EXHIBIT 10.19
EXECUTION COPY
FIFTH AMENDMENT TO GUARANTY AGREEMENT
This FIFTH AMENDMENT TO GUARANTY AGREEMENT (this "Amendment"), dated as
of September 20, 2002, is made and entered into by and between CARAUSTAR
INDUSTRIES, INC., a North Carolina corporation (the "Guarantor"), and SUNTRUST
BANK, a Georgia banking corporation, formerly known as SunTrust Bank, Atlanta
(the "Lender").
W I T N E S S E T H:
WHEREAS, the Guarantor executed that certain Guaranty Agreement, dated
as of July 30, 1999, in favor of the Lender, as amended by that certain First
Amendment to Guaranty Agreement dated as of September 29, 2000, that certain
Second Amendment and Waiver to Guaranty Agreement dated as of March 12, 2001,
that certain Third Amendment to Guaranty Agreement dated as of April 9, 2001 and
that certain Fourth Amendment and Waiver to Guaranty Agreement dated as of
January 18, 2002 (as so amended, the "Guaranty Agreement"), pursuant to which
the Guarantor guaranteed 50% of the obligations of Premier Boxboard Limited LLC,
a Delaware limited liability corporation (the "Borrower"), under a certain
Amended and Restated Revolving Credit Agreement dated as of December 18, 2000,
as amended by that certain First Amendment to Revolving Credit Agreement, dated
as of March 12, 2001 (as the same may be further amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement"; capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Credit Agreement);
WHEREAS, the Guarantor previously executed in favor of the Lender that
certain Fifth Amendment to Guaranty Agreement dated as of June 6, 2002 (the
"June 2002 Guaranty Amendment");
WHEREAS, notwithstanding the fact that the June 2002 Guaranty Amendment
was executed by the parties and deemed closed as of June 6, 2002, the June 2002
Guaranty Amendment contained certain conditions precedent to effectiveness,
which conditions have not been satisfied, and, accordingly, has not become
effective except to the extent provided therein;
WHEREAS, the Guarantor has requested that the Lender amend the Guaranty
Agreement in the manner set forth below, and the Lender and Guarantor intend
that this Amendment shall amend, restate and replace the June 2002 Guaranty
Amendment such that the June 2002 Guaranty Amendment shall have no further force
or effect, and the Lender is willing to do so subject to the terms and
conditions contained herein;
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, the parties hereto, intending to be legally bound, hereby amend the
Guaranty Agreement and agree as follows:
1. Section 7 of the Guaranty Agreement is hereby amended by
inserting the following new Sections in the appropriate numerical order:
SECTION 7.5 INSURANCE. Maintain with insurers of recognized
responsibility, insurance with respect to its properties and business,
against loss or
damage of the kinds customarily insured against by reputable companies
in the same or similar businesses, such insurance to be of such types
and in such amounts reasonably consistent with those amounts which are
customary for such companies under similar circumstances; provided,
however, that in any event Guarantor shall use its best efforts to
maintain, or cause to be maintained, insurance in amounts and with
coverages not materially less favorable to Guarantor as in effect on the
date of this Agreement, provided that within ten (10) business days
after the occurrence of the Second Amendment Effective Date, the
Caraustar Administrative Agent 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 Caraustar Administrative Agent, that it will give the Caraustar
Administrative Agent thirty (30) days prior written notice before any
such policy or policies shall be altered or canceled.
SECTION 7.6 VISITATION, INSPECTION, ETC.
(a) At any time during which no Default or Event of Default
shall have occurred and be continuing, Guarantor shall permit a
representative of Lender to visit and inspect any of the property of
Guarantor, to examine its books of account, records, reports and other
papers, to make extracts therefrom, and to discuss its affairs,
finances, and accounts with its officers and employees, all at such
reasonable times, but (unless a Default or Event of Default shall occur)
not more often than twice during each calendar year, as may be
reasonably requested.
(b) At any time during which a Default or Event of Default shall
have occurred and be continuing, Guarantor shall permit a representative
of Lender to visit and inspect any of the property of Guarantor, to
examine its books of accounts, records, reports and other papers, to
make copies and extracts therefrom (so long as, in the reasonable
opinion of Guarantor, the information to be copied does not constitute
proprietary information of its business operations), and to discuss its
affairs, finances and accounts with its officers and employees, all at
such reasonable times and as often as may be reasonably requested;
provided that, after the occurrence and during the continuance of an
Event of Default, any such action shall be at the expense of the
Guarantor.
(c) After the occurrence of the Second Amendment Effective Date,
Guarantor agrees that the Lender, and its representatives, may conduct
an annual audit of the Collateral, at the expense of the Guarantor.
SECTION 7.7 PLEDGED ASSETS. Guarantor will (i) cause all of its
Property that constitutes (or pursuant to the terms of the Security
Agreement is intended to constitute) Collateral to be subject at all
times to first priority, perfected Liens in favor of the Caraustar
Administrative Agent, for the 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,
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subject in any case to Liens permitted under Section 9.2 of the
Caraustar Credit Agreement and the Security Agreement, and (ii) deliver,
or, in the case of agreements or other documents that require the
consent of a non-Affiliate of the Guarantor, use commercially reasonable
efforts to deliver, such other documentation as the Caraustar
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 of the Caraustar
Credit Agreement), 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 Caraustar Administrative
Agent Liens thereunder), all in form, content and scope reasonably
satisfactory to the Caraustar Administrative Agent.
SECTION 7.8 FURTHER ASSURANCES REGARDING COLLATERAL.
Guarantor 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 Caraustar Administrative Agent or the Lender may reasonably request,
for the purposes of implementing or effectuating the provisions of this
Agreement and the other Credit Documents or creating or perfecting or
ensuring the priority or sufficiency or enforceability or enforcement of
a Lien in favor of the Caraustar Administrative Agent as security for
the Obligations upon any or all of the Collateral (whether owned prior
to the Second Amendment Effective Date or thereafter acquired), or more
fully perfecting or renewing any such Lien;
(ii) To the extent requested by the Caraustar
Administrative Agent, at its expense, if the exercise by the Caraustar
Administrative Agent or Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Credit 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 Guarantor 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 sixty (60) days of the Second Amendment Effective Date (or in the
case of locations which meet the threshold set forth herein on a date
subsequent to the Second Amendment Effective Date, within sixty (60)
days of the date on which a "Responsible Officer" (as defined in the
Caraustar Credit Agreement) of the Guarantor becomes aware of such
change) such landlord waiver and/or warehousemen and bailee letters, as
applicable, in form and substance satisfactory
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to the Caraustar 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.
SECTION 7.9 SENIOR SUBORDINATED NOTE ISSUANCE. Promptly, in
connection with the issuance of any New Senior Subordinated Notes (as
defined in the Caraustar Credit Agreement), and upon such issuance,
deliver a copy, certified by an officer of the Guarantor as true and
complete, of the New Senior Note Indenture (as defined in the Caraustar
Credit Agreement) 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.
2. Section 8 of the Guaranty Agreement is hereby amended by deleting
such Section in its entirety and inserting in lieu thereof the following:
So long as any Commitment remains in effect under the
Credit Agreement or any Obligations remain outstanding, the Guarantor
will not:
(a) Maximum Total Leverage Ratio. Permit its Total Leverage
Ratio (as defined in the Caraustar Credit Agreement) as of the end of
each fiscal quarter to be greater than or equal to:
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Period Ratio
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fiscal quarter ending March 31, 2001 72.5%
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fiscal quarter ending June 30, 2001 72.5%
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fiscal quarter ending September 30, 2001 72.5%
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fiscal quarter ending December 31, 2001 72.5%
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fiscal quarter ending March 31, 2002 70.0%
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fiscal quarter ending June 30, 2002 70.0%
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fiscal quarter ending September 30, 2002 70.0%
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fiscal quarter ending December 31, 2002 70.0%
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fiscal quarter ending March 31, 2003 70.0%
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fiscal quarter ending June 30, 2003 70.0%
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fiscal quarter ending September 30, 2003 67.5%
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fiscal quarter ending December 31, 2003 and 65.0%
each fiscal quarter ending thereafter
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(b) Minimum Fixed Charge Coverage Ratio. As of the end of each
fiscal quarter, commencing with the fiscal quarter ending September 30,
2002, permit its Fixed Charge Coverage Ratio (as defined in the
Caraustar Credit Agreement) to be less than 1.50:1.0.
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(c) Minimum Tangible Net Worth. At all times after the Second
Amendment Effective Date, Guarantor will not permit Tangible Net Worth
(as defined in the Caraustar Credit Agreement) to be less than the TNW
Floor (as defined in the Caraustar Credit Agreement) plus, as of the end
of each fiscal quarter, commencing with the end of the first fiscal
quarter ending after the Second Amendment Effective Date, (i) 50% of Net
Income (as defined in the Caraustar Credit Agreement) (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
(as defined in the Caraustar Credit Agreement) 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 (as defined in the Caraustar Credit Agreement) of Equity
Issuances (as defined in the Caraustar Credit Agreement) 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.
3. Section 21 of the Guaranty Agreement is hereby deleted and the
following Section 21 is inserted in lieu thereof:
SECTION 21. RELEVANT INDEBTEDNESS. "Relevant Indebtedness" shall
mean the indebtedness of the Guarantor embodied in and evidenced by (i)
the Caraustar Credit Agreement, (ii) the senior notes of the Guarantor
issued October 8, 1992, in an aggregate principal amount of
$82,750,000.00 and bearing an interest rate of 7.74% per annum and (iii)
the notes of the Guarantor issued June 1, 1999, in an aggregate
principal amount of $200,000,000.00 and bearing an interest rate of
7.375% per annum, (iv) the senior subordinated notes of the Guarantor,
due in the year 2011, in the principal amount of $285,000,000, (v) the
senior notes of the Guarantor, due in the year 2010, in the principal
amount of $29 million and (vi) the New Senior Subordinated Notes (as
such term is defined in the Caraustar Credit Agreement).
4. This Amendment shall be deemed closed when (and only when) each
of the following conditions precedent has been satisfied:
(a) The Lender shall have received from the Guarantor the duly
executed counterparts of this Amendment; and
(b) The Lender shall have received duly executed counterparts
to the Second Amendment to the Credit Agreement and all conditions
precedent contained in Section 6 therein shall be satisfied.
5. The amendments to the Guaranty Agreement set forth herein shall
be deemed effective when (and only when) each of the following conditions
precedent has been satisfied:
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(a) The satisfaction of each of the conditions set forth in
Section 4 of this Amendment;
(b) The conditions precedent contained in Section 6 of the
Second Amendment to the Credit Agreement shall be satisfied.
6. In order to induce the Lender to enter into this Amendment, the
Guarantor represents and warrants to the Lender that after giving effect to this
Amendment, all representations and warranties set forth in Section 6 of the
Guaranty Agreement are true and correct in all material respects and no default
under the covenants contained in Section 7 or 8 of the Guaranty Agreement has
occurred and is continuing. The Guarantor reaffirms and ratifies its obligations
under the Guaranty Agreement after giving effect to this Amendment.
7. Except as expressly provided herein, the Guaranty Agreement shall
continue in full force and effect, and the unamended terms and conditions of the
Guaranty Agreement are expressly incorporated herein and ratified and confirmed
in all respects. This Amendment is not intended to be or to create, nor shall it
be construed as, a novation or an accord and satisfaction.
8. From and after the date hereof, references to the Guaranty Agreement
shall be references to the Guaranty Agreement as amended hereby.
9. This Amendment constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. Neither this Amendment nor any
provision hereof may be changed, waived, discharged, modified or terminated
orally, but only by an instrument in writing signed by the parties required to
be a party thereto pursuant to the Guaranty Agreement.
10. THIS AMENDMENT SHALL BE GOVERNED IN ALL RESPECTS BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA (WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
11. This Amendment may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which, taken together,
shall constitute one and the same document, and shall be effective as of the
date first above written.
12. Guarantor agrees to reimburse the Lender for the reasonable fees and
expenses of counsel for the Lender in connection with this Amendment.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Guarantor and the Lender have caused this Amendment
to be executed as of the date first above written.
GUARANTOR:
CARAUSTAR INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxx, III
__________________________________
Name: Xxxxx X. Xxxxxx, III
Title: Vice President Planning &
Development and Chief
Financial Officer
[SIGNATURE PAGE TO FIFTH AMENDMENT TO GUARANTY AGREEMENT -- [SEPTEMBER] 2002]
SUNTRUST BANK, formerly known as
SUNTRUST BANK, ATLANTA
By: /s/ J. Xxxxx Xxxxxxx
__________________________________
Name: J. Xxxxx Xxxxxxx
Title: Vice President
[SIGNATURE PAGE TO FIFTH AMENDMENT TO GUARANTY AGREEMENT -- [SEPTEMBER] 2002]
