FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This First Amendment to Amended and Restated Credit Agreement (the
"Amendment") dated as of August 31, 1999, by and among Badger Paper Mills, Inc.
("Badger"), Badger Paper Mills Flexible Packaging Division, Inc. ("Packaging";
Badger and Packaging being referred to herein collectively as the "Borrowers"),
the Lenders, and Harris Trust and Savings Bank, as Agent;
W I T N E S S E T H:
WHEREAS, the Borrowers, the Lenders and Harris Trust and Savings Bank, as
Agent, have heretofore executed and delivered an Amended and Restated Credit
Agreement dated as of January 29, 1999 (the "Credit Agreement"); and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
provided herein;
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that the
Credit Agreement shall be and hereby is amended as follows:
ARTICLE 1
AMENDMENTS
1.1 Section 1.1 of the Credit Agreement is hereby amended in its entirety
and as so amended shall be restated to read as follows:
Section 1.1. Revolving Credit. Subject to all of the
terms and conditions hereof, each Lender, by its
acceptance hereof, severally agrees to extend a
revolving credit (the "Revolving Credit") to the
Borrowers in the amount of its commitment to extend the
Revolving Credit set forth on the applicable signature
page hereof (its "Commitment" and cumulatively for all
the Lenders, the "Commitments") (subject to any
reductions thereof pursuant to the terms hereof) prior
to the Termination Date. Such Revolving Credit may be
availed of by the Borrowers in their discretion from
time to time, be repaid and used again, during the
period from the date hereof to and including the
Termination Date. The Revolving Credit, subject to all
of the terms and conditions hereof, may be utilized by
the Borrowers in the form of Loans and Letters of
Credit, all as more fully hereinafter set forth;
provided, however, that the aggregate principal amount
of Loans and Letters of Credit outstanding to all of
the Borrowers at any one time shall not at any time
exceed the Commitments. The obligations of the Lenders
hereunder are several and not joint and no Lender shall
under any circumstances be obligated to extend credit
hereunder in excess of its Commitment.
1.2 Section 1 of the Credit Agreement is hereby amended by adding thereto a
new Section 1.4 which reads as follows:
Section 1.4. Letters of Credit.
(a) General Terms. Subject to the terms and
conditions hereof, the Revolving Credit may be availed
of by the Borrowers in the form of standby letters of
credit issued by the Agent for the account of a
Borrower (individually a "Letter of Credit" and
collectively the "Letters of Credit"), provided that
the aggregate amount of Letters of Credit issued and
outstanding hereunder shall not at any time exceed
$500,000. For purposes of this Agreement, a Letter of
Credit shall be deemed outstanding as of any time in an
amount equal to the maximum amount which could be drawn
thereunder under any circumstances and over any period
of time plus any unreimbursed drawings then outstanding
with respect thereto. If and to the extent any Letter
of Credit expires or otherwise terminates without
having been drawn upon, the availability under the
Commitments shall to such extent be reinstated. The
Letters of Credit shall be issued by the Agent, but
each Lender shall be obligated to reimburse the Agent
for such Lender's Percentage of the amount of each
draft drawn under a Letter of Credit in accordance with
this Section 1.4 and, accordingly, each Letter of
Credit shall be deemed to utilize the Commitments of
all Lenders pro rata in accordance with their
Percentages thereof.
(b) Term. Each Letter of Credit issued hereunder
shall expire not later than the earlier of (i) twelve
(12) months from the date of issuance (or be cancelable
not later than twelve (12) months from the date of
issuance and each renewal) or (ii) the Termination
Date. In the event the Agent issues any Letter of
Credit with an expiration date that is automatically
extended unless the Agent gives notice that the
expiration date will not so extend beyond its then
scheduled expiration date, the Agent will give such
notice of non-renewal before the time necessary to
prevent such automatic extension if before such
required notice date (i) the expiration date of such
Letter of Credit if so extended would be after the
Termination Date, (ii) the Commitments have terminated
or (iii) an Event of Default exists and the Lenders
have given the
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Agent instructions not to so permit the extension of
the expiration date of such Letter of Credit.
(c) General Characteristics. Each Letter of Credit
issued hereunder shall be payable in U.S. Dollars,
conform to the general requirements of the Agent for
the issuance of standby letters of credit as to form
and substance, and be a letter of credit which the
Agent may lawfully issue.
(d) Applications. At the time the relevant
Borrower requests each Letter of Credit to be issued
(or prior to the first issuance of a Letter of Credit
in the case of a continuing application), such Borrower
shall execute and deliver to the Agent an application
for such Letter of Credit in the form then customarily
prescribed by the Agent (individually an "Application"
and collectively the "Applications"). Subject to the
other provisions of this subsection, the obligation of
the Borrowers to reimburse the Agent for drawings under
a Letter of Credit shall be governed by the Application
for such Letter of Credit. Anything contained in the
Applications to the contrary notwithstanding, (i) in
the event the Agent is not reimbursed by the Borrowers
for the amount the Agent pays on any draft drawn under
a Letter of Credit issued hereunder by 11:00 a.m.
(Chicago time) on the date when such drawing is paid,
the obligation of the Borrowers to reimburse the Agent
for the amount of such draft paid shall bear interest
(which each Borrower hereby promises to pay on demand)
from and after the date the draft is paid until payment
in full thereof at a fluctuating rate per annum
determined by adding 4% to the Domestic Rate as from
time to time in effect (computed on the basis of a year
of 360 days for the actual number of days elapsed),
(ii) the Borrowers shall pay fees in connection with
each Letter of Credit as set forth in Section 3 hereof,
(iii) except as otherwise provided in Section 3.2(b)
hereof, prior to the occurrence of a Default or an
Event of Default the Agent will not call for additional
collateral security for the obligations of the
Borrowers under the Applications other than the
collateral security contemplated by this Agreement and
the Collateral Documents and collateral security
consisting of rights in goods (or documents of title
covering the same) financed under such Applications,
and (iv) except as otherwise provided in Section 3.2(b)
hereof, prior to the occurrence of a Default or an
Event of Default the Agent will not call for the
funding of a Letter of Credit by the Borrowers prior to
being presented with a draft drawn thereunder (or, in
the event the draft is a time draft, prior to its due
date). Each Borrower
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hereby irrevocably authorizes the Agent to charge any
of such Borrower's deposit accounts maintained with the
Agent for the amount necessary to reimburse the Agent
for any drafts drawn under Letters of Credit issued
hereunder.
(e) Change in Laws. If the Agent or any Lender
shall determine in good faith that any change in any
applicable law, regulation or guideline (including,
without limitation, Regulation D of the Board of
Governors of the Federal Reserve System) or any new
law, regulation or guideline, or any interpretation of
any of the foregoing by any governmental authority
charged with the administration thereof or any central
bank or other fiscal, monetary or other authority
having jurisdiction over the Agent or such Lender
(whether or not having the force of law), shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against the
Letters of Credit, or the Agent's or such Lender's or
the Borrowers' liability with respect thereto; or
(ii) impose on the Agent or such Lender any
penalty with respect to the foregoing or any other
condition regarding this Agreement, the Applications or
the Letters of Credit;
and the Agent or such Lender shall determine in good
faith that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or
adding to a cost) to the Agent or such Lender of
issuing, maintaining or participating in the Letters of
Credit hereunder (without benefit of, or credit for,
any prorations, exemptions, credits or other offsets
available under any such laws, regulations, guidelines
or interpretations thereof), then the Borrowers shall
pay on demand to the Agent or such Lender from time to
time as specified by the Agent or such Lender such
additional amounts as the Agent or such Lender shall
determine are sufficient to compensate and indemnify it
for such increased cost. If the Agent or any Lender
makes such a claim for compensation, it shall provide
the Borrowers (with a copy to the Agent in the case of
any Lender) a certificate setting forth the computation
of the increased cost as a result of any event
mentioned herein in reasonable detail and such
certificate shall be conclusive if reasonably
determined.
(f) Participations in Letters of Credit. Each
Lender shall participate on a pro rata basis in
accordance with its
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Percentage of the Commitments in the Letters of Credit
issued by the Agent, which participation shall
automatically arise upon the issuance of each Letter of
Credit. Each Lender unconditionally agrees that in the
event the Agent is not immediately reimbursed by the
Borrowers for the amount paid by the Agent on any draft
presented under a Letter of Credit, then in that event
such Lender shall pay to the Agent such Lender's
Percentage of the amount of each draft so paid and in
return such Lender shall automatically receive an
equivalent percentage participation in the rights of
the Agent to obtain reimbursement from the Borrowers
for the amount of such draft, together with interest
thereon as provided for herein. The obligations of the
Lenders to the Agent under this subsection shall be
absolute, irrevocable and unconditional under any and
all circumstances whatsoever and shall not be subject
to any set-off, counterclaim or defense to payment
which any Lender may have or have had against the
Borrowers, the Agent, any other Lender or any other
party whatsoever. In the event that any Lender fails to
honor its obligation to reimburse the Agent for its
Percentage of the amount of any such draft, then in
that event (i) each other Lender shall pay to the Agent
its pro rata share of the payment due the Agent from
the defaulting Lender, (ii) the defaulting Lender shall
have no right to participate in any recoveries from the
Borrowers in respect of such draft and (iii) all
amounts to which the defaulting Lender would otherwise
be entitled under the terms of this Agreement or any of
the other Loan Documents shall first be applied to
reimbursing the Lenders for their respective pro rata
shares of the defaulting Lender's portion of the draft,
together with interest thereon as provided for herein.
Upon reimbursement to the other Lenders (pursuant to
clause (iii) above or otherwise) of the amount advanced
by them to the Agent in respect of the defaulting
Lender's share of the draft together with interest
thereon, the defaulting Lender shall thereupon be
entitled to its participation in the Agent's right of
recovery against the Borrowers in respect of the draft
paid by the Agent.
1.3 Section 3.1 of the Credit Agreement is hereby amended in its entirety
and as so amended shall be restated to read as follows:
Section 3.1. (a) Commitment Fee. For the period
from the date hereof to and including the Termination
Date, the Borrowers shall pay to the Agent for the
account of the Lenders a commitment fee at the rate of
1/2 of 1% per annum (computed on the basis of a year of
360 days for the actual number of days elapsed) on the
average daily unused amount of
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the Commitments hereunder. Such fee shall be payable
quarterly in arrears on the last day of each March,
June, September and December in each year (commencing
March 31, 1999) and on the Termination Date, unless the
Commitments are terminated in whole on an earlier date,
in which event the commitment fee for the period to but
not including the date of such termination in whole
shall be paid on the date of such termination.
(b) Letter of Credit Fees. On the date of issuance
of each Letter of Credit, and as condition thereto, and
annually thereafter, the Borrowers shall pay to the
Agent for the account of the Lenders a letter of credit
fee computed at the rate of 1.50% on the maximum amount
of the related Letter of Credit which is scheduled to
be outstanding during the immediately succeeding twelve
(12) months. In addition to the letter of credit fee
called for above, the Borrowers further agree to pay to
the Agent for its own account such processing and
transaction fees and charges as the Agent from time to
time customarily imposes in connection with any
amendment, cancellation, negotiation and/or payment of
letters of credit and drafts drawn thereunder.
1.4 Section 3.2 of the Credit Agreement is hereby amended in its entirety
and as so amended shall be restated to read as follows:
Section 3.2. Prepayments. (a) Voluntary. The
Borrowers shall have the privilege of prepaying the
Notes in whole or in part (but if in part then in a
minimum amount of $100,000 and in an amount such that
the minimum amount required pursuant to Section 1.2
hereof remains outstanding) at any time upon one
Business Day's prior notice to the Agent (such notices,
if received subsequent to 12:00 Noon Chicago time on a
given day, to be treated as though received at the
opening of business on the next Business Day), which
shall promptly so notify the Lenders, by paying to the
Agent for the account of the Lenders the principal
amount to be prepaid and (i) if such prepayment prepays
a Note in full, accrued interest thereon to the date
fixed for prepayment and (ii) any amount due the
Lenders under Section 2.8 hereof.
(b) Mandatory. The Borrowers shall, on each date
the Commitments are reduced pursuant to Section 3.3
hereof, prepay the Loans and, if necessary, prefund the
Letters of Credit by the amount, if any, necessary to
reduce the sum of the aggregate principal amount of
Loans and Letters of Credit
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then outstanding to the amount to which the Commitments
have been so reduced.
1.5 Section 3.4 of the Credit Agreement shall be amended by amending each
of Subsections (c), (d) and (e) thereof its entirety and restating each such
Subsection to read as follows, and by adding thereto a new Subsection (f) which
reads as follows:
(c) third, to the payment of the principal of the
Notes and any liabilities in respect of unpaid drawings
under the Letters of Credit, the aggregate amount paid
to the Lenders to be allocated pro rata as among the
Lenders in accord with the then respective aggregate
unpaid principal balances of the Notes and the then
unpaid drawings under the Letters of Credit;
(d) fourth, to the Agent to be held as collateral
security for any undrawn Letters of Credit, until the
Agent is holding an amount of cash equal to the then
outstanding amount of all Letters of Credit;
(e) fifth, to the Agent and the Lenders ratably in
accord with the amounts of any other indebtedness,
obligations or liabilities of the Borrowers owing to
each of them and secured by the Collateral Documents
(other than those described in clause (e) below) unless
and until all such indebtedness, obligations and
liabilities have been fully paid and satisfied; and
(f) sixth, to the Borrowers or whoever may be
lawfully entitled thereto.
1.6 Section 5.1 of the Credit Agreement is hereby amended by adding thereto
the following new definitions:
"Application" is defined in Section 1.6 hereof.
"Letter of Credit" is defined in Section 1.6 hereof.
"Percentage" means, for each Lender, the percentage of
the relevant Commitments represented by such Lender's
Commitment or, if the Commitments have been terminated,
the percentage held by such Lender (including through
participation interest in Letters of Credit pursuant to
Section 1.3 hereof) of the aggregate principal amount
of all outstanding Obligations.
1.7 Each of the following definitions appearing in Section 5.1 of the
Credit Agreement is hereby amended in its entirety and as so amended shall be
restated as follows:
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"Loan Documents" means this Agreement, the Notes, the
Applications, the Guaranties, the Collateral Documents
and each other instrument or document to be delivered
hereunder or thereunder or otherwise in connection
therewith.
"Obligations" means all obligations of the Borrowers
and the Subsidiaries to pay principal and interest on
the Loans, all reimbursement obligations owing under
the Applications, all fees and charges payable
hereunder, and all other payment obligations of any
Borrower or any Subsidiary arising hereunder or under
the Notes or the Collateral Documents or any other Loan
Documents or in relation to any Loan Document, in each
case whether now existing or hereafter arising, due or
to become due, direct or indirect, absolute or
contingent, and howsoever evidenced, held or acquired.
1.8 Section 6.1 of the Credit Agreement is hereby amended in its entirety
and as so amended shall be restated to read as follows:
Section 6.1. All Advances. The obligation of the
Lenders to make any Loan or issue any Letter of Credit
under the Revolving Credit (including the first such
accommodation) shall also be subject to the conditions
precedent that as of the time of the making of each
Loan under the Revolving Credit:
(a) each of the representations and warranties set
forth herein or in the Collateral Documents shall be
and remain true and correct as of said time in all
material respects, except that the representations and
warranties made in Section 5.5 hereof shall be deemed
to refer to the most recent audited and unaudited
financial statements delivered to the Lenders pursuant
to Section 7.5 hereof;
(b) the Borrowers and the Subsidiaries shall be in
compliance with all of the terms and conditions hereof
and of the Collateral Documents, and no Default or
Event of Default shall have occurred and be continuing;
(c) after giving effect to such extension of
credit the aggregate principal amount of all Loans and
Letters of Credit outstanding under this Agreement
shall not exceed the Commitment;
(d) in the case of the issuance of any Letter of
Credit, the Agent shall have received a properly
completed Application therefor together with the fees
called for hereby; and
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(e) such extension of credit shall not violate any
order, judgment or decree of any court or other
authority or any provision of law or regulation
applicable to any Lender (including, without
limitation, Regulation U of the Board of Governors of
the Federal Reserve System) as then in effect.
Any Borrower's request for any Loan or Letter of Credit
shall constitute its warranty as to the facts specified
in subsections (a) through (e), both inclusive, above.
1.9 Section 8 of the Credit Agreement is hereby amended by adding thereto a
new Section 8.4 which reads as follows:
Section 8.4. Collateral for Undrawn Letters of Credit.
When any Event of Default, other than an Event of
Default described in subsection (k) or (l) of Section
8.1, has occurred and is continuing, the Borrowers
shall, upon demand of the Agent, and when any Event of
Default described in subsection (k) or (l) of Section
8.1 has occurred the Borrowers shall, without notice or
demand from the Agent, immediately pay to the Agent the
full amount of each Letter of Credit then outstanding,
the Borrowers agreeing to immediately make such payment
and acknowledging and agreeing that the Lender would
not have an adequate remedy at law for failure of the
Borrowers to honor any such demand and that the Agent
shall have the right to require the Borrowers to
specifically perform such undertaking whether or not
any draws have been made under any such Letters of
Credit.
ARTICLE II
CONDITIONS PRECEDENT
2.1 This Amendment shall become effective as of the date hereof on the date
that each of the following conditions precedent have been met:
(a) the Agent shall have received counterparts
hereof executed by the Borrowers and the Lenders; and
(b) the Agent shall have received (i) a
certificate of the Secretary of each Borrower dated the
date of this Amendment certifying that attached thereto
is a true and complete copy of resolutions adopted by
the Board of Directors of such Borrower, authorizing
the execution, delivery and performance of this
Amendment and certifying the names and true signatures
of the officers of such Borrower authorized to
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sign this Amendment and (ii) such supporting documents
as the Agent may reasonably request.
ARTICLE III
MISCELLANEOUS
3.1. To induce the Agent and the Banks to enter into this Amendment, each
Borrower represents and warrants to the Agent and the Banks that: (a) the
representations and warranties contained in the Loan Documents, as amended by
the Amendment, are true and correct in all material respects as of the date
hereof with the same effect as though made on the date hereof; (b) after giving
effect to this Amendment, no Event of Default or Default exists; (c) this
Amendment has been duly authorized by all necessary corporate proceedings and
duly executed and delivered by each Borrower and each Guarantor, and the Credit
Agreement, as amended by the Amendment, and each of the other Credit Documents
are the legal, valid and binding obligations of each Borrower or Guarantor,
enforceable against such Borrower or Guarantor in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights or by general principles of equity; and (d) no
consent, approval, authorization, order, registration or qualification with any
governmental authority is required for, and in the absence of which would
adversely effect, the legal and valid execution and delivery or performance by
any Borrower or any Guarantor of this Amendment or the performance by any
Borrower or any Guarantor of the Credit Agreement, as amended by the Amendment,
or any other Credit Document to which they are a party.
3.2. Each Borrower acknowledges and agrees that all of the Collateral
Documents to which it is a party remain in full force and effect for the benefit
and security of, among other things, the Obligations as modified hereby. Each
Borrower further acknowledges and agrees that the Borrowers' obligations owing
under the Applications and the Letters of Credit shall constitute Secured
Obligations as defined under the Collateral Documents. Nothing herein contained
shall in any manner affect or impair the priority of the liens and security
interests created and provided for by the Collateral Documents as to the
indebtedness which would be secured thereby prior to giving effect to this
Amendment. Each Borrower further agrees to execute and deliver any and all
instruments or documents as may be required by the Lenders to confirm any of the
foregoing.
3.3. This Amendment 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 Amendment.
3.4. Except as specifically provided above, the Credit Agreement and the
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed in all respects. The execution, delivery, and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power, or remedy of the Agent or any Bank
under the Credit Agreement or any of the other Loan Documents, nor constitute a
waiver or modification of any provision of any of the other Loan Documents.
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3.5. This Amendment and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
Illinois.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
Dated as of the date first above written.
BADGER PAPER MILLS, INC., as a Borrower and
Guarantor
By:________________________________________
Title:_____________________________________
BADGER PAPER MILLS FLEXIBLE PACKAGING
DIVISIONS, INC., as a Borrower and
Guarantor
By:________________________________________
Title:_____________________________________
Accepted and agreed to as of the date and year first above written.
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
By:________________________________________
Title:_____________________________________
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