EXECUTION COPY
SECOND AMENDMENT TO CREDIT AGREEMENT
SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second Amendment"), dated
as of September 30, 2009 is by and among APPLETON PAPERS INC., a Delaware
corporation (the "U.S. Borrower"), PAPERWEIGHT DEVELOPMENT CORP., a Wisconsin
corporation ("Holdings"), certain subsidiaries of Holdings identified on the
signature pages hereto as Guarantors, the Lenders identified on the signature
pages hereto and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line
Lender and L/C Issuer. All capitalized terms used herein and not otherwise
defined herein shall have the respective meanings provided such terms in the
Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the U.S. Borrower, Bemrosebooth Limited, a company organized
under the laws of the United Kingdom, certain Subsidiaries of the U.S. Borrower
party thereto, Holdings, the Lenders party thereto and the Administrative Agent
entered into that certain Credit Agreement dated as of June 5, 2007 (as amended,
restated, modified and/or supplemented from time to time, the "Credit
Agreement");
WHEREAS, Holdings and the U.S. Borrower wish to amend and/or modify
certain provisions of the Credit Agreement in order to permit the exchange of
not less than $87,560,000 of the Senior Unsecured Notes and not less than
$99,750,000 of the Senior Subordinated Notes for Second Lien Notes (as defined
below) pursuant to the Exchange Offer (as defined below);
WHEREAS, the Second Lien Notes shall be secured by a Lien on certain
of the Collateral pursuant to the Second Lien Security Documents (as defined
below), which Lien shall rank subordinated and junior to the Lien on the
Collateral pursuant to the Security Documents; and
WHEREAS, Holdings and the U.S. Borrower have requested that the
Lenders amend the Credit Agreement to modify certain provisions contained
therein; and
WHEREAS, the Required Lenders have agreed to amend the Credit
Agreement on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
I. Amendments to Credit Agreement.
1. Section 1.01 of the Credit Agreement is hereby amended by inserting
the following new definitions in the appropriate alphabetical order:
"Exchange Offer" means the tender and exchange of Senior Unsecured Notes
and Senior Subordinated Notes for Second Lien Notes pursuant to that certain
Offering Circular, dated August 18, 2009, in respect of the Senior Unsecured
Notes, the Senior Subordinated Notes and the Second Lien Notes.
"Intercreditor Agreement" means the Intercreditor Agreement executed by
Holdings, the U.S. Borrower, the other Loan Parties from time to time party
thereto, the Administrative Agent and the collateral agent under the Second Lien
Note Indenture, as the same may be amended, restated, supplemented, waived
and/or otherwise modified from time to time in accordance with the terms thereof
and of this Agreement.
"Second Amendment" means the Second Amendment to this Agreement, dated as
of September 30, 2009.
"Second Amendment Effective Date" has the meaning specified in the Second
Amendment.
"Second Lien Note Indenture" means the indenture entered into by Holdings,
the U.S. Borrower, certain of its Subsidiaries and U.S. Bank National
Association, as trustee, in connection with the issuance of the Second Lien
Notes, as the same may be amended, restated, supplemented, waived and/or
otherwise modified from time to time in accordance the terms thereof, of this
Agreement and of the Intercreditor Agreement.
"Second Lien Note Documents" means the Second Lien Note Indenture, the
Second Lien Notes, the Second Lien Security Documents and each other document,
instrument or agreement relating to the issuance of the Second Lien Notes, as
the same may be amended, restated, supplemented, waived and/or otherwise
modified from time to time in accordance with the terms thereof, of this
Agreement and of the Intercreditor Agreement.
"Second Lien Notes" means the 11.25% senior secured second lien notes of
the U.S. Borrower due 2015 to be issued and exchanged pursuant to the Second
Lien Note Indenture and in accordance with the Exchange Offer.
"Second Lien Security Documents" means the collective reference to each
security agreement, pledge agreement, mortgage, deed of trust, collateral
agreement, instrument or other document granting or perfecting a Lien on any
asset or assets of any Person in accordance with the terms of the Intercreditor
Agreement to secure the obligations and liabilities of Holdings, the U.S.
Borrower and certain of its Subsidiaries under the Second Lien Note Documents.
"Specified Litigation" means that certain litigation commenced by the U.S.
Borrower in September 2007 against a former contractor, in which the U.S.
Borrower asserted claims including breach of obligations under a February 2007
agreement to perform certain engineering services, and in connection with which
the U.S. Borrower received a favorable jury verdict on May 14, 2009.
2. The definition of "Applicable Rate" appearing in Section 1.01 of the
Credit Agreement is hereby amended by (a) deleting the grid contained in such
definition and inserting the following new grid in lieu thereof:
Eurodollar
Rate Loans
and
Pricing Consolidated Letter of Base Rate
Level Leverage Ratio Commitment Fee Credit Fee Loans
-------- --------------- -------------- ------------ ----------
1 <= 3.50:1 0.50% 3.125% 2.125%
2 > 3.50:1 but
<= 4.00:1 0.50% 3.625% 2.625%
3 > 4.00:1 but
<= 4.50:1 0.50% 4.125% 3.125%
4 > 4.50:1 0.50% 4.625% 3.625%
and (b) adding the following new sentence at the end thereof:
"The Applicable Rate in effect from the Second Amendment Effective
Date through the first Business Day immediately following the date a
Compliance Certificate is required to be delivered pursuant to Section
6.02(a) for the fiscal quarter ending on or about September 30, 2009 shall
be determined based upon Pricing Level 4."
3. The definition of "Consolidated EBITDA" appearing in Section 1.01 of
the Credit Agreement is hereby amended by deleting the first paragraph of such
definition and inserting the following new paragraph in lieu thereof:
""Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period plus (ii) without duplication and
to the extent reflected as a charge in the statement of such Consolidated
Net Income for such period, the sum of (a) income tax expense, (b) interest
expense, amortization or writeoff of debt discount and debt issuance costs
and commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense (including, but not limited to, goodwill), (d) any extraordinary
charges or losses determined in accordance with GAAP, (e) non-cash charges
from employee compensation deferrals and employer matching contributions
pursuant to the ESOP Documentation relating to ESOP Stock Issuances, (f)
cash losses from Asset Sales, (g) cash restructuring charges and/or
non-recurring cash charges or losses not to exceed $2,000,000 in any twelve
month period, (h) any other non-cash charges, non-cash expenses or non-cash
losses of Holdings or any of its Subsidiaries (provided, however, that cash
payments made in any future period in respect of such non-cash charges
added back in determining Consolidated EBITDA for periods ending after the
Closing Date (as with any other non-cash charge, expense or loss added to
Consolidated Net Income pursuant to this clause (h)) shall be subtracted
from Consolidated Net Income in calculating Consolidated EBITDA in the
period when such payments are made) and (i) litigation expenses in
connection with the Specified Litigation or one-time costs associated with
the machinery and equipment involved in such litigation (including start-up
costs), but only up to the aggregate amount of cash proceeds received by
the U.S. Borrower during such period in connection with such litigation (it
being understood that
approximately $5,600,000 of such costs were incurred in the fourth quarter
of fiscal year 2008, approximately $3,500,000 of such costs were incurred
in the first quarter of fiscal year 2009 and approximately $3,000,000 of
such costs were incurred in the second quarter of fiscal year 2009), minus
(iii) to the extent included in the statement of such Consolidated Net
Income for such period, the sum of, without duplication, (a) interest
income, (b) any extraordinary income or gains determined in accordance with
GAAP (including, in any event, proceeds of the Specified Litigation (except
to the extent permitted to be added back to Consolidated Net Income
pursuant to clause (ii)(i) above) and any other litigation that is unusual
in nature and non-recurring), (c) any cancellation-of-debt income resulting
from repurchases or exchanges of Indebtedness after the Closing Date, (d)
cash gains from Asset Sales and (e) any other non-cash income (excluding
any items that represent the reversal of any accrual of, or cash reserve
for, anticipated cash charges in any prior period that are described in the
parenthetical to clause (h) above), all as determined on a consolidated
basis."
4. The definition of "Consolidated Senior Secured Leverage Ratio"
appearing in Section 1.01 of the Credit Agreement is hereby amended by (i)
replacing the words "Senior Secured" with "First Lien", (ii) inserting the text
"the Second Lien Notes," immediately after the text "Senior Unsecured Notes"
appearing in such definition, (iii) inserting the text "(in right of payment or
in right of lien priority)" immediately following the text "(i) subordinated"
appearing in such definition and (iv) deleting the text "subordination
provisions of the Senior Subordinated Notes" appearing in such definition and
inserting the text "payment subordination provisions of the Senior Subordinated
Notes or lien subordination provisions of the Second Lien Notes, as applicable".
In addition, each other reference to "Consolidated Senior Secured Leverage
Ratio" in the Credit Agreement is hereby amended to read "Consolidated First
Lien Leverage Ratio".
5. The definition of "Excess Cash Flow" appearing in Section 1.01 of the
Credit Agreement is hereby amended by (i) inserting the text "Second Lien
Notes," immediately after the text "Existing Senior Subordinated Notes,"
appearing in such definition, (ii) replacing the text "Section 7.08(a)(C)" with
the text "Section 7.08(a)(D)" and (iii) inserting the text "or resulting from
the receipt of casualty or condemnation proceeds or other Extraordinary
Receipts" immediately after the text "(vii) the aggregate net amount of income
on the Disposition of property".
6. The definition of "Loan Documents" appearing in Section 1.01 of the
Credit Agreement is hereby amended by deleting the text "and (i) each Bilateral
Facility Document" and inserting the text ", (i) each Bilateral Facility
Document and (j) the Intercreditor Agreement" in lieu thereof.
7. The definition of "Permitted Refinancing Debt" appearing in Section
1.01 of the Credit Agreement is hereby amended by inserting the following text
immediately preceding the text "(x) in connection" appearing in such Section:
"(w) in connection with any refinancing of the Second Lien Notes, new
Indebtedness of the U.S. Borrower having terms (other than pricing), taken
as a whole, not materially less favorable to the U.S. Borrower than those
applicable to the Second Lien Notes or otherwise on then market terms and
conditions for comparable debt securities (as
determined in good faith by the U.S. Borrower) or otherwise acceptable to
the Administrative Agent; provided that in no event shall such Indebtedness
(a) amortize, or otherwise be subject to scheduled redemptions, repurchases
or other payments of principal or have a final maturity date that is
earlier than December 15, 2015 (i.e., the original maturity date of the
Second Lien Notes), (b) require prepayments or mandatory redemptions in a
manner materially more extensive than the Second Lien Notes, (c) contain
maintenance financial covenants that are more restrictive than those under
this Agreement, (d) be secured by Liens that are not subordinated to the
Liens securing the Obligations in a manner at least as favorable to the
Lenders as provided for in the Intercreditor Agreement or (e) contain other
terms and conditions that are more restrictive, taken as a whole, than
those under this Agreement;"
8. The definition of "Specified Change of Control" appearing in Section
1.01 of the Credit Agreement is hereby amended by inserting the text "in the
Second Lien Note Indenture," immediately after the text "in the Senior Unsecured
Note Indenture," appearing in such Section.
9. Section 2.01(b) of the Credit Agreement is hereby amended by adding
the following new paragraph to the end thereof:
"As of August 1, 2008, (i) BemroseBooth Limited, the UK Borrower, was
sold by Rose Holdings Limited, released from its obligations under the Loan
Documents and no longer constituted a Designated Foreign Subsidiary
Borrower pursuant to Section 2.15(e) and (ii) accordingly, the Bilateral
Facilities available to the UK Borrower are no longer applicable. As of the
First Amendment Effective Date, (i) no other Designated Foreign Subsidiary
Borrower had been designated pursuant to Section 2.15(e), (ii) no new
Designated Foreign Subsidiary Borrowers are permitted pursuant to Section
2.15(e) and (iii) accordingly, Revolving Credit Loans are no longer
available in Alternative Currencies."
10. Section 2.05(b) of the Credit Agreement is hereby amended by deleting
clause (ii) of such Section and inserting the following new clause (ii) in lieu
thereof:
"(ii) If any Loan Party or any of its Subsidiaries (x) Disposes of any
property in a Disposition constituting an Asset Sale which results in the
realization by such Person of Net Cash Proceeds, (y) receives Net Cash
Proceeds of casualty insurance or condemnation awards (or from payments in
lieu thereof) or any Extraordinary Receipts (excluding for purposes of this
clause (y) (I) any Net Cash Proceeds from "Recoveries" (as defined in the
AWA Environmental Indemnity Agreement and the API Environmental Indemnity
Agreement), which must be paid to AWA under the terms of the applicable Fox
River Indemnity Arrangements and (II) the first $20,000,000 of
Extraordinary Receipts received by the Loan Parties or any of their
Subsidiaries in connection with the Specified Litigation on or after the
Second Amendment Effective Date) or (z) incurs or issues any Indebtedness
(other than Indebtedness expressly permitted to be incurred or issued
pursuant to Section 7.02), the U.S. Borrower shall prepay an aggregate
principal amount of Term B Loans equal to 100% of such Net Cash Proceeds
within five Business Days of the receipt thereof by such Person (such
prepayments to be applied as set forth in clause (iii) below); provided,
however, that, (A)
the U.S. Borrower shall only be required to prepay an aggregate principal
amount of Term B Loans pursuant to preceding clause (x) above in this
Section 2.05(b)(ii) equal to 50% of any Net Cash Proceeds received by the
U.S. Borrower as a result of the Disposition by it of the Capital Stock of
C&H Packaging Company, Inc. on or after the Second Amendment Effective
Date, (B) so long as no Event of Default shall have occurred and be
continuing, with respect to any prepayment of Term B Loans required to be
made pursuant to preceding clause (x) above in this Section 2.05(b)(ii), if
such prepayment would result in the prepayment of one or more Eurodollar
Rate Loans on a day other than the last day of the then current Interest
Period for each such Eurodollar Rate Loan, the U.S. Borrower may defer the
relevant portion of such required payment until the last day of the
relevant then current Interest Period of each such applicable Eurodollar
Rate Loan (provided that such deferral period shall in no case exceed 60
days) and during such deferral period the U.S. Borrower may apply all or
any part of such relevant portion of such required payment to prepay
Revolving Credit Loans and may, subject to the fulfillment of the
applicable conditions set forth in Article IV, reborrow such amounts (which
amounts, to the extent originally constituting Net Cash Proceeds, shall be
deemed to retain their original character as Net Cash Proceeds when so
reborrowed) for application as required by this Section 2.05(b)(ii)
(provided that, upon the occurrence of an Event of Default during any such
deferral period, the U.S. Borrower shall immediately prepay Term B Loans in
the amount of all Net Cash Proceeds received by the U.S. Borrower and other
amounts, as applicable, that are required to be applied to prepay Loans
under this Section 2.05(b)(ii) (without giving effect to this clause (B))
but which have not previously been so applied) and (C) with respect to any
Net Cash Proceeds of casualty insurance or condemnation awards (or from
payment in lieu thereof) otherwise required to be applied under preceding
clause (y) above in this Section 2.05(b)(ii), at the election of the U.S.
Borrower (as notified by the U.S. Borrower to the Administrative Agent (of
its intent to reinvest) within five Business Days of the date of such
Disposition), and so long as no Event of Default shall have occurred and be
continuing at the time of such election, such Loan Party or such Subsidiary
may reinvest all or any portion of such Net Cash Proceeds in operating
assets so long as within 180 days after the receipt of such Net Cash
Proceeds, such purchase shall have been consummated; and provided further,
however, that any Net Cash Proceeds of casualty insurance or condemnation
awards (or from payment in lieu thereof) not so reinvested shall be
immediately applied (on such 180th day or, if sooner, to the extent (I) the
U.S. Borrower makes an earlier determination that such funds will not be so
invested or (II) an Event of Default has occurred and is continuing and the
Required Lenders have requested immediate application) to the prepayment of
the Term B Loans as set forth in this Section 2.05(b)(ii)."
11. Section 2.05(b) of the Credit Agreement is hereby further amended by
deleting clause (iii) of such Section and inserting the following new clause
(iii) in lieu thereof:
"(iii) Each prepayment of Term B Loans pursuant to the foregoing
provisions of this Section 2.05(b) shall be applied to the remaining
principal repayment installments of the Term B Facility on a pro rata
basis."
12. Section 2.05(c) of the Credit Agreement is hereby amended by inserting
the text ", the Second Lien Note Indenture" immediately after all instances of
the text "the Senior Unsecured Note Indenture" appearing in such Section.
13. Section 2.06(b) of the Credit Agreement is hereby amended by inserting
the following text immediately preceding the existing text of such Section:
"The Revolving Credit Facility shall be permanently reduced by (x)
$5,000,000 on December 31, 2009, (y) another $10,000,000 on March 31, 2010
and (z) another $15,000,000 on June 30, 2010, with each such reduction to
be applied as provided in Section 2.06(c) and to be accompanied by any
prepayment required pursuant to Section 2.05(b)(v)."
14. Section 2.08 of the Credit Agreement is hereby amended by deleting
subsection (a) of such Section and inserting the following new subsection (a) in
lieu thereof:
"(a) Subject to the provisions of Section 2.08(b), (i) with respect to
the Revolving Credit Loans (x) each Eurodollar Rate Loan shall bear
interest on the outstanding principal amount thereof for each Interest
Period at a rate per annum equal to the sum of (A) the Eurodollar Rate for
such Interest Period plus (B) the Applicable Rate plus (C) (in the case of
a Eurodollar Rate Loan of any Lender to any Designated Foreign Subsidiary
Borrower in an Alternative Currency which is lent from a Lending Office in
the United Kingdom or a Participating Member State) the Mandatory Cost; (y)
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 (z) each Swing Line Loan shall bear
interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to (I) the Base Rate plus the
Applicable Rate or (II) such other rate as mutually agreed to by the U.S.
Borrower and the Swing Line Lender; and (ii) with respect to Term B Loans,
(x) each Eurodollar Rate Loan shall bear interest on the outstanding
principal amount thereof for each Interest Period (A) prior to the Second
Amendment Effective Date at a rate per annum equal to the sum of the
Eurodollar Rate for such Interest Period plus 4.50% and (B) on the Second
Amendment Effective Date and thereafter at a rate per annum equal to the
sum of the Eurodollar Rate for such Interest Period plus 4.625% and (y)
each Base Rate Loan shall bear interest on the outstanding principal amount
thereof from the applicable borrowing date (A) prior to the Second
Amendment Effective Date at a rate per annum equal to the Base Rate plus
3.50% and (B) on the Second Amendment Effective Date and thereafter at a
rate per annum equal to the Base Rate plus 3.625%."
15. Section 6.02 of the Credit Agreement is hereby amended by (i) deleting
the word "and" appearing at the end of clause (f) of such Section, (ii)
redesignating clause (g) of such Section as clause (i) of such Section and (iii)
inserting the following new clauses (g) and (h) immediately following clause (f)
of such Section:
"(g) upon the request of the Administrative Agent (which request shall not
be made more than once in any twenty four-month period, with the appraisals
required pursuant to Section 6.16 counting as the initial request),
promptly upon the completion thereof,
appraisals at the expense of the U.S. Borrower, in form and substance, and
conducted by an appraiser, reasonably satisfactory to the Administrative
Agent, of the fixed assets and Mortgaged Properties of the Loan Parties;
(h) upon the request of the Administrative Agent (which request shall not
be made more than once in any twelve-month period, with the field
examinations required pursuant to Section 6.16 counting as the initial
request), promptly upon the completion thereof, field examinations at the
expense of the U.S. Borrower, in form and substance, and conducted by an
appraiser, reasonably satisfactory to the Administrative Agent, of the
inventory and accounts receivable of the Loan Parties; and"
16. Section 6.09(e) of the Credit Agreement is hereby amended by inserting
the text ", Second Lien Notes" immediately after the text "Senior Unsecured
Notes" appearing in such Section.
17. Section 6.12 of the Credit Agreement is hereby amended by inserting
the text "or the Second Lien Notes" immediately after the text "Senior Unsecured
Notes" appearing in such Section.
18. Article VI of the Credit Agreement is hereby amended by inserting the
following new Section 6.16 in the appropriate sequence:
"6.16 Second Amendment Post-Closing Actions.
Deliver to the Administrative Agent (or otherwise fully cooperate with
the Administrative Agent in obtaining, at the expense of the U.S. Borrower)
within 120 days of the Second Amendment Effective Date (or such later date
as agreed to by the Administrative Agent in writing):
(a) appraisals, in form and substance, and conducted by an appraiser,
reasonably satisfactory to the Administrative Agent, of the fixed assets
and Mortgaged Properties of the Loan Parties; and
(b) a field examination, in form and substance, and conducted by an
appraiser, reasonably satisfactory to the Administrative Agent, of the
inventory and accounts receivable of the Loan Parties."
19. Section 7.01(c) of the Credit Agreement is hereby amended to delete
the asterisk in the grid therein and the asterisked footnote at the end thereof.
20. Section 7.02 of the Credit Agreement is hereby amended by (i) deleting
the text "$150,000,000" appearing in clause (f) of such Section and inserting
the text "$142,500,000 minus the aggregate principal amount of the Senior
Subordinated Notes outstanding on the Second Amendment Effective Date and
exchanged for Second Lien Notes in connection with the Exchange Offer" in lieu
thereof, (ii) deleting the text "$185,000,000" appearing in clause (g) of such
Section and inserting the text "$109,500,000 minus the aggregate principal
amount of the Senior Unsecured Notes outstanding on the Second Amendment
Effective Date and exchanged for Second Lien Notes in connection with the
Exchange Offer" in lieu thereof, (iii) deleting the
word "and" appearing at the end of clause (r) of such Section, (iv) deleting the
period appearing at the end of clause (s) of such Section and inserting the text
"; and" in lieu thereof and (v) inserting the following new clause (t) at the
end of such Section:
"(t) (i) Indebtedness of the U.S. Borrower in respect of the Second Lien
Notes, together with any Permitted Refinancing Debt in connection
therewith, in an aggregate principal amount not to exceed $199,657,500
minus the sum of (x) 1.01 times the aggregate principal amount of the
Senior Unsecured Notes outstanding on the Second Amendment Effective Date
and not exchanged for Second Lien Notes in connection with the Exchange
Offer and (y) .625 times the aggregate principal amount of Senior
Subordinated Notes outstanding on the Second Amendment Effective Date and
not exchanged for Second Lien Notes in connection with the Exchange Offer
and (ii) Guarantee Obligations of Holdings and any Subsidiary that is a
Guarantor in respect of such Indebtedness."
21. Section 7.03 of the Credit Agreement is hereby amended by (i) deleting
the word "and" appearing at the end of clause (r) of such Section, (ii) deleting
the period appearing at the end of clause (s) of such Section and inserting the
text "; and" in lieu thereof and (iii) inserting the following new clause (t) at
the end of such Section:
"(t) to the extent such Liens are permitted under, and subject to, the
Intercreditor Agreement, Liens securing Indebtedness under the Second Lien
Note Documents and any Permitted Refinancing Debt in respect thereof."
22. Section 7.06(b) of the Credit Agreement is hereby amended by deleting
clause (iii) of such Section and inserting the following new clause (iii) in
lieu thereof:
"(iii) to the extent such Restricted Payments would be permitted under (x)
at any time prior to the Second Amendment Effective Date, Section 4.07(a)
of each of the Senior Subordinated Note Indenture and the Senior Unsecured
Note Indenture as in effect on the date hereof or (y) on and after the
Second Amendment Effective Date, Section 4.07(a) of the Second Lien Note
Indenture as in effect on the Second Amendment Effective Date, (in each
case taking into account any Investments made pursuant to Section 7.07(l)),
to make other Restricted Payments to, or in connection with, the ESOP or
the ESOP Documentation."
23. Section 7.07(l) of the Credit Agreement is hereby amended by deleting
such Section in its entirety and inserting the following Section 7.07(l) in lieu
thereof:
"(l) additional Investments to the extent such Investment, together with
all Restricted Payments made pursuant to Section 7.06(b)(iii), would be
permitted under (x) at any time prior to the Second Amendment Effective
Date, Section 4.07(a) of each of the Senior Subordinated Note Indenture and
the Senior Unsecured Note Indenture as in effect on the date hereof or (y)
on and after the Second Amendment Effective Date, Section 4.07(a) of the
Second Lien Note Indenture as in effect on the Second Amendment Effective
Date."
24. Section 7.08 of the Credit Agreement is hereby amended by deleting
said Section in its entirety and inserting the following new Section 7.08 in
lieu thereof:
"7.08 Prepayments and Modifications of Certain Debt Instruments.
(a) Make or offer to make any optional or voluntary payment, prepayment,
repurchase or redemption of or otherwise optionally or voluntarily defease
or segregate funds with respect to the Senior Unsecured Notes, Senior
Subordinated Notes, the Existing Senior Subordinated Notes, the Second Lien
Notes, any Permitted Refinancing Debt or enter into any derivative or other
transaction with any Derivatives Counterparty obligating Holdings, the U.S.
Borrower or any Subsidiary to make payments to such Derivatives
Counterparty as a result of any change in market value of the Senior
Unsecured Notes, the Senior Subordinated Notes, the Existing Senior
Subordinated Notes or the Second Lien Notes (other than (A) the refinancing
of any Existing Senior Subordinated Notes, Senior Subordinated Notes,
Senior Unsecured Notes or Second Lien Notes with applicable Permitted
Refinancing Debt, (B) the repurchase, redemption or defeasance of Senior
Unsecured Notes so long as the Consolidated First Lien Leverage Ratio after
giving effect thereto is less than 2.50 to 1.0 on a pro forma basis as if
such repurchase, redemption or defeasance had been made on the last day of
the most recent four quarter period of Holdings for which financial
statements have been delivered pursuant to Section 6.01, (C) the
repurchase, redemption or defeasance of Second Lien Notes so long as the
Consolidated First Lien Leverage Ratio after giving effect thereto is less
than 1.75 to 1.0 on a pro forma basis as if such repurchase, redemption or
defeasance had been made on the last day of the most recent four quarter
period of Holdings for which financial statements have been delivered
pursuant to Section 6.01 and (D) in addition to subsection (B) above, (i)
prior to the First Amendment Effective Date, the repurchase or repayment of
up to $50,000,000 in aggregate principal amount of the Existing Senior
Subordinated Notes, Senior Subordinated Notes, Senior Unsecured Notes
and/or any Permitted Refinancing Debt, (ii) prior to the Second Amendment
Effective Date, the repurchase or repayment of the Senior Subordinated
Notes so long as the aggregate cash amount expended does not exceed
$1,200,000, and (iii) Senior Unsecured Notes and Senior Subordinated Notes
may be exchanged for Second Lien Notes pursuant to the terms of the
Exchange Offer (including, without limitation, any consent payments,
payments of accrued and unpaid (but not yet due) interest and any payments
for rounding); provided that, in each case under this foregoing clauses
(A), (B), (C) and (D), before and after giving effect to such repurchase,
repayment and/or exchange, no Default or Event of Default shall have
occurred or be continuing), (b) amend, modify, waive or otherwise change,
or consent or agree to any amendment, modification, waiver or other change
to, any of the terms of the Senior Unsecured Notes, the Senior Subordinated
Notes, the Existing Senior Subordinated Notes, the Second Lien Notes or any
Permitted Refinancing Debt (other than any such amendment, modification,
waiver or other change that is (x) not materially adverse to the Lenders
(it being understood and agreed that an increase of greater than 2.00% to
the existing cash interest rate or other yield provisions is materially
adverse to the Lenders so long as the Commitments remain in effect, any
Letter of Credit remains outstanding or any Loan or other amount is owing
to any Lender or Agent hereunder) and that, in any event, would not result
in such Indebtedness being unable to qualify as Permitted Refinancing
Indebtedness if it were newly issued or (y) with respect to the Senior
Unsecured Notes and the Senior Subordinated Notes, made in connection with
the Exchange Offer) or (c) designate any Indebtedness (other than
obligations of the Loan Parties pursuant to the Loan Documents) as
"Designated Senior
Debt" (or any other defined term having a similar purpose) for the purposes
of the Senior Subordinated Note Indenture or any applicable Permitted
Refinancing Debt Document."
25. Section 7.11 of the Credit Agreement is hereby amended by (i) deleting
the word "and" appearing immediately preceding the text "(h) any agreements"
appearing in such Section and inserting a comma in lieu thereof and (ii)
deleting the period at the end of such Section and inserting the text "and (i)
the Second Lien Note Indenture." in lieu thereof.
26. Section 7.12 of the Credit Agreement is hereby amended by (i) deleting
the word "and" appearing immediately preceding the text "(viii) any
restrictions" appearing in such Section and inserting a comma in lieu thereof
and (ii) deleting the period at the end of such Section and inserting the text
"and (ix) the Second Lien Note Indenture." in lieu thereof.
27. Section 8.01 of the Credit Agreement is hereby amended by (i) deleting
the text "100%" appearing in clause (k)(ii) of such Section and inserting the
text "greater than 50%" in lieu thereof, (ii) deleting the word "or" appearing
at the end of clause (l) of such Section, (iii) deleting the comma appearing at
the end of clause (m) of such Section and inserting the text "; or" in lieu
thereof and (iv) inserting the following new clause (n) immediately after clause
(m) of such Section:
"(n) the Intercreditor Agreement or any provision thereof shall cease to be
in full force and effect, or any Lien securing or purporting to secure
Indebtedness or other obligations owing under the Second Lien Note
Documents shall, for any reason, cease to be subordinated to the Lien
created under the Security Documents securing the First-Lien Obligations
under, and as defined in, the Intercreditor Agreement,"
28. Article XI of the Credit Agreement is hereby amended by inserting the
following new Section 11.19 in the appropriate sequence:
" 11.19 OTHER LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENT; ETC.
(a) EACH LENDER HERETO UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT LIENS SHALL BE
CREATED ON THE COLLATERAL PURSUANT TO THE SECOND LIEN NOTE DOCUMENTS, WHICH
LIENS SHALL BE REQUIRED TO BE SUBORDINATED AND JUNIOR TO THE LIENS CREATED
PURSUANT TO THE LOAN DOCUMENTS IN ACCORDANCE WITH THE TERMS OF THE INTERCREDITOR
AGREEMENT. THE INTERCREDITOR AGREEMENT ALSO HAS OTHER PROVISIONS WHICH ARE
BINDING UPON THE LENDERS, THE HEDGE BANKS AND THE CASH MANAGEMENT BANKS PURSUANT
TO THIS AGREEMENT. PURSUANT TO THE EXPRESS TERMS OF SECTION 8.1 OF THE
INTERCREDITOR AGREEMENT, IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE
INTERCREDITOR AGREEMENT AND ANY OF THE LOAN DOCUMENTS, THE PROVISIONS OF THE
INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL.
(b) EACH LENDER AUTHORIZES AND INSTRUCTS THE ADMINISTRATIVE AGENT TO
ENTER INTO THE INTERCREDITOR AGREEMENT ON BEHALF OF THE LENDERS, AND TO TAKE ALL
ACTIONS (AND EXECUTE ALL
DOCUMENTS) REQUIRED (OR DEEMED ADVISABLE) BY IT IN ACCORDANCE WITH THE TERMS OF
THE INTERCREDITOR AGREEMENT.
(c) THE PROVISIONS OF THIS SECTION 11.19 ARE NOT INTENDED TO SUMMARIZE
ALL RELEVANT PROVISIONS OF THE INTERCREDITOR AGREEMENT. REFERENCE MUST BE MADE
TO THE INTERCREDITOR AGREEMENT ITSELF TO UNDERSTAND ALL TERMS AND CONDITIONS
THEREOF. EACH LENDER IS RESPONSIBLE FOR MAKING ITS OWN ANALYSIS AND REVIEW OF
THE INTERCREDITOR AGREEMENT AND THE TERMS AND PROVISIONS THEREOF, AND NEITHER
THE ADMINISTRATIVE AGENT NOR ANY OF ITS RESPECTIVE AFFILIATES MAKES ANY
REPRESENTATION TO ANY LENDER AS TO THE SUFFICIENCY OR ADVISABILITY OF THE
PROVISIONS CONTAINED IN THE INTERCREDITOR AGREEMENT."
II. Miscellaneous Provisions.
1. Conditions Precedent to Effectiveness. This Second Amendment shall
become effective on the date (the "Second Amendment Effective Date") when each
of the following conditions shall have been satisfied:
(i) Holdings, the U.S. Borrower, the Guarantors, the Administrative
Agent and the Lenders constituting the Required Lenders shall have signed a
counterpart hereof (whether the same or different counterparts) and shall
have delivered (including by way of pdf, facsimile or other electronic
transmission) the same to the Administrative Agent;
(ii) Holdings, the U.S. Borrower, the Guarantors, the Administrative
Agent and the collateral agent under the Second Lien Note Indenture shall
have duly authorized, executed and delivered the intercreditor agreement in
the form of Annex I attached hereto, and such intercreditor agreement shall
be in full force and effect;
(iii) the U.S. Borrower shall have paid to the Administrative Agent
(or one of its Affiliates, as applicable) (a) a non-refundable cash
amendment fee in dollars for distribution to each Lender which executes and
delivers to the Administrative Agent (or its designee) a counterpart hereof
by 5:00 P.M. (New York City time) on September 24, 2009, in an amount equal
to 25 basis points (0.25%) of the sum of (x) the aggregate principal amount
of all Term B Loans of such Lender and (y) Revolving Credit Commitments of
such Lender, in each case outstanding on the Second Amendment Effective
Date (immediately prior to the occurrence thereof) and (b) all other fees
required to be paid on or before the Second Amendment Effective Date;
(iv) the U.S. Borrower shall have paid all reasonable fees, expenses
and disbursements of counsel to the Administrative Agent to the extent
invoiced prior to or on the Second Amendment Effective Date, plus such
additional amounts of reasonable fees, expenses and disbursements of
counsel to the Administrative Agent as shall constitute its reasonable
estimate of reasonable fees, expenses and disbursements of counsel to the
Administrative Agent incurred or to be incurred by it through the closing
proceedings
(provided that such estimate shall not thereafter preclude a final settling
of accounts between the U.S. Borrower and the Administrative Agent);
(v) after giving effect to this Amendment, the representations and
warranties of the Loan Parties contained in Section 2 of Article II of this
Amendment, Article V of the Credit Agreement or any other Loan Document, or
which are contained in any document furnished at any time under or in
connection herewith or therewith, shall be true and correct in all material
respects (or, if the applicable representation and warranty is already
subject to a materiality standard, shall be true and correct in all
respects) on and as of the Second Amendment Effective Date, except to the
extent that such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct in all material
respects (or, if the applicable representation and warranty is already
subject to a materiality standard, shall be true and correct in all
respects) as of such date; and
(vi) no Default shall exist and be continuing as of the Second
Amendment Effective Date.
2. Representations and Warranties. Each of the Loan Parties hereby
represents and warrants that (a) it has the power and authority, and legal
right, to make, deliver and perform this Amendment, (b) it has taken all
necessary organizational action to authorize the execution, delivery and
performance this Amendment, (c) no consent or authorization of, filing with,
notice to or other act by or in respect of, or order of, any Governmental
Authority or any other Person is required in connection with the execution,
delivery or performance by it of this Amendment, except consents which have been
obtained or made and are in full force and effect, (d) the execution, delivery
and performance of this Amendment will not violate any material Requirement of
Law or Contractual Obligation of Holdings, the U.S. Borrower or any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien (other than Liens permitted hereunder in connection with the Second
Lien Notes) on any of their respective properties or revenues pursuant to any
such Requirements of Law or any such Contractual Obligation, (e) the
representations and warranties contained in Article V of the Credit Agreement
are true and correct in all material respects on and as of the date hereof as
though made on and as of such date (except for those which expressly relate to
an earlier date, in which case they are true and correct in all material
respects as of such date) and (f) no Default or Event of Default exists under
the Credit Agreement on and as of the date hereof and after giving effect to
this Amendment, or will occur as a result of the transactions contemplated
hereby.
3. No Other Changes; Ratification. Except as expressly modified or waived
hereby, all of the terms and provisions of the Credit Agreement (including
schedules and exhibits thereto) and the other Loan Documents shall remain in
full force and effect. The term "this Agreement" or "Credit Agreement" and all
similar references as used in each of the Loan Documents shall hereafter mean
the Credit Agreement as amended by this Amendment. This Amendment shall
constitute a "Loan Document" under, and as defined in, the Credit Agreement.
Except as herein specifically agreed, the Credit Agreement is hereby ratified
and confirmed and shall remain in full force and effect according to its terms.
This Amendment shall be effective only to the extent specifically set forth
herein and shall not (i) be construed as a waiver of any
breach or default other than as specifically waived herein nor as a waiver of
any breach or default of which the Lenders have not been informed by Holdings or
the U.S. Borrower, (ii) affect the right of the Lenders to demand compliance by
Holdings or the U.S. Borrower with all terms and conditions of the Credit
Agreement in all other instances, (iii) be deemed a waiver of any transaction or
future action on the part of Holdings or the U.S. Borrower requiring the
Lenders' or the Required Lenders' consent or approval under the Credit Agreement
(after giving effect hereto), or (iv) be deemed or construed to be a waiver or
release of, or a limitation upon, the Administrative Agent's or the Lenders'
exercise of any rights or remedies under the Credit Agreement or any other
document executed or delivered in connection therewith, whether arising as a
consequence of any Event of Default which may now exist or otherwise, all such
rights and remedies hereby being expressly reserved.
4. Expenses. The U.S. Borrower agrees to pay all reasonable costs and
expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Amendment, including without limitation the
reasonable fees and expenses of Moore & Van Allen PLLC, special counsel to the
Administrative Agent.
5. Acknowledgment of Guarantors. The Guarantors acknowledge and consent
to all of the terms and conditions of this Amendment and agree that this
Amendment and any documents executed in connection herewith do not operate to
reduce or discharge the Guarantors' obligations under the Guarantee and
Collateral Agreement or the other Loan Documents.
6. Affirmation of Liens. Each Loan Party affirms the liens and security
interests created and granted by it in the Loan Documents (including, but not
limited to, the Guarantee and Collateral Agreement) and agrees that this
Amendment and the permitting of Liens in connection with the Second Lien Notes
shall in no manner adversely affect or impair such liens and security interests.
7. Counterparts; Facsimile/Email. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original and it shall not be necessary in making proof of this
Amendment to produce or account for more than one such counterpart. Delivery of
an executed counterpart of this Amendment by telecopy or electronic mail by any
party hereto shall be effective as such party's original executed counterpart.
8. Governing Law. This Amendment shall be deemed to be a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of New York, without regard to conflicts of law principles that would
require the application of laws of another jurisdiction.
9. Entirety. This Amendment and the other Loan Documents embody the
entire agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof. These Loan
Documents represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no oral agreements between the parties.
10. References to Credit Agreement. From and after the Second Amendment
Effective Date, all references in the Credit Agreement and each of the other
Loan Documents to the Credit Agreement shall be deemed to be references to the
Credit Agreement, as modified hereby on the Second Amendment Effective Date.
* * *
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Second Amendment as of the date
first above written.
APPLETON PAPERS INC.
By: /s/ Jeffrey J. Fletcher
---------------------------
Name: Jeffrey J. Fletcher
Title: Controller
PAPERWEIGHT DEVELOPMENT CORP.
By: /s/ Jeffrey J. Fletcher
---------------------------
Name: Jeffrey J. Fletcher
Title: Controller
AMERICAN PLASTICS COMPANY, INC.
By: /s/ Jeffrey J. Fletcher
---------------------------
Name: Jeffrey J. Fletcher
Title: Treasurer
C & H PACKAGING COMPANY, INC.
By: /s/ Jeffrey J. Fletcher
---------------------------
Name: Jeffrey J. Fletcher
Title: Treasurer
NEW ENGLAND EXTRUSION INC.
By: /s/ Jeffrey J. Fletcher
---------------------------
Name: Jeffrey J. Fletcher
Title: Treasurer
PDC CAPITAL CORPORATION
By: /s/ Jeffrey J. Fletcher
---------------------------
Name: Jeffrey J. Fletcher
Title: Treasurer
ROSE HOLDINGS LIMITED
By: /s/ Thomas J. Ferree
---------------------------
Name: Thomas J. Ferree
Title: Director
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /s/ Rosanne Parsill
---------------------------
Name: Rosanne Parsill