This Press Release involves
Title: THIRD AMENDMENT TO CREDIT AGREEMENT
Governing Law: Illinois Date: 1/4/2011
Industry: Paper and Paper Products Law Firm: Moore Van Sector: Basic Materials
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “ Agreement ”) dated as of January 3, 2011 is by and among KAPSTONE KRAFT PAPER CORPORATION, a Delaware corporation (the “ Borrower ”), KAPSTONE PAPER AND PACKAGING CORPORATION, a Delaware corporation (the “ Parent ”), certain subsidiaries of the Parent identified on the signature pages hereto as Guarantors, the Lenders identified on the signature pages hereto and BANK OF AMERICA, N.A., as Administrative Agent (the “ Administrative Agent ”), Swing Line Lender and L/C Issuer.
W I T N E S S E T H
WHEREAS, the Borrower, the Parent, the other Guarantors party thereto, the Lenders party thereto, and the Administrative Agent have entered into that certain Credit Agreement dated as of June 12, 2008 (as modified by that certain First Amendment to Credit Agreement dated as of August 25, 2008, that certain Second Amendment and Limited Waiver Agreement dated as of March 30, 2009, this Agreement and that certain Joinder Agreement dated as of July 15, 2008 among Cogen South L.L.C., the Administrative Agent and Bank of America, N.A., as Collateral Agent, and as may be further amended, restated, modified or supplemented from time to time, the “ Credit Agreement ”);
WHEREAS, the Borrower has informed the Administrative Agent that it intends to prepay the balance of the Earn-Out Obligations under the International Paper Purchase Agreement on or about January 6, 2011 by making a payment of approximately $49,558,801, which will result in cost savings to the Company of approximately $5.43 million;
WHEREAS, (a) Section 7.12 of the Credit Agreement prohibits (i) the amendment of the International Paper Purchase Agreement in any manner which would accelerate the payment of the Earn-Out Obligations, and (ii) the prepayment of the Earn-Out Obligations, and (b) Sections 7.15 and 7.16 of the Credit Agreement may also prohibit such amendment and/or prepayment;
WHEREAS, the Borrower has requested that the Required Lenders agree to certain amendments to the Credit Agreement; and
WHEREAS, the Required Lenders are willing to agree to certain amendments to the Credit Agreement subject to the terms and conditions specified in this Agreement;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms . Capitalized terms used herein but not otherwise defined herein shall have the meanings provided to such terms in the Credit Agreement.
2. Amendments . Subject to the other terms and conditions of this Agreement (including the conditions precedent set forth in Section 3 hereof), the Credit Agreement is hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is amended to add the following definition in the appropriate alphabetical order:
“ Earn-Out Prepayment ” means the payment by the Borrower of approximately $49,558,801 to International Paper Company on or about January 6, 2011 as a prepayment of the
Earn-Out Obligations, subject to the following conditions: (a) such payment shall be made solely from the Borrower’s cash on hand and, in no event, shall such payment be funded with the proceeds of a Revolving Credit Loan (it being understood and agreed that ordinary course of business Borrowings under the Revolving Credit Facility for working capital purposes shall not be deemed to violate this condition) (b) no Default or Event of Default shall exist as of the date of such payment (or shall result therefrom) and (c) such payment shall satisfy and extinguish the Earn-Out Obligations in full.
(b) Section 7.12 of the Credit Agreement is amended in its entirety to read as follows:
“7.12 Restriction of Amendments to Certain Documents. Not amend or otherwise modify, or waive any rights under Related Agreement if, in any case, such amendment, modification or waiver could be adverse to the interests of the Lenders; provided , however, the foregoing restriction shall not be construed to prohibit (a) an amendment to the International Paper Purchase Agreement to permit the prepayment of the Earn-Out Obligations or (b) the Earn-Out Prepayment.”
(c) Section 7.15 of the Credit Agreement is amended to add the following clause (d) immediately following clause (c):
“and (d) the Earn-Out Prepayment,”
(d) Section 7.16 of the Credit Agreement is amended to add the following clause (a)(iv) immediately following clause (a)(iii):
“and (iv) the amendment of the International Paper Purchase Agreement to permit the prepayment of the Earn-Out Obligations,”
3. Condition Precedent to Effectiveness . This Agreement shall become effective as of the date hereof upon the satisfaction of the following conditions:
(a) Execution of Counterparts of Agreement . Receipt by the Administrative Agent of counterparts of this Agreement duly executed by the Borrower, the Parent, the other Guarantors, the Administrative Agent and the Required Lenders;
(b) Amendment Fee . The payment by the Borrower to the Administrative Agent (or its Affiliates), for the account of each Lender who executes and approves this Agreement on or before 5:00 P.M. (Eastern Time) on December 29, 2010, an amendment fee equal to 7.5 basis points on the sum of (i) such Lender’s outstanding Revolving Credit Commitment and (ii) such Lender’s outstanding Term Loans; and
(c) Other Fees and Expenses . The payment by the Borrower to the Administrative Agent (or one of its Affiliates) of (i) all fees set forth in that certain letter agreement, dated as of December 17, 2010, among the Borrower, Bank of America and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as successor to the Arranger and (ii) all other fees and expenses which are due and payable as of the date hereof under the Credit Agreement, including all reasonable out of pocket costs and expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Agreement (including, without limitation, the reasonable fees and expenses of Moore & Van Allen PLLC, special counsel to the Administrative Agent).
4. Representations and Warranties . Each Loan Party hereby represents and warrants that (a) it has the requisite corporate power and authority to execute, deliver and perform this Agreement, (b) it is duly authorized to, and has been authorized by all necessary corporate action to, execute, deliver and perform this Agreement, (c) no consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is requi