EXHIBIT 10.11
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT (this "Amendment") is
entered into as of March 28, 2003 among (i) CARAUSTAR INDUSTRIES, INC. (the
"Borrower"), (ii) the Subsidiaries of the Borrower listed on the signature pages
hereto (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 in the Security
Agreement referenced 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 (terms used but not otherwise defined herein
shall have the meaning given to such terms in the Credit Agreement or Security
Agreement, as applicable);
WHEREAS, in connection with the Fourth Amendment to Credit
Agreement dated as of September 23, 2002, among the Borrower, the Guarantors,
the Lenders party thereto and the Administrative Agent, the Obligors and the
Collateral Agent entered into the Security Agreement in consideration of, and as
a condition precedent to the effectiveness of, the Fourth Amendment.
WHEREAS, the Obligors are required to enter into this
Amendment in consideration of, and as a condition precedent to the effectiveness
of, that certain Sixth Amendment to Credit Agreement dated as of the date hereof
among the Borrower, the Guarantors, the Lenders party thereto and the
Administrative Agent.
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. AMENDMENTS TO SECURITY AGREEMENT.
(a) Section 1(a) of the Security Agreement is amended by adding
the following term to the list of terms contained therein that are defined
pursuant to the Uniform Commercial Code as in effect in the State of North
Carolina: "Equipment."
(b) Section 1(b) of the Security Agreement is amended by
substituting each of the following new definitions for the respective existing
definitions set forth therein:
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"Documents": the collective reference to the Credit Agreement,
the Loan Documents, the Premier Boxboard Guaranty (subject to Section
30 hereof), the Standard Gypsum Guaranty (subject to Section 31
hereof), and any Hedging Agreements between an Obligor and a Lender or
any Affiliate of a Lender.
"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) subject to
Section 30 hereof, the prompt performance and observance by the
Borrower of all of its guaranty obligations to SunTrust under the
Premier Boxboard Guaranty, (iii) subject to Section 31 hereof, 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) subject to Section 30 hereof, SunTrust and (iii)
subject to Section 31 hereof, Toronto Dominion, and "Secured Party"
means any one of them, as applicable.
(c) Section 1(b) of the Security Agreement is further amended by
inserting the following definition where alphabetically appropriate:
"Equipment Collateral Effective Date" means July 1, 2003.
(d) Section 2 of the Security Agreement is amended by (i)
restating clauses (c) and (d) thereof as clauses (d) and (e) thereof,
respectively, and inserting the following as clause (c) thereof:
"(c) Subject to Section 29 hereof, all Equipment (the
"Equipment Collateral")."
(e) Section 4 of the Security Agreement is hereby amended by
deleting clause (d) thereof and replacing it with the following:
"(d) Security Interest/Priority. 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
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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 as in effect on the date hereof;
provided, however, any Liens on the Collateral permitted pursuant to
Section 9.2(j) of the Credit Agreement as in effect on the date hereof
shall not exceed $1,000,000 in the aggregate at any time outstanding;
and provided further that the foregoing representations and warranties
shall only be applicable with respect to Equipment Collateral upon the
Equipment Collateral Effective Date.
(f) Section 5 of the Security Agreement is amended by adding the
following as new clauses (j) and (k) thereof:
"(j) Nature of Collateral. At all times maintain the
Collateral as personal property and not affix any of the Collateral to
any real property in a manner which would change its nature from
personal property to real property or a Fixture to real property,
unless the Administrative Agent shall have a perfected Lien on such
Fixture or real property.
(k) Legal Opinion. Upon the occurrence of the Equipment
Collateral Effective Date, the Borrower shall deliver to the Collateral
Agent a legal opinion from counsel to the Credit Parties in form and
substance acceptable to the Collateral Agent and its counsel (which
shall cover, among other things, the enforcability of the Security
Agreement with respect to the Equipment Collateral and the creation and
perfection of the Collateral Agent's Liens hereunder on the Equipment
Collateral)."
(g) Section 5 of the Security Agreement is further amended by
adding the following as a new last paragraph thereof:
"Notwithstanding the foregoing provisions of this Xxxxxxx 0, xxxx of
such provisions shall be applicable with respect to the Equipment
Collateral until the Equipment Collateral Effective Date and
thereafter."
(h) Section 7 of the Security Agreement is amended by deleting
such section in its entirety and replacing it with the following:
"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) subject
to Section 30 hereof, the occurrence of an event which gives SunTrust
the right to demand payment under the Premier Boxboard Guaranty or (c)
subject to Section 31 hereof, 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")."
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(i) Section 8 of the Security Agreement is amended by adding the
following as the last paragraph thereof:
"Notwithstanding the foregoing provisions of this Section 8,
to the extent any such provisions are subject to the occurrence and
continuation of an Event of Default, any such provision shall only be
applicable with respect to the Equipment Collateral upon the occurrence
and during the continuance of an Event of Default occurring
simultaneously with or subsequent to the Equipment Collateral Effective
Date."
(j) Section 9 of the Security Agreement is amended by adding the
following as the last paragraph thereof"
"Notwithstanding the foregoing provisions of this Section 9,
to the extent any rights and/or remedies detailed in such provisions
are subject to the occurrence and continuation of an Event of Default,
any such provision shall only be applicable with respect to the
Equipment Collateral upon the occurrence and during the continuance of
an Event of Default occurring simultaneously with or subsequent to the
Equipment Collateral Effective Date."
(k) Section 10(d) of the Security Agreement is amended by deleting
such section in its entirety and replacing it with the following:
"(d) FOURTH, to the payment of (i) all fees of the
Administrative Agent and (ii) subject to paragraphs 30 and 31 hereof,
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;"
(l) Section 13 of the Security Agreement is amended by adding the
following as a new second paragraph thereof:
"(b) Notwithstanding anything to the contrary herein or in the
Credit Agreement, the definition of "Equipment Collateral Effective
Date" as set forth herein 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."
(l) Section 14 of the Security Agreement is amended by deleting
such section in its entirety and replacing it with the following:
"14. Successors in Interest. This Security Agreement shall
create a continuing security interest in the Collateral (except with
respect to the Equipment Collateral, with respect to which the creation
of a continuing security interest shall be effective as of the
Equipment Collateral Date) 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
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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)."
(m) The Security Agreement is amended by inserting the following
as a new Section 29 thereof:
"29. Equipment Collateral Effective Date. Notwithstanding
anything in this Security Agreement to the contrary, the grant of a
security interest in Equipment Collateral pursuant to Section 2 hereof
shall not become effective until the Equipment Collateral Effective
Date; provided that on such Equipment Collateral Effective Date such
grant of a security interest shall become effective immediately and
without any further action on the part of any of the parties hereto."
(n) The Security Agreement is amended by inserting the following
as a new Section 30 thereof:
"30. Termination by SunTrust: SunTrust acknowledges and agrees
that effective upon the termination of, and payment in full in cash of
all obligations of the Borrower under, the Premier BoxBoard Guaranty,
(w) SunTrust shall have no further rights under or be entitled to any
benefits of the Security Agreement, (x) the Collateral Agent shall no
longer hold a security interest in the Collateral for the benefit of
SunTrust, (y) SunTrust shall no longer be a "Secured Party" hereunder,
nor shall the Borrower's performance and obligations to SunTrust under
the Premier Boxboard Guarantee be deemed a "Secured Obligation"
hereunder, and (z) upon reasonable request by the Borrower, SunTrust
shall confirm in writing such termination and payment to the Collateral
Agent."
(o) The Security Agreement is amended by inserting the following
as a new Section 31 thereof:
"31. Termination by Toronto Dominion: Toronto Dominion
acknowledges and agrees that effective upon the earlier of (i) the
termination of, and payment in full in cash of all obligations of the
Borrower under, the Standard Gypsum Guaranty, and (ii) Toronto
Dominion's receipt of a standby letter of credit in the amount of
$28,369,452.50 issued by Bank of America and naming Toronto Dominion as
beneficiary (or any other letter of credit acceptable to Toronto
Dominion issued in connection with Standard Gypsum's industrial revenue
bond obligations), which letter of credit is intended to replace the
Borrower's guaranty obligations under the Standard Gypsum Guaranty, (w)
Toronto Dominion shall have no further rights under or be entitled to
any benefits of the Security Agreement, (x) the Collateral Agent shall
no longer hold a security interest in the Collateral for the benefit of
Toronto Dominion, (y) Toronto Dominion shall no longer be a "Secured
Party" hereunder, nor shall the Borrower's performance and obligations
to Toronto Dominion under the Standard Gypsum Guaranty be deemed a
"Secured
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Obligation" hereunder and (z) upon reasonable request by the Borrower,
Toronto Dominion shall confirm in writing such termination and payment
or receipt, as applicable, to the Collateral Agent."
2. 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.
3. 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.
4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA.
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Each of the parties hereto has caused a counterpart of this First
Amendment to Security Agreement to be duly executed and delivered as of the date
first above written.
BORROWER: CARAUSTAR INDUSTRIES, INC.,
-------- a North Carolina corporation
By: Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and Chief
Financial Officer
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
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/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
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: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President & Chief Financial Officer
By: CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS
GROUP, INC., a Delaware corporation, general partner
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President & Assistant Secretary
RECCMG, LLC,
a Georgia limited liability company
PARADIGM CHEMICAL & CONSULTING, LLC,
a Georgia limited liability company
By: CARAUSTAR MILL GROUP, INC.,
an Ohio corporation f/k/a Caraustar Paperboard
Corporation, sole member of each of the foregoing
Guarantors
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President, Secretary and Treasurer
CICPG, LLC,
a North Carolina limited liability company
By: CARAUSTAR INDUSTRIAL AND CONSUMER PRODUCTS
GROUP, INC., a Delaware corporation, sole member
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President & Assistant Secretary
Agreed and Accepted to as of the date first above written.
BANK OF AMERICA, N.A.,
in its capacity as Collateral Agent
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------------------------
Title: Vice President
-----------------------------------------------
The undersigned hereby acknowledges, accepts and consents to the foregoing
First Amendment to Security Agreement and agrees to the terms of Section 29 of
the Security Agreement as amended by the First Amendment thereto:
BANK OF AMERICA, N.A.,
in its capacity as Administrative Agent for the Lenders
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
------------------------------------------------
Title: Vice President
-----------------------------------------------
The undersigned hereby acknowledges, accepts and consents to the foregoing
First Amendment to Security Agreement and agrees to the terms of Sections 29 and
30 of the Security Agreement as amended by the First Amendment thereto:
SUNTRUST BANK, ATLANTA
By: /s/ X. Xxxxx Dwinig
--------------------------------------------------
Name: X. Xxxxx Dwinig
------------------------------------------------
Title: Vice President
-----------------------------------------------
The undersigned hereby acknowledges, accepts and consents to the foregoing
First Amendment to Security Agreement and agrees to the terms of Sections 29 and
31 of the Security Agreement as amended by the First Amendment thereto:
TORONTO DOMINION (TEXAS), INC.
By: /s/ Xxxxx Xxxxxx
--------------------------------------------------
Name: Xxxxx Xxxxxx
------------------------------------------------
Title: Vice President
-----------------------------------------------
