Exhibit 10.1

 

FIFTH AMENDMENT

FIFTH AMENDMENT, dated as of December 4, 2009 (this “Amendment”), to the CREDIT
AGREEMENT, dated as of June 12, 2006 (as amended pursuant to the First
Amendment, dated as of March 21, 2007, the Second Amendment, dated as of July 2,
2008, the Third Amendment, dated as of September 26, 2008, and the Fourth
Amendment dated May 19, 2009 and as further amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), by and among CELLU PAPER
HOLDINGS, INC. (“Holdings”), CELLU TISSUE HOLDINGS, INC. (the “Borrower”),
INTERLAKE ACQUISITION CORPORATION LIMITED, the Loan Guarantors party thereto,
the lenders party thereto (the “Lenders”), JPMORGAN CHASE BANK, N.A., as US
Administrative Agent (in such capacity, the “Administrative Agent”) and JPMORGAN
CHASE BANK, N.A., TORONTO BRANCH, as Canadian Administrative Agent.

RECITALS

WHEREAS, the Borrower intends to reorganize its corporate structure through a
series of mergers whereby Cellu Parent Corporation and Holdings will be merged
into the Borrower (the “Reorganization”);

WHEREAS, following the Reorganization, the Borrower intends to issue common
stock in an initial public offering (the “IPO”) and use the proceeds of such
issuance to repay, repurchase, redeem or otherwise retire certain existing
Indebtedness, including, but not limited to, potentially redeeming or
repurchasing the Atlantic Seller Note and a portion of the 2009 Senior Secured
Notes;

WHEREAS, subsequent to the IPO, the Investor Group intends to sell common stock
of the Borrower in a secondary public offering;

WHEREAS, in connection with such issuance, the Lenders are willing to agree to
certain amendments to the Credit Agreement subject to the terms and conditions
set forth herein.

NOW, THEREFORE, in consideration of the foregoing Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:

AGREEMENT

1. Defined Terms. Terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement. As used in this
Amendment, the following term has the meaning specified below:

“Final Prospectus” means the “Prospectus” as such term is defined in the
Underwriting Agreement.

“Underwriting Agreement” means the underwriting agreement to be entered into in
connection with the IPO between Cellu Tissue Holdings, Inc., Weston Presidio V,
L.P., the selling stockholders named therein, and Goldman, Sachs & Co. and J.P.
Morgan Securities Inc. as representatives of the several underwriters named
therein.

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2. Amendment to Section 1.01. Section 1.01 of the Credit Agreement is hereby
amended by:

(a) replacing the definition of “Change in Control” in its entirety with the
following:

“Change in Control” means:

(a) any “person” or “group” of related persons (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) other than the Investor Group
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that such person or group shall be deemed to have
“beneficial ownership” of all shares that any such person or group has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total voting
power of the voting Equity Interests of the US Borrower or any of its direct or
indirect parent entities (or their successors by merger, consolidation or
purchase of all or substantially all of their assets) (for the purposes of this
clause, such person or group shall be deemed to beneficially own any voting
Equity Interests of the US Borrower or any of its direct or indirect parent
entities held by a parent entity, if such person or group “beneficially owns”
(as defined above), directly or indirectly, more than 50% of the voting power of
the voting Equity Interests of such parent entity); or

(b) the first day on which a majority of the members of the board of directors
of the US Borrower are not Continuing Directors; or

(c) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the US Borrower and its Subsidiaries
taken as a whole to any “person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act); or

(d) the adoption by the stockholders of the US Borrower of a plan or proposal
for the liquidation or dissolution of the US Borrower; or

(e) the US Borrower ceases to own, free and clear of all Liens other than
Permitted Encumbrances, 100% of the outstanding Equity Interests of the Canadian
Borrower.

(b) adding the following definitions in the appropriate alphabetical order:

“Continuing Director” means as of any date of determination, any member of the
board of directors of the US Borrower who (a) was a member of such board of
directors on the Fifth Amendment Effective Date or (b) was nominated for
election or election to such board of directors with the approval of a majority
of the Continuing Directors who were members of such board of directors at the
time of such nomination or election.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the United States Securities and Exchange Commission
promulgated thereunder.

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“Fifth Amendment” means that certain Fifth Amendment dated as of December 4,
2009 by and among the US Borrower, the Canadian Borrower, the other Loan
Guarantors party thereto, the Lenders party thereto, the US Administrative Agent
and the Canadian Administrative Agent.

“Fifth Amendment Effective Date” means the “Effective Date” as defined in the
Fifth Amendment.

“IPO” has the meaning assigned thereto in the Fifth Amendment.

“Reorganization” has the meaning assigned thereto in the Fifth Amendment.

(c) deleting the words “or dividends or distributions paid by the US Borrower to
Holdings pursuant to Sections 6.08(a)(iii) and 6.08(a)(v)” in the definition of
“Excess Cash Flow” thereof.

(d) deleting the words “plus, dividends or distributions paid in cash by the US
Borrower to Holdings other than dividends paid pursuant to Section 6.08(a)(v),”
in the definition of “Fixed Charges” thereof.

(e) deleting the words “(i) subject to the last sentence of Section 5.13(a),
Holdings, and (ii)” in the definition of “Loan Guarantor” thereof.

(f) deleting the word “Holdings,” in the definition of “Loan Parties” thereof.

(g) replacing subsection (b) in the definition of “Prepayment Event” in its
entirety with the following:

“(b) the issuance by the US Borrower of any Equity Interests, or the receipt by
the US Borrower of any capital contribution, other than any issuance by the US
Borrower of Equity Interests or receipt of any such capital contributions in
connection with the Reorganization or the IPO; or”

(h) amending the definition of “Swap Agreement” thereof by (i) inserting the
words “(including, for the avoidance of doubt, any Energy Hedging Contract)”
after the word “transactions” in the fifth line thereof, and (ii) deleting the
words “no Energy Hedging Contract and” in the first line of the proviso thereof.

3. Amendment to Section 3.11. Section 3.11 of the Credit Agreement is hereby
amended by deleting the words “and Holdings” each time such words appear in such
Section.

4. Amendment to Section 3.14. Section 3.14 of the Credit Agreement is hereby
amended by deleting the words “and Holdings believe” and substituting therefor
the word “believes”.

5. Amendment to Section 3.15. Section 3.15 of the Credit Agreement is hereby
amended by (i) inserting the words “and its Subsidiaries’” after the words “the
US Borrower’s”, and (ii) inserting the words “, in the case of the Subsidiaries
of the US Borrower,” before the word “owned”, in each case where such words
appear in subsection (b) thereof.

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6. Amendment to Section 5.13. Section 5.13 of the Credit Agreement is hereby
amended by deleting the last sentence of subsection (a) thereof in its entirety.

7. Amendment to Section 5.14. Section 5.14 of the Credit Agreement is hereby
amended by deleting the word “Holdings,” each time such word appears in such
Section and replacing the words “the Borrowers” in the first line thereof with
“The Borrowers”.

8. Amendment to Section 6.03. Section 6.03 of the Credit Agreement is hereby
amended by:

(a) inserting the words “ (other than in connection with the Reorganization or
the IPO)” immediately after the words “or liquidate or dissolve” in the third
line of subsection (a) thereof.

(b) replacing subsection (c) thereof in its entirety with the word “Reserved.”

9. Amendment to Section 6.04. Section 6.04 of the Credit Agreement is hereby
amended by deleting the words “by Holdings in the US Borrower and” in subsection
(c) thereof.

10. Amendment to Section 6.08. Section 6.08 of the Credit Agreement is hereby
amended by:

(a) replacing subsection (a) thereof in its entirety with the following:

(a) No Loan Party will, nor will it permit any Subsidiary to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except (i) the
Borrowers and each Subsidiary may declare and pay dividends with respect to its
common stock payable solely in additional shares of its common stock, and, with
respect to any preferred stock, payable solely in additional shares of such
preferred stock or in shares of its common stock, (ii) Subsidiaries may declare
and pay dividends or distributions ratably with respect to their Equity
Interests, (iii) the US Borrower may make Restricted Payments to pay for, or
discharge any promissory note in respect of, the repurchase, retirement or other
acquisition or retirement for value of any equity interests of the US Borrower
held by any future, present or former employee, director or consultant pursuant
to any management equity plan or stock option plan or any other management or
employee benefit plan or agreement, not exceeding US$5,000,000 during any fiscal
year (with unused amounts in any calendar year being permitted to be carried
over to the next succeeding calendar year); (iv) the US Borrower may pay
management fees pursuant to the Sponsor Management Agreement so long as such
fees are permitted to be paid under Section 6.09; (v) each Subsidiary of the US
Borrower may pay, fees and expenses to the US Borrower for certain management
services (including without limitation marketing, human resources and payroll
and other financial services) provided by the US Borrower to such Subsidiary in
accordance with the terms of the applicable Cellu Tissue Management Agreement;
and (vi) each Subsidiary of the US Borrower may pay fees and expenses to the US
Borrower for certain group purchasing services provided by the US Borrower in
accordance with the terms of the applicable Cellu Tissue Purchasing Agreement.

(b) striking the word “and” at the end of clause (ix) of subsection (b) thereof,
replacing the period at the end of clause (x) of subsection (b) with the word “;
and” and adding the following clause (xi) at the end of subsection (b) thereof:

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“(xi) payment, redemption or repurchase of all or any portion of the 2009 Senior
Secured Notes, the Atlantic Seller Note and the CityForest Bonds, financed in
each case with proceeds from the IPO.”

11. Amendment to Section 6.09. Section 6.09 of the Credit Agreement is hereby
amended by replacing the word “Holdings” with “the US Borrower” each time such
word appears in such Section.

12. Amendment to Section 6.11. Section 6.11 of the Credit Agreement is hereby
amended by inserting the words “(other than amendments to the certificate of
incorporation, bylaws and other organizational documents of the US Borrower in
connection with the Reorganization or the IPO)” at the end of subclause
(b) thereof.

13. Amendment to Schedules. Schedule 3.15 of the Credit Agreement is hereby
replaced in its entirety with Schedule 3.15 attached hereto.

14. Consent to IPO and Reorganization. The Administrative Agent and the Lenders
hereby consent to the IPO and the Reorganization and acknowledge and agree that
neither the IPO nor the Reorganization shall trigger any Default or Event of
Default under the Credit Agreement.

15. Conditions to Effectiveness. This Amendment shall become effective on the
date (the “Effective Date”) on which the following conditions shall have been
duly satisfied or waived to the reasonable satisfaction of the Administrative
Agent, as confirmed in writing by the Administrative Agent:

(a) the Administrative Agent shall have received this Amendment, duly executed
and delivered by the Loan Parties and the Lenders;

(b) the Administrative Agent shall have received a certified copy of the Final
Prospectus;

(c) the Administrative Agent shall have received a certified copy of the
Underwriting Agreement, duly executed and delivered by the parties thereto, and
all conditions to the effectiveness thereof shall have been duly satisfied or
waived; and

(d) the Administrative Agent shall have received a certified copy of the amended
organizational documents of the Borrower.

16. Counterparts. This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement. Delivery
of an executed signature page of this Amendment by email or facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.

17. Representations and Warranties. The Borrower hereby represents and warrants
to the Lenders and the Administrative Agent as follows:

(a) The Borrower has the corporate power and authority and the legal right to
execute, deliver and perform this Amendment and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Amendment. This Amendment has been duly executed and delivered on behalf of the
Borrower and constitutes the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and

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subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.

(b) The representations and warranties of the Borrower set forth in Article III
of the Credit Agreement as amended hereby are true and correct in all material
respects as of the date hereof.

18. Fees, Costs and Expenses. The Borrower agrees to reimburse the
Administrative Agent for all reasonable fees, costs and expenses incurred by it
in connection with this Amendment, including but not limited to the reasonable
fees, costs and expenses of counsel.

19. Governing Law. This Amendment and the rights and obligations of the parties
hereunder shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York.

[Signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

CELLU PAPER HOLDINGS, INC. By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

CELLU TISSUE HOLDINGS, INC. By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

INTERLAKE ACQUISITION CORPORATION LIMITED By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

CELLU TISSUE LLC By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

CELLU TISSUE CORPORATION – NATURAL DAM By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

CELLU TISSUE CORPORATION – NEENAH By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

 

 

 

 

 

Signature Page to Fifth Amendment

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COASTAL PAPER COMPANY By:  

Van Paper Company,

its Managing Partner

By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

 

VAN PAPER COMPANY By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

 

VAN TIMBER COMPANY By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

 

MENOMINEE ACQUISITION CORPORATION By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

 

CELLU TISSUE-CITYFOREST LLC By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

 

CELLU TISSUE – LONG ISLAND, LLC By:   /s/ David Morris  

Name:  David Morris

Title:    Chief Financial Officer

 

Signature Page to Fifth Amendment

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CELLU TISSUE–THOMASTON, LLC By:   /s/ David Morris  

Name: David Morris

Title: Chief Financial Officer

 

Signature Page to Fifth Amendment

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JPMORGAN CHASE BANK, N.A., individually, as US Administrative Agent, Issuing
Bank, Swingline Lender

and a Lender

By:   /s/ Thomas G. Williams  

Name: Thomas G. Williams

Title: Vice President

 

 

JPMORGAN CHASE BANK, N.A., TORONTO

BRANCH, individually and as Canadian Administrative

Agent and a Lender

By:   /s/ Dan Howat  

Name: Dan Howat

Title: Senior Vice President

 

Signature Page to Fifth Amendment

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REGIONS BANK, as a Lender By:   /s/ C. Mark Smith  

Name: C. Mark Smith

Title: Senior Vice President

 

Signature Page to Fifth Amendment

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Schedule 3.15

Capitalization and Subsidiaries

Following the consummation of the IPO, the authorized Equity Interests of Cellu
Tissue Holdings, Inc., a Delaware corporation, shall be as set forth in the
Final Prospectus and submitted to the Administrative Agent supplementally after
the Effective Date.

 

Owner

 

Subsidiary

 

Ownership

Interest

 

Subsidiary Jurisdiction
of Organization/Type
of Entity

 

Number of
Authorized Shares/
Interests

 

Number of Outstanding
Shares/Interests

Cellu Tissue

Holdings, Inc.

  Cellu Tissue LLC   100%   Delaware (limited liability company)   N/A   N/A;
Sole Member

Cellu Tissue

Holdings, Inc.

  Cellu Tissue Corporation- Natural Dam   100%   Delaware (corporation)  
1,000 common, $0.01 par value   1,000

Cellu Tissue

Holdings, Inc.

  Cellu Tissue Corporation- Neenah   100%   Delaware (corporation)   1,000
common, $0.01 par value   700

Cellu Tissue

Holdings, Inc.

  Interlake Acquisition Corporation Ltd.   100%   Nova Scotia, Canada
(corporation)   100,000 common, no par value   1,000

Cellu Tissue

Holdings, Inc.

  Menominee Acquisition Corporation   100%   Delaware (corporation)   1,000
common, $0.01 par value   1,000

Cellu Tissue

Holdings, Inc.

  Van Paper Company   100%   Mississippi (corporation)   100,000 common   10,000

Cellu Tissue

Holdings, Inc.

  Van Timber Company   100%   Mississippi (corporation)   100,000 common   1,000

Van Paper

Company

  Coastal Paper Company   99%   Virginia (general partnership)   N/A   99%

Van Timber

Company

  Coastal Paper Company   1%   Virginia (general partnership)   N/A   1%

Cellu Tissue

Holdings, Inc.

  Cellu Tissue- CityForest LLC   100%   Minnesota (limited liability company)  
N/A   N/A; Sole Member

Cellu Tissue

Holdings, Inc.

  Cellu Tissue- Thomaston, LLC   100%   Delaware (limited liability company)  
N/A   N/A; Sole Member

Cellu Tissue

Corporation-

Natural Dam

  Cellu Tissue- Long Island, LLC   100%   Delaware (limited liability company)  
N/A   N/A; Sole Member