FIFTH AMENDMENT TO CREDIT AGREEMENT
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THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as
of April 14, 1998, is among JOTAN, INC. ("Holding"), SOUTHLAND CONTAINER
PACKAGING CORP. (formerly Southland Holding Company, successor in interest
by merger to SHC Acquisition Corp., each of its own subsidiaries and
Atlantic Bag & Paper Company and herein the "Borrower"), each of the banks
or other lending institutions which are signatories hereto (collectively,
the "Banks") and BANQUE PARIBAS, individually as a Bank, and as agent for
the Banks (the "Agent").
RECITALS:
A. Holding, SHC Acquisition Corp., Agent and Banque Paribas, in its
individual capacity, entered into that certain Credit Agreement dated as
of February 28, 1997 (as amended by that certain letter amendment dated
April 30, 1997, that certain Second Amendment to Credit Agreement dated as
of June 20, 1997, that certain Third Amendment to Credit Agreement dated
as of August 19, 1997 and that certain Fourth Amendment dated as of
November 6, 1997, as so amended, the "Credit 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 Credit Agreement and the
Loan Documents (as defined in the Credit Agreement).
C. Banque Paribas has assigned certain of its rights and interests
under the Credit Agreement and the other Loan Documents to the other Banks
pursuant to those certain Assignment and Acceptances, each dated April 18,
1997.
D. Southland Holding Company has changed its name to Southland
Container Packaging Corp. and each Obligated Party (as defined in the
Credit Agreement) other than Holding has merged with and into Southland
Container Packaging Corp. with Southland Container Packaging Corp. as the
surviving entity. Southland Container Packaging Corp. is the only
Subsidiary (as defined in the Credit Agreement).
E. Prior to the date hereof, the Term A Commitment, the Term B
Commitment and the Acquisition Commitment of each Bank terminated so that
no further Term A Loans, Term B Loans or Acquisition Loans shall be made
by the Banks to the Borrower.
F. Certain Defaults and Events of Default (each as defined in the
Credit Agreement) have occurred and are continuing under the Credit
Agreement (collectively, the "Existing Defaults").
G. The Borrower and Holding have requested that the Agent and the
Banks waive the Existing Defaults and amend certain provisions of the
Credit Agreement in order to, among other things, defer the payment of
certain interest and principal with respect to the Loans, amend certain
covenants, and permit the incurrence of additional debt which is junior
and subordinate to the Obligations. The Banks have agreed to do so
subject to and on the terms and conditions of this Amendment and the
Credit Agreement, as amended hereby.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. Capitalized terms used in this
Amendment, to the extent not otherwise defined herein, shall have the same
meanings as in the Credit Agreement, as amended hereby.
ARTICLE 2
Amendments
Section 2.1 Amendment to Section 1.1. Section 1.1 of the Credit
Agreement is hereby amended as follows:
(a) Deleting the existing definition of "Borrowing Base" and
replacing it in its entirety with the following:
"Borrowing Base" means, at any time and calculated without
duplication based on the report most recently delivered at such time
pursuant to Section 11.1(d), an amount equal to the sum of (a) the
aggregate amount of Eligible Accounts multiplied by (i) during the
period prior to March 31, 1999, eighty-five percent (85%) and (ii)
after March 31, 1999, eighty percent (80%), plus (b) Eligible
Inventory multiplied by thirty-five percent (35%), minus (c) an
amount equal to all amounts then owed to Xxxxxx X. Xxxxxxxx which are
secured by a Lien on treasury shares of Southland.
(b) Deleting the existing definition of EBITDA and replacing it
in its entirety with the following:
"EBITDA" means, for any period and any Person, the total of the
following each calculated without duplication for such Person on a
consolidated basis for such period: (a) Net Income; plus (b) any
provision for (or less any benefit from) income or franchise taxes
included in determining Net Income; plus (c) interest expense
deducted in determining Net Income; plus (d) amortization and
depreciation expense deducted in determining Net Income; plus (e)
other noncash charges deducted in determining consolidated net income
and not already deducted in accordance with clause (d) above or
clauses (b) and (c) of the definition of Net Income; plus (f) all
restructuring expenses, litigation or arbitration costs related to
recovery of the Golden State Litigation Proceeds or the Selling
Shareholder Proceeds, contingency allocations and other non-recurring
non-operating expenses, but, in each case, only to the extent such
amounts were deducted in calculating Net Income.
(c) Amending the definition of "Eligible Accounts" by deleting
clause (xvi) and replacing it in its entirety with the following:
(xvi) the account is not an Excluded Account. The term
"Excluded Account" means an account that has been identified by the
Agent or Administrative Agent (by fifteen (15) days prior written
notice to Holding) as being unacceptable for inclusion in the
Borrowing Base because the Agent or Administrative Agent has
determined that the account debtor is not creditworthy or that the
Agent might not otherwise be able to receive the full amount of the
account within a reasonable period of time and at a reasonable cost
of collection if it sought to realize on its security interest
therein, such determination to be made in the Agent's or
Administrative Agent's judgment, in good faith and based on
information which, in its reasonable judgment, supports such
determination.
(d) Amending the definition of "Eligible Inventory" by deleting
clause (g) and replacing it in its entirety with the following:
(g) inventory that the Agent or Administrative Agent has
determined (by fifteen (15) days prior written notice to Holding) to
be unacceptable for inclusion in the Borrowing Base because the Agent
or Administrative Agent has determined that the inventory is
unmarketable or that the Agent might not otherwise be able to receive
sufficient value from the sale of such inventory if it sought to
realize on its security interest therein, such determination to be
made in the Agent's or Administrative Agent's judgment, in good faith
and based on information which, in its reasonable judgment, supports
such determination.
(e) Deleting the existing definition of "Interest Period" and
replacing it in its entirety with the following:
"Interest Period" means with respect to any Libor Accounts, each
period commencing on the date such Account is established or
Converted from a Prime Rate Account or the last day of the next
preceding Interest Period with respect to such Libor Account, and
ending on the numerically corresponding day in the next subsequent
month, except that each such Interest Period which commences on the
last Business Day of a calendar month (or on any day for which there
is no numerically corresponding day in the subsequent calendar month)
shall end on the last Business Day of the subsequent calendar month.
Notwithstanding the foregoing: (a) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day (or if such succeeding Business Day
falls in the next succeeding calendar month, on the next preceding
Business Day); (b) any Interest Period which would otherwise extend
beyond the Termination Date applicable to a given Loan shall end on
such Termination Date; (c) no Interest Period for any Libor Account
shall have a duration of less than or more than one (1) month and, if
the Interest Period would otherwise be a shorter period, the related
Libor Account shall not be available hereunder; and (d) no Interest
Period in respect of the Acquisition Loans, the Term A Loans or Term
B Loans may extend beyond a principal repayment date thereof unless,
after giving effect thereto, the aggregate principal amount of such
Loan subject to Libor Accounts having Interest Periods that end after
such principal payment date shall be equal to or less than the
aggregate principal amount of such Loan to be outstanding hereunder
after such principal payment date.
(f) Amending the definition of "Notes" by deleting the word
"and" after "Term A Notes", replacing it with "," and inserting after
"Term B Notes" the phrase "and the Interest Deferral Notes."
(g) Amending the definition of "Obligations" by inserting after
the word "Agent" in the second line thereof ", the Administrative Agent".
(h) Deleting the existing definition of "Revolving Commitment"
and replacing it in its entirety with the following:
"Revolving Commitment" means, as to each Bank, the obligation of
such Bank to make advances of funds and purchase participation
interests in (or with respect to the Agent as a Bank, hold other
interests in) Letters of Credit in an aggregate principal amount at
any one time outstanding up to but not exceeding such Bank's
Commitment Percentage of the maximum aggregate amount of the
Revolving Commitments of all Banks, as the same may be reduced or
terminated pursuant to Section 2.6, Section 7.4, Section 8.7 or
Section 14.2. The applicable Commitment Percentage of each Bank for
purposes hereof shall be as set forth on Exhibit Y.
The maximum aggregate amount of the Revolving Commitments of all
Banks equals Nine Million Five Hundred and Eighty Thousand Dollars
($9,580,000); provided that the aggregate amount of the Revolving
Commitments of all Banks may be increased to a maximum amount of
Twelve Million Dollars ($12,000,000) pursuant to Section 2.6A.
(i) Deleting the existing definition of "Revolving Termination
Date" and replacing it in its entirety with the following:
"Revolving Termination Date" means Febru-
ary 28, 2001.
(j) Deleting the existing definition of "Subordinated Loan
Documents" and replacing it in its entirety with the following:
"Subordinated Loan Documents" means the Note Purchase Agreement,
the Subordinated Notes, the guaranties issued pursuant to the Note
Purchase Agreement, all other promissory notes, guaranties and other
documentation executed and delivered pursuant to or in connection
with the Note Purchase Agreement and the Priority Senior Subordinated
Loan Documents; excluding, however, the Southland Acquisition
Documents, the Loan Documents and the Capitalization Documents.
(k) Deleting the existing definition of "Term A Termination
Date" and replacing it in its entirety with the following:
"Term A Termination Date" means February 28, 2001.
(l) Deleting the existing definition of "Term B Termination
Date" and replacing it in its entirety with the following:
"Term B Termination Date" means February 28, 2001.
(m) Adding the following new definitions in the appropriate
alphabetical order:
"Administrative Agent" means BankBoston, N.A., formerly The
First National Bank of Boston, acting on behalf of the Banks.
"Deferred Interest" means (a) all interest on the Loans that
accrued during the period from September 30, 1997 through March 31,
1998 in the aggregate amount of $1,120,198.00, (b) all interest on
the Loans at the Applicable Rate and all interest on the Interest
Deferral Notes at the Fixed Rate that accrues during the period from
April 1, 1998 through July 31, 1998, and (c) for the months of August
and September, 1998, the difference between (i) the sum of (A) the
amount of accrued interest on the Loans calculated at the Applicable
Rate for such months and (B) the amount of accrued interest on the
principal amount of the Interest Deferral Notes at the Fixed Rate for
such months, and (ii) the amount of accrued interest on the Loans and
on the principal amount of the Interest Deferral Notes calculated at
LIBOR for such months.
"Fixed Rate" means the rate of nine percent (9%) per annum.
"Golden State Litigation Proceeds" means all amounts received by
Holding, the Borrower or any Subsidiary as a result of or in
connection with any litigation commenced or claims asserted (whether
now existing or hereafter arising) by Holding, Borrower or any
Subsidiary against Golden State Container, Inc. n/k/a/ Victory
Packaging, Inc., Xxxxx Xxxxxx, Xxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxx
Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxx Xxxxx, Xxxx X'Xxxxxx, Xxxxxx
Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxx or any other former employees of
Holding or Borrower, or any of their respective successors and
assigns, less all attorneys fees and expenses actually paid or
accrued by Holding or the Borrower with respect to such litigation.
"Interest Deferral Notes" means the promissory notes to be
issued by the Borrower to the Banks for Deferred Interest pursuant to
Section 6.3, which shall be substantially in the form annexed hereto
as Exhibit X, and all amendments and modifications thereof.
"LIBOR" means the rate per annum (rounded upwards, if necessary,
to the nearest 1/16 of 1%) offered to the Agent at approximately
11:00 a.m. London time (or as soon thereafter as practicable) on July
31, 1998 by leading banks in the London interbank market of Dollar
deposits in immediately available funds having a thirty (30) day
term.
"1998 EBITDA" means EBITDA for Fiscal Year 1998, calculated on
the basis of audited financial statements for the Fiscal Year ending
December 31, 1998, which calculation has been certified by the
Borrower's independent certified public accountants.
"Operating Cash Flow" means, for any period, the total of the
following for Holding and the Subsidiaries calculated on a
consolidated basis without duplication for such period: (a) EBITDA;
minus (b) all Capital Expenditures which are not financed with Debt
permitted by Section 12.1(f) but including Capital Expenditures
financed with proceeds of the Revolving Loans.
"Priority Senior Subordinated Loan" means the subordinated loan
to be made by Rice Partners to Borrower in the aggregate principal
amount of $1.25 million, pursuant to the Priority Senior Subordinated
Loan Documents.
"Priority Senior Subordinated Loan Documents" means the Priority
Note Purchase Agreement dated as of April 14, 1998, by and among
Borrower, Holding and Rice Partners, the Priority Senior Subordinated
Notes (as defined therein), the guaranties issued pursuant thereto
and all purchase agreements, notes and other documentation executed
and delivered pursuant to or in connection with the Priority Senior
Subordinated Loan.
"Selling Shareholder Proceeds" means all amounts received by
Holding, Borrower or any Subsidiary from or with respect to (a) the
amounts deposited with NationsBank, N.A. (South) pursuant to the
Escrow and Depository Agreement, dated as of February 28, 1997, among
Holding, Borrower, certain former shareholders of Southland Holding
Company and NationsBank, N.A. (South), or (b) any arbitration, claim,
demand or proceeding commenced by or against the Borrower and/or
Holding (whether now existing or hereafter arising) and involving
Xxxxxx X. Xxxxxxxxxxx, Xxxx X. Xxxxxxx, Xx., or Xxxxxxx X. Xxxxxxx,
less, in each case, (i) all attorneys fees and expenses actually paid
or accrued by Holding or the Borrower with respect to any litigation
or arbitration commenced to obtain such amounts, and (ii) all such
amounts received solely as a result of tax liabilities of the
Borrower or Holding arising prior to February 28, 1997 and which are
actually paid by the Borrower or Holding in satisfaction of such tax
liability.
"Settlement Date" means the weekly date selected by the
Administrative Agent on which the Administrative Agent and the Banks
shall settle amongst themselves to ensure that on such date each Bank
shall have its Commitment Percentage of all outstanding Revolving
Loans that are Prime Rate Accounts, provided that such date shall be
a Business Day on which each Bank is open for business.
Section 2.2 Amendment of Section 2.1. Section 2.1 of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
Section 2.1 Revolving Commitments. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make
advances to the Borrower from time to time from and including the
Closing Date to but excluding the Revolving Termination Date in an
aggregate principal amount at any time outstanding up to but not
exceeding the amount of such Bank's Revolving Commitment as then in
effect; provided, however, (a) the Outstanding Revolving Credit
applicable to a Bank shall not at any time exceed such Bank's
Revolving Commitment, (b) the Outstanding Revolving Credit shall not
at any time exceed the lesser of (i) the aggregate Revolving
Commitments or (ii) the Borrowing Base, and (c) the amount of the
Outstanding Revolving Credit supported by Eligible Inventory shall
not exceed $3,500,000 at any time. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement,
the Borrower may borrow, prepay, and reborrow hereunder the amount of
the Revolving Commitments and may establish Prime Rate Accounts and
Libor Accounts thereunder and, until the Termination Date, the
Borrower may Continue Libor Accounts established under the Revolving
Loans or Convert Accounts established under the Revolving Loans of
one Type into Accounts of the other type; provided, however, that at
no time shall Revolving Loans subject to Libor Accounts exceed the
aggregate amount of Eight Million Dollars ($8,000,000). Accounts of
each Type under the Revolving Loan made by each Bank shall be
established and maintained at such Bank's Applicable Lending Office
for Revolving Loans of such Type.
Section 2.3 New Section 2.6A. A new section is hereby inserted
in Article 2 of the Credit Agreement, after Section 2.6, as follows:
Section 2.6A Increase in Revolving Commitments. After March
31, 1999 and provided that no Default or Event of Default exists, the
Borrower shall have the right, by giving written notice to the Agent
and the Administrative Agent, to increase the Revolving Commitments,
subject in all respects to the same limitations set forth in Section
2.1, and subject to the following additional conditions: (i) if 1998
EBITDA is equal to at least $3,260,000, the aggregate Revolving
Commitments may be increased to a maximum of Ten Million Eighty
Thousand Dollars ($10,080,000); (ii) if 1998 EBITDA is equal to at
least $3,912,000, the aggregate Revolving Commitments may be
increased to a maximum of Eleven Million Eighty Thousand Dollars
($11,080,000); and (iii) if 1998 EBITDA is equal to at least
$4,347,000, the aggregate Revolving Commitments may be increased to a
maximum of Twelve Million Dollars ($12,000,000).
Section 2.4 Amendment of Section 2.7.
(a) Section 2.7(a) of the Credit Agreement is hereby amended by
deleting it and replacing it in its entirety with the following:
(a) Commitment to Issue. The Borrower may utilize the
Revolving Commitments by requesting that the Agent issue, and the
Agent, subject to the terms and conditions of this Agreement, shall
issue, letters of credit for Borrower's or one of its Subsidiaries'
account (such letters of credit being hereinafter referred to as the
"Letters of Credit"); provided, however, (i) the aggregate amount of
outstanding Letter of Credit Liabilities shall not at any time exceed
Two Million Dollars ($2,000,000); (ii) the Outstanding Revolving
Credit shall not at any time exceed the lesser of (A) the aggregate
Revolving Commitments or (B) the Borrowing Base, (iii) the amount of
the Outstanding Revolving Credit supported by Eligible Inventory
shall not exceed $3,500,000 at any time; and (iv) the Outstanding
Revolving Credit applicable to a Bank shall not at any time exceed
such Bank's Revolving Commitment. Upon the date of issue of a Letter
of Credit, the Agent shall be deemed, without further action by any
party hereto, to have sold to each other Bank, and each other Bank
shall be deemed, without further action by any party hereto, to have
purchased from the Agent a participation to the extent of such Bank's
Commitment Percentage (calculated with respect to the Revolving
Commitments only) in such Letter of Credit and the related Letter of
Credit Liabilities.
(b) The third sentence of Section 2.7(b) of the Credit
Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
Each Letter of Credit shall have an expiration date that does not
extend beyond the earlier of (i) thirty (30) days from such Letter of
Credit's date of issuance and (ii) the date which is thirty (30) days
prior to the Revolving Termination Date, shall be payable in Dollars,
must support a transaction entered into in the ordinary course of the
Borrower's business, must be satisfactory in form and substance to
the Agent, and shall be issued pursuant to such documentation as the
Agent may require, including, without limitation, the Agent's
standard form letter of credit request and reimbursement agreement;
provided, that, in the event of any conflict between the terms of
such agreement and the other Loan Documents, the terms of the other
Loan Documents shall control.
Section 2.5 New Section 2.8. A new section is hereby inserted
in Article 2 of the Credit Agreement, after Section 2.7, as follows:
Section 2.8 Agreement Between Banks With Respect to Prime Rate
Accounts.
(a) Fund Disbursement. The Administrative Agent, for the
account of the Banks, shall disburse all Revolving Loans that are
Prime Rate Accounts to the Borrower. It is understood that for
purposes of advances to the Borrower and for purposes of this Section
2.8(a) the Administrative Agent is using the funds of the
Administrative Agent. Unless the Administrative Agent shall have
been notified in writing by any Bank prior to any advance to the
Borrower that such Bank will not make such Bank's Commitment
Percentage of such borrowing on such date available to the
Administrative Agent, the Administrative Agent may assume that such
Bank shall make such Commitment Percentage available to the
Administrative Agent on a Settlement Date, and the Administrative
Agent may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If such Bank's Commitment
Percentage is not in fact made available to the Administrative Agent
by such Bank on the Settlement Date, the Administrative Agent shall
be entitled to recover such amount with interest thereon at the rate
per annum applicable to such Revolving Loan hereunder, on demand,
from the Borrower without prejudice to any rights which the
Administrative Agent or the Borrower may have against such Bank
hereunder. Nothing contained in this subsection shall relieve any
Bank which has failed to make available its Commitment Percentage of
any borrowing hereunder from its obligation to do so in accordance
with the terms hereof. Nothing contained herein shall be deemed to
obligate the Administrative Agent to make available to the Borrower
the full amount of a requested advance when the Administrative Agent
has any notice (written or otherwise) that any Bank will not advance
its Commitment Percentage thereof.
(b) Payment by Banks. Prior to 1:00 p.m. New York time on each
Settlement Date, the Administrative Agent shall provide each Bank
obligated with respect to the Commitment with a settlement statement
that sets forth, for the period commencing on the prior Settlement
Date and ending at the close of the prior Business Day, the amount of
all borrowings of Revolving Loans that are Prime Rate Accounts and
all repayments, prepayments or Conversions of Revolving Loans that
are Prime Rate Accounts during such period. A certificate of the
Administrative Agent submitted to any Bank with respect to any amount
owing under this clause shall be conclusive, absent manifest error.
Prior to 4:30 p.m. New York time on each Settlement Date, the
Administrative Agent and the Banks shall each remit to the other, in
immediately available funds, all amounts necessary so as to ensure
that, as of the Settlement Date, the Banks shall have their
respective Commitment Percentages of all Revolving Loans that are
Prime Rate Accounts. As to that portion of the Revolving Loans
funded by the Administrative Agent on behalf of the Banks between
Settlement Dates, interest accrued during the period from funding
thereof by the Administrative Agent to the Settlement Date shall be
for the account of the Administrative Agent.
(c) Notice to Agent. The Administrative Agent shall provide to the
Agent, on a weekly basis, a statement setting forth all borrowings,
repayments and Conversions of Revolving Loans that are Prime Rate Accounts
during the prior week.
Section 2.6 Amendment of Section 4.3(a). Section 4.3(a) of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety, with the following:
(a) Ten (10) principal installments due and payable on certain
Quarterly Payment Dates in accordance with the following schedule:
Amount of Principal
Installment Due
Quarterly Payments Dates and Payable
------------------------ -------------------
June 1997 $250,000
September 1997 $250,000
March 1999 $375,000
June 1999 $437,500
September 1999 $437,500
December 1999 $437,500
March 2000 $437,500
June 2000 $500,000
September 2000 $500,000
December 2000 $500,000
Section 2.7 Amendment of Section 5.3(a). Section 5.3(a) of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
(a) Ten (10) principal installments of $25,000 each due and
payable on each of the following Quarterly Payment Dates:
June 1997
September 1997
March 1999
June 1999
September 1999
December 1999
March 2000
June 2000
September 2000
December 2000
Section 2.8 Amendment of Section 6.1. Section 6.1 of the
Credit Agreement is hereby amended by adding a new sentence after clause
(b), as follows:
Notwithstanding the foregoing, for the months of August and September
1998, interest on all the Loans shall be paid at a rate equal to
LIBOR, and the amount by which interest paid at such rate is less
than the amount of interest actually accrued at the Applicable Rate
shall constitute Deferred Interest, and such Deferred Interest shall
be payable as provided herein.
Section 2.9 Amendment of Section 6.3. Section 6.3 of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
Section 6.3 Payment Dates. Except for the Deferred Interest,
accrued interest on the Loans and on the principal amount of the
Interest Deferral Notes shall be due and payable as follows: (i) in
the case of Loans subject to Prime Rate Accounts and the principal
amount of the Interest Deferral Notes, monthly on the last Business
Day of each month, and on the Termination Date of such Loan and the
maturity date of the Interest Deferral Notes; or (ii) in the case of
Loans subject to Libor Accounts and with respect to each such
Account, on the last day of the Interest Period with respect thereto
and on the Termination Date of such Loan. On or before April 20,
1998, the Borrower shall deliver to each Bank an Interest Deferral
Note reflecting that portion of the Deferred Interest attributable to
the period from September 30, 1997 through March 31, 1998 in the
respective amounts set forth for each Bank opposite its name on
Schedule 6.3. The Borrower shall execute and deliver to each Bank
(A) on or before August 11, 1998, an Interest Deferral Note in an
amount equal to such Bank's ratable share of the Deferred Interest
attributable to the period from April 1, 1998 through July 31, 1998,
and (B) on or before October 9, 1998, an Interest Deferral Note in an
amount equal to such Bank's ratable share of the Deferred Interest
attributable to the months of August and September, 1998. The
principal amount of each Interest Deferral Note shall bear interest
at the Fixed Rate commencing on the date such Interest Deferral Note
was required to be issued pursuant to this Section 6.3, and such
interest shall be due and payable in accordance with clause (i) of
this Section 6.3, and the principal amount of the Interest Deferral
Notes shall be due and payable on the Revolver Termination Date.
Section 2.10 Amendment of Section 6.5. Section 6.5 of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
Section 6.5 Conversions and Continuations of Accounts. Subject
to Sections 2.1 and 7.2 hereof, the Borrower shall have the right
from time to time to Convert all or part of any Prime Rate Account in
existence under a Loan into a Libor Account under the same Loan or to
Continue Libor Accounts in existence under a Loan as Libor Accounts
under the same Loan, provided that: (a) the Borrower shall give the
Agent and the Administrative Agent notice of each such Conversion or
Continuation as provided in Section 7.3 hereof; (b) a Libor Account
may only be Converted on the last day of the Interest Period
therefore; and (c) except for Conversions into Prime Rate Accounts,
no Conversions or Continuations shall be made while a Default has
occurred and is continuing.
Section 2.11 Amendment of Section 7.1. Section 7.1 of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
Section 7.1 Borrowing Procedure. The Borrower shall give the
Agent and the Administrative Agent notice of each borrowing under the
Revolving Commitment in accordance with Section 7.3 hereof. The
Administrative Agent shall give each Bank obligated with respect to
such Commitment notice of the amount of any request for a Revolving
Loan that is a Libor Account not later than 1:00 p.m. New York time
on the effective date of such notice of borrowing. Not later than
4:30 p.m. New York time on the date specified for each borrowing of a
Libor Account under the Revolving Commitment, each Bank obligated
with respect to such Commitment will make available the amount of the
Revolving Loan to be made by it on such date to the Administrative
Agent, at its office 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
in immediately available funds, for the account of the Borrower. The
Administrative Agent shall provide notice to the Banks with respect
to any Revolving Loans that are Prime Rate Accounts in accordance
with Section 2.8(b) hereof. The amounts to be funded by the
Administrative Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by transferring the
same (a) to the Operating Account (as defined in Section 11.15(d)) or
(b) in immediately available funds by wire transfer, automated
clearinghouse debit or interbank transfer to a Person or Persons
designated by the Borrower in writing.
Section 2.12 Amendments to Section 7.3. Section 7.3 of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
Section 7.3 Certain Notices. Notices by the Borrower to the
Agent and the Administrative Agent of terminations or reductions of
Commitments, of prepayments or repayments of Loans and Interest
Deferral Notes and of Conversion and Continuation of Accounts shall
be irrevocable and shall be effective only if received by the Agent
and the Administrative Agent not later than 11:00 a.m. on the
Business Day prior to the date of the relevant termination,
reduction, prepayment, repayment, Conversion or Continuation;
provided, however, that notices of prepayment or repayment of Loans
subject to Libor Accounts and Conversions into or Continuations as
Libor Accounts shall only be effective if received by the Agent and
the Administrative Agent by 11:00 a.m. on the Business Day three days
prior to the relevant prepayment, repayment, Conversion or
Continuation. Notices by the Borrower to the Agent and the
Administrative Agent of borrowings of Loans subject to Prime Rate
Accounts shall be irrevocable and shall be effective only if received
by the Agent and the Administrative Agent not later than 11:00 a.m.
on the Business Day of the relevant borrowing. Notices by the
Borrower to the Agent and the Administrative Agent of borrowings of
Loans subject to Libor Accounts shall be irrevocable and shall be
effective only if received by the Agent and the Administrative Agent
not later than 11:00 a.m. on the Business Day three days prior to the
relevant borrowing. Any notices of the type described in this
Section 7.3 which are received by the Agent or the Administrative
Agent after the applicable time set forth above on a Business Day
shall be deemed to be received and shall be effective on the next
Business Day. Each such notice of termination or reduction shall
specify the applicable Commitments to be affected and the amount of
the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation, or prepayment shall specify (a)
the Loans to be borrowed or prepaid, the Interest Deferral Notes to
be prepaid or the Accounts to be Converted or Continued; (b) the
amount (subject to Sections 2.1 and 7.2 hereof) to be borrowed,
Converted, Continued or prepaid; (c) in the case of a Conversion, the
Type of Account to result from such Conversion; (d) in the case of a
borrowing, the Type of Account or Accounts to be applicable to such
borrowing and the amounts thereof; and (e) the date of borrowing,
Conversion, Continuation, or prepayment (which shall be a Business
Day). Except for notices of borrowings under Section 7.1, the Agent
shall notify the Banks of the contents of each such notice on the
date of its receipt of same or, if received on or after the
applicable time set forth above on a Business Day, on the next
Business Day. In the event the Borrower fails to select the Type of
Account applicable to a Loan within the time period and otherwise as
provided in this Section 7.3, such Account (if outstanding as a Libor
Account) will be automatically Converted into a Prime Rate Account on
the last day of the preceding Interest Period for such Account or (if
outstanding as a Prime Rate Account) will remain as, or (if not then
outstanding) will be made as, a Prime Rate Account. The Borrower may
not borrow any Loans subject to a Libor Account, Convert any Prime
Rate Accounts into Libor Accounts, or Continue any Libor Account as a
Libor Account if the Applicable Rate for such Libor Accounts would
exceed the Maximum Rate.
Section 2.13 Amendments to Sections 7.4.
(a) The second sentence of Section 7.4(a)(ii) of the Credit
Agreement is hereby amended by (i) inserting the words "and the Interest
Deferral Notes" after the word "Loans"; and (ii) deleting the phrase
"seventy-five percent (75%)" and inserting the phrase "fifty percent
(50%)" in lieu thereof.
(b) Section 7.4(a)(iii) of the Credit Agreement is hereby
amended by inserting the words "and the Interest Deferral Notes" after the
word "Loans" in the twelfth line thereof.
(c) Section 7.4(a)(iv) of the Credit Agreement is hereby
amended by inserting the words "and the Interest Deferral Notes" after the
word "Loans" in the sixteenth line thereof.
(d) Section 7.4(a) of the Credit Agreement is hereby amended by
inserting two new subsections after subsection (v), as follows:
(vi) Other Proceeds. In the event Borrower, Holding or any
Subsidiary receives any Selling Shareholder Proceeds or any Golden
State Litigation Proceeds, Borrower shall prepay the Loans in an
amount equal to all such amounts received by the Borrower, Holding or
any Subsidiary.
(vii) Concentration Account. All amounts in the Concentration
Account, other than Net Proceeds to be prepaid pursuant to Subsection
7.4(a)(iii), Selling Shareholder Proceeds and Golden State Litigation
Proceeds, shall be applied on a daily basis to reduce the Revolving
Loans. Application will be made upon the receipt of "collected
funds" at the Concentration Account on the Business Day of such
receipt if received no later than 1:00 p.m. and on the next
succeeding Business Day if received after 1:00 p.m. No checks,
drafts or other instrument received by the Administrative Agent shall
constitute final payment unless and until such instruments have
actually been collected.
(e) Section 7.4(a)(v) of the Credit Agreement is hereby amended
by deleting it and replacing it in its entirety with the following:
(v) Application of Mandatory Prepayments. Mandatory
prepayments made pursuant to Subsections 7.4(a)(ii), (iv) and (vi)
shall be applied as follows: (A) first to installments due under the
Term A Loans and Term B Loans, ratably, in inverse order of maturity
until such Loans are paid in full; (B) second to the Deferred
Interest Notes, ratably, until such Notes are paid in full; and (C)
third to the Revolving Loans, with such amounts being applied first
to repay outstanding Loans subject to a Prime Rate Account and then
to repay outstanding Loans subject to a Libor Account, with those
Loans subject to a Libor Account which have earlier expiring Interest
Periods being repaid prior to those which have later expiring
Interest Periods. Seventy-five percent (75%) of the mandatory
prepayments made pursuant to Subsection 7.4(a)(iii) shall be applied
as provided above in this clause (v) and twenty-five percent (25%)
thereof shall be applied to reduce the Revolving Loans in the same
fashion as provided in Subsection 7.4(a)(vii). Each prepayment under
Subsections 7.4(a)(ii), (iii), (iv) and (vi) shall be accompanied
with accrued interest on the amount prepaid to the date of
prepayment, any amount due under Section 8.5 as a result of such
prepayment and a certificate from Borrower detailing the application
thereof to the Loans as required by this clause (v).
(f) Section 7.4(b) of the Credit Agreement is hereby amended by
deleting the first two sentences thereof and replacing them in their
entirety with the following:
Subject to Section 7.2 hereof and the provisions of this clause (b),
Borrower may, at any time and from time to time without premium or
penalty upon prior notice to Agent and Administrative Agent as
specified in Section 7.3 hereof, prepay or repay any Loan or Interest
Deferral Note or Deferred Interest in full or in part. Any optional
prepayment of the Acquisition Loans, Term A Loans, Term B Loans or
Interest Deferral Notes shall be accompanied with accrued interest on
the amount prepaid to the date of prepayment.
Section 2.14 Amendment of Section 7.6. Section 7.6 of the
Credit Agreement is hereby amended by inserting in clause (c) thereof the
words "or Interest Deferral Notes" after the word "Loans" each time it
appears.
Section 2.15 Amendment of Section 8.7. Section 8.7 of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
Section 8.7 Replacement of Affected Bank. Within five (5) days
after receipt by Borrower of written notice and demand from any Bank
for any payment under the terms of Section 7.9, Section 8.1 or
Section 8.6, Borrower may notify Agent and such Bank (the "Affected
Bank") of its intention to obtain, at Borrower's expense, a
replacement Bank ("Replacement Bank") to purchase the Affected Bank's
Loans and Notes and its obligations under the Loan Documents.
Borrower shall, within thirty (30) days following the delivery of
such notice from Borrower cause the Replacement Bank to purchase the
Loans and Notes of the Affected Bank and assume the Affected Bank's
obligations hereunder in accordance with the terms of an Assignment
and Acceptance for cash in an aggregate amount equal to the aggregate
unpaid principal of the Loans and Notes held by such Bank, all unpaid
interest and commitment fees accrued thereon, and all other
Obligations owed to such Bank including amounts owed under Sections
7.9, 8.1, or 8.6. Notwithstanding the foregoing, (i) the Borrower
shall continue to be obligated to pay to the Affected Bank in full
all amounts then demanded and due under Sections 7.9, 8.1. or 8.6 in
accordance with the terms thereof, (ii) neither the Agent not any
Bank shall have any obligation to find a Replacement Bank, (iii) the
Replacement Bank must be reasonably acceptable to the Agent and (iv)
Banque Paribas cannot be replaced under this Section 8.7 without its
consent.
Section 2.16 Amendment of Section 9.3. Section 9.3 of the
Credit Agreement is hereby amended by deleting the word "and" at the end
of Subsection 9.3 (b), deleting the period at the end of Subsection 9.3(c)
and replacing it with "; and" , and by adding the following new Subsection
9.3(d):
(d) Borrowing Base Report. The Agent and the Administrative
Agent shall have received the Borrowing Base Report required by
Section 11.1(d) in a timely fashion on the date of such borrowing.
Section 2.17 Amendment of Section 11.1.
(a) Subsection 11.1(d) of the Credit Agreement is hereby
amended by deleting it and replacing it in its entirety with the
following:
(d) Borrowing Base Report and Other Reports. On each Business
Day, before 11 a.m. New York time, a Borrowing Base Report. In
addition to being furnished to the Agent, a copy of the Borrowing
Base Report shall be sent concurrently directly to the Administrative
Agent. Holding shall also furnish on a weekly and monthly basis, as
applicable, such standard reports as to accounts receivable and
inventory as requested by the Administrative Agent.
(b) Subsection 11.1(m) of the Credit Agreement is hereby
amended to insert the following additional sentence at the end thereof:
Without limiting the foregoing, Holding and Borrower shall
communicate with the Banks on a monthly basis in writing and by
conference call in the manner and at the times agreed to by Holding,
the Borrower and the Agent.
(c) Section 11.1 of the Credit Agreement is hereby amended by
deleting the period at the end of Subsection 11.1(m) and replacing it with
";" and by adding the following new Subsection 11.1(n):
(n) 1999 Business Plan. On or before November 15, 1998, a
business plan for Fiscal Year 1999 that contains on a consolidating
basis, without limitation, pro forma balance sheets and statements of
income, retained earnings, and cash flow for Fiscal Year 1999, in
each case setting forth in comparative form the figures for Fiscal
Year 1998, projection of Holdings' compliance with the financial
covenants in this Agreement for Fiscal Year 1999, the assumptions
underlying the foregoing, and projections of availability under the
Revolving Loan, all in reasonable detail.
Section 2.18 Amendment of Article 11. Article 11 of the Credit
Agreement is hereby amended by adding the following new sections after
Section 11.14:
Section 11.15 Cash Management.
(a) Net Proceeds, Selling Shareholder Proceeds, Golden State
Litigation Proceeds. Holding and the Borrower shall, and Holding
shall cause each Subsidiary to, deposit immediately all cash, checks,
notes, drafts or other similar items of payment relating to or
constituting Net Proceeds, Selling Shareholder Proceeds or Golden
State Litigation Proceeds in a bank account in the name of and
subject to the exclusive dominion and control of the Agent and
maintained at the offices of the Administrative Agent (the
"Concentration Account"), such Concentration Account to be
established in accordance with an agreement in form and substance
reasonably satisfactory to the Agent and the Administrative Agent.
The Concentration Account shall be a cash collateral account, with
all cash, checks and other items of payment in such account securing
payment of the Obligations. Holding and the Borrower hereby grant
to the Agent and the Administrative Agent for the benefit of the
Banks a lien on and security interest in the Concentration Account
and all cash, checks and other items deposited or held therein, and
all of the foregoing shall constitute Collateral under and as defined
in the Holding Security Agreement and the Borrower Security
Agreement.
(b) Other Proceeds and Collections. Holding and the Borrower
shall, and Holding shall cause each Subsidiary to, deposit on the
date of receipt thereof or cause to be deposited directly all cash,
checks, notes, drafts or other items of payment relating to or
constituting proceeds derived from the sale or disposition of any
property or assets (other than as required by Subsection 11.15(a)
hereof) including, without limitation, all payments made by any
account debtors of Holding, the Borrower or any Subsidiary in respect
of any Accounts (as such term is defined in the Collateral
Documents), all amounts referred to in clauses (i) and (ii) of the
definition of "Selling Shareholder Proceeds", all amounts attributed
to attorneys fees and expenses referred to in the last clause of the
definition of "Golden State Litigation Proceeds", and any other
payments or monies, in the Concentration Account or one of the local
bank accounts listed on Schedule 11.15(b) of this Agreement (the
"Local Accounts"); provided, however, that all funds in the Local
Accounts shall at all times be pledged to the Agent for the benefit
of the Banks, and subject to the exclusive dominion and control of
the Agent pursuant to appropriate blocked account and/or lockbox
agreements in form and substance reasonably satisfactory to the Agent
and the Administrative Agent with the banks in which the Local
Accounts are maintained. Holding and Borrower shall cooperate in
causing all amounts deposited in the Local Accounts, when collected,
to be deposited via wire transfer, in immediately available funds,
into the Concentration Account. The Local Accounts shall be cash
collateral accounts, with all cash, checks and other items of payment
in such accounts securing payment of the Obligations. Holding and
the Borrower hereby grant to the Agent for the benefit of the Banks a
lien on and security interest in the Local Accounts and all cash,
checks and other items deposited or held therein, and all of the
foregoing shall constitute Collateral under and as defined in the
Holding Security Agreement and the Borrower Security Agreement.
(c) Concentration Account. All amounts deposited in the
Concentration Account shall be applied by the Banks against the
outstanding balance of the Term A Loans, the Term B Loans, the
Interest Deferral Notes or the Revolving Loans, as the case may be,
in accordance with Subsections 7.4(a)(v) or 7.4 (a)(vii), on the
Business Day such amounts are so deposited and credited, in imme-
diately available funds, to such account or on the next succeeding
Business Day if such amounts are so credited after 1:00 p.m. The
Administrative Agent may charge the Concentration Account with any
other Obligations, including any and all reasonable costs, expenses
and attorneys' fees which the Agent may incur in connection with the
exercise by or for the Agent of any of the rights or powers herein
conferred upon the Agent, or in the prosecution or defense of any
action or proceeding to enforce or protect any rights of the Agent in
connection with this Agreement or the Obligations. All amounts
charged to the Concentration Account shall be deemed Revolving Loans
for all purposes hereunder.
(d) Operating Account. Holding and the Borrower may maintain
in their names, jointly and severally, an account (the "Operating
Account") into which, from time to time, proceeds of Revolving Loans
may be deposited; provided, however, that all funds in the Operating
Account shall at all times be pledged to the Agent for the benefit of
the Banks, and subject to the exclusive dominion and control of the
Agent pursuant to appropriate blocked account and/or lockbox
agreements in form and substance reasonably satisfactory to the Agent
with the bank in which the Operating Account is maintained. The
Operating Account shall be a cash collateral account, with all cash,
checks and other items of payment in such account securing payment of
the Obligations. Holding and the Borrower hereby grant to the Agent
for the benefit of the Banks a lien on and security interest in the
Operating Account and all cash, checks and other items deposited or
held therein, and all of the foregoing shall constitute Collateral
under and as defined in the Holding Security Agreement and the
Borrower Security Agreement.
(e) Monthly Statement. After the end of each month, the
Administrative Agent shall promptly send the Borrower a statement
showing the accounting for the charges, loans, advances and other
transactions occurring with respect to Revolving Loans between the
Administrative Agent and the Banks and the Borrower during that
month. The monthly statements shall be deemed correct and binding
upon the Borrower and shall constitute an account stated between the
Borrower and the Administrative Agent and the Banks unless the
Administrative Agent receives a written statement of the exceptions
within thirty (30) days of the date of the monthly statement.
Section 11.16 Cash Management Arrangements. On or before April
30, 1998, the Agent and the Administrative Agent shall have received
satisfactory evidence that the Local Accounts, the Concentration
Account and the Operating Account have been established and are
operating in accordance with the requirements of Section 11.15 and
that the Borrower and Holding are in full compliance with the
requirements of Section 11.15.
Section 2.19 Amendment of Section 12.1.
(a) Subsection 12.1(i) of the Credit Agreement is hereby
amended by deleting it and replacing it in its entirety with the
following:
(i) Debt of Borrower other than that specifically described in
clauses (a) through (h) and (j) of this Section 12.1 which in the
aggregate does not exceed One Hundred Thousand Dollars ($100,000)
at any time outstanding.
(b) Section 12.1 of the Credit Agreement is hereby amended by
deleting the "and" at the end of Subsection 12.1(h), by deleting the
period at the end of Subsection 12.1(i) and replacing it with "; and" and
by adding the following new Subsection 12.1(j):
(j) the Priority Senior Subordinated Loan, and unsecured, non-
interest bearing promissory notes issued to trade creditors and the
Borrower's auditors.
Section 2.20 Amendment of Section 12.3. Section 12.3 of the
Credit Agreement is hereby amended by deleting it and replacing it in its
entirety with the following:
Section 12.3 Mergers, Etc. Holding will not, and will not
permit any Subsidiary to, become a party to a merger or
consolidation, or purchase or otherwise acquire all or a substantial
part of the business or assets of any Person or any shares or other
evidence of beneficial ownership of any Person, or wind-up, dissolve,
or liquidate itself.
Section 2.21 Amendment of Section 12.4.
(a) The first sentence of Section 12.4 of the Credit Agreement
is hereby amended by (i) inserting at the end of clause (b) after
"outstanding" the words "or any warrant issued with respect thereto;" and
(ii) deleting the "or" immediately preceding clause (c) and inserting a
new clause (d) after "outstanding" in clause (c) and before "except," as
follows:
; or (d) any payment of principal, cash interest or other amounts in
respect of the Subordinated Notes or the Priority Senior Subordinated
Loan or otherwise in respect of the Subordinate Debt (as such term is
defined in the Senior Subordination Agreement)
(b) Section 12.4 of the Credit Agreement is hereby amended by
adding "and" at the end of clause (i), deleting the semi-colon at the end
of clause (ii) and replacing it with ".", and by deleting clauses (iii)
and (iv) in their entirety.
Section 2.22 Amendment of Section 12.5. Section 12.5 of the
Credit Agreement is hereby amended by deleting Subsections 12.5(a) and
12.5(g) in their entirety and in each case inserting in lieu thereof
"Intentionally Omitted."
Section 2.23 Amendments of Article 13.
(a) Article 13 of the Credit Agreement is hereby amended by
deleting Sections 13.1, 13.2 and 13.6 in their entirety and inserting in
lieu thereof "Intentionally Omitted."
(b) Section 13.3 of the Credit Agreement is hereby amended by
deleting it and replacing it in its entirety with the following:
Section 13.3 Fixed Charge Coverage. Holding shall not permit
the ratio of Operating Cash Flow to Fixed Charges computed on the
basis of the Operating Cash Flow and Fixed Charges for the twelve
(12) month period ending on the last day of each month (beginning
with the month ending January 31, 1999) to be less than 1:1. The
phrase "Fixed Charges" means, for any period, the total of the
following for Holding and the Subsidiaries calculated on a
consolidated basis without duplication for such period: (A) cash
interest expense; plus (B) cash federal and state income taxes paid;
plus (C) scheduled amortization of Debt paid or payable (excluding,
to the extent included, nonpermanent principal repayments under the
Revolving Loans and scheduled principal payments with respect to the
unsecured promissory notes issued to trade creditors and Borrower's
auditors referred to in Section 12.1(j)).
(c) Section 13.4 of the Credit Agreement is hereby amended by
deleting it and replacing it in its entirety with the following:
Section 13.4 Capital Expenditure Limit. Holding shall not, and
shall not permit any Subsidiary to, make or incur Capital
Expenditures during the 1998 Fiscal Year in excess of the aggregate
amount of $400,000. In calculating compliance with this Section
13.4, the aggregate amount of all payments due under a Capital Lease
for the entire term thereof (excluding, however, the interest portion
of capitalized lease payments) shall be considered expended in full
on the date that the Capital Lease is entered into.
(d) Section 13.5 of the Credit Agreement is hereby amended by
deleting it and replacing it in its entirety with the following:
Section 13.5 EBITDA. Holding shall not permit EBITDA for (a)
the nine month period ending September 30, 1998, to be less than
$2,009,000; and (b) the twelve month period ending December 31, 1998,
to be less than $2,825,000.
Section 2.24 Amendment to Section 14.1.
(a) Subsection 14.1(c) of the Credit Agreement is hereby
amended by deleting it and replacing it in its entirety with the
following:
(c) The Borrower shall fail to perform, observe, or comply with
any covenant, agreement, or term contained in Section 11.15,
Section 11.16, Article 12 or Article 13 of this Agreement,
Article IV of the Borrower Security Agreement or Article 2 of
the Mortgage to which it is a party. Any Subsidiary shall fail
to perform, observe or comply with any covenant, agreement or
term contained in Article IV of the Subsidiary Security
Agreement to which it is a party or Article 2 of any Mortgage to
which it is a party. Holding shall fail to perform, observe, or
comply with any covenant, agreement, or term contained in
Section 11.15, Section 11.16, Article 12 or Article 13 of this
Agreement, Article IV of the Holding Security Agreement or
Article 2 of any Mortgage to which it is a party.
(b) Section 14.1 of the Credit Agreement is hereby amended by
adding the following new Subsection after Subsection 14.1(p):
(q) Holding shall have failed to employ and have working on a
full-time basis a new Chief Executive Officer reasonably acceptable
to the Agent on or before May 31, 1998.
Section 2.25 Addition of Article 15A. The Credit Agreement is
hereby amended by inserting the following after Article 15:
ARTICLE 15A
The Administrative Agent
Section 15A.1 Appointment, Powers and Immunities. Each Bank
hereby appoints and authorizes BankBoston, N.A. or its designated
affiliate to act as its administrative agent hereunder and under the other
Loan Documents with such powers as are specifically delegated to the
Administrative Agent by the terms of the Loan Documents, together with
such other powers as are reasonably incidental thereto. Neither the
Administrative Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable for any action taken or
omitted to be taken by any of them hereunder or otherwise in connection
with any Loan Document or any of the other Loan Documents except for its
or their own gross negligence or willful misconduct. Without limiting the
generality of the preceding sentence, the Administrative Agent (i) may
treat the payee of any Note as the holder thereof until it receives
written notice of the assignment or transfer thereof signed by such payee
and in form satisfactory to the Administrative Agent; (ii) shall have no
duties or responsibilities except those expressly set forth in the Loan
Documents, and shall not by reason of any Loan Document be a trustee or
fiduciary for any Bank; (iii) shall not be required to initiate any
litigation or collection proceedings under any Loan Document except to the
extent requested by Required Banks; (iv) shall not be responsible to the
Banks for any recitals, statements, representations or warranties
contained in any Loan Document, or any certificate or other documentation
referred to or provided for in, or received by any of them under, any Loan
Document, or for the value, validity, effectiveness, enforceability, or
sufficiency of any Loan Document or any other documentation referred to or
provided for therein or for any failure by any Person to perform any of
its obligations thereunder; (v) may consult with legal counsel (including
counsel for the Borrower), independent public accountants, and other
experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of
such counsel, accountants, or experts; and (vi) shall incur no liability
under or in respect of any Loan Document by acting upon any notice,
consent, certificate, or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties. As to any
matters not expressly provided for by any Loan Document, the
Administrative Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder in accordance with instructions
signed by Required Banks, and such instructions of Required Banks and any
action taken or failure to act pursuant thereto shall be binding on all of
the Banks; provided, however, that the Administrative Agent shall not be
required to take any action which exposes it to personal liability or
which is contrary to any Loan Document or applicable law.
Section 15A.2 Rights of Administrative Agent as a Bank. With
respect to its Commitment, the Loans made by it and the Note issued to it,
BankBoston, N.A. (and any successor acting as Administrative Agent) in its
capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were
not acting as the Administrative Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include the Administrative
Agent in its individual capacity. The Administrative Agent and its
Affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to, act as trustee under indentures of, provide
merchant banking services to, and generally engage in any kind of banking,
trust, or other business with Holding, any Subsidiaries, any Obligated
Party, and any other Person who may do business with or own securities of
Holding, any Subsidiary, or any Obligated Party, all as if it were not
acting as the Administrative Agent and without any duty to account
therefor to the Banks.
Section 15A.3 Defaults. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of a Default (other
than the failure to deliver Borrowing Base Reports as required herein)
unless the Administrative Agent has received notice from a Bank or the
Borrower specifying such Default and stating that such notice is a "Notice
of Default."
Section 15A.4 Indemnification. THE BANKS HEREBY AGREE TO
INDEMNIFY THE ADMINISTRATIVE AGENT FROM AND HOLD THE ADMINISTRATIVE AGENT
HARMLESS AGAINST, RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE COMMITMENT
PERCENTAGES, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE
ADMINISTRATIVE AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ITS ROLE AS
ADMINISTRATIVE AGENT OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE
ADMINISTRATIVE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS;
PROVIDED, THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO
THE EXTENT CAUSED BY THE ADMINISTRATIVE AGENT'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE
EXPRESS INTENTION OF THE BANKS THAT THE ADMINISTRATIVE AGENT SHALL BE
INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), AND
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE
ADMINISTRATIVE AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF THIS
SECTION, EACH BANK AGREES TO REIMBURSE THE ADMINISTRATIVE AGENT PROMPTLY
UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF THE
COMMITMENT PERCENTAGES) OF ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING
ATTORNEYS' FEES) INCURRED BY THE ADMINISTRATIVE AGENT IN CONNECTION WITH
THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION,
AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS,
OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES
UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE ADMINISTRATIVE AGENT IS
NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section 15A.5 Independent Credit Decisions. Each Bank
agrees that it has independently and without reliance on the
Administrative Agent, and based on such documentation and information as
it has deemed appropriate, made its own credit analysis of the Borrower
and decision to enter into any Loan Document and that it will,
independently and without reliance upon the Administrative Agent, and
based upon such documents and information as it shall deem appropriate at
the time, continue to make its own analysis and decisions in taking or not
taking action under any Loan Document. Except as otherwise specifically
set forth herein, the Administrative Agent shall not be required to keep
itself informed as to the performance or observance by the Borrower or any
Obligated Party of any Loan Document or to inspect the properties or books
of the Borrower or any Obligated Party. Except for notices, reports and
other documents and information expressly required to be furnished to the
Banks by the Administrative Agent hereunder or under the other Loan
Documents, the Administrative Agent shall not have any duty or
responsibility to provide any Bank with any credit or other financial
information concerning the affairs, financial condition or business of the
Borrower or any Obligated Party (or any of their Affiliates) which may
come into the possession of the Administrative Agent or any of its
Affiliates.
Section 15A.6 Successor Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice
thereof to the Banks and the Borrower and the Administrative Agent may be
removed at any time by Required Banks if it has breached its obligations
under the Loan Documents. Upon any such resignation or removal, Required
Banks will have the right to appoint a successor Administrative Agent. If
no successor Administrative Agent shall have been so appointed by Required
Banks and shall have accepted such appointment within thirty (30) days
after the retiring Administrative Agent's giving of notice of resignation
or the Required Banks' removal of the retiring Administrative Agent, then
the retiring Administrative Agent may, on behalf of the Banks, appoint a
successor Administrative Agent, which shall be a commercial bank organized
under the laws of the United States of America or any State thereof and
having combined capital and surplus of at least One Hundred Million
Dollars ($100,000,000). Upon the acceptance of its appointment as
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all rights, powers,
privileges, immunities, contractual obligation, and duties of the
resigning or removed Administrative Agent, and the resigning or removed
Administrative Agent shall be discharged from its duties and obligations
under the Loan Documents. After any Administrative Agent's resignation or
removal as Administrative Agent, the provisions of this Article 15A shall
continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was the Administrative Agent.
Section 15A.7 Administrative Agent Fee. The Borrower shall pay
to the Administrative Agent on April 22, 1998, a fee in the amount of
$21,000 for the period through September 30, 1998, and in the amount of
$3,500 per month thereafter, payable in advance on the first Business Day
of each month commencing on October 1, 1998, and all other normal and
customary fees and expenses of the Administrative Agent in connection with
the performance of its duties hereunder.
Section 2.26 Amendment of Section 16.8. Section 16.8 of the
Credit Agreement is hereby amended by deleting clauses (i) and (ii) of the
proviso and replacing them in their entirety with the following:
(i) the parties to each such assignment shall execute and deliver to
the Agent for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance, together with the Notes
subject to such assignment, and, except in the event of an assignment
to an Eligible Assignee that is an Affiliate of the Bank that is the
assignor, a processing and recordation fee of Three Thousand Dollars
($3,000) payable by the assignor or assignee (and not the Borrower);
(ii) except in the event of an assignment to an Eligible Assignee
that is an Affiliate of the Bank that is the assignor, the Borrower
and the Agent must consent to such assignment, which consent shall
not be unreasonably withheld, with such consents to be evidenced by
the Borrower's and the Agent's execution of the Assignment and
Acceptance; provided, however, that in the event of the occurrence of
an Event of Default, the consent of the Borrower shall not be
required; and
Section 2.27 Amendment of Section 16.11. Section 16.11 of the
Credit Agreement is hereby amended by deleting the "or" immediately
preceding clause (h), by deleting the period at the end of clause (h) and
replacing it with "; or" and by adding the following new clause (i):
(i) amend or waive compliance with any covenant contained in
Article 13.
Section 2.28 Exhibits. Exhibit E of the Credit Agreement is
hereby amended by deleting it and replacing it in its entirety with the
Exhibit which is annexed hereto as Exhibit A. Annexed hereto as Exhibit B
is new Exhibit X to the Credit Agreement which is referred to in the
definition of "Interest Deferral Notes." Annexed hereto as Exhibit C is
new Exhibit Y to the Credit Agreement which is referred to in the new
definition of "Revolving Commitment."
ARTICLE 3
Waiver
Section 3.1 Waiver of Existing Defaults. Subject to the terms and
conditions contained in this Amendment, the Agent and the Banks waive the
Existing Defaults and agree not to exercise any rights or remedies arising
as a result thereof. The waiver specifically described in this Section
3.1 shall not constitute and shall not be deemed a waiver of any Default
or Event of Default arising after the effectiveness of this Amendment or a
waiver of any rights or remedies arising as a result of such a Default or
Event of Default.
ARTICLE 4
Conditions
Section 4.1 Conditions Precedent. The effectiveness of this
Amendment including, without limitation, the waivers provided in Section
3.1 hereof, is subject to the satisfaction of the following conditions
precedent:
(a) The Agent shall have received confirmation satisfactory to
the Agent that Rice Partners shall have advanced to the Borrower the
entire principal amount of the Priority Senior Subordinated Loan, and
the Priority Senior Subordinated Loan Documents shall be in form and
substance satisfactory to the Agent.
(b) The Agent shall have received an amendment to the Note
Purchase Agreement in the form of Exhibit D hereto (the "Subdebt
Amendment") and an amendment to the Senior Subordination Agreement in
the form of Exhibit E hereto (the "Subordination Amendment") each
executed by the respective parties thereto. For purposes of any
restriction set out in the Senior Subordination Agreement, each Bank
and the Agent consents, for the benefit of Borrower, Holding and the
holders of the Subordinated Notes, to the execution and delivery of
the Subdebt Amendment.
(c) The representations and warranties contained herein and in
all other Loan Documents, as amended hereby, shall be true and
correct as of the date hereof as if made on the date hereof except to
the extent such representations and warranties expressly relate
solely to another date;
(d) After giving effect to this Amendment, no Default or Event
of Default shall exist;
(e) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments, and
other legal matters incident thereto, including, without limitation,
the Priority Senior Subordinated Loan Documents, shall be reasonably
satisfactory to Agent and its legal counsel, Weil, Gotshal & Xxxxxx
LLP;
(f) All holders of any warrants (or shares issued in respect of
such warrants) or similar instruments issued (or to be issued) by
Holding or Borrower shall have agreed not to exercise any rights to
require Holding or Borrower to purchase or otherwise acquire such
warrants (or shares issued in respect of such warrants) or similar
instruments as long as any Obligations are outstanding;
(g) Delivery of Interest Deferral Notes. Borrower shall have
executed and delivered to each Bank an Interest Deferral Note in the
respective amount and to the extent required by Section 6.3 of the
Credit Agreement;
(h) Holding and the Borrower shall have paid all fees and
expenses of Agent and the Banks incurred in the preparation,
negotiation and execution of this Amendment, subject to the
limitation set forth in Section 6.3 hereof;
(i) The Agent shall have received favorable opinions of
counsel for each of Holding and the Borrower in form and substance
satisfactory to the Agent; and
(j) The Agent shall have received confirmation satisfactory to
the Agent that Rice Partners has made a $250,000 equity investment in the
Borrower or Holding prior to the date hereof.
Section 4.2 Restructuring Fee. On or before February 28, 1999,
the Borrower shall pay to the Agent for the benefit of the Banks a
restructuring fee of $125,000. Borrower and Holding agree that the failure
to pay such restructuring fee as provided herein shall constitute an
immediate Event of Default under the Credit Agreement.
ARTICLE 5
Ratifications, Representations and Warranties, Release
Section 5.1 Ratifications. The terms and provisions set forth in
this Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Credit Agreement. The terms and provisions of
the Credit Agreement, as amended and modified by this Amendment and the
terms and provisions of the other Loan Documents are ratified and
confirmed and shall continue in full force and effect. Borrower, Holding,
Agent and each Bank agree that the Credit Agreement, as amended hereby,
and the other Loan Documents shall continue to be legal, valid, binding
and enforceable in accordance with their respective terms. Without in any
way limiting any of the foregoing, Holding hereby ratifies and confirms
all of the terms and provisions of the Holding Guaranty and the Holding
Security Agreement, and Borrower hereby ratifies and confirms all of the
terms and provisions of the Borrower Security Agreement.
Section 5.2 Representations and Warranties. Borrower and Holding
represent and warrant to Agent and each Bank that (i) the execution,
delivery and performance of this Amendment and all documents required
hereby or related hereto have been authorized by all requisite action on
the part of Borrower and Holding and will not violate the articles of
incorporation, bylaws or any similar governing document of any such
parties, (ii) the representations and warranties contained in the Credit
Agreement, as amended hereby, and any other Loan Document are true and
correct on and as of the date hereof as though made on and as of the date
hereof except to the extent those representations and warranties expressly
relate solely to another date, and (iii) Borrower and Holding are in full
compliance with all covenants, agreements, terms and provisions contained
in the Credit Agreement, as amended hereby, and the other Loan Documents.
Section 5.3 RELEASE. EACH OF BORROWER AND HOLDING 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 OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR
NATURE FROM THE AGENT OR THE BANKS. EACH OF BORROWER AND HOLDING, FOR
ITSELF AND ITS SUBSIDIARIES AND EACH OF ITS SUCCESSORS, ASSIGNS,
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS, CONSULTANTS
AND ADVISORS OF OR TO ANY OF THE FOREGOING (COLLECTIVELY, THE "RELEASORS")
HEREBY ACQUITS, WAIVES, RELEASES AND DISCHARGES THE AGENT, EACH BANK AND
EACH OF THEIR RESPECTIVE SUCCESSORS, ASSIGNS, AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS, CONSULTANTS AND ADVISORS OF OR TO
ANY OF THE FOREGOING (COLLECTIVELY, THE "RELEASEES"), OF AND FROM ANY AND
ALL CLAIMS (INCLUDING, WITHOUT LIMITATION, ANY LIABILITIES, DAMAGES,
DEMANDS AND CAUSES OF ACTION TO THE EXTENT ARISING THEREFROM) WHATSOEVER,
IN LAW OR IN EQUITY, WHETHER KNOWN OR UNKNOWN, WHICH THE RELEASORS EVER
HAD, NOW HAVE, OR HEREINAFTER CAN, SHALL OR MAY HAVE AGAINST ANY RELEASEE
BY REASON OF ANY MATTER ARISING OUT OF OR RELATED TO THE CREDIT AGREEMENT,
THE OTHER LOAN DOCUMENTS, AND ANY AND ALL OTHER ACTIONS OR OMISSIONS
RELATING IN ANY WAY THERETO, IN EACH CASE LIMITED TO THE EXTENT
ORIGINATING PRIOR TO THIS AMENDMENT BECOMING EFFECTIVE.
ARTICLE 6
Miscellaneous
Section 6.1 Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Loan
Document shall survive the execution and delivery of this Amendment and
the other Loan Documents, and no investigation by Agent or any Bank, or
any closing shall affect the representations and warranties or the right
of Agent and the Banks to rely upon them.
Section 6.2 Reference to Agreement. Each of the Loan Documents,
including the Credit Agreement 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 Credit Agreement as
amended hereby, are hereby amended so that any reference in such Loan
Documents to the Credit Agreement shall mean a reference to the Credit
Agreement as amended hereby.
Section 6.3 Expenses of Agent and Banks. As provided in the
Credit Agreement, Borrower agrees to pay on demand all reasonable out-of-
pocket costs and expenses incurred by Agent and the Banks in connection
with the preparation, negotiation, and execution of this Amendment
(including attorneys' fees and expenses), such amount not to exceed
$150,000, in addition to amounts already paid.
Section 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.
Section 6.5 Applicable Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of Texas.
Section 6.6 Successors and Assigns. This Amendment is binding
upon and shall inure to the benefit of Agent, the Banks, Borrower and
Holding and their respective successors and assigns, except neither
Borrower nor Holding may assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Banks.
Section 6.7 Counterparts. This Amendment may be executed in one
or more counterparts and on telecopy counterparts, each of which when so
executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same agreement.
Section 6.8 Effect of Waiver. No consent or waiver, express or
implied, by Agent or any Bank to or for any breach of or deviation from
any covenant, condition or duty by Borrower or Holding shall be deemed a
consent or waiver to or of any other breach of the same or any other
covenant, condition or duty.
Section 6.9 Headings. The headings, captions, and arrangements
used in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 6.10 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION
WITH THIS AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO
THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
BORROWER and HOLDING:
JOTAN, INC.
SOUTHLAND CONTAINER PACKAGING CORP., formerly Southland Holding Company
and successor in interest to SHC Acquisition Corp. and each Obligated
Party (other than Holding)
By:______________________________________
Xxxxxx X. Xxxxxxxx,
Vice President and Chief Financial
Officer for both companies
AGENT:
BANQUE PARIBAS, as Agent and as a Bank
By:______________________________________
Name:_______________________________
Title:______________________________
By:______________________________________
Name:_______________________________
Title:______________________________
BANKS:
BANKBOSTON, N.A., formerly The First
National Bank of Boston
By:______________________________________
Name:_______________________________
Title:______________________________
ANTARES LEVERAGED CAPITAL CORP
By:______________________________________
Name:_______________________________
Title:______________________________
BHF-BANK AKTIENGESELLSCHAFT
By:______________________________________
Name:_______________________________
Title:______________________________
By:______________________________________
Name:_______________________________
Title:______________________________
CREDITANSTALT AG, formerly known as
CREDITANSTALT-BANKVEREIN
By:______________________________________
Name:_______________________________
Title:______________________________
By:______________________________________
Name:_______________________________
Title:______________________________
STATE OF GEORGIA Section
Section
COUNTY OF Section
This instrument was acknowledged before me on ______________,
1998, by Xxxxxx X. Xxxxxxxx, Vice President and Chief Financial Officer of
Jotan, Inc., on behalf of said corporation.
_________________________________
Notary Public, State of Georgia
Commission Expires:______________
Printed Name:____________________
STATE OF GEORGIA Section
Section
COUNTY OF Section
This instrument was acknowledged before me on ______________,
1998, by Xxxxxx X. Xxxxxxxx, Vice President and Chief Financial Officer of
Southland Container Packaging Corp., on behalf of said corporation.
_________________________________
Notary Public, State of Georgia
Commission Expires:______________
Printed Name:____________________
