Exhibit 10.1

 

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of November 9, 2001 (this "Amendment"), is among CHESAPEAKE CORPORATION, CHESAPEAKE UK ACQUISITIONS II PLC, CHESAPEAKE UK ACQUISITIONS PLC, CHESAPEAKE U.K. HOLDINGS LIMITED, BOXMORE INTERNATIONAL PLC, FIELD GROUP PLC and CHESAPEAKE EUROPE, SAS (collectively, the "Borrowers"), the Lenders (as defined below) signatories hereto and FIRST UNION NATIONAL BANK, as administrative agent for the Lenders (in such capacity, the "Administrative Agent").

WITNESSETH:

WHEREAS, the Borrowers, certain financial institutions and other Persons (such capitalized term and other capitalized terms used in these recitals to have the meanings set forth or defined by reference in Part I below) from time to time parties thereto (collectively, the "Lenders"), Bank of America, N.A., as the Syndication Agent, Wachovia Bank, N.A., as the Documentation Agent, and the Administrative Agent are parties to the Amended and Restated Credit Agreement, dated as of February 8, 2001 (as amended, supplemented, amended and restated or otherwise modified through the date hereof, the "Existing Credit Agreement");

WHEREAS, the Borrowers have requested that the Lenders amend the Existing Credit Agreement as set forth below; and

WHEREAS, the Required Lenders have agreed, subject to the terms and conditions hereinafter set forth, to amend the Existing Credit Agreement in certain respects (the Existing Credit Agreement, as so amended or otherwise modified by this Amendment, being referred to as the "Credit Agreement");

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:

DEFINITIONSCertain Definitions

. The following terms (whether or not underscored) when used in this Amendment shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

"Administrative Agent" is defined in the preamble.	

"Amendment" is defined in the preamble.

"Borrowers" is defined in the preamble.

"Credit Agreement" is defined in the third recital.

"Existing Credit Agreement" is defined in the first recital.

"First Amendment Effective Date" is defined in Subpart 3.1.

"Lenders" is defined in the first recital.
Other Definitions

. Terms for which meanings are provided in the Existing Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used in this Amendment with such meanings.

AMENDMENTS
Effective on (and subject to the occurrence of) the First Amendment Effective Date, the Existing Credit Agreement is hereby amended in accordance with this Part; except as so amended or otherwise modified by this Amendment, the Existing Credit Agreement and the Loan Documents shall continue in full force and effect in accordance with their terms.
Amendment to Article I

. Article I of the Existing Credit Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.5.
- Section 1.1 of the Existing Credit Agreement is hereby amended by inserting the following definitions therein in the appropriate alphabetical order:
"First Amendment" means the First Amendment, dated as of November __, 2001, to this Agreement among the Borrowers, the Administrative Agent and the Lenders parties thereto.
"First Amendment Effective Date" is defined in Subpart 3.1 of the First Amendment.
"Issuance Date" means the date of issuance by the U.S. Borrower of Subordinated Debt in a principal amount equal to at least $100,000,000 on terms and conditions satisfactory to the Administrative Agent.
"Readjustment Date" means the date after the Issuance Date on which the Administrative Agent receives a duly executed certificate from the Borrowers (a) certifying that the Senior Leverage Ratio as of the last day of the then most recently ended Fiscal Quarter was equal to or less than 3.0:1 and (b) requesting a reduction in the applicable Senior Leverage Ratio for all periods thereafter to 3.25:1.
"Senior Leverage Ratio" means, as of the last day of any Fiscal Quarter, the ratio 	of
	(a) Total Debt (other than Subordinated Debt) outstanding on the last day of such Fiscal Quarter

to

	(b) Adjusted EBITDA computed for the period consisting of such Fiscal 			Quarter and each of the three immediately preceding Fiscal Quarters.
- Section 1.1 of the Existing Credit Agreement is hereby further amended by amending and restating the definition of "Applicable Margin" appearing therein to read in its entirety as follows:
"Applicable Margin" means the applicable percentage set forth below corresponding to the relevant Leverage Ratio:

Leverage Ratio
Applicable Margin for LIBO Rate Loans
Applicable Margin for Base Rate Loans
Greater than or equal to 4.25:1
3.50%
2.50%
Greater than or equal to 4.0:1
2.75%
1.75%
Greater than or equal to 3.75:1
2.50%
1.50%
Greater than or equal to 3.5:1
2.125%
1.125%
Greater than or equal to 3.0:1
2.00%
1.00%
Less than 3.0:1
1.75%
.25%

Notwithstanding anything to the contrary set forth in this Agreement, (a) if the Issuance Date does not occur on or prior to December 15, 2001, the Applicable Margin shall be 4.50% for all types of Loans and (b) from and after the Readjustment Date, the Applicable Margin shall be reduced by .25% from the amount otherwise applicable during such period. The Leverage Ratio used to compute the Applicable Margin shall be the Leverage Ratio set forth in the Compliance Certificate most recently delivered by the Borrowers to the Administrative Agent. Changes in the Applicable Margin resulting from a change in the Leverage Ratio shall become effective upon delivery by the Borrowers to the Administrative Agent of a new Compliance Certificate pursuant to clause (c) of Section 7.1.1. If the Borrowers fail to deliver a Compliance Certificate within 50 days after the end of any Fiscal Quarter (or within 90 days, in the case of the last Fiscal Quarter of the Fiscal Year), the Applicable Margin from and including the 51st (or 91st, as the case may be) day after the end of such Fiscal Quarter to but not including the date the Borrowers deliver to the Administrative Agent a Compliance Certificate shall conclusively equal the highest Applicable Margin computed in accordance with the foregoing provisions of this definition.
Section 1.1 of the Existing Credit Agreement is hereby further amended by deleting (a) the definition of "French Borrower" appearing therein in its entirety and (b) all other references to "French Borrower", "Chesapeake Europe, SAS" and any related provisions appearing therein or elsewhere in the Existing Credit Agreement, and the French Borrower is hereby released from all of its obligations under the Loan Documents.
Section 1.1 of the Existing Credit Agreement is hereby further amended by amending the definition of "Net Worth" appearing therein by inserting the following immediately prior to the "." at the end thereof:

"; provided, further, that such amount shall exclude any non-cash costs incurred 			by the Borrowers and their Subsidiaries as a direct result of their adoption of 			FASB 142" 
Section 1.1 of the Existing Credit Agreement is hereby further amended by amending the definition of "Permitted Acquisition" appearing therein from and after

		(a) the First Amendment Effective Date by 

		(i) inserting the phrase "; provided, however, that no such written consent shall be required for such acquisitions made in compliance with the requirements of a Permitted Acquisition as set forth above and the other applicable provisions of this Agreement" immediately prior to the "." appearing at the end of clause (i) thereof; and

	(ii) inserting the phrase "to the extent reasonably practicable" immediately prior to the parenthesis in the second line of clause (d) thereof; and

(b) the Readjustment Date by 

	(i) inserting the phrase "; provided that, with respect to the Senior Leverage Ratio, the Borrower shall have demonstrated proforma compliance with a Senior Leverage Ratio of 3.0:1 through the Stated Maturity Date" immediately prior to the ";" appearing at the end of clause (c) thereof; and

	(ii) amending and restating clause (g) thereof to read in its entirety as follows:

	(g) the U.S. Borrower or such Subsidiary shall use only Capital Securities of the U.S. Borrower or any Subsidiary of the U.S. Borrower as payment for such acquisition; provided, however, that the Borrowers and their respective Subsidiaries may also use cash up to an aggregate amount equal to the sum of 

			(i) $50,000,000, plus

		(ii) 50% of the amount of the Net Disposition Proceeds realized from all Dispositions made (x) in accordance with Section 7.2.9 and (y) after the Issuance Date, so long as the Issuance Date is no later than December 15, 2001, 

through the Stated Maturity Date as payment for such acquisitons. 
Amendment to Article III
. Article III of the Existing Credit Agreement is hereby amended in accordance with 
Subpart 2.2.1
.
- Section 3.3.5 of the Existing Credit Agreement is hereby amended and restated to read in its entirety as follows:

SECTION 3.3.5. Amendment Fee. The Borrowers agree, jointly and severally, to pay on the Issuance Date (so long as such date occurs on or prior to December 15, 2001) to the Administrative Agent for the account of each Lender executing the First Amendment an amendment fee in an amount equal to .25% of the product of (a) such Lender's Percentage of the Revolving Loan Commitment Amount multiplied by (b) the Revolving Loan Commitment Amount.
Amendment to Article VII

. Article VII of the Existing Credit Agreement is hereby amended in accordance with Subparts 2.3.1 through 2.3.13.
- Subclause (ii) of clause (e) of Section 7.2.2 of the Existing Credit Agreement is hereby amended and restated to read in its entirety as follows:
(ii) is incurred by a Foreign Subsidiary (that is not an Obligor) and is owing to any Borrower or a Subsidiary Guarantor, shall not (when aggregated with the amount of Investments made by such Borrower and the Subsidiary Guarantors in Foreign Subsidiaries under clause (d)(i) of Section 7.2.5) exceed $50,000,000;
- Clause (a) of Section 7.2.4 of the Existing Credit Agreement is hereby amended and restated to read in its entirety as follows:
(a)	The Borrowers will not permit the Leverage Ratio as of the last day of any Fiscal Quarter occurring during any period set forth below to be greater than the ratio set forth opposite such period:

Period
 
Leverage Ratio
10/01/01 through (and including) 12/31/01
 
4.10:1
01/01/02 through (and including) 12/31/02 
 
3.50:1
01/01/03 and thereafter
 
3.25:1

provided, however, that if the Issuance Date occurs on or prior to December 15, 2001, the Borrowers will not permit the Leverage Ratio as of the last day of any Fiscal Quarter occurring during any period set forth below to be greater than the ratio set forth opposite such period:

Period
 
Leverage Ratio
10/01/01 through (and including) 09/30/02
 
4.50:1
10/01/02 and thereafter 
 
4.25:1

Clause (b) of Section 7.2.4 of the Existing Credit Agreement is hereby amended and restated to read in its entirety as follows:

(b)	The Borrowers will not permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter occurring during any period set forth below to be less than the ratio set forth opposite such period:

Period
Interest Coverage Ratio
10/01/01 and thereafter
2.75:1

provided, however, if the Issuance Date occurs on or prior to December 15, 2001, the Borrowers will not permit the Interest Coverage Ratio on the last day of any Fiscal Quarter set forth above to be less than 2.50:1.
Clause (c) of Section 7.2.4 of the Existing Credit Agreement is hereby amended and restated to read in its entirety as follows:

(c) 	The U.S. Borrower will not permit its Net Worth during any period set 	forth below to be less than the amount set forth opposite such period:

Period
Net Worth
10/01/01 through (and including) 12/31/01
$450,000,000
01/01/02 and thereafter
$450,000,000 plus 50% of Net Income since 01/01/02 without deduction for losses.

Clause (d) of Section 7.2.4 of the Existing Credit Agreement is hereby amended and restated to read in its entirety as follows:

(d)	The Borrowers will not permit Adjusted EBITDA as of the last day of any Fiscal Quarter occurring during any period set forth below to be less than the amount set forth opposite such period: