BUCKEYE TECHNOLOGIES INC.
CREDIT AGREEMENT
Amendment No. 4
This Agreement, dated as of July 28, 2003 (this "Agreement"), is among
Buckeye Technologies Inc., a Delaware corporation, its subsidiaries set forth on
the signature pages hereto, and Fleet National Bank, as Agent for itself and the
other Lenders under the Credit Agreement referred to below. The parties agree as
follows:
1. Credit Agreement; Definitions. This Agreement amends
the Credit Agreement dated as of April 16, 2001 among
the parties hereto and certain lenders (as amended
and in effect prior to giving effect to this
Agreement, the "Credit Agreement"). Terms defined in
the Credit Agreement as amended hereby (the "Amended
Credit Agreement") and not otherwise defined herein
are used with the meaning so defined.
2. Amendment of Credit Agreement. Effective on the date
all the conditions set forth in Section 5 hereof are
satisfied (the "Amendment Date"), or with respect to
Section 2.2, of this Agreement, the date set forth in
such Section 2.2, the Credit Agreement is amended as
follows:
2.1. Amendments of Section 1.
2.1.1. The definition of "Consolidated Net Worth" in Section 1
of the Credit Agreement is amended to read in its
entirety as follows:
""Consolidated Net Worth" means, at any date, the total of:
(a) stockholders' equity of the Company and its
Subsidiaries determined in accordance with GAAP on a
Consolidated basis, excluding the effect of any foreign
currency translation adjustments;
plus (b) noncash charges related to asset impairments."
2.1.2. The definition of "Consolidated EBITDA" in Section 1 of
the Credit Agreement is amended to read in its entirety
as follows:
""Consolidated EBITDA" means, for any period, the total of (a)
Consolidated Net Income minus (b) to the extent included in computing
such Consolidated Net Income (i) any extraordinary and nonrecurring
gains and (ii) noncash income items, plus (c) all amounts deducted in
computing such Consolidated Net Income in respect of:
(i) depreciation and amortization;
(ii) interest expense;
(iii) income tax expense;
(iv) the write down for impairment purposes of existing
goodwill and noncash charges related to asset
impairments;
(v) any extraordinary and nonrecurring losses;
(vi) noncash charges related to asset dispositions
(provided, however, that the amount added in respect of
such noncash charges shall not exceed $1,000,000);
(vii) restructuring costs (provided, however, that the amount
added in respect of such restructuring costs shall not
exceed $5,000,000; and provided, further, that the
addition of any amount in excess of $2,500,000 requires
the prior approval of the Agent); and
(viii) costs associated with the Senior Unsecured Note
Issuance (provided, however, that the amount added in
respect of such costs shall not exceed $5,000,000)"
2.1.3. The following definition of "Designated Loan
Prepayment" is hereby inserted into Section 1 of the Credit Agreement
in the appropriate alphabetical order:
"Designated Loan Prepayment" is defined in Section 3.1(b) of
Amendment No. 4 to the Credit Agreement."
2.1.4. The following definition of "Senior Unsecured Note
Issuance" is hereby inserted into Section 1 of the Credit Agreement in
the appropriate alphabetical order:
"Senior Unsecured Note Issuance" is defined in Section 3.1 of
Amendment No. 4 to the Credit Agreement."
2.2. Amendment of Section 2.1.2. From on and after the time of the
Designated Loan Prepayment (as defined in Section 3.1(a) of this Agreement)
Section 2.1.2 of the Credit Agreement is amended to read in its entirety as
follows:
"2.1.2. Maximum Amount of Revolving Credit. The term "Maximum
Amount of Revolving Credit" means the lesser of:
(a)(i) $215,000,000 minus (ii) the amount of the Designated
Loan Prepayment required to be paid pursuant to Section 3.1 of
Amendment No. 4 to the Credit Agreement minus (iii) Net Asset Sale
Proceeds to the extent (A) such Net Asset Sale Proceeds exceed
$5,000,000 in any fiscal year and (B) the amount of such excess in the
foregoing clause (A) is not allocated to an effective Permitted
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Reinvestment Reserve Amount, minus (iv) Receivables Securitization
Proceeds to the extent such Receivables Securitization Proceeds exceed
$30,000,000 in the aggregate after the Initial Closing Date, minus (v)
Net Equity Proceeds received at any time when Consolidated Total Net
Debt is greater than 350% of Consolidated EBITDA for the most recent
period of four consecutive fiscal quarters for which financial reports
have been (or are required to have been) furnished to the Lenders in
accordance with Section 6.4.2, minus (vi) $15,000,000 at any time when
neither a Supported Irish Loan nor a Letter of Credit for the benefit
of an Irish Lender is outstanding; or
(b) the amount (in an integral multiple of $1,000,000) to
which the Maximum Amount of Revolving Credit shall have been
irrevocably reduced from time to time by notice from the Company to the
Agent."
2.3. Amendment of Section 4.2.2. Section 4.2.2 of the Credit Agreement
is amended to read in its entirety as follows:
"4.2.2. Net Asset Sale Proceeds. Upon receipt of Net Asset
Sale Proceeds that exceed $5,000,000 in any year, the Company shall
within three Banking Days pay the amount of such excess to the Agent as
a prepayment of the Loan to be applied as provided in Section 4.4.2;
provided, however, that the Company may elect to reserve all or a
portion of such Net Asset Sale Proceeds up to $50,000,000 in the
aggregate, for Permitted Reinvestments. The amount so reserved (the
"Permitted Reinvestment Reserve Amount") must be expended as a
Permitted Reinvestment within 270 days after the transaction creating
the Permitted Reinvestment Reserve Amount (or, in the case of the
repair or replacement of assets with insurance or condemnation
proceeds, must be firmly committed to be expended). In the event the
Permitted Reinvestment is not so expended within such 270-day period
(or if the Company abandons its plans for a Permitted Reinvestment
prior to the end of such period), the Company shall within three
Banking Days repay the Loan in an amount equal to such Permitted
Reinvestment Reserve Amount to be applied as provided in Section
4.4.2."
2.4. Amendment of Section 6.5.2. Section 6.5.2 of the Credit Agreement
is amended to read in its entirety as follows:
"6.5.2. Consolidated Total Net Debt to Consolidated EBITDA.
Consolidated Total Net Debt as of the end of any fiscal quarter of the
Company shall not exceed the applicable percentage set forth in the
table below of Consolidated EBITDA for the period of four consecutive
fiscal quarters then ending:
Fiscal Quarter Ending Percentage
--------------------- ----------
June 30, 2003 690%
September 30, 2003 700%
through March 30, 2004
June 30, 2004 650%
September 30, 2004 600%
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December 31, 2004 575%
March 31, 2005 525%
and thereafter
2.5. Amendment of Section 6.5.3. Section 6.5.3 of the Credit Agreement
is amended to read in its entirety as follows:
"6.5.3. Consolidated EBITDA to Consolidated Interest Expense.
For each period of four consecutive fiscal quarters of the Company,
Consolidated EBITDA shall equal or exceed the percentage of
Consolidated Interest Expense set forth in the table below:
Fiscal Quarter Ending Percentage
--------------------- ----------
June 30, 2003 210%
September 30, 2003 200%
December 31, 2003 195%
through March 31, 2004
June 30, 2004 200%
September 30, 2004 215%
through December 31, 2004
March 30, 2005 240%"
and thereafter
2.6. Amendment of Section 6.5.4. Section 6.5.4 of the Credit Agreement
is amended to read in its entirety as follows:
"6.5.4. Consolidated EBITDA Minus Capital Expenditures to
Consolidated Interest Expense. For each period of four consecutive
fiscal quarters of the Company, the excess of Consolidated EBITDA minus
Capital Expenditures of the Company and its Subsidiaries shall equal or
exceed the percentage of Consolidated Interest Expense set forth in the
table below; provided, however, that for the purpose of this Section
6.5.4, Capital Expenditures shall exclude capital expenditures for
capital improvements to the Company's Americana cotton plant in Brazil
using Net Asset Sale Proceeds from the sale of land, buildings,
equipment or other assets from the Company's facility in Lumberton, NC
that are not required to be paid to the Agent as a prepayment of the
Loan pursuant to Section ▇.▇.▇.:
Fiscal Quarter Ending Percentage
--------------------- ----------
June 30, 2003 140%
September 30, 2003 120%
December 31, 2003 110%
through March 31, 2004
June 30, 2004 120%
September 30, 2004 130%
December 31, 2004 150%"
and thereafter
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2.7. Amendment of Section 6.5.5. Section 6.5.5 of the Credit
Agreement is amended to read in its entirety as follows:
"6.5.5. Consolidated Total Net Senior Debt to Consolidated
EBITDA. Consolidated Total Net Senior Debt as of the end of any fiscal
quarter of the Company set forth in the table below shall not exceed
the applicable percentage set forth in the table below (depending on
whether the Company has completed the Senior Unsecured Note Issuance
prior to the end of such fiscal quarter) of Consolidated EBITDA for the
period of four consecutive fiscal quarters then ending:
Fiscal Quarter Ending Percentage Before Senior Percentage After Senior
Unsecured Note Issuance Unsecured Note Issuance
June 30, 2003 n/a 245%
September 30, 2003 240% 425%
through December 31, 2003
March 31, 2004 220% 410%
June 30, 2004 205% 375%
September 30, 2004 180% 355%
December 30, 2004 165% 310%
and thereafter
2.8. Amendment of Section 6.5.6. Section 6.5.6 of the Credit
Agreement is amended to read in its entirety as follows:
"6.5.6. Capital Expenditures. The aggregate amount of Capital
Expenditures for any period of four consecutive fiscal quarters shall
not exceed (a) $55,000,000 for such periods ending after June 29, 2002
and on or before June 30, 2003, (b) $45,000,000 for such periods ending
after June 30, 2003 and on or before June 30, 2004 and (c) $50,000,000
for such periods ending after June 30, 2004 and on or before March 31,
2005; provided, however, that for purposes of this Section 6.5.6,
Capital Expenditures shall exclude expenditures for capital
improvements to the Company's Americana cotton plant in Brazil using
Net Asset Sale Proceeds from the sale of land, buildings, equipment or
other assets from the Company's facility in Lumberton, NC that are not
required to be paid to the Agent as a prepayment of the Loan pursuant
to Section 4.2.2."
2.9. Amendment of Section 6.6.14. Section 6.6.14 of the Credit Agreement
is amended to read in its entirety as follows:
"6.6.14. Reserved."
2.10. Amendment of Section 13. Section 13 of the Credit Agreement is
amended by adding the following sentence at the end thereof:
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"Notwithstanding anything contained in this Section 13, except
as reasonably necessary to comply with applicable securities laws, the
Agent and the Lenders (and each employee, representative, agent or
advisor of the Agent or the Lenders) may disclose to any and all
persons, without limitation of any kind, the U.S. tax treatment and
U.S. tax structure of this transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to the
Agent or the Lenders relating to such tax treatment and tax structure."
3. Certain Consents.
3.1. Consent with Respect to the Issuance of Senior Unsecured Notes.
Notwithstanding anything to the contrary in the Credit Agreement, including
Section 6.6 of the Credit Agreement, which restricts the ability of the Company
and its domestic Subsidiaries to incur Indebtedness, but excluding Section 6.5,
the Lenders consent to the issuance by the Company of senior unsecured notes
(the "Senior Unsecured Notes"), and the unsecured guarantee thereof by the
Company's domestic Subsidiaries that are Guarantors, in an aggregate principal
amount of not less than $200,000,000 bearing interest at an annual rate not
greater than 9.5% in an underwritten registered public offering under the
Securities Act or an underwritten offering exempt from registration under Rule
144A of the Securities Act (the "Senior Unsecured Note Issuance"); provided,
however that:
(a) the Senior Unsecured Notes shall be issued on more
complete terms satisfactory to the Agent; and
(b) the Company shall use the proceeds from the sale of the
Senior Unsecured Notes, immediately upon receipt of such proceeds, (i)
to redeem the Company's Senior Subordinated Notes Due 2005 in aggregate
principal amount of $150,000,000 and to pay any premium applicable to
such early redemption and the costs associated with the Senior
Unsecured Note Issuance, notwithstanding anything to the contrary in
the Credit Agreement, including Section 6.13 of the Credit Agreement,
which prohibits the Company from making any voluntary prepayment of
principal of or interest on any Financing Debt (other than the Credit
Obligations) at any time when Consolidated Total Net Debt is greater
than 350% of Consolidated EBITDA for the most recent period of four
consecutive fiscal quarters for which financial reports have been (or
are required to have been) furnished to the Lenders in accordance with
Section 6.4.2 of the Credit Agreement, but excluding Section 6.5 of the
Credit Agreement, and (ii) to pay to the Agent not less than
$40,000,000 (the "Designated Loan Prepayment") as a prepayment of the
Revolving Loan pursuant to Section 4.2.4 to be applied as provided in
Section 4.4.2, which Designated Loan Prepayment shall trigger the
effectiveness of the permanent reduction in the Maximum Amount of
Revolving Credit contemplated by Section 2.2. of this Agreement.
3.2. Consent with Respect to Prepayment of Financing Debt.
Notwithstanding anything to the contrary contained in the Credit
Agreement, including Section 6.13 of the Credit Agreement, which
prohibits the Company from making any voluntary prepayment of principal
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of or interest on any Financing Debt (other than the Credit Obligations)
at any time when Consolidated Total Net Debt is greater than 350% of
Consolidated EBITDA for the most recent period of four consecutive
fiscal quarters for which financial reports have been (or are
required to have been) furnished to the Lenders in accordance with
Section 6.4.2 of the Credit Agreement, but excluding Section 6.5 of the
Credit Agreement, the Lenders consent that the Company may pay up to
$22 million to UPM-Kymmene (the "UPM Prepayment"), as a prepayment of
the entire amount of the note payment due and payable to UPM-Kymmene on
or before October 1, 2003 in respect of the deferred purchase price for
the Walkisoft assets. Notwithstanding the foregoing, the Company shall
not make the UPM Prepayment unless and until:
(a) the Company has provided to the Agent computations based
upon preliminary financial statements for the fiscal quarter ended June
30, 2003 in substantially the form of Exhibit 6.4 to the Credit
Agreement demonstrating compliance with the Computation Covenants as of
the end of such fiscal quarter, and such computations shall be in form
and substance satisfactory to the Agent;
(b) the Company has provided to the Agent computations based
upon preliminary financial statements for the fiscal quarter ended June
30, 2003 on a pro forma basis assuming that the UPM Prepayment had been
made prior to the end of such fiscal quarter in substantially the form
of Exhibit 6.4 to the Credit Agreement demonstrating compliance with
the Computation Covenants as of the end of such fiscal quarter, and
such computations shall be in form and substance satisfactory to the
Agent; and
(c) immediately after making such UPM Prepayment, the total of
(a) unrestricted cash and Cash Equivalents plus (b) the amount the
Company is then permitted to borrow pursuant to Section 2.1 of the
Credit Agreement plus (c) the amount the Company is then permitted to
borrow under its Receivables Securitization exceeds $40,000,000.
3.3. Consent with Respect to Corporate Structuring Changes. The
Lenders consent to the transfer by the Company of the capital stock of BKI
Lending Inc., BKI Holding Corporation and BKI Asset Management Corporation to
Buckeye Lumberton Inc.; provided, however, that such consent shall not be
effective until Buckeye Lumberton Inc. delivers to the Agent for the benefit of
the Lenders the stock certificates representing such capital stock to the extent
required by the Security Agreement and delivers to the Agent an updated Exhibit
7.1 to the Credit Agreement reflecting the transactions referred to in this
Section 3.3.
3.4. Consent with Respect to Subsidiary Lease. The Lenders consent to
the Company and Buckeye Mt. ▇▇▇▇▇ L.L.C. entering into a Pilot Plant Lease
Agreement in substantially the form approved by the Agent, pursuant to which the
Company agrees to lease to Buckeye Mt. ▇▇▇▇▇ L.L.C. a portion of the property
located at ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; provided, however, that the such
consent shall not be effective until the Company and Buckeye Mt. ▇▇▇▇▇ LLC
execute and deliver to the Agent a Subordination and Attornment Agreement in
substantially the form approved by the Agent.
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4. Representations and Warranties. In order to induce the Agent and the
documentation agents to enter into this Agreement, each of the Company and the
Guarantors jointly and severally represents and warrants that (a) this
Agreement, each other Credit Document and the transactions contemplated hereby
and thereby have been authorized by all necessary proceedings of the Company and
the Guarantors, (b) all necessary consents, approvals and authorizations of any
governmental or administrative agency or any other Person with respect to any of
the transactions contemplated hereby or by any other Credit Document shall have
been obtained and shall be in full force and effect and (c) after giving effect
to this Agreement, (i) no Default exists and (ii) the representations and
warranties contained in Section 7 of the Credit Agreement are true and correct
in on and as of the date hereof with the same force and effect as though made on
and as of such date (except as to any representation or warranty which refers to
a specific earlier date).
5. Conditions to Effectiveness.
5.1. Payment of Fees and Expenses. The Company shall have paid to the
Agent (a)for the account of the Lenders, an amendment fee in an amount equal to
0.25% of the respective Commitments of the Lenders and (b) the reasonable legal
fees and expenses of the Agent with respect to this Agreement and the
transactions contemplated hereby. In addition, if the Company has not made the
Designated Loan Prepayment on or before November 30, 2003, the Company shall,
on November 30, 2003, pay to the Agent for the account of the Lenders an
additional amendment fee in an amount equal to 0.50% of the respective
Commitments of the Lenders.
6. General. The Amended Credit Agreement and all of the Credit Documents
are each confirmed as being in full force and effect. This Agreement, the
Amended Credit Agreement and the other Credit Documents referred to herein or
therein constitute the entire understanding of the parties with respect to the
subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. Interest and fees under
the Credit Agreement shall be calculated for all periods as provided in the
Amended Credit Agreement. Each of this Agreement and the Amended Credit
Agreement is a Credit Document and may be executed in any number of
counterparts, which together shall constitute one instrument, and shall bind and
inure to the benefit of the parties and their respective successors and assigns,
including as such successors and assigns all holders of any Credit Obligation.
This Agreement shall be governed by and construed in accordance with the laws
(other than the conflict of law rules) of The Commonwealth of Massachusetts.
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
BUCKEYE TECHNOLOGIES INC.
BUCKEYE FLORIDA CORPORATION
BUCKEYE LUMBERTON INC.
BKI FINANCE CORPORATION
BKI INTERNATIONAL INC.
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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As an authorized officer of each of the
foregoing corporations
BUCKEYE FLORIDA, LIMITED PARTNERSHIP
By Buckeye Florida Corporation, general partner
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title:Vice President
BUCKEYE MT. ▇▇▇▇▇ LLC
By Buckeye Lumberton Inc., manager
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title:Vice President
BKI ASSET MANAGEMENT CORPORATION
BKI HOLDING CORPORATION
By:/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:President
BKI LENDING INC.
By:/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title:Secretary
BFOL 2 Inc.
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title:Vice President
BFC 2 Inc.
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title:Vice President
BFC 3 LLC
By: BFOL 2 Inc., its manager
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title:Vice President
BFOL 3 LLC
By: BFC 2 Inc., its manager
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title:Vice President
MERFIN SYSTEMS INC.
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title:Vice President
FLEET NATIONAL BANK
By:/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title:Director
BANK OF AMERICA, N.A.
By:/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title:Sr. Vice President
THE BANK OF NOVA SCOTIA
By:/S/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Title:Director
FIRST PIONEER FARM CREDIT, ACA
By:/S/ ▇▇▇▇▇ ▇ ▇▇▇▇▇
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Title:Vice President
U.S. BANK NATIONAL ASSOCIATION
By:/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:Vice President
TORONTO DOMINION (TEXAS), INC.
By:/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title:Vice President
UNION PLANTERS BANK, NA
By:▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Title:Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION
By:▇▇▇ ▇▇▇▇▇▇
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Title:Director
OAK HILL ADVISORS
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title:Authorized Signatory
NUVEEN SENIOR INCOME FUND
By:
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Title: