Exhibit 10.37


 


Execution Copy


 


THIRD AMENDMENT TO CREDIT
AGREEMENT


 


This THIRD AMENDMENT TO CREDIT AGREEMENT dated November 21,
2005 (this “Amendment”), is made by and among UFP Technologies, Inc.,
a Delaware corporation (“UFP”), Moulded Fibre Technology, Inc., a
Maine corporation (“MFT”), Simco Industries, Inc., a Michigan
corporation (“Simco Industries”), and Simco Automotive Trim, Inc.,
a Michigan corporation (“Simco Auto” and collectively with UFP, MFT and Simco
Industries, the “Borrowers”), and Bank of America, N.A. (as assignee of
Banc of America Leasing & Capital LLC, as successor to Fleet Capital
Corporation) (the “Lender”).


 


WHEREAS, the Borrowers and the Lender are parties to
a Credit and Security Agreement dated as of February 28, 2003, as amended
by that certain First Amendment to Credit Agreement dated as of March 24,
2004 and that certain Second Amendment to Credit Agreement dated as of June 28,
2004 (as further amended, modified, restated and supplemented, the “Credit
Agreement”); and


 


WHEREAS, the Borrowers and the Lender desire to
amend certain provisions of the Credit Agreement, all subject to the terms,
conditions and limitations set forth herein;


 


NOW, THEREFORE, in consideration of the foregoing
and the agreements contained herein, the parties hereby agree as follows:


 


1.                                       Capitalized Terms.


 


Capitalized terms used herein which are defined in
the Credit Agreement have the same meanings herein as therein, except to the
extent that such meanings are amended hereby.


 


2.                                       Amendments. Subject to the satisfaction of the terms and conditions set forth in Section 4
hereof, the Borrowers and the Lender agree that the Credit Agreement is hereby
amended, effective as of the date of this Amendment, as follows:


 


(a)                                  Amendments to Section 1.1 of
the Credit Agreement.


 


(i)                                     Section 1.1
of the Credit Agreement is hereby amended by adding the following new
definitions (to the extent not already included in said Section 1.1) and
inserting the same in the appropriate alphabetical locations and amending the
following definitions (to the extent already included in said Section 1.1)
to read in their entirety as follows:


 


“‘Applicable Margin’
and ‘Applicable Unused Fee Rate’ means, for any Type of Loans (a) for
the Initial Payment Period (as defined below) the following percentages per
annum:


 


	
   

  	
   

  	
  Applicable Margin (% per annum)

  	
   

  	
  Applicable
  Unused Fee Rate

  	
   

  
	
  Class of Loans

  	
   

  	
  Base Rate Loans

  	
   

  	
  Eurodollar Loans

  	
   

  	
  (% per annum)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revolving Loans

  	
   

  	
  0.00

  	
  %

  	
  1.25

  	
  %

  	
  0.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Term Loan

  	
   

  	
  0.00

  	
  %

  	
  1.25

  	
  %

  	
  Not Applicable

  	
   

  



 

















 


and (b) for any Payment Period (as defined below)
other than the Initial Payment Period, the respective rates indicated below for
Loans of such Type opposite the applicable Adjusted Fixed Charge Coverage Ratio
indicated below (or as provided in the final paragraph of this definition, for part of
a Payment Period):


 


	
   

  	
   

  	
  Applicable Margin (% per annum)

  	
   

  	
  Applicable Unused

  Fee Rate

  	
   

  
	
  Adjusted Fixed

  	
   

  	
  Revolving Loans

  	
   

  	
  Term Loan

  	
   

  	
  (% per annum)

  	
   

  
	
  Charge Coverage

  Ratio

  	
   

  	
  Base Rate Loans

  	
   

  	
  Eurodollar Loans

  	
   

  	
  Base Rate Loans

  	
   

  	
  Eurodollar Loans

  	
   

  	
  Revolving Loans

  	
   

  	
  Term

  Loan

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than or equal to 1.50 to 1.00

  	
   

  	
  0.00

  	
  %

  	
  1.00

  	
  %

  	
  0.00

  	
  %

  	
  1.00

  	
  %

  	
  0.25

  	
  %

  	
  Not Applicable

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than or equal to 1.25 to 1.00 but less than
  1.50 to 1.00

  	
   

  	
  0.00

  	
  %

  	
  1.25

  	
  %

  	
  0.00

  	
  %

  	
  1.25

  	
  %

  	
  0.25

  	
  %

  	
  Not Applicable

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than or equal to 1.00 to 1.00 but less than
  1.25 to 1.00

  	
   

  	
  0.00

  	
  %

  	
  1.50

  	
  %

  	
  0.00

  	
  %

  	
  1.50

  	
  %

  	
  0.25

  	
  %

  	
  Not Applicable

  	
   

  



 


For purposes hereof, a “Payment
Period” means (i) initially, the period commencing on the Third
Amendment Effective Date to and including the fifth Business Day after the date
of delivery of the financial statements required by subsection 7.1(b) and
the Compliance Certificate required by subsection 7.1(c) for the
fiscal period of the Credit Parties ended December 31, 2005 (the “Initial
Payment Period”), and (ii) thereafter, the period commencing on the
day immediately succeeding the last day of the prior Payment Period to but not
including the fifth Business Day after the earlier of (x) the due date of the
next Compliance Certificate required to be delivered by the Borrowers to the
Lender pursuant to subsection 7.1(c) concurrently with the delivery
by the Borrowers of the financial statements required by subsection 7.1(b) to
be delivered to the Lender for the periods ended March 31st, June 30th,
September 30th and December 31st of each year,
or (y) the date of the actual receipt by the Lender of such Compliance
Certificate. Subject to and in accordance with the final paragraph of this definition,
the Applicable Margin and Applicable Unused Fee Rate shall be effective for
each Payment Period (or in the circumstances described in the final paragraph
of this definition, such portion of a Payment Period).


 


The Applicable Margin and
Applicable Unused Fee Rate for any Payment Period except the Initial Payment
Period shall be determined on the basis of the Compliance Certificates required
to be delivered to the Lender pursuant to subsection 7.1(c) concurrently
with the delivery by the Borrowers of the corresponding financial statements
required by subsection 7.1(b) to be delivered to the Lender for the
periods ended March 31st, June 30th, September 30th
and December 31st of each year, setting forth, among other
things, a calculation of the Adjusted Fixed Charge Coverage Ratio as at the
last day of the fiscal quarter immediately preceding such Payment Period.


 

















 


Anything in this Agreement
to the contrary notwithstanding, the Applicable Margin and Applicable Unused
Fee Rate shall be the rates applicable when the Adjusted Fixed Charge Coverage
Ratio is greater than or equal to 1.00 to 1.00 but less than 1.25 to 1.00 if
the Compliance Certificate required to be delivered by subsection 7.1(c) and
the financial statements required by subsection 7.1(b), respectively,
shall not be delivered within five Business Days after the same shall be due
(but only with respect to the portion of such Payment Period prior to the
delivery of such certificate).”


 


“‘Borrowing Base’
means, at the relevant time of reference thereto, an amount determined by the
Lender by reference to the most recent Borrowing Base Certificate/Collateral
Update Certificate delivered to the Lender pursuant to Section 2.1(b) which
is equal to the sum of:


 


(a)                                  85% of Eligible Accounts, provided that at no
time shall more than $500,000 in the aggregate of all outstanding Eligible
Accounts arise from the sale of tooling to account debtors, plus


 


(b)                                                                                 the lesser of:


 


(i)                                     the sum of:


 


(A)                              50% of Eligible Raw Material Inventory,


 


plus


 


(B)                                50% of Eligible Finished Goods Inventory,


 


and


 


(ii)                                  $5,000,000, minus


 


(c)                                  reserves for foreign exchange, interest rate
derivative exposure, letter of credit exposure and such other reserves as the
Lender in its reasonable credit judgment shall deem
appropriate from time to time;


 


In determining the Borrowing
Base from time to time, the Lender may, but shall not be required to, rely upon
reports or analyses generated by the Credit Parties (including, without
limitation, Borrowing Base Certificates/Collateral Update Certificates) and
reports or analyses generated by or on behalf of the Lender. Notwithstanding
anything to the contrary set forth herein, the Lender may in its
reasonable credit judgment at any time and from time to time, adjust the
percentages of Eligible Accounts, Eligible Raw Materials Inventory, Eligible
Finished Goods Inventory and undrawn amount of Documentary LCs included within
the Borrowing Base.”


 


“‘Cash Management Bank’
means Bank of America, N.A., in its capacity as the provider of cash management
services to the Credit Parties.”


 


“‘Eligible Accounts’
means (a) the aggregate face amount of the accounts receivable outstanding
and owed to the Credit Parties as determined in accordance with GAAP
consistently applied and as entered on the books and records of the Credit
Parties in the ordinary course of the business operations of the Credit Parties
which satisfy each of the requirements set forth below,


 

















 


minus (b) without duplication, the aggregate amount of any returns,
discounts (which may, at the Lender’s option, be calculated on the shortest
term), claims, credits, chargebacks, contra accounts, aged credit balances,
allowances or excise taxes of any nature (whether issued, owing, granted or
outstanding):


 


(i)                                     the subject goods have been sold and/or services
have been rendered on an absolute sale basis and on an open account basis to an
account debtor which is not (A) the United States government or any agency
thereof or other Person such that the Assignment of Claims Act would apply to
the pledge of receivables of such account debtor, unless the Assignment of
Claims Act has been complied with to the satisfaction of the Lender or (B) an
Affiliate of any Credit Party;


 


(ii)                                  an invoice (in form and substance
acceptable to the Lender) has been sent to the applicable account debtor and
bears an invoice date contemporaneous with or later than the date of sale of
such goods or rendering of such service;


 


(iii)                               the account receivable does not arise from a
sale to the account debtor on a bill-and-hold, guaranteed sale, progress
billing, sale-or-return, sale-on-assignment, sale-on-appraisal, consignment or
any other repurchase or return basis;


 


(iv)                              the account is not evidenced by chattel paper
or an instrument of any kind, and has not been reduced to judgment;


 


(v)                                 the account debtor is not insolvent or the
subject of any bankruptcy or insolvency proceedings of any kind;


 


(vi)                              the account debtor is credit worthy and not
experiencing financial difficulties that could affect the collectability of the
account;


 


(vii)                           the account debtor is an entity organized
under the laws of one of the United States, whose main office is also located
within the United States (including Puerto Rico as within the United States),
or, if the account debtor is not such an entity organized and located within
the United States, the account is insured by a letter of credit issued or
confirmed by a bank acceptable to the Lender or by other credit enhancements,
in each case in form and substance satisfactory to the Lender;


 


(viii)                        the account receivable is a valid and legally
enforceable obligation of the account debtor thereunder, it is not subject to
recoupment, offset (other than discount for prompt payment) or other defense on
the part of such account debtor or to any claim on the part of such
account debtor denying liability thereunder;


 


(ix)                                the account receivable is not subject to any
Lien of any kind except for the Lien of the Lender securing the obligations of
the Credit Parties under this Agreement;


 


(x)                                   the account receivable has not remained
outstanding in whole or in part for more than (A) ninety (90) days
after the invoice date or (B) sixty (60) days after the due date;


 


(xi)                                the account receivable does not arise out of
a transaction (direct or indirect) with an employee, officer, agent, director
or stockholder of any Credit Party;


 

















 


(xii)                             the account receivable is not owing from (i) an
account debtor from whom twenty-five percent (25%) or
more of the dollar amount of all accounts receivable are deemed ineligible
under clause (x) above; provided that this clause (xii) shall not apply to any
accounts receivable arising from the sale of tooling to account debtors.


 


(xiii)                          the total unpaid accounts receivable owing
from such account debtor do not exceed thirty percent (30%) of
all Eligible Accounts;


 


(xiv)                         the account receivable constitutes Collateral
in which the Lender has a First Priority Lien securing the Obligations of the
Credit Parties under this Agreement;


 


(xv)                            the Credit Parties have not made an agreement
with the account debtor to extend the time of payment of the subject account
receivable;


 


(xvi)                         the account debtor is
not located in Minnesota (or any other jurisdiction which adopts a statute or
other requirement with respect to which any Person that obtains business from
within such jurisdiction or is otherwise subject to such jurisdiction’s tax law
must file a “Business Activity Report” (or other applicable report) or make any
other required filings in a timely manner in order to enforce its claims in
such jurisdiction’s courts or arising under such jurisdiction’s laws);
provided, that accounts receivable which would be Eligible Accounts but for the
terms of this clause (xvi) shall nonetheless be deemed to be Eligible Accounts
if the Credit Parties have filed a “Business Activity Report” (or other
applicable report) with the applicable state office or are qualified to do
business in such jurisdiction and, at the time the account receivable was
created, was qualified to do business in such jurisdiction or had on file with
the applicable state office a current “Business Activity Report” (or other
applicable report);


 


(xvii)                      the account receivable is denominated in U.S.
Dollars; and


 


(xviii)                   with respect to any account receivable
arising from the sale of tooling to account debtors, such account receivable
has not been rejected by the Lender.


 


provided, however, that (A) the Lender may in its reasonable credit judgment
exclude particular accounts from the definition of Eligible Accounts and may impose
additional and/or more restrictive eligibility or valuation criteria than those
set forth above as preconditions for any account to be deemed to be an Eligible
Account hereunder, and (B) an account deemed to be an Eligible Account at
any one point in time may be excluded by the Lender in its reasonable
credit judgment at a future point in time.”


 


“‘Equipment Term Loan’
means the First Draw Equipment Term Loan and the Second Draw Equipment Term
Loan.


 


“‘Equipment Term Loan
Maturity Date’ means November 21, 2011, or such earlier date as provided
in Section 2.7 or Section 9.1.”


 


“‘Equipment Term Notes’
means the Amended and Restated Equipment Term Notes, each substantially in the form of
Exhibit A-2 annexed hereto, issued by the Borrowers in favor of the
Lender and evidencing the Equipment Term Loan.”


 


“‘First Draw Equipment
Term Loan’ means the First Draw Equipment Term Loan to be made by the
Lender to the Borrowers in the amount of $2,886,000 in accordance with Section 2.2(a)(i)(A).”


 

















 


“‘Issuing Lender’
means Bank of America, N.A., in its capacity as an issuer of Letters of Credit
hereunder.”


 


“‘Lender’ means Bank
of America, N.A. or any other party which becomes a lender hereunder.”


 


“‘Loan Documents’
means this Agreement, the Revolving Credit Note, the Equipment Term Notes, the
Real Estate Term Notes, the Forming Equipment Term Notes, the Control
Agreements, the Mortgages, the Stock Pledge Agreement, the Hazardous Materials
Indemnity Agreement, and any other instruments or documents executed and
delivered or to be delivered to the Lender from time to time pursuant to this
Agreement, as the same may be supplemented and amended from time to time
in accordance with their respective terms.”


 


“‘Permitted Acquisitions’
has the meaning assigned to such term in subsection 8.4(c)(iii).”


 


“‘Post-Default Rate’
means, (i) for Term Loans and Revolving Loans (other than the Forming
Equipment Term Loan), a rate per annum equal to the Adjusted Base Rate plus
the Applicable Margin plus two percent (2%), and (ii) for Forming
Equipment Term Loan, a rate per annum equal to the Adjusted Base Rate plus
two percent (2%).”


 


“‘Prime Rate’ means
the rate of interest per annum publicly announced from time to time by Bank of
America, N.A., as its prime rate for commercial loans in effect at its
principal office in Boston, Massachusetts, which rate is not necessarily the
lowest rate charged by Bank of America, N.A. to its most preferred customers;
each change in the Prime Rate shall be effective from and including the date
such change is publicly announced as being effective.”


 


“‘Real Estate Term Loan’
means the Real Estate Term Loan to be made by the Lender to the Borrowers in
the amount of $2,340,000 in accordance with Section 2.2(a)(ii).


 


“‘Real Estate Term Loan
Maturity Date’ means November 21, 2011, or such earlier date as
provided in Section 2.7 or Section 9.1.”


 


“‘Real Estate Term Note’
means the Amended and Restated Real Estate Term Note, substantially in the form of
Exhibit A-3 annexed hereto, issued by the Borrowers in favor of the
Lender and evidencing the Real Estate Term Loan.”


 


 “‘Revolving Credit Commitment’ means
the commitment of the Lender to make Revolving Loans as such commitment may be
reduced from time to time pursuant to Section 2.5. The original maximum
amount of the Revolving Credit Commitment is equal to $17,000,000.”


 


“‘Revolving Credit
Maturity Date’ means February 28, 2009.”


 


“‘Revolving Credit Note’
means the Amended and Restated Revolving Credit Note, substantially in the form of
Exhibit A-1 annexed hereto, issued by the Borrowers in favor of the
Lender.”


 


“‘Second Draw Equipment
Term Loan’ means the Second Draw Equipment Term Loan to be made by the
Lender to the Borrowers in an amount up to $800,000 in accordance with Section 2.2(a)(i)(B).


 

















 


“‘Second Draw Equipment
Term Loan Funding Date’ has the meaning assigned to such term in Section 2.2(a)(i)(B).


 


 “‘Special Counsel’ means Edwards Angell
Palmer & Dodge LLP, in its capacity as special counsel to Bank of
America, N.A., as Lender of the credit facilities contemplated hereby.”


 


“‘Third Amendment’
means the Third Amendment to Credit Agreement dated as of November 21,
2005 among the Borrowers and the Lender.”


 


 “‘Third Amendment Effective Date’ means
the date upon which all of the conditions set forth in Section 4 of the
Third Amendment are satisfied, or are waived by the Lender in accordance with Section 10.2
of this Agreement.”


 


(ii)                                  Section 1.1
of the Credit Agreement is hereby amended by deleting the definition of “Availability
Reserve” in its entirety.


 


(b)                                 Amendment to Section 2.1 of
the Credit Agreement. Section 2.1
of the Credit Agreement is hereby amended by deleting subclause (f) thereof
and replacing it in its entirety with the following new subclause (f):


 


“(f)                              Revolving Credit Note. Prior to the Third
Amendment Effective Date, the Borrowers shall prepare, execute and deliver to
the Lender a Revolving Credit Note in the principal amount of the Revolving
Credit Commitment.”


 


(c)                                  Amendments to Section 2.2 of
the Credit Agreement.


 


(i)                                     Section 2.2
of the Credit Agreement (other than Subsection 2.2A thereof) is hereby
deleted in its entirety and replaced with the following new Section 2.2.


 


(ii)                                  “2.2                           Term
Loans.


 


(a)                                  Funding of the
Equipment Term Loan and Real Estate Term Loan.


 


(i)                                     Subject to the terms and
conditions set forth herein, the Lender agrees to fund the Equipment Term Loan
in two (2) separate draws as follows:


 


(A)                              The Lender
agrees to fund $2,886,000 of the Equipment Term Loan (the “First Draw
Equipment Term Loan”) on the Third Amendment Effective Date.


 


(B)                                Upon the
request of the Borrowers, the Lender agrees to fund an additional amount of up
to $800,000 of the Equipment Term Loan (the “Second Draw Equipment Term Loan”)
to the Borrowers, in a single drawing, on any Business Day during the period
beginning on the date which the Lender Forming Equipment Term Loan shall have
been paid in full to a date that is not more than 120 days after the Third
Amendment Effective Date (the date on which the Second Draw Equipment Term Loan
is funded shall hereinafter be referred to as the “Second Draw Equipment
Term Loan Funding Date”).


 

















 


Notwithstanding the foregoing, the Lender shall have no obligation to
fund any amounts of the Second Draw Equipment Term Loan if the Forming
Equipment Term Loan shall not have been paid in full within ninety (90) days
after the Third Amendment Effective Date. Principal amounts of the Equipment
Term Loan that have been repaid or prepaid may not be reborrowed.


 


(ii)                                  Subject to the terms and
conditions set forth herein, the Lender agrees to fund the Real Estate Term
Loan on the Third Amendment Effective Date. Principal amounts of the Real
Estate Term Loan that have been repaid or prepaid may not be reborrowed.


 


(b)                                 Interest on the
Term Loans. Subject to Section 2.3 hereof, the outstanding principal
amount of the Term Loans shall bear interest at a rate per annum equal to the
Adjusted Base Rate plus the Applicable Margin. Notwithstanding the foregoing, (i) any
portion of the Term Loans which is not paid when due shall automatically bear
interest until paid in full at the Post-Default Rate, (ii) during the
period when any Event of Default of the type described in clauses (g), (h) or
(i) of Section 9.1 shall have occurred and be continuing, the
outstanding principal balance of the Term Loans shall automatically bear interest,
after as well as before judgment, at the Post-Default Rate, (iii) if there
shall occur and be continuing any Event of Default (other than an Event of
Default of the type described in clauses (g), (h) or (i) of Section 9.1),
following written notice delivered to the Borrowers from the Lender, the
outstanding principal balance of the Term Loans shall bear interest, after as
well as before judgment, at the Post-Default Rate during the period beginning
on the date such Event of Default first occurred, and ending on the date such
Event of Default is cured or waived. Accrued interest on the outstanding
principal balance of the Term Loans shall be payable in arrears on the first
day of each month; provided that
interest accrued at the Post-Default Rate shall be payable on demand, and all
accrued interest on the (x) Equipment Term Loan shall be payable on each date
that any portion of the principal of the Equipment Term Loan shall be payable
hereunder and on the Equipment Term Loan Maturity Date, and (y) Real Estate
Term Loan shall be payable on each date that any portion of the principal of
the Real Estate Term Loan shall be payable hereunder and on the Real Estate
Term Loan Maturity Date. All interest hereunder shall be computed on the basis
of a year of 360 days, and in each case shall be payable for the actual number
of days elapsed (including the first day but excluding the last day).


 


(c)                                  Repayment of
Term Loans.


 


(i)                                     Repayment of
Equipment Term Loan. The Borrowers hereby unconditionally promise to
pay to the Lender monthly principal installments in respect of the Equipment
Term Loan on the first day of each month commencing December 1, 2005 equal in amount to (A) $35,000 each month, from the
Third Amendment Effective Date through and including the Second Draw Equipment
Term Loan Funding Date and (B) from and after the Second Draw Equipment
Term Loan Funding Date, in equal monthly installments calculated based on the
full principal amount of the Equipment Term Loan amortizing on a seven-year
direct reduction amortization schedule; provided that if the Second Draw Term
Effective Date does not occur, the Borrowers shall continue to pay the Lender
the monthly principal installments of the Equipment Term Loan set forth in the
preceding clause (A). To the extent not previously paid, the Equipment Term
Loan shall be due and payable in full on the Equipment Term Loan Maturity Date.


 


(ii)                                  Repayment of
Real Estate Term Loans. The Borrowers hereby unconditionally
promise to pay to the Lender monthly principal installments in respect of the
Real Estate Term Loan on the first day of each month commencing December 1,
2005 equal in amount to $13,000 each month.
To the extent not


 

















 


previously paid, the Real
Estate Term Loan shall be due and payable in full on the Real Estate Term Loan
Maturity Date.”


 


(d)                                 Loan Account. The Lender
shall maintain in accordance with its usual practice an account evidencing the
indebtedness of the Borrowers to the Lender in respect of the Term Loan,
including the amounts of principal and interest payable and paid to the Lender
from time to time hereunder. The entries made in the account maintained
pursuant to this subsection 2.2(d) shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of the Lender to maintain such account or any error therein shall not
in any manner affect the obligation of the Borrowers to repay the Term Loan in
accordance with the terms of this Agreement.


 


(e)                                  Term Notes. Prior to the
Third Amendment Effective Date and the Second Draw Equipment Term Loan Funding
Date, as applicable, the Borrowers shall prepare, execute and deliver to the
Lender the Term Notes evidencing the Borrowers’ obligations in respect of the
Term Loans.”


 


(d)                                 Amendment to Article 5 of
the Credit Agreement. Article 5
of the Credit Agreement is hereby amended by the addition thereto of the
following new Section 5.21:


 


“5.21                     Certain Obligations Respecting
Subsidiaries.


 


(a)                                  Each Borrower shall, and shall cause each of
its Subsidiaries to, take such action from time to time as shall be necessary
to ensure that the percentage of the issued and outstanding shares of capital
stock of any class or character owned by it in any Subsidiary on the date
hereof is not at any time decreased, other than by reason of transfers to the
Borrowers.


 


(b)                                 While the Borrowers and the Subsidiaries are
not permitted to form or acquire any Subsidiary without the prior written
consent of the Lender pursuant to subsection 8.4(a), in the event that the
Lender consents to any formation or acquisition of any Subsidiary and such
Subsidiary is formed or acquired, this subsection 5.21(b) shall be
applicable and the Borrower forming or acquiring such Subsidiary will (or if
such Subsidiary is formed or acquired by a Credit Party which is not a
Borrower, the Borrowers will cause such Credit Party to) take or cause to be
taken the following actions:  as soon as
possible but in any case not later than 10 days after the date on which such
Subsidiary is created (or, in the case of a Subsidiary formed or acquired in
connection with a Permitted Acquisition, concurrently with the consummation of
such Permitted Acquisition) (x) cause such Subsidiary to (A) execute and
deliver to the Lender, a counterpart to the Credit Agreement and thereby become
a party thereto as an additional “Credit Party” and “Subsidiary Guarantor”
thereunder and grant to the Lender a First Priority Lien on all “Collateral” of
such Subsidiary Guarantor thereunder, (B) take such other action as shall
be necessary to create and perfect valid and enforceable First Priority Liens
in favor of the Lender on all or substantially all of the assets of such
Subsidiary consistent with the provisions of this Agreement and the applicable
other Loan Documents and (C) deliver proof of corporate action, incumbency
of officers and other documents and opinions as is consistent with those
delivered by each Borrower pursuant to Section 6.1 as of the Effective
Time and (y) execute and deliver to the Lender such pledge agreements or such
addenda or amendments to this Agreement and take such other actions (including
delivering the certificates representing such shares of stock or other equity
interests to the Lender) as shall be necessary to create and perfect valid and


 

















 


enforceable First Priority
Liens in favor of the Lender on all of the issued and outstanding stock or
other equity interests of such Subsidiary, all of the foregoing to be in form and
substance reasonably satisfactory to the Lender.”


 


(e)                                  Amendment to Section 7.6  of the Credit Agreement. Section 7.6 of the Credit Agreement is
hereby deleted in its entirety and replaced with the following new Section 7.6:


 


“7.6                           Books and Records; Inspection
Rights.


 


(a)                                  Each Credit Party shall keep proper books of
record and account in which entries are made of all dealings and transactions
in relation to its business and activities which fairly record such
transactions and activities. Each Credit Party shall permit any representatives
designated by the Lender to visit and inspect its properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants as frequently as
the Lender deems appropriate provided that,
so long as no Default has occurred and is continuing, all such visits shall be
on reasonable prior notice, at reasonable times during regular business hours
of such Credit Party, and provided further
that after the occurrence and during the continuance of any Default, the Lender
may visit at any reasonable times. The Borrowers shall reimburse the
Lender for all examination and inspections costs, internal costs at the rate of
$850 per man-day, plus all out-of-pocket
expenses incurred in connection with such inspections. The Credit Parties will
permit independent appraisers and environmental consultants selected by the
Lender to visit the properties of the Credit Parties and perform appraisals
and examinations of the inventory, equipment and Real Property Assets of the
Credit Parties at such times and with such frequencies as the Lender shall
reasonably request. The Borrowers shall reimburse the Lender for all fees,
costs and expenses charged by such independent appraisers and environmental
consultants for each such appraisal and examination.


 


(b)                                 In addition to and not in limitation of any
other inspection rights set forth in this Section 7.6, each Borrower
shall, and shall cause each Subsidiary to, permit the Lender or any
representatives designated by the Lender (including any third party consultants,
accountants, lawyers and appraisers) to conduct, at the Borrowers’ sole cost
and expense, up to two commercial field examinations of the business,
operations and assets of the Borrowers, including without limitation, the
assets included in the Borrowing Base, in each twelve month period following
the Third Amendment Effective Date, provided, however, that the Lender may conduct, at the Borrowers’
sole cost and expense, field examinations with greater frequency and at such
additional time or times as the Lender, in its sole discretion, may determine.”


 


(f)                                    Amendment to Section 8.4 of
the Credit Agreement.


 


(i)                                     Section 8.4
of the Credit Agreement is hereby amended by deleting subclause (a) thereof
in its entirety and replacing it in its entirety with the following new
subclause (a):


 


“(a)                            The Credit
Parties will not enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution) without the prior written consent of the Lender. The
Credit Parties will not acquire any business or property from, or capital stock
of, or other equity interests in, or be a party to any acquisition of, any
Person without the prior written consent of the Lender, except for purchases of
property to be used in the ordinary course of business, Investments permitted
under Section 8.5 and Capital


 

















 


Expenditures. The Credit
Parties will not form or acquire any Subsidiary without the prior written
consent of the Lender; provided that a Credit Party may form or
acquire a Subsidiary to effect a Permitted Acquisition permitted by subsection 8.4(c)(iii) so
long as the Credit Parties comply with the requirements of Section 5.21
with respect to such Subsidiary. The Credit Parties will not issue or sell any
of their capital stock or other equity interests without the prior consent of
the Lender (other than in connection with Equity Rights issued or granted to
members of the Credit Parties’ boards of directors or employees consistent with
the Credit Parties’ past business practices).”


 


(ii)                                  Subsection 8.4(c) of
the Credit Agreement is hereby amended by the addition thereto of a new
subclause (iii):


 


“(iii)                         subject to
Sections 8.1, 8.2 and 8.5 and the proviso in Section 8.4(a), any of the
Credit Parties may acquire all or substantially all of the business and
assets of any corporation, partnership, limited liability company, or other
entity located in and organized under the laws of the United States or any
state thereof (“Permitted Acquisitions”), subject to satisfaction of the
following conditions:


 


(A)                              the aggregate
consideration paid by the Credit Parties in connection with all acquisitions
during any fiscal year shall not exceed $2,000,000;


 


(B)                                the Lender must
be given at least thirty (30) days’ advance notice of each such Permitted
Acquisition;


 


(C)                                the business or
assets so acquired shall be located in the United States and in the same or a
substantially similar line of business as that of the Credit Parties;


 


(D)                               if such
acquisition is structured as a stock or other equity acquisition, then the
entity whose equity interests are being acquired shall be organized under the
laws of the United States and either (i) the Person so acquired shall
become (x) a direct Subsidiary of a Credit Party and (y) a Subsidiary Guarantor
or (ii) such Person shall be merged with and into a Credit Party (provided that such Credit Party shall be the surviving
corporation of such merger and no Change of Control shall occur) and, in any
event, all of the assets of such Person shall become Collateral and all of the
requirements of Section 5.21 shall be satisfied concurrently with the
consummation of such acquisition;


 


(E)                                 after giving
effect to the Permitted Acquisition and the financing thereof, the Credit
Parties must be in pro forma compliance with all financial covenants;


 


(F)                                 the assets so
acquired shall be transferred free and clear of any Liens (other than Liens
permitted by Section 8.2) and no debt or liabilities shall be incurred,
guaranteed, assumed or combined except to the extent otherwise permitted by Section 8.1;


 


(G)                                the Lender
shall have received Lien searches reasonably satisfactory to the Lender with
respect to the assets being acquired;


 

















 


(H)                               the Lender
shall have received perfected First Priority Liens (subject only to Liens
permitted by Section 8.2) on substantially all of the assets being
acquired in such Permitted Acquisition;


 


(I)                                    to the extent
requested by the Lender, the Lender shall have received an opinion of counsel
in each applicable jurisdiction reasonably satisfactory to it to the effect
that the Liens granted pursuant to this Agreement are perfected security
interests in such assets and as to such other matters as the Lender may reasonably
require;


 


(J)                                   in connection
with such Permitted Acquisition, the Borrowers shall deliver to the Lender (I)
a copy of the purchase agreement pursuant to which such Permitted Acquisition
will be consummated; (II) a copy of each existing material agreement relating
to the assets to be acquired in such Permitted Acquisition and which is to be
in effect after the consummation of such Permitted Acquisition; (III) a
Compliance Certificate calculating compliance (as of the last day of the then
most recently ended fiscal quarter) with the covenants set forth in Section 8.10
on a pro forma basis, assuming such Permitted
Acquisition had occurred prior to the first day of the earliest fiscal quarter
included in the applicable test period for calculating such compliance; (IV)
such other information or reports as the Lender may reasonably request
with respect to such Permitted Acquisition; (V) to the extent available to the
Credit Parties, historical financial statements for the prior three fiscal
years (provided that if such statements are not
available for the prior three fiscal years, historical financial statements for
not less than the prior four fiscal quarters) of the entity whose assets are
being acquired; and (VI) if the Credit Parties are acquiring any interest in
real property, and if required by the Lender, reports and other information in
form, scope and substance reasonably satisfactory to the Lender and prepared by
environmental consultants reasonably satisfactory to the Lender, concerning any
environmental hazards or liabilities to which any Credit Party is likely to be
subject with respect to such acquired real property;


 


(K)                               the acquisition
shall have been approved by the board of directors of the target Person;


 


(L)                                 immediately
prior to such Permitted Acquisition no Default shall have occurred and be
continuing and after giving effect to such Permitted Acquisition, no Default
shall have occurred and be continuing and, in the reasonable judgment of the
Lender, no Material Adverse Effect could reasonably be expected to result from
such Permitted Acquisition;


 


(M)                            the Lender
shall have completed (i) its business, legal and collateral due diligence,
including a collateral audit and review of the target Person’s books and
records and (ii) its field examination of the accounts receivable,
inventory and related matters of the target Person, which results shall be
satisfactory to the Lender; and


 


(N)                               the Lender
shall have received a certificate, dated the closing date of such Permitted
Acquisition and signed by a Designated Financial Officer, certifying that
Excess Availability under the Revolving Credit Commitment shall


 

















 


not be less than $2,000,000
both before and at any time during the period of 60 days after giving effect to
such Permitted Acquisition.


 


(g)                                 Amendment to Section 8.10 of
the Credit Agreement. Section 8.10
of the Credit Agreement is hereby amended by deleting clauses (a), (c) and
(d) thereof in their entirety and replacing clauses (a) and (c) thereof
with the following new clauses (a) and (c):


 


“(a)                            Fixed Charge Coverage Ratio. The Credit
Parties shall not permit the Fixed Charge Coverage Ratio to be less than 1.00
to 1.00 at any time.”


 


“(c)                            Capital Expenditures. The
Credit Parties shall not, and shall not permit any Subsidiary to, make any
Capital Expenditures (including, without limitation, incurring any Capital
Lease Obligations) which, in the aggregate for the Credit Parties and all
Subsidiaries, exceed $5,000,000 at any time during any fiscal year.”


 


(h)                                 Amendment to Section 10.1  of the Credit Agreement. Section 10.1 of the Credit Agreement is
hereby amended by deleting subclause (b) thereof and replacing it in its
entirety with the following new subclause (b):


 


(f)                                    “(b)                           if to the
Lender, to Bank of America, N.A., One Federal Street, Mail Stop: MA5-503-07-19,
Boston, Massachusetts 02110, Attention: Gregory A. Kress, Vice President (Fax
no.:  (617-654-1167), with a copy to
Edwards Angell Palmer & Dodge LLP, 111 Huntington Avenue, Boston, MA
02199-7613, Attention:  David L. Ruediger
(Fax no. (617-227-4420).”


 


(i)                                     Amendments to Exhibits to Credit
Agreement. Exhibits A-1,
A-2, A-3, B-1, B-2, D and J to the Credit Agreement shall be amended in their
entirety as set forth on the Exhibits attached hereto.


 


(j)                                     Amendments to Schedules to Credit
Agreement. Schedules 1.1,
1.4, 4.2, 5.3, 5.5, 5.6, 5.7, 5.9, 5.10, 5.12, 5.13, 5.14, 5.19 and 5.20 to the
Credit Agreement shall be amended in their entirety as set forth on the
Schedules attached hereto.


 


3.                                       No Default; Representations and Warranties,
etc. The Borrowers hereby
represent, warrant and confirm that: (a) the representations and
warranties of the Credit Parties contained in Article 5 of the Credit
Agreement are true and correct on and as of the date hereof as if made on such
date (except to the extent that such representations and warranties expressly
relate to an earlier date); (b) after giving effect to this Amendment, the
Borrowers are in compliance with all of the terms and provisions set forth in
the Credit Agreement and the other Loan Documents; (c) after giving effect
to this Amendment, no Default has occurred and is continuing; and (d) the
execution, delivery and performance by the Borrowers of this Amendment (i) have
been duly authorized by all necessary action on the part of the Borrowers,
(ii) will not violate any applicable law or regulation or the organizational
documents of any Borrower, (iii) will not violate or result in a default
under any indenture, agreement or other instrument binding on any Borrower or
any of its assets, and (iv) do not require any consent, waiver or approval
of or by any Person (other than the Lender) which has not been obtained.


 


4.                                       Conditions to Effectiveness. The effectiveness of this Amendment and the
funding of the First Draw Equipment Term Loan and the Real Estate Term Loan
shall be subject to the satisfaction of the following conditions precedent:


 


(a)                                  Amendment. The Lender shall have received counterparts of this Amendment duly
executed by each of the Borrowers;


 

















 


(b)                                 Notes. The Lender shall have received (i) a Revolving Credit Note, (ii) an
Equipment Term Note issued in favor of the Lender in the principal face amount
of $2,886,000, and (iii) a Real Estate Term Note issued in favor of the
Lender in the principal face amount of $2,340,000 each duly executed by each of
the Borrowers;


 


(c)                                  Secretary’s Certificate. The Lender shall have received a
Certificate of the Secretary of each of the Borrowers, certifying as to the
incumbency of such Borrower’s officers, the authenticity of the resolutions
authorizing the transactions contemplated by this agreement and such Borrower’s
bylaws and certificate of incorporation; and


 


(d)                                 Mortgage Amendment. The Lender shall have received a fully
executed and notarized amendment to the existing Mortgage relating to the
Mortgaged Property located at 172 East main Street, Georgetown, Massachusetts
(the “Mortgage Amendment”), together with flood hazard certificates and
such other documents as the Lender may reasonably require, each in form and
substance satisfactory to the Administrative Agent and in proper form for
recording in all appropriate places.


 


(e)                                  Title Endorsement. The Lender shall have received (A) an
endorsement to the existing ALTA mortgagee title insurance policy for the
Mortgaged Property referred to clause (d) above, or unconditional
commitment therefor (the “Policy Endorsement”) issued by the Title
Company in form reasonably acceptable to the Lender, which Policy
Endorsement shall not otherwise modify or amend the existing mortgagee policy
of title insurance except as may be acceptable to the Lender in its sole
discretion; and (B) evidence satisfactory to the Lender that such Borrower
has (I) delivered to the Title Company all certificates and affidavits required
by the Title Company in connection with the issuance of the Policy Endorsement
and (II) paid to the Title Company or to the appropriate public authority all
expenses and premiums of the Title Company in connection with the issuance of
the Policy Endorsement and all recording and stamp taxes (including mortgage
recording and intangible taxes) payable in connection with recording the
Mortgage Amendment in the appropriate real estate records.


 


(f)                                    Environmental Reports. The Lender shall have received and be
satisfied with the Phase I site assessment reports delivered with respect to
the Mortgaged Property located at 172 East main Street, Georgetown,
Massachusetts, and the Lender shall have obtained letters from the
environmental engineering firms that prepared such site assessment reports in form and
substance acceptable to the Lender and permitted the Lender to rely upon such
site assessment reports.


 


(g)                                 Opinion of Counsel. The Lender shall have received a favorable
written opinion (addressed to the Lender and dated as of the date hereof) of
Lynch, Brewer, Hoffman & Fink, LLP, counsel to the Borrowers, with
respect to this Amendment and such other matters as the Lender may reasonably
request, including without limitation matters relating to the Mortgage
Amendment.


 


(h)                                 Collateral Appraisals. The Lender shall have received results of
appraisals performed by independent appraisers engaged directly by the Lender,
of inventory, equipment and Real Property Assets of the Credit Parties, and
such results shall be satisfactory to the Lender in its sole discretion.


 


(i)                                     Financial Officer Certificate. The Lender shall have received a certificate,
dated the Third Amendment Effective Date and signed by a Designated Financial
Officer, confirming compliance with the conditions set forth in paragraphs (a) and
(b) of Section 6.2.


 

















 


(j)                                     Lender’s Due Diligence Review. The Lender shall be satisfied with its due
diligence review of the Credit Parties, including, but not limited to,
satisfactory review by the Lender of the inventory, equipment and Real Property
Assets of the Credit Parties.


 


(k)                                  Solvency Assurances. The Lender shall have received a certificate,
dated as of the Third Amendment Effective Date in the form of Exhibit J
to the Credit Agreement, as amended hereby.


 


(l)                                     Evidence of Insurance. The Lender shall have received certificates
from the Credit Parties’ insurance brokers that all insurance required to be
maintained pursuant to Section 7.5 is in full force and effect and that
Bank of America, N.A. has been named as additional insured or loss payee
thereunder to the extent required under Section 7.5.


 


(m)                               Additional Security Documents.


 


(i)                                     All necessary
amendments, modifications or confirmations to the Security Documents (as
defined below) in effect on the Third Amendment Effective Date duly executed
and delivered so as to ensure the continued effectiveness of the security
interests created thereby and the spreading of the liens created thereby to
cover the additional obligations to be incurred by the Credit Parties on the
Second Amendment Effective Date, in each case covering such matters as shall be
requested by the Lender.


 


(ii)                                  Evidence that
such other action as shall be necessary to perfect or record the liens
contemplated by the foregoing clause (i) under applicable law shall have
been taken.


 


5.                                       Post-Closing Matters. The Borrowers shall, within the period
beginning the date hereof and ending on January 5, 2006, deliver to the
Lender, a Landlord Waiver and Consent and where required by the terms of any
lease, the consent of the mortgagee, ground lessor or other party, in form and
substance satisfactory to the Lender, with respect to the premises in Clinton,
Iowa leased by MFT under that certain Lease of Business Property dated as of March 11,
2004 between Clinton Base Company, L.L.C., as landlord and MFT, as tenant, as
the same may be amended.


 


6.                                       Confirmation of Loan Documents. Each Credit Party hereby confirms that the
Obligations under the Credit Agreement shall be entitled to the benefits of the
collateral security provided by the Loan Documents.


 


7.                                       Miscellaneous.


 


(a)                                  Except as specifically amended hereby, all of
the terms and provisions of the Credit Agreement, the other Loan Documents and
all related documents, shall remain in full force and effect.


 


(b)                                 This Amendment may be executed in any
number of counterparts, each of which, when executed and delivered, shall be an
original, but all counterparts shall together constitute one instrument. Delivery
of an executed signature page hereto by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.


 


(c)                                  This Amendment shall be governed by the laws
of The Commonwealth of Massachusetts and shall be binding upon and inure to the
benefit of the parties hereto and their respective


 

















 


successors and assigns. This Amendment shall
be deemed to be a sealed instrument as of the date first above written.


 


(d)                                 The Borrowers shall reimburse the Lender for
all reasonable costs and expenses, including reasonable legal fees and
disbursements, incurred by the Lender in connection with this Amendment and the
transactions contemplated hereby.


 


[Signature
pages to follow]


 

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed under seal by
their respective authorized officers as of the day and year first above
written.


 


	
   

  	
  BORROWERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UFP TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Ronald J. Lataille

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Ronald J.
  Lataille

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MOULDED FIBRE TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Ronald J. Lataille

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Ronald J.
  Lataille

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIMCO INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Ronald J. Lataille

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Ronald J.
  Lataille

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SIMCO AUTOMOTIVE TRIM, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Ronald J. Lataille

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Ronald J.
  Lataille

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LENDER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as assignee of Banc of

  America Leasing & Capital, LLC (successor to Fleet

  
	
   

  	
  Capital Corporation)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/  Gregory Kress

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title: