EXHIBIT 10.14
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 LTD., an Ontario corporation (the "Borrower"), the other Loan
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parties (as defined in the Credit Agreement referred to below) party hereto, the
Lenders (as defined in the Credit Agreement referred to below) party hereto,
CREDIT SUISSE FIRST BOSTON CANADA, for itself as Lender and as Administrative
Agent (the "Administrative Agent") for the Lenders and ROYAL BANK OF CANADA,
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for itself as a Lender and as Documentation Agent (as defined in the Credit
Agreement referred to below).
RECITALS
A. The Borrower, the other Loan Parties and the Lenders have
previously entered into that certain Credit Agreement (as amended, supplemented,
restated, modified or otherwise modified from time to time, the "Credit
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Agreement"), dated as of February 18, 1999, with the Administrative and the
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Documentation Agent.
B. 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
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defined 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
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amended by deleting the text of clause (c) (iii) from the definition of the term
"Excess Cash Flow" and replacing such text with "[intentionally omitted]".
(b) Section 2.04. Section 2.04(c)(i) of the Credit Agreement is
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hereby amended and restated in its entirety to read as follows:
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(i) Prepayments and Reductions from Excess Cash Flow.
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Within 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
Canadian Facility Percentage of the amount of the total Excess Cash Flow of
Panolam International 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 of Term Loans paid pursuant to Section 2.04(a) during such
Fiscal Year, provided, however, if no Quarterly Compliance Certificate has
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been delivered at 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 (i):
Consolidated Leverage Ratio Excess Cash Flow
Prepayment Percentage
greater than or equal to 3.50:1.00 50%
greater than or equal to 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 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 of Panolam International 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. Amalgamate with, merge into or consolidate
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with any Person or permit any Person to amalgamate with, merge into or
consolidate with it, except that (i) any Domestic Subsidiary of
Panolam International may merge into or consolidate with any other
Domestic Subsidiary of Panolam International; provided that the Person
formed by such merger or consolidation shall be a Domestic Subsidiary
of Panolam International, (ii) any of Panolam
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International's Domestic Subsidiaries may merge into Panolam International,
(iii) any Canadian Subsidiary of the Borrower may amalgamate with a
Canadian Subsidiary of the Borrower or with the Borrower, (iv) a wholly-
owned Subsidiary of Panolam International or the Borrower formed primarily
for the purposes of consummating a Permitted Acquisition may, substantially
contemporaneously with the consummation of such Permitted Acquisition, be
merged into or amalgamated with the Person being acquired in such Permitted
Acquisition and (v) Group may merge into Holdings, PII Second or Panolam
International, and PII Second may merge into Holdings, Group or Panolam
International; provided, however, that (i) in the case of each of the
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foregoing clauses (i) through (v), immediately after giving effect thereto,
no event shall occur and be continuing that constitutes a Default, (ii) in
the case of any such merger to which Panolam International or Holdings is a
party, Panolam International or Holdings, as the case may be, is the
surviving corporation, (iii) in the case of any amalgamation to which the
Borrower or any of its Subsidiaries is party, the continuing corporation is
incorporated under the laws of Canada (but not the Province of Quebec) and
the Administrative Agent shall have been given sufficient prior notice by
the Borrower of such transaction to enable it to request and to receive, in
form and substance satisfactory to it, acting reasonably, concurrently
therewith if it reasonably determines it necessary or advisable one or more
agreements (including guarantees, security agreements and mortgages) duly
executed by the continuing person from such transaction together with
Officers' Certificates and legal opinions in connection therewith (as to
customary corporate matters relating to such continuing person and as to
the enforceability of such agreements and the perfection of the Liens
created by the Collateral Documents executed thereby), (iv) in each case,
each entity involved in any such merger, consolidation or amalgamation must
be Solvent and (v) 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 or consolidations with the
same force and effect as if made on such date."
(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 herein
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shall become effective on the date (the "First Amendment Effective Date") on
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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 other
Loan Parties and the Combined Required Lenders (as defined in the Intercreditor
Agreement) (provided that the
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amendments set forth in Sections 2(a) and 2(b) hereof shall 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")
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executed by each Guarantor.
(b) The Administrative Agent shall have received evidence satisfactory
to it of the effectiveness of an amendment to the US 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. Each Loan Party represents
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and warrants as follows:
(a) Authority. Each Loan Party has the requisite corporate power and
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authority to execute and deliver this Amendment and the Consent, as 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 each Loan Party of this Amendment and 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 the transactions contemplated hereby or
thereby.
(b) Enforceability. This Amendment has been duly executed and delivered
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by each Loan Party. The Consent has been duly executed and delivered by each
Guarantor and each Grantor. Each of this Amendment and the Loan Documents (in
each case as modified hereby) is the legal, valid and binding obligation of each
Loan 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 and 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
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this Amendment, no event has occurred and is continuing that constitutes a
Default or an Event of Default under any Loan Document.
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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 Loan Party or Loan Parties, as applicable, party to such
collateral Documents 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.
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 though 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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counterpart 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
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.
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SECTION 8. Governing Law. This Amendment shall be governed by, and
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construed in accordance with, the laws of the Province of Ontario and of Canada
applicable therein.
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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 LTD.
as Borrower
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Director of Finance
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