Document:

Exhibit 10.3

 

PANOLAM INDUSTRIES INTERNATIONAL, INC.

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

This SECOND AMENDMENT TO CREDIT
AGREEMENT (this “Amendment”)  is dated as of March 1, 2006 and entered
into by and among Panolam Industries International, Inc., a Delaware
corporation, as successor by merger to PIH Acquisition Co. (“Company”),
Panolam Holdings II Co., a Delaware corporation (“Holdings”), Credit Suisse, Cayman Islands Branch, as administrative
agent for Lenders (“Administrative Agent”), and, solely for purposes of Section 5
hereof, the Credit Support Parties (as defined in Section 5 hereof) listed on
the signature pages hereof, and is made with reference to that certain Credit
Agreement dated as of September 30, 2005 by and among Company, Holdings, Lenders,
Jefferies & Company, Inc., as syndication agent for Lenders and
Administrative Agent, as amended by that certain First Amendment to Credit
Agreement and Waiver dated February 27, 2006 (as so amended, the “Credit Agreement”). Capitalized terms used herein without
definition shall have the same meanings herein as set forth in the Credit
Agreement.

 

RECITALS

 

WHEREAS, subsection
2.1 A(iv) of the Credit Agreement permits Company to increase the then
effective aggregate principal amount of the Term Loan Commitments in an
aggregate principal amount of up to $80,000,000, provided that certain terms
and conditions are met;

 

WHEREAS, Company
has elected to exercise its option under subsection 2.1A(iv) of the Credit
Agreement to increase the aggregate principal amount of the Term Loan
Commitments by an aggregate principal amount of $80,000,000 (the “Increased Term Loans”), subject to the terms and conditions of
subsection 2.1A(iv);

 

WHEREAS, certain
Lenders have agreed to make the Increased Term Loans to Company in an aggregate
amount of $80,000,000;

 

WHEREAS, pursuant
to subsection 2.1A(iv) of the Credit Agreement, Company and Administrative
Agent are authorized to amend the Credit Agreement without the consent of the
Lenders to the extent necessary to give effect to the Increased Term Loans;

 

NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:

 

Section 1.      AMENDMENTS TO THE CREDIT AGREEMENT

 

A.        Subsection
2.1A(i) of the Credit Agreement is hereby amended by deleting the phrase “and
the aggregate amount of the Term Loan Commitments is $135,000,000” therefrom in
its entirety and substituting the following therefor: “and the aggregate amount
of the Term Loan Commitments (after giving effect to the Second Amendment to
this Agreement, dated as of March 1, 2006, in connection with which Company
exercised its option under subsection 2.1A(iv) to increase the Term Loan
Commitments by $80,000,000) is $215,000,000.”

 

1

 

B.        Subsection 2.4A of the Credit Agreement
is hereby amended by deleting the table contained therein in its entirety and
substituting the following therefor (it being agreed that scheduled repayments
of the Term Loans that were funded on the Closing Date are not reduced hereby):

 

	
  Date

  	
   

  	
  Scheduled Repayment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  337,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  538,001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  538,001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  538,001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  538,001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  538,001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  538,001

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  538,001

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  200,674,474

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  215,000,000

  	
   

  

 

2

 

Section 2.      CONDITIONS TO EFFECTIVENESS

 

The effectiveness of this Amendment is subject to the fulfillment, in a
manner satisfactory to Administrative Agent, of each of the following
conditions precedent (the date such conditions are fulfilled or waived by
Administrative Agent is hereafter referred to as the “Second Amendment Effective Date”):

 

A.        On or before the Second Amendment
Effective Date, Company shall deliver to Administrative Agent copies of this
Amendment, executed by Company and each Credit Support Party.

 

B.        On or before the Second Amendment
Effective Date, Administrative Agent shall have executed copies of this
Amendment.

 

C.        On or before the Second Amendment
Effective Date, new or existing Lenders shall have made, and Administrative
Agent and Company shall have accepted, additional Term Loan Commitments in an
aggregate amount of $80,000,000.

 

D.        Administrative Agent shall be satisfied
that all terms and conditions set forth in subsection 2.1A(iv) of the Credit
Agreement shall have been complied with.

 

Section 3.      EXPENSES

 

Without limiting any obligation of Company to reimburse the expenses
pursuant to the terms of the Loan Documents, Company hereby agrees that on or
before the Second Amendment Effective Date, Company shall reimburse
Administrative Agent for any and all reasonable out of pocket expenses
(including reasonable attorneys’ fees) incurred by Administrative Agent in
connection with this Amendment and the matters related hereto.

 

Section 4.      COMPANY’S AND HOLDINGS’ REPRESENTATIONS AND WARRANTIES

 

In order to induce Administrative Agent to enter into this Amendment
and to amend the Credit Agreement in the manner provided herein, Company and
Holdings represent and warrant to Administrative Agent and each Lender the
following:

 

A.        Corporate
Power and Authority. Company and Holdings have all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform their obligations under, the Credit
Agreement as amended by this Amendment (the “Amended Agreement”).

 

B.        Authorization
of Agreements. The execution and delivery of this Amendment
and the performance of the Amended Agreement have been duly authorized by all
necessary corporate action on the part of Company and Holdings.

 

C.        No
Conflict. The execution and delivery by Company and Holdings
of this Amendment do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to Company or any other Loan
Party, the Organizational Documents

 

3

 

of Company or any
other Loan Party or any order, judgment or decree of any court or other agency
of government binding on Company or any other Loan Party, (ii) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both)
a default under any Contractual Obligation of Company or any other Loan Party,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Company or any other Loan Party (other than Liens
created under any of the Loan Documents in favor of Administrative Agent on
behalf of Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Company
or any other Loan Party, except for such approvals or consents which will be
obtained on or before each of the Second Amendment Effective Date and except,
in each case, to the extent such violation, conflict, Lien or failure to obtain
such approval or consent could not reasonably be expected to have a Material
Adverse Effect.

 

D.        Governmental
Consents.  The
execution and delivery by Company and Holdings and the performance by Company
and Holdings of the Amended Agreement do not and will not require any
Governmental Authorization.

 

E.         Binding
Obligation.  This
Amendment has been duly executed and delivered by Company and Holdings and this
Amendment and the Amended Agreement are the legally valid and binding
obligations of Company and Holdings, enforceable against Company and Holdings
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or similar
laws relating to or limiting creditors’ rights generally or by equitable principles
relating to enforceability.

 

F.         Incorporation
of Representations and Warranties From Credit Agreement.  The representations and warranties
contained in Section 5 of the Credit Agreement are and will be true, correct
and complete in all material respects on and as of each of the Second Amendment
Effective Date to the same extent as though made on and as of each such date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case they were true, correct and complete in all
material respects on and as of such earlier date.

 

G.        Absence
of Default.  No event
has occurred and is continuing or will result from the consummation of the
transactions contemplated by this Amendment that would constitute an Event of
Default or a Potential Event of Default, except as shall be waived hereby.

 

H.        Senior
Debt; Subordination.  The
Increased Term Loans and the other Obligations constitute “Senior Debt” under
the Senior Subordinated Note Indenture. The incurrence of the Increased Term
Loans will not cause any portion of the Obligations (including the Increased
Term Loans) to lose the benefit of subordination provisions, if any, existing
for the benefit of the Obligations immediately prior to the issuance of the
Increased Term Loans.

 

Section 5.      ACKNOWLEDGEMENT AND CONSENT

 

Holdings, each Guarantor (as defined in the Guaranties) and each
Grantor (as defined in the Security Agreement) (such Guarantors and Grantors
together with Holdings, the “Credit Support
Parties”) each hereby acknowledges and agrees that the Guaranties
and

 

4

 

Collateral
Documents (each, a “Credit Support Document”)  to which it is a party or otherwise bound
shall continue in full force and effect and that all of its obligations
thereunder shall be valid and enforceable and shall not be impaired or limited
by the execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Second Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.

 

Each Credit Support Party acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Amendment,
such Credit Support Party is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the
consent of such Credit Support Party to any future amendments to the Credit
Agreement.

 

Section 6.      MISCELLANEOUS

 

A.        Reference
to and Effect on the Credit Agreement and the Other Loan Documents.

 

(i)        On and
after each of the Second Amendment Effective Date, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof, “herein” or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like
import referring to the Credit Agreement shall mean and be a reference to the
Credit Agreement, as amended hereby as of such date.

 

(ii)       Except
as specifically amended by this Amendment, the Credit Agreement and the other
Loan Documents shall remain in full force and effect and are hereby ratified
and confirmed.

 

(iii)      The
execution, delivery and performance of this Amendment shall not, except as
expressly provided herein, constitute a waiver of any provision of, or operate
as a waiver of any right, power or remedy of Administrative Agent or any Lender
under, the Credit Agreement or any of the other Loan Documents.

 

B.        Fees
and Expenses.  Company
acknowledges that all costs, fees and expenses as described in subsection 10.2
of the Credit Agreement incurred by Administrative Agent and its counsel with
respect to this Amendment and the documents and transactions contemplated
hereby shall be for the account of Company.

 

C.        Headings.  Section and subsection headings in this
Amendment are included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose or be given any
substantive effect.

 

5

 

D.        Applicable
Law. THIS AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.

 

E.         Counterparts;
Effectiveness. 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 an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document. This Amendment (other than (i) the provisions of
Sections 1 and 2 hereof, the effectiveness of which is governed by Section 3
hereof, and (ii) the provisions of Section 5 hereof, which shall become
effective upon execution of a counterpart hereof by each of the Credit Support
Parties) shall become effective upon the execution of a counterpart hereof by
Company, Holdings and Administrative Agent and receipt by Company and
Administrative Agent of written or telephonic notification of such execution
and authorization of delivery thereof.

 

[Remainder of page intentionally left blank]

 

6

 

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

 

	
   

  	
  PANOLAM
  INDUSTRIES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Muller,
  Jr.

  	
   

  
	
   

  	
  Name:

  	
  Robert J. Muller

  	
   

  
	
   

  	
  Title:

  	
  Chairman, President
  & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PANOLAM
  HOLDINGS II CO.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Muller,
  Jr.

  	
   

  
	
   

  	
  Name:

  	
  Robert J. Muller

  	
   

  
	
   

  	
  Title:

  	
  Chairman, President
  & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  For purposes of Section
  5 only, as a Credit Support Party:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PANOLAM
  INDUSTRIES, INC.

  PIONEER PLASTICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert J. Muller,
  Jr.

  	
   

  
	
   

  	
  Name:

  	
  Robert J. Muller

  	
   

  
	
   

  	
  Title:

  	
  Chairman, President
  & CEO

  	
   

  
							

 

S-1

 

	
   

  	
  CREDIT
  SUISSE, Cayman Islands Branch,

  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William O’Daly

  	
   

  
	
   

  	
  Name:

  	
  William O’Daly

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rianka Mohan

  	
   

  
	
   

  	
  Name:

  	
  Rianka Mohan

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Associate

  	
   

  	
   

  
										

 

S-2PANOLAM INDUSTRIES
INTERNATIONAL, INC.

THIRD AMENDMENT TO CREDIT
AGREEMENT AND LIMITED WAIVER

 

This THIRD
AMENDMENT  TO CREDIT AGREEMENT AND
LIMITED WAIVER (this “Amendment”) is
dated as of March 30, 2007 and entered into by and among Panolam Industries International,
Inc., a Delaware corporation, as successor by merger to PIH Acquisition Co. (“Company”), Panolam Holdings II Co., a Delaware corporation (“Holdings”), Credit Suisse, Cayman Islands Branch, as
administrative agent for Lenders (“Administrative
Agent”), and, solely for purposes
of Section 5 hereof, the Credit Support Parties (as defined in Section 5
hereof) listed on the signature pages hereof, and is made with reference to
that certain Credit Agreement dated as of September 30, 2005 by and among Company,
Holdings, Lenders, Jefferies & Company, Inc., as syndication agent for
Lenders and Administrative Agent, as amended by that certain First Amendment to
Credit Agreement and Waiver dated February 27, 2006, as further amended by that
certain Second Amendment to Credit Agreement dated March 1, 2006  (as so amended, the “Credit
Agreement”).  Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.

RECITALS

WHEREAS Company and Requisite Lenders desire to amend the
Credit Agreement as follows;

NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

Section 1.                                                                  AMENDMENTS
TO THE CREDIT AGREEMENT

A.            Subsection 6.1(iii) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and substituting
the following therefor:

                “(iii)        Year-End
Financials:  (a) (I) as soon as
available and in any event within 120 days after the end of Fiscal Year 2005,
within 180 days after the end of Fiscal Year 2006 and within 90 days after the
end of each other Fiscal Year thereafter, the unaudited consolidated balance
sheet of Company and its Subsidiaries as at the end of such Fiscal Year and the
related unaudited consolidated statements of income, stockholders’ equity and
cash flows of Company and its Subsidiaries for such Fiscal Year, setting forth
in each case in comparative form the corresponding figures for the previous
Fiscal Year and the corresponding figures from the Financial Plan for the
Fiscal Year covered by such financial statements, all in reasonable detail and
certified by a Financial Officer of Company that they fairly present, in all
material respects, the financial condition of Company and its Subsidiaries as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and normal
year-end adjustments and the absence of footnotes, provided that the
deliveries under this clause (I) shall not be required if the deliveries in
clause (II) are made within 90 days after the end of the relevant Fiscal Year, and
(II) as soon as available and in any event within 180 days after the end of
Fiscal Year 2006

 

 

 

and 120 days after the
end of each other Fiscal Year thereafter, or such earlier date as may be required
by the Securities Exchange Commission or any other Government Authority, the audited
consolidated balance sheet of Company and its Subsidiaries as at the end of
such Fiscal Year and the related audited consolidated statements of income,
stockholders’ equity and cash flows of Company and its Subsidiaries for such
Fiscal Year, setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and the corresponding figures from the
Financial Plan for the Fiscal Year covered by such financial statements, all in
reasonable detail and certified by a Financial Officer of Company that they
fairly present, in all material respects, the financial condition of Company
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, and (b) as soon
as available and in any event within 180 days after the end of Fiscal Year 2006
and 120 days after the end of each other Fiscal Year thereafter, or such
earlier date as may be required by the Securities Exchange Commission or any other
Government Authority, in the case of such audited consolidated financial
statements, a report thereon of Deloitte & Touche LLP or other independent
certified public accountants of recognized national standing selected by
Company and reasonably satisfactory to Administrative Agent, which report shall
not be subject to any “going concern” or like qualification or exception, and
shall state that such consolidated financial statements fairly present, in all
material respects, the consolidated financial position of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;”.

B.            Subsection 6.1(iv) of the Credit
Agreement is hereby amended by deleting the reference to clause “(iii)” in the
first phrase thereof and substituting a reference to clause “(iii)(a)(II)”
therefor.

C.            Subsection
6.1(vi) of the Credit Agreement is hereby amended by deleting the reference to
clause “(iii)” in the first phrase thereof and substituting a reference to
clause “(iii)(a)(II)” therefor.

Section 2.                                          LIMITED WAIVER

The undersigned Lenders, constituting Requisite
Lenders under the Credit Agreement, hereby waive the delivery of (a) quarterly
consolidated financial statements of the Company and its Subsidiaries for the
first Fiscal Quarter of Fiscal Year 2007 pursuant to subsection 6.1(ii) of the
Credit Agreement within 45 days after the end of such Fiscal Quarter, and the
certificates and documents required to be delivered in connection therewith
pursuant to subsection 6.1(iv) of the Credit Agreement, and (b) annual
consolidated financial statements of the Company and its Subsidiaries for
Fiscal Year 2006 pursuant to subsection 6.1(iii) of the Credit Agreement within
90 days after the end of such Fiscal Year, and the certificates and documents,
including auditor’s reports, required to be delivered in connection therewith
pursuant to subsections 6.1(iv) and 6.1(vi) of the Credit Agreement; provided
that Company shall deliver all such quarterly and annual consolidated financial
statements referred to in this paragraph and the related certificates and other
documents otherwise

 

2

 

required to have been delivered pursuant to
subsections 6.1(ii), 6.1(iii), 6.1(iv) and 6.1(vi) of the Credit Agreement, as
applicable, no later than June 30, 2007.

Without limiting the generality of the provisions of
subsection 10.6 of the Credit Agreement, the waiver set forth herein shall be
limited precisely as written and relates solely to noncompliance by Company
with the provisions of subsections 6.1(ii), 6.1(iii), 6.1(iv) and 6.1(vi) of
the Credit Agreement with respect to the timing of delivery of financial
statements for Fiscal Year 2006 and the first Fiscal Quarter of Fiscal Year
2007 in the manner and to the extent described above, and nothing in this
Limited Waiver shall be deemed to (a) constitute a waiver of compliance by
Company with respect to (i) any such subsection of the Credit Agreement in
any other instance or (ii) any other term, provision or condition of the
Credit Agreement or any other instrument or agreement referred to therein or
(b) prejudice any right or remedy that Administrative Agent or any Lender
may now have (except to the extent such right or remedy was based upon existing
defaults that will not exist after giving effect to this Limited Waiver) or may
have in the future under or in connection with the Credit Agreement or any
other instrument or agreement referred to therein.  Except as expressly set forth in this Limited
Waiver, the terms, provisions and conditions of the Credit Agreement and the
other Loan Documents shall remain in full force and effect and in all other
respects are hereby ratified and confirmed.

Section 3.                                          CONDITIONS TO EFFECTIVENESS

This Amendment
shall become effective only upon the satisfaction of all of the following
conditions precedent (the date of satisfaction of such conditions being
referred to herein as the “Third Amendment Effective
Date”):

A.    On or before the Third Amendment Effective Date,
Company shall deliver to Administrative Agent copies of this Amendment,
executed by Company and each Credit Support Party.

B.    On or before the Third Amendment Effective Date,
Administrative Agent and Requisite Lenders shall have executed copies of this
Amendment.

C.    On or before the Third Amendment Effective Date,
Company shall have paid to Administrative Agent or its counsel, as applicable, all
costs, fees and expenses of the type described in subsection 10.2 of the Credit
Agreement incurred by Administrative Agent or its counsel with respect to this
Amendment and the documents and transactions contemplated hereby.

Section 4.                                          COMPANY’S AND HOLDINGS’
REPRESENTATIONS AND WARRANTIES

In order to induce Requisite Lenders to enter into
this Amendment and to amend the Credit Agreement in the manner provided herein,
Company and Holdings represent and warrant to each Lender executing this
Amendment the following:

A.    Corporate Power and Authority. 
Company and Holdings have all requisite corporate power and authority to
enter into this Amendment and to carry out the

 

3

 

transactions contemplated
by, and perform their obligations under, the Credit Agreement as amended by
this Amendment (the “Amended Agreement”).

B.    Authorization of Agreements. 
The execution and delivery of this Amendment and the performance of the
Amended Agreement have been duly authorized by all necessary corporate action
on the part of Company and Holdings.

C.    No Conflict.  The execution
and delivery by Company and Holdings of this Amendment do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to Company or any other Loan Party, the Organizational Documents of
Company or any other Loan Party or any order, judgment or decree of any court or
other agency of government binding on Company or any other Loan Party, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any
other Loan Party, (iii) result in or require the creation or imposition of
any Lien upon any of the properties or assets of Company or any other Loan
Party (other than Liens created under any of the Loan Documents in favor of
Administrative Agent on behalf of Lenders), or (iv) require any approval
of stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any other Loan Party, except for such approvals or
consents which will be obtained on or before the Third Amendment Effective Date
and except, in each case, to the extent such violation, conflict, Lien or
failure to obtain such approval or consent could not reasonably be expected to
have a Material Adverse Effect.

D.    Governmental Consents. 
The execution and delivery by Company and Holdings and the performance
by Company and Holdings of the Amended Agreement do not and will not require
any Governmental Authorization, except to the extent the failure to obtain such
authorization could not reasonably be expected to have a Material Adverse
Effect.

E.     Binding Obligation. 
This Amendment has been duly executed and delivered by Company and
Holdings and this Amendment and the Amended Agreement are the legally valid and
binding obligations of Company and Holdings, enforceable against Company and
Holdings in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or similar
laws relating to or limiting creditors’ rights generally or by equitable
principles relating to enforceability.

F.     Incorporation of Representations and
Warranties From Credit Agreement.  The
representations and warranties contained in Section 5 of the Credit Agreement
are and will be true, correct and complete in all material respects on and as
of the Third Amendment Effective Date to the same extent as though made on and
as of each such date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.

G.    Absence of Default. 
No event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Amendment that

 

4

 

would constitute an Event
of Default or a Potential Event of Default, except as shall be waived hereby.

Section 5.                                          ACKNOWLEDGEMENT AND CONSENT

Holdings, each Guarantor (as defined in the
Guaranties) and each Grantor (as defined in the Security Agreement) (such
Guarantors and Grantors together with Holdings, the “Credit
Support Parties”) each hereby acknowledges and agrees that the
Guaranties and Collateral Documents (each, a “Credit
Support Document”) to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. 
Each Credit Support Party represents and warrants that all representations
and warranties contained in the Amended Agreement and the Credit Support
Documents to which it is a party or otherwise bound are true, correct and
complete in all material respects on and as of the Third Amendment Effective
Date to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.

Each Credit Support Party acknowledges and agrees that
(i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Credit Support Party is not required by the terms of the Credit
Agreement or any other Loan Document to consent to the amendments to the Credit
Agreement effected pursuant to this Amendment and (ii) nothing in the
Credit Agreement, this Amendment or any other Loan Document shall be deemed to
require the consent of such Credit Support Party to any future amendments to
the Credit Agreement.

Section 6.                                          MISCELLANEOUS

A.    Reference
to and Effect on the Credit Agreement and the Other Loan Documents.

(i)            On and after the Third Amendment
Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”,
“hereof”, “herein” or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”,
“thereof” or words of like import referring to the Credit Agreement shall mean
and be a reference to the Credit Agreement, as amended hereby as of such date.

(ii)           Except as specifically amended by
this Amendment, the Credit Agreement and the other Loan Documents shall remain
in full force and effect and are hereby ratified and confirmed.

(iii)          The execution, delivery and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver of any provision of, or operate as a waiver of any right,
power or remedy of Administrative Agent or any Lender under, the Credit
Agreement or any of the other Loan Documents.

 

5

 

B.    Fees and Expenses. 
Company acknowledges that all costs, fees and expenses as described in
subsection 10.2 of the Credit Agreement incurred by Administrative Agent and
its counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Company.

C.    Headings. 
Section and subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose or be given any substantive effect.

D.    Applicable Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT
WOULD REQUIRE APPLICATION OF ANOTHER LAW.

E.     Counterparts; Effectiveness. 
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 an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.  This Amendment (other than (i)
the provisions of Sections 1 and 2 hereof, the effectiveness of which is
governed by Section 3 hereof, and (ii) the provisions of Section 5 hereof,
which shall become effective upon execution of a counterpart hereof by each of
the Credit Support Parties) shall become effective upon the execution of a
counterpart hereof by Company, Holdings and the Requisite Lenders.

[Remainder of page intentionally left blank]

 

 

6

 

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

	
   

  	
  PANOLAM INDUSTRIES INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Vincent S. Miceli

  
	
   

  	
  Name:

  	
  Vincent S. Miceli

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PANOLAM HOLDINGS II CO.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vincent S. Miceli

  
	
   

  	
  By:

  	
  Vincent S. Miceli

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  For purposes of Section
  5 only, as a Credit Support Party:

  
	
   

  	
   

  	
   

  
	
   

  	
  PANOLAM INDUSTRIES, INC.

  
	
   

  	
  PIONEER
  PLASTICS CORPORATION

  
	
   

  	
  NEVAMAR
  HOLDING CORP.

  
	
   

  	
  NEVAMAR
  HOLDCO, LLC

  
	
   

  	
  NEVAMAR
  COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vincent S. Miceli

  
	
   

  	
  Name:

  	
  Vincent S. Miceli

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

 

 

 

	
   

  	
  CREDIT SUISSE, Cayman Islands Branch, 

  as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bill O’Daly

  
	
   

  	
  Name:

  	
  Bill O’Daly 

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mikhail Faybusovich

  
	
   

  	
  Name:

  	
  Mikhail Faybusovich 

  
	
   

  	
  Title:

  	
  Associate

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

2

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