EXHIBIT 3.4
FOURTH AMENDMENT TO LOAN AGREEMENT
This FOURTH AMENDMENT TO LOAN AGREEMENT (this "Amendment") is
---------
entered into as of December 19, 2001. between ASSOCIATED HYGIENIC PRODUCTS LLC,
a Delaware limited liability company ("Borrower") and FOOTHILL CAPITAL,
--------
CORPORATION, in its capacity as administrative agent ("Agent") for the
-----
Lenders (as defined below),
W I T N E S S E T H:
WHEREAS, Borrower, the Lenders (as defined therein) and Agent have
entered into that certain Amended and Restated Loan and Security Agreement
dated as of March 14, 2001, as amended by that certain First Amendment to Loan
Agreement, as further amended by that certain Second Amendment to Loan
Agreement and as further amended by that certain Third Amendment and
Waiver to Loan Agreement prior to the date hereof (as the same may be further
modified, amended, restated or supplemented from time to time, the "Loan
----
Agreement"), pursuant to which the Lenders have agreed to extend credit to
---------
Borrower from time to time: and
WHEREAS, pursuant to Section 7.20(a) of the Loan Agreement, Borrower
is required to meet certain financial tests, and Borrower has informed Agent and
the Lenders that Borrower (i) failed to satisfy the requirements of Section
7.20(a)(ii) for the fiscal quarter ending June 30, 2001 (the "Second Quarter
--------------
Covenant Default"), and (ii) failed to satisfy the requirements of Section
----------------
7.20(a)(i) for the six (6) month period ending September 30, 2001 and further
failed to satisfy the requirements of Section 7.20(a)(ii) for the fiscal quarter
ending September 30, 2001 (collectively, the "Third Quarter Covenant Defaults;
-------------------------------
with the Second Quarter Covenant Default, the "Financial Covenants Defaults");
----------------------------
and
WHEREAS, Borrower has requested that Agent and the Lenders waive the
Financial Covenants Defaults and amend the Loan Agreement to chance the
financial tests for the fiscal quarter ending December 31, 2001 and for each
fiscal quarter during the fiscal year ending December 31, 2002, and Agent and
the Lenders have agreed to the requested amendments and waiver on the terms
and conditions set forth herein; and
WHEREAS, Borrower has requested that Agent and the Lenders further
amend the Loan Agreement by) restructuring the Term Loan (as such term is
defined in the Loan Agreement) into three separate term loans, and Agent and
the Lenders have agreed to the requested amendments on the terms and conditions
set forth herein;
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree that all capitalized terms not
otherwise
defined herein shall have the meanings ascribed to such terms in the Loan
Agreement and further agree as follows:
1. Amendments to Loan Agreement.
----------------------------
(a) Amendments to Section 1.1 of the Loan Agreement. Section 1.1.
-----------------------------------------------
"Definitions," is hereby amended and modified as follows:
-----------
(i) The definition of "Term Loan" is hereby amended and modified by
deleting such definition in its entirety and substituting the following in lieu
thereof:
""Term Loan" means, collectively, Term Loan A, Term Loan B and Term
---------
Loan C."
(ii) The definition of "Term Loan Amount" is hereby amended and
modified by deleting such definition in its entirety and substituting the
following in lieu thereof:
""Term Loan Amount" means, collectively, the Term Loan A Amount, the
----------------
Term Loan B Amount and the Term Loan C Amount."
(iii) The definition of "Term Loan Commitment" is hereby amended and
modified by deleting such definition in its entirety and substituting the
following in lieu thereof:
""Term Loan Commitment" means, collectively, the Term Loan A
--------------------
Commitment, the Term Loan B Commitment and the Term Loan C
Commitment."
(iv) The following definitions are inserted therein in correct
alphabetical order:
""Business Plan" has the meaning set forth in Section 7.20(a)(iii)."
------------- --------------------
""EBITDA" means, with respect to any fiscal period, Borrower's and
------
its Subsidiaries consolidated net earnings (or loss), minus
extraordinary gains, plus interest expense (excluding interest
received on the Amended and Restated Wang Note), income taxes,
depreciation and amortization for such period, plus, during Borrower's
fiscal year 2002, non-cash restructuring charges paid by Borrower in
such period, as determined in accordance with GAAP."
""Fourth Amendment Effective Date" has the meaning set forth in that
-------------------------------
certain Fourth Amendment and Waiver to Loan Agreement dated as of
December 19, 2001 among Borrower and Agent."
2
""Term Loan A" the meaning set forth in Section 2.2(a)(i)."
----------- -----------------
""Term Loan B" has the meaning set forth in Section 2.2(a)(ii)."
----------- ------------------
""Term Loan C" has the meaning set forth in Section 2.2 (a)(iii)."
----------- --------------------
""Term Loan A Amount" has the meaning set forth in Section 2.2(a)(i)."
------------------ -----------------
""Term Loan B Amount" has the meaning set forth in Section
------------------ -------
2.2(a)(ii)."
----------
""Term Loan C Amount" has the meaning set forth in Section
------------------ -------
2.2(a)(iii)."
----------
""Term Loan A Commitment" means, with respect to each Lender, its Term
----------------------
Loan A Commitment, and, with respect to all Lenders, their Term Loan A
Commitments, in each case as such Dollar amounts are set forth beside
such Lender's name under the applicable heading on Schedule C-1 or on
------------
the signature page of the Assignment and Acceptance pursuant to
which such Lender became a Lender hereunder in accordance with the
provisions of Section 14.1."
------------
""Term Loan B Commitment" means, with respect to each Lender, its Term
----------------------
Loan B Commitment, and with respect to all Lenders, their Term Loan B
Commitments, in each case as such Dollar amounts are set forth beside
such Lender's name under the applicable heading on Schedule C-1 or on
------------
the signature page of the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder in accordance with the
provisions of Section 14.1."
------------
""Term Loan C Commitment" means, with respect to each Lender, its Term
----------------------
Loan C Commitment and, with respect to all Lenders, their Term Loan C
Commitments, in each case as such Dollar amounts are set forth beside
such Lender's name under the applicable heading on Schedule C-1 or on
------------
the signature page of the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder in accordance with the
provisions of Section 14.1."
------------
(b) Amendment to Section 2.2 of the Loan Agreement. Section 2.2 of
----------------------------------------------
the Loan Agreement, "Term Loan; Capital Expenditure Loans," is hereby amended
------------------------------------
and modified by deleting Section 2.2(a) in its entirety and substituting the
following in lieu thereof:
"(a) Term Loans. On March 14, 2001, the Lenders made a term loan to
Borrower in the original principal amount of Eleven Million Dollars
($11,000,000). As of the Fourth Amendment Effective Date, the principal
3
balance of such term loan is $8,712,000, which shall be divided into three
separate term loans, as set forth below:
(i) Term Loan A. The principal balance of Term Loan A ("Term
----
Loan A") is $2,780,601 (the "Term Loan A Amount"). Term Loan A shall be
------ ------------------
repaid in equal monthly installments of principal in the amount of $58,510
plus accrued interest, such installments to be payable on the first day of
----
each month commencing with the first day of the first month following the
Fourth Amendment Effective Date and continuing on the first day of each
succeeding month until and including the earliest of (1) the payment in
full of the Term Loan A, or (2) the Maturity Date, or (3) termination of
this Agreement;
(ii) Term Loan B. The principal balance of Term Loan B ("Term
----
Loan B") is $2,934,365 (the "Term Loan B Amount"). Term Loan B shall be
------ ------------------
repaid in equal monthly installments of principal in the amount of $61,746
plus accrued interest, such installments to be payable on the first day of
----
each month commencing with the first day of the first month following the
Fourth Amendment Effective Date and continuing on the first day of each
succeeding month until and including the earliest of (1) the payment in
full of the Term Loan B, or (2) the Maturity Date, or (3) termination of
this Agreement;
(iii) Term Loan C. The principal balance of Term Loan C ("Term
----
Loan C") is $2,997,034 (the "Term Loan C Amount"). Term Loan C shall
------ ------------------
be repaid in equal monthly installments of principal in the amount
of $63,077 plus accrued interest, such installments to be payable on the
----
first day of each month commencing with the first day of the first month
following the Fourth Amendment Effective Date and continuing on the first
day of each succeeding month until and including the earliest of (1) the
payment in full of the Term Loan C, or (2) the Maturity Date, or (3)
termination of this Agreement;
The unpaid principal balance of each of Term Loan A Term Loan B, and Term
Loan C shall be repaid with the proceeds of any Permitted Disposition to
the extent such repayment is required by Section 7.4 hereof, with such
-----------
proceeds being applied to the installments due on the respective Term Loan
in the inverse order of their maturity. The outstanding unpaid principal
balance of the Term Loan, together with all accrued and unpaid interest and
fees thereon, shall be due and payable on the earlier of the Maturity Date
or the date of termination of this Agreement, whether by its terms, by
prepayment, by acceleration, or otherwise. The unpaid principal balance of
the Term Loan may be prepaid in whole or in part without penalty or premium
(except as provided in Section 3.6) at any time during the term of this
-----------
Agreement upon ninety (90) days' written notice by Borrower to Agent, all
such prepaid amounts to be applied pro-rata to the installments due on the
Term Loan A. Term Loan B and Term Loan C, in the inverse order of their
4
respective maturity. All amounts outstanding under the Term Loan shall
constitute Obligations."
(c) Amendment to Section 6.9 of the Loan Agreement. Section 6.9 of the
----------------------------------------------
Loan Agreement. "Location of Inventory and Equipment." is hereby amended and
-----------------------------------
modified to add the following proviso at the end of such Section:
"and; provided further Borrower may re-locate Inventory and Equipment
----------------
from a location identified on Schedule 5.5 to another location identified
------------
on Schedule 5.5 so long as Borrower provides written notice to Agent not
------------
less than 30 days prior to such relocation, and so long as, at the time of
such written notification, Borrower provides any financing statements,
fixture filings, Collateral Access Agreements or other documents required
by Agent to perfect and continue Agent's Liens on such assets."
(d) Amendment to Section 7.4 of the Loan Agreement. Section 7.4 of the
----------------------------------------------
Loan Agreement, "Disposal of Assets," is hereby amended and modified by deleting
------------------
Section 7.4 in its entirety and substituting the following in lieu thereof:
"7.4 Disposal of Assets. Convey, sell, lease, license, assign,
------------------
transfer, or otherwise dispose of any of Borrower's assets; provided, however,
-------- -------
that the Borrower may dispose of assets in a Permitted Disposition so long as:
(a) if the asset was acquired ,with the proceeds of a Capital Expenditure Loan,
the proceeds are used to repay the applicable Capital Expenditure Loan on the
date of receipt thereof by Borrower; (b) if the asset is Real Property
Collateral that was included by Agent in the calculation of the Term Loan C
Amount (designated "Real Estate Held for Sale" in Borrower's strategic business
plan delivered to Agent), the proceeds are used (i) first, to repay the
-----
installments due on Term Loan C in the inverse order of maturity, (ii} second,
------
to repay the installments due on Term Loan B in the inverse order of maturity,
(iii) third, to repay the installments due on Term Loan A in the inverse order
-----
of maturity, and (iv) fourth, any remaining proceeds are directed to the Cash
------
Management Account; (c) if the asset is Equipment that was included by Agent in
the calculation of the Term Loan B Amount (designated "Machinery and Equipment
Held for Sale" in Borrower's strategic business plan delivered to Agent), and to
the extent such proceeds from the sale of such Equipment are not used to
purchase replacement Equipment of equal or greater value within five (5)
Business Days after selling any such Equipment, the proceeds are used (i) first,
-----
to repay the installments due on the Term Loan B in the inverse order of
maturity. (ii) second, to repay the installments due on Term Loan A in the
------
inverse order of maturity, third, to repay the installments due on Term Loan C
-----
in the inverse order of maturity, and (iv) fourth, any remaining proceeds are
------
directed to the Cash Management Account; and (d) in all other cases, the
proceeds are directed to the Cash Management Account, or immediately deposited
by Borrower in the Cash Management Account.
(e) Amendment to Section 7.20 of the Loan Agreement. Section 7.20 of
-----------------------------------------------
the Loan Agreement, "Financial Covenants," is hereby amended and modified by
-------------------
5
deleting Section 7.20(a) and 7.20(b) in their entirety and substituting the
following in lieu thereof:
(a} Fail to maintain:
(i) Minimum EBITDA. EBITDA, measured on a fiscal quarter-end
basis, of not less than the required amount set forth in the following
table for the applicable period set forth opposite thereto:
--------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------
($6,923,000) For the 3 month period ending December 31, 2001
--------------------------------------------------------------------
($757,000) For the 3 month period ending March 31, 2002
--------------------------------------------------------------------
$ 1,318,000 For the 6 month period ending June 30, 2002
--------------------------------------------------------------------
$ 3,302,000 For the 9 month period ending September 30, 2002
--------------------------------------------------------------------
$ 5,591,000 For the 12 month period ending December 31, 2002
--------------------------------------------------------------------
(ii} Tangible Net Worth. Tangible Net Worth of at least the
required amount set forth in the following table as of the applicable date
set forth opposite thereto:
--------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------
($12,834,000) as of December 31, 2001
--------------------------------------------
($14,531,000) as of March 31, 2002
--------------------------------------------
($13,944,000) as of June 30, 2002
--------------------------------------------
($l3,198,000) as of September 30, 2002
--------------------------------------------
($12,058,000) as of December 31, 2002
--------------------------------------------
(iii) On December 1, 2002, and on each December 1
thereafter, Borrower agrees to deliver to Agent Borrower's business plan
for its upcoming fiscal year commencing January 1 of succeeding year (the
"Business Plan"), which plan shall be reasonably acceptable to Agent in all
-------------
respects. Based upon the Business Plan for each fiscal year, Agent shall
establish the quarterly minimum EBITDA and minimum Net Worth covenants for
the fiscal year in question using the same methodology as utilized for the
2001 and 2002 fiscal year financial covenants, and the new covenant levels
shall be presented to Borrower for approval, which approval shall not be
unreasonably withheld. In the event that Borrower does not approve the
proposed covenant levels, Agent shall
6
establish the covenant levels, in its reasonable discretion, based upon the
Business Plan for the applicable fiscal year.
(b) Capital Expenditures. Make Capital Expenditures in any fiscal
year in excess of $6,975,000."
(f) Amendment to Schedule C-1 to the Loan Agreement. Schedule C-1 of
-----------------------------------------------
the Loan Agreement, "Commitments." is hereby amended and modified by deleting
-----------
Schedule C-1 in its entirety and substituting the schedule attached to this
Amendment as Annex A in lieu thereof.
2. Waiver. The Lenders and Agent hereby waive the Financial Covenants
------
Defaults and their rights and remedies under the Credit Agreement arising as a
result of the Financial Covenants Defaults; provided, however, the
-------- -------
above-referenced waiver shall not waive any other requirement or hinder,
restrict or otherwise modify the rights and remedies of Agent or the Lenders
following the occurrence of any other Default or Event of Default under the Loan
Agreement, including, but not limited to, any future defaults by Borrower of the
financial covenants contained in Section 7.20 of the Loan Agreement.
3. No Other Amendments or Waivers. Except as otherwise expressed herein.
------------------------------
the execution, delivery and effectiveness of this Amendment shall not operate as
a waiver of any right, power or remedy of Agent or the Lenders under the Loan
Agreement or any of the other Loan Documents, nor constitute a waiver of any
provision of the Loan Agreement or any of the other Loan Documents. Except for
the amendment and waiver set forth above, the text of the Loan Agreement and all
other Loan Documents shall remain unchanged and in full force and effect and
Borrower hereby ratifies and confirms its obligations thereunder. This Amendment
shall not constitute a modification of the Loan Agreement or any of the other
Loan Documents or a course of dealing with Agent or the Lenders at variance with
the Loan Agreement or the other Loan Documents such as to require further notice
by Agent or the Lenders to require strict compliance with the terms of the Loan
Agreement and the other Loan Documents in the future, except as expressly set
forth herein. Borrower acknowledges and expressly agrees that Agent and the
Lenders reserve the right to, and do in fact, require strict compliance with all
terms and provisions of the Loan Agreement and the other Loan Documents.
Borrower has no knowledge of any challenge to Agent's or any Lenders' claims
arising under the Loan Documents, or to the effectiveness of the Loan Documents.
4. Conditions Precedent to Effectiveness. This Amendment shall become
-------------------------------------
effective as of the date hereof (the "Fourth Amendment Effective Date") when,
-------------------------------
and only when, Agent shall have received:
(a) an amendment fee from Borrower in the amount of $40,000, which
fee shall be fully earned and non-refundable when paid (it being understood
that, by execution and delivery of this Amendment, Borrower authorizes Agent to
charge Borrower's Loan Account for such fee and such amount shall thereafter
accrue interest at
7
the rate applicable to Advances under the Loan Agreement in accordance with
Section 2.6 of the Loan Agreement);
(b) counterparts of this Amendment duly executed and delivered by
Borrower and the Lenders; and
(c) such other information, documents, instruments or approvals as
Agent or Agent's counsel may reasonably require.
5. Representations and Warranties of Borrower. Borrower represents and
------------------------------------------
warrants as follows:
(a) Borrower is a limited liability company organized, validly
existing and in good standing under the laws of the jurisdiction indicated at
the beginning of this Amendment and all other jurisdictions in which the failure
to be so qualified reasonably could be expected to constitute a Material Adverse
Change;
(b) The execution, delivery, and performance by Borrower of this
Amendment and the Loan Documents to which it is a party, as amended hereby, are
within Borrower's limited liability company powers, have been duly authorized
by all necessary limited liability company action and do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to Borrower, the Governing Documents of Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on Borrower, (ii)
conflict with, result in a breach of, or constitute (with due notice or lapse of
time or both) a default under any material contractual obligation of Borrower,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Borrower, other than Permitted
Liens, or (iv) require any approval of Borrower's members or any approval or
consent of any Person under any material contractual obligation of Borrower;
(c) The execution, delivery, and performance by Borrower of this
Amendment and the Loan Documents to which it is a party, as amended hereby, do
not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
Person;
(d) This Amendment and each other Loan Document to which Borrower is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally; and
(e) Except as expressly set forth herein, no other Default or Event of
Default is existing.
8
6. Counterparts. This Amendment may be executed in multiple counterparts,
------------
each of which shall be deemed to be an original and all of which, taken
together, shall constitute one and the same agreement. In proving this Amendment
in any judicial proceedings, it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom such enforcement
is sought. Any signatures delivered by a party by facsimile transmission shall
be deemed an original signature hereto.
7. Reference to and Effect on the Loan Documents. Upon the effectiveness of
---------------------------------------------
this Amendment, on and after the date hereof each reference in the Loan
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Loan Agreement, and each reference in the other Loan Documents
to "the Loan Agreement" "thereunder", "thereof" or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as amended hereby.
8. Costs, Expenses and Taxes. Borrower agrees to pay on demand all
-------------------------
reasonable costs and expenses in connection with the preparation, execution, and
delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for Agent with respect thereto and with
respect to advising Agent as to its rights and responsibilities hereunder and
thereunder.
9. Governing Law. This Amendment shall be deemed to be made pursuant to the
-------------
laws of the State of Georgia with respect to agreements made and to be performed
wholly in the State of Georgia, and shall be construed, interpreted, performed
and enforced in accordance therewith.
10. Loan Document. This Amendment shall be deemed to be a Loan Document for
-------------
all purposes.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
IN WITNESS WHEREOF the parties hereto have executed and delivered this
Amendment as of the day and year first written above.
BORROWER: ASSOCIATED HYGIENIC PRODUCTS LLC
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
AGENT
and LENDER: FOOTHILL CAPITAL CORPORATION,
as Agent and a Lender
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
S-1
Annex A
-------
Schedule C-1
------------
Commitments
--------------------------------------------------------------------------------------------
Term Loan A Term Loan B Term Loan C
Revolver Commitment Commitment Commitment Total
Lender Commitment (subfacility) (subfacility) (subfacility) Commitment
--------------------------------------------------------------------------------------------
Foothill Capital $35,000,000 $2,780,601 $2,934,365 $2,997,034 $35,000,000
Corporation
--------------------------------------------------------------------------------------------
All Lenders $35,000,000 $2,780,601 $2,934,365 $2,997,034 $35,000,000
--------------------------------------------------------------------------------------------
S-1
