EXHIBIT 10.18
EXECUTION COPY
FIFTH AMENDMENT TO GUARANTY AGREEMENT
This FIFTH AMENDMENT TO GUARANTY AGREEMENT (this "Amendment"), dated as
of June 6, 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:
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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 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); and
WHEREAS, the Guarantor has requested that the Lender amend the Guaranty
Agreement in the manner set forth below, 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
business days after the occurrence of the Collateral 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 Collateral 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) upon the
occurrence of the Collateral Effective Date, 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, subject in any case to
Liens permitted under Section 9.2 of the Caraustar Credit 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.
(b) 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, 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 Caraustar 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 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 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 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 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."
2. Section 8(c) of the Guaranty Agreement is hereby deleted and
the following is inserted in lieu thereof:
"SECTION 8(C) MINIMUM TANGIBLE NET WORTH. At all times after
the Second Amendment Effective Date, Guarantor will not permit Tangible
Net
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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 3 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:
(a) The satisfaction of each of the conditions set forth
in Section 4 of this Amendment;
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(b) The conditions precedent contained in Section 4 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:
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Name:
Title:
[SIGNATURE PAGE TO FIFTH AMENDMENT TO GUARANTY AGREEMENT]
SUNTRUST BANK, formerly known as
SUNTRUST BANK, ATLANTA
By:
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Name:
Title:
[SIGNATURE PAGE TO FIFTH AMENDMENT TO GUARANTY AGREEMENT]
