EXHIBIT 10.6
GUARANTY
STATE OF GEORGIA
COUNTY OF DEKALB
FOR VALUE RECEIVED, in consideration of and to induce GHGA Properties,
L.P., a Georgia limited partnership, (the "Lessor") to enter into a lease as
hereinafter referred and set forth with Papercon, Inc, a Georgia corporation,
(the "Lessee"), said lease agreement herein referred to as the "Lease", and in
consideration of the sum of TEN AND NO/100 ($10.00) DOLLARS and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged by the undersigned, and in consideration of any other financial
accommodation heretofore or hereafter at any time made or granted to Lessee by
Xxxxxx, the undersigned, whose mailing address for purposes of this Agreement
is 0000 Xxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, hereby agrees as follows:
The undersigned hereby unconditionally guarantees the full and prompt
payment when due, and at all times hereafter: (a) all sums due from the Lessee
in favor of Lessor under the Lease and any and all extensions, amendments,
modifications or renewals of the Lease (subject to the terms of this Guaranty);
(b) all expenses, including reasonable attorneys' fees, incurred in the
enforcement of any rights under the Lease and the enforcement of this Guaranty;
and (c) any indebtedness resulting from advances hereafter made on Xxxxxx's
behalf by Xxxxxx in accordance with the provisions of the Lease (the foregoing
items, (a), (b) and (c) being hereinafter collectively referred to as the
"Liabilities").
The undersigned further unconditionally guarantees the full, timely and
faithful completion, performance and compliance by Xxxxxx of and with each and
every covenant, provision, term and condition on the part of the Lessee to be
kept or performed contained in the Lease as the same may be amended from time
to time (collectively, the "Lease").
In the event Lessee fails to perform its covenants, agreements and
undertakings as provided in the Lease, the undersigned shall immediately upon
the written demand of Lessor promptly, and with due diligence, do and perform
for the benefit of Lessor, all of such covenants, agreements and undertakings
as if they constituted the direct and primary obligations of the undersigned.
The undersigned expressly represents and acknowledges that the entering
into of the Lease between the Lessor and the Lessee are and will be of direct
interest, benefit and advantage to the undersigned.
The obligations of the undersigned hereunder are independent of the
obligations of Xxxxxx, and a separate action or actions for payment, damages or
performance may be brought and prosecuted against the undersigned whether or
not an action is brought against Lessee or the security for Xxxxxx's
obligations, and whether or not Lessee be joined in any such action or actions,
and whether or not notice be given or demand be made upon Lessee.
Lessor may, from time to time, without notice to the undersigned, and
without affecting, diminishing or releasing any liability of the undersigned:
(a) extend or renew for any period (whether or not longer than the original
period), modify, amend, consolidate, alter or exchange any of the Liabilities,
or any of the instruments evidencing or executed in connection with any of the
Liabilities, provided, however, that any such action which operates to increase
the Liabilities of Guarantor hereunder (other than as contemplated in the
Lease) is made without the consent of Guarantor, such modification or
alteration shall be ineffective as against Guarantor only to the extent the
same shall increase the obligations of Guarantor under this Guaranty, (b)
release or compromise or grant any indulgences with respect to any liability of
any of the undersigned hereunder or any liability of any other party or parties
primarily or secondarily liable on any of the Liabilities, (c) surrender any
property or other security of any kind or nature whatsoever held by it or by
any person, firm or corporation on its behalf or for its account, securing any
of the Liabilities, (d) substitute for any collateral so held by it, other
collateral of like kind, or of any kind, (e) release its security interest, if
any, in all or any property securing any of the Liabilities or any obligation
hereunder and permit any substitution or exchange for any such property, (f)
resort to the undersigned for payment of any of the Liabilities, or any portion
thereof, whether or not Lessor shall have resorted to any property securing any
of the Liabilities or any obligation hereunder or shall have proceeded against
any other of the undersigned or any other party primarily or secondarily liable
on any of the Liabilities, and (g) alter, extend, change, modify, release or
cancel any covenant, agreement, or provision contained in the Lease; provided,
however, that unless any such modification or alteration of the Lease is
required by law or on account of bankruptcy or insolvency, then no such
modification or alteration of the Lease which has the effect of increasing the
obligations of Guarantor hereunder shall be effective against Guarantor to the
extent of such increase unless Guarantor shall be a party to, or consent to,
such modification or alteration; and provided, further, that if any
modification or alteration of the Lease is made without such consent of
Guarantor, such modification or alteration shall be ineffective as against
Guarantor only to the extent the same shall increase the obligations of
Guarantor under this Guaranty.
Any amount received by Lessor from whatever source and applied by it
toward the payment of the Liabilities shall be applied in such order of
application as Lessor may from time to time elect provided, however, that all
payments shall be applied by Lessor in accordance with the terms of the Lease.
Notwithstanding anything to the contrary contained herein, in addition
to, and without limiting the Guarantor's rights under Section 9.4 of that
certain Acquisition Agreement, dated as of August 6, 2004, by and among the
undersigned, 3141276 Canada Inc., GMG International Inc., Xx. Xxxx X. Xxxxx
("Mr. Xxxxx") and Lessee (the "Acquisition Agreement"), Lessor hereby agrees
that Guarantor shall have the right, but not the obligation, to set-off against
Guarantor's payment obligations under this Guaranty, the full amount of any
Purchaser Indemnifiable Damages (as such term is defined in the Acquisition
Agreement) required to be paid pursuant to Section 9.1 of the Acquisition
Agreement. From time to time, if Guarantor elects to exercise its set-off
rights hereunder, it will give Lessor written notice of such election which
includes the amount under the Lease and this Guaranty to be set-off, and upon
giving of such notice, the amount due in respect of such amount under the Lease
and this Guaranty shall automatically be reduced by the amount set forth in
such notice and such amount shall be deposited into an interest-bearing escrow
account with the Escrow Agent (as such term is defined in the Acquisition
Agreement) to be held in escrow by such Escrow Agent pending the resolution of
claims for Purchaser Indemnifiable Damages. Each of Guarantor and Lessor shall
pay one-half of the reasonable fees and out-of-pocket expenses of the Escrow
Agent incurred by it in connection with carrying out its duties under this
paragraph. In the event there is a "final determination" by a court of
competent jurisdiction, or if resolved by written mutual agreement of Guarantor
and Mr. Xxxxx, that Guarantor was not entitled to indemnification under Article
IX of the Acquisition Agreement with respect to the set-off amount, all such
amounts which are so determined to have been wrongfully set-off shall be
released from the escrow account to Lessor and the remainder of the set-off
amount, if any, shall be released from the escrow account to Guarantor. All
interest accrued on the set-off amount shall be paid to Landlord and Guarantor
pro rata based on the amount of the escrow account disbursed to such parties
pursuant to this paragraph. For purposes of this paragraph, a determination
shall be "final" if any and all appeals therefrom shall have been resolved or
if thirty (30) calendar days shall have passed from the rendering of such
determination (or of any determination on appeal therefrom) and no party shall
have commenced any such appeal therefrom.
The undersigned hereby expressly waives: (a) acceptance or notice of the
acceptance of this guaranty, (b) notice of the existence or creation of the
Lease or all of any of the Liabilities, (c) presentment, demand, notice or
dishonor, protest, (d) all diligence on the part of Lessor in collection or
protection of, or realization upon, any security for any of the Liabilities or
in enforcing any remedy available to it under the Lease (e) the right or power
under the Official Code of Georgia Annotated Section 10-7-24, or any other
statute or rule of law, to demand, or otherwise require, that Lessor take,
initiate or pursue any action against the Lessee or against the property of the
Lessee standing as security for the Liabilities, and (f) any defense that may
now or hereafter arise by reason of the incapacity, lack of authority, death or
disability of Lessee, or any officer or agent thereof, any coguarantor, or by
any other person or entity or the failure of Lessor to file or enforce a claim
against the estate (either in administration, bankruptcy or any other
proceeding) of Lessee or any other person or entity; (g) any duty on the part
of Lessor to disclose to the undersigned any facts it may now or hereafter know
regarding money set apart as exempt to pay the indebtedness guaranteed hereby,
or any renewal thereof, and does hereby jointly and severally, appoint Lessor
the attorney in fact for each of them, to claim any and all homestead
exemptions by law.
Nothwithstanding anything to the contrary provided herein, Lessor shall
deliver to Guarantor a copy of any notice of default delivered to Lessee under
the Lease at the same time and in the same manner such notice is delivered to
Lessee. Any such notice shall be delivered to Guarantor at the address for
Guarantor set forth in the Lease or at such other address as Guarantor shall
from time to time provide written notice thereof to Lessor.
The parties to this guaranty agree that any and all disputes,
controversies or claims (each, a "Dispute") arising out of or relating to this
guaranty, or the breach hereof, shall be submitted for mediation in a mutually
agreeable location. Either party may commence mediation by providing to the
other party a written request for mediation (a "Dispute Notice"), setting forth
the subject of the dispute and the relief requested. The parties will cooperate
with one another in selecting a mediator from a panel of neutrals, and in
scheduling the mediation proceedings. The parties covenant that they will
participate in the mediation in good faith, and that they will share equally in
its costs. All offers, promises, conduct and statements, whether oral or
written, made in the course of the mediation by any of the parties, their
agents, employees, experts and attorneys, and by the mediator, are
confidential, privileged and inadmissible for any purpose, including
impeachment, in any arbitration or court proceeding involving the parties,
provided that evidence that is otherwise admissible or discoverable shall not
be rendered inadmissible or non-discoverable as a result of its use in the
mediation.
If the Dispute has not been resolved in accordance with the immediately
preceding paragraph within ninety (90) calendar days after receipt of a Dispute
Notice, then either party may take any action or exercise any remedy available
to it by appropriate legal proceedings against the other party.
In the event of a Dispute which is ultimately resolved by a court of
competent jurisdiction, the non-prevailing party will reimburse the prevailing
party for its reasonable costs and expenses (including, without limitation,
legal fees and expenses) incurred in connection with such action.
The terms and provisions of the guaranty may be enforced by the Lessor
or any person, party or other entity which may, from time to time, be a
venturer of the Lessor.
This guaranty may not be changed orally, and no obligation of the
undersigned can be released or waived by Lessor or any officer or agent of
Lessor, except by a writing signed by a duly authorized officer of Lessor. This
guaranty shall be irrevocable by the undersigned until all indebtedness
guaranteed hereby, has been completely repaid and all obligations and
undertakings of Lessee under, by reason of or pursuant to the Lease have been
completely performed.
This guaranty has been delivered in the State of Georgia and it shall
be construed, interpreted and enforced in accordance with the laws of the State
of Georgia. Wherever possible each provision of this guaranty shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this guaranty, or application thereof, shall be
prohibited by or be invalid under such law, such provision or application
hereof, as the case may be, shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or other applications thereof or the remaining provisions of this guaranty.
IN WITNESS WHEREOF, the undersigned has signed this guaranty under seal
this the 14th day of September, 2004.
PACKAGING DYNAMICS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Chairman
