SIXTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois
Gentlemen:
The undersigned, BADGER PAPER MILLS, INC., a Wisconsin corporation
("Badger"), and PLASTECHS, INC., a Wisconsin corporation ("PlasTechs")
(collectively, Badger and PlasTechs are hereinafter sometimes referred to
as "Borrowers"), refers to the Credit Agreement dated as of June 30, 1993,
as amended from time to time (the "Agreement") and currently in effect
between the Borrowers and you (the "Bank"). All capitalized terms used
herein without definition shall have the same meanings as they have in the
Agreement.
The Borrowers hereby apply to the Bank for certain modifications to
the Agreement and the Borrowers' borrowing arrangements with the Bank, and
for the waiver of certain covenants of the Agreement.
1. AMENDMENT.
Upon your acceptance hereof in the space provided for that purpose
below, the Agreement shall be and hereby is amended as follows:
(a) Section 7.7 of the Agreement is hereby amended in its entirety
to read as follows:
Section 7.7. Consolidated Tangible Net Worth. Badger will, as
of the last day of each fiscal month ending during each of the
periods specified below maintain Consolidated Tangible Net Worth
at not less than:
CONSOLIDATED
TANGIBLE NET
WORTH SHALL
FROM AND TO AND NOT BE LESS
INCLUDING INCLUDING THAN
July 1, 1996 June 29, 1997 $17,300,000
June 30, 1997 December 30, 1997 18,500,000
December 31, 1997 June 29, 1998 20,000,000
June 30, 1998 December 30, 1998 22,000,000
December 31, 1998 Thereafter 24,500,000
(b) Section 7.13 of the Agreement is hereby amended in its entirety
to read as follows:
Section 7.13. Capital Expenditures. Badger will not, nor will
it permit any Subsidiary to, expend or become obligated for
Capital Expenditures in an aggregate amount in excess of the
following:
Fiscal Year 1996 . . . . . . . . . . . $11,000,000
Fiscal Year 1997 . . . . . . . . . . . 8,000,000
Fiscal Year 1998 . . . . . . . . . . . 6,000,000
Fiscal Year 1999 . . . . . . . . . . . 4,000,000
(c) Section 7.15 of the Agreement is hereby amended in its entirety
to read as follows:
Section 7.15. Dividends and Certain Other Restricted Payments.
Badger will not, without the prior written consent of the
Lenders, declare or pay any dividends on or make any other
distributions in respect of any class of its capital stock
(other than dividends payable solely in its capital stock) and
no Borrower will directly or indirectly or through any
Subsidiary purchase, redeem or otherwise acquire or retire any
of its capital stock (all such payments and distributions are
collectively referred to as "Restricted Payments"); provided,
however, Badger may declare and make Restricted Payments only
after July 1, 1996 so long as (i) no Default or Event of Default
exists prior to or would result after giving effect to any such
Restricted Payments; and (ii) after giving effect to any such
Restricted Payments made during the period (taken as a single
accounting period) commencing July 1, 1996 and ending on the
last day of the most recent fiscal month for which financial
statements have been delivered shall not exceed 33% of the
Consolidated Net Income for such period; notwithstanding, Badger
may make a Restricted Payment up to $150,000.
(d) Section 10 of the Agreement is hereby amended as follows:
The definition of "Termination Date" appearing in Section 10 of
the Agreement is hereby amended by deleting the date "April 30,
1998" appearing therein and inserting in its place the date
"April 30, 1999".
2. WAIVER.
Badger has indicated that as of June 30, 1996 it was not in
compliance with the terms of the Agreement as follows and upon
satisfaction of the conditions precedent set forth in Section 3 hereof:
(a) As of such date, Badger's Tangible Net Worth was
$19,452,722. Section 7.7 of the Agreement requires Badger maintain a
Consolidated Net Worth of not less than $20,000,000. The Bank hereby
waives non-compliance by the Borrowers with Section 7.7 of the
Agreement for the period ending June 30, 1996 through the effective
date of this Amendment.
(b) As of such date, Badger exceeded the Restricted Payment by
$622,671. The Bank hereby waives non-compliance by the Borrowers
with Section 7.15 of the Agreement for the period ending June 30,
1996 through the effective date of this Amendment.
(c) The waiver contained in Sections 2(a) and 2(b) of this
Amendment is limited to matters set forth in those Sections, and the
Borrowers agree that they remain obligated to comply with the terms
of the Agreement, including Sections 7.7 and 7.15 of the Agreement,
and that the Bank shall not be obligated in the future to waive any
provision of the Agreement.
3. CONDITIONS PRECEDENT.
The effectiveness of this Sixth Amendment is subject to the
satisfaction of all of the following conditions precedent:
(a) The Borrowers and the Bank shall have executed this Sixth
Amendment.
(b) The Bank shall have received copies executed or certified
(as may be appropriate) of all legal documents or proceedings taken
in connection with the execution and delivery hereof and the other
instruments and documents contemplated hereby.
(c) All legal matters incident to the execution and delivery
hereof and of the instruments and documents contemplated hereby shall
be satisfactory to the Bank and its counsel.
4. REPRESENTATIONS.
In order to induce the Bank to execute and deliver this Sixth
Amendment, the Borrowers hereby represent to the Bank that as of the date
hereof and as of the time that this Sixth Amendment becomes effective,
each of the representations and warranties set forth in Section 5 of the
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 5 shall be deemed to refer to the
most recent financial statements of the Borrowers delivered to the Bank)
and the Borrowers are in full compliance with all of the terms and
conditions of the Agreement and no Default as defined in the Agreement as
amended hereby nor any Event of Default as so defined, shall have occurred
and be continuing or shall arise after giving effect to this Sixth
Amendment.
5. MISCELLANEOUS.
(a) Collateral Security Unimpaired. The Borrowers hereby agree that
notwithstanding the execution and delivery hereof, the Collateral
Documents shall be and remain in full force and effect and that any rights
and remedies of the Bank thereunder, obligations of the Borrowers
thereunder and any liens or security interests created or provided for
thereunder shall be and remain in full force and effect and shall not be
affected, impaired or discharged hereby. Nothing herein contained shall
in any manner affect or impair the priority of the liens and security
interest created and provided for by the Collateral Documents as to the
indebtedness which would be secured thereby prior to giving effect hereto.
(b) Effect of Amendment. Except as specifically amended and
modified hereby, the Agreement shall stand and remain unchanged and in
full force and effect in accordance with its original terms. Reference to
this specific Amendment need not be made in any note, instrument or other
document making reference to the Agreement, any reference to the Agreement
in any of such to be deemed to be a reference to the Agreement as amended
hereby.
(c) Costs and Expenses. The Borrowers agree to pay on demand all
out-of-pocket costs and expenses incurred by the Bank in connection with
the negotiation, preparation, execution and delivery of this Sixth
Amendment and the documents and transactions contemplated hereby,
including the fees and expenses of counsel to the Bank with respect to the
foregoing.
(d) Counterparts; Governing Law. This Sixth Amendment may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which when so executed shall be an original
but all of which to constitute one and the same agreement. This Agreement
shall be governed by the internal laws of the State of Illinois.
Dated as of August 9, 1996.
BADGER PAPER MILLS, INC.
By: _________________________________
Its: ___________________________
PLASTECHS, INC.
By: _________________________________
Its: ___________________________
Accepted and agreed to at Chicago, Illinois, as of the date and year
last above written.
HARRIS TRUST AND SAVINGS BANK
By: _________________________________
Its: Vice President