EXHIBIT 10.7
EXECUTION COPY
FOURTH AMENDMENT TO CREDIT AGREEMENT
This Fourth Amendment to Credit Agreement (this "Amendment") is
entered into as of June 3, 2002 among (i) CARAUSTAR INDUSTRIES, INC. (the
"Borrower"), (ii) the subsidiaries of the Borrower identified as Guarantors on
the signature pages hereto, (iii) the Lenders identified on the signature pages
hereto and (iv) BANK OF AMERICA, N.A., as Administrative Agent (the
"Administrative Agent"). All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Credit Agreement
referred to below.
RECITALS
A. A Credit Agreement dated as of March 29, 2001 (as amended by
that certain First Amendment to Credit Agreement dated as of September 10,
2001, that certain Second Amendment to Credit Agreement dated as of November
30, 2001 and that certain Third Amendment to Credit Agreement dated as of
January 22, 2002 and as further modified or amended from time to time, the
"Credit Agreement") has been entered into by and among the Borrower, the
Guarantors party thereto (the "Guarantors"), the financial institutions party
thereto (the "Lenders") and the Administrative Agent.
B. The Borrower has requested, and the Required Lenders have
agreed to, an amendment of the terms of the Credit Agreement as set forth
below.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Section 1.1 of the Credit Agreement. Section 1.1
of the Credit Agreement is hereby amended by adding the following definitions
in appropriate alphabetical order:
(a) "Collateral" means all the accounts receivable and inventory
of the Credit Parties, now existing or hereafter acquired and
with respect to which Liens in favor of the Administrative
Agent are purported to be granted, effective as of the
Collateral Effective Date, pursuant to and in accordance with
the terms of the Collateral Documents.
(b) "Collateral Documents" means a collective reference to the
Security Agreement and all financing statements and/or other
documents reasonably requested by the Administrative Agent to
create and/or perfect its security interest, for the benefit
of the secured parties referred to therein, in the Collateral
of the Credit Parties.
(c) "Collateral Effective Date" means the first date upon which
(i) the quotient of (a) the aggregate principal amount as of
such date of (x) all outstanding Loans and (y) all
outstanding L/C Obligations divided by (b) the Aggregate
Revolving Credit Commitment as of such date is greater than
or equal to 50% and (ii) the ratio of (a) Total Debt as of
such date to (b) EBITDA (measured for the period of four (4)
consecutive fiscal quarters ending as of the last day of the
most recently ended fiscal quarter for which the
Administrative Agent has received the financial statements
and Officer's Compliance Certificate required to be delivered
pursuant to Section 7.1(a) or (b) and Section 7.2 of the
Credit Agreement, as appropriate) is greater than 4.25 to
1.0; provided that, for purposes of calculating the ratio of
Total Debt to EBITDA as contemplated by clause (ii)(b) above
and in any Officer's Compliance Certificate, EBITDA for any
period during which Historical JS Industrial Packaging Group
EBITDA is applicable shall be calculated after giving effect
to the JS Industrial Packaging Group Acquisition as if such
acquisition were consummated on the first day of such period
and so as to include Historical JS Industrial Packaging Group
EBITDA for such period. Notwithstanding anything to the
contrary contained herein, the definition of "Collateral
Effective Date" may not be amended, modified, changed,
discharged or terminated in a manner materially adverse to
the Lenders except with the prior written consent of all of
the Lenders.
(d) "Fourth Amendment" means that certain Fourth Amendment to
Credit Agreement dated as of June 3, 2002 among the Borrower,
the Guarantors, the Lenders party thereto and the
Administrative Agent.
(e) "Fourth Amendment Effective Date" has the meaning provided in
Section 24 of the Fourth Amendment.
(f) "Historical JS Industrial Packaging Group EBITDA" means, for
any period ending on the date the JS Industrial Packaging
Group Acquisition is consummated, the sum of the following
amounts for such period to the extent attributable to the
business acquired by the Borrower in connection with the JS
Industrial Packaging Group Acquisition: (a) net income (after
taxes), plus (b) an amount which, in the determination of net
income, has been deducted for (i) all interest expense
(whether paid or accrued) and capitalized interest, including
without limitation (x) the amortization of debt discount and
premium, (y) the interest component under Capital Leases and
synthetic leases and (z) the implied interest component,
discount or other similar fees or charges in connection with
any asset securitization program, net of interest income
(including any net amount payable or receivable under any
Hedging Agreement regarding the hedging of interest rate risk
exposure), (ii) all federal and state income tax expense and
(iii) depreciation and amortization expense, minus (c) an
amount which, in the determination of net income, has
been added for any non-cash credits, all of the foregoing
determined and computed on a Consolidated basis in accordance
with GAAP; provided that (A) the calculation of Historical JS
Industrial Packaging
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Group EBITDA shall be based on financial information that is
readily ascertainable (whether from stand alone financial
statements or an independent auditor's analysis and review or
other reasonable method acceptable to the Administrative
Agent; provided that such other reasonable method shall have
been disclosed to the Lenders and no objection shall have
been received from the Required Lenders within five (5)
Business Days of such disclosure) and (B) the financial
information serving as the basis for the calculation of
Historical JS Industrial Packaging Group EBITDA for any
period shall be delivered in writing by the Borrower to the
Administrative Agent and the Lenders concurrently with, or
prior to, the delivery of the Officer's Compliance
Certificate required to be delivered pursuant to Section 7.2
of the Credit Agreement for the relevant period.
(g) "JS Industrial Packaging Group Acquisition" means the
Borrower's acquisition from Jefferson Smurfit Corporation of
the business referred to as the "JS Industrial Packaging
Group" for an aggregate consideration (including any assumed
Debt) of approximately $90 million (plus approximately $5
million of transaction costs).
(h) "New Senior Subordinated Note Indenture" means the Indenture,
to be dated on or about the closing date of the JS Industrial
Packaging Group Acquisition, between the Borrower, the
Subsidiaries of the Borrower identified as guarantors therein
and The Bank of New York, as Trustee, as amended, modified
and supplemented from time to time to the extent permitted
under this Agreement.
(i) "New Senior Subordinated Notes" means the Senior Subordinated
Notes issued pursuant to the New Senior Subordinated Note
Indenture, as amended, modified and supplemented from time to
time to the extent permitted under this Agreement.
(j) "Security Agreement" means that certain Security Agreement,
substantially in the form of Exhibit I hereto, to be dated as
of the Fourth Amendment Effective Date among the Credit
Parties and the Administrative Agent, pursuant to which Liens
in favor of the Administrative Agent, in its capacity as
Collateral Agent, for the ratable benefit of (i) the
Administrative Agent and the Lenders (and, with respect to
Obligations under Hedging Agreements, Affiliates of the
Lenders as well as the Lenders), (ii) the lenders under the
Premier Boxboard Credit Facility and (iii) the lenders under
the Standard Gypsum Credit Facility, are purported to be
granted, effective as of the Collateral Effective Date, as
such Security Agreement is amended, modified, restated or
supplemented from time to time.
(k) "Standard Gypsum Credit Facility" means the revolving credit
facility provided pursuant to the Second Amended and Restated
Loan Agreement, dated as of August 1, 1999 (as may be further
amended, restated, modified or supplemented from time to
time), between the lenders party thereto, Standard Gypsum and
Toronto Dominion (Texas), Inc., as administrative agent.
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2. Further Amendment to Section 1.1 of the Credit Agreement. The
definition of "Applicable Percentage" in Section 1.1 of the Credit Agreement is
hereby amended by replacing the pricing grid found therein with the following:
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Applicable Applicable Applicable Applicable
Pricing Total Percentage for Percentage for Percentage for Percentage
Level Leverage Ratio Offshore Rate Base Rate Commitment for
Loans Loans Fee L/C Fee
-------------------------------------------------------------------------------------------------------------
I < 45.0% 1.75% 0.50% 0.40% 1.75%
-------------------------------------------------------------------------------------------------------------
II < 55.0% but > 2.00% 0.75% 0.50% 2.00%
_
45.0%
-------------------------------------------------------------------------------------------------------------
III < 60.0% but > 2.25% 1.00% 0.50% 2.25%
_
55.0%
-------------------------------------------------------------------------------------------------------------
IV < 65.0% but > 2.50% 1.25% 0.50% 2.50%
_
60.0%
-------------------------------------------------------------------------------------------------------------
> 65.0% 2.75% 1.50% 0.55% 2.75%
_
-------------------------------------------------------------------------------------------------------------
3. Further Amendment to Section 1.1 of the Credit Agreement. The
definition of the "EBITDA" is hereby amended by:
(a) inserting the following at the end of clause (b)(v)
therein:
"and one-time charges, fees and expenses paid or incurred by
the Borrower in connection with the issuance of the New
Senior Subordinated Notes and the consummation of the other
transactions contemplated by the Fourth Amendment in an
aggregate amount of up to $3,000,000"; and
(b) inserting the following immediately after the words
"Section 9.6" in the proviso therein:
"(other than the JS Industrial Packaging Group
Acquisition)".
4. Further Amendment to Section 1.1 of the Credit Agreement. The
definition for "Loan Documents" is hereby amended in its entirety by replacing
it with the following:
"Loan Documents" means, collectively, this Agreement, the
Notes, the L/C Applications, any Guarantor Joinder Agreement, the
Collateral Documents and each other document, instrument and agreement
executed and delivered by any Credit Party or its Subsidiaries in
connection with this Agreement or otherwise referred to herein or
contemplated hereby, all as may be amended, restated or otherwise
modified.
5. Further Amendment to Section 1.1 of the Credit Agreement. The
definition of "Senior Subordinated Note Indenture" is hereby amended by
inserting the following at the end thereof:
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"Except as otherwise expressly provided herein or as the
context otherwise requires, references herein to the Senior
Subordinated Note Indenture shall also be deemed references to the New
Senior Subordinated Note Indenture."
6. Further Amendment to Section 1.1 of the Credit Agreement. The
definition of "Senior Subordinated Notes" is hereby amended by inserting the
following at the end thereof:
"Except as otherwise expressly provided herein or as the
context otherwise requires, references herein to the Senior
Subordinated Notes shall also be deemed references to the New Senior
Subordinated Notes."
7. Amendment to Section 8.3 of the Credit Agreement. Section 8.3
of the Credit Agreement is hereby amended by inserting the following at the end
of the sentence found therein:
"Within ten Business Days after the occurrence of the
Collateral Effective Date, the Administrative Agent, in its capacity
as Collateral Agent under the Security Agreement (for the ratable
benefit of the Secured Parties named therein), shall be named as loss
payee, as its interest may appear, and/or additional insured with
respect to any such insurance providing coverage in respect of any
Collateral, and each provider of any such insurance shall agree, by
endorsement upon the policy or policies issued by it or by independent
instruments furnished to the Administrative Agent, that it will give
the Administrative Agent thirty (30) days prior written notice before
any such policy or policies shall be altered or canceled.
In the event there occurs, on or after the occurrence of the
Collateral Effective Date, any material loss, damage to or destruction
of the Collateral of any Credit Party or any part thereof, such Credit
Party shall promptly give written notice thereof to the Administrative
Agent generally describing the nature and extent of such loss, damage
or destruction. Subsequent to any loss, damage to or destruction of
the Collateral of any Credit Party or any part thereof, and subject to
the provisions of the last sentence of this paragraph, such Credit
Party, whether or not the insurance proceeds, if any, received on
account of such damage or destruction shall be sufficient for that
purpose, at such Credit Party's cost and expense, will promptly repair
or replace the Collateral of such Credit Party so lost, damaged or
destroyed; provided, however, that such Credit Party need not repair
or replace the Collateral of such Credit Party so lost, damaged or
destroyed to the extent the failure to make such repair or replacement
(a) is desirable to the conduct of the business of such Credit Party
in the ordinary course and otherwise is in the best interest of such
Credit Party and (b) would not materially impair the rights and
benefits of (i) the Administrative Agent or the Lenders under this
Credit Agreement or any other Loan Document or (ii) the Collateral
Agent and Secured Parties under (and as defined in) the Security
Agreement. So long as no Event of Default has occurred and is
continuing, the Administrative Agent, in its capacity as Collateral
Agent under the Security Agreement, agrees to release any insurance
proceeds received by it to the applicable Credit Party for replacement
or restoration of the portion of the Collateral of such Credit Party
lost, damaged or destroyed. In the event a
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Credit Party shall receive any insurance proceeds as a result of any
loss, damage or destruction of Collateral in a net amount in excess of
$1,000,000, the Credit Parties shall, within the period of 180 days
following the date of receipt of such proceeds, apply (or cause to be
applied) an amount equal to such proceeds to (x) make reinvestments
consisting of acquisitions of assets used or useful in the same or a
similar line of business as the Borrower and its subsidiaries were
engaged in on the Closing Date (including but not limited to the
repair or replacement of the related Collateral) or (y) prepay the
Secured Obligations (as defined in the Security Agreement) (including
by cash collateralizing letter of credit (but only after all
outstanding loans under the same facility have been prepaid) or
guaranty obligations) on a pro rata basis.
The Administrative Agent is authorized, but not obligated, as
the attorney-in-fact of each of the Credit Parties and for the benefit
of the Lenders (and any other secured parties under the Security
Agreement), upon the occurrence and during the continuance of an Event
of Default on or after the Collateral Effective Date, without the
consent of the applicable Credit Party, (i) to adjust and compromise
proceeds payable under such insurance policies, (ii) to collect,
receive and give receipts for such insurance proceeds in the name of
such Credit Party, the Administrative Agent and the Lenders (and any
other secured parties under the Security Agreement) and (iii) to
endorse such Credit Party's name upon any instrument in payment
thereof.
All insurance proceeds shall be subject to the security
interest of the Secured Parties (as defined in the Security Agreement)
under the Collateral Documents."
8. Amendment to Section 8.10 of the Credit Agreement. Section
8.10 of the Credit Agreement is hereby amended by inserting the following at
the end of the sentence found therein:
"After the occurrence and during the continuance of an Event
of Default, any such action shall be at the expense of the Credit
Parties. In addition, after the occurrence of the Collateral Effective
Date, the Credit Parties agree that the Administrative Agent, and its
representatives, may conduct an audit of the Collateral annually (or,
after the occurrence and during the continuance of an Event of
Default, more frequently), at the expense of the Credit Parties."
9. Amendment to Article VIII of the Credit Agreement. Article
VIII of the Credit Agreement is hereby amended by inserting the following
Sections in numerical order:
"(a) SECTION 8.13 Pledged Assets.
Each Credit Party will (i) upon the occurrence of the
Collateral Effective Date, cause all of its Property that constitutes
(or pursuant to the terms hereof is intended to constitute) Collateral
to be subject at all times to first priority, perfected Liens in favor
of the Administrative Agent, as Collateral Agent for the ratable
benefit of the Secured Parties referred to in the Collateral
Documents, to secure the Obligations pursuant to the terms and
conditions of the Collateral Documents, subject in any case to Liens
permitted
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under Section 9.2 and (ii) deliver, or, in the case of agreements or
other documents that require the consent of a non-Affiliate of the
Borrower, use commercially reasonable efforts to deliver, such other
documentation as the Administrative Agent may reasonably request in
connection with the foregoing, including, without limitation,
appropriate UCC-1 financing statements, landlord's waivers (subject to
Section 8.14), certified resolutions and other organizational and
authorizing documents of such Person, favorable opinions of counsel to
such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation
referred to above and the perfection of the Administrative Agent's
Liens thereunder), all in form, content and scope reasonably
satisfactory to the Administrative Agent.
(b) SECTION 8.14 Further Assurances Regarding, Collateral.
Each Credit Party shall:
(i) At its expense, from time to time execute and deliver, or
cause to be executed and delivered, such additional instruments,
certificates or documents, and take all such actions, as the
Administrative Agent or the Required Lenders may reasonably request,
for the purposes of implementing or effectuating the provisions of
this Agreement and the other Loan Documents or, upon the occurrence of
the Collateral Effective Date, creating or perfecting or ensuring the
priority or sufficiency or enforceability or enforcement of a Lien in
favor of the Administrative Agent as security for the Obligations upon
any or all of the Collateral (whether owned prior to the Collateral
Effective Date or thereafter acquired), or more fully perfecting or
renewing any such Lien;
(ii) To the extent requested by the Administrative Agent, at
such Credit Party's expense, if the exercise by the Administrative
Agent or any Lender of any power, right, privilege or remedy pursuant
to this Agreement or the other Loan Documents requires any consent,
approval, recording, qualification or authorization of any
Governmental Authority, execute and deliver, or cause the execution
and delivery of, all applications, certifications, instruments and
other documents and papers that may be required from the Borrower or
any of its Subsidiaries or may reasonably be requested for such
governmental consent, approval, recording, qualification or
authorization; and
(iii) Use its commercially reasonable efforts to obtain
within 45 days of the Collateral Effective Date (or in the case of
locations which meet the threshold set forth herein on a date
subsequent to the Collateral Effective Date, within 45 days of the
date on which a Responsible Officer of the Borrower becomes aware of
such change) such landlord waiver and/or warehousemen and bailee
letters, as applicable, in form and substance satisfactory to the
Administrative Agent with respect to all Collateral located at a
leased location or held by a warehouseman or bailee to the extent the
aggregate value of the Collateral at such location exceeds
$1,000,000."
10. Amendment to Section 9.1(c) of the Credit Agreement. Section
9.1(c) of the Credit Agreement is hereby amended in its entirety by replacing
it with the following:
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"(c) Minimum Tangible Net Worth. At all times after the
Fourth Amendment Effective Date, the Credit Parties will not permit
Tangible Net Worth to be less than the TNW Floor (as defined below)
plus, as of the end of each fiscal quarter, commencing with the end of
the first fiscal quarter ending after the Fourth Amendment Effective
Date, (i) 50% of Net Income (to the extent positive) for the fiscal
quarter then ended (or, with respect to the fiscal quarter in which
the JS Industrial Packaging Group Acquisition occurs, for the portion
of the fiscal quarter occurring after the date such acquisition is
consummated), such increases to be cumulative, and (ii) 100% of the
Net Cash Proceeds of Equity Issuances during the fiscal quarter then
ended (or, with respect to the fiscal quarter in which the JS
Industrial Packaging Group Acquisition occurs, for the portion of the
fiscal quarter occurring after the date such acquisition is
consummated), such increases to be cumulative. For purposes hereof,
"TNW Floor" shall mean (A) initially, $108,900,000 and (B) upon the
consummation of the JS Industrial Packaging Group Acquisition, 90% of
actual Tangible Net Worth as of the date of such consummation (and
after giving effect thereto), as calculated in good faith by the
Borrower and as certified in writing to the Administrative Agent on
the date of such consummation by a Responsible Officer of the
Borrower."
11. Amendment to Section 9.2 of the Credit Agreement. Section 9.2
of the Credit Agreement is hereby amended by (i) deleting the word "and" at the
end of subclause (i) thereof; (ii) replacing the period at the end of subclause
(j) thereof with "; and" and (iii) adding the following new subclause (k)
immediately to the end of such clause (j):
"(k) prior to the consummation of the JS Industrial Packaging
Group Acquisition, Liens in favor of the trustee for (or escrow agent
with respect to) the New Senior Subordinated Notes granted by the
Borrower on the Borrower's interest in the proceeds from the issuance
of such New Senior Subordinated Notes (it being understood that such
Liens shall secure only the obligation of the Borrower to return such
proceeds to the trustee for the New Senior Subordinated Notes (or such
escrow agent) in the event the JS Industrial Packaging Group
Acquisition fails to close)."
12. Amendment to Section 9.2(e) of the Credit Agreement. Section
9.2(e) of the Credit Agreement is hereby amended in its entirety by replacing
it with the following:
"(c) Liens in favor of the Administrative Agent (or another
collateral agent acceptable to the Administrative Agent and the
Required Lenders) for the benefit of (i) the Administrative Agent and
the Lenders (and, with respect to Obligations under Hedging
Agreements, Affiliates of the Lenders), (ii) to the extent a default
would otherwise exist under the Senior Note Indenture, the holders of
the Senior Notes and (iii) to the extent a default would otherwise
arise under the Premier Boxboard Credit Facility and/or Standard
Gypsum Credit Facility, the lenders under such credit facility;"
13. Amendment to Section 9.3(f) of the Credit Agreement. Section
9.3(f) of the Credit Agreement is hereby amended in its entirety by replacing
it with the following:
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"(f) Debt owing under the Senior Subordinated Notes and the New
Senior Subordinated Notes not to exceed in the aggregate
principal at any time outstanding an amount equal to (i)
$375,000,000 less (ii) the aggregate amount of any Senior
Subordinated Notes and/or New Senior Subordinated Notes that
have been permanently prepaid, redeemed or otherwise
retired;"
14. Amendment to Section 9.5 of the Credit Agreement. Section 9.5
of the Credit Agreement is hereby amended by adding the following at the end of
the paragraph found therein:
"Upon a sale of assets permitted by this Section 9.5, the
Administrative Agent shall (to the extent applicable) deliver to the
Credit Parties, upon the Credit Parties' request and at the Credit
Parties' expense, such documentation as is reasonably necessary to
evidence the release of the Administrative Agent's security interest,
if any, in such assets, including, without limitation, amendments or
terminations of UCC financing statements, if any, and the release of
such Credit Party from all of its obligations, if any, under the Loan
Documents."
15. Amendment of Section 9.6 of the Credit Agreement. Section 9.6
of the Credit Agreement is hereby amended in its entirety by replacing it with
the following:
"SECTION 9.6 Limitations on Acquisitions.
Other than transactions permitted under Section 9.7, no
Credit Party will, nor will it permit any of its Subsidiaries to,
acquire all or any portion of the Capital Stock or other ownership
interest in any Person which is not a Subsidiary or all or any
substantial portion of the assets, property and/or operations of a
Person which is not a Subsidiary, except (a) the JS Industrial
Packaging Group Acquisition and (b) other acquisitions, so long as,
with respect to transactions permitted under this clause (b), (i) the
Person, assets, property and/or operations being acquired engage in or
are engaged in the same line of business as that engaged in by the
Borrower and its Subsidiaries on the Closing Date or a business
reasonably related thereto, (ii) in the case of an acquisition of
Capital Stock or other ownership interest of a Person, the Board of
Directors of the Person which is the subject of such acquisition shall
have approved the acquisition, (iii) no Default or Event of Default
shall exist on the date of, or shall result from, any such acquisition
(including after giving effect to such transaction on a pro forma
basis), and (iv) the aggregate cash consideration for each such
acquisition does not exceed $25,000,000 and the aggregate
consideration (cash and noncash) for all such acquisitions consummated
in any twelve-month period does not exceed $50,000,000."
16. Amendment to Section 11.1 of the Credit Agreement. Section
11.1 of the Credit Agreement is hereby amended by adding a new clause (q) at
the end thereof to read as follows:
"(q) JV Debt Cross-Default. The occurrence of (i) any event
of default under the Standard Gypsum Credit Facility or the Premier
Boxboard Credit Facility (beyond the period of grace, if any, provided
therein) or (ii) any demand for payment under (A) the Borrower's
guaranty of Standard Gypsum's obligations under the Standard Gypsum
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Credit Facility or (B) the Borrower's guaranty of Premier Boxboard's
obligations under the Premier Boxboard Credit Facility."
17. Amendment to Section 13.9(d) of the Credit Agreement. Section
13.9(d)(iii) of the Credit Agreement which reads "or (iii) release all or
substantially all of the Guarantors from their obligations hereunder" is hereby
deleted and replaced with the following:
", (iii) release all or substantially all of the Guarantors
from their obligations hereunder or (iv) except as a result of or in
connection with an Asset Disposition permitted by Section 9.5, release
all or substantially all of the Collateral (upon or after the
occurrence of the Collateral Effective Date)."
18. Modification to Section 13.11 of the Credit Agreement.
Section 13.11 of the Credit Agreement is modified as follows to fix a
typographical error: The reference to "this Section 13.10" contained in clause
(g) of the proviso found therein is replaced with a reference to "this Section
13.11 ".
19. Amendment to Article XIII of the Credit Agreement. A new
Section 13.20 is hereby added to the Credit Agreement to read as follows:
"SECTION 13.20 MATTERS RELATING TO SECURITY AGREEMENT.
Notwithstanding anything to the contrary contained herein,
and without limiting the generality of Section 12.1, each of the
Lenders hereby (a) irrevocably designates and appoints Bank of America
as Collateral Agent of such Lender under the Security Agreement and
the other Collateral Documents for the term hereof and each such
Lender irrevocably authorizes Bank of America as Collateral Agent for
such Lender, to execute and deliver the Security Agreement, to take
such action on its behalf under the provisions of the Security
Agreement and the other Collateral Documents and to exercise such
powers and perform such duties as are expressly delegated to the
Collateral Agent by the terms of the Security Agreement and such other
Collateral Documents, together with such other powers as are
reasonably incidental thereto and (b) acknowledges and agrees that (i)
the Security Agreement provides that the Collateral (and proceeds
thereof) are to be shared ratably among the Secured Parties referred
to in the Security Agreement and that the Required Secured Parties (as
defined in the Security Agreement) can direct the Collateral Agent to
act (or refrain from acting) with respect to the Collateral and (ii)
neither the Security Agreement nor the definition of "Collateral
Effective Date" herein may be amended except in accordance with the
provisions of Section 13 thereof (which provisions may, in certain
instances, require the consent of certain Secured Parties referred to
in the Security Agreement in addition to consent of the Required
Lenders hereunder)."
20. Amendment to Exhibit G to the Credit Agreement. Exhibit G to
the Credit Agreement is hereby amended in its entirety by replacing it with the
new Exhibit G attached hereto.
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21. New Exhibit I of the Credit Agreement. Exhibit I attached
hereto is hereby added as a new Exhibit I to the Credit Agreement.
22. Representations and Warranties. Each Credit Party hereby
represents and warrants to the Administrative Agent and the Lenders that (a) no
Default or Event of Default exists; (b) all of the representations and
warranties set forth in the Loan Documents are true and correct in all material
respects as of the date hereof (except for those that expressly state that they
are made as of an earlier date); and (c) it has no claims, counterclaims,
offsets, credits or defenses to its obligations under the Loan Documents or, to
the extent it does, they are hereby released in consideration of the Required
Lenders entering into this Amendment.
23. Conditions Precedent to Closing. This Amendment shall be
deemed closed as of the date set forth above (the "Amendment Closing Date")
when (and only when) each of the following conditions precedent has been
satisfied:
(a) The Administrative Agent shall have received from
the Credit Parties and the Required Lenders duly executed counterparts
of this Amendment;
(b) The Administrative Agent shall have received from
the Borrower an amendment closing fee equal to 0.125% multiplied by
the aggregate Revolving Credit Commitments of the Consenting Lenders
(as defined below), such fee being for the account of each such
Consenting Lender pro rata according to such Lender's Revolving Credit
Commitment as of the Amendment Closing Date; provided, however, that
such fee shall be payable only to those Lenders (the "Consenting
Lenders") that shall have returned (including via telecopy) executed
signature pages to this Amendment on or before June 3, 2002, as
directed by the Administrative Agent; and
(c) The Credit Parties shall have paid any and all
out-of-pocket costs (to the extent invoiced) incurred by the
Administrative Agent through the Amendment Closing Date (including the
reasonable fees and expenses of the Administrative Agent's legal
counsel), and fees and other amounts payable to the Administrative
Agent as of the Amendment Closing Date, in each case in connection
with the arrangement, negotiation, preparation, execution and delivery
of this Amendment.
24. Conditions Precedent to Effectiveness. The amendments to the
Credit Agreement set forth herein shall be deemed effective as of the date (the
"Fourth Amendment Effective Date") when (and only when) each of the following
conditions precedent has been satisfied:
(a) The satisfaction of each of the conditions set forth
in Section 23 of this Amendment;
(b) The Administrative Agent shall have received (i)
from the Credit Parties, duly executed counterparts of the Security
Agreement and (ii) from counsel to the Credit Parties, a legal opinion
in form and substance acceptable to the Administrative Agent and its
counsel (which shall cover, among other things, the legality,
validity, binding effect
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and enforceability of the Security Agreement and, subject to the
occurrence of the Collateral Effective Date, the creation and
perfection of the Administrative Agent's Liens thereunder);
(c) The Administrative Agent shall have received from
the Borrower an amendment effectiveness fee equal to 0.125% multiplied
by the aggregate Revolving Credit Commitments of the Consenting
Lenders, such fee being for the account of each such Consenting Lender
pro rata according to such Lender's Revolving Credit Commitment as of
the Amendment Closing Date;
(d) The Borrower shall have (i) issued New Senior
Subordinated Notes on terms and conditions reasonably satisfactory to
the Administrative Agent and (ii) received gross proceeds from the
issuance of such New Senior Subordinated Notes in an aggregate amount
of not less than $50,000,000. The Borrower shall have delivered a
copy, certified by an officer of the Borrower as true and complete, of
the New Senior Subordinated Note Indenture and each other material
document executed in connection therewith, in each case as originally
executed and delivered and together with all exhibits and schedules
thereto;
(e) The JS Industrial Packaging Group Acquisition shall
have been consummated in material compliance with all Applicable Law
and applicable governmental approvals;
(f) To the extent not paid by the Credit Parties in
connection with the Amendment Closing Date, the Credit Parties shall
have paid any and all out-of-pocket costs (to the extent invoiced)
incurred by the Administrative Agent (including the reasonable fees
and expenses of the Administrative Agent's legal counsel), and fees
and other amounts payable to the Administrative Agent, in each case in
connection with the arrangement, negotiation, preparation, execution
and delivery of this Amendment;
(g) The Administrative Agent shall have received
evidence satisfactory to it that the Borrower shall have obtained
amendments to its guaranties in connection with the Premier Boxboard
Credit Facility and the Standard Gypsum Credit Facility that conform
to the applicable terms of this Amendment; and
(h) The representations and warranties contained in
Section 22 of this Amendment shall be true and correct in all material
respects on and as of such Fourth Amendment Effective Date (including
after giving effect to the consummation of the JS Industrial Packaging
Group Acquisition) with the same effect as if made on and as of such
date.
25. Ratification of Credit Agreement. Except as expressly
modified and amended in this Amendment, all of the terms, provisions and
conditions of the Loan Documents shall remain unchanged and in full force and
effect. The term "this Agreement" or "Credit Agreement" and all similar
references as used in each of the Loan Documents shall hereafter mean the
Credit Agreement as amended by this Amendment. Except as herein specifically
agreed, the Credit
12
Agreement is hereby ratified and confirmed and shall remain in full force and
effect according to its terms.
26. Authority/Enforceability. Each of the Credit Parties hereto
represents and warrants as follows:
(a) It has taken all necessary action to authorize the
execution, delivery and performance of this Amendment.
(b) This Amendment has been duly executed and delivered
by such Person and constitutes such Person's legal, valid and binding
obligations, enforceable in accordance with its terms, except as such
enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(c) No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental
authority or third party is required in connection with the execution,
delivery or performance by such Person of this Amendment. The
execution, delivery and performance by such Person of this Amendment
do not and will not conflict with, result in a breach of or constitute
a default under the articles of incorporation, bylaws or other
organizational documents of any Credit Party or any of its
Subsidiaries or any indenture or other material agreement or
instrument to which such Person is a party or by which any of its
properties may be bound or any Governmental Approval relating to such
Person except as could not reasonably be expected to have a Material
Adverse Effect.
27. Expenses. The Borrower agrees to pay all reasonable costs and
expenses in connection with the preparation, execution and delivery of this
Amendment, including without limitation the reasonable fees and expenses of
Xxxxx & Xxx Xxxxx PLLC, special counsel to the Administrative Agent.
28. Counterparts/Telecopy. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts by telecopy shall be effective as an original
and shall constitute a representation that an original will be delivered.
29. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA.
30. Entirety. This Amendment and the other Loan Documents embody
the entire agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof. These Loan
Documents represent the final agreement
13
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no oral
agreements between the parties.
14
IN WITNESS WHEREOF, the parties hereto have caused this Amendment, to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
BORROWER: CARAUSTAR INDUSTRIES, INC.,
a North Carolina corporation
By /s/ H. Xxx Xxxxxx, III
--------------------------------------------------
Name: H. Xxx Xxxxxx, III
Title: Vice President Planning & Development and
Chief Financial Officer
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JUNE 2002
GUARANTORS: AUSTELL HOLDING COMPANY, LLC,
a Georgia limited liability company
CAMDEN PAPERBOARD CORPORATION,
a New Jersey corporation
CARAUSTAR CUSTOM PACKAGING GROUP, INC.,
a Delaware corporation
CARAUSTAR CUSTOM PACKAGING GROUP (MARYLAND), INC.,
a Maryland corporation
CARAUSTAR INDUSTRIAL AND PRODUCTS GROUP, INC.,
a Delaware corporation
CARAUSTAR MILL GROUP, INC., an Ohio corporation f/k/a Caraustar
Paperboard Corporation (as successor by merger to Austell Box Board
Corporation, Buffalo Paperboard Corporation, Carolina Component
Concepts, Inc., Carolina Converting Incorporated, Carolina Paper Board
Corporation, Carotell Paper Board Corporation, Chattanooga Paperboard
Corporation, Cincinnati Paperboard Corporation, Columbus Recycling,
Inc., New Austell Box Board Company, Paper Recycling, Inc., Reading
Paperboard Corporation, Richmond Paperboard Corporation and
Sweetwater Paper Board Company, Inc.)
CARAUSTAR RECOVERED FIBER GROUP, INC.,
a Delaware corporation
CHICAGO PAPERBOARD CORPORATION,
an Illinois corporation
FEDERAL TRANSPORT, INC.,
an Ohio corporation
GYPSUM MGC, INC.,
a Delaware corporation
HALIFAX PAPER BOARD COMPANY, INC.,
a North Carolina corporation
XXXXXXXXX GYPSUM COMPANY,
a Delaware corporation
XXXXXXXX GYPSUM COMPANY, LLC,
a Delaware limited liability company
PBL INC.,
a Delaware corporation
XXXXXXX PAPERBOARD, INC.,
a Connecticut corporation
By: /s/ H. Xxx Xxxxxx, III
---------------------------------------------------
Name: H. Xxx Xxxxxx, III
Title: Vice President Planning & Development and
Chief Financial Officer
of each of the foregoing Guarantors
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JUNE 2002
CARAUSTAR, G.P.,
a South Carolina general partnership
By: CARAUSTAR INDUSTRIES, INC.,
a North Carolina corporation, general partner
By: /s/ H. Xxx Xxxxxx, III
-------------------------------------------
Name: H. Xxx Xxxxxx, III
Title: Vice President Planning & Development and
Chief Financial Officer
By: CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS
GROUP, INC., a Delaware corporation, general partner
By: /s/ H. Xxx Xxxxxx, III
-------------------------------------------
Name: H. Xxx Xxxxxx, III
Title: Vice President Planning & Development and
Chief Financial Officer
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JUNE 2002
ADMINISTRATIVE
AGENT: BANK OF AMERICA, N.A., in its capacity
as Administrative Agent
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
MAY 2002
LENDERS: BANK OF AMERICA, N.A.,
as an Issuing Lender and a Lender
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
---------------------------------------
Title: Vice President
--------------------------------------
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
MAY 2002
BANKERS TRUST COMPANY,
individually as an Issuing Lender and a Lender
By: /s/ M. A. Orlando
-----------------------------------------------
Name: Xxxxx Xxxxxxx
---------------------------------------------
Title: Director
--------------------------------------------
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
MAY 2002
CREDIT SUISSE FIRST BOSTON
By: /s/ Xxx Xxxxx
-----------------------------------------
Name: Xxx Xxxxx
---------------------------------------
Title: Director
--------------------------------------
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxxxx
---------------------------------------
Title: Vice President
--------------------------------------
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
MAY 2002
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
------------------------------------
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
MAY 0000
XXX XXXX XX XXX XXXX
By: /s/ Xxxxxx X. XxXxxxxxx
--------------------------------------
Name: Xxxxxx X. XxXxxxxxx
------------------------------------
Title: Assistant Vice President
-----------------------------------
SIGNATURE PAGE TO FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
MAY 2002
EXHIBIT G
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
The undersigned, on behalf of Caraustar Industries, Inc., a North
Carolina corporation (the "Borrower"), hereby certifies to the Administrative
Agent and the Lenders, each as defined in the Credit Agreement referred to
below, as follows:
1. This Certificate is delivered to you pursuant to Section 6.2
of the Credit Agreement dated as of March 29, 2001 (as amended, restated or
otherwise modified, the "Credit Agreement") by and among the Borrower, the
Subsidiaries of the Borrower identified therein, the Lenders from time to time
party thereto (the "Lenders") and Bank of America, N.A., as Administrative
Agent. Capitalized terms used herein and not defined herein shall have the
meanings assigned thereto in the Credit Agreement.
2. I have reviewed the financial statements of the Borrower and
its Subsidiaries dated as of ____________ and for the ______________ period[s]
then ended and such statements present fairly in all material respects the
financial condition of the Borrower and its Subsidiaries as of their respective
dates and the results of the operations of the Borrower and its Subsidiaries
for the respective period[s] then ended, subject to normal year end adjustments
for interim statements.
3. I have reviewed the terms of the Credit Agreement and the
related Loan Documents and have made, or caused to be made under my
supervision, a review in reasonable detail of the transactions and the
condition of the Borrower and its Subsidiaries during the accounting period
covered by the financial statements referred to in Paragraph 2 above. Such
review has not disclosed the existence during or at the end of such accounting
period of any condition or event that constitutes a Default or an Event of
Default, nor do I have any knowledge of the existence of any such condition or
event as at the date of this Certificate [except, if such condition or event
existed or exists, describe the nature and period of existence thereof and what
action the Borrower and its Subsidiaries have taken, are taking and propose to
take with respect thereto].
4. The Applicable Percentage Pricing Level and information as to
the financial ratios necessary for determining such figure are set forth on the
attached Schedule 1.
5. The Borrower and its Subsidiaries are in compliance with the
financial covenants contained in Section 9.1 of the Credit Agreement as shown
on such Schedule 1.
6. Based on the financial information set forth on the attached
Schedule 2, the Collateral Effective Date [has] [has not] occurred. The
information on Schedule 2 shall include a calculation, as of the end of the
accounting period covered by the financial statements referred to in Paragraph
2 above, of (i) the quotient of (a) the aggregate principal amount as of such
date of (x) all outstanding Loans and (y) all outstanding L/C Obligations
divided by (b) the Aggregate Revolving Credit Commitment as of such date, and
(ii) the ratio of (a) Total Debt as of such date to (b) EBITDA for the period
of four (4) consecutive fiscal quarters ending as of such date.
WITNESS the following signature as of the ____ day of _______________, 200_.
CARAUSTAR INDUSTRIES, INC.,
a North Carolina corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Schedule 1
Financial Covenant and Applicable Percentage Calculations
See attached
Schedule 2
Determination of Collateral Effective Date
See attached
EXHIBIT I
FORM OF SECURITY AGREEMENT
[to be attached]
EXHIBIT 10.7
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of June --, 2002 among (i) CARAUSTAR INDUSTRIES, INC. (the "Borrower"), (ii) the
Subsidiaries of the Borrower listed on the signature pages hereto or that
become parties hereto after the date hereof (individually a "Guarantor" and
collectively the "Guarantors"; together with the Borrower, individually an
"Obligor" and collectively the "Obligors") and BANK OF AMERICA, N.A., in its
capacity as collateral agent (in such, the "Collateral Agent") for the Secured
Parties (as defined below).
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as
of March 29, 2001 (as amended, modified, extended, renewed or replaced from
time to time, the "Credit Agreement"), among the Borrower, the Guarantors, the
financial institutions from time to time party thereto (the "Lenders") and Bank
of America, N.A. ("Bank of America"), as Administrative Agent, the Lenders have
agreed to make Loans and issue Letters of Credit upon the terms and subject to
the conditions set forth therein;
WHEREAS, the Borrower has executed that certain Guaranty
Agreement dated as of July 30, 1999 (as amended, modified, extended, renewed or
replaced from time to time, the "Premier Boxboard Guaranty") in favor of
SunTrust Bank (formerly known as SunTrust Bank, Atlanta; "SunTrust"), pursuant
to which the Borrower has guaranteed 50% of the obligations of Premier Boxboard
Limited LLC ("Premier Boxboard") under a certain revolving credit facility in
favor of Premier Boxboard and evidenced by the Credit Agreement referred to and
defined in the Premier Boxboard Guaranty (the "Premier Boxboard Credit
Agreement");
WHEREAS, the Borrower has executed that certain Second
Amended and Restated Parent Guaranty dated as of August 1, 1999 (as amended,
modified, extended, renewed or replaced from time to time, the "Standard Gypsum
Guaranty") in favor of Toronto Dominion (Texas), Inc., ("Toronto Dominion"),
pursuant to which the Borrower has guaranteed 50% of the obligations of
Standard Gypsum, L.L.C. ("Standard Gypsum") under a certain credit facility in
favor of Standard Gypsum and evidenced by the Loan Agreement referred to and
defined in the Standard Gypsum Guaranty (the "Standard Gypsum Loan Agreement");
WHEREAS, the Obligors are required to execute this Security
Agreement in consideration of, and as a condition precedent to the
effectiveness of, that certain Amendment No. 4 to Credit Agreement dated as of
June 3, 2002 among the Obligors, the Lenders party thereto and Bank of America,
as Administrative Agent;
WHEREAS, pursuant to the Premier Boxboard Guaranty, the
Obligors must permit SunTrust to share ratably in any liens granted for the
benefit of the Lenders;
1
WHEREAS, in connection with the Standard Gypsum Guaranty, the
Obligors have agreed to permit Toronto Dominion to share ratably in any liens
granted for the benefit of the Lenders and in any proceeds realized from the
sale or other disposition of any Collateral securing such liens; and
WHEREAS, Bank of America is acting as Collateral Agent for
the Secured Parties (as defined below) pursuant to the terms of this Security
Agreement.
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit
Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of North Carolina on the date
hereof are used herein as so defined: Accounts, As-Extracted
Collateral, Chattel Paper, Consumer Goods, Farm Products, Instrument,
Inventory, Manufactured Homes, Tangible Chattel Paper and Proceeds.
For purposes of this Security Agreement, the term "Lender" shall
include any Affiliate of any Lender which has entered into a Hedging
Agreement with any Obligor.
(b) In addition, the following terms shall have the
following meanings:
"Documents": the collective reference to the Credit
Agreement, the Loan Documents, the Premier Boxboard Guaranty, the
Standard Gypsum Guaranty and any Hedging Agreements between an Obligor
and a Lender or an Affiliate of a Lender.
"Fully Satisfied": with respect to the Secured Obligations as
of any date, that, as of such date, (a) all principal of and interest
accrued to such date which constitute Secured Obligations shall have
been indefeasibly paid in full in cash, (b) all fees, expenses and
other amounts then due and payable which constitute Secured
Obligations shall have been indefeasibly paid in cash, (c) all
outstanding letters of credit shall have been (i) terminated and
surrendered, (ii) fully cash collateralized on terms reasonably
satisfactory to (x) with respect to Letters of Credit outstanding
under the Credit Agreement, the Issuing Lender and the Required
Lenders and (y) with respect to any other letter of credit, the issuer
thereof, or (iii) secured by one or more letters of credit on terms
and conditions, and with one or more financial institutions,
reasonably satisfactory to (x) with respect to Letters of Credit
outstanding under the Credit Agreement, the Issuing Lender and the
Required Lenders and (y) with respect to any other letter of credit,
the issuer thereof, and (d) the relevant commitments shall have
expired or been terminated in full.
2
"Required Secured Parties": at any date, any combination of
Secured Parties collectively holding more than sixty-six and
two-thirds percent (66-2/3%) of the aggregate unpaid principal amount
of the Secured Obligations at such time.
"Secured Obligations": with respect to the Collateral, all of
the following, whether now existing or hereafter incurred: (i) the
prompt performance and observance by each Obligor of all of its
Obligations to the Lenders under the Loan Documents, including,
without limitation, (a) all obligations consisting of principal of and
interest on (including interest accruing after the filing of any
bankruptcy or similar petition) the Loans, all fees, indemnities and
other amounts arising under any of the Loan Documents and all
reimbursement obligations in respect of Letters of Credit, (b) all
guaranty obligations arising out of Article X of the Credit Agreement
and (c) all obligations arising under any Hedging Agreements between
any Obligor and any Lender, or any Affiliate of a Lender, (ii) the
prompt performance and observance by the Borrower of all of its
guaranty obligations to SunTrust under the Premier Boxboard Guaranty,
(iii) the prompt performance and observance by the Borrower of all of
its guaranty obligations to Toronto Dominion under the Standard Gypsum
Guaranty and (iv) all other indebtedness, liabilities and obligations
of any kind or nature, now existing or hereafter arising, owing from
any Obligor to any Secured Party or the Collateral Agent under any of
the Documents, howsoever evidenced, created, incurred or acquired,
whether primary, secondary, direct, contingent, or joint and several,
and all obligations and liabilities incurred in connection with
collecting and enforcing the Secured Obligations.
"Secured Parties": the collective reference to (i) the
Lenders and any Affiliate of a Lender that has entered into a Hedging
Agreement, (ii) SunTrust and (iii) Toronto Dominion, as administrative
agent, and "Secured Party" means any one of them, as applicable.
2. Grant of Security Interest in the Collateral.
Subject to Section 25 hereof, to secure the prompt payment and performance in
full when due, whether by lapse of time, acceleration or otherwise, of the
Secured Obligations, each Obligor hereby grants to the Collateral Agent, for
the ratable benefit of the Secured Parties, a continuing security interest in,
and a right to set off against, any and all right, title and interest of such
Obligor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "Collateral"):
(a) all Accounts;
(b) all Inventory;
(c) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks, and
related data processing software (owned by such
Obligor or to the extent of its interest therein)
that at any time evidence or contain information
relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or
realization thereupon; and
3
(d) all Proceeds of any and all of the foregoing and, to
the extent not included in the foregoing, all
payments under any insurance (whether or not the
Collateral Agent is the loss payee therefore),
indemnity, warranty or guaranty with respect to any
of the foregoing Collateral.
The Obligors and the Collateral Agent, on behalf of the
Secured Parties, hereby acknowledge and agree that the security interest
created hereby in the Collateral constitutes continuing collateral security for
all of the Secured Obligations, whether now existing or hereafter arising.
3. Provisions Relating, to Accounts and Inventory.
(a) Anything herein to the contrary notwithstanding,
each of the Obligors shall remain liable under each of the Accounts to
observe and perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to each such Account. Neither the Collateral
Agent nor any Secured Party shall have any obligation or liability
under any Account (or any agreement giving rise thereto) by reason of
or arising out of this Security Agreement or the receipt by the
Collateral Agent or any Secured Party of any payment relating to such
Account pursuant hereto, nor shall the Collateral Agent or any Secured
Party be obligated in any manner to perform any of the obligations of
an Obligor under or pursuant to any Account (or any agreement giving
rise thereto), to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto), to present or file any claim, to take
any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be
entitled at any time or times.
(b) At any time after the occurrence and during the
continuance of an Event of Default, (i) the Collateral Agent shall
have the right, but not the obligation, to make test verifications of
the Accounts in any manner and through any medium that it reasonably
considers advisable, and the Obligors, upon the written request of the
Collateral Agent, shall furnish all such assistance and information as
the Collateral Agent may reasonably require in connection with such
test verifications, (ii) upon the Collateral Agent's request and at
the expense of the Obligors, the Obligors shall cause independent
public accountants or others satisfactory to the Collateral Agent to
furnish to the Collateral Agent reports showing reconciliations, aging
and test verifications of, and trial balances for, the Accounts and
(iii) the Collateral Agent in its own name or in the name of others
may communicate with account debtors on the Accounts to verify with
them to the Collateral Agent's satisfaction the existence, amount and
terms of any Accounts.
(c) At any time after the occurrence and during the
continuance of an Event of Default, the Collateral Agent shall have
the right, but not the obligation, to inspect and evaluate the
Inventory in any manner and through any medium that it reasonably
considers advisable, and the Obligors, upon the written request of the
Collateral Agent, shall furnish all such assistance and information as
the Collateral Agent may reasonably require in
4
connection with such inspections and evaluations. Each Obligor will
furnish to the Collateral Agent from time to time statements and
schedules further identifying and describing the inventory and other
Collateral of such Grantor and such other reports in connection with
such Collateral as the Collateral Agent may reasonably request, all in
reasonable detail.
4. Representations and Warranties. Each Obligor hereby
represents and warrants to the Collateral Agent, for the benefit of the Secured
Parties, that until such time as the Secured Obligations are Fully Satisfied:
(a) Legal Name and Location of Obligor. Each Obligor's
exact legal name is as shown in this Security Agreement and its state
of formation is (and for the prior four months has been) as set forth
on Schedule 4(a) hereto. The principal place of business and chief
executive office of each Obligor is as set forth on Schedule 4(a)
hereto. No Obligor has in the past four months changed its name, been
party to a merger, consolidation or other change in structure or used
any tradename except as set forth in Schedule 4(a) attached hereto.
(b) Location of Collateral. The location of all
Collateral owned by each Obligor is as shown on Schedule 4(b) hereto.
(c) Ownership. Each Obligor is the legal and beneficial
owner of the Collateral which it purports to own, and each Obligor has
the right to pledge, sell, assign or transfer the Collateral.
(d) Security Interest/Priority. Upon the Collateral
Effective Date, this Security Agreement shall create a valid security
interest in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, in the Collateral of such Obligor and, when
properly perfected by filing, shall constitute a valid perfected
security interest in such Collateral, to the extent such security
interest can be perfected by filing under the UCC, free and clear of
all Liens except for Liens permitted under Section 9.2 of the Credit
Agreement.
(e) Types of Collateral. None of the Collateral consists
of, or is the Proceeds of, (i) As-Extracted Collateral, (ii) Consumer
Goods, (iii) Farm Products or (iv) Manufactured Homes.
(f) Accounts. (i) Each Account of the Obligors and the
papers and documents relating thereto are genuine and in all material
respects what they purport to be, (ii) each Account arises out of (A)
a bona fide sale of goods sold and delivered by such Obligor (or is in
the process of being delivered) or (B) services theretofore actually
rendered by such Obligor to, the account debtor named therein, (iii)
no Account of an Obligor in excess of $50,000 is evidenced by any
Instrument or Chattel Paper unless such Instrument or Chattel Paper
has been theretofore endorsed over and delivered to, or submitted to
the control of, the Collateral Agent and (iv) no surety bond was
required or given in connection with any Account of an Obligor or the
contracts or purchase orders out of which they arose.
5
(g) Inventory. No Inventory is held by an Obligor
pursuant to consignment, sale or return, sale on approval or similar
arrangement except for raw materials supplied to an Obligor on a sale
or return, consignment or similar arrangement.
(h) Authorization. It has taken all necessary action to
authorize the execution, delivery and performance of this Security
Agreement.
(i) Execution and Delivery. This Security Agreement has
been duly executed and delivered by such Person and constitutes such
Person's legal, valid and binding obligations, enforceable in
accordance with its terms, except as such enforceability may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(j) No Covenants: No Conflict. No consent, approval,
authorization or order of, or filing, registration or qualification
with, any court or governmental authority or third party is required
in connection with the execution, delivery or performance by such
Person of this Security Agreement. The execution, delivery and
performance by such Person of this Security Agreement do not and will
not conflict with, result in a breach of or constitute a default under
the articles of incorporation, bylaws or other organizational
documents of any Obligor or any of its Subsidiaries or any indenture
or other material agreement or instrument to which such Person is a
party or by which any of its properties may be bound or any
Governmental Approval relating to such Person except as could not
reasonably be expected to have a Material Adverse Effect.
5. Covenants. Each Obligor covenants that until such
time as the Secured Obligations are Fully Satisfied such Obligor shall:
(a) Other Liens. Defend the Collateral against the
claims and demands of all other parties claiming an interest therein,
and keep the Collateral free from all Liens, except in each case for
Liens permitted under Section 9.2 of the Credit Agreement. Neither the
Collateral Agent, nor any Secured Party authorizes any Obligor to, and
no Obligor shall, sell, exchange, transfer, assign, lease or otherwise
dispose of the Collateral or any interest therein, except as permitted
under the Credit Agreement.
(b) Preservation of Collateral. To the extent consistent
with ordinary prudent business practices, keep the Collateral in good
repair, working order and condition and not use the Collateral in
violation of the provisions of this Security Agreement or any other
agreement relating to the Collateral or any policy insuring the
Collateral or any applicable statute, law, bylaw, rule, regulation or
ordinance; provided, however, an Obligor may discontinue the operation
or maintenance of a property or piece of equipment if the
discontinuance (i) is desirable to the conduct of such Obligor's
business and (ii) does not materially adversely affect the business of
the Obligors on a consolidated basis.
6
(c) Instruments/Tangible Chattel Paper/Documents. If, on
or after the Collateral Effective Date, any amount payable in excess
of $50,000 under or in connection with any of the Collateral in excess
of $50,000 shall be or become evidenced by any Instrument, or Tangible
Chattel Paper, or if any property constituting Collateral shall be
stored or shipped subject to a Document, such Instrument, Tangible
Chattel Paper or Document is either in the possession of such Obligor
at all times or, if requested by the Collateral Agent, to perfect its
security interest in such Collateral, is delivered to the Collateral
Agent duly endorsed in a manner reasonably satisfactory to the
Collateral Agent. Such Obligor shall ensure that any Collateral
consisting, on or after the Collateral Effective Date, of Tangible
Chattel Paper is marked with a legend reasonably acceptable to the
Collateral Agent indicating the Collateral Agent's security interest
in such Tangible Chattel Paper.
(d) Change in Corporate Structure or Location. Not,
without providing prior written notice to the Collateral Agent, and
then only to the extent permitted under the Credit Agreement, (i)
alter its corporate existence or, in one transaction or in a series of
transactions, merge into or consolidate with any other entity, or sell
all or substantially all of its assets, (ii) change its state of
incorporation or formation or (iii) change its registered corporate
name; provided that within 30 days of any such change, the Obligor
shall provide the Collateral Agent with all such information as the
Collateral Agent may reasonably request to enable the Collateral Agent
to file such amendments to any previously filed financing statements
as the Collateral Agent may reasonably require.
(e) Inspection. Upon reasonable notice, and during
reasonable hours, at all times allow the Collateral Agent or its
representatives to visit and inspect the Collateral as set forth in
Section 8.10 of the Credit Agreement.
(f) Filing of Financing Statements; Filing of Financing
Statements, Notices, etc. Each Obligor hereby authorizes the
Collateral Agent to prepare and file such financing statements
(including renewal statements) or amendments thereof or supplements
thereto or other instruments as the Collateral Agent may from time to
time reasonably deem necessary or appropriate in order to perfect and
maintain the security interests granted hereunder (and effective as of
the Collateral Effective Date) in accordance with the UCC. Each
Obligor shall also execute and deliver to the Collateral Agent such
agreements, assignments or instruments (including affidavits, notices,
reaffirmations and amendments and restatements of existing documents,
as the Collateral Agent may reasonably request) and do all such other
things as the Collateral Agent may reasonably deem necessary or
appropriate to assure to the Collateral Agent its security interests
hereunder (which are effective as of the Collateral Effective Date).
To that end, each Obligor agrees that the Collateral Agent may file
one or more financing statements disclosing the Collateral Agent's
security interests (which are effective as of the Collateral Effective
Date) in any or all of the Collateral of such Obligor without, to the
extent permitted and/or required by law, such Obligor's signature
thereon, and further each Obligor hereby irrevocably makes,
constitutes and appoints the Collateral Agent, its nominee or any
other person whom the Collateral Agent may designate, as such
Obligor's attorney in fact with full power and for the limited purpose
to sign in the name
7
of such Obligor any such financing statements, amendments and
supplements to financing statements, renewal financing statements,
notices or similar documents which in the Collateral Agent's
reasonable discretion would be necessary, appropriate or convenient in
order to perfect and maintain perfection of the security interests
granted hereunder, such power, being coupled with an interest, being
and remaining irrevocable until the Secured Obligations are Fully
Satisfied. Each Obligor hereby agrees that a carbon, photographic or
other reproduction of this Security Agreement or any such financing
statement is sufficient for filing as a financing statement by the
Collateral Agent without notice thereof to such Obligor wherever the
Collateral Agent may in its sole discretion desire to file the same.
In the event for any reason the law of any jurisdiction other than
North Carolina becomes or is applicable to the Collateral of any
Obligor or any part thereof, or to any of the Secured Obligations,
such Obligor agrees to execute and deliver all such instruments and to
do all such other things as the Collateral Agent in its sole
discretion reasonably deems necessary or appropriate to preserve,
protect and enforce the security interests of the Collateral Agent
under the law of such other jurisdiction (and, if an Obligor shall
fail to do so promptly upon the request of the Collateral Agent, then
the Collateral Agent may execute any and all such requested documents
on behalf of such Obligor pursuant to the power of attorney granted
hereinabove). Each Obligor agrees to xxxx, upon the Collateral
Effective Date and as necessary thereafter, its books and records to
reflect the security interest of the Collateral Agent in the
Collateral.
(g) Treatment of Accounts. Not grant or extend the time
for payment of any Account, or compromise or settle any Account for
less than the full amount thereof, or release any person or property,
in whole or in part, from payment thereof, or allow any credit or
discount thereon, other than as normal and customary in the ordinary
course of an Obligor's business or to the extent such action would not
reasonably be expected to have a Material Adverse Effect.
(h) Collateral Held by Warehouseman, Bailee, etc. If any
Collateral having a value in excess of $1,000,000 is at any time on or
after the Collateral Effective Date in the possession or control of a
warehouseman, bailee or any agent or processor of the Obligors, (i)
notify in writing the Collateral Agent of such possession, (ii) notify
in writing such Person of the Collateral Agent's security interest for
the ratable benefit of the Secured Parties in such Collateral, (iii)
instruct in writing such Person to hold all such Collateral for the
Collateral Agent's account and subject to the Collateral Agent's
instructions and (iv) use its commercially reasonable efforts to
obtain an acknowledgment from such Person that is holding such
Collateral for the benefit of the Collateral Agent.
(i) Insurance. Insure, repair and replace the Collateral
of such Obligor as set forth in the Credit Agreement. All insurance
proceeds shall be subject to the security interest of the Collateral
Agent hereunder.
6. Advances by Secured Parties. On failure of any
Obligor to perform any of the covenants and agreements contained herein, the
Collateral Agent may, on or after the Collateral Effective Date and at its sole
option and in its sole discretion, perform the same and in so doing
8
may expend such sums as the Collateral Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of
a Lien or potential Lien, expenditures made in defending against any adverse
claim and all other expenditures which the Collateral Agent or the Secured
Parties may make for the protection of the security hereof or may be compelled
to make by operation of law. The Collateral Agent or, if applicable, the
relevant Secured Party shall notify the respective Obligor of any such
expenditure. All such sums and amounts so expended (including, without
limitation, reasonable attorneys' fees and court costs in connection therewith)
shall be repayable by the Obligors on a joint and several basis promptly upon
timely notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are expended at
the default rate specified in Section 4.1 of the Credit Agreement for Revolving
Loans that are Base Rate Loans. No such performance of any covenant or
agreement by the Collateral Agent or the Secured Parties on behalf of any
Obligor, and no such advance or expenditure therefor, shall relieve the
Obligors of any default under the terms of this Security Agreement, or the
Documents. The Secured Parties may make any payment hereby authorized in
accordance with any xxxx, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such xxxx, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by an Obligor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with GAAP.
7. Events of Default.
Any of (a) the occurrence of an event which under the Credit
Agreement would constitute an Event of Default thereunder, (b) the occurrence
of an event which gives SunTrust the right to demand payment under the Premier
Boxboard Guaranty or (c) the occurrence of an event which gives Toronto
Dominion the right to demand payment under the Standard Gypsum Guaranty shall
be an Event of Default hereunder (an "Event of Default").
8. Remedies.
(a) General Remedies. Upon the occurrence and during the
continuance of an Event of Default occurring simultaneously with or
subsequent to the Collateral Effective Date, the Secured Parties shall
have, in addition to the rights and remedies provided herein, in the
Documents, or by law (including, but not limited to, levy of
attachment, garnishment and the rights and remedies set forth in the
Uniform Commercial Code of the jurisdiction applicable to the affected
Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where
the rights and remedies are asserted and regardless of whether the UCC
applies to the affected Collateral), and further, the Collateral Agent
may, with or without judicial process or the aid and assistance of
others, (i) enter on any premises on which any of the Collateral may
be located and, without resistance or interference by the Obligors,
take possession of the Collateral, (ii) dispose of any Collateral on
any such premises, (iii) to the extent such Collateral may be moved,
require the Obligors to assemble and make available to the Collateral
Agent at the expense of the Obligors any Collateral at any place and
time designated by the Collateral Agent which is reasonably convenient
to both parties, (iv) remove any Collateral from any
9
such premises for the purpose of effecting sale or other disposition
thereof, and/or (v) without demand and without advertisement, notice,
hearing or process of law, all of which each of the Obligors hereby
waives to the fullest extent permitted by law, at any place and time
or times, sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or more
parcels, for cash, upon credit or otherwise, at such prices and upon
such terms as the Collateral Agent deems advisable, in its sole
discretion (subject to any and all mandatory legal requirements).
Neither the Collateral Agent's compliance with any applicable state or
federal law in the conduct of such sale, nor its disclaimer of any
warranties relating to the Collateral, shall be considered to
adversely affect the commercial reasonableness of such sale. In
addition to all other sums due the Collateral Agent and the Secured
Parties with respect to the Secured Obligations, the Obligors shall
pay the Collateral Agent and each of the Secured Parties all
reasonable documented costs and expenses incurred by the Collateral
Agent or any such Secured Party, including, but not limited to,
reasonable attorneys' fees and court costs, in obtaining or
liquidating the Collateral, in enforcing payment of the Secured
Obligations, or in the prosecution or defense of any action or
proceeding by or against the Collateral Agent or the Secured Parties
or the Obligors concerning any matter arising out of or connected with
this Security Agreement, any Collateral or the Secured Obligations,
including, without limitation, any of the foregoing arising in,
arising under or related to a case under the Bankruptcy Code. To the
extent the rights of notice cannot be legally waived hereunder, each
Obligor agrees that any requirement of reasonable notice shall be met
if such notice is personally served on or mailed, postage prepaid, to
the Borrower in accordance with the notice provisions of Section 13.1
of the Credit Agreement at least 10 days before the time of sale or
other event giving rise to the requirement of such notice. The
Collateral Agent and the Secured Parties shall not be obligated to
make any sale or other disposition of the Collateral regardless of
notice having been given. To the extent permitted by law, any Secured
Party may be a purchaser at any such sale. To the extent permitted by
applicable law, each of the Obligors hereby waives all of its rights
of redemption with respect to any such sale. Subject to the provisions
of applicable law, the Collateral Agent and the Secured Parties may
postpone or cause the postponement of the sale of all or any portion
of the Collateral by announcement at the time and place of such sale,
and such sale may, without further notice, to the extent permitted by
law, be made at the time and place to which the sale was postponed, or
the Collateral Agent and the Secured Parties may further postpone such
sale by announcement made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence
and during the continuance of an Event of Default occurring
simultaneously with or subsequent to the Collateral Effective Date,
whether or not the Collateral Agent has exercised any or all of its
rights and remedies hereunder, each Obligor will promptly upon the
written request of the Collateral Agent instruct all account debtors
to remit all payments in respect of Accounts to a mailing location
selected by the Collateral Agent. In addition, the Collateral Agent or
its designee may notify any Obligor's customers and account debtors
that the Accounts of such Obligor have been assigned to the Collateral
Agent or of the Collateral Agent's security interest therein, and may
(either in its own name or in the name of an Obligor or both) demand,
collect (including without limitation by way of a lockbox
arrangement), receive, take receipt for, sell, xxx for, compound,
settle, compromise and give acquaintance for any
10
and all amounts due or to become due on any Account, and, in the
Collateral Agent's discretion, file any claim or take any other action
or proceeding to protect and realize upon the ratable security
interest of the Secured Parties in the Accounts. Each Obligor
acknowledges and agrees that the Proceeds of its Accounts remitted to
or on behalf of the Collateral Agent in accordance with the provisions
hereof shall be solely for the Collateral Agent's own convenience and
that such Obligor shall not have any right, title or interest in such
Accounts or in any such other amounts except as expressly provided
herein. The Collateral Agent and the Secured Parties shall have no
liability or responsibility to any Obligor for acceptance of a check,
draft or other order for payment of money bearing the legend "payment
in full" or words of similar import or any other restrictive legend or
endorsement or be responsible for determining the correctness of any
remittance. Each Obligor hereby agrees to indemnify the Collateral
Agent and the Secured Parties from and against all liabilities,
damages, losses, actions, claims, judgments, costs, expenses, charges
and reasonable attorneys' fees suffered or incurred by the Collateral
Agent or the Secured Parties (each, an "Indemnified Party") because of
the maintenance of the foregoing arrangements except as relating to or
arising out of the gross negligence or willful misconduct of an
Indemnified Party or its officers, employees or agents. In the case of
any investigation, litigation or other proceeding, the foregoing
indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by an Obligor, its directors,
shareholders or creditors or an Indemnified Party or any other Person
or any other Indemnified Party is otherwise a party thereto.
(c) Access. In addition to the rights and remedies
hereunder, upon the occurrence and during the continuance of an Event
of Default occurring simultaneously with or subsequent to the
Collateral Effective Date, the Collateral Agent shall have the right
to enter and remain upon the various premises of the Obligors without
cost or charge to the Collateral Agent, and use the same, together
with materials, supplies, books and records of the Obligors for the
purpose of collecting and liquidating the Collateral, or for preparing
for sale and conducting the sale of the Collateral, whether by
foreclosure, auction or otherwise. In addition, the Collateral Agent
may remove Collateral, or any part thereof, from such premises and/or
any records with respect thereto, in order to effectively collect or
liquidate such Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the
Collateral Agent or the Secured Parties to exercise any right, remedy
or option under this Security Agreement, the Documents, or as provided
by law, or any delay by the Collateral Agent or the Secured Parties in
exercising the same, shall not operate as a waiver of any such right,
remedy or option. No waiver hereunder shall be effective unless it is
in writing, signed by the party against whom such waiver is sought to
be enforced and then only to the extent specifically stated, which in
the case of the Collateral Agent or the Secured Parties shall only be
granted as provided herein. To the extent permitted by law, neither
the Collateral Agent, the Secured Parties, nor any party acting as
attorney for the Collateral Agent or the Secured Parties, shall be
liable hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence
or willful misconduct hereunder. The rights and remedies of the
Collateral Agents and the Secured Parties under this Security
11
Agreement shall be cumulative and not exclusive of any other right or
remedy which the Collateral Agent or the Secured Parties may have.
(e) Retention of Collateral. Upon the occurrence and
during the continuance of an Event of Default occurring simultaneously
with or subsequent to the Collateral Effective Date, the Collateral
Agent may, after providing the notices required by Sections 9-620 and
9-621 of the UCC or otherwise complying with the requirements of
applicable law of the relevant jurisdiction accept or, to the extent
the Collateral Agent is in possession of any of the Collateral, retain
the Collateral in satisfaction of the Secured Obligations. Unless and
until the Collateral Agent shall have provided such notices, however,
the Collateral Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all amounts to
which the Collateral Agent or the Secured Parties are legally
entitled, the Obligors shall be jointly and severally liable for the
deficiency, together with interest thereon at the default rate
specified in Section 4.1 of the Credit Agreement for Revolving Loans
that are Base Rate Loans, together with the costs of collection and
the reasonable fees of any attorneys employed by the Collateral Agent
or Secured Party to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Secured Obligations
shall be returned to the Obligors or to whomsoever a court of
competent jurisdiction shall determine to be entitled thereto.
9. Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Obligor hereby designates and appoints
the Collateral Agent, on behalf of the Secured Parties, and each of
its designees or agents, as attorney-in-fact of such Obligor,
irrevocably and with power of substitution, with authority to take any
or all of the following actions upon the occurrence and during the
continuance of an Event of Default occurring simultaneously with or
subsequent to the Collateral Effective Date:
(i) to demand, collect, settle, compromise,
adjust, give discharges and releases, all as the Collateral
Agent may reasonably determine;
(ii) to commence and prosecute any actions at
any court for the purposes of collecting any Collateral and
enforcing any other right in respect thereof as the
Collateral Agent may deem reasonably appropriate;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Collateral Agent may deem reasonably
appropriate;
(iv) receive, open and dispose of mail addressed
to an Obligor and endorse checks, notes, drafts, acceptances,
money orders, bills of lading,
12
warehouse receipts or other instruments or documents
evidencing payment, shipment or storage of the goods giving
rise to the Collateral of such Obligor on behalf of and in
the name of such Obligor, or securing, or relating to such
Collateral;
(v) sell, assign, transfer, make any agreement
in respect of, or otherwise deal with or exercise rights in
respect of, any Collateral or the goods or services which
have given rise thereto, as fully and completely as though
the Collateral Agent were the absolute owner thereof for all
purposes;
(vi) adjust and settle claims under any
insurance policy relating thereto;
(vii) execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, security agreements, affidavits,
notices and other agreements, instruments and documents that
the Collateral Agent may reasonably determine necessary in
order to perfect and maintain the security interests and
liens granted in this Security Agreement and in order to
fully consummate all of the transactions contemplated
therein;
(viii) institute any foreclosure proceedings that
the Collateral Agent may deem appropriate; and
(ix) do and perform all such other acts and
things as the Collateral Agent may reasonably deem to be
necessary, proper or convenient in connection with the
Collateral.
This power of attorney is a power coupled with an interest and shall
be irrevocable until such time as the Secured Obligations are Fully
Satisfied. The Collateral Agent shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and
options expressly or implicitly granted to the Collateral Agent in
this Security Agreement, and shall not be liable for any failure to do
so or any delay in doing so. The Collateral Agent shall not be liable
for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct. This power of attorney is conferred
on the Collateral Agent solely to protect, preserve and realize upon
its security interest in the Collateral.
(b) Performance by the Collateral Agent of Obligations.
If any Obligor fails to perform any agreement or obligation contained
herein on a timely basis, the Collateral Agent itself may, on and
after the Collateral Effective Date, perform, or cause performance of,
such agreement or obligation, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Obligors on a
joint and several basis pursuant to Section 11 hereof.
13
(c) Assignment by the Collateral Agent. The Collateral
Agent may from time to time assign its own interest (but not the
interest of any other Secured Party) in the Secured Obligations and
any portion thereof and/or the Collateral and any portion thereof, and
the assignee shall be entitled to all of the rights and remedies of
the Collateral Agent under this Security Agreement in relation
thereto.
(d) Release of Collateral. Upon a sale of any of the
Collateral of an Obligor as permitted by Section 9.5 of the Credit
Agreement, the Collateral Agent shall (to the extent applicable)
deliver to the Obligor, upon the Obligor's request and at the
Obligor's expense, such documentation as is reasonably necessary to
evidence the release of the Collateral Agent's security interest, if
any, in such Collateral, including, without limitation, amendments or
terminations of UCC financing statements, if any, and the release of
such Obligor from all of its obligations, if any, under this Security
Agreement.
(e) The Collateral Agent's Duty of Care. Other than the
exercise of reasonable care to assure the safe custody of the
Collateral while being held by the Collateral Agent hereunder, the
Collateral Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Obligors
shall be responsible for preservation of all rights in the Collateral
until surrendered or tendered to the Collateral Agent, and the
Collateral Agent shall be relieved of all responsibility for the
Collateral upon surrendering it or tendering the surrender of it to
the Obligors. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially
equal to that which the Collateral Agent accords its own property,
which shall be no less than the treatment employed by a reasonable and
prudent agent in the industry, it being understood that the Collateral
Agent shall not have responsibility for taking any necessary steps to
preserve rights against any parties with respect to any of the
Collateral. In the event of a public or private sale of Collateral
pursuant to Section 8 hereof, the Collateral Agent shall have no
obligation to clean-up, repair or otherwise prepare the Collateral for
sale.
10. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any proceeds of any Collateral,
when received by the Collateral Agent or any of the Secured Parties in cash or
its equivalent, will be applied in reduction of the applicable Secured
Obligations then due and payable as follows:
(a) FIRST, to the payment of all out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the Collateral Agent or an applicable Secured Party in connection with
enforcing the rights of the applicable Secured Parties under this
Security Agreement and any protective advances made by the Collateral
Agent or an applicable Secured Party;
(b) SECOND, to the payment of all other expenses then
due and payable by the Obligors under the Documents or otherwise in
connection with the Secured Obligations, pro rata as set forth below;
14
(c) THIRD, to the payment of all indemnity obligations
then due and payable by the Obligors under the Documents or otherwise
in connection with the Secured Obligations, pro rata as set forth
below;
(d) FOURTH, to the payment of (i) all fees of the
Administrative Agent and (ii) all fees of SunTrust and Toronto
Dominion, if any, that are in the nature of administrative agent's
fees, in each case that are then due and payable under the Documents
or otherwise in connection with the Secured Obligations, pro rata as
set forth below;
(e) FIFTH, to the payment of all commitment and other
fees and commissions then due and payable under the Documents or
otherwise in connection with the Secured Obligations, pro rata as set
forth below;
(f) SIXTH, to the payment of all accrued and unpaid
interest then due and payable under the Documents or otherwise in
connection with the Secured Obligations (including without limitation
any accrued and unpaid interest on obligations arising under any
Hedging Agreements between any Obligor and any Lender, or any
Affiliate of a Lender), pro rata as set forth below;
(g) SEVENTH, to the payment of the principal amount of
the Secured Obligations then due and payable and to the cash
collateral account described in Section 11.2(b) of the Credit
Agreement to the extent of any L/C Obligations then outstanding
(including without limitation the termination value or other payment
obligations (not constituting interest or fees) arising under any
Hedging Agreements between any Obligor and any Lender, or any
Affiliate of a Lender), pro rata as set forth below;
(h) EIGHTH, to all other obligations which shall have
become due and payable under the applicable Documents and not repaid
pursuant to clauses "FIRST" through "SEVENTH" above, pro rata as set
forth below; and
(i) NINTH, to the payment of the surplus, if any, to
whomever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the applicable Secured Parties shall receive
an amount equal to its pro rata share of amounts available to be applied above
(based on the proportion that the then outstanding obligations owed by the
Obligors to such Secured Party under the Documents bears to the aggregate
outstanding obligations of the Obligors to the applicable Secured Parties under
the Documents); and (iii) to the extent that any amounts available for
distribution pursuant to clause "SEVENTH" above are attributable to L/C
Obligations then outstanding under the Credit Agreement, such amounts shall be
held by the Collateral Agent in a cash collateral account and applied (x)
first, to reimburse the Issuing Lender and/or the Lenders under the Credit
Agreement from time to time for any drawings under Letters of Credit and (y)
then, following the expiration of all such L/C Obligations, without
duplication, to all other obligations of
15
the types described in clause "SEVENTH" above; provided that the aggregate
amount distributable to a Secured Party (or to its representative on its
behalf) on a given distribution date shall not exceed the aggregate amount of
Secured Obligations which are then due and payable to such Secured Party. Each
Obligor irrevocably waives the right to direct the application of such payments
and proceeds and acknowledges and agrees that the Collateral Agent shall have
the continuing and exclusive right to apply and reapply any and all such
payments and proceeds in the Collateral Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.
11. Costs of Counsel. If at any time hereafter, whether
upon the occurrence of an Event of Default or not, the Collateral Agent or a
Secured Party employs counsel to prepare or consider amendments, waivers or
consents with respect to this Security Agreement, or to take action or make a
response in or with respect to any legal or arbitral proceeding relating to
this Security Agreement or relating to the Collateral, or to protect the
Collateral or exercise any rights or remedies under this Security Agreement or
with respect to the Collateral, then the Obligors agree to promptly pay upon
demand any and all such reasonable documented costs and expenses of the
Collateral Agent or the Secured Parties, all of which costs and expenses shall
constitute Secured Obligations hereunder.
12. Continuing Agreement.
(a) This Security Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect
until such time as the Secured Obligations are Fully Satisfied. Upon
such payment and termination, this Security Agreement shall be
automatically terminated and the Collateral Agent and the Secured
Parties shall, upon the request and at the expense of the Obligors,
forthwith release all of its liens and security interests hereunder
and shall execute and deliver all UCC termination statements and/or
other documents reasonably requested by the Obligors evidencing such
termination. Notwithstanding the foregoing all releases and
indemnities provided hereunder shall survive termination of this
Security Agreement.
(b) This Security Agreement shall continue to be
effective or be automatically reinstated, as the case may be, if at
any time payment, in whole or in part, of any of the Secured
Obligations is rescinded or must otherwise be restored or returned by
the Collateral Agent or any Secured Party as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided that in
the event payment of all or any part of the Secured Obligations is
rescinded or must be restored or returned, all reasonable costs and
expenses (including without limitation any reasonable legal fees and
disbursements) incurred by the Collateral Agent or any Secured Party
in defending and enforcing such reinstatement shall be deemed to be
included as a part of the Secured Obligations.
13. Amendments; Waivers; Modifications.
(a) This Security Agreement and the provisions hereof
may not be amended, waived, modified, changed, discharged or
terminated except with the prior written consent
16
of both (i) the parties required to give such consent under Section
13.11 of the Credit Agreement and (ii) the Required Secured Parties;
provided that, without the prior written consent of each Secured
Party, no such amendment, waiver or modification shall (x) alter the
pro rata sharing among the Secured Parties of the Liens granted
hereunder (and proceeds thereof) or the order of the application of
proceeds set forth in Section 10 or (y) except as the result of or in
connection with an Asset Disposition permitted by Section 9.5 of the
Credit Agreement, release all or substantially all of the Collateral
(upon or after the occurrence of the Collateral Effective Date).
(b) Notwithstanding anything to the contrary herein or
in the Credit Agreement, the definition of "Collateral Effective Date"
as set forth in Section 1.1 of the Credit Agreement may not be
amended, modified, changed, discharged or terminated in a manner
adverse to the Secured Parties except with the prior written consent
of each Secured Party.
14. Successors in Interest. This Security Agreement
shall create, effective as of the Collateral Effective Date, a continuing
security interest in the Collateral and shall be binding upon each Obligor, its
successors and assigns and shall inure, together with the rights and remedies
of the Collateral Agent and the Secured Parties hereunder, to the benefit of
the Collateral Agent and the Secured Parties, on a ratable basis, and their
successors and permitted assigns; provided, however, that none of the Obligors
may assign its rights or delegate its duties hereunder without the prior
written consent of each Secured Party (or, with respect to the Lenders, the
Required Lenders, as required by the Credit Agreement).
15. Notices. All notices required or permitted to be
given under this Security Agreement shall be in conformance with Section 13.1
of the Credit Agreement and/or, to the extent applicable, the Premier Boxboard
Guaranty and/or the Standard Gypsum Guaranty.
16. Counterparts. This Security Agreement may be
executed in any number of counterparts (including telecopy), each of which
where so executed and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Security Agreement to produce or account for more than one such
counterpart.
17. Headings. The headings of the sections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA. Any legal action or proceeding with respect to this
Security Agreement may be brought in the courts of the State of North
Carolina in Mecklenburg County, or of the United States for the
Western District of North Carolina, and, by execution and delivery of
this Security Agreement, each Obligor hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally,
the
17
jurisdiction of such courts. Each Obligor further irrevocably consents
to the service of process out of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the address
for notices pursuant to Section 13.1 of the Credit Agreement, such
service to become effective 30 days after such mailing. Nothing herein
shall affect the right of the Collateral Agent to serve process in any
other manner permitted by law or to commence legal proceedings or to
otherwise proceed against any Obligor in any other jurisdiction.
(b) Each Obligor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection
with this Security Agreement brought in the courts referred to in
clause (a) hereof and hereby further irrevocably waives and agrees not
to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of any of the
Security Agreement is determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions shall remain in
full force and effect and shall be construed without giving effect to the
illegal, invalid or unenforceable provisions.
21. Entirety. This Security Agreement and the Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Documents, or the
transactions contemplated herein and therein.
22. Survival. All representations and warranties of the
Obligors hereunder shall survive the execution and delivery of this Security
Agreement and the Documents, the delivery of the Notes and the making of the
Loans and the issuance of the Letters of Credit under the Credit Agreement.
23. Other Security. To the extent that any of the
Secured Obligations are now or hereafter secured by property other than the
Collateral (including, without limitation, real property and securities owned
by an Obligor), or by a guarantee, endorsement or property of any other Person,
then the Collateral Agent and the Secured Parties shall have the right to
proceed against such other property, guarantee or endorsement upon the
occurrence and during the continuance of any Event of Default occurring
simultaneously with or subsequent to the Collateral Effective Date, and the
Collateral Agent and the Secured Parties have the right, in their sole
discretion, to determine which rights, security, liens, security interests or
remedies the Collateral Agent and the Secured Parties shall at any time pursue,
relinquish, subordinate, modify or take with respect thereto, without
18
in any way modifying or affecting any of them or any of the Collateral Agent's
and the Secured Parties' rights or the Secured Obligations under this Security
Agreement or the Documents.
24. Joint and Several Obligations of Obligors.
(a) Each of the Obligors is accepting joint and several
liability hereunder in consideration of the financial accommodation to
be provided by the Secured Parties under the Documents, for the mutual
benefit, directly and indirectly, of each of the Obligors and in
consideration of the undertakings of each of the Obligors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Obligors with respect to the payment and performance of all of the
Secured Obligations arising under this Security Agreement and the
Documents, it being the intention of the parties hereto that all the
Secured Obligations shall be the joint and several obligations of each
of the Obligors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary
contained herein, in any of the Documents, the obligations of each
Guarantor under the Credit Agreement and the other Documents shall be
limited to an aggregate amount equal to the largest amount that would
not render such obligations subject to avoidance under Section 548 of
the Bankruptcy Code or any comparable provisions of any applicable
state law.
25. Effective Date. Notwithstanding anything in this
Security Agreement to the contrary, the grants of security interests pursuant
to Section 2 hereof shall not become effective until the Collateral Effective
Date; provided that on such Collateral Effective Date such grants of security
interests shall become effective immediately and without any further action on
the part of any of the parties hereto.
26. Rights of Required Lenders. All rights of the
Collateral Agent hereunder, if not exercised by the Collateral Agent, may be
exercised by the Required Lenders.
27. Third-Party Beneficiaries. The parties hereto
further acknowledge and agree that SunTrust and Toronto Dominion are intended
third-party beneficiaries of this Security Agreement and this Security
Agreement shall be enforceable by each of them.
28. Indemnification. The Borrower hereby reaffirms its
indemnity obligations under Section 13.2(c) of the Credit Agreement and
acknowledges and agrees that this Security Agreement constitutes a Loan
Document for purposes thereof. Without limiting the foregoing, the Obligors
hereby agree to defend, indemnify and hold harmless the Collateral Agent and
the Secured Parties, and their respective parents, Subsidiaries, Affiliates,
employees, agents, officers and directors, from and against any losses,
penalties, fines, liabilities, settlements, damages, costs and expenses,
suffered by any such Person in connection with any claim, investigation,
litigation or other proceeding (whether or not the Collateral Agent or any
Secured Party is a party thereto) and the prosecution and defense thereof,
arising out of or in any way connected with this
19
Security Agreement or the other Documents or as a result of the breach of any
of the Obligors' obligations hereunder or thereunder, including without
limitation reasonable attorney's fees (including the allocated cost of internal
counsel), consultant's fees and settlement costs (but excluding any losses,
penalties, fines liabilities, settlements, damages, costs and expenses to the
extent incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified (as finally determined by a court of competent
jurisdiction)).
29. Collateral Agency Provisions.
(a) Appointment. Each of SunTrust, Toronto Dominion and
Bank of America, as Administrative Agent for the Lenders, hereby
irrevocably designates and appoints Bank of America as Collateral
Agent of such Secured Party (or the Secured Parties represented by it)
under this Security Agreement for the term hereof and each such Person
irrevocably authorizes Bank of America as Collateral Agent for such
Secured Party (or the Secured Parties represented by it), to take such
action on its behalf under the provisions of this Security Agreement
and to exercise such powers and perform such duties as are expressly
delegated to the Collateral Agent by the terms of this Security
Agreement, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Security Agreement, the Collateral Agent shall not
have any duties or responsibilities, except those expressly set forth
herein and therein, or any fiduciary relationship with any Secured
Party, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Security Agreement
or otherwise exist against the Collateral Agent. Any reference to the
Collateral Agent in this Section 29 shall be deemed to refer to the
Collateral Agent solely in its capacity as Collateral Agent and not in
its capacity as a Secured Party.
(b) Delegation of Duties. The Collateral Agent may
execute any of its respective duties under this Security Agreement by
or through agents or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The
Collateral Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by the
Collateral Agent with reasonable care.
(c) Exculpatory Provisions. Neither the Collateral Agent
nor any of its officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates shall be (i) liable for
any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Security Agreement (except for
actions occasioned solely by its or such Person's own gross negligence
or willful misconduct), or (ii) responsible in any manner to any of
the Secured Parties for any recitals, statements, representations or
warranties made by any Obligor or any of its Subsidiaries or any
officer thereof contained in this Security Agreement or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Collateral Agent under or in
connection with, this Security Agreement or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Security Agreement or for any failure of any Obligor or any of its
Subsidiaries to perform its obligations hereunder. The Collateral
Agent shall not be under any obligation to any Secured Party to
ascertain or to inquire as to the
20
observance or performance of any of the agreements contained in, or
conditions of, this Security Agreement, or to inspect the properties,
books or records of any Obligor or any of its Subsidiaries.
(d) Reliance by Collateral Agent. The Collateral Agent
shall be entitled to rely, and shall be fully protected in relying,
upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to the Obligors),
independent accountants and other experts selected by the Collateral
Agent. The Collateral Agent may deem and treat the payee of any note
as the owner thereof for all purposes unless the Collateral Agent
shall have actual notice of any transferee. The Collateral Agent shall
be fully justified in failing or refusing to take any action under
this Security Agreement unless it shall first receive advice or
concurrence of the Required Secured Parties (or, when expressly
required hereby, all the Secured Parties) as it deems appropriate or
it shall first be indemnified to its satisfaction by the Secured
Parties against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such
action except for its own gross negligence or willful misconduct. The
Collateral Agent shall in all cases by fully protected in acting, or in
refraining from acting, under this Security Agreement in accordance
with a request of the Required Secured Parties (or, when expressly
required hereby, all the Secured Parties), and such request and any
action taken or failure to act pursuant thereto shall be binding upon
all the Secured Parties and all future holders of the Secured
Obligations.
(e) Notice of Default. The Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any Event of
Default hereunder unless it has received notice of such Event of
Default in accordance with the terms of the Credit Agreement or notice
from a Secured Party of the Obligors referring to this Security
Agreement, describing such Event of Default and stating that such
notice is a "notice of default." In the event the Collateral Agent
receives such notice, it shall promptly give notice thereof to the
Secured Parties. The Collateral Agent shall take such action with
respect to such Event of Default as shall be reasonably directed by
the Required Secured Parties; provided that unless and until the
Collateral Agent shall have received such directions, the Collateral
Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Event of Default as it
shall deem advisable in the best interests of the Secured Parties,
except to the extent that other provisions of this Security Agreement
expressly require that any such action be taken or not be taken only
with the consent and authorization or the request of the Secured
Parties or Required Secured Parties, as applicable.
(f) Non-Reliance on the Collateral Agent and Other
Secured Parties. Each of SunTrust, Toronto Dominion and Bank of
America, as Administrative Agent for the Lenders, expressly
acknowledges that neither the Collateral Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties
to it and that no act by the
21
Collateral Agent hereinafter taken, including any review of the
affairs of the Obligors or any of their respective Subsidiaries, shall
be deemed to constitute any representation or warranty by the
Collateral Agent to any Secured Party. Each of SunTrust, Toronto
Dominion and Bank of America, as Administrative Agent for the Lenders,
represents that it has made and will continue to make, independently
and without reliance upon the Collateral Agent or any other Secured
Party, and based on such documents and information as it shall deem
appropriate at the time, its own credit analysis, appraisals and
decisions in taking or not taking action under this Security Agreement
and the other Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Obligors and
their respective Subsidiaries. Except for notices, reports and other
documents expressly required to be furnished to the Secured Parties by
the Collateral Agent hereunder, the Collateral Agent shall not have
any duty or responsibility to provide any Secured Party with any
credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of any
Obligor or any of its Subsidiaries which may come into the possession
of the Collateral Agent or any of its respective officers, directors,
employees, agents, attorneys-in-fact, Subsidiaries or Affiliates.
(g) Indemnification. The Lenders under the Credit
Agreement have agreed, and each of SunTrust and Toronto Dominion, as
Secured Parties, hereby agree, to indemnify the Collateral Agent in
its capacity as such and (to the extent not reimbursed by the Obligors
and without limiting the obligation of the Obligors to do so), ratably
according to the respective amounts of their Secured Obligations from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Secured
Obligations) be imposed on, incurred by or asserted against the
Collateral Agent in any way relating to or arising out of this
Security Agreement or the other Documents, or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Collateral Agent under or in connection with any of the foregoing;
provided that no Secured Party shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the
extent they result from the Collateral Agent's bad faith, gross
negligence or willful misconduct. The agreements in this Section 29(g)
shall survive the payment of the Secured Obligations and all other
amounts payable hereunder and the termination of this Security
Agreement.
(h) The Collateral Agent in Its Individual Capacity. The
Collateral Agent and its respective Subsidiaries and Affiliates may
make loans to, accept deposits from and generally engage in any kind
of business with the Obligors as though the Collateral Agent were not
an Collateral Agent hereunder. With respect to any Loans made or
renewed by it and any Note issued to it and with respect to any Letter
of Credit issued by it or participated in by it, the Collateral Agent
shall have the same rights and powers under this Security Agreement
and the other Documents as any Secured Party and may exercise
22
the same as though it were not an Collateral Agent, and the terms
"Secured Party" and "Secured Parties" shall include the Collateral
Agent in its individual capacity.
(i) Resignation of the Collateral Agent; Successor
Collateral Agent. The Collateral Agent may resign as Collateral Agent
at any time by giving thirty (30) days advance notice thereof to the
Secured Parties and the Obligors and, thereafter, the retiring
Collateral Agent shall be discharged from its duties and obligations
hereunder. Upon any such resignation, the Required Secured Parties
shall have the right, subject to the approval of the Borrower (so long
as no Event of Default has occurred and is continuing), to appoint a
successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed by the Required Secured Parties, been approved
(so long as no Event of Default has occurred and is continuing) by the
Borrower or have accepted such appointment within thirty (30) days
after the Collateral Agent's giving of notice of resignation, then the
Collateral Agent may, on behalf of the Secured Parties, appoint a
successor Collateral Agent reasonably acceptable to the Borrower (so
long as no Default or Event of Default has occurred and is
continuing). Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all
rights, powers, privileges and duties of the retiring Collateral
Agent. After any retiring Collateral Agent's resignation hereunder as
Collateral Agent, the provisions of this Section 29 shall continue in
effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Collateral Agent. If no
successor administrative agent has accepted appointment as Collateral
Agent by the date which is thirty (30) days following a retiring
Collateral Agent's notice of resignation, the retiring Collateral
Agent's resignation shall nevertheless thereupon become effective and
the Secured Parties shall perform all of the duties of the Collateral
Agent hereunder until such time, if any, as the Required Secured
Parties appoint a successor agent as provided for above.
[remainder of page intentionally left blank]
23
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: CARAUSTAR INDUSTRIES, INC.,
a North Carolina corporation
By:
----------------------------------------
Name:
Title:
GUARANTORS: AUSTELL HOLDING COMPANY, LLC,
a Georgia limited liability company
CAMDEN PAPERBOARD CORPORATION,
a New Jersey corporation
CARAUSTAR CUSTOM PACKAGING GROUP, INC.,
a Delaware corporation
CARAUSTAR CUSTOM PACKAGING GROUP (MARYLAND), INC.,
a Maryland corporation
CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS GROUP, INC.,
a Delaware corporation
CARAUSTAR MILL GROUP, INC.,
an Ohio corporation f/k/a Caraustar Paperboard
Corporation (as successor by merger to Austell Box
Board Corporation, Buffalo Paperboard Corporation,
Carolina Component Concepts, Inc., Carolina Converting
Incorporated, Carolina Paper Board Corporation,
Carotell Paper Board Corporation, Chattanooga
Paperboard Corporation, Cincinnati Paperboard
Corporation, Columbus Recycling, Inc., New Austell Box
Board Company, Paper Recycling, Inc., Reading
Paperboard Corporation, Richmond Paperboard
Corporation and Sweetwater Paper Board Company, Inc.)
CARAUSTAR RECOVERED FIBER GROUP, INC.,
a Delaware corporation
CHICAGO PAPERBOARD CORPORATION,
an Illinois corporation
FEDERAL TRANSPORT, INC.,
an Ohio corporation
GYPSUM MGC, INC.,
a Delaware corporation
HALIFAX PAPER BOARD COMPANY, INC.,
a North Carolina corporation
XXXXXXXXX GYPSUM COMPANY,
a Delaware corporation
XXXXXXXX GYPSUM COMPANY, LLC,
a Delaware limited liability company
PBL INC.,
a Delaware corporation
XXXXXXX PAPERBOARD, INC.,
a Connecticut corporation
By:
----------------------------------------------------------
Name:
Title:
of each of the foregoing Guarantors
CARAUSTAR, G.P.,
a South Carolina general partnership
By: CARAUSTAR INDUSTRIES, INC.,
a North Carolina corporation, general partner
By:
-------------------------------------------------------
Name:
Title:
By: CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS GROUP, INC.,
a Delaware corporation, general partner
By:
-------------------------------------------------------
Name:
Title:
Agreed and Accepted to as of the date first above written.
BANK OF AMERICA, N.A.,
in its capacity as Collateral Agent
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
The undersigned hereby acknowledge and accept the
foregoing Security Agreement and agree to the terms
of Section 29 thereof:
BANK OF AMERICA, N.A.,
in its capacity as Administrative Agent for the Lenders
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
SUNTRUST BANK, ATLANTA
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
TORONTO DOMINION (TEXAS), INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
SCHEDULE 4(a)
PRINCIPAL PLACE OF BUSINESS/CHIEF EXECUTIVE OFFICES
SCHEDULE 4(b)
LOCATIONS OF COLLATERAL
CONSENT AND MODIFICATION
July 11, 2002
Caraustar Industries, Inc.
0000 Xxx Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: H. Xxx Xxxxxx, III
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of March 29,
2001 (as amended by that certain First Amendment to Credit Agreement dated as
of September 10, 2001, that certain Second Amendment to Credit Agreement dated
as of November 30, 2001, that certain Third Amendment to Credit Agreement dated
as of January 22, 2002 and that certain Fourth Amendment to Credit Agreement
dated as of June 3, 2002 (the "Fourth Amendment") and as further modified or
amended from time to time, the "Credit Agreement"). Capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the
Credit Agreement.
You have requested that the Required Lenders consent to modifications of the
Fourth Amendment to:
(1) Modify the definition of "New Senior Subordinated Note
Indenture" in Section 1 of the Fourth Amendment to read as follows:
"New Senior Subordinated Note Indenture" means the Indenture, to be
dated on or about the date of the asset purchase agreement executed
and delivered in connection with the JS Industrial Packaging Group
Acquisition, between the Borrower, the Subsidiaries of the Borrower
identified as guarantors therein and The Bank of New York, as Trustee,
as amended, modified and supplemented from time to time to the extent
permitted under this Agreement; and
(2) Modify Section 24 of the Fourth Amendment by adding the
following sentence at the end thereof:
Notwithstanding the foregoing or Section 9.13 of the Credit Agreement,
Section 13 of the Fourth Amendment shall become effective upon the
date of the asset purchase agreement executed and delivered in
connection with the JS Industrial Packaging Group Acquisition;
provided that (x) New Senior Subordinated Notes shall (except as
otherwise specified in clause (y) below) be issued and redeemed (or
may be redeemed) in accordance with the terms of the New Senior
Subordinated Note Indenture and the Escrow Agreement defined and
referred to therein and (y) any and all New Senior Subordinated Notes
issued prior to the consummation of the JS Industrial Packaging Group
Acquisition shall, in any event, be redeemed not later than September
30, 2002 if the JS Industrial Packaging Group Acquisition has not been
consummated on or before such date.
The undersigned Required Lenders hereby consent to the above modifications.
Except to the extent specifically provided to the contrary in this letter, all
terms and conditions of the Fourth Amendment and the Credit Agreement shall
remain in full force and effect, without modification or limitation. This
letter shall not operate as a consent to any other action or inaction by the
Borrower or any of the Guarantors, or as a waiver of any right, power, or
remedy of any Lender or the Administrative Agent under, or any provision
contained in, the Fourth Amendment or the Credit Agreement except as
specifically provided herein. This letter may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall be deemed to constitute one and the same instrument. This letter
shall constitute a Loan Document.
Very truly yours,
ADMINISTRATIVE
AGENT: BANK OF AMERICA, N.A., in its capacity
as Administrative Agent
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 2002
LENDERS: BANK OF AMERICA, NA.,
Individually as an Issuing Lender and a
Lender
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 2002
BANKERS TRUST COMPANY,
individually as an Issuing Lender and a
Lender
By: /s/ Xxxxx Xxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxx
--------------------------------------
Title: Director
-------------------------------------
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 2002
CREDIT SUISSE FIRST BOSTON
By: /s/ Xxx Xxxxx
----------------------------------------
Name: XXX XXXXX
--------------------------------------
Title: DIRECTOR
-------------------------------------
By: /s/ Xxxxxxx Xxxxxxxxx
----------------------------------------
Name: XXXXXXX XXXXXXXXX
--------------------------------------
Title: VICE PRESIDENT
-------------------------------------
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 2002
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Name: XXXXX X. XXXXXXXXX
--------------------------------------
Title: VICE PRESIDENT
-------------------------------------
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 0000
XXX XXXX XX XXX XXXX
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 2002
Acknowledged and Agreed:
BORROWER: CARAUSTAR INDUSTRIES, INC.,
a North Carolina corporation
By: /s/ X. Xxx. Xxxxxx, III
----------------------------------------
Name: H. Xxx Xxxxxx, III
Title: Vice President Planning &
Development and Chief Financial
Officer
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 2002
GUARANTORS: AUSTELL HOLDING COMPANY, LLC,
a Georgia limited liability company
CAMDEN PAPERBOARD CORPORATION,
a New Jersey corporation
CARAUSTAR CUSTOM PACKAGING GROUP, INC.,
a Delaware corporation
CARAUSTAR CUSTOM PACKAGING GROUP (MARYLAND), INC.,
a Maryland corporation
CARAUSTAR INDUSTRIAL AND PRODUCTS GROUP, INC.,
a Delaware corporation
CARAUSTAR MILL GROUP, INC., an Ohio corporation f/k/a
Caraustar Paperboard Corporation (as successor by
merger to Austell Box Board Corporation, Buffalo
Paperboard Corporation, Carolina Component Concepts,
Inc., Carolina Converting Incorporated, Carolina
Paper Board Corporation, Carotell Paper Board
Corporation, Chattanooga Paperboard Corporation,
Cincinnati Paperboard Corporation, Columbus
Recycling, Inc., New Austell Box Board Company,
Paper Recycling, Inc., Reading Paperboard
Corporation, Richmond Paperboard Corporation and
Sweetwater Paper Board Company, Inc.)
CARAUSTAR RECOVERED FIBER GROUP, INC.,
a Delaware corporation
CHICAGO PAPERBOARD CORPORATION,
an Illinois corporation
FEDERAL TRANSPORT, INC.,
an Ohio corporation
GYPSUM MGC, INC.,
a Delaware corporation
HALIFAX PAPER BOARD COMPANY, INC.,
a North Carolina corporation
XXXXXXXXX GYPSUM COMPANY,
a Delaware corporation
XXXXXXXX GYPSUM COMPANY, LLC,
a Delaware limited liability company
PBL INC.,
a Delaware corporation
XXXXXXX PAPERBOARD, INC.,
a Connecticut corporation
By: /s/ H. Xxx Xxxxxx, III
------------------------------------------------
Name: H. Xxx Xxxxxx, III
Title: Vice President Planning & Development and
Chief Financial Officer
of each of the foregoing Guarantors
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 2002
CARAUSTAR, G.P.,
a South Carolina general partnership
By: CARAUSTAR INDUSTRIES, INC.,
a North Carolina corporation, general partner
By: /s/ H. Xxx Xxxxxx, III
---------------------------------------------
Name: H. Xxx Xxxxxx, III
Title: Vice President Planning & Development and
Chief Financial Officer
By: CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS
GROUP, INC., a Delaware corporation,
general partner
By: /s/ H. Xxx Xxxxxx, III
---------------------------------------------
Name: H. Xxx Xxxxxx, III
Title: Vice President Planning & Development and
Chief Financial Officer
CONSENT AND MODIFICATION REGARDING
FOURTH AMENDMENT TO
CARAUSTAR INDUSTRIES, INC. CREDIT AGREEMENT
JULY 2002
