Term Loan And Security Agreement

EXHIBIT 10.15


TERM LOAN AND SECURITY AGREEMENT


by and among


CPG INTERNATIONAL I INC.

SCRANTON PRODUCTS INC.

AZEK BUILDING PRODUCTS, INC.

PROCELL DECKING INC.

as Borrowers


CPG INTERNATIONAL INC.

SANTANA PRODUCTS INC.

CPG SUB I CORPORATION

VYCOM CORP.

SANATEC SUB I CORPORATION

as Guarantors


THE LENDERS FROM TIME TO TIME PARTY HERETO


WACHOVIA BANK, NATIONAL ASSOCIATION

as Administrative Agent


WACHOVIA CAPITAL MARKETS, LLC

as Lead Arranger and Lead Bookrunner


Dated: February 29, 2008


TABLE OF CONTENTS


SECTION 1. DEFINITIONS

1

SECTION 2. CREDIT FACILITIES

38


2.1 Loans

38


2.2 Prepayments

39


2.3 Joint and Several Liability of Borrowers

41

SECTION 3. INTEREST AND FEES

44


3.1 Interest

44


3.2 Fees

45


3.3 Inability to Determine Applicable Interest Rate

45


3.4 Illegality

45


3.5 Increased Costs

46


3.6 Capital Requirements

46


3.7 Certificates for Reimbursement

46


3.8 Delay in Requests

46


3.9 Mitigation; Replacement of Lenders

47


3.10 Funding Losses

47


3.11 Maximum Interest

48


3.12 No Requirement of Match Funding

48

SECTION 4. CONDITIONS PRECEDENT

48


4.1 Conditions Precedent to Effectiveness of Agreement to Make the Loans

48

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

54


5.1 Grant of Security Interest

54


5.2 Exclusions from Collateral

56


5.3 Perfection of Security Interests

56


5.4 Control Collateral Held by Control Agent.

60


5.5 Intercreditor Provisions.

60

SECTION 6. COLLECTION AND ADMINISTRATION

60


6.1 Borrowers' Loan Accounts

60


6.2 [Reserved]

60


6.3 Lenders' Evidence of Debt

60


6.4 Register

61


6.5 [Reserved]

61


6.6 [Reserved]

61


6.7 Payments

61


6.8 Taxes

62


6.9 [Reserved]

65


6.10 Appointment of Borrower Agent as Agent for Requesting Loans and Receipts of Loans and Statements

65


6.11 Pro Rata Treatment

66


6.12 Sharing of Payments, Etc

66


6.13 [Reserved]

67


6.14 Obligations Several; Independent Nature of Lenders' Rights

67

SECTION 7. COLLATERAL REPORTING AND COVENANTS

67


7.1 Collateral Reporting.

67


i


7.2 Accounts Covenants

67


7.3 Inventory Covenants

68


7.4 Equipment and Real Property

69


7.5 Power of Attorney

70


7.6 Right to Cure

70


7.7 Access to Premises

70

SECTION 8. REPRESENTATIONS AND WARRANTIES

71


8.1 Existence, Power and Authority

71


8.2 Name; State of Organization; Chief Executive Office; Collateral Locations

71


8.3 Financial Statements; No Material Adverse Effect

72


8.4 Priority of Liens; Title to Properties

72


8.5 Tax Returns

72


8.6 Litigation

73


8.7 Compliance with Other Agreements and Applicable Laws

73


8.8 Environmental Compliance

73


8.9 Employee Benefits

74


8.10 Bank Accounts

75


8.11 Intellectual Property

75


8.12 Subsidiaries; Affiliates; Capitalization; Solvency

76


8.13 Labor Disputes

76


8.14 Restrictions on Subsidiaries

77


8.15 Material Contracts

77


8.16 Payable Practices

77


8.17 OFAC

77


8.18 Accuracy and Completeness of Information

77


8.19 Survival of Warranties; Cumulative

78


8.20 Compliance with FCPA

78


8.21 Anti-Terrorism Laws.

78


8.22 Regulation H

78


8.23 Insurance.

78


8.24 Brokers' Fees.

78


8.25 Use of Proceeds.

78


8.26 Margin Regulations.

79


8.27 Investment Company Act; etc.

79


8.28 Consummation of Acquisition.

79

SECTION 9. AFFIRMATIVE COVENANTS

79


9.1 Maintenance of Existence

79


9.2 New Collateral Locations

80


9.3 Compliance with Laws, Regulations, Etc

80


9.4 Payment of Taxes and Claims

81


9.5 Insurance

82


9.6 Financial Statements and Other Information

82


9.7 Compliance with ERISA

87


9.8 End of Fiscal Years; Fiscal Quarters

87


9.9 License Agreements

87


9.10 Additional Guaranties and Collateral Security; Further Assurances

88


ii


9.11 Costs and Expenses

89


9.12 Collateral Access Agreements.

90


9.13 After Acquired Real Property.

90


9.14 Delivery of Reports.

90


9.15 Post-Closing Covenant.

90

SECTION 10. NEGATIVE COVENANTS

91


10.1 Sale of Assets, Consolidation, Merger, Dissolution, Etc

91


10.2 Encumbrances

93


10.3 Indebtedness

93


10.4 Investments

97


10.5 Restricted Payments

98


10.6 Transactions with Affiliates

101


10.7 Change in Business

102


10.8 Limitation of Restrictions Affecting Subsidiaries

102


10.9 Certain Payments of Indebtedness, Etc

103


10.10 Modifications of Indebtedness, Organizational Documents and Certain Other Agreements

104


10.11 Inactive Subsidiaries; Parent Holding Company

104


10.12 Sale and Leasebacks

105


10.13 Designation of Designated Senior Debt

105


10.14 Foreign Assets Control Regulations, Etc

105

SECTION 11. FINANCIAL COVENANT

106


11.1 Maximum Senior Secured Leverage Ratio

106

SECTION 12. EVENTS OF DEFAULT AND REMEDIES

106


12.1 Events of Default

106


12.2 Remedies

108

SECTION 13. JURY TRIAL WAIVER; OTHER WAIVERS CONSENTS; GOVERNING LAW

111


13.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver

111


13.2 Waiver of Notices

112


13.3 Amendments and Waivers

113


13.4 Waiver of Counterclaims

115


13.5 Indemnification

116

SECTION 14. THE AGENT

116


14.1 Appointment, Powers and Immunities

116


14.2 Reliance by Agent

117


14.3 Events of Default

117


14.4 Wachovia in Its Individual Capacity

118


14.5 Indemnification

118


14.6 Non-Reliance on Agent and Other Lenders

118


14.7 Failure to Act

119


14.8 [Reserved]

119


14.9 Concerning the Collateral and the Related Financing Agreements

119


14.10 [Reserved]

119


14.11 Collateral Matters

119


14.12 Agency for Perfection

121


iii


14.13 Agent May File Proofs of Claim

121


14.14 Successor Agent

122


14.15 Legal Representation of Agent

122


14.16 Other Agent Designations

122


14.17 Intercreditor Agreement.

123

SECTION 15. TERM OF AGREEMENT; MISCELLANEOUS

123


15.1 Term

123


15.2 Interpretative Provisions

124


15.3 Notices

126


15.4 Partial Invalidity

127


15.5 Confidentiality

127


15.6 Successors

128


15.7 Assignments; Participations

129


15.8 Entire Agreement

132


15.9 USA Patriot Act

132


15.10 No Advisory or Fiduciary Responsibility

132


15.11 Counterparts, Etc

133


iv


INDEX

TO

EXHIBITS AND SCHEDULES


Exhibit A

Form of Assignment and Acceptance

Exhibit B

Form of Patriot Act Certificate

Exhibit C

Information Certificate

Exhibit D

Form of Compliance Certificate

Exhibit E

Commitment Percentages

Exhibit F

Form of Officer' s Certificate

Schedule 1.35

Historical EBITDA


v


TERM LOAN AND SECURITY AGREEMENT


This Term Loan and Security Agreement (" Agreement" ) dated February 29, 2008 is entered into by and among CPG International I Inc., a Delaware corporation (" CPG I" ), Scranton Products, Inc., a Delaware corporation (" Scranton" ), AZEK Building Products, Inc., a Delaware corporation (" AZEK" ), Procell Decking Inc., a Delaware corporation (" Procell" , and together with CPG I, Scranton and AZEK, and any Subsidiaries that may become parties hereto after the date hereof as borrowers, each individually a " Borrower" and collectively, " Borrowers" as hereinafter defined), CPG International Inc., a Delaware corporation (" Parent" ), Santana Products Inc., a Delaware corporation (" Santana" ), CPG Sub I Corporation, a Delaware Corporation (" Sub I" ), Vycom Corp., a Delaware corporation (" Vycom" ) and Sanatec Sub I Corporation, a Delaware corporation (" Sanatec" , and together with Parent, Santana, Sub I, Vycom, and any Subsidiaries that are not Foreign Subsidiaries that may become parties hereto after the date hereof as guarantors, each individually a " Guarantor" and collectively " Guarantors" as hereinafter defined), the parties hereto from time to time as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a " Lender" and collectively, " Lenders" as hereinafter further defined), Wachovia Bank, National Association, a national banking association, in its capacity as agent for Lenders (in such capacity, " Agent" as hereinafter further defined).


W I T N E S S E T H :


WHEREAS, Borrowers and Guarantors have requested that Lenders provide a term loan to Borrowers and each Lender is willing to (severally and not jointly) make such term loan and provide such financial accommodations to Borrowers on a pro rata basis according to its Commitment Percentage (as defined below) on the terms and conditions set forth herein and in the other Financing Agreements (as defined below), and Agent is willing to act as agent for Lenders on the terms and conditions set forth herein and the other Financing Agreements;


NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:


SECTION 1.


DEFINITIONS


For purposes of this Agreement, the following terms shall have the respective meanings given to them below:


1.1 " ABL Agent" shall mean Wachovia, in its capacity as Agent under the ABL Credit Agreement and the other ABL Financing Agreements.


1.2 " ABL Credit Agreement" shall mean that certain Loan and Security Agreement dated as of February 13, 2008 as amended by that certain Amendment No. 1 dated as of the date hereof, by and among the Borrowers party thereto, the Guarantors party thereto, the ABL Lenders and the ABL Agent pursuant to which the ABL Lenders have agreed to provide revolving credit facilities to the Borrowers party thereto, as in effect on the date hereof and as amended or otherwise


1


modified from time to time in accordance with the terms of this Agreement and the Intercreditor Agreement.


1.3 " ABL Financing Agreements" shall have the meaning specified for the term " Financing Agreements" in the ABL Credit Agreement, each as in effect on the date hereof and as amended or otherwise modified from time to time in accordance with the terms of this Agreement.


1.4 " ABL Lenders" shall mean those certain lenders and other financial institutions from time to time party to the ABL Credit Agreement.


1.5 " ABL Obligations" shall have the meaning specified for the term " Obligations" in the ABL Credit Agreement.


1.6 " ABL Priority Collateral" shall have the meaning specified for the term " ABL Priority Collateral" in the Intercreditor Agreement.


1.7 " Accounts" shall mean, as to each Borrower and Guarantor, all present and future rights of such Borrower or Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) arising out of the use of a credit or charge card or information contained on or for use with the card.


1.8 " Acquired Business" shall have the meaning given such term in the definition of the term " Permitted Acquisitions" contained herein.


1.9 " Acquired Company" shall mean Creative Composite Products, Inc., a corporation incorporated under the laws of the Province of Ontario.


1.10 " Acquired Indebtedness" shall mean Indebtedness of a Person or any of its Subsidiaries existing at the time such Person becomes a Subsidiary of Parent or at the time it merges or consolidates with the Parent or any of its Subsidiaries or assumed in connection with the acquisition of assets from such Person and in each case not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Subsidiary of a Borrower or such acquisition, merger or consolidation; provided , that , any Indebtedness of such Person that is extinguished, redeemed, defeased (other than through covenant defeasance), retired or otherwise repaid at the time of or immediately upon consummation of the transaction pursuant to which such Person becomes a Subsidiary of Parent will not be Acquired Indebtedness.


1.11 " Acquisition" shall mean the purchase of the outstanding Equity Interests of the Acquired Company by AZEK Canada Inc. (formerly known as 2162771 Ontario Inc.), which is a wholly-owned subsidiary of AZEK.


1.12 " Acquisition Documents" shall mean (a) that certain Share Purchase Agreement dated as of February 8, 2008 by and among 2162771 Ontario Inc., as the purchaser, the Acquired Company, and the holders of all Equity Interests of the Acquired Company, as the sellers, and (b) any other material agreement, document or instrument executed in connection with the foregoing, in each case as amended, modified, extended, restated, replaced, or supplemented from time to time.


2 2


1.13 " Adjusted Eurodollar Rate" shall mean, with respect to each Interest Period for any Eurodollar Rate Loan comprising part of the same borrowing (including conversions, extensions and renewals), the rate per annum determined by dividing (a) the London Interbank Offered Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, " Reserve Percentage" shall mean for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage.


1.14 " AEA Group" shall mean, collectively, AEA Investors LLC, AEA Management (Cayman) Ltd., AEA Investors LP and their Affiliates.


1.15 " Affiliate" shall mean, with respect to a specified Person, any other Person (excluding any Subsidiary) which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person. For the purposes of this definition, the term " control" (including with correlative meanings, the terms " controlled by" and " under common control with" ), as used with respect to any Person, means the possession, directly or indirectly, of the power either (a) to vote ten (10%) percent or more of the securities having ordinary voting power for the election of directors of such Person or (b) to direct or cause the direction of the management and policies, whether through the ownership of Equity Interests, by agreement or otherwise. Notwithstanding the foregoing, none of Wachovia Capital Markets, LLC, Agent or any Lender shall be deemed an Affiliate of Parent or any of its Subsidiaries solely by reason of the relationship created by the Financing Agreements. Furthermore, for purposes of Sections 8 and 10 (other than Section 10.6) hereof, neither the limited partners participating in the AEA Group's investment programs nor any mezzanine or other debt investment funds managed by the AEA Group nor portfolio companies of the AEA Group shall constitute an Affiliate of Parent or any of its Subsidiaries.


1.16 " Agent" shall mean Wachovia Bank, National Association, in its capacity as agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.


1.17 " Applicable Margin" shall mean (a) for Loans that are Base Rate Loans a rate equal to the sum of (i) the Base Rate plus (ii) 4.00% and (b) for Loans that are Eurodollar Rate Loans a rate equal to the sum of (i) the Eurodollar Rate plus (ii) 5.00%.


1.18 " Approved Fund" shall mean any Person (other than a natural Person), including, without limitation, any special purpose entity, that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary


3 2


course of its business; provided , that , such Approved Fund must be administered 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.


1.19 " Arranger" shall mean Wachovia Capital Markets, LLC, a Delaware limited liability company, in its capacity as lead arranger, and its successors and assigns hereunder.


1.20 " Asset Disposition" shall mean the disposition of any or all of the assets (including, without limitation, the Equity Interests of a Subsidiary or any ownership interest in a joint venture) of any Borrower, any Guarantor or any of their Subsidiaries, whether by sale, lease, transfer or otherwise, in each case in excess of $1,000,000, individually or in the aggregate for all such dispositions for any fiscal year. The term " Asset Disposition" shall not include the sale, lease or transfer of assets permitted by subsections (a), (c) through (f), (g) (except as otherwise stated in said subsection (g)), and (h) through (p) of the definition of Permitted Dispositions.


1.21 " Assignment and Acceptance" shall mean an Assignment and Acceptance substantially in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lender' s interest hereunder in accordance with the provisions of Section 15.7 hereof.


1.22 " Bank Product Provider" shall have the meaning set forth in the ABL Credit Agreement.


1.23 " Base Rate" shall mean, on any date, the greater of (a) the rate from time to time publicly announced by Wachovia, or its successors, as its prime rate, whether or not such announced rate is the best rate available at such bank or (b) the Federal Funds Rate in effect on such day plus one-half (1/2%) percent.


1.24 " Base Rate Loans" shall mean any Loans or portion thereof on which interest is payable based on the Base Rate in accordance with the terms hereof.


1.25 " Borrower Agent" shall mean CPG I in its capacity as Borrower Agent on behalf of itself and the other Borrowers and Guarantors pursuant to Section 6.10 hereof and its successors and assigns in such capacity.


1.26 " Borrowers" shall have the meaning set forth in the preamble hereto; each sometimes being referred to herein individually as a " Borrower" .


1.27

" Borrowing Base" shall have the meaning set forth in the ABL Credit Agreement.


1.28 " Borrowing Base Certificate" shall have the meaning set forth in the ABL Credit Agreement.


1.29 " Business Day" shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York, the State of Pennsylvania or the State of North Carolina, and a day on which Agent is open for the transaction of business, except that if a determination of a Business Day shall relate to


4 2


any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market.


1.30 " Capital Expenditures" shall mean with respect to any Person for any period the aggregate of all expenditures by such Person and its Subsidiaries made during such period that in accordance with GAAP are or should be included in " property, plant and equipment" or in a similar fixed asset account on its balance sheet, whether such expenditures are paid in cash or financed and including all Capitalized Lease Obligations paid or payable during such period, other than the interest component of any Capitalized Lease Obligation (without duplication as to any period). No expenditures for assets purchased as part of a Permitted Acquisition will constitute Capital Expenditures for purposes hereof.


1.31 " Capitalized Lease Obligations" shall mean, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date on a balance sheet prepared in accordance with GAAP.


1.32 " Cash Dominion Event" shall have the meaning set forth in the ABL Credit Agreement.


1.33 " Cash Equivalents" shall mean (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within two years from the date of acquisition thereof; (b) marketable direct obligations issued by any state, commonwealth or territory of the United States of America or any political subdivision of any such state, commonwealth or territory or any public instrumentality thereof maturing within two years from the date of acquisition thereof and, at the time of acquisition, having an investment grade rating from either S&P or Moody's; (c) commercial paper or other indebtedness maturing no more than one year from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, then an equivalent rating from another nationally recognized rating service); (d) certificates of deposit, time deposits and Eurodollar time deposits or bankers' acceptances maturing within two years from the date of acquisition thereof and overnight bank deposits issued by any bank organized under the laws of the United States of America or any state thereof or the District of Columbia or any U.S. branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $250,000,000 in the case of domestic banks and $100,000,000 (or the dollar equivalent thereof) in the case of foreign banks; (e) repurchase obligations for underlying securities of the types described in clauses (a), (b) and (d) above entered into with any bank meeting the qualifications specified in clause (iv) above or securities dealers of recognized national standing; (f) United States dollars, euros, pounds sterling and local currencies held by Foreign Subsidiaries from time to time in the ordinary course of business; (g) in the case of any investment by a Foreign Subsidiary or investments made in a country outside the United States of America, "Cash Equivalents" will also include: (i) direct obligations of the sovereign nation (or any agency thereof) in which such Foreign Subsidiary is organized and is conducting business or in obligations fully and unconditionally guaranteed by such sovereign nation (or agency thereof) and (ii) other customarily utilized high-quality investments in the country where such Subsidiary is located or in which such investment is made; and (h) investments in money market funds or shares


5 2


of investment companies that are registered under the Investment Company Act of 1940 that invest substantially all their assets in securities of the types described in clauses (a) through (g) above. Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (a), (b) and (f) above, provided, that, such amounts are converted into any currency listed in clauses (a), (b) and (f) above, as promptly as practicable and in any event within ten (10) Business Days following the receipt of such amounts.


1.34 " 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 or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.


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