EXHIBIT 3.8
FIFTH AMENDMENT TO LOAN AGREEMENT
This FIFTH AMENDMENT TO LOAN AGREEMENT (this "Amendment") is entered
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into as of April 17, 2002, between ASSOCIATED HYGIENIC PRODUCTS LLC, a Delaware
limited liability company ("Borrower"), and FOOTHILL CAPITAL CORPORATION, in its
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capacity as administrative agent ("Agent") for the Lenders (as defined below),
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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, as further amended by that certain Third Amendment and Waiver to Loan
Agreement, and as further amended by that certain Fourth Amendment 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"),
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pursuant to which the Lenders have agreed to extend credit to Borrower from time
to time; and
WHEREAS, the United States District Court for the Middle District of
Georgia, Albany Division, has entered a judgment (the "Patent Infringement
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Judgment") on the jury's verdict in favor of the plaintiffs in the amount of
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$10,400,000.00 in the matter of Xxxx X. Xxxxxx; Xxxxxx X. Xxxxxx; and R&L
Engineering, Inc., Plaintiffs, vs. DSG International Limited, and Associated
Hygienic Products, LLC, Defendant; and
WHEREAS, Borrower hereby represents and warrants that the parties have
entered into a settlement of all claims under the Patent Infringement Judgment
and the related litigation pursuant to that certain Settlement Agreement dated
as of April 9, 2002 (the "Settlement Agreement"); and
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WHEREAS, Borrower has requested that Agent and the Lenders amend the
Loan Agreement to permit Borrower to use up to $1,450,000 in Advances (as
defined in the Loan Agreement) to fund, in part, the amounts due under the
Settlement Agreement; and
WHEREAS, 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:
l. Amendments to Loan Agreement.
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(a) Amendments to Section 1.1 of the Loan Agreement. Section 1.1,
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"Definitions," is hereby amended and modified by inserting the following
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definitions in appropriate alphabetical order therein:
""Settlement Agreement" means that certain Settlement Agreement dated
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as of April 9, 2002 by and among the parties signatory thereto to
settle all claims against the Borrower and DSG related to that certain
judgment entered by the United States District Court for the Middle
District of Georgia, Albany Division, on the jury's verdict in favor
of the plaintiffs in the amount of $10,400,000 in the matter of Xxxx
X. Xxxxxx; Xxxxxx X. Xxxxxx; and R&L Engineering, Inc., Plaintiffs,
vs. DSG International Limited, and Associated Hygienic Products, LLC,
Defendants, or any other litigation or claims related thereto."
""Subordinated Note A-3" means the indebtedness of Borrower to
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Disposable Soft Goods (UK) Plc, evidenced by that certain promissory
note executed by Borrower and payable to the order of Disposable Soft
Goods (UK) Plc dated as of April 17, 2002, in the original principal
amount of $2,750,000, in form and substance satisfactory to Agent."
(b) Amendment to Section 3.3 of the Loan Agreement. Section 3.3 of the
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Loan Agreement, "Conditions Precedent to all Extensions of Credit," is hereby
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amended and modified by deleting the "and" at the end of subsection 3.3(c), by
deleting the period at the end of subsection 3.3(d) and substituting "; and"
therefor, and adding the following subsection 3.3(e):
"(e) with regard to any Capital Expenditure Loan, Borrower and DSG
shall have satisfied all of their respective obligations under the
Settlement Agreement, and Excess Availability shall be $3,500,000 or more
on the date of such Capital Expenditure Loan."
(c) Amendment to Section 7.1 of the Loan Agreement. Section 7.1 of the
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Loan Agreement, "Indebtedness," is hereby amended and modified by deleting
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subsection (d) thereof in its entirety and substituting the following in lieu
thereof:
"(d) Indebtedness evidenced by Subordinated Note A-2 (as such term is
defined in the Subordination, Waiver and Consent Agreement dated as of September
11,
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2001 among Borrower, Agent and Disposable Soft Goods (UK) Plc), Subordinated
Note B and Subordinated Note A-3,"
(d) Amendment to Section 7.8 of the Loan Agreement. Section 7.8 of the
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Loan Agreement, "Payments, Prepayments and Amendments," is hereby amended and
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modified by deleting subsection (a) thereof in its entirety and substituting the
following in lieu thereof:
"(a) Make any payments of principal of, or interest or fees on,
Subordinated Note A-2, Subordinated Note B or Subordinated Note A-3; provided,
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however, that Borrower may make regularly scheduled interest payments on
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Subordinated Note A-2 if (i) no Event of Default has occurred and is continuing,
and (ii) Borrower has demonstrated to the satisfaction of Agent that, after
giving effect to such payment, Excess Availability is $10,000,000 or more;
provided, further, that Borrower may refinance and pay in full the Subordinated
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Note A-2 with the proceeds of new subordinated debt provided by an Affiliate of
Borrower on terms and conditions, and subject to a Subordination Agreement and
other documents, in form and substance satisfactory to Agent, and provided,
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further, Borrower may make regularly scheduled payments of principal and
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interest on Subordinated Note A-3 if (i) no Event of Default has occurred and is
continuing, and (ii) Borrower has demonstrated to the satisfaction of Agent
that, after giving effect to such payment, Excess Availability (after
subtracting the amount of any payables of the Borrower which are more than 60
days past due) is $10,000,000 or more."
(e) Amendment to Section 7.11 of the Loan Agreement. Section 7.11 of
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the Loan Agreement, "Distributions," is hereby amended and modified by deleting
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Section 7.11 in its entirety and substituting the following in lieu thereof:
"7.11 Distributions. Make any distribution or declare or pay any
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dividends (in cash or other property, other than Stock) on, or purchase,
acquire, redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding, or pay any management fees; provided, however, so long as
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no Default or Event of Default exists on the date of such distribution or
immediately after giving effect thereto, and Borrower demonstrates to the
reasonable satisfaction of Agent that Excess Availability will be at least
$1,000,000 after giving effect to such distribution, Borrower may from time to
time during or following the end of any fiscal quarter during which Borrower was
a Pass-Through Entity, distribute to its respective equity holders in cash an
amount not in excess of the Tax Distribution Amount for the portion of the
fiscal year during the end of such fiscal quarter, minus the aggregate amount of
any such distributions therefor made in respect of such fiscal year; provided,
however, that in no event shall the amount so distributed in respect of any
fiscal year exceed the actual amount of federal and state income taxes for such
year solely attributable to the ownership of Borrower's equity interest. The
amount of any distribution of the Tax Distribution Amount under this Section
shall be verified by the chief financial officer of Borrower in the certificate
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required under Section 6.3 and in the written statement required of Borrower's
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accountants under Section 6.3."
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(f) Amendment to Section 7.17 of the Loan Agreement. Section 7.17 of
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the Loan Agreement, "Use of Proceeds," is hereby amended and modified by
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deleting Section 7.17 in its entirety and substituting the following in lieu
thereof:
"7.17 Use of Proceeds. Use the proceeds of (a) the Advances and the
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Term Loan for any purpose other than (i) on the Closing Date, (x) to facilitate
the Drypers Acquisition, (y) to restate and restructure amounts owing under the
Prior Loan Agreement, and (z) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (ii) thereafter, consistent
with the terms and conditions hereof, for its lawful and permitted corporate
purposes; provided, Borrower may use the proceeds of Advances in an aggregate
amount not exceeding $1,450,000 to pay amounts due under the Settlement
Agreement, and (b) the Capital Expenditure Loan for any purpose other than to
purchase Equipment."
2. No Other Amendments or Waivers. The execution, delivery and
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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 amendments 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.
3. Conditions Precedent to Effectiveness. This Amendment shall become
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effective as of the date hereof when, and only when, Agent shall have received:
(a) an amendment fee from Borrower in the amount of $25,000, 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 the rate applicable to Advances under the Loan Agreement in
accordance with Section 2.6 of the Loan Agreement);
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(b) counterparts of this Amendment duly executed and delivered by
Borrower and the Lenders;
(c) true and correct copies of a court order or settlement agreement
approving the settlement of the Patent Infringement Judgment, in form and
substance satisfactory to Agent;
(d) evidence of Borrower's receipt of not less than $2,750,000 in
subdebt from Disposable Soft Goods (UK) Plc and copies of all documents
evidencing such indebtedness, on terms and conditions satisfactory to Agent;
(e) a subordination agreement executed by and among Borrower, Agent
and Disposable Soft Goods (UK) Plc, on terms and conditions satisfactory to
Agent;
(f) a wire of the funds described in (d) above, together with
instructions from Borrower to wire transfer such funds and Advances hereunder
directly to the plaintiffs in full satisfaction of the Settlement Agreement; and
(g) such other information, documents, instruments or approvals as
Agent or Agent's counsel may reasonably require.
4. Representations and Warranties of Borrower. Borrower represents and
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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
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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) After giving effect to this Amendment, no Default or Event of
Default is existing.
5. Counterparts. This Amendment may be executed in multiple counterparts,
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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.
6. Reference to and Effect on the Loan Documents. Upon the effectiveness of
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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.
7. Costs Expenses and Taxes. Borrower agrees to pay on demand all costs and
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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.
8. Governing Law. This Amendment shall be deemed to be made pursuant to the
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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.
9. Loan Document. This Amendment shall be deemed to be a Loan Document for
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all purposes.
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