EXHIBIT 10.13
FIRST AMENDMENT
To
CREDIT AGREEMENT
Dated as of July 2, 1999
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is among
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PANOLAM INDUSTRIES INTERNATIONAL, INC., a Delaware corporation (the "Borrower"),
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the Lenders (as defined in the Credit Agreement referred to below) party hereto,
DLJ CAPITAL FUNDING, INC., for itself as a Lender and as Syndication Agent and
CREDIT SUISSE FIRST BOSTON, for itself and as a Lender and as Administrative
Agent (the "Administrative Agent") for the Lenders.
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PRELIMINARY STATEMENTS:
1. The Borrower and Lenders have previously entered into that certain
Credit Agreement (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), dated as of February 18, 1999 with the
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Syndication Agent, the Administrative Agent, and ROYAL BANK OF CANADA, for
itself as a Lender and as Documentation Agent.
2. The Borrower has requested that the Lenders consent to amendments to
certain of the provisions contained in the Credit Agreement; specifically, those
regarding mandatory prepayments from Excess Cash Flow and the definition of
"Excess Cash Flow," the monthly reporting requirements, and the merger or
consolidation of Group and/or PII Second with and into Holdings or certain of
its Subsidiaries.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Defined Terms. Capitalized terms used but not otherwise defined
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herein shall have the respective meanings assigned to such terms in the Credit
Agreement.
SECTION 2. Amendments to Credit Agreement. Effective as of the First
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Amendment Effective Date (as defined in Section 3 hereof), the Credit Agreement
is hereby amended as follows:
(a) Section 1.01. Section 1.01 of the Credit Agreement is hereby amended
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by deleting the text of clause (c)(iii) from the definition of the term "Excess
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Cash Flow" and replacing such text with "[intentionally omitted]".
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(b) Section 2.04. Section 2.04(c)(i) of the Credit Agreement is hereby
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amended and restated in its entirety to read as follows:
(i) Prepayments and Reductions from Excess Cash Flow. Within
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the earlier of five days after delivery of the Annual Financials pursuant to
Section 6.03(d) and 95 days following the end of each Fiscal Year, the Borrower
shall prepay the Term Loans and/or the Revolving Loans, and/or the Revolving
Commitments shall be permanently reduced (in each case, as and to the extent set
forth in Section 2.04(c)(xiii)), in an aggregate principal amount equal to (A)
the product of (1) the Applicable US Facility Percentage of the amount of the
total Excess Cash Flow of the Borrower and its Subsidiaries for such Fiscal Year
and (2) the prepayment percentage set forth below opposite the applicable
Consolidated Leverage Ratio as of the end of such Fiscal Year as set forth in
the Effective Quarterly Compliance Certificate delivered pursuant to Section
6.03(d), minus (B) the aggregate principal amount of all voluntary prepayments
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of Term Loans paid pursuant to Section 2.04(a) during such Fiscal Year;
provided, however, if no Quarterly Compliance Certificate has been delivered at
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the time required by Section 6.03(d), the Consolidated Leverage Ratio shall be
deemed to be greater than 3.50:1.00 for purposes of this clause:
Excess Cash Flow
Consolidated Leverage Ratio Prepayment Percentage
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greater than 3.50:1.00 50%
greater than 3.00:1.00 less than 3.50:1.00 35%
less than 3.00:1.00 0%
(c) Section 6.02.
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(i) Section 6.02(b) of the Credit Agreement is hereby amended by
(i) deleting the word "and" appearing at the end of the clause (vi)(B) thereof,
(ii) deleting the period at the end of clause (vii) thereof and replacing it
with "; and" and (iii) adding thereto a new clause (viii) to read as follows:
"(viii) in the case of Holdings, Group, PII Second and any
Domestic Subsidiary that is a Guarantor, Debt under guarantees of the
Subordinated Notes pursuant to Article X of the Subordinated Note
Indenture."
(ii) Section 6.02(d) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"(d) Mergers, Etc. Merge into or consolidate with any Person or
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permit any Person to merge into or consolidate with it, or permit Holdings or
any of its Subsidiaries to do so, except that (i) any Domestic Subsidiary of the
Borrower may merge into or consolidate with any other Domestic Subsidiary of the
Borrower provided that the Person formed by such merger or consolidation shall
be a Domestic Subsidiary of the Borrower, (ii) any of the Borrower's Domestic
Subsidiaries may merge into the Borrower, (iii) any Subsidiary of Panolam Canada
may amalgamate with any other Subsidiary of Panolam Canada, (iv) any of Panolam
Canada's Subsidiaries may amalgamate with Panolam Canada, (v) a wholly owned
Subsidiary of the Borrower or Panolam Canada formed primarily for the purposes
of consummating a Permitted Acquisition may, substantially contemporaneously
with the consummation of such
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Permitted Acquisition, be merged into or amalgamated with the Person being
acquired in such Permitted Acquisition, and (vi) Group may merge into Holdings,
PII Second or the Borrower, and PII Second may merge into Holdings, Group or the
Borrower, in each case so long as the representations and warranties set forth
in Section 5.01(p) as to Group and/or PII Second, as the case may be, are true
and correct on and as of the date of such merger with the same force and effect
as if made on such date; provided, however, that in the case of each of the
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foregoing clauses (i) through (vi): (x) immediately after giving effect thereto,
no event shall occur and be continuing that constitutes a Default, (y) in the
case of any such merger to which the Borrower or Holdings is a party, the
Borrower or Holdings, as the case may be, is the surviving corporation, and (z)
each entity involved in any such merger, consolidation or amalgamation is
Solvent."
(d) Section 6.03. Section 6.03(b) of the Credit Agreement is hereby
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amended by inserting, immediately following the words "setting forth in
comparative form" appearing in the first sentence thereof, the following:
"(for each Fiscal Month ending on or after the date that is one year
and one month after the Closing Date)"
SECTION 3. Conditions to Effectiveness. The amendments set forth
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herein shall become effective on the date (the "First Amendment Effective Date")
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on which each of the following conditions has been satisfied:
(a) The Administrative Agent shall have executed this Amendment
and shall have received counterparts of this Amendment executed by the Borrower,
the Combined Required Lenders (as defined in the Intercreditor Agreement)
(provided that the amendments set forth in Sections 2(a) and 2(b) hereof shall
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become effective only upon receipt of counterparts of this Amendment executed by
the Combined Required Lenders and the Supermajority Lenders (as defined in the
Intercreditor Agreement), and a counterpart of the Consent attached hereto (the
"Consent") executed by each Guarantor.
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(b) The Administrative Agent shall have received evidence
satisfactory to it of the effectiveness of an amendment to the Canadian Credit
Agreement on terms substantially identical to the terms of this Amendment (and
by its execution hereof each signatory hereto approves such amendment and agrees
that its execution hereof shall be deemed execution thereof for purposes of
Section 11 of the Intercreditor Agreement).
(c) The Administrative Agent shall have received certified copies of
such documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
each Loan Party, the authorization of this Amendment and any other legal matters
relating to the Loan Parties and this Amendment, all in form and substance
satisfactory to the Administrative Agent and its counsel.
SECTION 4. Representations and Warranties. The Borrower represents and
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warrants as follows:
(a) Authority. The Borrower and each other Loan Party has the
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requisite corporate power and authority to execute and deliver this Amendment
and the Consent, as
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applicable, and to perform its obligations hereunder and under the Loan
Documents (as modified hereby) to which it is a party. The execution, delivery
and performance by the Borrower of this Amendment and by each other Loan Party
of the Consent, and the performance by each Loan Party of each Loan Document (in
each case as modified hereby) to which it is a party have been duly approved by
all necessary corporate action of such Loan Party and no other corporate
proceedings on the part of such Loan Party are necessary to consummate such
transactions.
(b) Enforceability. This Amendment has been duly executed and delivered by
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the Borrower. The Consent has been duly executed and delivered by each Guarantor
and each Grantor. This Amendment and each Loan Document (in each case as
modified hereby) is the legal, valid and binding obligation of each Loan Party
party hereto and thereto, enforceable against such Loan Party in accordance with
its terms, and is in full force and effect.
(c) Representations and Warranties. The representations and warranties
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contained in each Loan Document are true and correct on and as of the date
hereof as though made on and as of the date hereof will be true and correct on
and as of the First Amendment Effective Date as though made on and as of such
date (in each case, other than any such representations and warranties that, by
their terms, are specifically made as of a date other than the date hereof, in
which case such representations and warranties shall be true and correct as of
such other date).
(d) No Default. Both before and immediately after giving effect to this
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Amendment, no event has occurred and is continuing that constitutes a Default or
Event of Default under any Loan Document.
SECTION 5. Reference to and Effect on the Loan Documents.
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(a) Upon and after the effectiveness of this Amendment, each reference in
the Credit Agreement to "this Agreement," "hereunder," "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement," "thereunder," "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as modified hereby.
(b) Except as specifically modified above, the Credit Agreement and the
other Loan Documents are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed. Without limiting the
generality of the foregoing, the Collateral Documents (as defined in the Credit
Agreement) and all of the Collateral described therein do and shall, to the
extent set forth therein, continue to secure the payment of all obligations and
liabilities of the Borrower and the other Loan Parties, as applicable, under the
Credit Agreement and/or any of the other Loan Documents, in each case as amended
hereby.
(c) The execution, delivery and effectiveness of this Amendment shall not
except as expressly provided herein, operate as a waiver of any right, power or
remedy of the Administrative Agent or Lenders under any of the Loan Documents,
nor constitute a waiver of any provision of any of the Loan Documents.
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SECTION 6. Costs, Expenses and Taxes. The Borrower agrees to pay on demand
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all reasonable costs and expenses of the Administrative Agent, the Lead Arranger
and the Syndication Agent in connection with the preparation, execution,
delivery and administration of this Amendment and the other instruments and
documents, if any, to be delivered hereunder, including, without limitation, the
reasonable fees and out of pocket expenses of counsel for the Administrative
Agent, the Lead Arranger and the Syndication Agent with respect thereto and with
respect to advising each of such parties as to its rights and responsibilities
hereunder and thereunder. The Borrower further agrees to pay on demand all costs
and expenses, of the Administrative Agent, the Lead Arranger, the Syndication
Agent, each Lender and each Issuing Bank (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Amendment
and the other instruments and documents to be delivered hereunder, including,
without limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section.
SECTION 7. Counterparts. This Amendment may be executed in any number of
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counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this Amendment by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Amendment.
SECTION 8. Governing Law. This Amendment shall be governed by, and
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construed in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
PANOLAM INDUSTRIES
INTERNATIONAL, INC.,
as Borrower
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx, Xx.
Title: President
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Director of Finance
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