PROMISSORY NOTE
$10,000,000 subject to
adjustment
May 30, 1996
For value received, the undersigned, FLORIDA COAST PAPER
COMPANY, L.L.C., a Delaware limited liability company ("Maker"),
promises to pay to St. Joe Forest Products Company, a Florida
corporation ("Payee"), or order, the principal amount of TEN
MILLION DOLLARS ($10,000,000.00), plus all amounts added to the
principal amount hereof pursuant to the proviso at the end of this
sentence, and to pay interest on such principal amount from the
date hereof until but not including the date of payment at the rate
of thirteen and one-quarter percent (13 1/4%) per annum, such
interest to be payable quarterly in arrears on the 1st day of
March, June, September and December of each year, commencing
September 1, 1996 (each, an "Interest Payment Date"); provided,
that the interest due on any Interest Payment Date may, at the
option of Maker, be added to the outstanding principal amount of
this Promissory Note and shall accrue interest thereon from and
after such Interest Payment Date. Maker shall be deemed to have
exercised such option unless Maker shall give written notice to
Payee at least five but no more than 30 days in advance of an
Interest Payment Date of Maker's intention to pay interest due on
such Interest Payment Date in cash. This Promissory Note shall
mature on June 1, 2007, at which time all principal and interest
shall be due and payable. Interest shall be calculated on the
basis of a 360 day year. Maker shall pay interest (including post-
petition interest in any proceeding under any applicable Bankruptcy
Law) on overdue principal at the rate equal to 1% per annum in
excess of the rate set forth above to the extent lawful.
Maker shall make each cash payment hereunder not later than
12:00 noon (Eastern time) on the day when due (or if such day is a
Saturday, Sunday or other day on which commercial banks in New York
City are authorized or required by law to close, on the next
succeeding day which is not such a day) in lawful money of the
United States of America and in immediately available funds, by
wire transfer to such account as Payee may designate from time to
time.
If any of the following events ("Events of Default") shall
have occurred and be continuing:
(a) default for thirty (30) days in the payment, when due, of
any installment of interest on this Promissory Note;
(b) default in the payment, when due, of the principal of
this Promissory Note;
(c) failure of the Maker for 30 days after notice to comply
with any of the covenants under the heading "Special Covenants"
below; provided such notice requirement shall not apply to
paragraphs (e), (f) or (g) thereunder;
(d) failure by Maker for thirty (30) days after notice from
Payee to comply with any of Maker's other covenants and agreements
set forth in this Promissory Note;
(e) the occurrence of any "Event of Default" as defined in
the Indenture of even date herewith among Maker and Norwest Bank
Minnesota, N.A., trustee, as in effect on the date hereof (the
"Indenture");
(f) Maker or any Significant Subsidiary or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary (i) commences a voluntary case under Title 11, U.S. Code
or any similar federal or state law for the relief of debtors (a
"Bankruptcy Law"), (ii) consents to the entry of an order for
relief against it in a involuntary case under a Bankruptcy Law,
(iii) consents to the appointment of a custodian of it or for all
or substantially all of its property, (iv) makes a general
assignment for the benefit of its creditors, or (v) generally is
not paying its debts as they become due; or
(g) a court of competent jurisdiction enters an order or
decree under Bankruptcy Law that (i) is for relief against Maker or
any Significant Subsidiary, or group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary, in an
involuntary case, (ii) appoints a custodian of Maker or any
Significant Subsidiary, or group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary, or for all or
substantially all of its property, or (iii) orders the liquidation
of Maker or any Significant Subsidiary, or group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary,
and the order or decree remains unstayed and in effect for sixty
(60) consecutive days,
then Payee may declare the unpaid principal amount of this
Promissory Note, together with all interest accrued thereon, to be
immediately due and payable. Notwithstanding the foregoing, in the
case of an Event of Default specified in clause (f) or clause (g)
above, this Promissory Note will become immediately due and payable
without further action by or notice from Payee. The ability of
Payee to enforce this Promissory Note is subject to the terms and
provisions of this Promissory Note, including, without limitation,
the terms and provisions of the immediately following paragraphs.
Maker may not make any cash payment upon or in respect of this
Promissory Note if (i) a default in the payment of the principal
of, premium, if any, or interest on any indebtedness of Maker with
respect to the Senior Secured Notes (including any refinancing
thereof, provided that the amount of such refinancing shall not
exceed the principal amount of the Senior Secured Notes that is
refinanced plus applicable fees charged or incurred in connection
with such refinancing) ("Senior Debt") occurs and is continuing
beyond any applicable period of grace; or (ii) any other default
occurs and is continuing with respect to any Senior Debt that
permits, or that with the giving of notice or the passage of time
would permit, holders of such Senior Debt to accelerate its
maturity; or (iii) such payment would constitute a default with
respect to any Senior Debt that permits, or that with the giving of
notice or the passage of time would permit, holders of such Senior
Debt to accelerate its maturity. Payments on this Promissory Note
may and shall be resumed upon the date on which such default is
cured or waived, unless the maturity of any Senior Debt has been
accelerated.
Upon (i) any acceleration of the principal amount of this
Promissory Note because of an Event of Default, or (ii) any
distribution of assets of Maker upon any dissolution, winding up,
or liquidation of Maker:
(1) the holders of all Senior Debt shall first be
entitled to receive in full all amounts (including
interest) due thereon before the holder of this
Promissory Note is entitle to receive payment on
account of the principal of or interest on this
Promissory Note;
(2) any payment or distribution of assets of Maker of
any kind or character, whether in cash, property or
securities (other than securities of Maker or of
any other corporation or limited liability company
provided for by a plan or reorganization or
readjustment, the payment of which is subordinated,
at least to the same extent as provided in this
Promissory Note, to the payment in full without
diminution or modification by such plan of all
Senior Debt) to which the holder of this Promissory
Note would be entitled except for the provisions of
this Promissory Note shall be paid by the
liquidating trustee, agent or other person making
such payment or distribution directly to the
holders of Senior Debt to the extent necessary to
pay in full all Senior Debt remaining unpaid after
giving effect to any concurrent payment or
distribution to the holders of such Senior Debt;
and
(3) in the event that, notwithstanding the foregoing,
any payment or distribution of assets of Maker of
any kind or character (other than securities of
Maker or of any other corporation or limited
liability company provided for by a plan of
reorganization or readjustment, the payment of
which is subordinated, at least to the same extent
as provided in this Promissory Note, to the payment
in full without diminution or modification by such
plan of all Senior Debt) shall be received by the
holder of this Promissory Note with actual
knowledge that such payment is prohibited hereby or
is required to be paid over to the holders of
Senior Debt before all Senior Debt is paid in full,
such payment or distribution shall be held in trust
for the benefit of, and shall be paid over to, the
holders of Senior Debt remaining unpaid (or to the
representatives or trustees acting on their behalf)
until all such Senior Debt shall have been paid in
full, after giving effect to any concurrent payment
or distribution to the holders of such Senior Debt.
Subject to the payment in full of all Senior Debt, the holder of
this Promissory Note shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of
cash, property or securities of Maker applicable to the Senior Debt
until the principal of and all interest accrued on this Promissory
Note shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of Senior Debt which
otherwise would have been payable or distributable to the holder of
this Promissory Note shall, as between Maker, its creditors other
than the holders of Senior Debt, and the holder of this Promissory
Note, be deemed to be a payment by Maker to or on account of the
Senior Debt, it being understood that the provisions of this
Promissory Note dealing with subordination are and are intended
solely for the purpose of defining the relative rights of the
holder of this Promissory Note, on the one hand, and the holders of
Senior Debt, on the other hand and shall not impair, as between the
Maker and the Payee, the obligations of Maker, which are absolute
and unconditional, to pay principal and interest in accordance with
the terms hereof.
Special Covenants
Maker hereby covenants and agrees with Payee that, so long as
any principal of or accrued interest on this Promissory Note
remains unpaid, Maker will comply with the following covenants:
(a) Simultaneously with the delivery thereof to the Holders
of Senior Secured Notes, but in any event within 10 days of the
filing thereof with the SEC, Maker shall deliver to Payee one copy
of all financial information and other reports required to be
delivered to the Holders of Senior Secured Notes pursuant to
section 4.03 of the Indenture.
(b) Simultaneously with the delivery thereof to the Holders
of Senior Secured Notes, Maker shall deliver to Payee one copy of
all certificates and statements required to be delivered pursuant
to Section 4.04 of the Indenture.
(c) Neither Maker nor any of its Subsidiaries shall, directly
or indirectly, create, incur, assume or suffer to exist any Lien on
any asset acquired by Maker or any of its Subsidiaries pursuant to
that certain Asset Purchase Agreement dated as of November 1, 1995
among Maker, Payee and certain other parties, or any income or
profits therefrom or assign or convey any right to receive income
therefrom, except Liens referred to in clauses (i), (ii), (ix) and
(x) of the definition of Permitted Liens.
(d) Maker will permit any authorized representatives
designated by Payee, at the sole cost and expense of Payee, to
visit and inspect any of the properties and records of Maker,
including its financial records, and to discuss Maker's affairs and
finances with its officers and employees, all upon reasonable
notice and as often as may be reasonably requested.
(e) Maker and its Restricted Subsidiaries shall comply with
Section 4.07 of the Indenture provided that, for purposes hereof,
the definition of Disqualified Stock shall be amended to change the
words "the Senior Secured Notes mature" at the end thereof to read
"this Promissory Note matures".
(f) Neither Maker nor any of its Subsidiaries will permit any
assets securing the Senior Secured Notes to secure any other
Indebtedness unless this Promissory Note is paid in full; provided
that the foregoing shall not prohibit Maker and its Subsidiaries
from permitting such assets to secure any Indebtedness incurred to
refinance the Senior Secured Notes provided that the amount of such
Indebtedness so secured shall not exceed the principal amount of
the Senior Secured Notes that is refinanced plus any applicable
fees charged or incurred in connection with such refinancing.
(g) In the event that the Company shall be required to
commence an offer to all Holders to repurchase the Senior Secured
Notes pursuant to Section 4.10 of the Indenture, the Company, to
the extent not prohibited by the Indenture, shall make a similar
offer to repurchase this Promissory Note to the Payee in
substantially the manner provided in Section 3.09 of the Indenture
with respect to a Repurchase Offer; provided that the offer to
repurchase this Promissory Note shall be at the amount of the then
outstanding principal plus accrued interest to the date of such
repurchase, and provided that any such offer to repurchase shall be
limited to the amount by which the Excess Proceeds exceed the
aggregate amount required to be paid to the Holders of Senior
Secured Notes who accept the Repurchase Offer pursuant to
Section 4.10.
For purposes hereof this Promissory Note, the terms
"Bankruptcy Laws," "Excess Proceeds," "Excess Proceeds Offer,"
"Holders," "Disqualified Stock," "Indebtedness," "Permitted Liens,"
"Restricted Subsidiary," "SEC", "Senior Secured Notes,"
"Significant Subsidiary," and "Subsidiary" shall have the
respective meanings set forth in the Indenture.
This Promissory Note may be repaid by Maker, in whole or in
part, at any time and from time to time, without penalty or
premium, upon at lease one (1) day's prior written notice to Payee.
Maker waives presentment, demand, protest and, except as
expressly set forth in this Promissory Note, notice thereof or of
dishonor.
Maker agrees to pay all costs and expenses, including without
limitation reasonable attorney's fees, incurred in connection with
the interpretation or enforcement of this Promissory Note. None of
the provisions hereof and none of Payee's rights or remedies
hereunder on account of any past or future defaults shall be deemed
to have been waived by Payee's acceptance of any past due
installments or by any indulgence granted by Payee to Maker.
This Promissory Note has been executed and delivered in and
shall be construed and interpreted in accordance with and governed
by the laws of the State of Florida.
IN WITNESS WHEREOF, Maker has caused this Promissory Note to
be duly executed the day and year first above written.
FLORIDA COAST PAPER COMPANY, L.L.C.
(a Delaware limited liability company)
By: /s/ Mary B. Dopslaff
Name: Mary B. Dopslaff
Title: Vice President