EXHIBIT 10.1b
EXECUTION COPY
AMENDMENT AND WAIVER, dated as of December 13, 2002 (this
"Second 2002 Amendment"), to the Credit Agreement, dated as of December 1, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among BEAR ISLAND PAPER COMPANY, LLC, a Virginia limited liability
company (the "Borrower"), the several banks and other financial institutions or
entities from time to time parties thereto (the "Lenders"), TD SECURITIES (USA)
INC., as Arranger, and TORONTO-DOMINION (TEXAS), INC., as the administrative
agent for the Lenders (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Agreement, the Lenders have agreed to make,
and have made, certain loans and other extensions of credit to the Borrower; and
WHEREAS, the Borrower has requested, and, upon this Second 2002
Amendment becoming effective, the Required Lenders have agreed, that certain
provisions of the Agreement be amended in the manner provided for in this Second
2002 Amendment; and
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. Defined Terms. Terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
SECTION 2. Waivers.
a. The Lenders hereby waive:
(i) any Default or Event of Default arising by reason of the failure
of the Borrower to deliver financial statements for the fiscal year
ended December 31, 2001 pursuant to Section 5.1(a) without a "going
concern" or like qualification;
(ii) any Default or Event of Default arising by reason of the
failure of the Borrower to comply with Sections 6.1(c) (Consolidated
Fixed Charge Coverage Ratio) and 6.1(d) (Maintenance of Current Ratio)
of the Credit Agreement for the periods of four consecutive fiscal
quarters ended December 31, 2001, March 31, 2002 and June 30, 2002;
(iii)any Default or Event of Default arising by reason of the
failure of the Borrower to comply with Section 6.1(b) (Consolidated
Interest Coverage Ratio) of the Credit Agreement for the periods of
four consecutive fiscal quarters ended March 31, 2002 and June 30,
2002;
(iv) any Default or Event of Default arising by reason of the
failure of the Borrower to comply with Sections 6.1(a) (Consolidated
Total Debt to Consolidated Total Capitalization Ratio), 6.1(b)
(Consolidated Interest Coverage Ratio), 6.1(c) (Consolidated Fixed
Charge Coverage Ratio) and 6.1(d) (Maintenance of Current Ratio) of the
Credit Agreement as of September 30, 2002 or, as the case may be, for
the period of four consecutive fiscal
quarters ended on September 30, 2002, in each case to the extent such
Default or Event of Default would not have occurred if the amendments
effected by Section 3 of this Second 2002 Amendment had been in effect
on September 30, 2002;
(v) any Default or Event of Default arising by reason of any
representation and warranty made by the Borrower, in connection with
any extensions of credit under the Credit Agreement, to the effect that
no Default or Event of Default described in the foregoing clauses (i),
(ii), (iii) and (iv) and clause (vi) below had occurred; and
(vi) any Default or Event of Default arising by reason of the
failure of the Borrower to give notice under the Credit Agreement of
the occurrence of any Default or Event of Default described in the
foregoing clauses (i), (ii), (iii), (iv) and (v).
SECTION 3. Amendments to Credit Agreement. The Credit Agreement is,
effective as of September 30, 2002 and subject to the satisfaction or waiver of
the conditions of effectiveness set forth in Section 4 of this Second 2002
Amendment, hereby amended as follows:
(a) Definitions. Section 1.1 of the Credit Agreement is hereby amended
as follows:
(i) The following definitions are added in appropriate alphabetical
order:
"▇▇▇▇▇-▇▇▇▇▇ 2003 Collateral Account": as defined in the New
Guarantee.
"New Guarantee": a guarantee, substantially in the form of
Exhibit A to the Second 2002 Amendment, executed and delivered by
▇▇▇▇▇-▇▇▇▇▇ as of December 13, 2002, as amended, supplemented or
otherwise modified from time to time.
"Pro Forma Fixed Charge Coverage Ratio": for any period of two
consecutive fiscal quarters (a "Semi-Annual Test Period"), the
ratio of (a) the sum of (i) Consolidated EBITDA for such
Semi-Annual Test Period, (ii) the amount of cash and Cash
Equivalents held by the Borrower and its Subsidiaries on the last
day of such Semi-Annual Test Period, (iii) the aggregate
Available Revolving Credit Commitments of all Lenders on the last
day of such Semi-Annual Test Period, and (iv) the amount of cash
and Cash Equivalents in the ▇▇▇▇▇-▇▇▇▇▇ 2003 Collateral Account
on the last day of such Semi-Annual Test Period (provided, that
such amount shall be deemed to be $5,000,000 on December 31,
2002), less the amount of Capital Expenditures reasonably
projected by the Borrower to be made during the two consecutive
fiscal quarters following such Semi-Annual Test Period (the two
fiscal quarters following any Semi-Annual Test Period, the
"Projected Test Period") to (b) the sum of (i) the total
Consolidated Interest Expense for the Projected Test Period,
calculated using the rate of interest in effect on the last day
of such Semi-Annual Test Period with respect to the applicable
Indebtedness and the aggregate amount of the Borrower's
Indebtedness outstanding on such last day, (ii) scheduled
payments to be made during the Projected Test Period on account
of principal of Indebtedness of the Borrower or any of its
Subsidiaries (for purposes of this clause (ii), such scheduled
payments shall not include scheduled principal payments under the
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Revolving Credit Facility), (iii) the amount of dividends and other
distributions reasonably projected by the Borrower to be made by
the Borrower during the Projected Test Period pursuant to Section
6.6 and (iv) Consolidated Lease Expense reasonably projected by the
Borrower to be incurred during the Projected Test Period.
"Second 2002 Amendment": the Amendment and Waiver dated as of
December 13, 2002 to this Agreement.
(ii) The phrase "New Guarantee," is added to the definitions of
"Guarantees" after the phrase "the collective reference to the" in such
definition.
(b)Amendments to Section 2. Section 2 of the Credit Agreement is hereby
amended as follows:
(i) Section 2.7 is hereby amended to add the following new paragraph
(c):
(c) The Borrower agrees to pay to the Administrative Agent, for
the account of each Lender, on July 1, 2003, a fee equal to the
difference between (i) the amount of interest that would have
accrued on the Loans of such Lender from the effective date of
the Second Amendment to July 1, 2003 if such Loans had been Base
Rate Loans at all times during such period minus (ii) the amount
of interest that actually accrued on such Loans during such
period in accordance with this Agreement; provided, such fee
shall not be deemed accrued or earned until July 1, 2003.
(ii) Section 2.11 is hereby amended to add the following new paragraph
(c):
(c) Notwithstanding anything to the contrary in this Agreement,
from and after June 30, 2003, all Loans shall be Base Rate Loans.
(c) Affirmative Covenants. Section 5.2 of the Credit Agreement is
hereby amended to add the following text as Section 5.2(h):
(h) within 45 days after the end of each of the first three
fiscal quarters of the Borrower and within 90 days after the end
of each fiscal year of the Borrower, a calculation by the
Borrower as of the end of such fiscal quarter or year of the
Consolidated Total Debt to Consolidated Total Capitalization
Ratio, the Current Ratio and the Pro Forma Fixed Charge Coverage
Ratio.
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(d) Financial Covenants. Section 6.1 of the Credit Agreement is hereby
amended as follows:
(i) The table contained in Section 6.1(a) is deleted in its entirety
and replaced with the following text:
Period Consolidated Total Debt to Consolidated
------ ---------------------------------------
Total Capitalization Ratio
--------------------------
September 30, 2002 through
December 31, 2004 85%
March 31, 2005 and thereafter 80%
(ii) Section 6.1(b), "Consolidated Interest Coverage Ratio," is
deleted in its entirety and the text "[Omitted]" is inserted in lieu
thereof.
(iii)Section 6.1(c) is deleted in its entirety and the following
text is inserted in lieu thereof:
(c) Pro Forma Fixed Charge Coverage Ratio. Permit the Pro
Forma Fixed Charge Coverage Ratio at the end of any fiscal
quarter ending (i) during the period commencing October 1,
2002 and ending December 31, 2002, to be less than 1.25 to
1.0, (ii) during the period commencing March 31, 2003 and
ending June 30, 2003, to be less than 1.05 to 1.0 or (iii) on
September 30, 2003 or thereafter, to be less than 1.25 to 1.0;
provided, that a violation of this covenant at the end of any
fiscal quarter shall not constitute a Default or Event of
Default if, within 25 days after the end of such fiscal
quarter, the Borrower shall have received cash, either as an
equity contribution or as the proceeds of subordinated debt
permitted by Section 6.2(i) in an amount which, if such amount
had been received on the last day of such fiscal quarter, no
violation of this covenant would have occurred as at the end
of such fiscal quarter.
(iv) Section 6.1(d) is deleted in its entirety and the following
text is inserted in lieu thereof:
(d) Maintenance of Current Ratio. Permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities
at the end of any fiscal quarter ending (i) during the period
commencing October 1, 2002 and ending December 31, 2003, to be
less than 1.25 to 1.0 or (ii) on March 31, 2004 or thereafter, to
be less than 1.50 to 1.0 (for purposes of clauses (i) and (ii),
during the period commencing October 1, 2002 and ending September
29, 2003, Consolidated Current Liabilities shall not include
outstanding amounts under the Revolving Credit Facility).
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(e) Events of Default. Section 7 of the Credit Agreement is hereby
amended as follows:
(i) The phrase "the New Guarantee" is added to replace the phrase
"▇▇▇▇▇-▇▇▇▇▇ Guarantee" in the first parenthetical in paragraph (e) and
in the first parenthetical in paragraph (h).
(ii) The phrase "▇▇▇▇▇-▇▇▇▇▇ Guarantee" in clause (j) is deleted and
replaced with the phrase "New Guarantee" and the reference to "Section
11 thereof" in clause (j) is hereby replaced with the reference to
"Section 19 thereof".
(iii)The phrase ", or Section 10 of the New Guarantee" shall be
added after the term "Security and Pledge Agreement" in Section
7(c)(i).
(f) Annex A. Annex A to the Credit Agreement is hereby amended by
deleting in its entirety the grid set forth in such Annex and inserting
in lieu thereof the grid set forth in Annex A attached hereto.
SECTION 4. Conditions to Effectiveness. This Second 2002 Amendment
shall become effective on the date (the "Amendment Effective Date") on which all
of the following conditions precedent have been satisfied or waived:
(a) The Borrower, the Administrative Agent and the Required Lenders
shall have executed and delivered this Second 2002 Amendment.
(b) The Administrative Agent shall have received the New Guarantee,
executed and delivered by a duly authorized officer of ▇▇▇▇▇-▇▇▇▇▇.
(c) The Administrative Agent shall have received a legal opinion of
counsel to ▇▇▇▇▇-▇▇▇▇▇, in form and substance reasonably satisfactory to the
Administrative Agent.
(d) The Administrative Agent shall have received from the Borrower, for
the account of each Lender that has executed this Second 2002 Amendment on or
prior to 5:00 p.m., New York City time on December 13, 2002, an amendment fee
equal to 0.15% of the amount of the Aggregate Exposure of such Lender; provided
that such amendment fee shall only be due and payable if Lenders constituting
Required Lenders execute and deliver this Second 2002 Amendment by such time.
The Administrative Agent shall give the Borrower notice when this Second 2002
Amendment has become effective.
SECTION 5. Representation and Warranties. To induce the Administrative
Agent and the Lenders parties hereto to enter into this Second 2002 Amendment,
the Borrower hereby represents and warrants to the Administrative Agent and all
of the Lenders as of the Amendment Effective Date that the representations and
warranties made by the Borrower in the Loan Documents are true and correct in
all material respects on and as of the Amendment Effective Date (other than
those that expressly speak as of a different date), after giving effect to the
effectiveness of this Second 2002 Amendment, as if made on and as of the
Amendment Effective Date.
SECTION 6. Payment of Expenses. The Borrower agrees to pay or reimburse
the Administrative Agent for all of its reasonable out-of-pocket costs and
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reasonable expenses incurred in connection with this Second 2002 Amendment, any
other documents prepared in connection herewith and the transactions
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent.
SECTION 7. No Other Waivers; Confirmation. Except as expressly amended,
modified and supplemented hereby, the provisions of the Agreement and the Notes
are and shall remain in full force and effect.
SECTION 8. Continuing Effect; No Other Amendments. Except as expressly
amended or waived hereby, all of the terms and provisions of the Credit
Agreement and the other Loan Documents are and shall remain in full force and
effect. The amendments contained herein shall not constitute an amendment or
waiver of any other provision of the Credit Agreement or the other Loan
Documents or for any purpose except as expressly set forth herein.
SECTION 9. No Default. No Default or Event of Default shall have
occurred and be continuing as of the Amendment Effective Date after giving
effect to this Second 2002 Amendment.
SECTION 10. Counterparts. This Second 2002 Amendment may be executed by
one or more of the parties to this Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Second 2002
Amendment signed by all the parties shall be lodged with the Borrower and the
Administrative Agent. This Second 2002 Amendment may be delivered by facsimile
transmission of the relevant signature pages hereof.
SECTION 11. Governing Law. This Second 2002 Amendment and the rights
and obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Second 2002
Amendment to be duly executed and delivered by their respective proper and duly
authorized officers as of the day and year first above written.
BEAR ISLAND PAPER COMPANY, LLC
By:
---------------------------------------
Name:
Title:
TORONTO-DOMINION (TEXAS), INC.,
as Administrative Agent and as a Lender
By:
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Name:
Title:
7
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Name of Lender
By:
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Name:
Title:
8
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Name of Lender
By:
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Name:
Title:
By:
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Name:
Title:
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Annex A
====================================================================================================================
Applicable Applicable Margin-
Margin-Eurodollar Base Rate Revolving Applicable Applicable
Consolidated Revolving Credit Credit Loans Margin-Eurodollar Margin-Base
Leverage Loans Term Loan Rate Term Commitment Fee
Ratio Loans
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=> 5.00 x 3.50% 2.50% N/A N/A .50%
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=> 4.00 x 3.25% 2.25% 3.00% 2.50% .50%
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=> 3.00 x 2.75% 1.75% 3.00% 2.00% .50%
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< 3.00 x 2.50% 1.50% 2.75% 1.75% .375%
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Exhibit A
[NEW GUARANTEE]
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