THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as
of August 19, 1997, 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, 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 and that certain Second Amendment to Credit Agreement dated
as of June 20, 1997, herein 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 interest
under the Credit Agreement and the other Loan Documents to the other Banks
party hereto 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.
E. Borrower has advised Agent that Events of Default (as defined in
the Credit Agreement) have occurred under subsections 14.1(c) and 14.1(j)
of the Credit Agreement as a result of the following (the "Existing
Defaults"): (i) the Borrower's failure to comply with the covenants set
forth in Sections 13.2, 13.3, 13.5 and 13.6 of the Credit Agreement each
as of June 30, 1997 and for the relevant period then ending (the "Violated
Covenants") and (ii) the occurrence of an event of default under the
Subordinated Loan Documents.
F. In accordance with the Agreement, the Borrower has requested
that the Agent and the Banks waive the Existing Defaults. The Banks have
agreed to do so subject to and on the terms 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. The definition of
"Revolving Commitment" in Section 1.1 of the Credit Agreement is amended
in its entirety to read as follows:
"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 the following, as the same may be reduced or
terminated pursuant to Section 2.6, Section 7.4, Section 8.7 or
Section 14.2:
(a) the amount set forth opposite the name of such
Bank on the signature pages hereto under the heading
"Revolving Commitment"; or
(b) if applicable, the amount set forth on the Bank's
most recent Assignment and Acceptance as its Revolving
Commitment; or
(c) if the amount of a Bank's Revolving Commitment is
determined at any time during the period from August 19,
1997 through March 31, 1998, an amount equal to the Bank's
Commitment Percentage (calculated based on the Revolving
Commitments only without regard to this clause (c)) of Nine
Million Dollars ($9,000,000).
The aggregate amount of the Revolving Commitments of all Banks equals
(a) from the Closing Date through August 19, 1997, Twelve Million
Dollars ($12,000,000); (b) from August 19, 1997, through March 31,
1998, Nine Million Dollars ($9,000,000), and (c) from April 1, 1998,
through the Revolving Termination Date, Twelve Million Dollars
($12,000,000).
Section 2.2 Amendment to Section 3.1. The first sentence of Section
3.1 is deleted in its entirety. As a result and as of the date hereof,
the commitment of the Banks to make Acquisition Loans is hereby
terminated.
Section 2.3 Amendment to Section 11.1. The phrase ", as of the end
of each Fiscal Quarter," is hereby deleted from clause (c) of Section 11.1
of the Credit Agreement.
Section 2.4 Amendments to Article 13.
(a) Sections 13.2 and 13.3 of the Credit Agreement are amended
by deleting the phrase "the Closing Date" and replacing it with the
phrase "June 30, 1997" wherever appearing in such Sections.
(b) Section 13.2 and 13.3 of the Credit Agreement are amended
by deleting the phrase "(beginning with the Fiscal Quarter ending
June 30, 1997)" and replacing it with the phrase "(beginning with the
Fiscal Quarter ending September 30, 1997)".
(c) The "9/30/97" date set forth in the chart in Section 13.2
of the Credit Agreement is amended to be "12/31/97" and the "10/1/97"
date in such chart is amended to be "1/1/98".
(d) Part (A) of the definition of "Fixed Charges" in Section
13.3 of the Credit Agreement is amended to read in its entirety as
follows: "(A) interest expense but excluding any interest expense
satisfied or required to be satisfied with the delivery of additional
Subordinated Notes (the "PIK Notes") and including any principal
payments on such PIK Notes made during the period in question;"
(e) The following sentence is added as the first sentence of
Section 13.5 of the Credit Agreement:
As of each month end set forth below, Holding shall not
permit EBITDA for the period from and excluding June 30, 1997
through the month then ending to be less than the Dollar amount
set forth below for such period and month end:
Month Ending Dollar Amount
------------ -------------
7/31/97 $ 350,000
8/31/97 $ 875,000
9/30/97 $1,250,000
10/31/97 $1,625,000
11/30/97 $2,100,000
12/31/97 $2,500,000
1/31/98 $2,750,000
2/28/98 $3,000,000
3/31/98 $3,500,000
The phrase "(or portion thereof since the Closing Date)" is deleted
from the existing first sentence of Section 13.5 of the Credit Agreement
and the first four lines of the existing chart in Section 13.5 of the
Credit Agreement are deleted.
(f) Section 13.6 of the Credit Agreement is amended by (i)
adding the phrase "on or after September 30, 1997," immediately after
the phrase "Holding will at all times", (ii) deleting the phrase
"Twelve Million Dollars ($12,000,000)" and replacing it with the
phrase "Eleven Million Dollars ($11,000,000)", (iii) amending the
phrase "the Closing Date" as used in clause (b) thereof to be June
30, 1997 and (iv) amending the phrase "the Closing Date" as used in
clause (c) to be September 30, 1997.
Section 2.5 Amendments to Compliance Certificate. Exhibit "L" to
the Credit Agreement, the Compliance Certificate, is amended by (i)
inserting the phrase "excluding interest paid with the delivery of
additional Subordinated Notes" immediately after the phrase "interest
paid" in part 9(b)(i), and (ii) deleting the phrase "$12,000,000" in part
12(a) and replacing it with the phrase "$11,000,000".
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 other
Default or Event of Default, whether arising as a result of the further
violation of the Violated Covenants or otherwise, or a waiver of any
rights or remedies arising as a result of such other Defaults or Events of
Default. The failure to comply with the Violated Covenants for any date,
or any period ending on any date, other than as described above in the
definition of Existing Defaults shall constitute an Event of Default.
ARTICLE 4
Conditions Precedent
Section 4.1 Conditions. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent:
(a) Agent shall have received an amendment to the Note Purchase
Agreement in the form of Exhibit A hereto (the "Subdebt Amendment")
executed by Borrower, Holding and each holder of the Subordinated
Notes and, for purposes of any restriction set out in the Senior
Subordination Agreement, each Bank and Agent consents, for the
benefit of Borrower, Holding and the holders of the Subordinated
Notes, to the execution and delivery of the Subdebt Amendment.
(b) Each Bank shall have received from Borrower an amendment
fee in immediately available funds in an amount equal to such Bank's
Commitment Percentage of $36,000;
(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) No Default nor Event of Default (other than the Existing
Defaults) shall have occurred and be continuing; and
(e) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments, and
other legal matters incident thereto shall be reasonably satisfactory
to Agent and its legal counsel, Jenkens & Xxxxxxxxx, a Professional
Corporation.
ARTICLE 5
Ratifications, Representations and Warranties, Covenants
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 and except as expressly
modified and superseded by this Amendment the terms and provisions of the
Credit Agreement and 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.
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, (ii) except with respect to the Existing
Defaults, no Default or Event of Default has occurred and is continuing,
and (iv) Borrower and Holding are in full compliance with all covenants
and agreements contained in the Credit Agreement, as amended hereby, and
the other Loan Documents. BORROWER AND HOLDING REPRESENT AND WARRANT THAT
AS OF THE DATE OF ITS EXECUTION OF THIS AMENDMENT THERE ARE NO CLAIMS OR
OFFSETS AGAINST OR DEFENSES OR COUNTERCLAIMS TO ITS OBLIGATIONS UNDER THE
LOAN DOCUMENTS AND IN ACCORDANCE THEREWITH IT WAIVES ANY AND ALL SUCH
CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN,
ARISING PRIOR TO THE DATE OF ITS EXECUTION OF THIS AMENDMENT.
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. As provided in the Credit
Agreement, Borrower agrees to pay on demand all reasonable out-of-pocket
costs and expenses incurred by Agent in connection with the preparation,
negotiation, and execution of this Amendment.
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: /s/ Xxxxx Xxxxxxxx
Xxxxx 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:_______________________________________
