AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT
This Amendment No. 2 to Note Purchase Agreement (this "Amendment"),
dated as of November 6, 1997, by and among Southland Container Packaging
Corp., a Texas corporation (as successor by merger to SHC Acquisition
Corp., a Florida corporation, and formerly called Southland Holding
Company, herein the "Company"), JOTAN, INC., a Florida corporation
("Parent"), RICE PARTNERS II, L.P., a Delaware limited partnership
("Rice"), F-SOUTHLAND, L.L.C., a North Carolina limited liability company
("F-Southland"), and FF-SOUTHLAND, L.P., a Delaware limited partnership
("FF-Southland") (F-Southland and FF-Southland are individually or
collectively, as the context requires, referred to herein as "Southland
Purchasers") (Rice and Southland Purchasers are individually or
collectively, as the context requires, referred to herein as the
"Purchaser").
RECITALS
A. The Company, Parent, Rice and the Southland Purchasers have
entered into that certain Note Purchase Agreement, dated as of February
28, 1997, as the same has been amended by that certain Amendment No. 1
dated as of August 19, 1997 (the "Original Agreement" and, as amended
hereby, the "Note Agreement").
B. SHC Acquisition Corp. has merged with and into Southland Holding
Company, with Southland Holding Company surviving and assuming all the
obligations of SHC Acquisition Corp. under the Original Agreement. On
July 31, 1997, all of the subsidiaries of Southland Holding Company and
Atlantic Bag & Paper Company, a Subsidiary of Parent, merged with and into
Southland Holding Company (which concurrently changed its name to
Southland Container Packaging Corp.), with the result that the Company, as
of July 31, 1997, had no Subsidiaries.
C. The Company has advised the Purchaser, the Senior Lender and the
Senior Agent that certain defaults have occurred under the financial
covenants in the Original Agreement and in the Senior Loan Agreement.
D. The Company has requested that the Senior Lender (1) make
certain amendments to the Senior Loan Agreement (as the same has been
amended by that certain letter amendment dated April 30, 1997, that
certain Second Amendment to Credit Agreement dated as of June 20, 1997 and
that certain Third Amendment to Credit Agreement dated as of August 19,
1997) pursuant to the Fourth Amendment to Credit Agreement among the
Company, Parent, Senior Agent and the Senior Lender, which Purchaser will
review and approve (the "Senior Loan Amendment"), and (2) waive such
defaults, and the Senior Lender is willing to do so subject to the terms
and conditions set forth therein.
E. The Company has requested that the Purchaser make (1) certain
amendments to the Original Agreement and (2) waive such defaults under the
Original Agreement, and the Purchaser is willing to do so subject to the
terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. DEFINITIONS. All capitalized terms used but not otherwise defined in
this Amendment shall have the meanings ascribed to them in the Note
Agreement. Unless otherwise specified, all section references herein
refer to sections of the Original Agreement.
2. AMENDMENTS. The Original Agreement is hereby amended as follows:
Amendment to Section 6.20. Effective as of the date hereof,
Section 6.20(d) is hereby amended as follows:
(a) Section 6.20(d) is hereby amended by deleting it in its
entirety and substituting the following in lieu thereof:
(d) EBITDA. As of the end of each Fiscal Quarter set forth
below, Parent shall not permit EBITDA for the twelve (12) month
period (or portion thereof since June 30, 1997) then ending to be
less than the Dollar amount set forth below for such Fiscal Quarter
(beginning with the Fiscal Quarter ending December 31, 1997):
Period Dollar Amount
------ -------------
December 31, 1997 $2,250,000
March 31, 1998 $3,150,000
June 30, 1998 $5,850,000
September 30, 1998 $6,075,000
December 31, 1998 $6,300,000
March 31, 1999 $6,525,000
June 30, 1999 $6,750,000
Period Dollar Amount
------ -------------
September 30, 1999 $6,975,000
December 31, 1999 $7,200,000
March 31, 2000 $7,425,000
3. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment is subject to the satisfaction of the following conditions
precedent, unless specifically waived in writing by the Purchaser:
3.1. Purchaser shall have received (a) this Amendment, duly executed
by the Company; (b) a certificate of each of the Secretary of the Company
and of Parent in the forms of Exhibit A and Exhibit A-1 attached hereto,
respectively (hereinafter collectively referred to as the "Company General
Certificate"), certified by the Secretary of the Company as Parent, as
appropriate, and acknowledging (i) that the Company's Board of Directors
has adopted, approved, consented to and ratified resolutions which
authorize the execution, delivery and performance by the Company of the
Senior Loan Amendment, this Amendment and all Other Agreements to which
the Company is or is to be a party, and (ii) the names of the officers of
the Company authorized to sign the Senior Loan Amendment, this Amendment
and each of the Other Agreements to which the Company is or is to be a
party hereunder (including the certificates contemplated herein) together
with specimen signatures of such officers; (c) an executed copy of the
Senior Loan Amendment and each document relating thereto, or a certificate
executed by the Chief Financial Officer of the Company certifying that the
Senior Loan Amendment and other documents attached thereto are true,
correct and complete copies of the Senior Loan Agreement and all documents
relating thereto; (d) a written consent of the Senior Agent on behalf of
the Senior Lender to the execution and delivery of this Amendment and all
documents relating hereto; and (e) such additional documents, instruments
and information as Purchaser or its legal counsel may request.
3.2. The representations and warranties contained herein and in the
Original Agreement and the Other Agreements, as amended hereby, shall be
true and correct on and as of the date hereof, as if made on the date
hereof.
3.3. No Potential Default or Event of Default under the Original
Agreement, as amended hereby, shall have occurred and be continuing,
unless such Potential Default or Event of Default has been specifically
waived in writing by Purchaser.
3.4. The Senior Loan Amendment shall have been duly executed and
delivered by the parties thereto and shall be on terms and conditions
satisfactory to Purchaser, and all conditions precedent to funding of the
Senior Loans contemplated thereunder shall have been satisfied or waived.
4. RATIFICATIONS, REPRESENTATIONS AND WARRANTIES; CONSENT TO SENIOR
LOAN AMENDMENT; COVENANT TO ISSUE PIK NOTES.
4.1. The terms and provisions set forth in this Amendment shall
modify and supersede all inconsistent terms and provisions set forth in
the Original Agreement and the Other Agreements and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Original Agreement and the Other Agreements are ratified and confirmed
and shall continue in full force and effect. The Company, Parent and
Purchaser agree that the Original Agreement and the Other Agreements, as
amended hereby, shall continue to be legal, valid, binding and enforceable
in accordance with their respective terms.
4.2. The Company hereby represents and warrants to Purchaser that (a)
the execution, delivery and performance of this Amendment and any and all
other agreements executed and/or delivered in connection herewith or
therewith have been authorized by all requisite corporate action on the
part of the Company and will not violate the Articles of Incorporation or
Bylaws of the Company; (b) the representations and warranties contained in
the Original Agreement and the Other Agreements, as amended hereby, are
true and correct on and as of the date hereof as though made on and as of
such date; (c) no Potential Default or Event of Default under the Original
Agreement, as amended hereby, has occurred and is continuing, unless such
Potential Default or Event of Default has been specifically waived in
writing by Purchaser; (d) the Company is in full compliance with all
covenants and agreements contained in the Original Agreement, as amended
hereby, and the Other Agreements; and (e) the Company has not amended its
Articles of Incorporation or its Bylaws since August 19, 1997, except for
such amendments, if any, as are attached to the Company General
Certificate. The foregoing representations and warranties shall survive
the execution and delivery of this Amendment.
4.3 The Purchaser hereby represents that is the holder of the Senior
Subordinated Notes issued to it on the Closing Date, and consents to the
execution and delivery by the Company and Parent of the Senior Loan
Amendment. This consent is expressly intended for the benefit of, and may
be relied upon by, the Senior Lender and the Senior Agent for all purposes
of the Loan Documents (as defined in the Senior Loan Agreement) including
the Senior Subordination Agreement.
4.4 Each of Parent and the Company hereby consents to the execution
and delivery by the other of this Amendment; and Parent hereby confirms
its Parent Guaranty and the Company hereby confirms its Company Guaranty
for all purposes, giving effect to this Amendment and the Senior Loan
Amendment and the transactions contemplated hereby and thereby.
5. LIMITED WAIVER.
By execution of this Amendment, Purchaser hereby waives any Potential
Default or Event of Default occurring and existing under Section 8.1(c) of
the Note Purchase Agreement solely as a result of the Company's failure to
comply with the specific financial covenant set forth in Sections 6.20(b),
(c) and (d) of the Note Purchase Agreement during the measurement period
ended September 30, 1997 and any rights and remedies arising as a result
thereof. Except as specifically provided in this Section 5, nothing
contained in this Amendment shall be construed as a waiver by Purchaser of
any covenant or provision of the Note Purchase Agreement, the Other
Agreements, this Amendment, or of any other contract or instrument between
or among Parent, the Company and Purchaser, and the failure of Purchaser
at any time or times hereafter to require strict performance by Parent or
the Company, as the case may be, of any provision thereof shall not waive,
affect or diminish any right of Purchaser to thereafter demand strict
compliance therewith. Purchaser hereby reserves all rights granted under
the Note Purchase Agreement, the Other Agreements, this Amendment and any
other contract or instrument between or among Parent, the Company and
Purchaser.
6. MISCELLANEOUS.
6.1. Survival of Representations and Warranties. All representations
and warranties made in the Original Agreement or any Other Agreement,
including, without limitation, any document furnished in connection with
this Amendment, shall survive the execution and delivery of this Amendment
and the Other Agreements, and no investigation by Purchaser or any closing
shall affect the representations and warranties or the right of Purchaser
to rely upon them.
6.2. Reference to Original Agreement. Each of the Original Agreement
and the Other Agreements, and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Original Agreement, as amended
hereby, are hereby amended so that any reference in the Original Agreement
and such Other Agreements to the Original Agreement shall mean a reference
to the Original Agreement as amended hereby.
6.3. Expenses of Purchaser. As provided in the Original Agreement,
the Company agrees to pay on demand all costs and expenses incurred by
Purchaser in connection with the preparation, negotiation and execution of
this Amendment and any other agreements executed pursuant hereto,
including, without limitation, the reasonable costs and fees of
Purchaser's legal counsel.
6.4. Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall
be confined to the provision so held to be invalid or unenforceable.
6.5. Successors and Assigns. This Amendment will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
6.6. Headings. The headings of the sections and subsections of this
Amendment are inserted for convenience only and do not constitute a part
of this Amendment.
6.7. Counterparts. This Amendment may be executed in any number of
counterparts, which shall collectively constitute one agreement.
6.8. Law Governing. THIS AMENDMENT HAS BEEN SUBSTANTIALLY
NEGOTIATED AND IS BEING EXECUTED, DELIVERED, AND ACCEPTED, AND IS INTENDED
TO BE PERFORMED, IN PART IN THE STATE OF FLORIDA. ALL OBLIGATIONS, RIGHTS
AND REMEDIES HEREUNDER, SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA. THE SENIOR
SUBORDINATED NOTES SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE SPECIFIED THEREIN. EACH PURCHASER
RETAINS ALL RIGHTS UNDER THE LAWS OF THE UNITED STATES OF AMERICA,
INCLUDING THOSE RELATING TO THE CHARGING OF INTEREST.
6.9 Waivers; Modification. NO PROVISION OF THIS AMENDMENT MAY BE
WAIVED, AMENDED, CHANGED OR MODIFIED, OR THE DISCHARGE THEREOF
ACKNOWLEDGED, ORALLY, BUT ONLY BY AN AGREEMENT IN WRITING SIGNED BY THE
PARTY AGAINST WHOM THE ENFORCEMENT OF ANY WAIVER, CHANGE, MODIFICATION OR
DISCHARGE IS SOUGHT.
6.10 Waiver of Jury Trial. AFTER REVIEWING THIS SECTION 6.10 WITH
ITS COUNSEL, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, PARENT,
THE COMPANY AND EACH PURCHASER HEREBY KNOWINGLY, INTELLIGENTLY AND
INTENTIONALLY, IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AMENDMENT, THE SENIOR SUBORDINATED NOTES OR ANY DOCUMENTS ENTERED INTO IN
CONNECTION THEREWITH OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF EACH PURCHASER IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH
PURCHASER TO PURCHASE THE SENIOR SUBORDINATED NOTES FROM THE COMPANY.
6.11. Final Agreement. THE ORIGINAL AGREEMENT, AS AMENDED HEREBY,
AND THE OTHER AGREEMENTS REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS
EXECUTED. THE ORIGINAL AGREEMENT, AS AMENDED HEREBY, AND THE OTHER
AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
6.12. Release. THE COMPANY HEREBY ACKNOWLEDGES THAT IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY
KIND OR NATURE WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL
OR ANY PART OF ITS LIABILITY TO REPAY THE "SENIOR SUBORDINATED
OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR
NATURE FROM PURCHASER. THE COMPANY HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES PURCHASER, ITS PREDECESSORS, AGENTS,
OFFICERS, DIRECTORS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AMENDMENT IS EXECUTED, WHICH THE COMPANY MAY NOW OR HEREAFTER HAVE AGAINST
PURCHASER, ITS PREDECESSORS, AGENTS, OFFICERS, DIRECTORS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM THE "SENIOR SUBORDINATED OBLIGATIONS",
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING,
RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST
LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE
ORIGINAL AGREEMENT OR OTHER AGREEMENTS, AND NEGOTIATION FOR AND EXECUTION
OF THIS AMENDMENT.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Parent, the Company and Purchaser have caused
this Amendment to be executed and delivered as of the date first written.
PARENT:
JOTAN, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx,
Vice President and Chief Financial
Officer
Address for Notices for Parent and all
Subsidiaries:
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Mr. Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
COMPANY:
SOUTHLAND CONTAINER
PACKAGING CORP. (formerly known as
Southland Holding Company and as
successor by merger to SHC Acquisition
Corp.)
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx,
Vice President and Chief Financial
Officer
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Mr. Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
PURCHASER:
RICE PARTNERS II, L.P.
By: Rice Capital Group IV,
L.P., Its general partner
By: RMC Fund Management,
L P., Its general partner
By: Rice Mezzanine
Corporation, its
general partner
By: /s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Managing Director
F-SOUTHLAND, L.L.C.
By: Franklin Street/Fairview Capital,
L.L.C., its manager
By: /s/ Xxxxxxxx X. Xxxxxxxx
Xxxxxxxx X. Xxxxxxxx,
Manager
FF-SOUTHLAND, L.P.
By: FSFC Associates, L.P.,
its general partner
By: Franklin Capital, L.L.C.,
its general partner
By: /s/ Xxxxxxxx X. Xxxxxxxx
Xxxxxxxx X. Xxxxxxxx,
Manager
EXHIBIT A
Form of Company General Certificate
[See Attached]
EXHIBIT A-1
Form of Parent General Certificate
[See Attached]
