Exhibit 10.1

 

AMENDMENT No. 10 TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS AMENDMENT NO. 10 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
“Agreement”), dated as of November 21, 2018, among ORCHIDS PAPER PRODUCTS
COMPANY, a Delaware corporation (“Borrower”), the Guarantors party hereto, the
lenders party hereto (“Lenders”) and U.S. BANK NATIONAL ASSOCIATION, as a Lender
and as LC Issuer, Swing Line Lender and Administrative Agent for the Lenders (in
such capacity, “Administrative Agent”).

 

BACKGROUND

 

A.       Borrower, Administrative Agent and Lenders are parties to that certain
Second Amended and Restated Credit Agreement dated as of June 25, 2015 (as
amended, supplemented and modified from time to time, the “Credit Agreement”).

 

B.       Borrower has requested that Administrative Agent and Lenders increase
the Revolving Credit Commitment and amend certain provisions of the Credit
Agreement as set forth herein.

 

C.       Administrative Agent and Lenders are willing to increase the Revolving
Credit Commitment and amend certain provisions of the Credit Agreement upon the
terms and conditions set forth below.

 

D.       NOW THEREFORE, in consideration of the matters set forth in the
recitals and the covenants and provisions herein set forth, and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

AGREEMENT

 

Section 1.                Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the Credit
Agreement.

 

Section 2.                Amendments to the Credit Agreement. As of the
Effective Date (as defined below), the Credit Agreement is hereby amended as
follows:

 

(a)               Article I of the Credit Agreement is hereby amended to delete
the definition of Eligible Assignee and insert in substitution therefor the
following:

 

“Eligible Assignee” means any Person except a natural Person, the Borrower, any
of the Borrower’s Affiliates or Subsidiaries or any Defaulting Lender or any of
its Subsidiaries.

 

(b)               Article I of the Credit Agreement is hereby amended to add the
following defined term:

 

 

 

 

“Tenth Amendment” shall mean Amendment No. 10 to Second Amended and Restated
Credit Agreement dated as of November 21, 2018 among Borrower, Guarantors,
Administrative Agent and Lenders.”

 

(c)               Section 6.1(j) of the Credit Agreement is hereby amended to
provide that the Cash-Flow Forecast for the period starting the week ending
November 9, 2018 to and including December 14, 2018, tendered by Borrower to and
accepted by Administrative Agent prior to the Effective Date shall replace the
Cash Flow Forecast in existence on the date of this Agreement. On or before the
third Business Day of each week, commencing November 14, 2018, Borrower shall
provide to Administrative Agent (A) a line-by-line reconciliation of (1) the
amounts of budgeted expenditures and receipts for the immediately preceding week
as set forth in the Cash-Flow Forecast most recently delivered to and approved
by Administrative Agent for such week and (2) the actual expenditures and
receipts for such week (together with an explanation, in reasonable detail, of
any material differences between the budgeted and actual amounts) and (B) a
certification by the CSO, that such person has no reason to believe that such
reconciliation is incorrect or misleading in any material respect, and on or
before the second Business Day of each week commencing November 13, 2018,
Borrower shall provide to Administrative Agent, a report on the prior weekly
sales by customer, together with a comparison to budgeted sales for such period
and a certification by the CEO or CSO that such person has no reason to believe
that such reconciliation is incorrect or misleading in any material respect.

 

(d)               Notwithstanding anything contained in the Credit Agreement to
the contrary, (i) payments of principal, interest and the Commitment Fee due and
payable on the Term Loans and Draw Loans and payment of interest on the
Revolving Loans otherwise due and payable on October 31, 2018, November 1, 2018
and December 1, 2018 or at the end of the applicable Interest Period if not
falling on such dates, shall instead be due and payable on the earlier of the
occurrence of an Event of Default or December 31, 2018, (ii) Borrower shall not
be entitled to request and Lenders shall have no obligation to make Revolving
Loans from and after the Effective Date of this Agreement in excess of the
lesser of $7,250,000 (“Cap Amount”) or the amount of Draws on the Revolver set
forth in the Cash-Flow Forecast for such period, (iii) the actual ending
Revolving Loan balance for each week shall not exceed the projected amount of
the ending Revolving Loan balance for such week set forth in the Cash-Flow
Forecast, and (iv) Borrower shall use the proceeds of such Revolving Loans
solely for the Borrower’s operating and other expenses set forth in the
Cash-Flow Forecast.

 

(e)               Notwithstanding anything contained in the Credit Agreement to
the contrary, Borrower agrees to, by not later than December 14, 2018, either
provide Administrative Agent with a signed purchase agreement in form and
content acceptable to Administrative Agent for the purchase of the equity or
assets of Borrower in an amount sufficient to repay the outstanding Obligations
in full or a fully executed firm binding commitment from an institutional
lender, in form and substance acceptable to Administrative Agent, for
replacement financing in an amount sufficient to repay all of Borrower’s
Obligations to Administrative Agent and Lenders in full. By not later than
December 31, 2018, Borrower shall have closed on the sale of its equity or
assets or refinancing and repaid the Obligations in full.

 

  -2- 

 

 

(f)                To the extent Borrower has cash on deposit in its domestic
operating accounts (other than the account ending in 9314) in excess of (i)
$2,500,000 as measured as of the end of any given week ending prior to December
14, 2018 and (ii) $1,500,000 as of the end of any given week ending on or after
December 14, 2018, Borrower shall promptly pay such excess to Administrative
Agent for application to the Obligations under the Revolving Loans. Such excess
payments shall increase the maximum total amount of permitted Draws on the
Revolver under Section 2(c)(ii) hereof; provided, that for the avoidance of
doubt, in no event shall the aggregate amount of Revolving Loans after the
Effective Date of this Agreement exceed the Cap Amount.

 

(f) Section 6.21(f) of the Credit Agreement is hereby deleted in its entirety
and the following is inserted in substitution therefor:

 

“(f) [Reserved].

 

(g) The Revolving Commitment is increased by $5,900,000 and the Revolving
Commitment Column to Schedule 1 to the Credit Agreement is hereby amended to
read as follows:

 

Lender Revolving Commitment     U.S. Bank National Association $21,282,516.67  
  JPMorgan Chase Bank, N.A. $16,072,733.94     SunTrust Bank $10,668,969.96    
First Tennessee Bank $3,879,625.43     Total Commitments $51,903,846.00

 

(h) Borrower covenants and agrees with Administrative Agent and Lenders, to
endorse and deposit with Administrative Agent, the check in the approximate
amount of $2,200,000 to be received by Borrower from FM Global related to an
insurance damage claim by Borrower by not later than November 26, 2018. Such
proceeds shall be applied to the outstanding Revolving Loans, but shall not
increase the Cap Amount.

 

(i) Section 10.12 of the Credit Agreement is hereby amended to delete the
following sentence where it appears therein:

 

“Any successor Administrative Agent shall be a commercial bank having capital
and retained earnings of at least $100,000,000.”

 

  -3- 

 

 

(j) Notwithstanding anything contained in Section 12.3 to the contrary, the
Borrower’s consent shall not be required for any assignment by a Lender to be
effective.

 

Section 3.                Representations and Warranties. To induce
Administrative Agent and Lenders to execute this Agreement, Borrower hereby
represents and warrants to Administrative Agent and Lenders as follows:

 

(a)               Authorization; No Conflict. Borrower is duly authorized to
execute and deliver this Agreement. The execution, delivery and performance by
Borrowers of this Agreement, do not and will not (a) require any consent or
approval of any governmental agency or authority (other than any consent or
approval which has been obtained and is in full force and effect), (b) conflict
with (i) any provision of applicable law, (ii) the charter, by-laws or other
organizational documents of Borrower or (iii) any agreement, indenture,
instrument or other document, or any judgment, order or decree, which is binding
upon Borrower or any of its properties or (c) require, or result in, the
creation or imposition of any Lien on any asset of Borrower or any other Loan
Party (other than Liens in favor of Administrative Agent created pursuant to the
Loan Documents).

 

(b)               Binding Effect. This Agreement constitutes the legal, valid
and binding obligation of Borrower enforceable against Borrower in accordance
with its terms, subject to bankruptcy, insolvency and similar laws affecting the
enforceability of creditors’ rights generally and to general principles of
equity (whether enforcement is sought by proceeding in equity or at law).

 

(c)               Continuation of Representations and Warranties. After giving
effect to this Agreement, each of the representations and warranties of Borrower
in the Credit Agreement and the other Loan Documents are true and correct in all
material respects with the same effect as though made on and as of the date
hereof (except to the extent such representations and warranties expressly
relate to a specific earlier date, in which case such representations and
warranties shall be true and correct in material respects as of such earlier
date).

 

(d)               No Event of Default. After giving effect to this Agreement, no
Event of Default exists.

 

Section 4.                Conditions Precedent. This Agreement shall be
effective as of the date first set forth above, subject to the satisfaction of
the following conditions precedent (the date of such satisfaction being the
“Effective Date”):

 

4.1              Execution and Delivery. Borrower, Administrative Agent and
Lenders shall have executed and delivered this Agreement.

 

4.2              No Events of Default. No Event of Default under the Credit
Agreement (other than the Existing Events of Default) shall have occurred and be
continuing or will result from the consummation of the transactions contemplated
by this Agreement.

 

  -4- 

 

 

4.3              Representations and Warranties. The representations and
warranties set forth in Section 3 hereof are true and correct.

 

4.4              Organizational Documents. Administrative Agent shall have
received such customary documents and certificates as Administrative Agent may
reasonably request relating to the organization, existence and good standing of
Borrower and the authorization of the transactions contemplated by this
Agreement.

 

4.5              Payment of Fees and Attorney Costs. Borrower shall have paid to
Administrative Agent all reasonable out-of-pocket costs and expenses of
Administrative Agent (including legal fees, auditor fees, and consultant fees)
in connection with the negotiation, documentation and closing of this Agreement.

 

4.6              Investment Banker. Borrower shall have retained Houlihan Lokey
as its replacement Investment Banker to assist Borrower in the sale of the
equity or assets of Borrower on terms reasonably acceptable to Administrative
Agent

 

4.7              CSO Contract. Borrower shall have entered into a revised
contract with its CSO on terms reasonably acceptable to Administrative Agent.

 

Section 5.                Fees. In consideration for Administrative Agent and
Lenders entering into this Agreement, Borrower agrees to pay to Administrative
Agent, (i) for its own benefit, a fee in the amount of $25,000, and (ii) the pro
rata benefit of Lenders executing this Agreement, an amendment fee in the amount
of $250,000, which fees shall be non-refundable and fully earned on the
Effective Date of this Agreement, and shall be due and payable, along with the
Amendment Fee (as defined in the Eighth Amendment) and Amendment Commitment Fee
(as defined in the Ninth Amendment) on the earliest of (i) December 31, 2018,
(ii) occurrence of an Event of Default, or (iii) sale of all or substantially
all of Borrower’s Assets or equity interests or refinancing of the Obligations.

 

Section 6.                Miscellaneous.

 

6.1              Effect of Agreement. The execution, delivery and effectiveness
of this Agreement shall not operate as a waiver of any right, power or remedy of
Administrative Agent or Lenders under the Credit Agreement or any other Loan
Document, or constitute a waiver of any provision of the Credit Agreement or any
other Loan Document, except as specifically set forth herein, and Borrower and
each Guarantor hereby fully confirms, affirms and ratifies each Loan Document to
which it is a party. Except as specifically modified hereby, the Credit
Agreement and the other Loan Documents remain in full force and effect.

 

6.2              Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument. Delivery of the
executed counterpart of this Agreement by telecopy or electronic mail shall be
as effective as delivery of a manually executed counterpart to this Agreement.

 

  -5- 

 

 

6.3              Costs and Expenses. Borrower shall pay all invoices of
Administrative Agent’s auditors, financial consultants and any legal counsel of
Agent within five days of written request.

 

6.4              Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.

 

6.5              Captions. Section captions used in this Agreement are for
convenience only, and shall not affect the construction of this Agreement.

 

6.6              Entire Agreement. This Agreement embodies the entire agreement
and understanding among the parties hereto and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof.

 

6.7              References. Any reference to the Credit Agreement contained in
any notice, request, certificate, or other document executed concurrently with
or after the execution and delivery of this Agreement shall be deemed to include
this Agreement unless the context shall otherwise require. Reference in any of
this Agreement, the Credit Agreement or any other Loan Document to the Credit
Agreement shall be a reference to the Credit Agreement as amended hereby and as
further amended, modified, restated, supplemented or extended from time to time.

 

  -6- 

 

 

6.8              Waiver of Claims and Defenses. By execution of this Agreement,
Borrower and each Guarantor acknowledges and confirms that it does not have any
offsets, defenses or claims arising out of or relating to this Agreement, the
Credit Agreement or the other Loan Documents against Administrative Agent, any
Lender, or any of their subsidiaries, affiliates, officers, directors,
employees, agents, attorneys, predecessors, successors or assigns whether
asserted or unasserted. The Borrower and Guarantors, for and on behalf of
themselves and their legal representatives, successors and assigns, do waive,
release, relinquish and forever discharge the Administrative Agent and each
Lender, its parents, subsidiaries, and affiliates, its and their respective
past, present and future directors, officers, managers, agents, employees,
insurers, attorneys, representatives and all of their respective heirs,
successors and assigns (collectively, the “Released Parties”), of and from any
and all manner of action or causes of action, suits, claims, demands, judgments,
damages, levies and executions of whatsoever kind, nature or description arising
on or before the date hereof, including, without limitation, any claims, losses,
costs or damages, including compensatory and punitive damages, in each case
whether known or unknown, asserted or unasserted, liquidated or unliquidated,
fixed or contingent, direct or indirect, which the Borrower or the Guarantors,
or their legal representatives, successors or assigns, ever had or now have or
may claim to have against any of the Released Parties, with respect to any
matter whatsoever, including, without limitation, the Loan Documents, the
administration of the Loan Documents, the negotiations relating to this
Agreement and the other Loan Documents executed in connection with this
Agreement and any other instruments and agreements executed by the Borrower or
any Guarantor in connection with the Loan Documents or this Agreement, arising
on or before the date hereof (collectively, “Claims”).  The Borrower and each
Guarantor acknowledges that they are aware that they may discover facts
different from or in addition to those they now know or believe to be true with
respect to the Claims, and agree that the release contained in this Agreement is
and will remain in effect in all respects as a complete and general release as
to all matters released in this Agreement, notwithstanding any such different or
additional facts.  The Borrower and each Guarantor agrees not to sue any
Released Party or in any way assist any other person or entity in suing a
Released Party with respect to any claim released in this Section. Borrower and
each Guarantor acknowledges and agrees that Administrative Agent and the Lenders
have fully and timely performed all of their respective obligations and duties
in compliance with the Loan Documents and applicable law, and has acted
reasonably, in good faith, and appropriately under the circumstances.

 

6.9              Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF OKLAHOMA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.

 

[signature page follows]

 

  -7- 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the date first
set forth above.

 

 

  BORROWER:             ORCHIDS PAPER PRODUCTS COMPANY             By: /s/
Jeffrey S. Schoen     Name: Jeffrey S. Schoen     Title: President and CEO      
              GUARANTORS:           ORCHIDS MEXICO (DE) HOLDINGS, LLC          
  By: /s/ Jeffrey S. Schoen      Name: Jeffrey S. Schoen     Title: President
and CEO                     ORCHIDS MEXICO (DE) MEMBER, LLC             By: /s/
Jeffrey S. Schoen     Name: Jeffrey S. Schoen     Title: President and CEO      
              ORCHID PAPER PRODUCTS COMPANY OF SOUTH CAROLINA           By: /s/
Jeffrey S. Schoen     Name: Jeffrey S. Schoen     Title: President and CEO      
              OPP ACQUISITION MEXICO, S. de. R.L.de C.V.           By: /s/
Jeffrey S. Schoen     Name: Jeffrey S. Schoen     Title: President and CEO      
   

 

 

 

 

          ADMINISTRATIVE AGENT:           U.S. BANK NATIONAL ASSOCIATION, as a
Lender, LC Issuer, Swing Line Lender and Administrative Agent           By: /s/
Mike Warren     Name: Mike Warren     Title: Sr. V.P.                    
LENDERS:              JPMORGAN CHASE BANK, N.A., as a Lender           By: /s/
Kevin Kemp     Name: Kevin Kemp     Title: VP                     SUNTRUST BANK,
as a Lender             By: /s/ Samuel M. Ballesteros     Name: Samuel M.
Ballesteros     Title: Senior Vice President                     FIRST TENNESSEE
BANK, as a Lender           By: /s/ Jim Hennigan     Name: Jim Hennigan    
Title: SVP