EXECUTION VERSION
Exhibit 10.2
CONTINUING
GUARANTY
CONTINUING GUARANTY (“
Guaranty ”) dated as of July 28, 2008, made by
and between SMURFIT-STONE CONTAINER ENTERPRISES, INC., a Delaware
corporation (“ Guarantor ”), and UNION BANK OF
CALIFORNIA, N.A. (“ Bank ”).
RECITALS
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(a)
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WHEREAS , Guarantor is a leading U.S. integrated
manufacturer of various paperboard and paper-based packaging
material;
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(b)
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WHEREAS , Guarantor has agreed to acquire 90% of the
membership interests of CALPINE CORRUGATED, LLC, a California
limited liability company formerly known as Produce Container, LLC
(“ Borrower ”), pursuant to a restructuring of
the ownership interests of Borrower pursuant to the Amended and
Restated Operating Agreement being entered into concurrently
herewith;
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(c)
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WHEREAS, Borrower and Bank have entered into the Loan and
Security Agreement dated March 30, 2006, as amended by the
First Amendment to Loan and Security Agreement dated as of
August 30, 2006, the Second Amendment to Loan and Security
Agreement dated as of December 10, 2007, the Third Amendment
to Loan and Security Agreement dated as of December 31, 2007,
the Fourth Amendment to Loan and Security Agreement dated as of
January 31, 2008, the Fifth Amendment to Loan and Security
Agreement dated as of February 29, 2008, and the Sixth
Amendment to Loan and Security Agreement of even date herewith
(including all exhibits and schedules thereto, and as the same may
be subsequently amended, restated, supplemented or otherwise
modified from time to time, collectively, the “ Loan
Agreement ”);
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(d)
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WHEREAS , Guarantor has agreed to guarantee the
Obligations of Borrower;
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(e)
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WHEREAS , Guarantor has requested that Bank increase the
maximum amount of its financing to Borrower by $3,000,000, to an
aggregate principal amount not exceeding $12,000,000;
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(f)
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WHEREAS , Guarantor will derive substantial benefit if
the financing continues to be provided by Bank, and the maximum
amount of such financing is increased pursuant to the terms of the
Sixth Amendment to Loan and Security Agreement between Borrower and
Bank of even date herewith (the “ Sixth Amendment
”); and
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(g)
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WHEREAS , it is a condition precedent, among others, to
the obligation of Bank to continue to provide and increase the
maximum amount of its financing to Borrower under the Sixth
Amendment that the Guarantor shall have executed and delivered this
Guaranty to the Bank.
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NOW, THEREFORE
, in consideration of the foregoing
premises, to induce the Borrower and Bank to enter into
the
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Sixth Amendment, Guarantor and Bank
hereby agree as follows:
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1.
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Obligations
Guaranteed. For
consideration, the adequacy and sufficiency of which is
acknowledged, Guarantor unconditionally guaranties and promises
(a) to pay to Bank on demand, in lawful United States money,
all Obligations (as such term is defined below), and (b) to
perform all undertakings of Borrower in connection with
Obligations. “ Obligations ” means all
Obligations of Borrower when due and payable to Bank under the Loan
Agreement and the other Loan Documents, whether made, incurred or
created previously, concurrently or in the future, whether
voluntary or involuntary and however arising, whether incurred
directly or acquired by
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1
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Bank by assignment or succession,
absolute or contingent, liquidated or unliquidated, legal or
equitable, whether Borrower is liable individually or jointly with
others, whether incurred before, during or after any bankruptcy,
reorganization, insolvency, receivership or similar proceeding
(“ Insolvency Proceeding ”), and whether
recovery thereof is or becomes barred by a statute of limitations
or is or becomes otherwise unenforceable, together with all
expenses of, for and incidental to collection, including, without
limitation, reasonable attorneys’ fees. All capitalized terms
used and not otherwise defined herein shall have the respective
meanings ascribed to them in the Loan Agreement.
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2.
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Continuing
Nature/Revocation/Reinstatement. This Guaranty (a) is in addition to any
other guaranties of the Obligations, (b) is a continuing
guaranty, and (c) covers all Obligations, including, without
limitation, those arising under successive transactions which
continue or increase the Obligations from time to time, renew all
or part of the Obligations after they have been satisfied or create
new Obligations. Revocation by one or more signers of this Guaranty
or any other guarantors of the Obligations shall not
(a) affect the obligations under this Guaranty of a
non-revoking Guarantor, (b) apply to Obligations outstanding
when Bank receives written notice of revocation, or to any
extensions, renewals, readvances, modifications, amendments or
replacements of such Obligations, or (c) apply to Obligations,
arising after Bank receives such notice of revocation that are
created pursuant to a commitment existing at the time of the
revocation, whether or not there exists an unsatisfied condition to
such commitment or Bank has another defense to its performance. All
of Bank’s rights pursuant to this Guaranty continue with
respect to amounts previously paid to Bank on account of any
Obligations which are thereafter restored or returned by Bank,
whether in an Insolvency Proceeding of Borrower or for any other
reason, all as though such amounts had not been paid to Bank; and
Guarantor’s liability under this Guaranty (and all of its
terms and provisions) shall be reinstated and revived,
notwithstanding any surrender or cancellation of this Guaranty.
Bank, at its sole discretion, may determine whether any amount paid
to it must be restored or returned; provided, however, that if Bank
elects to contest any claim for return or restoration, Guarantor
agrees to indemnify and hold Bank harmless from and against all
costs and expenses, including, without limitation, reasonable
attorneys’ fees, expended or incurred by Bank in connection
with such contest. If any Insolvency Proceeding is commenced by or
against Borrower or Guarantor, at Bank’s election,
Guarantor’s obligations under this Guaranty shall immediately
and without notice or demand become due and payable, whether or not
then otherwise due and payable.
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3.
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Authorization.
Guarantor authorizes Bank, without
notice and without affecting Guarantor’s liability under this
Guaranty, from time to time, whether before or after any revocation
of this Guaranty, to: (a) renew, compromise, extend,
accelerate, release, subordinate, waive, amend and restate, or
otherwise amend or change, the interest rate, time or place for
payment or any other terms of all or any part of the Obligations to
the extent permitted in the Loan Agreement; (b) accept
delinquent or partial payments of the Obligations; (c) take or
not take security or other credit support for this Guaranty or for
all or any part of the Obligations, and exchange, enforce, waive,
release, subordinate, fail to enforce or perfect, sell, or
otherwise dispose of any such security or credit support;
(d) apply proceeds of any such security or credit support and
direct the order or manner of its sale or enforcement as Bank, at
its sole discretion may determine; and (e) release or
substitute Borrower or any guarantor or other person or entity
liable on the Obligations.
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4.
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Waivers. To the maximum extent permitted by law,
Guarantor waives (a) all rights to require Bank to proceed
against Borrower, or any other guarantor, or proceed against,
enforce or exhaust any security for the Obligations or to marshal
assets or to pursue any other remedy in Bank’s power
whatsoever; (b) all defenses arising by reason of any
disability or other defense of Borrower, the cessation for any
reason of the liability of Borr
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