EXHIBIT 10.03

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made and entered
into as of this 8th day of July, 2003, among Caraustar Industries, Inc., a North
Carolina corporation (“Caraustar”), and each Subsidiary of Caraustar listed on
the signature pages hereto as a “Borrower” (Caraustar and each such Subsidiary,
individually, a “Borrower”, and, collectively, “Borrowers”), and each Subsidiary
of Caraustar listed on the signature pages hereto as a “Guarantor” (each such
Subsidiary, individually, a “Guarantor”, and, collectively, “Guarantors”;
Borrowers and Guarantors, collectively, “Obligors”), the Lenders party to this
Amendment (the “Lenders”), and Bank of America, N.A., as Agent for the Lenders
(the “Agent”).

 

W I T N E S S E T H :

 

WHEREAS, Borrowers, Guarantors, the Lenders and the Agent entered into that
certain Credit Agreement, dated as of June 24, 2003, pursuant to which the
Lenders agreed to make certain loans to Borrowers (as amended, modified,
supplemented and restated from time to time, the “Credit Agreement”); and

 

WHEREAS, Borrowers, Guarantors, the Lenders and the Agent desire to enter into
this Amendment for the purpose of amending the Credit Agreement in certain
respects.

 

NOW, THEREFORE, in consideration of the foregoing premises, and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

1. All capitalized terms used herein and not otherwise expressly defined herein
shall have the respective meanings given to such terms in the Credit Agreement.

 

2. The Credit Agreement is amended to reflect that Merrill Lynch Capital, a
division of Merrill Lynch Business Financial Services Inc. has acted as the
Documentation Agent thereunder.

 

3. The Credit Agreement is amended by deleting the second sentence of Section
3.7 and replacing it with the following:

 

All payments shall be remitted to the Agent and all such payments not relating
to principal or interest of specific Loans, or not constituting payment of
specific fees, and all proceeds of Accounts or other Collateral received by the
Agent, shall be applied, ratably, subject to the provisions of this Agreement,
first, to pay any fees

--------------------------------------------------------------------------------

(other than any annual Agent administrative fees that are more than $60,000 in
excess of the current Agent administrative fee), indemnities or expense
reimbursements, then due to the Agent or the Arranger from the Obligors; second,
to pay any fees or expense reimbursements then due to the Lenders from the
Obligors; third, to pay interest due in respect of all Loans, including
Non-Ratable Loans and Agent Advances; fourth, to pay or prepay principal of the
Non-Ratable Loans and Agent Advances (such amounts being applied first to the
most recently made Non-Ratable Loans and Agent Advances); fifth, to pay or
prepay principal of the Revolving Loans (such amounts being applied first to the
most recently made Revolving Loans), other than Non-Ratable Loans and Agent
Advances, and to unpaid reimbursement obligations in respect of Letters of
Credit; sixth, at the election of the Agent during the existence of a Default or
Event of Default, to pay an amount to the Agent equal to all outstanding
Obligations (contingent or otherwise) with respect to outstanding Letters of
Credit and Credit Support to be held as cash collateral for such Obligations;
and seventh, to the payment of any other Obligation due to the Agent or any
Lender by any Obligor (including any amounts relating to ACH Transactions with
the Bank or any Affiliate of the Bank or any other Bank Products with any Lender
or any Affiliate of a Lender; provided, that, if any Lender (or any of its
Affiliates) other than the Bank provides Bank Products, the payment of amounts
relating to such Bank Products shall be junior in priority to the payment of all
amounts owing to the Bank under this clause seventh with respect to Bank
Products provided by the Bank and its Affiliates unless such other Lender
provides the Agent notice of the amounts owing to it with respect to its Bank
Products prior to or contemporaneously with the provision of such Bank Products
or any increase in the Obligors’ obligations with respect thereto).

 

4. The Credit Agreement is amended by deleting the last sentence of Section
1.2(h)(A) and replacing it with the following:

 

The Agent shall not request the Bank to make any Non-Ratable Loan if (1) the
Agent has received written notice from a Borrower or any Lender that one or more
of the applicable conditions precedent set forth in Article 8 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or (2) the
requested Borrowing would exceed Availability on that Funding Date or cause the
aggregate outstanding amount of Non-Ratable Loans to exceed $10,000,000.

 

5. The Credit Agreement is amended by deleting the last sentence of Section 12.6
and replacing it with the following:

 

Except for notices, reports and other documents expressly herein (or in another
Loan Document to which the Agent is a party) required to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,

 

2

--------------------------------------------------------------------------------

prospects, operations, property, financial and other condition or
creditworthiness of any Obligor or any of its Affiliates which may come into the
possession of any of the Agent-Related Persons.

 

6. The Credit Agreement is amended by deleting Section 12.11(c) and replacing it
with the following:

 

(c) The Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by the Obligors or is cared for,
protected or insured or has been encumbered, or that the Agent’s Liens have been
properly or sufficiently or lawfully created, perfected, protected or enforced
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to the Agent pursuant to any of the Loan Documents, it being
understood and agreed that, except as otherwise expressly set forth in this
Agreement or another Loan Document to which the Agent is a party, in respect of
the Collateral, or any act, omission or event related thereto, the Agent may act
in any manner it may deem appropriate, in its sole discretion given the Agent’s
own interest in the Collateral in its capacity as one of the Lenders and that
the Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing.

 

7. The Credit Agreement is amended by deleting the last two sentences of Section
12.15(c) and replacing them with the following:

 

The failure of any Lender to make any Revolving Loan in respect of which such
Lender is obligated to fund hereunder on any Funding Date (any such Lender,
prior to the cure of such failure, being hereinafter referred to as a
“Defaulting Lender”) shall not relieve any other Lender of its obligation
hereunder to make a Revolving Loan on that Funding Date. No Lender shall be
responsible for any other Lender’s failure to advance such other Lender’s Pro
Rata Share of any Borrowing.

 

8. The Credit Agreement is amended by deleting Section 12.20 and replacing it
with the following:

 

 12.20 Arranger; Co-Agents.

 

(a) Each of the parties to this Agreement acknowledges that the Arranger does
not have any obligations hereunder and shall not be responsible or accountable
to any other party hereto for any action or failure to act hereunder. Without
limiting the foregoing, the Arranger shall not have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it has

 

3

--------------------------------------------------------------------------------

not relied, and will not rely, on the Arranger in deciding to enter into this
Agreement or in taking or not taking action hereunder.

 

(b) Each of the parties to this Agreement acknowledges that Merrill Lynch
Capital, a division of Merrill Lynch Business Financial Services Inc. does not
have any obligations hereunder in its capacity as Documentation Agent and shall
not be responsible or accountable to any other party hereto for any action or
failure to act hereunder in its capacity as Documentation Agent. Without
limiting the foregoing, the Documentation Agent shall not have or be deemed to
have any fiduciary relationship with any Lender. Each Lender acknowledges that
it has not relied, and will not rely, on the Documentation Agent in deciding to
enter into this Agreement or in taking or not taking action hereunder.

 

9. The Credit Agreement is amended by deleting the last two sentences of Section
14.7 and replacing them with the following:

 

In addition, the Obligors jointly and severally agree to pay (i) on demand to
the Agent, for its benefit, all costs and expenses incurred by the Agent
(including Attorneys’ Costs), and (ii) subject to the limitations expressly set
forth herein or in another Loan Document on actions which may be taken by the
Lenders alone, to the Lenders (other than the Bank), on demand, all reasonable
and actual fees, expenses and disbursements paid or incurred by the Lenders
during the existence of an Event of Default to obtain payment of the
Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents (provided
that attorneys’ fees, expenses and disbursements associated with the foregoing
shall be limited to those of one law firm retained by the Lenders), or to defend
any claims made or threatened against the Agent or any Lender arising out of the
transactions contemplated hereby (including preparations for and consultations
concerning any such matters). The foregoing shall not be construed to limit any
other provisions of the Loan Documents regarding costs and expenses to be paid
by the Obligors. All of the foregoing costs and expenses shall be charged to the
Borrowers’ Loan Account as Revolving Loans as described in Section 3.6.

 

 

10. The Credit Agreement is amended by deleting the definition of “Required
Lenders” set forth in Annex A and replacing it with the following:

 

“Required Lenders” means at any time Lenders whose Pro Rata Shares aggregate
more than 50%; provided, that at any time when there are only two Lenders,
“Required Lenders” shall mean both Lenders.

 

11. The effectiveness of this Amendment is expressly conditioned upon the
assignment by the Bank, pursuant to one or more Assignments and Acceptances, of
such amounts of its Commitment such that, after such assignment, the Commitments
of the Lenders shall be as set forth

 

4

--------------------------------------------------------------------------------

on Schedule 1.1 attached hereto. Upon the effectiveness of this Amendment,
Schedule 1.1 attached hereto shall supersede and replace Schedule 1.1 attached
to the Credit Agreement.

 

12. To induce the Agent and the Lenders to enter into this Amendment, Borrowers
and Guarantors hereby represent and warrant that, as of the date hereof, there
exists no Default or Event of Default under the Credit Agreement.

 

13. Borrowers and Guarantors hereby restate, ratify, and reaffirm each and every
representation and warranty heretofore made by each of them under or in
connection with the execution and delivery of the Credit Agreement, as modified
hereby, and the other Loan Documents, as fully as though such representations
and warranties had been made on the date hereof and with specific reference to
this Amendment, except to the extent that any such representation or warranty
relates solely to a prior date.

 

14. Except as expressly set forth herein, the Credit Agreement and the other
Loan Documents shall be and remain in full force and effect as originally
written, and shall constitute the legal, valid, binding and enforceable
obligations of Borrowers and Guarantors to the Agent and the Lenders.

 

15. Borrowers agree to pay on demand all reasonable costs and expenses of the
Agent in connection with the preparation, execution, delivery and enforcement of
this Amendment and all other Loan Documents and any other transactions
contemplated hereby, including, without limitation, the reasonable fees and
out-of-pocket expenses of legal counsel to the Agent.

 

16. Borrowers and Guarantors agree to take such further action as the Agent
shall reasonably request in connection herewith to evidence the agreements
herein contained.

 

17. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.

 

18. This Amendment shall be binding upon and inure to the benefit of the
successors and permitted assigns, and legal representatives and heirs, of the
parties hereto.

 

19. This Amendment shall be governed by, and construed in accordance with, the
laws of the State of Georgia.

 

[SIGNATURES BEGIN ON NEXT PAGE]

 

5

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have entered into this Agreement on the date
first above written.

 

BORROWERS:

CARAUSTAR INDUSTRIES, INC.

By:

 

/s/  Ronald J. Domanico

 

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

CARAUSTAR CUSTOM PACKAGING GROUP, INC.

By:

 

/s/  Ronald J. Domanico

 

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

CARAUSTAR RECOVERED FIBER GROUP, INC.

By:

 

 

/s/  Ronald J. Domanico

 

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

CARAUSTAR INDUSTRIAL AND CONSUMER

PRODUCTS GROUP, INC.

By:

 

/s/  Ronald J. Domanico

 

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

CARAUSTAR MILL GROUP, INC.

By:

 

/s/  Ronald J. Domanico

 

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

 

PARADIGM CHEMICAL & CONSULTING, LLC

   

By:

 

CARAUSTAR MILL GROUP, INC.,

sole member

       

By:

 

/s/ Ronald J. Domanico

 

--------------------------------------------------------------------------------

           

Ronald J. Domanico, Vice President

--------------------------------------------------------------------------------

SPRAGUE PAPERBOARD, INC.

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

GUARANTORS:

PBL INC.

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

GYPSUM MGC, INC.

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

MCQUEENEY GYPSUM COMPANY

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

 

CARAUSTAR, G.P.

   

By:

 

CARAUSTAR INDUSTRIES, INC.,

general partner

       

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

           

Ronald J. Domanico, Vice President

   

By:

 

CARAUSTAR INDUSTRIAL AND

CONSUMER PRODUCTS GROUP, INC.,

general partner

       

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

           

Ronald J. Domanico, Vice President

--------------------------------------------------------------------------------

MCQUEENY GYPSUM COMPANY, LLC

   

By:

 

MCQUEENEY GYPSUM COMPANY,

sole member

       

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

           

Ronald J. Domanico, Vice President

 

RECCMG, LLC

   

By:

 

CARAUSTAR MILL GROUP, INC.,

sole member

       

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

           

Ronald J. Domanico, Vice President

 

CICPG, LLC

   

By:

 

CARAUSTAR INDUSTRIAL AND

CONSUMER PRODUCTS GROUP, INC.

       

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

           

Ronald J. Domanico, Vice President

 

FEDERAL TRANSPORT, INC.

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

       

Ronald J. Domanico, Vice President

 

AUSTELL HOLDING COMPANY, LLC

   

By:

 

CARAUSTAR INDUSTRIES, INC.,

sole member

       

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

           

Ronald J. Domanico, Vice President

 

CAMDEN PAPERBOARD CORPORATION

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

       

Ronald J. Domanico, Vice President

--------------------------------------------------------------------------------

CHICAGO PAPERBOARD CORPORATION

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

HALIFAX PAPER BOARD COMPANY, INC.

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

CARAUSTAR CUSTOM PACKAGING GROUP

(MARYLAND), INC.

By:

 

/S/    RONALD J. DOMANICO

--------------------------------------------------------------------------------

   

Ronald J. Domanico, Vice President

AGENT:

BANK OF AMERICA, N.A., as the Agent

By:

 

/S/    WALTER T. SHELLMAN

--------------------------------------------------------------------------------

   

Walter T. Shellman, Vice President

--------------------------------------------------------------------------------

SCHEDULE 1.1

 

COMMITMENTS

 

Lender

--------------------------------------------------------------------------------

   Commitment

--------------------------------------------------------------------------------

   Pro Rata Share

--------------------------------------------------------------------------------

Bank of America, N.A.

   $ 27,500,000    36.667%

Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services
Inc.

   $ 27,500,000    36.667%

The CIT Group/Business Credit, Inc.

   $ 20,000,000    26.667%