Document:

Senior Management Incentive Plan for 2006

 Exhibit 10.08 
 

 
 Senior Manager Incentive Compensation Plan – 2006 
 Plan Objective 
 The Senior Manager
Incentive Compensation Plan is established to provide an opportunity for designated Caraustar Senior Managers to earn incentive compensation in the form of a cash bonus based upon the achievement of predetermined annual corporate financial
performance targets and personal performance objectives. 
 Plan Participants (Eligibility) 
 Participants in the Senior Manager Incentive Compensation Plan shall be designated senior managers of the company in positions whose contribution has a material effect
upon corporate financial performance. Plan participants shall be designated each January 1 by the President and CEO and approved by the Compensation and Employee Benefits Committee of the Board of Directors. Newly hired or promoted Senior
Managers may enter the plan within the calendar plan year with the approval of the President and CEO and the Compensation and Employee Benefits Committee; however, no participant may enter the plan after July 1. 
 In order for a participant to receive a payout under the plan, the participant must be in active service as of December 31 of the plan year unless terminated due to
death, disability or retirement. The Compensation and Employee Benefits Committee may approve a payout in other circumstances of separation. The Compensation and Employee Benefits Committee will make the final determination of payout eligibility.

 Plan Year and Plan Measurement (Performance Criteria) 
 The plan year shall be the calendar year, January 1 through December 31. Performance and payout under the plan shall be determined based upon the achievement of
annual corporate financial performance targets established within the first 90 days of the plan year by the Compensation and Employee Benefits Committee. The Corporate financial performance targets may be revised during the plan year by the
Compensation and Employee Benefits Committee based upon the recommendation of the President and CEO due to extraordinary factors which significantly impact target achievement. 

 Plan Payout 
 The cash bonus corporate finance performance related opportunity for designated senior manager participants shall be a maximum opportunity of 120% (target of 60%) of plan year bonusable earnings. 
 Payout Computation (Bonus Formula) 
 The payout of the cash bonus shall be based upon the achievement of the Corporate Financial Performance Objective in accordance with the following: 
  

			
	 Percentage of Financial Performance Objective
Achieved
	 	 Cash Bonus Percentage of Bonusable Earnings Paid

	Less than 70%	 	0
		
	Between 70% and 100%	 	For each additional 1% achieved from 70 – 100%, the percent of cash bonus paid is increased by 3 1/3%.
		
	Beyond 100-120%	 	For each 1% beyond the 100% target EPS achieved, the percent of bonus paid will be increased by an additional 3 1/3%.

 Personal Performance Achievement 
 In addition to the incentive cash bonus based upon achievement of the Corporate financial performance targets, Senior Managers may earn an additional incentive cash bonus
of up to a maximum opportunity of 30% of base salary earnings (with a target of 15%) for the successful completion of specified personal performance objectives. The personal performance objectives shall be determined at the beginning of the plan
year and evaluated for successful completion at the end of the plan year by the President and CEO subject to the final approval of the Compensation and Employee Benefits Committee of the Board of Directors. 
 Bonus Payments Conditions 
 Any bonus
payments due under the Senior Manager Employee Incentive Compensation Plan will normally be made after the completion of audited financial statements for the plan year. In no case will the total bonus payout exceed 100% of earnings. 
 Plan Changes 
 The Senior Manager
Incentive Compensation Plan may be subject to review and alteration as deemed appropriate by the Compensation and Employee Benefits Committee each plan year.Second Amendment to Credit Agreement

 Exhibit 10.21 
 SECOND AMENDMENT TO CREDIT AGREEMENT 
 THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this
“Amendment”) is made and entered into as of this 22nd day of December, 2003, among Caraustar
Industries, Inc., a North Carolina corporation (“Caraustar”), and each Subsidiary of Caraustar listed on the signature pages hereto as a “Borrower” (Caraustar and each such Subsidiary, individually, a
“Borrower”, and, collectively, “Borrowers”), and each Subsidiary of Caraustar listed on the signature pages hereto as a “Guarantor” (each such Subsidiary, individually, a “Guarantor”, and,
collectively, “Guarantors”; Borrowers and Guarantors, collectively, “Obligors”), the Lenders party to this Amendment (the “Lenders”), and Bank of America, N.A., as Agent for the Lenders (the
“Agent”). 
 W I T N E S S E T H : 
 WHEREAS, Borrowers, Guarantors, the Lenders and the Agent entered into that certain Credit Agreement, dated as of June 24, 2003, pursuant to which
the Lenders agreed to make certain loans to Borrowers (as amended, modified, supplemented and restated from time to time, the “Credit Agreement”); and 
 WHEREAS, Borrowers, Guarantors, the Lenders and the Agent desire to enter into this Amendment for the purpose of amending the Credit Agreement in certain respects. 
 NOW, THEREFORE, in consideration of the foregoing premises, and other good and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows: 
 1. All capitalized terms used herein and not otherwise expressly defined
herein shall have the respective meanings given to such terms in the Credit Agreement. 
 2. Notwithstanding anything to the contrary in
Section 7.9 or any other provision of the Credit Agreement, the Agent and each of the Lenders hereby consents to the sale by Caraustar Mill Group, Inc. (“Mill Group”) of all of the equity interests in Paradigm
Chemical & Consulting, LLC (“Paradigm Chemical”) to certain executives of Paradigm Chemical (the “Buyers”), provided that (a) prior to the consummation of such sale, the Borrowers shall provide the Agent a final
term sheet or definitive sale agreement with respect to such sale, and the Agent shall have provided its written consent, in its reasonable discretion, to the terms thereof, (b) the cash purchase price consideration payable by the Buyers to
Mill Group on the closing date of such sale shall be paid directly to the Agent for application to the Obligations, (c) on the date of such sale, the Obligors shall provide the Agent an updated Borrowing Base Certificate giving 

  

					
		  		  	

 
effect to such sale, (d) no Event of Default shall exist immediately before or after such sale, and (e) immediately upon the consummation of such
sale, Paradigm Chemical shall cease to be a “Borrower”. Each of the Lenders hereby authorizes the Agent to (i) prepare, execute and deliver such releases of Paradigm Chemical as a “Borrower” as the Obligors or the Buyers may
reasonably request, and (ii) prepare, execute, deliver, file and authorize the filing of such releases and terminations of the Agent’s Liens in the Collateral and equity interests of Paradigm Chemical as the Obligors or the Buyers may
reasonably request. 
 3. The Credit Agreement is amended by deleting clauses (e) and (f) of Section 7.12
and replacing such clauses with the following: 
 (e) non-recourse Guaranties executed by the Obligors on the Closing Date in favor of
SunTrust Bank with respect to the Premier Boxboard credit facility in connection with the posting of the SunTrust Credit Support, or, in the event that the Premier Boxboard credit facility with SunTrust Bank is replaced with a credit facility from
another lender, a Guaranty executed by the Obligors in favor of such replacement lender so long as the maximum principal amount of such Guaranty does not exceed $10,000,000, such Guaranty is unsecured, and the maturity and other material terms of
such credit facility are reasonably acceptable to the Agent, (f) a Guaranty of Premier Boxboard’s obligations under an equipment lease agreement with Synovus Leasing Company, its affiliates or assigns, with respect to the leasing of $2,000,000
of equipment, on the terms and conditions contained in that certain True Lease Proposal, dated as of November 21, 2003, a copy of which has been previously provided to the Agent, provided such Guaranty is unsecured and the form of such Guaranty
is reasonably acceptable to the Agent, and (g) other Guaranties of obligations in an aggregate amount not to exceed $1,000,000 at any time. 
 4. The Credit Agreement is amended by deleting clause (j) of Section 7.13 and replacing it with the following: 
 (j) Guaranties permitted under clause (e) of Section 7.12 with respect to the Premier Boxboard credit facility; 
 5. The Credit Agreement is amended by deleting clause (iv) of Section 7.14 and replacing it with the following: 
 (iv) immediately after giving effect to such prepayment, the Obligors are in compliance with the financial covenant set forth in Section 7.23(a); provided, that (A) this requirement shall apply whether or not such financial
covenant would then be applicable as a result of the terms of Section 7.23(b), (B) such financial covenant shall be measured as of the most recently ended fiscal month for which the Obligors have delivered the financial statements
required under Section 5.2(b) for the twelve fiscal month period then ended (or, in the case of any fiscal month 

  

					
		  	-2-	  	

 
ending prior to March 31, 2004, for the period commencing on April 1, 2003 and ending on the last day of such fiscal month), (C) in the case of any
fiscal month end that is not also a fiscal quarter end, the level of the required Fixed Charge Coverage Ratio shall be the same as the Fixed Charge Coverage Ratio required under Section 7.23(a) as of the immediately preceding fiscal
quarter end, (D) in calculating the Fixed Charge Coverage Ratio for purposes of this Section 7.14(a), such prepayment shall be included as a Fixed Charge, except to the extent that, in the case of the first $10,000,000 of
prepayments, such prepayments are made from cash of the Obligors and not from the direct or indirect proceeds of Loans, and (E) this requirement shall not apply with respect to the first $5,000,000 of prepayments made on or prior to
June 30, 2004; and; 
 6. The Credit Agreement is amended by deleting clauses (i) and (j) in the definition of
“Permitted Liens” set forth in Annex A and replacing such clauses with the following clauses (i), (j) and (k): 
 (i) the SunTrust Credit Support; 
 (j) cash collateral in the maximum aggregate amount of
$350,000 posted as security for the Obligors’ obligations under commodity Hedge Agreements; and 
 (k) Liens described on
Schedule 7.18. 
 7. To induce the Agent and the Lenders to enter into this Amendment, Borrowers and Guarantors hereby represent and
warrant that, as of the date hereof, there exists no Default or Event of Default under the Credit Agreement. 
 8. Borrowers and Guarantors
hereby restate, ratify, and reaffirm each and every representation and warranty heretofore made by each of them under or in connection with the execution and delivery of the Credit Agreement, as modified hereby, and the other Loan Documents as fully
as though such representations and warranties had been made on the date hereof and with specific reference to this Amendment, except to the extent that any such representation or warranty relates solely to a prior date. 
 9. Except as expressly set forth herein, the Credit Agreement and the other Loan Documents shall be and remain in full force and effect as originally
written, and shall constitute the legal, valid, binding and enforceable obligations of Borrowers and Guarantors to the Agent and the Lenders. 
 10. Borrowers agree to pay on demand all reasonable costs and expenses of the Agent in connection with the preparation, execution, delivery and enforcement of this Amendment and all other Loan Documents and any other transactions
contemplated hereby, including, without limitation, the reasonable fees and out-of-pocket expenses of legal counsel to the Agent. 
  

					
		  	-3-	  	

 11. Borrowers and Guarantors agree to take such further action as the Agent shall reasonably request in
connection herewith to evidence the agreements herein contained. 
 12. This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. 
 13. This Amendment shall be binding upon and inure to the benefit of the successors and permitted assigns, and legal representatives and heirs, of the
parties hereto. 
 14. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Georgia. 

[SIGNATURES BEGIN ON NEXT PAGE] 
  

					
		  	-4-	  	

 IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above written.

  

							
	BORROWERS:
	
	 CARAUSTAR INDUSTRIES, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 CARAUSTAR CUSTOM PACKAGING GROUP, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 CARAUSTAR RECOVERED FIBER GROUP, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 CARAUSTAR INDUSTRIAL AND CONSUMER
 PRODUCTS GROUP, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 CARAUSTAR MILL GROUP, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 PARADIGM CHEMICAL & CONSULTING, LLC

			
		 	 By:
	 	 CARAUSTAR MILL GROUP, INC.,
 sole member

				
		 		 	 By:
	 	 /s/ Ronald J. Domanico

		 		 		 	 Ronald J. Domanico, Vice President

  

					
		  		  	

							
	 SPRAGUE PAPERBOARD, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	GUARANTORS:
	
	 PBL INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 GYPSUM MGC, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 MCQUEENEY GYPSUM COMPANY

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 CARAUSTAR, G.P.

			
		 	 By:
	 	 CARAUSTAR INDUSTRIES, INC.,
 general partner

				
		 		 	 By:
	 	 /s/ Ronald J. Domanico

		 		 		 	 Ronald J. Domanico, Vice President

			
		 	 By:
	 	 CARAUSTAR INDUSTRIAL AND
 CONSUMER PRODUCTS GROUP, INC.,
 general partner

				
		 		 	 By:
	 	 /s/ Ronald J. Domanico

		 		 		 	 Ronald J. Domanico, Vice President

  

					
		  		  	

							
	 MCQUEENEY GYPSUM COMPANY, LLC

			
		 	 By:
	 	 MCQUEENEY GYPSUM COMPANY,
 sole member

				
		 		 	 By:
	 	 /s/ Ronald J. Domanico

		 		 		 	 Ronald J. Domanico, Vice President

	
	 RECCMG, LLC

			
		 	 By:
	 	 CARAUSTAR MILL GROUP, INC.,
 sole member

				
		 		 	 By:
	 	 /s/ Ronald J. Domanico

		 		 		 	 Ronald J. Domanico, Vice President

	
	 CICPG, LLC

			
		 	 By:
	 	 CARAUSTAR INDUSTRIAL AND
 CONSUMER PRODUCTS GROUP, INC.

				
		 		 	 By:
	 	 /s/ Ronald J. Domanico

		 		 		 	 Ronald J. Domanico, Vice President

	
	 FEDERAL TRANSPORT, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 AUSTELL HOLDING COMPANY, LLC

			
		 	 By:
	 	 CARAUSTAR INDUSTRIES, INC.,
 sole member

				
		 		 	 By:
	 	 /s/ Ronald J. Domanico

		 		 		 	 Ronald J. Domanico, Vice President

	
	 CAMDEN PAPERBOARD CORPORATION

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

  

					
		  		  	

					
	 CHICAGO PAPERBOARD CORPORATION

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 HALIFAX PAPER BOARD COMPANY, INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	 CARAUSTAR CUSTOM PACKAGING GROUP
 (MARYLAND), INC.

			
	 By:
	 		 	 /s/ Ronald J. Domanico

		 		 	 Ronald J. Domanico, Vice President

	
	LENDERS:
	
	 BANK OF AMERICA, N.A.

			
	 By:
	 		 	 /s/ Walter T. Shellman

		 		 	 Walter T. Shellman, Vice President

	
	 MERRILL LYNCH CAPITAL, a division of
MERRILL
 LYNCH BUSINESS FINANCIAL SERVICES INC.

		
	 By:
	 	 /s/ Brad Ament

	 Name:  
	 	 Brad Ament

	 Title:
	 	 Director

	
	 THE CIT GROUP/BUSINESS CREDIT, INC.

		
	 By:
	 	 /s/ Kenneth B. Butlee

	 Name:
	 	 Kenneth B. Butlee

	 Title:
	 	 Vice President

  

					
		  		  	

					
	AGENT:
	
	 BANK OF AMERICA, N.A.

			
	 By:
	 		 	 /s/ Walter T. Shellman

		 		 	 Walter T. Shellman, Vice President

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