Exhibit 4.16
WAIVER AND AMENDMENT
AGREEMENT
THIS AGREEMENT dated as of
March 29, 2006 is entered into by and among Pope &
Talbot Ltd. ( “Pope & Talbot Canada” )
and P&T Factoring Limited Partnership, each in its capacity as
a Borrower and as a Guarantor in respect of the obligations of the
other Borrower, Mackenzie Pulp Land Ltd. and P&T Finance Two
Limited Partnership, each in its capacity as a Guarantor of the
obligations of both Borrowers, and The Toronto-Dominion Bank, as
Administration Agent (the “Agent” ), in its
capacity as the Administration Agent for and on behalf of the
Lenders under the Credit Agreement (as defined below).
WHEREAS:
A. The parties hereto are, together
with the Lenders, parties to a third amended and restated credit
agreement dated as of November 30, 2004, as amended by an
amending agreement dated as of July 27, 2005 amongst the same
parties, and which was in turn amended by an amendment of amending
agreement dated as of December 16, 2005, also amongst the same
parties (as so amended, the “Credit Agreement”
);
B. Section 8.1(y) of the Credit
Agreement provides that, for so long as any amount remains
outstanding under the Acquisition Facility, and from and after the
Conversion Date in respect of the Operating Facility, the Borrowers
shall ensure that as at each fiscal quarter end of the Borrowers,
the ratio of Normalized EBITDA to Interest Expense for the four
fiscal quarters then ended, calculated in accordance with the
Credit Agreement, shall not be less than 2 to 1 (the
“Subject Financial Covenant” ); and
C. The Borrowers have requested that
the Lenders waive compliance with the Subject Financial Covenant as
at the fiscal quarter ended March 31, 2006, and the Lenders
have agreed to provide such a waiver on the terms and conditions
set out herein.
NOW THEREFORE in consideration of
the premises herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. In this
Agreement, all defined terms shall have the respective meanings set
forth in the Credit Agreement, unless otherwise defined
herein.
2. Representations and
Acknowledgements of Borrowers. Each of the Borrowers
hereby:
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(a)
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represents and
warrants that it is not an insolvent person within the meaning of
the Bankruptcy and Insolvency Act (Canada) and has no
knowledge that it will become an insolvent person or that it is on
the eve of insolvency; and
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(b)
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acknowledges
and agrees that the granting of the waiver set out in paragraph 3
of this Agreement is of vital importance to the Borrowers in order
to avoid the occurrence of an Event of Default under the Credit
Agreement, which would have significant financial consequences to
the Borrowers.
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3. Waiver of Subject Financial Covenant.
The Agent, for and on behalf of the Lenders, hereby waives
compliance with the Subject Financial Covenant as at the fiscal
quarter ended March 31, 2006 for the four fiscal quarters then
ended, subject to the terms and conditions of this
Agreement.
4. Agreement to Grant Additional
Security. Pope & Talbot Canada hereby agrees with the
Agent and the Lenders:
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(a)
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to grant
forthwith in favour of the Agent for the benefit of the
Lenders:
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(i)
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a debenture in
the principal amount of $200,000,000 containing a fixed charge over
all of the real property interests of Pope & Talbot Canada
not currently charged in favour of the Agent under the Credit
Agreement; and
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(ii)
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a general
security agreement creating a security interest over all present
and after-acquired personal property of Pope & Talbot
Canada,
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except in each case any real
property interests or personal property held by Pope &
Talbot Canada as general partner of Pope & Talbot
Spearfish Limited Partnership, and each in form and content
satisfactory to the Agent; and
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(b)
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to comply with
Section 11.2 of the Credit Agreement in respect of the
debenture and general security agreement referred to in
subparagraph (a) above.
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5. Amendment of Credit
Agreement. The Credit Agreement is hereby amended as
follows:
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(a)
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The following
definition is added to the Credit Agreement as Section 1.1
(cz.1):
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“Material U.S.
Subsidiary” means,
at any time, a Subsidiary of Pope & Talbot US which has
consolidated assets with a book value exceeding US$10,000,000, and
in any event includes P&T Funding Ltd. and Pope &
Talbot Spearfish Limited Partnership.
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(b)
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The definition
of “Operating Facility Maturity Date” in
Section 1.1(dm) of the Credit Agreement is amended by deleting
“two years” therefrom and substituting “one
year”.
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(c)
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The definition
of “Permitted Liens” in Section 1.1(dv) of the
Credit Agreement is amended by inserting “in favour of the
Lenders” in the second line of subparagraph (xi) thereof
immediately before “created by”.
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(d)
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Section 2.9 of the Credit Agreement is
amended by deleting “two years” from the sixth line of
paragraph (iv)(B)(2) thereof and substituting “one
year”.
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