Exhibit 99.1
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,
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