Exhibit 10.3
FIRST AMENDMENT TO SENIOR
SUBORDINATED NOTE PURCHASE
AGREEMENT AND JUNIOR
SUBORDINATED NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO SENIOR
SUBORDINATED NOTE PURCHASE AGREEMENT AND JUNIOR SUBORDINATED NOTE
PURCHASE AGREEMENT (“First Amendment”) is made as of
the 15th day of March, 2005 by and among PW Eagle, Inc., a
Minnesota corporation (“Company”) and Churchill Capital
Partners IV, L.P., a Delaware limited partnership (“Note
Purchaser”).
W I T N E S
S E T H :
WHEREAS, the Company and Note
Purchaser entered into that certain Senior Subordinated Note
Purchase Agreement dated as of October 25, 2004 (the “Senior
Subordinated Agreement”) and that certain Junior Subordinated
Note Purchase Agreement dated as of October 25, 2004 (the
“Junior Subordinated Agreement” and, together with the
Senior Subordinated Agreement, the “Note Purchase
Agreements”); and
WHEREAS, the Company desires to
amend and modify certain provisions of the Note Purchase Agreements
and, subject to the terms hereof, Note Purchaser is willing to
agree to such amendments and modifications;
NOW THEREFORE, in consideration of
the premises, the mutual covenants and agreements herein contained,
and any extension of credit heretofore, now or hereafter made by
Note Purchaser to the Company, the parties hereto hereby agree as
follows:
11. Definitions . All
capitalized terms used herein without definition shall have the
meaning given to them in the Loan Agreement.
12. Additional and Amended
Definitions . Section 1.1 of each of the Note Purchase
Agreements is hereby amended by adding or amending, as applicable,
the following definitions:
“ Capital Expenditure
Carryover ” shall have the meaning specified in Section
7.7.
“ Debt to EBITDA Ratio
” shall have the meaning specified in Section
7.5(b)
“ EBITDA ” shall
mean with respect to any fiscal period, the sum of Consolidated Net
Income for such period plus amounts deducted in determining such
Consolidated Net Income in respect of: (a) any provision for (or
less any benefit from) income taxes whether current or deferred;
(b) amortization and depreciation expense; (c) Interest Expense for
such period; and (d) the amount, if any, deducted from Consolidated
Net Income (and not otherwise added back pursuant to clause (a),
(b), or (c) of this definition) paid to OxyVinyls, LP in connection
with Section 5.5 of the new PVC Resin Supply Agreement referred to
in Section 7(C) of the First Amendment. For purposes of
Schedule
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6.5, EBITDA for fiscal periods
ending on or prior to December 31, 2004, shall not include
restructuring charges of up to $1,000,000 which were incurred in
fiscal year 2003, but were expensed in fiscal year 2004 and up to
$400,000 of expenses which have been or will be incurred in the PW
Poly Spinoff.
“ First Amendment
” shall mean that certain First Amendment to Senior
Subordinated Note Purchase Agreement and Junior Subordinated Note
Purchase Agreement dated as of March 15, 2005 by and between the
Company and Note Purchaser.”
“ Interest Expense
” means, with respect to any fiscal period, the interest
expense incurred for such period excluding interest income as
determined in accordance with GAAP, including, without limitation
(whether or not such amount is included within interest expense
pursuant to GAAP), the amount payable to Oxy Vinyls, LP under
Section 5.5 of the new PVC Resin Supply Agreement referred to in
Section 7(C) of the First Amendment.
13. Additional Definitions
.
(a) Section 1.1 of the Senior
Subordinated Agreement is hereby amended by adding the following
definition:
“ Covenant Election
” shall mean an election made by the Company with respect to
any fiscal quarter and the twelve month fiscal period then ended to
reduce the covenant levels of Minimum EBITDA and Interest Coverage
Ratio contained in Schedule 6.5 . The Company may only
exercise a Covenant Election and such Covenant Election shall only
remain effective if (x) on each day from the date on which the
Covenant Election is exercised until the date on which the Company
delivers to Note Purchaser the financial statements required by
subsection 6.2(b) for the last month of the fiscal quarter
immediately succeeding the fiscal quarter for which the Covenant
Election is to apply Availability equaled or exceeded $9,000,000,
(y) the Company has not exercised a Covenant Election for more than
six consecutive fiscal quarters and (z) the Company has not
exercised a Covenant Election for more than eight fiscal quarters
within the term of this Agreement. In order to make a Covenant
Election, the Company must notify Note Purchaser in writing as
provided in Section 10.4 of such election no later than thirty days
after the end of the fiscal quarter to which the Covenant Election
is to apply. By way of example of the period described in clause
(x) above, if the Company wishes to make a Covenant Election for
the fiscal quarter ended December 31, 2005, then the Company must
notify Note Purchaser of such Covenant Election on or prior to
January 30, 2006 and must maintain Availability greater than
$9,000,000 for each day from the date of the Covenant Election
until the date on which the financial statements for the fiscal
period ended March 31, 2006 are delivered to Note
Purchaser.
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(b) Section 1.1 of the Junior
Subordinated Agreement is hereby amended by adding the following
definition:
“ Covenant Election
” shall mean an election made by the Company with respect to
any fiscal quarter and the twelve month fiscal period then ended to
reduce the covenant levels of Minimum EBITDA and Interest Coverage
Ratio contained in Schedule 6.5 . The Company may only
exercise a Covenant Election and such Covenant Election shall only
remain effective if (x) on each day from the date on which the
Covenant Election is exercised until the date on which the Company
delivers to Note Purchaser the financial statements required by
subsection 6.2(b) for the last month of the fiscal quarter
immediately succeeding the fiscal quarter for which the Covenant
Election is to apply Availability equaled or exceeded $8,100,000,
(y) the Company has not exercised a Covenant Election for more than
six consecutive fiscal quarters and (z) the Company has not
exercised a Covenant Election for more than eight fiscal quarters
within the term of this Agreement. In order to make a Covenant
Election, the Company must notify Note Purchaser in writing as
provided in Section 10.4 of such election no later than thirty days
after the end of the fiscal quarter to which the Covenant Election
is to apply. By way of example of the period described in clause
(x) above, if the Company wishes to make a Covenant Election for
the fiscal quarter ended December 31, 2005, then the Company must
notify Note Purchaser of such Covenant Election on or prior to
January 30, 2006 and must maintain Availability greater than
$8,100,000 for each day from the date of the Covenant Election
until the date on which the financial statements for the fiscal
period ended March 31, 2006 are delivered to Note
Purchaser.
14. Distributions
.
(a) Section 7.5(b) of the Senior
Subordinated Agreement is hereby deleted and the following is
inserted in its stead:
Notwithstanding the foregoing, (i)
the Company may effect the PW Poly Spinoff; (ii) the Company may
make repurchases of its common stock from its stockholders or may
pay dividends on its common stock not in excess of an aggregate
amount of $500,000 during any fiscal year or $125,000 in any fiscal
quarter, in each case, provided (u) the Company shall have
delivered the financial statements required by Section 6.2(a) or
(b), as applicable, for the fiscal year ending December 31, 2005 or
for any fiscal quarter or fiscal year ending thereafter, and such
financial statements and the Compliance Certificate delivered in
connection therewith show compliance with the covenants set forth
on Schedule 6.5, (v) the Company shall have Availability over the
60 days prior to such repurchase or dividend, on average, and
immediately after giving effect to any such repurchase or dividend,
of at least $18,000,000, (w) the Fixed Charge Coverage Ratio for
the most recently ended twelve month period computed on a pro forma
basis (assuming such repurchase or dividend had occurred during
such twelve month period) equals or exceeds 1.05 to 1; (x) EBITDA
for the most recently ended twelve month period equaled or exceeded
$15,000,000, (y) the ratio of (A) the sum of the Company’s
average amount of Funded Debt over the twelve month period prior to
the date of such repurchase or dividend plus the amount of the
dividend or the repurchase to (B) EBITDA for the most recently
ended twelve month period (such ratio hereinafter referred to as
the “Debt to EBITDA Ratio”) equals or is less than 7.00
to 1, and (z) no Default or Event of Default shall have occurred
and be continuing; (iii) the Company may make repurchases of its
common stock from its stockholders or may pay dividends on its
common stock not in excess of an aggregate amount of $1,000,000
during any fiscal year or $250,000 in any fiscal quarter, in each
case, provided (u) the Company shall have delivered the financial
statements required by Section 6.2(a) or (b), as applicable, for
the fiscal year ending December 31, 2005 or for any fiscal quarter
or fiscal year ending thereafter, and such financial statements and
the Compliance Certificate delivered in connection therewith show
compliance with the covenants set forth on Schedule 6.5, (v) the
Company shall have Availability over the 60 days
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prior to such repurchase or
dividend, on average, and immediately after giving effect to any
such repurchase or dividend, of at least $20,700,000, (w) the Fixed
Charge Coverage Ratio for the most recently ended twelve month
period computed on a pro forma basis (assuming such repurchase or
dividend had occurred during such twelve month period) equals or
exceeds 1.05 to 1; (x) EBITDA for the most recently ended twelve
month period equaled or exceeded $20,000,000, (y) the
Company’s Debt to EBITDA Ratio equals or is less than 4.50 to
1, and (z) no Default or Event of Default shall have occurred and
be continuing; (iv) the Company may make repurchases of its common
stock from its stockholders or may pay dividends on its common
stock not in excess of an aggregate amount of $2,000,000 during any
fiscal year or $500,000 in any fiscal quarter, in each case,
provided (u) the Company shall have delivered the financial
statements required by Section 6.2(a) or (b), as applicable, for
the fiscal year ending December 31, 2005 or for any fiscal quarter
or fiscal year ending thereafter, and such financial statements and
the Compliance Certificate delivered in connection therewith show
compliance with the covenants set forth on Schedule 6.5, (v) the
Company shall have Availability over the 60 days prior to such
repurchase or dividend, on average, and immediately after giving
effect to any such repurchase or dividend, of at least $24,300,000,
(w) the Fixed Charge Coverage Ratio for the most recently ended
twelve month period computed on a pro forma basis (assuming such
repurchase or divi
