Aptargroup Holding SAS, filed as Exhibit 2.1 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2012 (File No. 1-11846), is hereby incorporated by reference. | |
3(i) | Amended and Restated Certificate of Incorporation of AptarGroup, Inc., as amended, filed as Exhibit 4(a) to AptarGroup Inc.'s Registration Statement on Form S-8, Registration Number 333-152525, filed on July 25, 2008 (the "Form S-8"), is hereby incorporated by reference. | |
3(ii) | Amended and Restated By-Laws of the Company, filed as Exhibit 3(ii) to the Company's Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 1-11846), is hereby incorporated by reference. | |
4.1 | Rights Agreement dated as of April 7, 2003 between the Company and Wells Fargo, as successor rights agent, which includes the Form of Rights Certificate as Exhibit B, filed as Exhibit 1 to the Company's Registration Statement on Form 8-A filed on April 7, 2003 (File No. 1-11846), is hereby incorporated by reference. | |
4.2 | Certificate of Designation to the Series B Junior Participating Preferred Stock of the Company, dated April 7, 2003, filed as Exhibit 2 of the Company's Registration Statement on Form 8-A filed on April 7, 2003 (File No. 1-11846), is hereby incorporated by reference. | |
The Company hereby agrees to provide the Commission, upon request, copies of instruments defining the rights of holders of long-term debt of the Registrant and its subsidiaries as are specified by item 601(b)(4)(iii) (A) of Regulation S-K. | ||
4.3 | Credit Agreement dated as of January 31, 2012 among AptarGroup, Inc. and the financial institutions party thereto as Lenders, Wells Fargo Bank, National Association, as administrative agent, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as co-syndication agents, HSBC Bank USA, N.A. and Union Bank, N.A., as co-documentation agents, and Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as joint lead arrangers and joint bookrunners, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on February 3, 2012 (File No. 1-11846), is hereby incorporated by reference (replaced herein by Exhibit 4.4). | |
4.4* | Amendment No. 1 to Credit Agreement dated as of January 31, 2013 by and among AptarGroup, Inc., and the financial institutions party thereto as Lenders and Wells Fargo Bank, National Association, as administrative agent and swingline lender. | |
4.5 | Note Purchase Agreement dated as of July 31, 2006, among AptarGroup, Inc. and the purchasers listed on Schedule A thereto, filed as Exhibit 4.2 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2006 (File No. 1-11846), is hereby incorporated by reference. | |
4.6 | Form of AptarGroup, Inc. 6.04% Series 2006-A Senior Notes Due July 31, 2016, filed as Exhibit 4.3 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2006 (File No. 1-11846), is hereby incorporated by reference. |
63 /ATR
2012 Form 10-K
Exhibit Number |
Description |
|
---|---|---|
4.7 | Note Purchase Agreement dated as of July 31, 2008, among AptarGroup, Inc. and the purchasers listed on Schedule A thereto, filed as Exhibit 4.1 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008 (File No. 1-11846), is hereby incorporated by reference. | |
4.8 | Form of AptarGroup, Inc. 5.41% Series 2008-A-1 Senior Notes Due July 31, 2013, filed as Exhibit 4.2 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008 (File No. 1-11846), is hereby incorporated by reference. | |
4.9 | Form of AptarGroup, Inc. 6.03% Series 2008-A-2 Senior Notes Due July 31, 2018, filed as Exhibit 4.2 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008 (File No. 1-11846), is hereby incorporated by reference. | |
4.10 | First Amendment to 2006 Note Purchase Agreement, dated as of November 30, 2010, among the Company and each of the institutions listed as signatories thereto, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on December 1, 2010 (File No. 1-11846), is hereby incorporated by reference. | |
4.11 | First Amendment to 2008 Note Purchase Agreement, dated as of November 30, 2010, among the Company and each of the institutions listed as signatories thereto, filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on December 1, 2010 (File No. 1-11846), is hereby incorporated by reference. | |
4.12 | Supplemental Note Purchase Agreement, dated as of November 30, 2010, among the Company and each of the purchasers listed in Exhibit A thereto, filed as Exhibit 4.3 to the Company's Current Report on Form 8-K filed on December 1, 2010 (File No. 1-11846), is hereby incorporated by reference. | |
4.13 | Form of AptarGroup, Inc. 2.33% Series 2008-B-1 Senior Notes due November 30, 2015, filed as Exhibit 4.4 to the Company's Current Report on Form 8-K filed on December 1, 2010 (File No. 1-11846), is hereby incorporated by reference. | |
4.14 | Form of AptarGroup, Inc. 3.78% Series 2008-B-2 Senior Notes due November 30, 2020, filed as Exhibit 4.5 to the Company's Current Report on Form 8-K filed on December 1, 2010 (File No. 1-11846), is hereby incorporated by reference. | |
4.15 | Second Supplemental Note Purchase Agreement, dated as of September 5, 2012, among the Company and each of the purchasers listed in Exhibit A thereto, filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on September 5, 2012 (File No. 1-11846), is hereby incorporated by reference. | |
4.16 | Form of AptarGroup, Inc. 3.25% Series 2008-C-1 Senior Notes Due September 5, 2022, filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on September 5, 2012 (File No. 1-11846), is hereby incorporated by reference. | |
4.17 | Form of AptarGroup, Inc. 3.40% Series 2008-C-2 Senior Notes Due September 5, 2024, filed as Exhibit 4.3 to the Company's Current Report on Form 8-K filed on September 5, 2012 (File No. 1-11846), is hereby incorporated by reference. | |
10.1 | AptarGroup, Inc. 2000 Stock Awards Plan, filed as Appendix A to the Company's Proxy Statement, dated April 6, 2000 (File No. 1-11846), is hereby incorporated by reference.** | |
10.2 | AptarGroup, Inc. 2000 Director Stock Option Plan, filed as Appendix B to the Company's Proxy Statement, dated April 6, 2000 (File No. 1-11846), is hereby incorporated by reference.** | |
10.3 | AptarGroup, Inc. 2004 Stock Awards Plan, filed as Appendix A to the Company's Proxy Statement, dated March 26, 2004 (File No. 1-11846), is hereby incorporated by reference.** | |
10.4 | AptarGroup, Inc. 2004 Director Stock Option Plan, filed as Appendix B to the Company's Proxy Statement, dated March 26, 2004 (File No. 1-11846), is hereby incorporated by reference.** | |
10.5 | AptarGroup, Inc., Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2004 Stock Awards Plan, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 1-11846), is hereby incorporated by reference.** | |
10.6 | AptarGroup, Inc. Stock Option Agreement for Non-Employee Directors pursuant to the AptarGroup, Inc. 2004 Director Option Plan, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 1-11846), is hereby incorporated by reference.** | |
10.7 | AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2000 Stock Awards Plan, filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 1-11846), is hereby incorporated by reference.** | |
10.8 | AptarGroup, Inc. Restricted Stock Unit Award Agreement pursuant to the AptarGroup, Inc. 2000 Stock Awards Plan, filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (File No. 1-11846), is hereby incorporated by reference.** | |
10.9 | Supplementary Pension PlanFrance dated August 24, 2001, filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 (File No. 1-11846), is hereby incorporated by reference.** |
64 /ATR
2012 Form 10-K
Exhibit Number |
Description |
|
---|---|---|
10.10 | AptarGroup, Inc. Supplemental Retirement Plan dated October 6, 2008, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (File No. 1-11846), is hereby incorporated by reference.** | |
10.11 | Indemnification Agreement dated January 1, 1996 of King Harris, filed as Exhibit 10.25 to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2001 (File No. 1-11846), is hereby incorporated by reference.** | |
10.12 | Employment Agreement effective January 1, 2012 of Stephen J. Hagge, filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2012 (File No. 1-11846), is hereby incorporated by reference.** | |
10.13 | Employment Agreement effective January 1, 2012 of Robert W. Kuhn, filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2012 (File No. 1-11846), is hereby incorporated by reference.** | |
10.14 | Employment Agreement effective January 1, 2012 of Patrick F. Doherty, filed as Exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2012 (File No. 1-11846), is hereby incorporated by reference.** | |
10.15 | Employment Agreement effective January 1, 2012 of Eldon W. Schaffer, filed as Exhibit 10.4 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2012 (File No. 1-11846), is hereby incorporated by reference.** | |
10.16 | Employment Agreement dated January 18, 2008 of Olivier Fourment, filed as Exhibit 10.9 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008 (File No. 1-11846), is hereby incorporated by reference.** | |
10.17 | Employment Agreement dated October 1, 2010 of Ursula Saint Léger, filed as Exhibit 10.21 to the Company's annual report on Form 10-K for the fiscal year ended December 31, 2010 (File No. 1-11846), is hereby incorporated by reference. ** | |
10.18 | Consulting Agreement between AptarGroup, Inc. and Peter Pfeiffer dated November 2, 2011, filed as Exhibit 10.1 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2011 (File No. 1-11846), is hereby incorporated by reference.** | |
10.19 | AptarGroup, Inc. Annual Bonus Plan, filed as Exhibit 10.2 to AptarGroup, Inc.'s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.** | |
10.20 | AptarGroup, Inc. 2008 Stock Option Plan, filed as Exhibit 10.3 to AptarGroup, Inc.'s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.** | |
10.21 | AptarGroup, Inc. 2008 Director Stock Option Plan, filed as Exhibit 10.1 to AptarGroup, Inc.'s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.** | |
10.22 | Form of AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2008 Stock Option Plan, filed as Exhibit 10.4 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008 (File No. 1-11846), is hereby incorporated by reference.** | |
10.23 | Form of AptarGroup, Inc. Stock Option Agreement for Non-Employee Directors pursuant to the AptarGroup, Inc. 2008 Director Stock Option Plan, filed as Exhibit 10.5 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008 (File No. 1-11846), is hereby incorporated by reference.** | |
10.24 | Form of AptarGroup, Inc. Restricted Stock Unit Award Agreement pursuant to the AptarGroup, Inc. 2004 Stock Awards Plan, filed as Exhibit 10.6 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008 (File No. 1-11846), and amended as of January 1, 2010.** | |
10.25 | Form of AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2011 Stock Awards Plan, filed as Exhibit 10.2 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2011 (File No. 1-11846), is hereby incorporated by reference.** | |
10.26 | Form of AptarGroup, Inc. Restricted Stock Unit Award Agreement pursuant to the AptarGroup, Inc. 2011 Stock Awards Plan, filed as Exhibit 10.3 to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2011 (File No. 1-11846), is hereby incorporated by reference.** | |
10.27 | AptarGroup, Inc. 2011 Stock Awards Plan, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 10, 2011 (File No. 1-11846), is hereby incorporated by reference.** | |
21* | List of Subsidiaries. | |
23* | Consent of Independent Registered Public Accounting Firm. | |
31.1* | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1* | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2* | Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
65 /ATR
2012 Form 10-K
Exhibit Number |
Description |
|
---|---|---|
101* | The following financial information from AptarGroup, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the SEC on February 28, 2013, formatted in Extensible Business Reporting Language (XBRL): (1) the consolidated statements of income for the years ended December 31, 2012, 2011 and 2010, (2) the consolidated statements of comprehensive income for the years ended December 31, 2012, 2011 and 2010, (3) the consolidated balance sheets as of December 31, 2012 and 2011, (4) the consolidated statements of cash flows for the years ended December 31, 2012, 2011 and 2010, (5) the consolidated statements of changes in equity for the years ended December 31, 2012, 2011 and 2010 and (6) notes to the consolidated financial statements, tagged as blocks of text. |
66 /ATR
2012 Form 10-K
EXHIBIT 4.4
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This AMENDMENT NO. 1 TO CREDIT AGREEMENT (this Amendment) dated as of January 31, 2013 is entered into by and among APTARGROUP, INC., a Delaware corporation (the Borrower), WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders (as defined in the Credit Agreement described below) (in such capacity, the Administrative Agent) and in its capacity as the maker of swingline loans (in such capacity, the Swingline Lender), and each of the Lenders signatory hereto. Each capitalized term used and not otherwise defined in this Amendment has the definition specified in the Credit Agreement described below.
WITNESSETH:
WHEREAS, the Borrower, the Administrative Agent and the Lenders party thereto have entered into that certain Credit Agreement dated as of January 31, 2012 (the Credit Agreement), pursuant to which the Lenders have made available to the Borrower a revolving credit facility;
WHEREAS, the Borrower has advised the Administrative Agent and the Lenders that it desires to amend the Credit Agreement to provide for, among other things, a swingline loan sub-facility and to extend the maturity date for the revolving credit facility by one year;
WHEREAS, the Administrative Agent and the Lenders are willing to so amend the Credit Agreement on the terms and conditions contained in this Amendment; and
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto hereby agree as follows:
1. Amendments to Credit Agreement. Subject to the terms and conditions set forth herein, the Credit Agreement (including the Schedules and Exhibits attached thereto) is hereby amended such that, after giving effect to all such amendments, it shall read in its entirety as Exhibit A attached hereto.
2. Joinder of the Swingline Lender. By its execution of this Amendment, the Swingline Lender hereby confirms and agrees that, on and after the date this Amendment becomes effective, it shall be and become a party to the Credit Agreement as the Swingline Lender, and shall have all of the rights and be obligated to perform all of the obligations of the Swingline Lender thereunder (after giving effect to this Amendment). By its execution of this Amendment, each of the other parties to this Amendment hereby approves the appointment of the Swingline Lender as the Swingline Lender under the Credit Agreement (as amended by this Amendment).
3. Effectiveness; Condition Precedent. The effectiveness of this Amendment and the amendments provided in Section 1 are subject to the satisfaction of the following conditions precedent:
(a) Documentation. The Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent, the Swingline Lender and the Lenders, this Amendment, duly executed and acknowledged where appropriate by all parties hereto.
(b) Assignments and Assumptions. The Administrative Agent shall have received a duly executed and completed Assignment and Assumption between Deutsche Bank AG, New York Branch, Mega International Commercial Bank Co., Ltd. New York Branch and The Chiba Bank, Ltd., New York Branch, as assignors, and PNC Bank, National Association and U.S. Bank National Association, as
assignees, whereby such assignors assign, among other things, all of their rights and obligations as Lenders under the Credit Agreement to such assignees.
(c) Fees. Any fees required to be paid on or before the effective date hereof shall have been paid.
(d) Legal Expenses. The Borrower shall have paid all reasonable fees and expenses due the Administrative Agents counsel as of the date hereof.
4. Representations and Warranties. In order to induce the Administrative Agent and the Lenders to enter into this Amendment, the Borrower represents and warrants to the Administrative Agent and the Lenders as follows:
(a) The representations and warranties made by it in Section 5 of the Credit Agreement are true and correct in all material respects on and as of the date hereof, except that (i) if a qualifier relating to materiality or Material Adverse Effect applies, such representation or warranty is true and correct in all respects, (ii) if such representation or warranty specifically refers to an earlier date, such representation or warranty is true and correct in all material respects as of such earlier date (except that if a qualifier relating to materiality or Material Adverse Effect applies, such representation or warranty is true and correct in all respects as of such earlier date) and (iii) for purposes of this Amendment, the representations and warranties contained in Section 5.9 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)(i) and (ii), respectively, of Section 6.6 of the Credit Agreement;
(b) This Amendment has been duly authorized, executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, except as may be limited by general principles of equity or by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors rights generally; and
(c) No Default or Event of Default has occurred and is continuing or will exist after giving effect to this Amendment.
5. Entire Agreement. This Amendment, together with the Credit Documents (collectively, the Relevant Documents), sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relating to such subject matter. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to the other in relation to the subject matter hereof or thereof. None of the terms or conditions of this Amendment may be changed, modified, waived or canceled orally or otherwise, except in writing and in accordance with Section 9.1 of the Credit Agreement.
6. Full Force and Effect of Amendment. Except as hereby specifically amended, modified or supplemented, the Credit Agreement and all other Credit Documents are hereby confirmed and ratified in all respects and shall be and remain in full force and effect according to their respective terms.
7. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. Delivery of an executed counterpart of a signature
page of this Amendment by telecopy, facsimile or other electronic transmission (including .pdf) shall be effective as delivery of a manually executed counterpart of this Amendment.
8. Governing Law. This Amendment shall in all respects be governed by, and construed in accordance with, the laws of the State of New York.
9. Enforceability. Should any one or more of the provisions of this Amendment be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto.
10. References. All references in any of the Credit Documents to the Credit Agreement shall mean the Credit Agreement, as amended hereby and as from time to time hereafter further amended, modified, supplemented, restated or amended and restated.
11. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, the Swingline Lender, each Lender and their respective successors and assignees to the extent such assignees are permitted assignees as provided in Section 9.7 of the Credit Agreement.
[Signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Credit Agreement to be executed as of the date first above written.
|
BORROWER: | ||
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APTARGROUP, INC. | ||
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By: |
/s/ ROBERT W. KUHN | |
|
Name: |
Robert W. Kuhn | |
|
Title: |
Executive Vice President and Chief Financial Officer | |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
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ADMINISTRATIVE AGENT: | ||
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| ||
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WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent | ||
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| ||
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By: |
/s/ BETH RUE | |
|
Name: |
Beth Rue | |
|
Title: |
Director | |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
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LENDERS: | ||
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| ||
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WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender and Swingline Lender | ||
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| ||
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By: |
/s/ BETH RUE | |
|
Name: |
Beth Rue | |
|
Title: |
Director | |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
|
BANK OF AMERICA, N.A. | |
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| |
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By: |
/s/ CHRISTOPHER M. WOZNIAK |
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Name: Christopher M. Wozniak | |
|
Title: Vice President |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
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JPMORGAN CHASE BANK, N.A. | |
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| |
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By: |
/s/ OLIVIER LOPEZ |
|
Name: Olivier Lopez | |
|
Title: Associate |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
|
HSBC BANK USA, N.A. | |
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| |
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By: |
/s/ JONATHAN TWICHELL |
|
Name: Jonathan Twichell | |
|
Title: Vice President |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
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UNION BANK, N.A. | |
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| |
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By: |
/s/ MICHAEL GARDNER |
|
Name: Michael Gardner | |
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Title: Vice President |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
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THE NORTHERN TRUST COMPANY | |
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| |
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By: |
/s/ JEFFREY P. SULLIVAN |
|
Name: Jeffrey P. Sullivan | |
|
Title: Vice President |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
|
PNC BANK, NATIONAL ASSOCIATION | |
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| |
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By: |
/s/ PATRICK FLAHERTY |
|
Name: Patrick Flaherty | |
|
Title: Assistant Vice President |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
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U.S. BANK NATIONAL ASSOCIATION | |
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| |
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By: |
/s/ NAVNEET KHANNA |
|
Name: Navneet Khanna | |
|
Title: Vice President |
AMENDMENT NO. 1 TO CREDIT AGREEMENT
Signature Page
EXHIBIT A
AMENDED CREDIT AGREEMENT
See attached.
Published CUSIP Number: 03833HAC3
Revolving Credit CUSIP Number: 03833HAD1
$300,000,000
CREDIT AGREEMENT
dated as of January 31, 2012,
by and among
APTARGROUP, INC.,
as Borrower,
the Lenders referred to herein,
as Lenders,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
BANK OF AMERICA, N.A.
and
JPMORGAN CHASE BANK, N.A.,
as Co-Syndication Agents,
HSBC BANK USA, N.A.
and
UNION BANK, N.A.,
as Co-Documentation Agents
and
WELLS FARGO SECURITIES, LLC,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
and
J.P. MORGAN SECURITIES LLC,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
|
|
Page | |
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|
| |
Section 1 - |
DEFINITIONS; INTERPRETATION |
1 | |
|
|
| |
Section 1.1 |
Definitions |
1 | |
Section 1.2 |
Other Interpretive Provisions |
16 | |
Section 1.3 |
Accounting Terms |
17 | |
Section 1.4 |
Rounding |
17 | |
Section 1.5 |
References to Agreements and Laws |
17 | |
Section 1.6 |
Times of Day |
17 | |
|
|
| |
Section 2 - |
THE COMMITMENTS AND CREDIT EXTENSIONS |
17 | |
|
|
| |
Section 2.1 |
Commitments |
17 | |
Section 2.2 |
Borrowings, Conversions and Continuations of Loans |
18 | |
Section 2.3 |
Prepayments |
19 | |
Section 2.4 |
Termination or Reduction of Commitments |
19 | |
Section 2.5 |
Repayment of Loans |
20 | |
Section 2.6 |
Interest |
20 | |
Section 2.7 |
Fees |
20 | |
Section 2.8 |
Computation of Interest and Fees |
21 | |
Section 2.9 |
Evidence of Debt |
21 | |
Section 2.10 |
Payments Generally; Administrative Agents Clawback |
21 | |
Section 2.11 |
Sharing of Payments by Lenders |
23 | |
Section 2.12 |
Defaulting Lenders |
23 | |
Section 2.13 |
Extension of Maturity Date |
24 | |
Section 2.14 |
Increase in Commitments |
26 | |
|
|
| |
Section 3 - |
TAXES, YIELD PROTECTION AND ILLEGALITY |
27 | |
|
|
| |
Section 3.1 |
Taxes |
27 | |
Section 3.2 |
Illegality |
30 | |
Section 3.3 |
Inability to Determine Rates |
31 | |
Section 3.4 |
Increased Costs Generally |
31 | |
Section 3.5 |
Compensation for Losses |
32 | |
Section 3.6 |
Mitigation Obligations; Replacement of Lenders |
33 | |
Section 3.7 |
Survival |
34 | |
|
|
| |
Section 4 - |
CONDITIONS PRECEDENT |
34 | |
|
|
| |
Section 4.1 |
Conditions to Closing and Initial Loans |
34 | |
Section 4.2 |
All Borrowings |
35 | |
|
|
| |
Section 5 - |
REPRESENTATIONS AND WARRANTIES |
35 | |
|
|
| |
Section 5.1 |
Organization |
35 | |
Section 5.2 |
Corporate Power and Authority |
36 | |
Section 5.3 |
No Violation |
36 | |
Section 5.4 |
Governmental Authorization |
36 | |
Section 5.5 |
Litigation |
36 | |
TABLE OF CONTENTS
(continued)
|
|
Page | |
|
|
| |
Section 5.6 |
Use of Proceeds; Margin Regulations |
36 | |
Section 5.7 |
Investment Company Act |
37 | |
Section 5.8 |
True and Complete Disclosure |
37 | |
Section 5.9 |
Financial Statements |
37 | |
Section 5.10 |
No Material Adverse Change |
37 | |
Section 5.11 |
Labor Controversies |
37 | |
Section 5.12 |
Taxes |
37 | |
Section 5.13 |
ERISA Compliance |
37 | |
Section 5.14 |
Intellectual Property |
38 | |
Section 5.15 |
Compliance with Statutes, Etc. |
38 | |
Section 5.16 |
Environmental Matters |
38 | |
Section 5.17 |
Existing Debt |
39 | |
Section 5.18 |
Anti-Terrorism; Anti-Money Laundering |
39 | |
Section 5.19 |
No Burdensome Restrictions; Compliance with Agreements |
39 | |
|
|
| |
Section 6 - |
COVENANTS |
39 | |
|
|
| |
Section 6.1 |
Existence |
39 | |
Section 6.2 |
Maintenance |
39 | |
Section 6.3 |
Taxes |
40 | |
Section 6.4 |
ERISA |
40 | |
Section 6.5 |
Insurance |
40 | |
Section 6.6 |
Financial Reports and Other Information |
40 | |
Section 6.7 |
Lender Inspection Rights |
42 | |
Section 6.8 |
Conduct of Business |
42 | |
Section 6.9 |
Fiscal Years and Quarters |
42 | |
Section 6.10 |
Limitation on Certain Restrictions on Subsidiaries |
42 | |
Section 6.11 |
Mergers, Consolidations and Asset Sales |
43 | |
Section 6.12 |
Use of Property and Facilities; Environmental, Health and Safety Laws |
43 | |
Section 6.13 |
Liens |
43 | |
Section 6.14 |
Debt |
45 | |
Section 6.15 |
Advances, Acquisitions, Investments and Loans |
45 | |
Section 6.16 |
Dividends and Other Shareholder Distributions |
46 | |
Section 6.17 |
Leverage |
46 | |
Section 6.18 |
Transactions with Affiliates |
46 | |
Section 6.19 |
Compliance with Laws |
46 | |
Section 6.20 |
Take or Pay Contracts |
47 | |
Section 6.21 |
Inconsistent Agreements |
47 | |
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|
| |
Section 7 - |
EVENTS OF DEFAULT AND REMEDIES |
47 | |
|
|
| |
Section 7.1 |
Events of Default |
47 | |
Section 7.2 |
Non-Bankruptcy Defaults |
48 | |
Section 7.3 |
Bankruptcy Defaults |
48 | |
Section 7.4 |
Notice of Default |
48 | |
TABLE OF CONTENTS
(continued)
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|
Page | |
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|
| |
Section 8 - |
ADMINISTRATIVE AGENT |
49 | |
|
|
| |
Section 8.1 |
Appointment and Authorization of Administrative Agent |
49 | |
Section 8.2 |
Delegation of Duties |
49 | |
Section 8.3 |
Liability of Administrative Agent |
49 | |
Section 8.4 |
Reliance by Administrative Agent |
49 | |
Section 8.5 |
Notice of Default |
50 | |
Section 8.6 |
Credit Decision; Disclosure of Information by Administrative Agent |
50 | |
Section 8.7 |
Indemnification of Administrative Agent |
51 | |
Section 8.8 |
Administrative Agent in its Individual Capacity |
51 | |
Section 8.9 |
Successor Administrative Agent |
51 | |
Section 8.10 |
Administrative Agent May File Proofs of Claim |
52 | |
Section 8.11 |
Other Agents; Arrangers and Managers |
52 | |
|
|
| |
Section 9 - |
MISCELLANEOUS |
53 | |
|
|
| |
Section 9.1 |
Amendments, Etc. |
53 | |
Section 9.2 |
Notices and Other Communications; Facsimile Copies |
53 | |
Section 9.3 |
No Waiver; Cumulative Remedies |
55 | |
Section 9.4 |
Attorney Costs, Expenses and Taxes |
55 | |
Section 9.5 |
Indemnification |
56 | |
Section 9.6 |
Payments Set Aside |
56 | |
Section 9.7 |
Successors and Assigns |
57 | |
Section 9.8 |
Confidentiality |
60 | |
Section 9.9 |
Set-off |
61 | |
Section 9.10 |
Interest Rate Limitation |
61 | |
Section 9.11 |
Counterparts |
62 | |
Section 9.12 |
Integration |
62 | |
Section 9.13 |
Survival of Representations and Warranties |
62 | |
Section 9.14 |
Severability |
62 | |
Section 9.15 |
[Intentionally deleted.] |
62 | |
Section 9.16 |
Governing Law; Submission to Jurisdiction; Etc. |
63 | |
Section 9.17 |
Waiver of Right to Trial by Jury |
63 | |
Section 9.18 |
No Advisory or Fiduciary Responsibility |
64 | |
Section 9.19 |
USA PATRIOT Act Notice |
64 | |
Section 9.20 |
Entire Agreement |
64 | |
TABLE OF CONTENTS
(continued)
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Page |
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EXHIBITS |
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|
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|
|
Exhibit A |
Form of Borrowing Notice |
|
Exhibit B |
Form of Compliance Certificate |
|
Exhibit C |
Form of Assignment and Assumption |
|
Exhibit D |
Form of Note |
|
Exhibit E |
Form of Notice of Account Designation |
|
Exhibit F-1 |
Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Lenders) |
|
Exhibit F-2 |
Form of U.S. Tax Compliance Certificate (Non-Partnership Foreign Participants) |
|
Exhibit F-3 |
Form of U.S. Tax Compliance Certificate (Foreign Participant Partnerships) |
|
Exhibit F-4 |
Form of U.S. Tax Compliance Certificate (Foreign Lender Partnerships) |
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|
|
|
SCHEDULES |
|
|
|
|
|
Schedule 2.1 |
Commitments and Commitment Percentages |
|
Schedule 5.1 |
Subsidiaries |
|
Schedule 5.17 |
Debt |
|
Schedule 6.15 |
Existing Loans, Advances and Investments |
|
Schedule 9.2 |
Administrative Agents Office; Certain Addresses for Notices |
|
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 31, 2012, among APTARGROUP, INC., a Delaware corporation (the Borrower), the lenders from time to time party hereto (each a Lender and, collectively, the Lenders) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent.
The Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
SECTION 1 - DEFINITIONS; INTERPRETATION.
Section 1.1 Definitions. The following terms when used herein have the following meanings:
Administrative Agent means Wells Fargo in its capacity as administrative agent under any of the Credit Documents, or any successor administrative agent.
Administrative Agents Office means the Administrative Agents address and, as appropriate, account as set forth on Schedule 9.2, or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
Administrative Questionnaire means an Administrative Questionnaire in a form supplied by the Administrative Agent.
Affiliate means, with respect to any 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.
Agent Parties means the Administrative Agent and its Related Parties.
Aggregate Commitments means the Commitments of all Lenders.
Agreement means this Credit Agreement.
Applicable Rate means the following percentages per annum, based upon the Consolidated Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.6(b):
Pricing |
|
Consolidated Leverage |
|
Applicable Rate |
|
Applicable Rate for |
|
Applicable Rate |
|
1 |
|
Less than or equal to 15% |
|
1.000 |
% |
0.000 |
% |
0.125 |
% |
2 |
|
Less than or equal to 25% but greater than 15% |
|
1.100 |
% |
0.100 |
% |
0.150 |
% |
3 |
|
Less than or equal to 35% but greater than 25% |
|
1.200 |
% |
0.200 |
% |
0.175 |
% |
4 |
|
Less than or equal to 45% but greater than 35% |
|
1.275 |
% |
0.275 |
% |
0.225 |
% |
5 |
|
Greater than 45% |
|
1.475 |
% |
0.475 |
% |
0.275 |
% |
Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.6(b); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then Pricing Level 5 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered through the date of delivery of such Compliance Certificate. The Applicable Rate in effect from the Closing Date through the date the first Compliance Certificate is required to be delivered pursuant to Section 6.6(b) shall be determined based upon Pricing Level 2.
Notwithstanding the foregoing, in the event that any financial statement or Compliance Certificate delivered pursuant to Section 6.6(b) is shown to be inaccurate (regardless of whether (i) this Agreement is in effect, (ii) any Commitments are in effect, or (iii) any Borrowing is outstanding when such inaccuracy is discovered or such financial statement or Compliance Certificate was delivered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Rate for any period (an Applicable Period) than the Applicable Rate applied for such Applicable Period, then (A) the Borrower shall immediately deliver to the Administrative Agent a corrected Compliance Certificate for such Applicable Period, (B) the Applicable Rate for such Applicable Period shall be determined as if the Consolidated Leverage Ratio in the corrected Compliance Certificate were applicable for such Applicable Period, and (C) the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent the accrued additional interest and fees owing as a result of such increased Applicable Rate for such Applicable Period, which payment shall be promptly applied by the Administrative Agent in accordance with Section 2.11. Nothing in this paragraph shall limit the rights of the Administrative Agent and Lenders with respect to Sections 2.6(b), 7.2 and 7.3 or any of their other rights under this Agreement or any other Credit Document. The Borrowers obligations under this paragraph shall survive the termination of the Commitments and the repayment of all other Obligations hereunder.
Approved Fund means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
Arrangers means, collectively, WFS, MLPFS and JPMorgan Securities, in their capacities as joint lead arrangers and joint bookrunners.
Asset Sale means any sale, transfer or other disposition by the Borrower or any of its Subsidiaries to any Person other than the Borrower or any Wholly-Owned Subsidiary of the Borrower of any asset (including, without limitation, any capital stock or other securities of another Person) of the Borrower or such Subsidiary other than (i) sales, transfers or other dispositions of inventory in the ordinary course of business, (ii) sales of equipment and other fixed assets no longer used or useful in the business of the Borrower or any of its Subsidiaries, as determined by the Borrower or such Subsidiary in its reasonable judgment, (iii) sales of equipment and other fixed assets if the proceeds thereof are used to purchase additional equipment or fixed assets, (iv) the license or sublicense of software, trademarks and
other intellectual property in the ordinary course of business and (v) any sale, transfer or other disposition of cash.
Assignee Group means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.
Assignment and Assumption means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.7(b)) and accepted by the Administrative Agent, in substantially the form of Exhibit C or any other form approved by the Administrative Agent.
Attorney Costs means and includes all reasonable and documented fees, expenses and disbursements of any law firm and, without duplication, the reasonable and documented allocated cost of internal legal services and all reasonable and documented expenses and disbursements of internal counsel.
Availability Period for any Lender means the period from and including the Closing Date to the earliest of (a) the Maturity Date for such Lender, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.4, and (c) the date of termination of the commitment of each Lender to make Loans pursuant to Section 7.2.
Base Rate means, at any time, the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) except during any period of time during which a notice delivered to the Borrower under Section 3.2, 3.3 or 3.4 shall remain in effect, LIBOR for an Interest Period of one month plus 1%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate, the Federal Funds Rate or LIBOR.
Base Rate Loan means a Loan bearing interest prior to maturity based upon the Base Rate.
Borrower has the meaning specified in the introductory paragraph hereto.
Borrower Materials has the meaning specified in Section 9.2.
Borrowing means a Revolving Borrowing or a Swingline Borrowing as the context may require.
Borrowing Notice means a notice in substantially the form of Exhibit A.
Business Day means (a) for all purposes other than as set forth in clause (b) below, any day other than a Saturday, Sunday or legal holiday on which banks in Charlotte, North Carolina and New York, New York, are open for the conduct of their commercial banking business and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, or any Base Rate Loan as to which the interest rate is determined by reference to LIBOR, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market.
Cash Collateralize means, to pledge and deposit with, or deliver to, the Administrative Agent, for the benefit of one or more of the Swingline Lender or the Lenders, as collateral for obligations of the Lenders to fund participations in respect of Swingline Loans, cash or deposit account balances or, if the Administrative Agent and the Swingline Lender shall agree, in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent
and the Swingline Lender. Cash Collateral shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support
Cash Equivalents means (a) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than six months from the date of acquisition, (b) domestic and Eurodollar denominated time deposits, certificates of deposit and bankers acceptances of any Lender or any bank whose short-term debt rating from Standard & Poor s Ratings Service (S&P) is at least A-1 or the equivalent or from Moody s Investors Service, Inc. (Moodys) is at least P-1 or the equivalent with maturities of not more than six months from the date of acquisition, (c) commercial paper with a rating of at least A-1 or the equivalent by S&P or at least P-1 or the equivalent by Moody s maturing within six months after the date of acquisition, (d) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within six months from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moodys, (e) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (a) through (d) above, and (f) BMTNs (Bons Moyen-Terme Negociables) maturing within five years from the date of acquisition thereof which is issued by a Person which is rated at least A-1 or the equivalent by S&P or at least P-1 or the equivalent by Moodys and other similar high quality instruments of equivalent United States rating in countries where Subsidiaries organized under Laws of jurisdictions outside of the United States are located.
A Change of Control Event shall be deemed to have occurred if (a) any Person or group of Persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934) shall have acquired beneficial ownership (within the meaning of Rule 13(d)-3 of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder) of more than 50% of the outstanding Voting Stock of the Borrower, (b) during any period of 12 consecutive months, commencing before or after the date of this Agreement, individuals who on the first day of such period were directors of the Borrower (together with any replacement or additional directors who were nominated or elected by a majority of directors then in office) cease to constitute a majority of the Board of Directors of the Borrower or (c) Aptar SAS ceases to be a Wholly-Owned Subsidiary.
Change in Law means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law, regardless of the date enacted, adopted or issued.
Closing Date means the date of this Agreement.
Code means the Internal Revenue Code of 1986.
Commitment means as to any Lender, the obligation of such Lender to make Loans to, and to purchase participations in Swingline Loans for the account of, the Borrower hereunder in an aggregate principal amount at any time outstanding not to exceed the amount set forth opposite such Lenders name on the Register, as such amount may be modified at any time or from time to time pursuant to the terms
hereof (including, without limitation, Section 2.14). The initial amount of the Commitment of each Lender is set forth on Schedule 2.1, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable.
Commitment Percentage means, as to any Lender at any time, the percentage (carried out to the twelfth decimal place) of the Aggregate Commitments represented by (a) at any time prior to the expiration or termination of the Aggregate Commitments, such Lenders Commitment at such time, and (b) thereafter, the principal amount of such Lenders Revolving Credit Exposure at such time. The initial Commitment Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.1 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
Compliance Certificate means a certificate in the form of Exhibit B.
Connection Income Taxes means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
Consolidated Debt means all Debt of the Borrower determined on a consolidated basis.
Consolidated Leverage Ratio means, as of any time the same is to be determined, the ratio of (x) Consolidated Debt at such time to (y) Total Capitalization at such time.
Consolidated Net Worth means, as of any date of determination, the aggregate amount of the Borrowers shareholders equity determined from its consolidated balance sheet as of the most recently ended fiscal period prior to such date for which financial statements have been, or were required to have been, delivered to the Administrative Agent.
Contractual Obligations means, for any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its Property is bound.
Control means 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 ability to exercise voting power, by contract or otherwise. Controlling and Controlled have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote 30% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.
Credit Documents means this Agreement, each Note, each Fee Letter and any other agreements executed and delivered by the Borrower in favor of or provided to the Administrative Agent or any Lender in connection with this Agreement.
Debt means all items described in clauses (i) through (vii) of the definition of Indebtedness.
Debtor Relief Laws means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
Default means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
Default Rate means (a) with respect to Base Rate Loans, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate plus (iii) 2% per annum; (b) with respect to LIBOR Rate Loans, an interest rate equal to (i) the interest rate (including any Applicable Rate) otherwise applicable to such Loan, plus (ii) 2% per annum; and (c) with respect to Swingline Loans, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate plus (iii) 2% per annum.
Defaulting Lender means, subject to Section 2.12(b), any Lender that (a) has failed to (i) fund all or any portion of the Loans or participations in Swingline Loans required to be funded by it hereunder within two Business Days of the date such Loans or participations were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lenders determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participations in Swingline Loans) within two Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent or the Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lenders obligation to fund a Loan hereunder and states that such position is based on such Lenders determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the FDIC or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent demonstrable error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.12(b)) upon delivery of written notice of such determination to the Borrower, the Swingline Lender and each Lender.
Dollar and $ mean lawful money of the United States.
Eligible Assignee means any Person that meets the requirements to be an assignee under Section 9.7(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 9.7(b)(iii)).
Environmental Claims means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, investigations or proceedings relating in any way to any Environmental Law (Claims) or any permit issued under any Environmental Law, including, without limitation, (a) any and all Claims by a Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment.
Environmental Law means any United States federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy having the force of law or rule of common law now or hereafter in effect and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, in each case relating to the environment, health, safety or Hazardous Materials.
ERISA means the Employee Retirement Income Security Act of 1974.
ERISA Affiliate means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
ERISA Event means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001 (a) (2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (f) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of the Pension Funding Rules; or (g) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
Eurodollar Reserve Percentage means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the FRB (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of Eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City.
Event of Default means any of the events or circumstances specified in Section 7.1.
Existing Agreement means that certain Amended and Restated Multicurrency Credit Agreement dated as of July 31, 2006, as amended, restated, supplemented or otherwise modified through the Closing Date) by and among the Borrower, AptarGroup Holdings SAS, the lenders party thereto and Bank of America, N.A., as the administrative agent for the lenders.
Excluded Taxes means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, United States federal withholding Taxes imposed on amounts payable to or for the account of such Lender with
respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 3.6(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3.1, amounts with respect to such Taxes were payable either to such Lenders assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipients failure to comply with Section 3.1(f) and (d) any United States federal withholding Taxes imposed under FATCA.
FATCA means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.
Federal Funds Rate means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day (or, if such day is not a Business Day, for the immediately preceding Business Day), as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, or if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent.
Fee Letters means, collectively, the Wells Fargo Fee Letter, the Merrill Lynch Fee Letter and the JPMorgan Fee Letter.
FRB means the Board of Governors of the Federal Reserve System of the United States.
Fronting Exposure means, at any time there is a Defaulting Lender, with respect to the Swingline Lender, such Defaulting Lenders Commitment Percentage of outstanding Swingline Loans other than Swingline Loans as to which such Defaulting Lenders participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.
Fund means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.
GAAP means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
Governmental Authority means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any supra national bodies such as the European Union or the European Central Bank), and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.
Guaranty by any Person means all obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Indebtedness, dividend or other obligation (including, without limitation, limited or full
recourse obligations in connection with sales of receivables or any other Property) of any other Person (the primary obligor) in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such Indebtedness or obligation or any Property or assets constituting security therefor, (ii) to advance or supply funds (x) for the purchase or payment of such Indebtedness or obligation, or (y) to maintain working capital or other balance sheet condition, or otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation, or (iii) to lease Property or to purchase securities or other Property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation of the ability of the primary obligor to make payment of the Indebtedness or obligation, or (iv) otherwise to assure the owner of the Indebtedness or obligation of the primary obligor against loss in respect thereof. For the purpose of all computations made under this Agreement, the amount of a Guaranty in respect of any obligation shall be deemed to be equal to the maximum aggregate amount of such obligation or, if the Guaranty is limited to less than the full amount of such obligation, the maximum aggregate potential liability under the terms of the Guaranty.
Hazardous Materials means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
Hedge Agreement means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other similar master agreement.
Hedge Termination Value means, in respect of any one or more Hedge Agreements for any date on or after the date such Hedge Agreements have been closed out and termination values determined in accordance therewith, after taking into account the effect of any legally enforceable netting agreement and rights of set-off relating to such Hedge Agreements, such net termination value.
Indebtedness means, for any Person, all obligations of such Person, without duplication, required by GAAP to be shown as liabilities on its balance sheet, and in any event shall include all (i) obligations of such Person for borrowed money, (ii) obligations of such Person representing the deferred purchase price of property or services other than accounts payable and accrued expenses arising in the ordinary course of business on terms customary in the trade, (iii) obligations of such Person evidenced by notes, acceptances, or other instruments of such Person or arising out of letters of credit issued for such Persons account, (iv) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (v) capitalized lease obligations of such Person, (vi) all Indebtedness (as defined above) of any partnership in which such Person is a general partner, (vii) the outstanding principal amount then owed to investors in connection with the sale of the Borrowers or any of its Subsidiaries accounts receivable, (viii) Synthetic Lease Obligations of such Person, and (ix) obligations for which such Person is obligated pursuant to a Guaranty.
Indemnified Liabilities has the meaning specified in Section 9.5.
Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Credit Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
Indemnitees has the meaning specified in Section 9.5.
Information has the meaning specified in Section 9.8.
Interest Payment Date means (a) for a Base Rate Loan or a Swingline Loan, the last Business Day of each March, June, September and December and, with respect to any Lender, its Maturity Date, (b) for a LIBOR Rate Loan with an Interest Period of 3 months or less, the last day of such Interest Period and, with respect to any Lender, its Maturity Date, and (c) for a LIBOR Rate Loan with an Interest Period of 6 months, the date that is 3 months from the first day of such Interest Period and the last day of such Interest Period and, with respect to any Lender, its Maturity Date.
Interest Period means, as to each LIBOR Rate Loan, the period commencing on the date such LIBOR Rate Loan is disbursed or converted to or continued as a LIBOR Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Borrowing Notice; provided that:
(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the final Maturity Date in effect at such time.
IRS means the United States Internal Revenue Service.
JPMorgan means JPMorgan Chase Bank, N.A. and its successors.
JPMorgan Fee Letter means the letter agreement, dated November 28, 2011, among the Borrower, JPMorgan and JPMorgan Securities.
JPMorgan Securities means J.P. Morgan Securities LLC and its successors.
Laws means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable executive orders, administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
Lender is defined in the introductory paragraph of this Agreement and, unless the context requires otherwise, includes the Swingline Lender.
Lending Office means, as to any Lender, the office or offices of such Lender described as such in such Lenders Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.
LIBOR means,
(a) for any interest rate calculation with respect to a LIBOR Rate Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars for a period equal to the applicable Interest Period which appears on Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page), then LIBOR shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period; and
(b) for any interest rate calculation with respect to a Base Rate Loan or a Swingline Loan, the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a period equal to one month (commencing on the date of determination of such interest rate) which appears on the Reuters Screen LIBOR01 Page (or any applicable successor page) at approximately 11:00 a.m. (London time) on such date of determination, or, if such date is not a Business Day, then the immediately preceding Business Day (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate does not appear on Reuters Screen LIBOR01 Page (or any applicable successor page) then LIBOR for such Base Rate Loan shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) on such date of determination for a period equal to one month commencing on such date of determination.
Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent demonstrable error.
LIBOR Rate means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula:
LIBOR Rate = |
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LIBOR |
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1.00-Eurodollar Reserve Percentage |
LIBOR Rate Loan means any Loan bearing interest at a rate based upon the LIBOR Rate.
Lien means any interest in any Property or asset securing an obligation owed to, or a claim by, a Person other than the owner of the Property or asset, whether such interest is based on the common law, statute or contract, including, but not limited to, the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale, security agreement or trust receipt, or a lease, consignment or bailment for security purposes and any financing lease having substantially the same economic effect as any of the foregoing.
Loan means the collective reference to the Revolving Loans and the Swingline Loans, and Loan means any of such Loans.
Material Adverse Effect means (a) a material adverse change in, or a material adverse effect on, the business, assets, liabilities (actual or contingent), operations or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole; (b) a material impairment of the ability of the Borrower to perform its obligations under this Agreement or any Note; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower of this Agreement or any Note.
Material Subsidiaries means, as of any date of determination, any Subsidiary of the Borrower owning or holding in the aggregate more than five percent (5%) of the consolidated assets of the Borrower and its Subsidiaries determined as of the most recently ended fiscal period prior to such date for which financial statements have been, or were required to have been, delivered to the Administrative Agent.
Maturity Date for any Lender means the later of (a) January 31, 2018 and (b) if such Lender has consented to extend its Maturity Date pursuant to Section 2.13, such extended Maturity Date as determined pursuant to such Section; provided, however, that, in each case, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.
Merrill Lynch Fee Letter means the letter agreement, dated November 28, 2011, between the Borrower and MLPFS.
Minimum Collateral Amount means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 105% of the Fronting Exposure of the Swingline Lender with respect to Swingline Loans outstanding at such time and (b) otherwise, an amount determined by the Administrative Agent and the Swingline Lender in their sole discretion.
MLPFS means Merrill Lynch, Pierce, Fenner and Smith Incorporated and its successors.
Multiemployer Plan means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
Non-Consenting Lender means any Lender that does not approve any consent, waiver, amendment, modification or termination that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 9.1 and (b) has been approved by the Required Lenders.
Non-Defaulting Lender means, at any time, each Lender that is not a Defaulting Lender at such time.
Non-Extending Lender has the meaning specified in Section 2.13(b).
Non-U.S. Lender means any Lender that is not a U.S. Person.
Note means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender to the Borrower, substantially in the form of Exhibit D.
Notice of Account Designation has the meaning specified in Section 2.2(b).
Obligations means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Credit Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
OFAC means the U.S. Department of the Treasurys Office of Foreign Assets Control.
Organization Documents means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
Other Connection Taxes means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document).
Other Taxes means all present or future stamp, court, documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.6(b)).
Overnight Rate means, for any day, the greater of (a) the Federal Funds Rate and (b) an overnight rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
Participant has the meaning specified in Section 9.7(d).
Participant Register has the meaning specified in Section 9.7(d).
PATRIOT Act has the meaning specified in Section 9.19.
PBGC means the Pension Benefit Guaranty Corporation.
Pension Act means the Pension Act of 2006.
Pension Funding Rules means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section
302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
Pension Plan means any employee pension benefit plan (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.
Permitted Liens has the meaning specified in Section 6.13.
Permitted Receivables Transaction means a transaction whereby the Borrower and/or one or more of its Subsidiaries sells, transfers, otherwise disposes of or pledges Receivables or interests therein to or for the benefit of one or more third parties or another Subsidiary (and, in the latter case, such intermediate Subsidiary in turn sells, transfers, otherwise disposes of or pledges such Receivables or interests therein to one or more third parties) in connection with agreements providing for limited recourse or non-recourse to the Borrower or any of its Subsidiaries (other than any such intermediate Subsidiary), provided that (a) any such agreement is of a type and on terms customary for comparable transactions in the good faith judgment of the Borrower, (b) such agreement does not provide for the sale, transfer, disposition or pledge of, or otherwise create any interest in, any asset other than (i) Receivables, (ii) contracts associated with such Receivables, (iii) accounts into which payments of such Receivables are made, (iv) books and records related to such Receivables, (v) property securing or otherwise supporting, and guaranties and other credit support for the payment of, such Receivables, and (vi) proceeds of any of the foregoing and (c) on any date of determination, the maximum outstanding capital or principal balance of the related financing with respect to such Receivables shall not exceed at any time outstanding $100,000,000.
Person means a natural person, partnership, corporation, limited liability company, association, trust, unincorporated organization or any other entity or organization, including a Governmental Authority.
Platform has the meaning specified in Section 9.2.
Plan means any employee benefit plan (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.
Prime Rate means, at any time, the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by the Administrative Agent as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks.
Property means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired.
Receivable means any right to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including any items of property that would be classified as an account receivable of the Borrower or any Subsidiary, and any account, chattel paper, payment intangible or instrument under any
applicable Uniform Commercial Code and any supporting obligations or proceeds as so defined of any of the foregoing.
Recipient means (a) the Administrative Agent and (b) any Lender, as applicable.
Register has the meaning specified in Section 9.7(c).
Related Parties means, with respect to any Person, such Persons Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Persons Affiliates.
Reportable Event means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.
Required Lenders means, as of any date of determination, one or more Lenders having Revolving Credit Exposure and unused Commitments representing more than 50% of the sum of the aggregate Revolving Credit Exposure and unused Commitments at such time; provided that the Revolving Credit Exposure of, and the portion of the unused Commitments held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.
Responsible Officer means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of the Borrower. Any document delivered hereunder that is signed by a Responsible Officer of the Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower.
Revolving Borrowing means (a) the total of Revolving Loans of a single type advanced by Lenders on a single date and, in the case of LIBOR Rate Loans, for a single Interest Period, pursuant to Section 2.1(a) or (b) the making of any Revolving Loan, as the context requires.
Revolving Credit Exposure means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Loans and such Lenders participation in Swingline Loans at such time.
Revolving Loans has the meaning specified in Section 2.1(a).
Sanctioned Country means a country subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx, or as otherwise published from time to time.
Sanctioned Person means (a) a Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time, or (b) (i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country, or (iii) a person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by the U.S. Department of the Treasurys Office of Foreign Assets Control.
SEC means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
Subsidiary means, for the Borrower, any corporation or other entity of which more than fifty percent (50%) of the outstanding stock or comparable equity interests having ordinary voting power for
the election of the Board of Directors of such corporation or similar governing body in the case of a non-corporation (irrespective of whether or not, at the time, stock or other equity interests of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned by the Borrower or by one or more of its Subsidiaries.
Swingline Borrowing means a borrowing of a Swingline Loan pursuant to Section 2.1(b).
Swingline Lender means Wells Fargo in its capacity as provider of Swingline Loans, or any successor swing line lender hereunder.
Swingline Loan has the meaning specified in Section 2.1(b).
Swingline Rate means the rate per annum as may be agreed upon in writing from time to time by the Swingline Lender and the Borrower.
Swingline Sublimit means an amount equal to the lesser of (a) $30,000,000 and (b) the Aggregate Commitments. The Swingline Sublimit is part of, and not in addition to, the Aggregate Commitments.
Synthetic Lease Obligation means the monetary obligation 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 property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
Taxes means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto.
Total Capitalization means the sum of Consolidated Debt plus Consolidated Net Worth.
Total Outstanding Amount means, on any date, the aggregate outstanding principal amount of all Loans after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date.
Treasury Management Agreement means any treasury management services, autoborrow, sweep or similar agreement entered into between the Borrower and the Swingline Lender.
Type means, with respect to a Loan, its character as a Base Rate Loan or LIBOR Rate Loan.
Unfunded Pension Liability means the excess of a Pension Plans benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plans assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.
United States and U.S. mean the United States of America.
U.S. Person means any Person that is a United States Person as defined in Section 7701(a)(30) of the Code.
U.S. Tax Compliance Certificate has the meaning specified in Section 3.1(f)(ii)(3).
Voting Stock of any Person means capital stock of any class or classes (however designated) having ordinary voting power for the election of directors of such Person, other than stock having such power only by reason of the happening of a contingency.
Wells Fargo means Wells Fargo Bank, National Association, a national banking association, and its successors.
Wells Fargo Fee Letter means the letter agreement, dated November 28, 2011, among the Borrower, Wells Fargo and WFS.
WFS means Wells Fargo Securities, LLC and its successors.
Wholly-Owned when used in connection with any Subsidiary of the Borrower means a Subsidiary of which all of the issued and outstanding shares of stock or other equity interests (other than directors qualifying shares as required by Law or equity interests held by Persons other than the Borrower or any Subsidiary of the Borrower to the extent required in connection with any Permitted Receivables Transaction) are owned by the Borrower and/or one or more of its Wholly-Owned Subsidiaries.
Section 1.2 Other Interpretive Provisions. With reference to this Agreement and each other Credit Document, unless otherwise specified herein or in such other Credit Document:
(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b) (i) The words herein, hereto, hereof and hereunder and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision thereof.
(ii) Section, Exhibit and Schedule references are to the Credit Document in which such reference appears.
(iii) The term including is by way of example and not limitation.
(iv) The term documents includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.
(c) In the computation of periods of time from a specified date to a later specified date, the word from means from and including; the words to and until each mean to but excluding; and the word through means to and including.
(d) Section headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Credit Document.
Section 1.3 Accounting Terms.
(a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.
(b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended or such request shall be withdrawn, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
(c) Consolidation of Variable Interest Entities. All references herein to consolidated financial statements of the Borrower and its Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.
Section 1.4 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
Section 1.5 References to Agreements and Laws. Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Credit Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Credit Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.
Section 1.6 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
SECTION 2 - THE COMMITMENTS AND CREDIT EXTENSIONS.
Section 2.1 Commitments.
(a) Revolving Loans. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a Revolving Loan) to the Borrower in Dollars from time to time, on any Business Day during the Availability Period, in an aggregate amount not to
exceed at any time outstanding the amount of such Lenders Commitment; provided, however, that after giving effect to any Revolving Borrowing, (i) the Total Outstanding Amount shall not exceed the Aggregate Commitments and (ii) the aggregate outstanding principal amount of the Revolving Loans of any Lender shall not exceed such Lenders Commitment. Within the limits of each Lenders Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1(a), prepay under Section 2.3, and reborrow under this Section 2.1(a). Revolving Loans may be Base Rate Loans or LIBOR Rate Loans, as further provided herein.
(b) Swingline Loans.
(i) Subject to the terms and conditions of herein, the Swingline Lender agrees to make loans (each such loan, a Swingline Loan) to the Borrower in Dollars from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of the Swingline Sublimit; provided, however, that after giving effect to any Swingline Borrowing, the Total Outstanding Amount shall not exceed the Aggregate Commitments. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1(b), prepay under Section 2.3, and reborrow under this Section 2.1(b). Swingline Loans shall not be Base Rate Loans (except when subject to the Default Rate) or LIBOR Rate Loans.
(ii) Swingline Loans shall be refunded by the Lenders on demand by the Swingline Lender. Such refundings shall be made by the Lenders in accordance with their respective Commitment Percentages and shall thereafter be reflected as Revolving Loans of the Lenders on the books and records of the Administrative Agent (which Revolving Loans shall initially be Base Rate Loans until converted in accordance with Section 2.2). Each Lender shall fund its respective Commitment Percentage of Revolving Loans as required to repay Swingline Loans outstanding to the Swingline Lender upon demand by the Swingline Lender but in no event later than 1:00 p.m. on the next succeeding Business Day after such demand is made. No Lenders obligation to fund its respective Commitment Percentage of a Swingline Loan shall be affected by any other Lenders failure to fund its Commitment Percentage of a Swingline Loan, nor shall any Lenders Commitment Percentage be increased as a result of any such failure of any other Lender to fund its Commitment Percentage of a Swingline Loan.
(iii) The Borrower shall pay to the Swingline Lender on demand the amount of such Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. In addition, the Borrower hereby authorizes the Administrative Agent to charge any account maintained by the Borrower with the Swingline Lender (up to the amount available therein) in order to immediately pay the Swingline Lender the amount of such Swingline Loans to the extent amounts received from the Lenders are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. If any portion of any such amount paid to the Swingline Lender shall be recovered by or on behalf of the Borrower from the Swingline Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among all the Lenders in accordance with their respective Commitment Percentages (unless the amounts so recovered by or on behalf of the Borrower pertain to a Swingline Loan extended after the occurrence and during the continuance of an Event of Default of which the Administrative Agent has received notice in the manner required pursuant to Section
8.3 and which such Event of Default has not been waived by the Required Lenders or the Lenders, as applicable).
(iv) Each Lender acknowledges and agrees that its obligation to refund Swingline Loans in accordance with the terms of this Section is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Article IV. Further, each Lender agrees and acknowledges that if prior to the refunding of any outstanding Swingline Loans pursuant to this Section, one of the events described in Section 7.1(f) or (g) shall have occurred, each Lender will, on the date the applicable Revolving Loan would have been made, purchase an undivided participating interest in the Swingline Loan to be refunded in an amount equal to its Commitment Percentage of the aggregate amount of such Swingline Loan. Each Lender will immediately transfer to the Swingline Lender, in immediately available funds, the amount of its participation and upon receipt thereof the Swingline Lender will deliver to such Lender a certificate evidencing such participation dated the date of receipt of such funds and for such amount. Whenever, at any time after the Swingline Lender has received from any Lender such Lenders participating interest in a Swingline Loan, the Swingline Lender receives any payment on account thereof, the Swingline Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lenders participating interest was outstanding and funded).
(v) Defaulting Lenders. Notwithstanding anything to the contrary contained in this Agreement, this Section 2.1(b) shall be subject to the terms and conditions of Section 2.12 and Section 2.15.
Section 2.2 Borrowings, Conversions and Continuations of Loans.
(a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of LIBOR Rate Loans shall be made upon the Borrowers irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than (i) 11:30 a.m. three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of LIBOR Rate Loans or of any conversion of LIBOR Rate Loans to Base Rate Loans, (ii) 11:30 a.m. on the requested date of any Borrowing of Base Rate Loans and (iii) 3:00 p.m. on the requested date of any Borrowing of Swingline Loans. Each telephonic notice by the Borrower pursuant to this Section 2.2(a) must be confirmed promptly by delivery to the Administrative Agent of a written Borrowing Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to or continuation of LIBOR Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Borrowing of or conversion to Base Rate Loans and each Borrowing of Swingline Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Borrowing Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Revolving Borrowing, a Swingline Borrowing, a conversion of Loans from one Type to the other, or a continuation of LIBOR Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) in the case of Revolving Loans, the Type of Loans to be borrowed or to which existing Loans are to be converted and (v) in the case of Revolving Loans, if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Borrowing Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, Base Rate Loans. Any automatic conversion to Base Rate Loans shall be effective as of the
last day of the Interest Period then in effect with respect to the applicable LIBOR Rate Loans. If the Borrower requests a Revolving Borrowing of, conversion to, or continuation of LIBOR Rate Loans in any such Borrowing Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. Notwithstanding the foregoing, the Borrower may request LIBOR Rate Loans to be made on the Closing Date provided the Borrower has given the Administrative Agent a Borrowing Notice not later than 11:30 a.m. three Business Days prior to the Closing Date.
(b) Following receipt of a Borrowing Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Commitment Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans as described in the preceding subsection. In the case of a Borrowing, (i) each Lender shall make the amount of its Revolving Loan available to the Administrative Agent in immediate available funds at the Administrative Agents Office not later than 1:00 p.m., in the case of any Base Rate Loan, and not later than noon, in the case of any LIBOR Loan, in each case on the Business Day specified in the applicable Borrowing Notice and (ii) the Swingline Lender shall make the amount of the Swingline Loan available to the Administrative Agent in immediate available funds at the Administrative Agents Office not later than 4:00 p.m. on the Business Day specified in the applicable Borrowing Notice. Upon satisfaction of the applicable conditions set forth in Section 4.2, the Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of each Borrowing requested pursuant to this Section in immediately available funds by crediting or wiring such proceeds to the deposit account of the Borrower identified in the most recent notice substantially in the form attached as Exhibit E (a Notice of Account Designation) delivered by the Borrower to the Administrative Agent or as may be otherwise agreed upon by the Borrower and the Administrative Agent from time to time. Revolving Loans to be made for the purpose of refunding Swingline Loans shall be made by the Lenders as provided in Section 2.1(b).
(c) Subject to the provisions of Section 3.5, a LIBOR Rate Loan may be continued or converted other than on the last day of an Interest Period for such LIBOR Rate Loan. During the continuance of an Event of Default under Section 7.1(a) or following acceleration of all Obligations pursuant to Section 7.2, or solely with respect to the Borrower, Section 7.1(f) or (g), without the consent of the Required Lenders, no Loans may be requested as, converted to or continued as LIBOR Rate Loans.
(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for LIBOR Rate Loans upon determination of such interest rate. The determination of the LIBOR Rate by the Administrative Agent shall be conclusive in the absence of demonstrable error. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in the Prime Rate used in determining the Base Rate promptly following the public announcement of such change.
(e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than ten Interest Periods in effect.
(f) Notwithstanding the foregoing, Swingline Borrowings may be made pursuant to terms otherwise set forth in any applicable Treasury Management Agreement without giving effect to any minimum amounts or notice requirement set forth herein.
Section 2.3 Prepayments.
(a) The Borrower may, upon notice from the Borrower to the Administrative Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by the Administrative Agent not later than 11:30 a.m. (A) three Business Days prior to any date of prepayment of LIBOR Rate Loans and (B) on the date of prepayment of Base Rate Loans or Swingline Loans; (ii) any prepayment of LIBOR Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans or Swingline Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment, whether such prepayment is of Revolving Loans or Swingline Loans and the Type(s) of Loans to be prepaid and, if LIBOR Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lenders Commitment Percentage of such prepayment. If such notice is given, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein; provided that any such notice of prepayment of Loans in whole in connection with a refinancing of all Obligations hereunder may state that it is conditioned on the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or before the specified effective date) if such condition is not satisfied, in which case such prepayment and payment shall not be due and payable. Any prepayment of a LIBOR Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.5. Each such prepayment of Revolving Loans shall be applied to the Revolving Loans of the Lenders in accordance with their respective Commitment Percentage of such Revolving Loan. Notwithstanding the foregoing, Swingline Borrowings may be prepaid pursuant to terms otherwise set forth in any applicable Treasury Management Agreement without giving effect to any minimum amounts or notice requirement set forth herein.
(b) If at any time the Total Outstanding Amount exceeds the Aggregate Commitments then in effect, the Borrower shall immediately prepay Loans in an aggregate amount equal to such excess.
Section 2.4 Termination or Reduction of Commitments. The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time irrevocably reduce the Aggregate Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 3:00 p.m. three Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, and (iii) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, either the Total Outstanding Amount would exceed the Aggregate Commitments or the aggregate outstanding principal amount of all Swingline Loans would exceed the Swingline Sublimit. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any such notice terminating the Commitments in whole in connection with a refinancing of all Obligations hereunder may state that it is conditioned on the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or before the specified effective date) if such condition is not satisfied, in which case such termination of the Commitments shall not occur. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Commitment Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.
Section 2.5 Repayment of Loans.
(a) The Borrower shall repay to each Lender on its Maturity Date the aggregate principal amount of Revolving Loans made by such Lender outstanding on such date.
(b) The Borrower shall repay each Swingline Loan in accordance with Section 2.1(b) and/or any applicable Treasury Management Agreement, but in any event on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.
Section 2.6 Interest.
(a) Subject to the provisions of subsection (b) below, (i) each LIBOR Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the LIBOR Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swingline Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Swingline Rate plus the Applicable Rate.
(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws and (ii) accrued and unpaid interest on past due amounts shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
Section 2.7 Fees.
(a) Facility Fee. The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Commitment Percentage, a facility fee in Dollars equal to the Applicable Rate times the actual daily amount of the Aggregate Commitments (or, if the Aggregate Commitments have been terminated, on the Total Outstanding Amount), regardless of usage. The facility fee shall accrue at all times during the Availability Period (and thereafter so long as Loans remain outstanding), including at any time during which one or more of the conditions in Section 4 is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date and on the last day of the Availability Period (and, if applicable, thereafter on demand). The facility fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
(b) Other Fees.
(i) The Borrower shall pay to the Arrangers and the Administrative Agent for their own respective accounts, in Dollars, fees in the amounts and at the times specified in the applicable Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
(ii) The Borrower shall pay to the Lenders, in Dollars, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
Section 2.8 Computation of Interest and Fees. All computations of interest for Base Rate Loans when the Base Rate is determined by the Prime Rate shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.10(a), bear interest for one day.
Section 2.9 Evidence of Debt. The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent demonstrable error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of demonstrable error. Upon the request of any Lender to the Borrower made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note which shall evidence such Lenders Loans to the Borrower in addition to such accounts or records. Each Lender may attach schedules to a Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.
Section 2.10 Payments Generally; Administrative Agents Clawback.
(a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agents Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its applicable Commitment Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lenders Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.
(b) If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
(c) (i) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of LIBOR Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lenders share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.2 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.2) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith
on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lenders Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(ii) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it up to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.
(d) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender to the Borrower as provided in the foregoing provisions of this Section 2, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Borrowing set forth in Section 4 are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
(e) The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 8.7 are several and not joint. The failure of any Lender to make any Loan or to make any payment under Section 8.7 on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 8.7.
(f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
(g) Notwithstanding the foregoing clause (a), if there exists a Defaulting Lender each payment by the Borrower to such Defaulting Lender hereunder shall be applied in accordance with Section 2.12(a)(ii).
Section 2.11 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lenders receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon or such other obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:
(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (w) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (x) the application of Cash Collateral provided for in Section 2.15, (y) any payment made to a Lender on its Maturity Date or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in Swingline Loans to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
Section 2.12 Defaulting Lenders.
(a) Defaulting Lender Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i) Waivers and Amendments. Such Defaulting Lenders right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders and Section 9.1.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 7 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.9 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment of any amounts owing by such Defaulting Lender to the Swingline Lender hereunder; third, to Cash Collateralize the Fronting Exposure of the Swingline Lender with respect to such Defaulting Lender in accordance with Section 2.15; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan or funded participation in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to (A) satisfy such Defaulting Lenders potential future funding obligations with respect to Loans and funded participations under this
Agreement and (B) Cash Collateralize the Swingline Lenders future Fronting Exposure with respect to such Defaulting Lender with respect to future Swingline Loans issued under this Agreement, in accordance with Section 2.15; sixth, to the payment of any amounts owing to the Lenders or the Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Swingline Lender against such Defaulting Lender as a result of such Defaulting Lenders breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lenders breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (1) such payment is a payment of the principal amount of any Loans or funded participations in Swingline Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (2) such Loans were made or the related Swingline Loans were issued at a time when the conditions set forth in Section 4.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and funded participations in Swingline Loans owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or funded participations in Swingline Loans owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in Swingline Loans are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.12(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.12(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees.
(A) Each Defaulting Lender shall be entitled to receive a Facility Fee for any period during which such Lender is a Defaulting Lender only to extent allocable to the sum of (1) the outstanding principal amount of the Revolving Loans funded by it and (2) its Commitment Percentage of the stated amount of Swingline Loans for which it has provided Cash Collateral pursuant to Section 2.15.
(B) With respect to any Facility Fee not required to be paid to any Defaulting Lender pursuant to clause (A) above, the Borrower shall (1) pay to each Non-Defaulting Lender that portion of the Facility Fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lenders participation in Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (2) pay to the Swingline Lender the amount of the Facility Fee otherwise payable to such Defaulting Lender to the extent allocable to the Swingline Lenders Fronting Exposure to such Defaulting Lender, and (3) not be required to pay the remaining amount of the Facility Fee.
(iv) Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lenders participation in Swingline Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Commitment Percentages (calculated without regard to such Defaulting Lenders Commitment) but only to the extent that (x) the conditions set forth in Section 4.2 are satisfied at the time of such reallocation (and, unless the Borrower shall have otherwise notified the
Administrative Agent at such time, the Borrower shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lenders Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lenders increased exposure following such reallocation.
(v) Repayment of Swingline Loans. If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, prepay Swingline Loans in an amount equal to the Swingline Lenders Fronting Exposure.
(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent and the Swingline Lender agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), such Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Swingline Loans to be held pro rata by the Lenders in accordance with the Commitments (without giving effect to Section 2.12(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lenders having been a Defaulting Lender.
Section 2.13 Extension of Maturity Date.
(a) Requests for Extension. The Borrower may, by notice to the Administrative Agent (who shall promptly notify the Lenders) not earlier than 45 days and not later than 35 days prior to the second anniversary of the Closing Date and/or the third anniversary of the Closing Date (each an Anniversary Date), request that each Lender extend such Lenders then existing Maturity Date for one year.
(b) Lender Elections to Extend. Each Lender, acting in its sole and individual discretion, shall, by notice to the Administrative Agent given not earlier than 30 days prior to the Anniversary Date and not later than the date (the Notice Date) that is 20 days prior to the Anniversary Date, advise the Administrative Agent whether or not such Lender agrees to such extension and each Lender that determines not to so extend its Maturity Date (a Non-Extending Lender) shall notify the Administrative Agent of such fact promptly after such determination (but in any event no later than the Notice Date) and any Lender that does not so advise the Administrative Agent on or before the Notice Date shall be deemed to be a Non-Extending Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to so agree.
(c) Notification by Administrative Agent. The Administrative Agent shall notify the Borrower of each Lenders determination under this Section no later than the date 15 days prior to the Anniversary Date (or, if such date is not a Business Day, on the next preceding Business Day).
(d) Additional Commitment Lenders. The Borrower shall have the right on or before the Anniversary Date to replace each Non-Extending Lender with, and add as Lenders under this Agreement in place thereof, one or more Eligible Assignees (each, an Additional Commitment Lender) as provided in Section 3.6(b), each of which Additional Commitment Lenders shall have entered into a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent pursuant to which such Additional Commitment Lender shall, effective as of the Anniversary Date, undertake a Commitment (and, if any such Additional Commitment Lender is already a Lender, its Commitment shall be in addition to such Lenders Commitment hereunder on such date).
(e) Minimum Extension Requirement. If (and only if) the total of the Commitments of the Lenders that have agreed so to extend their Maturity Date (each, an Extending Lender) and the additional Commitments of the Additional Commitment Lenders shall be more than 50% of the Aggregate Commitments in effect immediately prior to the Anniversary Date, then, effective as of the Anniversary Date, the Maturity Date of each Extending Lender and of each Additional Commitment Lender shall be extended to the date falling one year after the existing Maturity Date (except that, if such date is not a Business Day, such Maturity Date as so extended shall be the next preceding Business Day) and each Additional Commitment Lender shall thereupon become a Lender for all purposes of this Agreement.
(f) Conditions to Effectiveness of Extensions. Notwithstanding the foregoing, the extension of the Maturity Date pursuant to this Section shall not be effective with respect to any Lender unless:
(i) no Default shall have occurred and be continuing on the date of such extension and after giving effect thereto;
(ii) the representations and warranties contained in Section 5 and the other Credit Documents are true and correct in all material respects on and as of the date of such extension and after giving effect thereto, except that: (1) if a qualifier relating to materiality or Material Adverse Effect applies, then such representation or warranty shall be true and correct in all respects, (2) if any such representation or warranty specifically refers to an earlier date, then such representation or warranty shall be true and correct in all material respects as of such earlier date (except that if a qualifier relating to materiality or Material Adverse Effect applies, then such representation or warranty shall be true and correct in all respects as of such earlier date) and (3) for purposes of this Section 2.13, the representations and warranties contained in Section 5.9 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)(i) and (ii), respectively, of Section 6.6; and
(iii) on the Maturity Date of each Non-Extending Lender, the Borrower shall prepay any Loans outstanding on such date (and pay any additional amounts required pursuant to Section 3.5) to the extent necessary to keep outstanding Loans ratable with any revised Commitment Percentages of the respective Lenders effective as of such date.
(g) Conflicting Provisions. This Section shall supersede any provisions in Section 2.11 or 9.1 to the contrary.
Section 2.14 Increase in Commitments.
(a) Request for Increase. Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may from time to time,
request an increase in the Aggregate Commitments by an amount (for all such requests) not exceeding $100,000,000; provided that (i) any such request for an increase shall be in a minimum amount of $25,000,000 (unless the Administrative Agent agrees to a smaller amount), and (ii) the Borrower may make a maximum of three such requests. At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).
(b) Lender Elections to Increase. Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Commitment Percentage of such requested increase. Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.
(c) Notification by Administrative Agent; Additional Lenders. The Administrative Agent shall notify the Borrower and each Lender of the Lenders responses to each request made hereunder. To achieve the full amount of a requested increase and subject to the approval of the Administrative Agent and the Swingline Lender (which approvals shall not be unreasonably withheld or delayed), the Borrower may also invite additional Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent and its counsel.
(d) Increase Effective Date and Allocations. If the Aggregate Commitments are increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the increase effective date (the Increase Effective Date) and the final allocation of such increase. The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the Increase Effective Date.
(e) Conditions to Effectiveness of Increase. As a condition precedent to such increase, the Borrower shall deliver to the Administrative Agent a certificate of the Borrower dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of the Borrower (i) certifying and attaching the resolutions adopted by the Borrower approving or consenting to such increase, and (ii) certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Section 5 and the other Credit Documents are true and correct in all material respects on and as of the Increase Effective Date, except that: (1) if a qualifier relating to materiality or Material Adverse Effect applies, then such representation or warranty shall be true and correct in all respects, (2) if any such representation or warranty specifically refers to an earlier date, then such representation or warranty shall be true and correct in all material respects as of such earlier date (except that if a qualifier relating to materiality or Material Adverse Effect applies, then such representation or warranty shall be true and correct in all respects as of such earlier date) and (3) for purposes of this Section 2.14, the representations and warranties contained in Section 5.9 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)(i) and (ii), respectively, of Section 6.6, and (B) no Default exists or will result from such increase in the Commitments. The Borrower shall prepay (nonratably, to the extent necessary) any Loans outstanding on the Increase Effective Date (and pay any additional amounts required pursuant to Section 3.5) to the extent necessary to keep the outstanding Loans ratable with any revised Commitment Percentages arising from any nonratable increase in the Commitments under this Section.
(f) Conflicting Provisions. This Section shall supersede any provisions in Section 2.11 or 9.1 to the contrary.
Section 2.15 Cash Collateral.
(a) At any time that there shall exist a Defaulting Lender, within one Business Day following the written request of the Administrative Agent or the Swingline Lender (with a copy to the Administrative Agent), the Borrower shall Cash Collateralize the Fronting Exposure of the Swingline Lender with respect to such Defaulting Lender (determined after giving effect to Section 2.12(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.
(b) The Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the Swingline Lender, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders obligation to fund participations in respect of Swingline Loans, to be applied pursuant to subsection (c) below. If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent and the Swingline Lender as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).
(c) Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.15 or Section 2.12 in respect of Swingline Loans shall be applied to the satisfaction of the Defaulting Lenders obligation to fund participations in respect of Swingline Loans (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(d) Cash Collateral (or the appropriate portion thereof) provided to reduce the Fronting Exposure of the Swingline Lender shall no longer be required to be held as Cash Collateral pursuant to this Section 2.15 following (i) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Lender), or (ii) the determination by the Administrative Agent and the Swingline Lender that there exists excess Cash Collateral; provided that, subject to Section 2.12, the Person providing Cash Collateral and the Swingline Lender may agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations.
SECTION 3 - TAXES, YIELD PROTECTION AND ILLEGALITY.
Section 3.1 Taxes.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Credit Document shall be made without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of the Administrative Agent) requires the deduction or withholding of any Tax from any such payment by the Borrower or the Administrative Agent, then the Borrower or the Administrative Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that, after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section), the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(c) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within fifteen (15) Business Days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified 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 the Borrower by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Recipient, shall be conclusive absent demonstrable error.
(d) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lenders failure to comply with the provisions of Section 9.7(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such 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 any Lender by the Administrative Agent shall be conclusive absent demonstrable error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Credit Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this subsection (d).
(e) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 3.1, the Borrower shall deliver 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.
(f) Status of Lenders.
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Credit Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.1(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lenders
reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person:
(A) Any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from United States federal backup withholding tax;
(B) any Non-U.S. Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1) in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Credit Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the interest article of such tax treaty and (y) with respect to any other applicable payments under any Credit Document, IRS Form W-8BEN establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the business profits or other income article of such tax treaty;
(2) executed originals of IRS Form W-8ECI;
(3) in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Non-U.S. Lender is not a bank within the meaning of Section 881(c)(3)(A) of the Code, a 10 percent shareholder of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a controlled foreign corporation described in Section 881(c)(3)(C) of the Code (a U.S. Tax Compliance Certificate) and (y) executed originals of IRS Form W-8BEN; or
(4) to the extent a Non-U.S. Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Lender is a partnership and one or more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner;
(C) any Non-U.S. Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in United States federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Credit Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lenders obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), FATCA shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(g) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 3.1 or Section 3.4(a)(ii) (including by the payment of additional amounts pursuant to this Section 3.1 or Section 3.4(a)(ii)), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section or Section 3.4(a)(ii) with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(h) Survival. Each partys obligations under this Section 3.1 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all obligations under any Credit Document.
Section 3.2 Illegality. If any Lender determines that any change in Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBOR Rate Loans, or to determine or charge interest rates based upon the LIBOR Rate (including Base Rate Loans and Swingline Loans as to which the interest rate is determined with reference to LIBOR), or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of Dollars in the applicable interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, any obligation of such Lender to make or continue LIBOR Rate Loans or to convert Base Rate Loans to LIBOR Rate Loans shall be suspended, and all calculations of the Base Rate or the Swingline Rate with respect to such Lender shall be made without reference to LIBOR, until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all such LIBOR Rate Loans of such Lender to Base Rate Loans as to which the interest rate is not determined by reference to LIBOR, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.
Section 3.3 Inability to Determine Rates. If the Administrative Agent and the Required Lenders determine that for any reason in connection with any request for a LIBOR Rate Loan or a conversion to or continuation thereof that (i) deposits are not being offered to banks in the applicable offshore interbank market for the applicable amount and Interest Period of such Loan, (ii) adequate and reasonable means do not exist for determining the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan, or (iii) the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loans, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or continue LIBOR Rate Loans or to convert Base Rate Loans to LIBOR Rate Loans shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans as to which the interest rate is not determined by reference to LIBOR in the amount specified therein.
Section 3.4 Increased Costs Generally.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or advances, loans or other credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBOR Rate);
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon written request of such Lender or other Recipient, the Borrower shall promptly pay to any such Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any lending office of such Lender or such Lenders holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on such Lenders capital or on the capital of such Lenders holding company, if any, as a consequence of this Agreement, the Commitment of such Lender or the Loans made by, or participations in Swingline Loans held by, such Lender, to a level below that which such Lender or such Lenders holding company could have achieved but for such Change in Law (taking into consideration such Lenders policies and the policies of such Lenders holding company with respect to capital adequacy), then from time to time upon written request of such Lender the Borrower shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender or such Lenders holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender or such other Recipient setting forth the amount or amounts necessary to compensate such Lender, such other Recipient or any of their respective holding companies, as the case may be, as specified in paragraph (a) or (b) of this Section and delivered to the Borrower, shall be conclusive absent demonstrable error. The Borrower shall pay such Lender or such other Recipient, as the case may be, the amount shown as due on any such certificate within fifteen (15) Business Days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender or such other Recipient to demand compensation pursuant to this Section shall not constitute a waiver of such Lenders or such other Recipients right to demand such compensation; provided that the Borrower shall not be required to compensate any Lender or any other Recipient pursuant to this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or such other Recipient, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions, and of such Lenders or such other Recipients intention to claim compensation therefor (except that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).
Section 3.5 Compensation for Losses. On or prior to the fifteenth (15th) Business Day after the Borrowers receipt of a written demand of any Lender (with a copy to the Administrative Agent) from
time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan or Swingline Loan on the date or in the amount notified by the Borrower; or
(c) any assignment of a LIBOR Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 3.6(b);
including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. The amount of such loss or expense shall be determined, in the applicable Lenders reasonable discretion, based upon the assumption that such Lender funded its Commitment Percentage of the LIBOR Rate Loans in the London interbank market and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. The Borrower shall not be required to compensate a Lender pursuant to this Section 3.5 for any amounts incurred or arising hereunder more than 180 days prior to the date that such Lender notifies the Borrower of the event(s) giving rise to such amounts and of such Lenders intention to claim compensation therefor. The applicable Lender shall deliver a written statement of such Lender to the Borrower (with a copy to the Administrative Agent) as to the amount due, if any, under this Section 3.5. Such written statement shall set forth in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrower in the absence of demonstrable error.
Section 3.6 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 3.4, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1, then such Lender shall, at the request of the Borrower, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.4 or Section 3.1, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the Issuing Lender, as the case may be. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section 3.4, or if the Borrower is required to pay additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1, and, in each case, such Lender has declined or is unable to designate a different Lending Office in accordance with Section 3.6(a), or if any Lender is a Defaulting Lender, a Non-Consenting Lender or a Non-Extending Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such
Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.7), all of its interests, rights (other than its existing rights to payments pursuant to Section 3.4 or Section 3.1) and obligations under this Agreement and the related Credit Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:
(i) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 9.7;
(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Credit Documents (including any amounts under Section 3.5) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(iii) in the case of any such assignment resulting from a claim for compensation under Section 3.4 or payments required to be made pursuant to Section 3.1, such assignment will result in a reduction in such compensation or payments thereafter;
(iv) such assignment does not conflict with applicable Law; and
(v) in the case of any assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
Section 3.7 Survival. All of the Borrowers obligations under this Section 3 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Aggregate Commitments and repayment of all other Obligations hereunder.
SECTION 4 - CONDITIONS PRECEDENT.
Section 4.1 Conditions to Closing and Initial Loans. The obligation of the Lenders to close this Agreement and to make its Loans is subject to the satisfaction of each of the following conditions:
(a) Documentation. The Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent and each Lender, each of the following, duly executed and acknowledged where appropriate by all parties thereto:
(i) this Agreement;
(ii) a Note executed by the Borrower in favor of each Lender requesting a Note;
(iii) the opinion of Sidley Austin LLP, legal counsel to the Borrower;
(iv) copies of the Organization Documents and resolutions of the Board of Directors of the Borrower authorizing the execution and delivery of the Credit Documents, certified by the Secretary or Assistant Secretary of the Borrower;
(v) specimen signatures of the persons authorized to execute Credit Documents on the Borrowers behalf, certified by the Secretary or Assistant Secretary of the Borrower; and
(vi) such other documents as the Administrative Agent or the Required Lenders may reasonably require.
(b) Notice of Borrowing. The Administrative Agent shall have received a Notice of Borrowing from the Borrower in accordance with Section 2.2(a) and a Notice of Account Designation specifying the account or accounts to which the proceeds of any Loans made on or after the Closing Date are to be disbursed.
(c) Financial Statements. The Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent, (A) the audited consolidated financial statements of the Borrower and its Subsidiaries for the fiscal years ended 2008, 2009 and 2010 and (B) unaudited consolidated financial statements of the Borrower and its Subsidiaries for the fiscal quarter ended September 30, 2011.
(d) PATRIOT Act; Etc. The Borrower shall have provided to the Administrative Agent and the Lenders the documentation and other information requested by the Administrative Agent in order to comply with requirements of the PATRIOT Act, applicable know your customer and anti-money laundering rules and regulations.
(e) Pay-Off of Certain Existing Debt. All existing Debt of the Borrower and its Subsidiaries under the Existing Agreement shall be repaid in full and terminated, all guaranties therefor, if any, and all collateral security, if any, therefor shall be released, and the Administrative Agent shall have received a pay-off letter in form and substance satisfactory to it evidencing such repayment, termination and release.
(f) Fees. Any fees required to be paid on or before the Closing Date shall have been paid.
(g) Legal Expenses. Unless waived by the Administrative Agent, the Borrower shall have paid all reasonable fees and expenses due the Administrative Agents counsel as of the date hereof.
The Administrative Agent shall promptly notify the Lenders that the Closing Date has occurred.
Section 4.2 All Borrowings. At the time of each Borrowing hereunder:
(a) The Administrative Agent shall have received the notice required by Section 2.2;
(b) Each of the representations and warranties of the Borrower set forth in Section 5 shall be and remain true and correct in all material respects on and as of the date of such Borrowing, with the same effect as though such representations and warranties had been made on and as of each such date, except that (i) if a qualifier relating to materiality or Material Adverse Effect applies, then such representation or warranty shall be required to be true and correct in all respects, (ii) if such representation or warranty specifically refers to an earlier date, then such representation or warranty shall be true and
correct in all material respects as of such earlier date (except that if a qualifier relating to materiality or Material Adverse Effect applies, then such representation or warranty shall be required to be true and correct in all respects as of such earlier date) and (iii) for purposes of this Section 4.2(b), the representations and warranties contained in Section 5.9 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)(i) and (ii), respectively, of Section 6.6; and
(c) No Default or Event of Default shall have occurred and be continuing or would occur as a result of such Borrowing. Each request for a Borrowing shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing, conversion or continuance as to the facts specified in subsections (b) and (c) of this Section 4.2.
In addition, so long as any Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan.
SECTION 5 - REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to each Lender and the Administrative Agent as follows:
Section 5.1 Organization.
(a) The Borrower and each of its Material Subsidiaries (i) is duly organized and existing and in good standing under the Laws of the jurisdiction of its organization, (ii) has all necessary power to own the Property and assets it uses in its business and otherwise to carry on its present business and the business it currently proposes to transact and (iii) is duly licensed or qualified and in good standing in each jurisdiction in which the nature of the business transacted by it or the nature of the property owned or leased by it makes such licensing or qualification necessary and in which the failure to be so licensed or qualified would have a Material Adverse Effect.
(b) As of the Closing Date, the Borrower has no Subsidiaries other than those Subsidiaries listed on Schedule 5.1.
Section 5.2 Corporate Power and Authority. The Borrower has the corporate power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance of such Credit Documents. The Borrower has duly executed and delivered each Credit Document to which it is a party and each such Credit Document constitutes the legal, valid and binding obligation of the Borrower enforceable in accordance with its terms, except that enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other similar Laws now or hereafter in effect relating to creditors rights generally and by general principles of equity (regardless of whether enforcement is sought in equity or at law).
Section 5.3 No Violation. Neither the execution, delivery or performance by the Borrower of the Credit Documents to which it is a party nor compliance by it with the terms and provisions thereof, will (i) contravene any applicable provision of any Law, or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) conflict with or result in any breach of any term, covenant, condition or other provision of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of the Borrower or any of its Subsidiaries under the terms of any Contractual Obligation to which the Borrower or any of its Subsidiaries is a party or by which it or any of its property or assets are bound or to which it may be
subject or (iii) violate any provision of the Articles of Incorporation or By-Laws or corresponding organizational documents of the Borrower or any of its Subsidiaries.
Section 5.4 Governmental Authorization. No material approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority which has not been obtained or given is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Borrower of any Credit Document.
Section 5.5 Litigation. As of the Closing Date, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower or any of its Subsidiaries, threatened, involving the Borrower or any of its Subsidiaries (i) that are likely to have a Material Adverse Effect or (ii) that could reasonably be expected to have a material adverse effect on the rights or remedies of the Lenders or on the ability of the Borrower to perform its obligations to the Lenders under this Agreement.
Section 5.6 Use of Proceeds; Margin Regulations.
(a) The proceeds of all Loans shall be used (i) to pay fees and expenses incurred in connection with this Agreement, (ii) to repay Debt under the Existing Agreement and (iii) working capital, capital expenditures and other lawful corporate purposes.
(b) No proceeds of any Loan will be used to purchase or carry any margin stock (as defined in Regulation U of the FRB) or to extend credit for the purpose of purchasing or carrying any margin stock.
(c) Notwithstanding any of the foregoing, no proceeds of any Loan will be used to finance, fund or complete any hostile acquisition of any Person.
Section 5.7 Investment Company Act. Neither the Borrower nor any of its Subsidiaries is an investment company or a company controlled by an investment company, within the meaning of the Investment Company Act of 1940, as amended.
Section 5.8 True and Complete Disclosure. All factual information heretofore or contemporaneously furnished by or on behalf of the Borrower or its Subsidiaries to the Administrative Agent or any Lender (including, without limitation, all information contained herein) in connection with this agreement or any transaction contemplated herein is, and all other such factual information hereafter furnished by or on behalf of any such Persons in writing to the Administrative Agent or any Lender will be, in each case when taken together, true and accurate in all material respects on the date of such information and not incomplete by omitting to state any material fact necessary to make such information not misleading at such time in light of the circumstances under which such information was provided.
Section 5.9 Financial Statements. The audited consolidated financial statements of the Borrower as at December 31, 2010 and the unaudited consolidated financial statements of the Borrower for the nine month period ended September 30, 2011, copies of which have been delivered to the Lenders, in each case (i) have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as disclosed therein) and (ii) fairly present on a consolidated basis the financial position of the Borrower and its Subsidiaries, as of the dates thereof, and the results of operations for the periods covered thereby. The Borrower and its Subsidiaries have no material contingent liabilities other than those disclosed in the financial statements referred to in this Section 5.9 or in any supplemental report already furnished to the Lenders in writing. With respect to any representation and warranty which is deemed to be made after the date hereof by the Borrower this representation shall be deemed to refer to the financial statements most recently delivered by the Borrower to the Lenders.
Section 5.10 No Material Adverse Change. As of the Closing Date, no event has occurred which had a Material Adverse Effect since December 31, 2010.
Section 5.11 Labor Controversies. There are no labor controversies pending or, to the best knowledge of the Borrower or its Subsidiaries, threatened against the Borrower or any of its Subsidiaries that can reasonably be foreseen to threaten a Material Adverse Effect.
Section 5.12 Taxes. The Borrower and its Subsidiaries have filed all federal tax returns and all other material tax returns required to be filed and have paid all taxes due, except such taxes, if any, as are being contested in good faith and for which adequate reserves have been provided. No tax liens have been filed and no claims are being asserted for taxes, which liens or claims could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries for taxes and other governmental charges are adequate.
Section 5.13 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Sections 412, 430 or 431 of the Code except where a failure to make a required contribution could not reasonably be expected to have a Material Adverse Effect. No application for a funding waiver or an extension of any amortization period pursuant to Sections 412, 430 or 431 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained, (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (v) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (vi) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA, which individually under clauses (i) through (vi), or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.
Section 5.14 Intellectual Property. The Borrower and its Subsidiaries own or hold a valid license to use all the material patents, trademarks, permits, service marks, trade names, technology, know-how and formulas or other rights related to the foregoing, free of any burdensome restrictions, that are used in the operation of the business of the Borrower or of its Subsidiaries as presently conducted and as proposed to be conducted as determined by the Borrower and its Subsidiaries in their reasonable
judgment, except for such intellectual property or burdensome restrictions which are not likely to individually or in the aggregate, have a Material Adverse Effect.
Section 5.15 Compliance with Statutes, Etc. The Borrower and its Subsidiaries are in compliance with all applicable Laws imposed by all Governmental Authorities in respect of the conduct of its business and the ownership of its Property, except such non-compliance as is not likely to, individually or in the aggregate, have a Material Adverse Effect.
Section 5.16 Environmental Matters.
(a) The Borrower and its Subsidiaries have complied with, and on the date of each Borrowing are in compliance with, all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws except to the extent such noncompliance is not likely to have a Material Adverse Effect. As of the Closing Date, there are no pending or, to the best knowledge of the Borrower and its Subsidiaries, past or threatened Environmental Claims against the Borrower or its Subsidiaries of any real property owned or operated by the Borrower or its Subsidiaries that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect. As of the Closing Date, there are no conditions or occurrences on any real property owned or operated by the Borrower or its Subsidiaries or, to the best knowledge of the Borrower and its Subsidiaries, on any property adjoining or in the vicinity of any such real property that would reasonably be expected (i) to form the basis of an Environmental Claim against the Borrower or its Subsidiaries or any such real property that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect or (ii) to cause any such real property to be subject to any restrictions on the ownership, occupancy, use or transferability of such real property by the Borrower or its Subsidiaries under any applicable Environmental Law which restrictions are likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, any real property owned or operated by the Borrower or its Subsidiaries in a manner that has violated or would reasonably be expected to violate any Environmental Law except such violations as are not likely, individually or in the aggregate, to have a Material Adverse Effect. Hazardous Materials have not at any time been released on or from any real property located in the United States owned or operated by the Borrower or any of its Subsidiaries except such releases as are not likely, individually or in the aggregate, to have a Material Adverse Effect. To the best of the Borrowers knowledge, there are not as of the Closing Date any underground storage tanks located on any real property located in the United States owned or operated by the Borrower or its Subsidiaries.
Section 5.17 Existing Debt. Schedule 5.17 contains a complete list of (a) all Debt of the Borrower and its Subsidiaries as of December 31, 2011 and (b) all other Debt incurred by the Borrower or any of its Subsidiaries between December 31, 2011 and the Closing Date, other than, in the case of clauses (a) and (b), the Obligations hereunder and under the Existing Agreement and, in the case of clause (b), Debt incurred by the Borrower or any of its Subsidiaries which does not exceed an aggregate principal amount, for all such Debt for all such Persons, of $25,000,000.
Section 5.18 Anti-Terrorism; Anti-Money Laundering. Neither the Borrower nor any of its Subsidiaries (a) is an enemy or an ally of the enemy within the meaning of Section 2 of the Trading with the Enemy Act of the United States (50 U.S.C. App. §§ 1 et seq.), (b) is in violation of (i) the Trading with the Enemy Act of the United States (50 U.S.C. App. §§ 1 et seq.), (ii) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V) or any enabling legislation or executive order relating thereto or (iii) the PATRIOT Act or (c) is a Sanctioned Person. No part of the proceeds of any Borrowing hereunder will be used directly or
indirectly to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country.
Section 5.19 No Burdensome Restrictions; Compliance with Agreements. Neither the Borrower nor any of its Subsidiaries is party or subject to any law, regulation, rule or order, or any Contractual Obligation that (individually or in the aggregate) has or reasonably could be foreseen to have a Material Adverse Effect.
SECTION 6 - COVENANTS.
The Borrower covenants and agrees that, so long as any Loan is outstanding or any Commitment is available to or in use by the Borrower hereunder, except to the extent compliance in any case is waived in writing by the Required Lenders:
Section 6.1 Existence. The Borrower will, and will cause each of its Subsidiaries to, preserve and maintain its existence, subject to the provisions of Section 6.11.
Section 6.2 Maintenance. The Borrower will, and will cause each of its Subsidiaries to, maintain, preserve and keep its plants, properties and equipment necessary to the proper conduct of its business in reasonably good repair, working order and condition and will from time to time make all reasonably necessary repairs, renewals, replacements, additions and betterments thereto so that at all times such plants, properties and equipment are reasonably preserved and maintained; provided, however, that nothing in this Section 6.2 shall prevent the Borrower or any of its Subsidiaries from discontinuing the operation or maintenance of any such properties if such discontinuance is, in the judgment of the Borrower or any such Subsidiary, as applicable, desirable in the conduct of its business or the business of its Subsidiary and not materially disadvantageous to the Lenders.
Section 6.3 Taxes. The Borrower will, and will cause each of its Subsidiaries to, duly pay and discharge all taxes, rates, assessments, fees and governmental charges upon or against it or its properties before payment is delinquent and before penalties accrue thereon, unless and to the extent that the same is being contested in good faith and by appropriate proceedings and appropriate reserves have been established in conformity with GAAP.
Section 6.4 ERISA. The Borrower will, and will cause each of its Subsidiaries to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed could reasonably be expected to result in the imposition of a Lien against any of its properties or assets and will promptly notify the Administrative Agent of any ERISA Event which could be reasonably be expected to have a Material Adverse Effect.
Section 6.5 Insurance. The Borrower will, and will cause each of its Subsidiaries to, insure, and keep insured, all insurable Property and assets owned by it of a character usually insured by companies similarly situated and operating like Property or assets, to the extent usually insured (subject to self-insured retentions) by such similar companies. The Borrower and each of its Subsidiaries will also insure employers and public and product liability risks. The Borrower will, upon request of the Administrative Agent, furnish to the Administrative Agent a summary setting forth the nature and extent of the insurance maintained pursuant to this Section 6.5.
Section 6.6 Financial Reports and Other Information.
(a) The Borrower and its Subsidiaries will maintain a system of accounting in accordance with GAAP and will furnish to the Administrative Agent such information about the business
and financial condition of the Borrower and its Subsidiaries as the Administrative Agent may reasonably request; and, without any request, will furnish to the Administrative Agent and each Lender:
(i) Within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter and the related consolidated statement of income and of cash flow for such fiscal quarter and for the portion of the fiscal year ended with the last day of such fiscal quarter, all of which shall be in reasonable detail and certified by the Executive Vice President or the Vice President-Treasurer of the Borrower that they fairly present the financial condition of the Borrower and its Subsidiaries (as applicable) as of the dates indicated and the results of their operations and changes in their cash flows for the periods indicated and that it has been prepared in accordance with the terms of this Agreement, subject to normal year-end audit adjustments.
(ii) Within 120 days after the end of each fiscal year of the Borrower, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statement of income and retained earnings and of cash flows for such fiscal year and setting forth consolidated comparative figures for the preceding fiscal year certified by PriceWaterhouseCoopers or another independent certified public accounting firm of recognized national standing, in each case to the effect that such statements fairly present the financial condition of the Borrower and its Subsidiaries as of the dates indicated and the results of their operations and changes.
(iii) Promptly after the sending or filing thereof, copies of all financial statements and projections that the Borrower sends to its shareholders and copies of all filings and registrations with, and reports to, the SEC by the Borrower or any of its Subsidiaries.
(b) Each financial statement furnished to the Administrative Agent pursuant to subsections (i) and (ii) of Section 6.6(a) shall be accompanied by (A) a written certificate signed by the Borrowers Executive Vice President or Vice President-Treasurer to the effect that (i) no Default or Event of Default has occurred during the period covered by such statements or, if any such Default or Event of Default has occurred during such period, setting forth a description of such Default or Event of Default and specifying the action, if any, taken by the Borrower to remedy the same, and (ii) the representations and warranties contained in Section 5 are true and correct in all material respects as though made on the date of such certificate, except as otherwise described therein, and (B) a Compliance Certificate in the form of Exhibit B showing the Borrowers compliance with the covenants set forth in Sections 6.14, 6.15 and 6.17, and attaching an updated Schedule 5.1 if any information pertaining thereto has changed since the previous Compliance Certificate was submitted.
(c) Promptly after obtaining knowledge of any of the following, the Borrower shall provide the Administrative Agent with written notice in reasonable detail of:
(i) any pending or threatened material Environmental Claim against the Borrower or any of its Subsidiaries or any real property owned or operated by the Borrower or any of its Subsidiaries;
(ii) any condition or occurrence on any real property owned or operated by the Borrower or any of its Subsidiaries that (x) results in material noncompliance by the Borrower or any of its Subsidiaries with any Environmental Law or (y) could reasonably
be anticipated to form the basis of a material Environmental Claim against the Borrower or any of its Subsidiaries or any such real property;
(iii) any condition or occurrence on any real property owned or operated by the Borrower or any of its Subsidiaries that could reasonably by anticipated to cause such real property to be subject to any material restrictions on the ownership, occupancy, use or transferability by the Borrower or its Subsidiary, as the case may be, of its interest in such real property under any Environmental Law; and
(iv) the taking of any material removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any real property owned or operated by the Borrower or any of its Subsidiaries. For purposes of this Section 6.6(c), material shall refer to an event or circumstance that could reasonably be expected to result in losses, costs or liabilities (in excess of any cash escrow available to the Borrower), individually or in the aggregate, in excess of $5,000,000.
(d) The Borrower will promptly (and in any event within one Business Day after an officer of the Borrower has knowledge thereof) give notice to the Administrative Agent of:
(i) the occurrence of any Default or Event of Default;
(ii) any default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries which is likely to have a Material Adverse Effect;
(iii) any litigation or governmental proceeding of the type described in clause (i) or (ii) of Section 5.5; and
(iv) any circumstance that has had a Material Adverse Effect.
Documents required to be delivered pursuant to this Section 6.6 (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically to the Administrative Agent for distribution to the Lenders and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower delivers electronic copies thereof to the Administrative Agent , posts such documents, or provides a link thereto on the Borrowers website on the Internet at the website address listed on Schedule 9.2; or (ii) on which such documents are posted on the Borrowers behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (x) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that delivers a written request to the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (y) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall deliver any documents delivered to it by the Borrower pursuant to Section 6.6 to the Lenders either electronically or by posting such documents on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificates required by Section 6.6(c) to the Administrative Agent. Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
Section 6.7 Lender Inspection Rights. Upon reasonable notice from the Administrative Agent, the Borrower will permit the Administrative Agent (and such Persons as the Administrative Agent may designate, subject to Section 9.8) and any Lender during normal business hours to visit and inspect any of the properties of the Borrower and its Subsidiaries to examine all its respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss its respective affairs, finances and accounts with its officers, employees and independent public accountants (and by this provision the Borrower authorizes such accountants to discuss with the Administrative Agent (and such Persons as the Administrative Agent may designate) and any Lender the finances and affairs of the Borrower and its Subsidiaries) all at such reasonable times and as often as may be reasonably requested.
Section 6.8 Conduct of Business. The Borrower and each of its Subsidiaries will not engage in any line of business outside the packaging industry other than a Permitted Receivables Transaction.
Section 6.9 Fiscal Years and Quarters. The Borrower will, for reporting purposes, maintain for itself and its Subsidiaries a fiscal year that ends on December 31 of each year and fiscal quarters that end on March 31, June 30, September 30 and December 31 of each year.
Section 6.10 Limitation on Certain Restrictions on Subsidiaries. The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise permit to exist or become effective any Lien or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by the Borrower or any Subsidiary of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of the Borrower, or (b) make loans or advances to the Borrower or any Subsidiaries of the Borrower, except for such Liens or restrictions existing under or by reason of (i) applicable Law, (ii) this Agreement, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or a Subsidiary of the Borrower, (iv) customary provisions restricting assignment of any licensing agreement entered into by the Borrower or a Subsidiary of the Borrower in the ordinary course of business; and (v) customary provisions restricting distributions pursuant to any Permitted Receivables Transaction.
Section 6.11 Mergers, Consolidations and Asset Sales.
(a) The Borrower will not, and will not permit any of its Subsidiaries to, be a party to any merger or consolidation or engage in any Asset Sale of all or a substantial part of the consolidated assets (including assets consisting of stock) of the Borrower and its Subsidiaries, except for any such merger or consolidation (x) by any Subsidiary into or with the Borrower or into or with any Subsidiary, (y) by any Subsidiary provided the survivor is a Subsidiary or (z) by the Borrower provided the Borrower is the surviving corporation. As used in this Section 6.11(a), an Asset Sale shall be deemed to be of a substantial part of the consolidated assets of the Borrower and its Subsidiaries if the book value of such assets (excluding accounts receivable transferred as part of a Permitted Receivables Transaction), when added to the book value of all such other assets (including assets consisting of stock) sold, leased, transferred or disposed of by the Borrower and its Subsidiaries during any fiscal year (other than inventory in the ordinary course of business) exceeds 10% of the book value of their consolidated assets (including assets consisting of stock) as of the date of the most recently ended fiscal year.
(b) The Borrower will not permit any of its Subsidiaries to issue or sell any shares of stock of any class (including as stock for the purpose of this subsection any warrants, rights or options to purchase or otherwise acquire stock or other securities exchangeable for or convertible into stock) of
such Subsidiary to any Person other than the Borrower or a Wholly-Owned Subsidiary of the Borrower, except for the purpose of qualifying directors, if the effect of such issuance of sale would be to dilute the voting rights or ownership interests of the Borrower in any such Subsidiary to fifty percent (50%) or less.
Section 6.12 Use of Property and Facilities; Environmental, Health and Safety Laws. The Borrower will, and will cause each of its Subsidiaries to, comply in all material respects with all Environmental Laws applicable to or affecting the properties or business operations of the Borrower or its Subsidiaries except to the extent such noncompliance is not likely to have a Material Adverse Effect.
Section 6.13 Liens. The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien of any kind on any Property or asset of any kind of the Borrower or any Subsidiary of the Borrower, except the following (collectively, the Permitted Liens):
(a) Liens arising in the ordinary course of business by operation of law in connection with workers compensation, unemployment insurance, old age benefits, social security obligations, taxes, assessments, statutory obligations or other similar charges, good faith deposits, pledges or other Liens in connection with bids, tenders, contracts or leases to which the Borrower or its Subsidiaries is a party or other deposits required to be made in the ordinary course of business; provided that in each case the obligation secured is not for Debt and is not overdue or, if overdue, is being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor;
(b) mechanics, workers, materialmens, landlords, carriers or other similar Liens arising in the ordinary course of business (or deposits to obtain the release of such Liens) related to obligations not due or, if due, that are being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor;
(c) Liens for taxes or assessments or other government charges or levies not yet due or which are being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor;
(d) Liens arising out of judgments or awards against the Borrower or any of its Subsidiaries, or in connection with surety or appeal bonds in connection with bonding such judgments or awards, the time for appeal from which or petition for rehearing of which shall not have expired or which the Borrower or such Subsidiary shall be prosecuting an appeal or proceeding for review, and for which it shall have obtained a stay of execution pending such appeal or proceeding for review; provided that the aggregate amount of liabilities (including interest and penalties, if any but excluding any liabilities covered by insurance) of the Borrower and its Subsidiaries secured by such Liens shall not exceed $15,000,000 at any one time outstanding;
(e) easements, rights-of-way, restrictions and other similar encumbrances on real property incurred in the ordinary course of business that, in the aggregate, are not substantial in amount and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;
(f) any interest or title of a lessor under any operating lease entered into by the Borrower or any Subsidiary in the ordinary course of its business and covering only the assets so leased;
(g) Liens in favor of depository and collection banks and other regulated financial institutions consisting of statutory or contractual setoff rights with respect to deposit accounts or securities accounts of the Borrower or any Subsidiary thereof maintained with such bank or financial institution to secure payment of customary maintenance fees or other administrative charges associated
with such accounts so long as such Liens do not secure Indebtedness and are incurred in the ordinary course of business or that are being contested in good faith by appropriate proceedings;
(h) Liens upon any Property acquired by the Borrower or any of its Subsidiaries (A) to secure the payment of all or any part of the purchase price of such Property upon its acquisition, (B) to secure Debt issued, assumed or guaranteed by the Borrower or such Subsidiary before, at the time of, or within 90 days after the acquisition of such Property, which Debt financed all or any part of the purchase price of such Property, (C) to secure capitalized lease obligations or (D) to secure commercial letters of credit issued to pay part or all of the purchase price of such Property; provided that in each case such Lien applies only to the Property that was so acquired or purchased, such Debt is incurred in connection with such acquisition or purchase and such Debt does not exceed the purchase price of such Property;
(i) Liens on Property existing at the time such Property is acquired by the Borrower or any Subsidiary of the Borrower and not created in contemplation of such acquisition and Liens on property of a Person existing at the time such Person is merged into or consolidated with the Borrower or any Subsidiary of the Borrower or becomes a Subsidiary of the Borrower, provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with the Borrower or such Subsidiary or acquired by the Borrower or such Subsidiary;
(j) Liens on Receivables and other property referred to in clause (b) of the definition of, and in connection with, a Permitted Receivables Transaction; and
(k) Liens securing Debt described on Schedule 5.17 hereto and other Indebtedness not to exceed in the aggregate 15% of Consolidated Net Worth at any time outstanding.
Nothing contained in subsections (a) through (k) of this Section 6.13 shall be deemed to permit a pledge of the stock (or other equity interests) of the Borrower or any of its Subsidiaries.
Section 6.14 Debt. The Borrower will not, and will not permit any of its Subsidiaries to, contract, assume or suffer to exist any Debt, except:
(a) Debt under this Agreement;
(b) Debt in existence on the Closing Date; and
(c) other Debt; provided that at the time such other Debt is incurred and after giving effect to the incurrence of such other Debt (i) the Borrower is in pro forma compliance with Section 6.17 hereof and (ii) the Debt of Subsidiaries of the Borrower (excluding Debt owing to the Borrower or other Subsidiaries of the Borrower) does not exceed 30% of Consolidated Net Worth.
Section 6.15 Advances, Acquisitions, Investments and Loans. The Borrower will not, and will not permit any of its Subsidiaries to, lend money or credit or make advances to any Person, or purchase or acquire any stock of any class of, or any partnership, joint venture or other equity interest in or obligations of, or make any capital contribution to, any Person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, except:
(a) investments in Cash Equivalents;
(b) receivables owing to the Borrower or its Subsidiaries created or acquired in the ordinary course of business and payable on customary trade terms of the Borrower or such Subsidiary;
(c) investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;
(d) advances, loans and investments in existence on the Closing Date (all such advances, loans and investments by the Borrower or any of its Subsidiaries in existence on the Closing Date in excess of $10,000,000 individually are reflected on Schedule 6.15 hereto, other than any such advance, loan or investment that would be permitted by any of clauses (a) through (c) or (e) through (j) of this Section 6.15);
(e) deposits made in the ordinary course of business consistent with past practices;
(f) financing provided by the Borrower and its Subsidiaries to their customers in the ordinary course of business;
(g) intercompany loans, contributions to capital and advances to any of its Subsidiaries; and any Subsidiaries of the Borrower may make intercompany loans, contributions to capital and advances to the Borrower;
(h) loans and advances by the Borrower and its Subsidiaries to directors, officers and employees of the Borrower and its Subsidiaries for moving and travel expenses and other similar expenses, in each case incurred in the ordinary course of business, in an aggregate outstanding principal amount not to exceed $15,000,000 at any time;
(i) purchases or acquisitions of stock or partnership interests, joint venture interests or other equity interests in any Person who after such purchase or other acquisition becomes a Subsidiary;
(j) loans, advances and investments in connection with a Permitted Receivables Transaction; and
(k) other purchases, advances, loans and investments with respect to Persons who are not (or as a result of such investment do not become) a Subsidiary not to exceed, in the aggregate, twelve and one-half percent (12.5%) of the Consolidated Net Worth at any time outstanding.
Section 6.16 Dividends and Other Shareholder Distributions. The Borrower shall not during the occurrence and continuation of any Default or Event of Default:
(a) declare or pay any dividends or make any distribution of any kind on its outstanding capital stock, or set aside any sum for any such purpose; or
(b) purchase, redeem, retire or otherwise acquire, directly or indirectly, or make any sinking fund payments for, any shares of any class of stock of the Borrower or any Subsidiary of the Borrower now or hereafter outstanding or set apart any sum for any such purpose.
Section 6.17 Leverage. The Borrower will at all times maintain a Consolidated Leverage Ratio of not more than 0.55 to 1.00.
Section 6.18 Transactions with Affiliates. Except as otherwise expressly permitted by the terms of this Agreement, the Borrower will not, and will not permit any of its Subsidiaries to, enter into or be a party to any material transaction or arrangement with any Affiliate of the Borrower or such Subsidiary which is not itself a Subsidiary, including without limitation, the purchase from, sale to or exchange of Property with, any merger or consolidation with or into, or the rendering of any service by or for, any such Affiliate, except
(i) in the ordinary course of and pursuant to the reasonable requirements of the Borrowers or such Subsidiarys business and upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than would obtain in a comparable arms-length transaction with a Person other than an Affiliate;
(ii) the Permitted Receivables Transaction; and
(iii) transactions and arrangements permitted under the terms of Section 6.11 or 6.15 provided the Board of Directors of the Borrower have determined that such transaction or arrangement is in the best interest of the Borrower.
Section 6.19 Compliance with Laws. Without limiting any of the other covenants of the Borrower in this Section 6, the Borrower will, and will cause its Subsidiaries to, conduct their business, and otherwise be, in compliance with all applicable Laws and orders of any governmental or judicial authorities; provided, however, that this Section 6.19 shall not require the Borrower or any of its Subsidiaries to comply with any such law, regulation, ordinance or order if (x) it shall be contesting such Law or order in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor, or (y) the failure to comply therewith could not, in the aggregate, have a Material Adverse Effect.
Section 6.20 Take or Pay Contracts. The Borrower will not, and will not permit any of its Subsidiaries to, enter into or be a party to any arrangement for the purchase of materials, supplies, other property or services if such arrangement (i) by its express terms requires that payment be made by the Borrower or such Subsidiary regardless of whether such materials, supplies, other property or services are delivered or furnished to it and (ii) could reasonably be expected to have a Material Adverse Effect.
Section 6.21 Inconsistent Agreements. The Borrower will not enter into any Contractual Obligation if compliance by the Borrower with the terms and provisions thereof, consummation of the transactions contemplated therein, or application or operation of any term, covenant, condition or other provision thereof would (i) result in a Default or Event of Default or (ii) violate any provision of the Organization Documents of the Borrower or any of its Subsidiaries.
SECTION 7 - EVENTS OF DEFAULT AND REMEDIES.
Section 7.1 Events of Default. Any one or more of the following shall constitute an Event of Default:
(a) default (x) in the payment when due of the principal amount of any Loan or (y) for a period of three (3) days in the payment when due of any other Obligation constituting a payment obligation not mentioned in clause (x);
(b) default by the Borrower or any of its Subsidiaries in the observance or performance of any covenant set forth in Section 6.10, 6.11, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18, 6.19, 6.20 or 6.21;
(c) default by the Borrower or any Subsidiary in the observance or performance of any provision hereof not mentioned in (a) or (b) above, which is not remedied within thirty (30) days after notice thereof to the Borrower by the Administrative Agent;
(d) any representation or warranty made herein by the Borrower or any Subsidiary, or in any statement or certificate furnished pursuant hereto, proves untrue in any material respect as of the date of the issuance or making, or deemed making or issuance, thereof;
(e) (x) default by the Borrower or any Subsidiary occurs in the payment when due of Indebtedness in an aggregate principal amount in excess of $15,000,000, (y) default by the Borrower or any Subsidiary occurs in the payment when due with respect to a Hedge Agreement the Hedge Termination Value of which is in excess of $15,000,000 or (z) a default by the Borrower or any Subsidiary or other circumstance occurs under any Contractual Obligation under which any Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount in excess of $15,000,000 is issued or created, and such default or other circumstance continues for a period of time sufficient to permit the holder or beneficiary of such Indebtedness, or a trustee therefor, to cause the acceleration of the maturity of any such Indebtedness or any mandatory unscheduled prepayment, purchase, or other early funding thereof;
(f) the Borrower or any Material Subsidiary (i) does not pay, or admits its inability to pay, its debts generally as they become due, (ii) makes an assignment for the benefit of creditors, (iii) applies for, seeks, consents to, or acquiesces in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (iv) institutes any proceeding seeking to have entered against it an order for relief under any Debtor Relief Law or fails to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (v) takes any corporate action in furtherance of any matter described in clauses (i) through (iv) above, or (vi) fails to contest in good faith any appointment or proceeding described in Section 7.1(g);
(g) a custodian, receiver, trustee, examiner, liquidator or similar official is appointed for the Borrower or any Material Subsidiary or any substantial part of any of their respective Property, or a proceeding described in Section 7.1(f)(iv) is instituted against the Borrower or any such Subsidiary of the Borrower, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) days;
(h) the Borrower or any Subsidiary of the Borrower fails within thirty (30) days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of, in the aggregate, $15,000,000, which is not stayed on appeal or otherwise being appropriately contested in good faith in a manner that stays execution;
(i) (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount which could reasonably be expected to have a Material Adverse Effect, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $15,000,000;
(j) (i) the Borrower or any Person acting on behalf of the Borrower, or any Governmental Authority challenges the validity of any Credit Document or the Borrowers obligations thereunder or (ii) any Credit Document ceases to be in full force and effect or ceases to give the
Administrative Agent and Lenders the material Liens, rights, and powers purported to be granted in their favor thereby; or
(k) a Change of Control Event occurs.
Section 7.2 Non-Bankruptcy Defaults. When any Event of Default other than those described in subsections (f) or (g) of Section 7.1 has occurred and is continuing, the Administrative Agent shall, by notice to the Borrower: (a) if so directed by the Required Lenders, terminate the remaining Commitments and all other obligations of the Lenders hereunder on the date stated in such notice (which may be the date thereof) and (b) if so directed by the Required Lenders, declare the principal of and the accrued interest on all outstanding Loans to be forthwith due and payable and thereupon all outstanding Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts payable under the Credit Documents without further demand, presentment, protest or notice of any kind. The Administrative Agent, after giving notice to the Borrower pursuant to Section 7.1(c) or this Section 7.2, shall also promptly send a copy of such notice to the other Lenders, but the failure to do so shall not impair or annul the effect of such notice.
Section 7.3 Bankruptcy Defaults. When any Event of Default described in subsections (f) or (g) of Section 7.1 has occurred and is continuing, then all outstanding Loans shall immediately become due and payable together with all other amounts payable under the Credit Documents without presentment, demand, protest or notice of any kind, and all obligations of the Lenders to extend further credit pursuant to any of the terms hereof shall immediately terminate.
Section 7.4 Notice of Default. The Administrative Agent shall give notice to the Borrower under Section 7.1(c) promptly upon being requested to do so by any Lender and shall thereupon notify all the Lenders thereof.
SECTION 8 - ADMINISTRATIVE AGENT.
Section 8.1 Appointment and Authorization of Administrative Agent. Each Lender hereby irrevocably appoints, designates and authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Credit Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Credit Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Credit Document, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Administrative Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term agent herein and in the other Credit Documents with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.
Section 8.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement or any other Credit Document by or through agents, employees or attorneys-in-fact, including, such sub-agents as shall be deemed necessary by the Administrative Agent, and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agent, sub-agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct. Any
such agent, sub-agent or other Person retained or employed pursuant to this Section 8.2 shall have all the benefits and immunities provided to the Administrative Agent in this Section 8 with respect to any acts taken or omissions suffered by such Person in connection herewith or therewith, as fully as if the term Administrative Agent as used in this Section 8 and in the definition of Agent Party included such additional Persons with respect to such acts or omissions.
Section 8.3 Liability of Administrative Agent. No Agent Party shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Credit Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by the Borrower or any officer thereof, contained herein or in any other Credit Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Credit Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document, or for any failure of the Borrower or any other party to any Credit Document to perform its obligations hereunder or thereunder. No Agent Party shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of the Borrower or any Affiliate thereof.
Section 8.4 Reliance by Administrative Agent.
(a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under any Credit Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Credit Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.
(b) For purposes of determining compliance with the conditions specified in Section 4.1, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
Section 8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders, unless the Administrative Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default and stating that such notice is a notice of default. The Administrative Agent will notify the Lenders of its receipt of any such notice. The Administrative
Agent shall take such action with respect to such Default as may be directed by the Required Lenders in accordance with Section 7; provided, however, that unless and until the Administrative Agent has received any such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable or in the best interest of the Lenders.
Section 8.6 Credit Decision; Disclosure of Information by Administrative Agent. Each Lender acknowledges that no Agent Party has made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of the Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent Party to any Lender as to any matter, including whether Agent Parties have disclosed material information in their possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent, or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and its Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent, or any other Lender or any of their Related Parties and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Borrower or any of its Affiliates which may come into the possession of any Agent Party.
Section 8.7 Indemnification of Administrative Agent. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand each Agent Party (to the extent not reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), pro rata in accordance with their Commitment Percentages, and hold harmless each Agent Party from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Agent Party of any portion of such Indemnified Liabilities to the extent determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted from such Agent Partys own gross negligence or willful misconduct, provided, however, that no action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section; provided, further, that such indemnified liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement, as the case may be, was incurred by or asserted against such Agent Party acting for the Administrative Agent in connection with such capacity. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any reasonable and documented costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Credit Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this Section shall survive termination of the Aggregate Commitments, the payment of all other Obligations and the resignation of the Administrative Agent.
Section 8.8 Administrative Agent in its Individual Capacity. Wells Fargo and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Borrower and any of its Affiliates as though Wells Fargo were not the Administrative Agent hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Wells Fargo or its Affiliates may receive information regarding the Borrower or any of its Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Wells Fargo shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not the Administrative Agent, and the terms Lender and Lenders include Wells Fargo in its individual capacity.
Section 8.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 30 days notice to the Lenders and the Borrower. If the Administrative Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor administrative agent shall be consented to by the Borrower at all times other than during the existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term Administrative Agent shall mean such successor administrative agent, the retiring Administrative Agents appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agents resignation hereunder as Administrative Agent, the provisions of this Section 8 and Sections 9.4 and 9.5 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agents notice of resignation, the retiring Administrative Agents resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.
Any resignation by Wells Fargo as Administrative Agent pursuant to this Section shall also constitute its resignation as Swingline Lender. If Wells Fargo resigns as Swingline Lender, it shall retain all the rights of the Swingline Lender provided for hereunder with respect to Swingline Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to refund Swingline Loans on demand. Upon the appointment by the Borrower of a successor Swingline Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Swingline Lender and (b) the retiring Swingline Lender shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents.
Section 8.10 Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Borrower, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.7 and 9.4) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.7 and 9.4.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
Section 8.11 Other Agents; Arrangers and Managers. None of the Lenders or other Persons identified on the facing page or signature pages of this agreement as a syndication agent, co-syndication agent, documentation agent, co-documentation agent, co-agent, book manager, bookrunner, joint bookrunner, lead manager, arranger, lead arranger, joint lead arranger or co-arranger shall have any right, power, obligation, liability, responsibility or duty under this agreement other than, in the case of such Lenders, those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this agreement or in taking or not taking action hereunder.
SECTION 9 - MISCELLANEOUS.
Section 9.1 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Credit Document, and no consent to any departure by the Borrower therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.1(a) without the written consent of each Lender;
(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 7.2) without the written consent of such Lender;
(c) postpone any date fixed by this Agreement or any other Credit Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Credit Document without the written consent of each Lender directly affected thereby;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or (subject to clauses (ii) and (iii) of the second proviso to this Section 9.1) any fees or other amounts payable hereunder or under any other Credit Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary (x) to amend the definition of Default Rate or to waive, suspend or terminate any obligation of the Borrower to pay interest at the Default Rate or (y) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or to reduce any fee payable hereunder;
(e) change Section 2.11 in a manner that would alter the sharing of payments required thereby without the written consent of each Lender; or
(f) change any provision of this Section or the definition of Required Lenders or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;
Provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Credit Document, (ii) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto, (iii) any letter agreement between the Swingline Lender and the Borrower setting forth the Swingline Rate may be amended, or rights or privileges thereunder waived, in a writing executed only by the Borrower and the Swingline Lender and (iv) no amendment, waiver or consent shall, unless in writing and signed by the Swingline Lender in addition to the Lenders required above, affect the rights or duties of the Swingline Lender under this Agreement.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that no Commitment of such Lender may be increased or extended without the consent of such Lender.
Section 9.2 Notices and Other Communications; Facsimile Copies.
(a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed certified or registered mail, faxed or delivered by hand or by overnight courier service to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Borrower, the Administrative Agent or the Swingline Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 9.2 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower and the Administrative Agent.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).
(b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. The Administrative Agent, the Swingline Lender or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the senders receipt of an acknowledgement from the intended recipient (such as by the return receipt requested function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor or, in the case of the Administrative Agent (and any sub-agent thereof) and the Agent Parties only, the administration of this Agreement and the other Credit Documents.
(c) The Platform. SYNDTRAK OR ANOTHER SIMILAR ELECTRONIC SYSTEM (THE PLATFORM) IS PROVIDED AS IS AND AS AVAILABLE. THE AGENT PARTIES DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE MATERIALS AND/OR INFORMATION PROVIDED BY OR ON BEHALF OF THE BORROWER HEREUNDER (COLLECTIVELY, BORROWER MATERIALS) OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Agent Parties have any liability to the Borrower, any Lender, or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrowers or the Administrative Agents transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses result from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).
(d) Effectiveness of Facsimile Documents and Signatures. Credit Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding on the Borrower, the Administrative Agent and the Lenders. The Administrative Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof;
provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.
(e) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic Borrowing Notices) purportedly given by or on behalf of the Borrower even if
(i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.
The Borrower shall indemnify each Agent Party and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower, except to the extent any such losses, costs, expenses or liabilities resulted from the gross negligence or willful misconduct of such Person. All telephonic notices to and other communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
Section 9.3 No Waiver; Cumulative Remedies. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Section 9.4 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the Administrative Agent for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Credit Documents and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or reimburse the Administrative Agent and each Lender for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Credit Documents (including all such costs and expenses incurred during any workout or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include any search, filing, recording, title insurance and appraisal charges and fees and taxes related thereto and the cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. All amounts due under this Section 9.4 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the termination of the Aggregate Commitments and repayment of all other Obligations.
Section 9.5 Indemnification. The Borrower shall indemnify and hold harmless the Administrative Agent, each Lender and each Related Party of any of the foregoing Persons (collectively the Indemnitees) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any
kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Credit Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Credit Documents, (b) any Commitment or Loan or the use or proposed use of the proceeds therefrom or (c) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by the Borrower or any Subsidiary, or any Environmental Claim related in any way to the Borrower or any Subsidiary, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee is a party thereto (all the foregoing, collectively, the Indemnified Liabilities), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements (i) resulted from the gross negligence or willful misconduct of such Indemnitee or such Indemnitees breach in bad faith of its obligations hereunder or under any other Credit Document or (ii) are subject to reimbursement, indemnity or payment under another provision of this Agreement. The Borrower shall not have any reimbursement obligation in respect of any legal or other expenses (including Attorney Costs) incurred in connection with investigating or defending against any of the foregoing if the same is due to any event described in clause (i) of the final proviso of the immediately preceding sentence. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through SyndTrak or other similar information transmission systems in connection with this Agreement except to the extent such liabilities resulted from the gross negligence of or willful misconduct of such Indemnitee, nor shall any Indemnitee have any liability for any indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages) relating to this Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). All amounts due under this Section 9.5 shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the resignation of the Administrative Agent and the Swingline Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
Section 9.6 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Overnight Rate from time to time in effect.
Section 9.7 Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, and (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment (which for this purpose includes Loans outstanding thereunder and participations in Swingline Loans)); provided that any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning Lenders Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if Trade Date is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof; provided, further, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single assignee (or to an assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lenders rights and obligations under this Agreement with respect to the Loans or the Commitment assigned;
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided, that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of a Lender or an Approved Fund with respect to a Lender; and
(C) the consent of the Swingline Lender shall be required for any assignment.
(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 for each assignment; provided that (A) only one such fee will be payable in connection with simultaneous assignments to two or more related Approved Funds by a Lender and (B) the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons. No such assignment shall be made to (A) the Borrower or any of the Borrowers Subsidiaries or Affiliates or (B) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).
(vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person.
(vii) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested, but not funded by, the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (A) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent and each other Lender hereunder (and interest accrued thereon), and (B) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Swingline Loans in accordance with its Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this subsection, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lenders rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.1, 3.4, 3.5, 9.4 and 9.5 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lenders having been a Defaulting Lender. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agents Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the Register). The entries in the Register shall be conclusive absent demonstrable error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of the Borrowers Affiliates or Subsidiaries) (each, a Participant) in all or a portion of such Lenders rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lenders participations in Swingline Loans) owing to it); provided that (i) such Lenders obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lenders rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity and reimbursement obligations under Section 8.7 with respect to any payments made by such Lender to its Participant(s).
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 9.1 that affects such Participant. Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.1, 3.4 and 3.5 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.9 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.11 as though it were a Lender.
Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts of (and stated interest on) each Participants interest in the Loans or other obligations under the Credit Documents (the Participant Register); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participants interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent demonstrable error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e) Limitations Upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.1 or 3.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers prior written consent. A Participant that would be a Non-U.S. Lender if it were a Lender shall not be entitled to the benefits of Section 3.1 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.1(f) as though it were a Lender.
(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note(s), if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(g) Electronic Execution of Assignments. The words execution, signed, signature, and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
Section 9.8 Confidentiality. Each of the Administrative Agent and the Lenders agrees it will use its best efforts not to disclose and to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) is or becomes publicly available other than as a result of a breach of this Section or (y) is or becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For purposes of this Section, Information means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective business. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Each of the Administrative Agent and the Lenders acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.
Section 9.9 Set-off. In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to the Borrower, any such prior notice being waived by the Borrower to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the Borrower against any and all Obligations constituting a payment obligation owing to such Lender hereunder or under any other Credit Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any other Credit Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.12 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.
Section 9.10 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Credit Document, the interest paid or agreed to be paid to any Lender under the Credit Documents shall not exceed the maximum rate of non-usurious interest permitted for such Lender by applicable Law (the Maximum Rate). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
Section 9.11 Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., pdf or tif) format shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 9.12 Integration. This Agreement, together with the other Credit Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Credit Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Administrative Agent or the Lenders in any other Credit Document shall not be deemed a conflict with this Agreement. Each Credit Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.
Section 9.13 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Credit Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Borrowing, and shall continue in full force and effect with respect to the date as to which they were made as long as any Loan or any other Obligation constituting a payment obligation (other than contingent indemnity obligations) hereunder shall remain unpaid or unsatisfied.
Section 9.14 Severability. If any provision of this Agreement or the other Credit Documents is held to be illegal, invalid or unenforceable, (a) the enforceability of the remaining provisions of this Agreement and the other Credit Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 9.15 [Intentionally deleted.]
Section 9.16 Governing Law; Submission to Jurisdiction; Etc.
(a) Governing Law. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT (EXCEPT, AS TO ANY OTHER CREDIT DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) Submission to Jurisdiction. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO 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 COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION 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 OR IN ANY OTHER CREDIT DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) Waiver of Venue. Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Credit Document in any court referred to in subsection (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Service of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 9.2. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable Law.
Section 9.17 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY CREDIT DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY CREDIT DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 9.18 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby, the Borrower acknowledges and agrees that: (i) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arms-length commercial transaction between the Borrower, on the one hand, and the Administrative Agent and the Arrangers, on the other hand, and the Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Document (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, the Administrative Agent and each of the Arrangers is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person; (iii) neither the Administrative Agent nor any Arranger has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit Document (irrespective of whether the Administrative Agent or any Arranger has advised or is currently advising the Borrower or any of its Affiliates on other matters) and neither the Administrative Agent nor any Arranger has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Document; (iv) the Administrative Agent and each Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any Arranger has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) neither the Administrative Agent nor any Arranger has provided nor will provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Credit Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent and each Arranger with respect to any breach or alleged breach of agency or fiduciary duty.
Section 9.19 USA PATRIOT Act Notice. Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the PATRIOT Act), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the PATRIOT Act.
Section 9.20 Entire Agreement. This Agreement and the other Credit Documents represent the final agreement among the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers as of the day and year first above written.
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BORROWER: | |
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APTARGROUP, INC. | |
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By: |
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Name: | |
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Title: |
CREDIT AGREEMENT
Signature Page
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ADMINISTRATIVE AGENT: | |
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WELLS FARGO BANK, NATIONAL ASSOCIATION | |
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By: |
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Name: | |
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Title: |
CREDIT AGREEMENT
Signature Page
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LENDERS: | |
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WELLS FARGO BANK, NATIONAL ASSOCIATION | |
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By: |
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Title: |
CREDIT AGREEMENT
Signature Page
EXHIBIT A
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF BORROWING NOTICE
BORROWING NOTICE
Dated as of: , 20
Wells Fargo Bank, National Association,
as Administrative Agent
MAC D 1109-019
1525 West W.T. Harris Blvd.
Charlotte, North Carolina 28262
Attention: Syndication Agency Services
E-mail Address: agencyservices.requests@wellsfargo.com
Ladies and Gentlemen:
This Borrowing Notice is delivered to you pursuant to Section 2.2 of the Credit Agreement dated as of January 31, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), by and among AptarGroup, Inc., a Delaware corporation (the Borrower), the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
The Borrower hereby requests:
o A Borrowing of [Revolving][Swingline] Loans
o A conversion or continuation of [Base][LIBOR] Rate Loans
1. On (a Business Day).
2. In the amount of .
3. In the case of a Revolving Borrowing, [comprised of] [as] [Base Rate Loans] or [LIBOR Rate Loans].
4. In the case of a Borrowing of LIBOR Rate Loans, with an Interest Period of months.
The aggregate principal amount of all Loans outstanding as of the date hereof [(including the Loan(s) requested herein)] (1) does not exceed the maximum amount permitted to be outstanding pursuant to the terms of the Credit Agreement. [All of the conditions applicable to the Borrowing requested herein as set forth in the Credit Agreement have been satisfied as of the date hereof and will remain satisfied to the date of such Borrowing.](2)
[Signature Page Follows]
(1) Include bracketed sentence except in the case of a conversion or continuation of Loans.
(2) Include bracketed sentence except in the case of a conversion or continuation of Loans.
IN WITNESS WHEREOF, the undersigned has executed this Borrowing Notice as of the day and year first written above.
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APTARGROUP, INC. | |
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By: |
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EXHIBIT B
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF COMPLIANCE CERTIFICATE
COMPLIANCE CERTIFICATE
Statement Date: , 20
To: Wells Fargo Bank, National Association, as Administrative Agent
The undersigned, the [(1)] of AptarGroup, Inc., a Delaware corporation (the Borrower), hereby certifies to the Administrative Agent and the Lenders, each as defined in the Credit Agreement referred to below, as follows:
1. This Compliance Certificate is delivered to you pursuant to Section 6.6(b) of the Credit Agreement dated as of January 31, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), by and among the Borrower, the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
[Use following paragraph 2 for fiscal year-end financial statements]
2. Attached hereto as Schedule 1 (or otherwise available in the Borrowers public filings with the Securities and Exchange Commission) are the year-end audited financial statements required by Section 6.6(a)(ii) of the Credit Agreement for the fiscal year of the Borrower and its Subsidiaries ended as of the above date, together with the certification of an independent certified public accountant required by such section.
[Use following paragraph 2 for fiscal quarter-end financial statements]
2. Attached hereto as Schedule 1 (or otherwise available in the Borrowers public filings with the Securities and Exchange Commission) are the unaudited financial statements required by Section 6.6(a)(i) of the Credit Agreement for the fiscal quarter of the Borrower and its Subsidiaries ended as of the above date. Such consolidated financial statements fairly present the financial condition of the Borrower and its Subsidiaries (as applicable) as of their respective dates and the results of operations and changes in cash flows of the Borrower and its Subsidiaries for the respective periods then ended and have been prepared in accordance with the terms of the Credit Agreement, subject to normal year end audit adjustments.
3. I have reviewed the terms of the Credit Agreement and have made, or caused to be made under my supervision, a review in reasonable detail of the transactions and the condition of the Borrower and its Subsidiaries relevant to the delivery of this Compliance Certificate. To the best of my knowledge, [no Default or Event of Default occurred during the period covered by the financial statements referred to in paragraph 2 above.] or [the following is a list of each Default and Event of Default that occurred during the period covered by the financial statements referred to in paragraph 2 above, a description thereof and the action the Borrower has taken, if any, to remedy the same:]
4. Except as set forth below, the representations and warranties of the Borrower set forth in Section 5 of the Credit Agreement are true and correct in all material respects on and as of the date hereof, with the same effect as though such representations and warranties had been made on and as of
(1) This Compliance Certificate should be signed by the Executive Vice President or Vice President-Treasurer of the Borrower.
each such date, except that (a) if a qualifier relating to materiality or Material Adverse Effect applies, then such representation or warranty is true and correct in all respects, (b) if such representation or warranty specifically refers to an earlier date, then such representation or warranty is true and correct in all material respects as of such earlier date (except that if a qualifier relating to materiality or Material Adverse Effect applies, then such representation or warranty is true and correct in all respects as of such earlier date), and (c) for purposes of this Compliance Certificate, the representations and warranties contained in Section 5.9 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a)(i) and (ii), respectively, of Section 6.6 of the Credit Agreement, including the statements in connection with which this Compliance Certificate is delivered:
[ ](2)
5. The financial covenant analyses and information set forth on Schedule 2 attached hereto are true and accurate on and as of the date of this Compliance Certificate.
6 [Schedule 5.1 of the Credit Agreement contains a true and complete list of all Subsidiaries of the Borrower as of the date of this Compliance Certificate.] or [Attached hereto is an updated Schedule 5.1 to the Credit Agreement which contains a true and complete list of all Subsidiaries of the Borrower as of the date of this Compliance Certificate.]
IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as of , .
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APTARGROUP, INC. | |
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By: |
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(2) Include description of any representations and warranties that are not true and correct as of the date hereof.
Schedule 1
to
Compliance Certificate
[See attached.]
Schedule 2
to
Compliance Certificate
($ in 000s)
Statement Date: , 20
The Applicable Rate is to be calculated at Pricing Level .
Pricing Level |
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Consolidated Leverage Ratio |
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1 |
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Less than or equal to 15% |
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2 |
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Less than or equal to 25% but greater than 15% |
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3 |
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Less than or equal to 35% but greater than 25% |
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4 |
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Less than or equal to 45% but greater than 35% |
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5 |
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Greater than 45% |
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II. |
Section 6.14(c) Other Debt: |
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A. |
Debt of Subsidiaries of the Borrower (excluding Debt owing to the Borrower or other Subsidiaries of the Borrower) as of the Statement Date: |
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$ |
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B. |
Consolidated Net Worth as of the Statement Date: |
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$ |
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Subsidiary Debt to Consolidated Net Worth Ratio = A ÷ B: |
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to 1.00 ( %) | |
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Maximum permitted Subsidiary Debt to Consolidated Net Worth Ratio is: |
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0.30 to 1.00 (30%) |
III. Section 6.15(k) Other Investments, Etc.:
A. |
Purchases, advances, loans and investments with respect to Persons who are not (or as a result of such investment do not become) a Subsidiary as of the Statement Date (other than those permitted under clauses (a) through (j) of Section 6.15): |
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$ |
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B. |
Consolidated Net Worth as of the Statement Date: |
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$ |
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Non-Subsidiary Investments to Consolidated Net Worth Ratio = A ÷ B: |
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to 1.00 ( %) | |
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Maximum permitted Non-Subsidiary Investments to Consolidated Net Worth Ratio is: |
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0.125 to 1.00 (12.5%) |
EXHIBIT C
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the Assignment and Assumption) is dated as of the Effective Date set forth below and is entered into by and between [INSERT NAME OF ASSIGNOR] (the Assignor) and [the] [each](1) Assignee identified on the Schedules hereto as Assignee or as Assignees (collectively, the Assignees and each an Assignee). [It is understood and agreed that the rights and obligations of the Assignees hereunder are several and not joint.](2) Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the Credit Agreement), receipt of a copy of which is hereby acknowledged by [the] [each] Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to [the Assignee] [the respective Assignees], and [the] [each] Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignors rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including without limitation any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned to [the] [any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as, [the] [an] Assigned Interest). Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
1. |
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Assignor: |
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[INSERT NAME OF ASSIGNOR] |
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2. |
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Assignee(s): |
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See Schedules attached hereto |
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3. |
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Borrower: |
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AptarGroup, Inc. |
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4. |
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Administrative Agent: |
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Wells Fargo Bank, National Association, as the administrative agent under the Credit Agreement |
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5. |
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Credit Agreement: |
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The Credit Agreement dated as of January 31, 2012, among AptarGroup, Inc., as Borrower, the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National |
(1) For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.
(2) Include bracketed language if there are multiple Assignees.
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Association, as Administrative Agent (as amended, restated, supplemented or otherwise modified) |
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6. |
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Assigned Interest: |
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See Schedules attached hereto |
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[7. |
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Trade Date: |
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](3) |
[Remainder of Page Intentionally Left Blank]
(3) To be completed if the Assignor and the Assignees intend that the minimum assignment amount is to be determined as of the Trade Date.
Effective Date: , 2 [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR]
The terms set forth in this Assignment and Assumption are hereby agreed to:
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ASSIGNOR | |
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[NAME OF ASSIGNOR] | |
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By: |
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Title: |
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ASSIGNEES | |
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See Schedules attached hereto |
[Consented to and](4) Accepted: |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, |
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By |
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Title: |
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[Consented to:](5) |
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[APTARGROUP, INC.] |
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By |
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Title: |
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Consented to: |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, |
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Title: |
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(4) To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. May also use a Master Consent.
(5) To be added only if the consent of the Borrower is required by the terms of the Credit Agreement. May also use a Master Consent.
SCHEDULE 1
To Assignment and Assumption
By its execution of this Schedule, the Assignee identified on the signature block below agrees to the terms set forth in the attached Assignment and Assumption.
Assigned Interests:
Aggregate Amount |
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Amount of |
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Percentage |
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CUSIP Number |
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$ |
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$ |
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% |
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$ |
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$ |
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% |
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$ |
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$ |
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% |
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[NAME OF ASSIGNEE](4) | |
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[and is an Affiliate/Approved Fund of [identify Lender](5)] | |
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By: |
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Title: |
(1) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
(2) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
(3) Set forth, to at least 12 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.
(4) Add additional signature blocks, as needed.
(5) Select as appropriate.
ANNEX 1
to Assignment and Assumption
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Credit Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Credit Document.
1.2. Assignee[s]. [The] [Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 9.7(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.7 (b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the] [the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.6 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the] [such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent, or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the] [such] Assigned Interest, and (vii) if it is a Non-U.S. Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, [the] [any] the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Documents are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the] [each] Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to [the] [the relevant] Assignee for amounts which have accrued from and after the Effective Date.
3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
EXHIBIT D
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF NOTE
NOTE
, 20
FOR VALUE RECEIVED, the undersigned, APTARGROUP, INC., a Delaware corporation (the Borrower), promises to pay to (the Lender) or its registered assigns, at the place and times provided in the Credit Agreement referred to below, the unpaid principal amount of each Loan made by the Lender from time to time pursuant to that certain Credit Agreement, dated as of January 31, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), by and among the Borrower, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agents Office. Any amounts not paid in full when due hereunder shall bear interest and be paid as set forth in the Agreement.
This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.
The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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APTARGROUP, INC. | |
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EXHIBIT E
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF NOTICE OF ACCOUNT DESIGNATION
NOTICE OF ACCOUNT DESIGNATION
Dated as of: , 20
Wells Fargo Bank, National Association,
as Administrative Agent
MAC D 1109-019
1525 West W.T. Harris Blvd.
Charlotte, North Carolina 28262
Attention: Syndication Agency Services
E-mail Address: agencyservices.requests@wellsfargo.com
Ladies and Gentlemen:
This Notice of Account Designation is delivered to you pursuant to Section 2.2(b) of the Credit Agreement dated as of January 31, 2012 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), by and among AptarGroup, Inc., a Delaware corporation (the Borrower), the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
1. The Administrative Agent is hereby authorized to disburse all Loan proceeds into the following account(s):
ABA Routing Number:
Account Number:
2. This authorization shall remain in effect until revoked or until a subsequent Notice of Account Designation is provided to the Administrative Agent.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Account Designation as of the day and year first written above.
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APTARGROUP, INC. | |
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By: |
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Name: |
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Title: |
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EXHIBIT F-1
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF U.S. TAX COMPLIANCE CERTIFICATE (NON-PARTNERSHIP FOREIGN LENDERS)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of January 31, 2012 (the Credit Agreement), by and among AptarGroup, Inc., a Delaware corporation (the Borrower), the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
Pursuant to the provisions of Section 3.1 of the Credit Agreement, the undersigned hereby certifies that (a) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (b) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (c) it is not a ten percent (10%) shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (d) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (a) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (b) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.
[NAME OF LENDER] |
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By: |
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Name: |
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Title: |
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Date: , 20 |
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EXHIBIT F-2
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF U.S. TAX COMPLIANCE CERTIFICATE (NON-PARTNERSHIP FOREIGN PARTICIPANTS)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of January 31, 2012 (the Credit Agreement), by and among AptarGroup, Inc., a Delaware corporation (the Borrower), the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
Pursuant to the provisions of Section 3.1 of the Credit Agreement, the undersigned hereby certifies that (a) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (b) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (c) it is not a ten percent (10%) shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (d) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (a) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (b) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.
[NAME OF PARTICIPANT] |
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By: |
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Name: |
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Title: |
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Date: , 20 |
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EXHIBIT F-3
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN PARTICIPANT PARTNERSHIPS)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of January 31, 2012 (the Credit Agreement), by and among AptarGroup, Inc., a Delaware corporation (the Borrower), the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
Pursuant to the provisions of Section 3.1 of the Credit Agreement, the undersigned hereby certifies that (a) it is the sole record owner of the participation in respect of which it is providing this certificate, (b) its direct or indirect partners/members are the sole beneficial owners of such participation, (c) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (d) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (e) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (a) an IRS Form W-8BEN or (b) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partners/members beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (i) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (ii) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.
[NAME OF PARTICIPANT] |
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By: |
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Name: |
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Title: |
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Date: , 20 |
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EXHIBIT F-4
to
Credit Agreement
dated as of January 31, 2012
by and among
AptarGroup, Inc.,
as Borrower,
the Lenders referred to therein,
as Lenders,
and
Wells Fargo Bank, National Association,
as Administrative Agent
FORM OF U.S. TAX COMPLIANCE CERTIFICATE (FOREIGN LENDER PARTNERSHIPS)
U.S. TAX COMPLIANCE CERTIFICATE
(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Reference is hereby made to the Credit Agreement dated as of January 31, 2012 (the Credit Agreement), by and among AptarGroup, Inc., a Delaware corporation (the Borrower), the lenders from time to time party thereto, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement.
Pursuant to the provisions of Section 5.11 of the Credit Agreement, the undersigned hereby certifies that (a) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (b) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (c) with respect to the extension of credit pursuant to this Credit Agreement or any other Credit Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (d) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (e) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (a) an IRS Form W-8BEN or (b) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partners/members beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (i) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (ii) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.
[NAME OF LENDER] |
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By: |
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Name: |
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Title: |
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Date: , 20 |
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SCHEDULE 2.1
COMMITMENTS AND COMMITMENT PERCENTAGES
Lender |
|
Commitment |
|
Commitment |
| |
Wells Fargo Bank, National Association |
|
$ |
55,000,000.00 |
|
18.333333333333 |
% |
Bank of America, N.A. |
|
$ |
55,000,000.00 |
|
18.333333333333 |
% |
JPMorgan Chase Bank, N.A. |
|
$ |
55,000,000.00 |
|
18.333333333333 |
% |
HSBC Bank USA, N.A. |
|
$ |
37,500,000.00 |
|
12.500000000000 |
% |
Union Bank, N.A. |
|
$ |
37,500,000.00 |
|
12.500000000000 |
% |
The Northern Trust Company |
|
$ |
25,000,000.00 |
|
8.333333333333 |
% |
Deutsche Bank AG New York Branch |
|
$ |
20,000,000.00 |
|
6.666666666667 |
% |
Mega International Commercial Bank Co., Ltd. |
|
$ |
10,000,000.00 |
|
3.333333333333 |
% |
The Chiba Bank, Ltd., New York Branch |
|
$ |
5,000,000.00 |
|
1.666666666667 |
% |
Total |
|
$ |
300,000,000.00 |
|
100.00000000000 |
% |
SCHEDULE 5.1
SUBSIDIARIES
|
|
State or Other |
|
|
|
|
|
Jurisdiction of |
|
Percentage |
|
|
|
Incorporation |
|
Owned |
|
|
|
|
|
|
|
AptarGroup International L.L.C. |
|
Delaware |
|
100 |
% |
AptarGroup International Holding B.V. |
|
Netherlands |
|
100 |
% |
AptarGroup Holding S.A.S. |
|
France |
|
100 |
% |
Aptar GmbH |
|
Germany |
|
100 |
% |
Desotec GmbH |
|
Germany |
|
23.5 |
% |
Ing. Erich Pfeiffer GmbH |
|
Germany |
|
100 |
% |
Aptar Pharma Japan Ltd. |
|
Japan |
|
100 |
% |
P&P Promotion of German Manufacturing Technologies GmbH |
|
Germany |
|
100 |
% |
Seaquist Closures Spain, S.A. |
|
Spain |
|
100 |
% |
Seaquist Closures Löeffler GmbH |
|
Germany |
|
100 |
% |
Seaquist Closures Löeffler s.r.o. |
|
Czech Republic |
|
100 |
% |
SeaquistPerfect Dispensing GmbH |
|
Germany |
|
100 |
% |
Valois Deutschland GmbH |
|
Germany |
|
100 |
% |
SeaquistPerfect Plastic GmbH |
|
Germany |
|
100 |
% |
AptarGroup S.A.S. |
|
France |
|
100 |
% |
SeaquistPerfect Dispensing S.A.S. |
|
France |
|
100 |
% |
Aptar South Europe SARL |
|
France |
|
100 |
% |
Novares S.p.A. |
|
Italy |
|
100 |
% |
EMSAR S.p.A. |
|
Italy |
|
100 |
% |
Aptar Milano S.r.l. |
|
Italy |
|
100 |
% |
Seaquist Closures France S.A.S. |
|
France |
|
100 |
% |
Graphocolor S.A.S. |
|
France |
|
100 |
% |
Aptar U.K. Ltd. |
|
United Kingdom |
|
100 |
% |
Valois U.K. Limited |
|
United Kingdom |
|
100 |
% |
SeaquistPerfect Dispensing Limited |
|
United Kingdom |
|
100 |
% |
Seaquist Closures, Ltd. |
|
United Kingdom |
|
100 |
% |
EMSAR UK Ltd. |
|
United Kingdom |
|
100 |
% |
Oval Medical Technologies Limited |
|
United Kingdom |
|
20 |
% |
GIE Aptar Louveciennes |
|
France |
|
100 |
% |
Valois S.A.S. |
|
France |
|
100 |
% |
Airlessystems S.A.S. |
|
France |
|
100 |
% |
Aptar Beauty + Home S.A.S. |
|
France |
|
100 |
% |
Pfeiffer Vaporisateurs France S.A.S. |
|
France |
|
100 |
% |
EMSAR France S.A.S. |
|
France |
|
100 |
% |
Valois Dispray S.A. |
|
Switzerland |
|
100 |
% |
Valois España S.A. |
|
Spain |
|
100 |
% |
Valois (Ireland) Limited |
|
Ireland |
|
100 |
% |
OOO Seaquist Closures |
|
Russia |
|
100 |
% |
Aptar Suzhou Dispensing Systems Co., Ltd. |
|
China |
|
100 |
% |
MBF Developpement S.A.S. |
|
France |
|
100 |
% |
MBF Plastiques S.A.S. |
|
France |
|
100 |
% |
EP Systems S.A. |
|
Switzerland |
|
100 |
% |
Aptar Beauty + Home India Private Ltd |
|
India |
|
100 |
% |
TKH Plastics Private Limited |
|
India |
|
100 |
% |
Dispensing Two S.A.S. |
|
France |
|
100 |
% |
Dispensing Three S.A.S. |
|
France |
|
100 |
% |
Asia Pacific Inspection Center (Suzhou) Co., Ltd. |
|
China |
|
55 |
% |
Aptar B&H Embalagens Ltda. |
|
Brazil |
|
100 |
% |
Graphocolor do Brasil Embalagens Ltda. |
|
Brazil |
|
100 |
% |
MBF Embalagens Ltda. |
|
Brazil |
|
100 |
% |
Aptar B&H S.A. |
|
Argentina |
|
100 |
% |
H. Engelmann S.A.I.C.F. el |
|
Argentina |
|
100 |
% |
|
|
State or Other |
|
|
|
|
|
Jurisdiction of |
|
Percentage |
|
|
|
Incorporation |
|
Owned |
|
|
|
|
|
|
|
Seaquist Canada Ltd. |
|
Canada |
|
100 |
% |
PT. Aptar B&H |
|
Indonesia |
|
100 |
% |
Aptar (Thailand) Ltd. |
|
Thailand |
|
100 |
% |
AIGE LLC |
|
Delaware |
|
100 |
% |
Aptar Pharma India Private Limited |
|
India |
|
100 |
% |
Next Breath L.L.C. |
|
Maryland |
|
70 |
% |
Philson, Inc. |
|
Connecticut |
|
100 |
% |
Aptar Queretaro S.A. de C.V. |
|
Mexico |
|
100 |
% |
SCHEDULE 9.2
ADMINISTRATIVE AGENTS OFFICE; CERTAIN ADDRESSES FOR NOTICES
Borrower:
AptarGroup, Inc.
475 West Terra Cotta, Suite E
Crystal Lake, IL 60014-9695
Attention of: Jim Meyer
Telephone No.: 815-261-3220
Facsimile No.: 815-477-0481
E-mail: jim.meyer@aptar.com
Administrative Agent and Swingline Lender:
Wells Fargo Bank, National Association
MAC D1109-019
1525 West W.T. Harris Blvd.
Charlotte, NC 28262
Attention of: Syndication Agency Services
E-mail Address: agencyservices.requests@wellsfargo.com
With copies to:
Wells Fargo Bank, National Association
One South Broad Street, 8th Floor
Philadelphia, PA 19107
Attention of: Beth Rue
Telephone No.: 267-321-6619
Facsimile No.: 267-321-6700
Email: beth.rue@wellsfargo.com
Exhibit 21
APTARGROUP, INC.
LIST OF SUBSIDIARIES
|
|
State or Other |
|
|
|
|
|
Jurisdiction of |
|
Percentage |
|
|
|
Incorporation |
|
Owned |
|
|
|
|
|
|
|
AptarGroup International L.L.C. |
|
Delaware |
|
100 |
% |
AptarGroup International Holding B.V. |
|
Netherlands |
|
100 |
% |
AptarGroup Holding S.A.S. |
|
France |
|
100 |
% |
Aptargroup Holding GmbH |
|
Germany |
|
100 |
% |
Desotec GmbH |
|
Germany |
|
23.5 |
% |
Aptar Radolfzell GmbH |
|
Germany |
|
100 |
% |
Aptar Pharma Japan Ltd. |
|
Japan |
|
100 |
% |
P&P Promotion of German Manufacturing Technologies GmbH |
|
Germany |
|
100 |
% |
Seaquist Closures Spain, S.A. |
|
Spain |
|
100 |
% |
Aptar Freyung GmbH |
|
Germany |
|
100 |
% |
Seaquist Closures Löeffler s.r.o. |
|
Czech Republic |
|
100 |
% |
Aptar Dortmund GmbH |
|
Germany |
|
100 |
% |
Aptar Menden GmbH |
|
Germany |
|
100 |
% |
AptarGroup S.A.S. |
|
France |
|
100 |
% |
Aptar South Europe SARL |
|
France |
|
100 |
% |
Novares S.p.A. |
|
Italy |
|
100 |
% |
EMSAR S.p.A. |
|
Italy |
|
100 |
% |
Aptar Milano S.r.l. |
|
Italy |
|
100 |
% |
Seaquist Closures France S.A.S. |
|
France |
|
100 |
% |
Graphocolor S.A.S. |
|
France |
|
100 |
% |
Rumpler Technologies SA |
|
France |
|
100 |
% |
Somegi SARL |
|
France |
|
100 |
% |
Stelmi SA |
|
France |
|
100 |
% |
American Stelmi Corporation |
|
Delaware |
|
100 |
% |
Aptar UK Ltd. |
|
United Kingdom |
|
100 |
% |
Valois U.K. Limited |
|
United Kingdom |
|
100 |
% |
Seaquist Perfect Dispensing Limited |
|
United Kingdom |
|
100 |
% |
Seaquist Closures, Ltd. |
|
United Kingdom |
|
100 |
% |
EMSAR UK Ltd. |
|
United Kingdom |
|
100 |
% |
Oval Medical Technologies Limited |
|
United Kingdom |
|
22 |
% |
Aptar France S.A.S. |
|
France |
|
100 |
% |
Aptar Mezzovico S.A. |
|
Switzerland |
|
100 |
% |
Valois España S.A. |
|
Spain |
|
100 |
% |
Valois (Ireland) Limited |
|
Ireland |
|
100 |
% |
OOO Seaquist Closures |
|
Russia |
|
100 |
% |
Aptar Suzhou Dispensing Systems Co. Ltd. |
|
China |
|
100 |
% |
MBF Developpement S.A.S. |
|
France |
|
100 |
% |
MBF Plastiques S.A.S. |
|
France |
|
100 |
% |
EP Systems S.A. |
|
Switzerland |
|
100 |
% |
Aptar Beauty + Home India Private Ltd. |
|
India |
|
100 |
% |
Dispensing Two S.A.S. |
|
France |
|
100 |
% |
Dispensing Three S.A.S. |
|
France |
|
100 |
% |
Dispensing Four S.A.S. |
|
France |
|
100 |
% |
GIE Aptar Louveciennes |
|
France |
|
100 |
% |
Asia Pacific Inspection Center (Suzhou) Co., Ltd. |
|
China |
|
55 |
% |
Aptar B&H Embalagens Ltda. |
|
Brazil |
|
100 |
% |
Graphocolor do Brasil Embalagens Ltda. |
|
Brazil |
|
100 |
% |
MBF Embalagens Ltda. |
|
Brazil |
|
100 |
% |
Aptar B&H S.A. |
|
Argentina |
|
100 |
% |
H. Engelmann S.A.I.C.F. el |
|
Argentina |
|
100 |
% |
Seaquist Canada Ltd. |
|
Canada |
|
100 |
% |
PT. Aptar B&H |
|
Indonesia |
|
100 |
% |
Aptar (Thailand) Ltd. |
|
Thailand |
|
100 |
% |
|
|
State or Other |
|
|
|
|
|
Jurisdiction of |
|
Percentage |
|
|
|
Incorporation |
|
Owned |
|
|
|
|
|
|
|
AIGE LLC |
|
Delaware |
|
100 |
% |
Aptar Pharma India Private Limited |
|
India |
|
100 |
% |
Next Breath L.L.C. |
|
Maryland |
|
70 |
% |
Philson, Inc. |
|
Connecticut |
|
100 |
% |
Aptar Queretaro S.A. de C.V. |
|
Mexico |
|
100 |
% |
EXHIBIT 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (333-40326, 333-115872, 333-152525, 333-156761 and 333-174549) of AptarGroup, Inc. of our report dated February 27, 2013, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PRICEWATERHOUSECOOPERS LLP |
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PricewaterhouseCoopers LLP |
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Chicago, Illinois |
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February 28, 2013 |
|
Exhibit 31.1
CERTIFICATION
I, Stephen J. Hagge, certify that:
1. I have reviewed this annual report on Form 10-K of AptarGroup, Inc,;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a15(f) and 15d15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors:
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
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Date: |
February 28, 2013 |
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| |
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By: |
/s/ STEPHEN J. HAGGE |
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Stephen J. Hagge |
|
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President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Robert W. Kuhn, certify that:
1. I have reviewed this annual report on Form 10-K of AptarGroup, Inc,;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a15(f) and 15d15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors:
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
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Date: |
February 28, 2013 |
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By: |
/s/ ROBERT W. KUHN |
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Robert W. Kuhn |
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Executive Vice President, |
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Chief Financial Officer and Secretary |
Exhibit 32.1
CERTIFICATE PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Stephen J. Hagge, the president and chief executive officer of AptarGroup, Inc., certify that (i) the Annual Report on Form 10-K of AptarGroup, Inc. for the year ended December 31, 2012 (the Form 10-K) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of AptarGroup, Inc.
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/s/ Stephen J. Hagge |
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Stephen J. Hagge |
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President and Chief Executive Officer |
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February 28, 2013 |
Exhibit 32.2
Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
I, Robert W. Kuhn, executive vice president and chief financial officer of AptarGroup, Inc., certify that (i) the Annual Report on Form 10-K of AptarGroup, Inc. for the year ended December 31, 2012 (the Form 10-K) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of AptarGroup, Inc.
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By: |
/s/ Robert W. Kuhn |
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Robert W. Kuhn |
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Executive Vice President, |
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Chief Financial Officer and Secretary |
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February 28, 2013 |
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