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EXHIBIT 10.03
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT dated as of July 23, 1997 (this "Amendment") to the
Note Agreement dated as of October 1, 1992 (as heretofore amended, the
"Agreement") between CARAUSTAR INDUSTRIES, INC. (the "Company") and The
Prudential Insurance Company of America ("Prudential"). Capitalized terms used
herein have the meanings ascribed to such terms in the Agreement unless
otherwise defined herein.
W I T N E S S E T H:
WHEREAS, Prudential and the Company have executed and delivered the
Agreement, which has heretofore been amended; and
WHEREAS, the Company is, simultaneously herewith, entering into the
Credit Agreement dated the date hereof with BANKERS TRUST COMPANY, as
Administrative Agent, NATIONSBANK, N.A., as Syndication Agent, SUNTRUST BANK,
ATLANTA, as Document Agent, FIRST UNION NATIONAL BANK, as Managing Agent, the
Co-Agents party thereto, and the other banks named therein (as amended from time
to time, the "Credit Agreement"); and
WHEREAS, the Company has requested that Prudential amend the terms of
the Agreement to provide for the Credit Agreement and agree to certain
modifications of the Agreement; and
WHEREAS, Prudential is willing to amend the Notes and the Agreement on
the terms, and subject to the conditions, contained herein;
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Amendments to the Agreement. The Agreement shall be amended such that:
1.1 Xxxxxxxxx 0X. Paragraph 5I, is hereby amended to read in its
entirety as follows:
"5I. SUBSIDIARY GUARANTIES. In the event the Company is
required to issue Bank Guaranties pursuant to the Credit
Agreement, the Company shall provide notice of such requirement
to Prudential, and the Company shall, without any notice from
Prudential cause to be issued and delivered to Prudential
Subsidiary Guaranties of even date with the Bank Guaranties
required under the Credit Agreement. This Paragraph 5I shall be
deleted and shall have no force or effect in the event that the
Credit Agreement is amended to remove the Company's obligation to
issue Bank Guaranties pursuant to the Credit Agreement, whereupon
the Intercreditor Agreement shall terminate and
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be of no force or effect.
1.2. Paragraph 6A(1). Paragraph 6A(1) is hereby amended to read in its
entirety as follows:
"6A(1). Interest Coverage Ratio. The Company covenants that
it will not permit, as of any fiscal quarter end, the ratio of
(a) Consolidated EBITDA to (b) Consolidated Interest Expense paid
or payable in cash for the four fiscal quarters immediately
preceding such date to be less than 2.50 to 1.00."
1.3. Paragraph 6A(2). Paragraph 6A(2) is hereby amended to read in its
entirety as follows:
"6A(2). Leverage. The Company covenants that it will not
permit Consolidated Debt as of any fiscal quarter end to exceed
an amount equal to the product of (x) Consolidated EBITDA for the
four fiscal quarters immediately preceding such date multiplied
by (y) 4.00."
1.4. Subparagraph (i) of Paragraph 6C(2). Subparagraph (i) of
Paragraph 6C(2) is hereby amended to read in its entirety as
follows:
"(i) Indebtedness of the Company and its Subsidiaries (x)
incurred under the Credit Agreement and the Security Documents in
an aggregate principal amount outstanding at any time not to
exceed the lesser of (A) $500,000,000 and (B) the maximum amount
of such Indebtedness permitted to be outstanding at such time
under the Credit Agreement and the Security Documents and (y)
incurred under Interest Rate Agreements entered into in respect
of the Obligations";
1.5. Subparagraph (xi) of Paragraph 6C(2). Subparagraph (xi) of
Paragraph 6C(2) is hereby amended in its entirety as follows:
"(xi) additional Indebtedness of the Company so long as no
Default or Event of Default shall have occurred and be continuing
either at the time of any proposed incurrence of any such
Indebtedness or immediately after giving effect thereto."
1.6. Paragraph 6C(5). Paragraph 6C(5) is hereby amended by deleting
the "and" at the end of subparagraph (ii), deleting the period at
the end of subparagraph (iii) and adding the following:
"; and
(iv) the Company may sell or dispose of assets in any fiscal
year having a fair market value not exceeding an aggregate amount
equal to $20,000,000."
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1.7. Paragraph 7A. Paragraph 7A is hereby amended to:
(a) amend subparagraph (iii) thereof to delete the number
"$5,000,000" and to replace it with the number "$10,000,000".
(b) amend Subparagraph (xiii) thereof to delete the number
"$2,000,000" and to replace it with the number "$10,000,000.
1.8. Paragraph 10B. Paragraph 10B is hereby amended to:
(a) add the following new definitions in the correct
alphabetical order:
"'ACQUISITION' means any acquisition by the
Company or by any Subsidiary of any Person or business
which acquisition results in such Person or business
becoming a Subsidiary of (or becoming part of) the
Company or any of its Subsidiaries."
"'BANK GUARANTY' shall mean any Unconditional
Guaranty Agreement of a Material Subsidiary of the
Company delivered pursuant to the Credit Agreement."
"'CONSOLIDATED DEBT' means, with respect to
the Company and its Subsidiaries at any date of
determination, the sum of the following calculated in
accordance with GAAP: (a) all liabilities, obligations
and indebtedness for borrowed money including but not
limited to obligations evidenced by bonds, debentures,
notes or other similar instruments of any such Person,
(b) all obligations of any such Person as lessee under
Capital Leases, (c) all obligations, contingent or
otherwise, of any such Person relative to the face
amount of letters of credit, whether or not drawn, and
banker's acceptances issued for the account of any such
Person and (d) all Contingent Obligations of any such
Person with respect to the Debt described in clauses (a)
through (c) above of any other Person."
"'CONSOLIDATED EBITDA' means, for any period
(the "EBITDA Measurement Period"), the sum of the amount
for such EBITDA Measurement Period of: (a) Consolidated
Net Income, excluding therefrom any extraordinary items
of gain or loss, plus (b) the sum of the following to
the extent deducted in the determination of Consolidated
Net Income: (i) Consolidated Interest Expense, (ii)
income and franchise taxes and (iii) depreciation and
amortization expense, in each case determined in
accordance with GAAP; provided, however, that for
purposes of the calculation of the Leverage Ratio (A)
Consolidated EBITDA shall be calculated after giving
effect to Acquisitions and dispositions of Subsidiaries
or businesses (provided, in
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the event of an Acquisition or disposition of
a business, the EBITDA of such business is readily
ascertainable (whether from stand-alone financial
statements or an independent auditor's analysis and
review or other reasonable method)) consummated during
the EBITDA Measurement Period as if such Acquisitions or
dispositions were consummated on the first day of such
period, and (B) in the event the Company elects to
submit a Cost Adjustment Certificate pursuant to Section
7.5 of the Credit Agreement for a Substantial
Acquisition, Consolidated EBITDA shall be increased by
the amount of estimated cost reduction synergies, which
shall be reasonable, set forth on such Cost Adjustment
Certificate for each fiscal quarter in the Estimated
Cost Synergy Period that is in the EBITDA Measurement
Period."
"'COST ADJUSTMENT CERTIFICATE' means a
certificate substantially in the form of Exhibit I of
the Credit Agreement delivered pursuant to Section 7.5
thereof. A Cost Adjustment Certificate shall (i) deem
its relevant Substantial Acquisition to have occurred on
the first day of the four full fiscal quarter period
immediately preceding the date of delivery of such Cost
Adjustment Certificate (the "Estimated Cost Synergy
Period") and (ii) set forth for each of the four fiscal
quarters in the Estimated Cost Synergy Period
management's good faith estimate of the amount of cost
reduction synergies reasonably likely to have been
achieved during the Estimated Cost Synergy Period (as if
such Acquisition actually occurred on the first day of
the Estimated Cost Synergy Period) as a result of such
Substantial Acquisition."
"'DEBT' means, with respect to the Borrower
and its Subsidiaries at any date of determination, the
sum of the following calculated in accordance with GAAP:
(a) all liabilities, obligations and indebtedness for
borrowed money including but not limited to obligations
evidence d by bonds, debentures, notes or other similar
instruments of any such Person, (b) all obligations to
pay the deferred purchase price of property or services
of any such Person, except trade payables arising in the
ordinary course of business not more than ninety (90)
days past due unless contested in good faith by
appropriate proceedings, (c) all obligations of any such
Person as lessee under Capital Leases; (d) all Debt of
any other Person secured by a Lien on any asset of any
such Person, (e) all obligations, contingent or
otherwise, of any such Person relative to the face
amount of letters of credit, whether or not drawn, and
banker's acceptances issued for the account of any such
Person, (f) all termination or settlement payments
incurred by any such Person pursuant to Hedging
Agreements, (g) all Contingent Obligations of any such
Person and (h) the aggregate amount of each class or
series of capital stock of any such Person that, prior
to the termination of the Credit Agreement, by its terms
or by the terms of any security into
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which it is convertible or exchangeable, is or upon
the happening of any event or passage of time would
be (i) convertible or exchangeable into Debt or (ii)
required to be redeemed or repurchased, including at
the option of the holder, in whole or in part, or
has, or upon the happening of an event or passage of
time would have, a redemption or similar payment
due."
"'HEDGING AGREEMENT' means any agreement with
respect to an interest rate swap, collar, cap, floor or
a forward rate agreement or other agreement regarding
the hedging of interest rate risk exposure executed in
connection with hedging the interest rate exposure of
the Company under this Agreement or the Credit
Agreement, and any confirming letter executed pursuant
to such hedging agreement, all as amended, amended and
restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof and
thereof."
"'SUBSTANTIAL ACQUISITION' means an
Acquisition the purchase price (including any deferred
portion thereof) of which is greater than $20,000,000
(in cash or otherwise)."
(b) amend the definitions of "Consolidated Interest Expense"
"Credit Agreement," and "Material Subsidiary" to read in their
entirety as follows:
"'CONSOLIDATED INTEREST EXPENSE' means the
total interest expense, net of interest income, of the
Company and its Subsidiaries (including any amount
attributable to interest in respect of payments under
Capital Leases and any net amount payable under any
Hedging Agreement) for such period, all determined on a
consolidated basis in accordance with GAAP."
"'CREDIT AGREEMENT' shall mean the Credit
Agreement dated as of July 23, 1997 among the Company,
the banks party thereto, Bankers Trust Company, as
Administrative Agent, NationsBank, N.A., as Syndication
Agent, SunTrust Bank, Atlanta, as Documentation Agent,
First Union National Bank, as Managing Agent, the
Co-Agents party thereto, and the other banks named
therein or any successor agreement, together with the
documents related thereto, including, without
limitation, any guaranties, in each case as such
agreements may be amended, restated, supplemented or
otherwise modified from time to time, and shall include
any agreement renewing, extending the maturity of,
refinancing (including by way of placement or issuance
of notes) or restructuring all or any portion of the
Indebtedness under such agreements."
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"'MATERIAL SUBSIDIARY' means a Subsidiary of
the Company which has total annual revenue or total
assets equal to or in excess of $10,000,000 as of the
date of formation or acquisition of such Subsidiary, as
applicable, or at any time thereafter."
(c) delete the definitions of "Consolidated Funded Debt" and
"Fixed Charge Coverage Ratio" in their entirety.
2. Conditions to Effectiveness. This Amendment shall be effective and the
Agreement shall be deemed amended hereby upon the following:
2.1 Prudential's receipt of a fully executed copy hereof;
2.2 Prudential's receipt of a fully executed copy of the
Intercreditor Agreement between Prudential and the Banks party
to the Credit Agreement in the form attached hereto as Exhibit
1.
2.3 Prudential's receipt of such documents relating to this
Amendment as Prudential may request, including, without
limitation, officers' certificates, financial statements,
opinions of counsel, board resolutions, charter documents, and
certificates of existence and authority to do business.
3. Company Representations. The Company hereby represents and warrants
that (a) no Default or Event of Default exists or, after giving effect
to this Amendment, will exist and (b) each of the representations and
warranties of the Company contained in Article VI of the Credit
Agreement (referred to therein as Representations and Warranties of the
Borrower) is true and correct in all material respects as of the date
hereof.
4. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF PARTIES SHALL BE GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK.
5. Effect of Agreement. Except as expressly provided herein, the
Agreement shall remain in full force and effect and this Amendment
shall not operate as a waiver of any right, power or remedy of any
holder of a Note, nor constitute a waiver of any provision of the
Agreement.
6. Counterparts. This Amendment may be executed in two or more
counterparts, each of which 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.
[SIGNATURES APPEAR ON THE NEXT PAGE.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers as of the date and year first above
written.
CARAUSTAR INDUSTRIES, INC.
By:/s/ H. Xxx Xxxxxx, III
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Title: Vice President and Chief
Financial Officer
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:/s/ Xxxxxx X. Xxxxxxx
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Senior Vice President
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Attachments:
Exhibit 1: Form of Intercreditor Agreement
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