TENTH AMENDMENT TO
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS
TENTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (“
Amendment ”), dated as of May 23, 2005, is by and
between BADGER PAPER MILLS, INC., a corporation organized under the
laws of the State of Wisconsin (“Borrower ”),
and PNC BANK, NATIONAL ASSOCIATION (“ PNC ”) as
sole Lender and as Agent under the Credit Agreement referred to
below.
W I T N E S
S E T H :
WHEREAS,
PNC and Borrower entered into a certain Revolving Credit and
Security Agreement, dated as of November 30, 2001, as amended
by a First Amendment to Revolving Credit and Security Agreement,
dated as of April 30, 2002, as further amended by a Second
Amendment to Revolving Credit and Security Agreement, dated as of
September, 2002, as further amended by a Third Amendment to
Revolving Credit and Security Agreement, dated as of
August 13, 2003, as further amended by a Fourth Amendment to
Revolving Credit and Security Agreement, dated as of
November 14, 2003, as further amended by a Fifth Amendment to
Revolving Credit and Security Agreement, dated as of March 23,
2004, as further amended by a Sixth Amendment to Revolving Credit
and Security Agreement dated as of April 30, 2004, as further
amended by a Seventh Amendment to Revolving Credit and Security
Agreement dated as of May 14, 2004, as further amended by an
Eighth Amendment to Revolving Credit and Security Agreement, dated
as of August 12, 2004 and as further amended by a Ninth Amendment
to Revolving Credit and Security Agreement dated as of March 31,
2005 (the “ Credit Agreement ”);
WHEREAS,
Borrower has requested that the Credit Agreement be amended to
clarify Section 6.6 thereof as set forth herein;
WHEREAS,
pursuant to the Eighth Amendment to Revolving Credit and Security
Agreement, dated as of August 12, 2004 (the “ Eighth
Amendment ”) by and between Borrower and PNC, Section 6.6
of the Credit Agreement was restated in its entirety so as to
provide for a limitation on the net loss of Borrower (Section 6.6
of the Credit Agreement, as so restated being referred to herein as
the “ Net Loss Covenant ”);
WHEREAS,
at the time of the execution and delivery of the Eighth Amendment
it was the intent and understanding of Borrower and PNC that for
purposes of the calculation of net loss for the Net Loss Covenant,
the gross income of Borrower would not be reduced for any
nonoperating asset impairment charge with respect to
Borrower’s Fourdrinier paper machine that might be
recommended by Borrower’s independent accountants;
WHEREAS,
Borrower’s independent accountants recommended that Borrower
take an asset impairment charge against Borrower’s Fourdriner
paper machine for the fiscal year ending December 31, 2004 in an
amount equal to $4,556,000 (the “ Asset Impairment
Charge ”);
WHEREAS,
Borrower and PNC
