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Proc-Type: 2001,MIC-CLEAR
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: February 23, 2006 (Date of Earliest Event Reported) Commission file number: 1-3203 CHESAPEAKE CORPORATION (Exact name of registrant as specified in its charter) Virginia 54-0166880 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1021 East Cary Street Richmond, Virginia 23219 (Address of principal executive offices) Zip Code Registrant's telephone number, including area code: 804-697-1000 Not Applicable (Former name, former address, and former fiscal year, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT On February 23, 2006, Chesapeake Corporation ("Chesapeake" or the "Company") executed amendment No. 2 to the Second Amended and Restated Credit Agreement dated as of February 23, 2004 by and among Chesapeake Corporation and various subsidiary borrowers, the banks and other institutional lenders and Wachovia Bank, National Association, as administrative agent for the lenders (the "Credit Agreement"). In addition to certain technical corrections and amendments, the Credit Agreement amendment includes provisions to accommodate strategic initiatives of the Company and to adjust certain financial maintenance covenants during 2006 and 2007. The amendment, which is attached as Exhibit 4.1 to this report, is incorporated herein by reference. (c) Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CHESAPEAKE CORPORATION (Registrant) Date: March 1, 2006 BY: /s/ Joel K. Mostrom Joel K. Mostrom Senior Vice President & Chief Financial Officer (Principal Financial Officer) EXHIBIT INDEX Exhibit No. Description of Exhibit Exhibit 4.1 EXECUTION COPY AMENDMENT NO. 2 TO THE Dated as of February 23, 2006 AMENDMENT NO. 2 TO THE SECOND AMENDED AND PRELIMINARY STATEMENTS: WHEREAS, the U.S. Borrower, the U.K. Borrowers, the Lenders, the Administrative Agent, Bank of America, N.A. and Citicorp North America, Inc., as syndication agents, HSBC Bank plc, as documentation agent, Wachovia Capital Markets, LLC, as a co-lead arranger and the sole bookrunner, and Banc of America Securities LLC and Citicorp North America, Inc., as co-lead arrangers have entered into a Second Amended and Restated Credit Agreement dated as of February 23, 2004, as amended by Amendment No. 1 dated as of June 10, 2004 (as so amended, the "Credit Agreement"; capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Credit Agreement); and WHEREAS, the Borrowers, the Lenders and the Administrative Agent have agreed to amend the Credit Agreement as hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto hereby agree as follows: SECTION 1. Amendments to Credit Agreement. The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2, hereby amended as follows: ""Loan Note Guaranty Commitment Amount" means an amount equal to zero." ""Other Currency Loans" is defined in clause (c) of Section 2.1.1." "Other Currency Loan Commitment Amount" means, on any date, the Dollar Equivalent of $250,000,000, as such amount has been from the Effective Date and may be reduced from time to time pursuant to Section 2.2 and clause (b) of Section 3.1.2." ""Revolving Loans" is defined in clause (a) of Section 2.1.1." ""Revolving Loan Commitment Amount" means, on any date, the Dollar Equivalent of $250,000,000, as such amount has been from the Effective Date and may be reduced from time to time pursuant to Section 2.2 and clause (b) of Section 3.1.2." "SECTION 2.1.1. Loan Commitments. From time to time on any Business Day occurring from and after the Effective Date but prior to the Revolving Loan Commitment Termination Date, (a) each Lender that has a Revolving Loan Commitment (referred to as a "Revolving Loan Lender") agrees that it will make loans (relative to such Lender, its "Revolving Loans") in Dollars to the Borrowers equal to such Lender's Percentage of the aggregate amount of each Borrowing of the Revolving Loans requested by such Borrower to be made on such day; (b) the Swing Line Lender agrees that (i) it will make loans (its "Swing Line Loans") in Dollars to the Borrowers equal to the principal amount of the Swing Line Loan requested by such Borrower to be made on such day and (ii) it will make loans (its "Other Currency Swing Line Loans") in an Other Currency to the Borrowers equal to the principal amount of the Other Currency Swing Line Loans requested by such Borrower to be made on such date. The Commitment of the Swing Line Lender described in subclause (i) of clause (b) of this Section 2.1.1 is herein referred to as its "Swing Line Commitment" and the Commitment of the Swing Line Lender described in subclause (ii) of clause (b) of this Section 2.1.1 is herein referred to as its "Other Currency Swing Line Commitment"; (c) each Other Currency Lender (other than Participating Lenders, whose Other Currency Loans shall be made by the Administrative Agent in accordance with Section 2.3.3) agrees that it will make loans (its "Other Currency Loans") in Other Currency to the Borrowers equal to such Lender's Percentage of the aggregate amount of each Borrowing of the Other Currency Loans requested by such Borrower to be made on such day. The Commitment of each Other Currency Lender described in this clause is herein referred to as its "Other Currency Loan Commitment". On the terms and subject to the conditions hereof, the Borrowers may from time to time borrow, prepay and reborrow Loans. No Revolving Loan Lender may make any Revolving Loan if, after giving effect thereto, the aggregate outstanding principal amounts of all Revolving Loans of such Revolving Loan Lender, plus such Lender's Percentage of the aggregate outstanding principal amount of all Other Currency Loans, Swing Line Loans and Other Currency Swing Line Loans, plus such Lender's Percentage of the aggregate amount of all Letter of Credit Outstandings and Loan Note Guaranty Obligations, would exceed such Lender's Percentage of the then existing Revolving Loan Commitment Amount. Furthermore, the Swing Line Lender may not make Swing Line Loans or Other Currency Swing Line Loans if, after giving effect thereto, (a) the aggregate outstanding principal amount of all Swing Line Loans would exceed the then existing Swing Line Loan Commitment Amount, (b) the aggregate outstanding principal amount of
all Other Currency Swing Line Loans would exceed the then existing the Other Currency Swing Line Commitment Amount or (c) unless otherwise agreed to by the Swing Line Lender, in its sole discretion, the sum of the aggregate outstanding principal amount of all Swing Line Loans, Other Currency Swing Line Loans and Revolving Loans made by the Swing Line Lender plus the Swing Line Lender's Percentage of the aggregate amount of Letter of Credit Outstandings and all Loan Note Guaranty Obligations plus the Swing Line Lender's Percentage of the aggregate outstanding principal amount of all Other Currency Loans would exceed the Swing Line Lender's Percentage of the then existing Revolving Loan Commitment Amount. Additionally, no Other Currency Lender may make any Other Currency Loans if, after giving effect thereto, unless otherwise agreed to by such Other Currency Lender, in its sole discretion, the sum of the aggregate outstanding principal amount of all Other Currency Loans and Revolving Loans
made by such Other Currency Lender plus such Other Currency Lender's Percentage of the aggregate amount of Letter of Credit Outstandings and all Loan Note Guaranty Obligations plus such Other Currency Lender's Percentage of the aggregate outstanding principal amount of all Swing Line Loans and Other Currency Swing Line Loans would exceed the Other Currency Lender's Percentage of the then existing Revolving Loan Commitment Amount." "SECTION 7.1.7. Use of Proceeds. The Borrowers will apply the proceeds of all Loans and Letters of Credit to provide for working capital and general corporate purposes of the U.S. Borrower and its Subsidiaries, including Capital Expenditures and Permitted Acquisitions by such Persons; provided that the proceeds of any Loans or Letters of Credit shall not be used to finance or refinance any obligations in a manner that would cause the Obligations to constitute unlawful financial assistance prohibited by Section 151 of the English Companies Act 1985 and Article 161 of the Companies (Northern Ireland) Order 1986." "(a) the Borrower 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 February 23, 2006 through (and including) the end of the last Fiscal Quarter of 2007 4.75:1 The first Fiscal Quarter of 2008 4.25:1 Beginning of the second Fiscal Quarter of 2008 and thereafter 4:00:1"
SIGNATURE
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
RESTATED CREDIT AGREEMENT among Chesapeake Corporation, a Virginia corporation (the "U.S. Borrower"), Chesapeake U.K. Holdings Limited, Chesapeake U.K. Acquisitions plc, Boxmore International Limited, Field Group plc (collectively, the "U.K. Borrowers"), the banks, financial institutions and other institutional lenders party to the Credit Agreement referred to below (collectively, the "Lenders") and Wachovia Bank, National Association, as administrative agent for the Lenders (in such capacity, the "Administrative Agent").
"or (e) the sale by the U.S. Borrower or any of its Subsidiaries of a minority interest in Boxmore Plastics International (pty) Ltd., a corporation organized and existing under the laws of South Africa (or any successor corporation), with an aggregate fair market value of such minority interest not to exceed 10,000,000 pounds Sterling."
"provided, however, in the case of either (B)(1) or (2), (X) such aggregate amounts shall be reduced on a Dollar for Dollar basis by the aggregate amount of Permitted Acquisitions made during the term of this Agreement in accordance with clause (h) of Section 7.2.5 and (Y) such aggregate amounts shall not be reduced by the redemption or repurchase made by the U.S. Borrower of 40,000,000 pounds Sterling in principal amount of its 103/8% Senior Subordinated Notes due 2011 with the proceeds of an Equity Issuance made in March 2004."
"or (vi) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document (unless the transferee would be required to grant a Lien thereon under the Loan Documents)."
"ITEM 6.13. ENVIRONMENTAL MATTERS.
See "Environmental Matters" discussion in Note 11 to Consolidated Financial Statement of Chesapeake Corporation's Form 10-Q dated November 10, 2005 regarding potential liability of WTM I Company for natural resources damages and certain environmental remediation related to the lower Fox River, Wisconsin, site."
SECTION 2. Conditions of Effectiveness. This Amendment shall be effective as of December 31, 2005 (except for Sections 1(p), 1(r) and 1(s) of this Amendment which shall become effective as of the date first above written) when, and only when, (A) the U.S. Borrower shall have paid, on or before February 23, 2006, for the benefit of each Lender executing this Amendment on or before 12:00 Noon Eastern time on February 23, 2006, a fee equal to 0.25% of the Total Exposure Amount of each such Lender, and (B) the Administrative Agent shall have received, on or before February 23, 2006, the following documents, each such document (unless otherwise specified) dated the date of receipt thereof by the Administrative Agent (unless otherwise specified) and in sufficient copies for each Lender, in form and substance satisfactory to the Administrative Agent:
SECTION 3. Representations and Warranties of the Borrowers. Each Borrower represents and warrants as follows:
SECTION 4. Reference to and Effect on the Loan Documents. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the Notes and each of 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 by this Amendment.
SECTION 5. Costs and Expenses. The Borrowers agree to pay on demand all costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 10.3 of the Credit Agreement.
SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.
SECTION 7. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.
CHESAPEAKE CORPORATION
By /s./ Joel K. Mostrom
Name: Joel K Mostrom
Title: Senior Vice President & Chief Financial Officer
CHESAPEAKE U.K. HOLDINGS LIMITED
By /s/ J. P. Causey Jr.
Name: J. P. Causey Jr.
Title: Director
CHESAPEAKE U.K. ACQUISITIONS PLC
By /s/ J. P. Causey Jr.
Name: J. P. Causey Jr.
Title: Director
BOXMORE INTERNATIONAL LIMITED
By /s/ J. P. Causey Jr.
Name: J. P. Causey Jr.
Title: Director
FIELD GROUP PLC
By /s/ J. P. Causey Jr.
Name: J. P. Causey Jr.
Title: Director
Agreed as of the date first above written:
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender and Administrative Agent
By /s/ Leanne S. Phillips
Name: Leanne S. Phillips
Title: Director