Document:

Exhibit 10.2

 

AMENDED AND RESTATED GUARANTY

 

THIS AMENDED AND RESTATED GUARANTY (this “Unlimited Guaranty”), dated as of July 28, 2008, made
by SMURFIT-STONE CONTAINER ENTERPRISES, INC.,
a corporation organized under the laws of the State of Delaware having its chief
executive office at 150 North Michigan Avenue, Chicago, IL  60601 (“Guarantor”) in favor of THE CIT GROUP/EQUIPMENT FINANCING, INC., as the initial
lender (the “Initial Lender”) and as
Administrative Agent for the benefit of the Lenders (as defined below) (the “Administrative Agent”
and together with the Lenders, the “Beneficiaries”).

 

WHEREAS,
pursuant to that Credit Agreement dated as of March 30, 2006 (as
subsequently amended, the “Original Credit Agreement”),
by and between Calpine Corrugated, LLC (formerly known as Produce Container,
LLC (the “Borrower”) and the Administrative Agent
and Initial Lender and such other financial institutions as may become parties
thereto from time to time (together with the Initial Lender, the “Lenders”), the Initial Lender made advances to Borrower in
the aggregate principal amount of $40,350,000.00 to finance the purchase and
installation of equipment for the manufacture of corrugated containers at
Borrower’s facility in Fresno, California (the “Manufacturing
Facility”), which advances were subsequently converted to a Term
Loan evidenced by that Term Note in favor of the Initial Lender effective as of
November 30, 2006;

 

WHEREAS,
pursuant to that Guaranty dated as of March 30, 2006 (the “Original Guaranty”), the Guarantor provided a limited
guaranty of the obligations of Borrower under the Original Credit Agreement;

 

WHEREAS,
the Borrower, the Administrative Agent and the Initial Lender thereafter
amended the Original Credit Agreement in certain respect pursuant to that
Amendment No. 1 to Credit Agreement entered into as of October 30,
2006, that letter agreement denominated Amendment No. 2 to Credit
Agreement dated November 30, 2006, and that Amendment No. 2 [sic] to Credit Agreement entered into as April 23, 2007;

 

WHEREAS,
during 2007 the Working Capital Lender (as defined in the Original Credit
Agreement) advised the Administrative Agent of the occurrence of certain “Events
of Default” (the “Revolver Defaults”)
under the Working Capital Loan Documents (as defined in the Original Credit
Agreement);

 

WHEREAS,
by letter dated November 30, 2007, the Administrative Agent notified the
Borrower and the Guarantor that certain Events of Default (collectively, the “Identified Defaults”) had occurred and were continuing under
the Original Credit Agreement, including breach of certain financial covenants
in the Original Credit Agreement and the existence of the Revolver Defaults;

 

WHEREAS,
the Borrower, the Administrative Agent, the Initial Lender and the Guarantor subsequently
entered into negotiations to restructure the Original Credit Agreement and
other Loan Documents, and pursuant to that Amendment No. 4 to Credit
Agreement, Reservation of Rights and Reaffirmation of Guaranty entered into as
of December 28, 2007, that Amendment No. 5 to Credit Agreement,
Reservation of Rights and Reaffirmation of Guaranty 

 

 

entered into
as of January 31, 2008, and that Amendment No. 6 to Credit Agreement,
Reservation of Rights and Reaffirmation of Guaranty entered into as of February 29,
2008, the Borrower, the Administrative Agent, the Initial Lender and the
Guarantor further amended the Original Credit Agreement on the terms and
conditions set forth therein;

 

WHEREAS,
the Borrower has failed to make the principal payments due under the Original Credit
Agreement as of March 14, April 14, May 14 and June 14, 2008
(the “Payment Defaults,” and collectively
with the Identified Defaults and any other Defaults described on Schedule
1.01(a) to the Credit Agreement (as defined below), the “Existing Defaults”);

 

WHEREAS,
pursuant to that Amended and Restated Operating Agreement of Calpine
Corrugated, LLC (the “Calpine Operating
Agreement”) dated as of the Effective Date (as defined in the Credit
Agreement), the existing members of the Borrower and the Guarantor have
restructured the Borrower to, among other things, admit the Guarantor as a
Member (as defined in the Calpine Operating Agreement) owning a 90% Percentage
Interest (as defined in the Calpine Operating Agreement) in the Borrower;

 

WHEREAS,
the Borrower and the Guarantor have requested that the Administrative Agent and
the Initial Lender (i) waive the Existing Defaults and the right to
collect interest at the Default Rate (as defined in the Original Credit
Agreement) as a result of the Existing Defaults (ii) enter into an Amended
and Restated Credit Agreement (the “Credit Agreement”)
and (iii) otherwise amend the Loan Documents on the terms and subject to
the conditions set forth in the Credit Agreement, in consideration for which
the Guarantor has agreed to amend and restate the Original Guaranty to provide
a full guaranty of the Term Loan and all obligations of the Borrower under the
Credit Agreement;

 

WHEREAS,
the Borrower, the Administrative Agent, the Initial Lender and the Guarantor have
agreed that, on the Effective Date, the Original Credit Agreement, the Term
Note and the Original Guaranty will each be amended and restated in its
entirety, and other Loan Documents will be further amended in certain respects,
in each case as provided in, and on and subject to the terms and conditions set
forth in, the Credit Agreement;

 

WHEREAS, the Administrative Agent and the
Initial Lender are unwilling to waive the Existing Defaults and the collection
of interest at the Default Rate, to enter into the Credit Agreement and to otherwise
provide the concessions requested by the Borrower and Guarantor unless, among
other conditions, the Guarantor shall have executed and delivered this Unlimited
Guaranty in favor of the Administrative Agent (for the benefit of all
Beneficiaries); and

 

WHEREAS, the Guarantor, both through its
contractual relationships with the Borrower and as 90% owner of the Borrower, has
derived and will derive substantial economic benefit from the financing provided
by the Initial Lender to the Borrower pursuant to the Credit Agreement and will
derive substantial additional economic benefit from the Initial Lender’s
forbearance with respect to, and waiver of, the Existing Defaults and the other
concessions granted by the Initial Lender in acceding to the request of the
Borrower and the Guarantor to amend the Original Credit Agreement and the other
Loan Documents;

 

 

NOW THEREFORE, in consideration of the
foregoing (all of which are incorporated as express representations and
covenants of Guarantor) and in order to induce the Initial Lender and the
Administrative Agent to waive the Existing Defaults and the right to collect
interest at the Default Rate as a result of the Existing Defaults and to
otherwise amend the Original Credit Agreement and the Loan Documents for the
benefit of Borrower and Guarantor, Guarantor, for the benefit of the
Administrative Agent and the Beneficiaries, hereby amends and restates the Original
Guaranty in its entirety to read as follows:

 

1.             Guarantor,
as a primary obligor, hereby unconditionally and irrevocably, guarantees to the
Beneficiaries that the Borrower will fully and promptly pay and perform all of
the Borrower’s obligations under the Credit Agreement and the other Loan
Documents as now in effect or as the same may be modified, amended and/or
restructured at any time, including, but not limited to, the obligation to
repay the principal of the Term Loan (as defined in the Credit Agreement),
interest thereon, break costs contemplated therein, prepayment fees
contemplated therein, costs and expenses (including legal fees and
disbursements) of the Administrative Agent and the other Lenders that the Borrower
has agreed to bear thereunder, and payment and performance of all other obligations
of the Borrower thereunder (all of the foregoing are hereinafter referred to collectively
as the “Obligations”)
and that, if for any reason the Borrower shall fail to pay or perform any
Obligation, the Guarantor will promptly pay or perform the same without
limitation or condition.

 

2.             The
obligations of Guarantor under this Unlimited Guaranty shall be continuing,
absolute and unconditional under any and all circumstances and shall be paid
and performed by Guarantor regardless of (a) the invalidity or
unenforceability of any of the Obligations; (b) any change in the time,
manner, place of payment or in any other term of any of the Obligations; (c) any
impossibility, impracticably, frustration of purpose, illegality, force majeure
or act of government; (d) the bankruptcy, winding up, liquidation,
dissolution or insolvency of the Borrower; (e) the insufficiency,
invalidity or unenforceability of any collateral security or any other guaranty
of the Obligations at any time held by the Beneficiaries (or any of them); or (f) any
defense, offset or counterclaim which may at any time be available to or
asserted by the Borrower against the Beneficiaries (or any of them).

 

3.             The
Guarantor agrees, without the Beneficiaries first having to proceed against the
Borrower or other person or to liquidate any collateral security for any
Obligations, to pay on demand all Obligations due and to become due to the
Beneficiaries (or any of them) from the Borrower together with all losses,
costs, attorneys’ fees or expenses the Beneficiaries (or any of them) may incur
in enforcing its rights against the Guarantor hereunder.

 

4.             Guarantor
waives (a) notice of acceptance of this Unlimited Guaranty and the
presentment, demand, protest and notice of non-payment or protest with respect
to any Obligation and any and all other demands and notices required by law; (b) any
and all rights of subrogation, reimbursement, indemnity, exoneration,
contribution or any other claim which Guarantor may now or hereafter have
against the Borrower or any other person directly or contingently liable for
the Obligations or with respect to the Borrower’s property (including, without
limitation, property collateralizing the Obligations), arising from the
existence of this Unlimited Guaranty; (c) all exemptions; (d) all
setoffs and counterclaims; and (e) any duty on the part of any Beneficiary
(should such duty exist) to disclose to Guarantor any matter, fact or thing 

 

 

related to the business operations or condition (financial or
otherwise) of the Borrower or its affiliates or property, whether now or
hereafter known by such Beneficiary.

 

5.             Guarantor
agrees that the Beneficiaries may at any time and from time to time, without
Guarantor’s consent and without notice to Guarantor and without affecting,
releasing or impairing any of Guarantor’s obligations hereunder, from time to
time, as the Beneficiaries may deem advisable, do any of the following (a) renew,
grant time, extend, modify, release or discharge any of the Obligations
(including extensions beyond the original term thereof) or of any other party
at any time directly or contingently liable for the payment thereof; (b) accept
partial payments of the Obligations; (c) settle, release (by operation of
law or otherwise), compound, compromise, collect or liquidate any Obligation and
any collateral security therefor in any manner; (d) consent to the
transfer or return of any collateral security, or take and hold additional
security or guaranties, for any Obligation; (e) bid and purchase at any
sale of collateral security for any Obligation, and direct the order and manner
of any sale.

 

6.             This
Unlimited Guaranty is an unconditional guarantee of payment and performance.

 

7.             A
waiver by any Beneficiary of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which such Beneficiary
or any other Beneficiary would otherwise have on any future occasion.  Neither failure to exercise nor any delay on the
part of any Beneficiary in exercising any right or remedy hereunder shall
operate as a waiver thereof.  The rights
and remedies herein provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law.

 

8.             If
a claim is made upon any Beneficiary at any time for repayment or recovery of
any amount of other value received by such Beneficiary from any source in
payment of or on account of any Obligations guaranteed hereunder and such
Beneficiary repays or otherwise becomes liable for all or any part of such
claim by reason of (a) any judgment, decree or order of any court or
administrative body having competent jurisdiction; (b) any event or action
including the insolvency, bankruptcy or reorganization of the Borrower; or (c) any
settlement or compromise of any such claim, Guarantor shall remain liable to such
Beneficiary hereunder for the amount so repaid or for which such Beneficiary is
otherwise liable to the same extent as if such amount had never been received
by such Beneficiary.

 

9.             Any
and all amounts required to be paid by Guarantor hereunder shall be paid in
lawful money of the United States of America in accordance with the terms and
provisions hereof, without deductions for and free and clear of any and all
taxes, levies, duties, withholding or restrictions of any nature now or
hereafter imposed, levied, collected, withheld or assessed with respect to any
of the Obligations or this Unlimited Guaranty by any taxing authority of
competent jurisdiction (“Taxes”).  If any Taxes
are required to be deducted or withheld from any amount payable to any
Beneficiary under this Unlimited Guaranty, such amount payable shall be
increased to yield to such Beneficiary (after payment of all Taxes) the amount
specified to be paid hereunder.  Whenever
any Taxes are paid by Guarantor on behalf of any Beneficiary, Guarantor shall,
as promptly as possible, send such Beneficiary (through the Administrative 

 

 

Agent) an official receipt showing payment thereof, together with such
additional evidence of payment as such Beneficiary (through the Administrative
Agent) may reasonably require.

 

10.           Guarantor
specifically acknowledges that the specification of payment in United States
Dollars (“Dollars”) is of the essence.  Unrestricted, convertible and transferable
Dollars shall be the currency of account in the case of all payments pursuant
to or arising under this Unlimited Guaranty. 
The payment obligations of the Guarantor under this Unlimited Guaranty
shall not be discharged by an amount paid in another currency, whether pursuant
to a judgment or otherwise, to the extent that the amount so paid on prompt
conversion to Dollars under normal banking procedures does not yield the amount
of Dollars due under this Unlimited Guaranty. 
If, for the purpose of obtaining judgment in any court, it is necessary
to convert a sum due hereunder in Dollars into another currency (the “Other Currency”),
the rate of exchange used shall be that at which the applicable Beneficiary
could, in accordance with normal banking procedures, purchase Dollars with the
Other Currency on the business day immediately preceding the date on which
final judgment is given in such court.  The
obligation of the Guarantor in respect to any such sum due from it to any
Beneficiary hereunder shall, notwithstanding any judgment in such Other Currency,
be discharged only to the extent that, on the business day immediately
following the date on which such Beneficiary receives any sum adjudged to be so
due in the Other Currency, such Beneficiary may, in accordance with normal
banking procedures, purchase dollars with the Other Currency.  If the dollars so purchased are less than the
sum originally due to such Beneficiary in dollars, the Guarantor agrees as a
separate obligation and notwithstanding any such judgment, to indemnify such
Beneficiary against such loss, and if the dollars so purchased exceed the sum
originally due to such Beneficiary in dollars, such Beneficiary (through the
Administrative Agent) will promptly remit to the Guarantor such excess.

 

11.           This
Unlimited Guaranty shall be governed by, and construed in all respects in
accordance with, the internal laws of the State of Arizona, without regard to
any conflicts of law principles that may mandate the application of the laws of
any other jurisdiction.  Guarantor hereby
irrevocably consents and agrees that any legal action, suit or proceeding
arising out of or in any way connected with this Unlimited Guaranty may be
instituted or brought against Guarantor in the courts of the State of Arizona,
in the county of Maricopa, or the United States courts as the Administrative
Agent or any other Beneficiary may elect, and, by execution and delivery of
this Unlimited Guaranty, Guarantor hereby irrevocably accepts and submits to
the non-exclusive jurisdiction of any such court, and to all proceedings in
such courts, and agrees to be bound by any judgment thereof.  Guarantor hereby waives any right to a trial
by jury in any action or proceeding relating to or connection with this Unlimited
Guaranty.  Nothing in this Unlimited
Guaranty shall affect or limit the right to effect service of process in any
other manner permitted by law or limit the right of the Administrative Agent or
any other Beneficiary to bring actions, suits or proceedings in the court of
any other jurisdiction.  Guarantor
further agrees that final judgment against it in any such legal action, suit or
proceeding shall be conclusive and may be enforced in any other jurisdiction,
within or without the United States, by suit on the judgment, certified or
exemplified copy of which shall be conclusive evidence of the fact and amount
of liability.

 

12.           To
the extent that the Guarantor or the Borrower or any of their respective
properties, assets or revenues may have or may hereafter become entitled to, or
have attributed to 

 

 

it, any right of immunity, on the grounds of sovereignty or otherwise,
from any legal action, suit or proceeding, from the giving of any relief in any
thereof, from setoff or counterclaim, from the jurisdiction of any court, from
service or process, from attachment upon or prior to judgment, from attachment
in aid of execution of judgment, or from execution of judgment, or other legal
process or proceeding from the giving of any relief or for the enforcement of
any judgment, in any jurisdiction in which proceedings may at any time be
commenced, with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Unlimited Guaranty, the
Guarantor hereby irrevocably and unconditionally waives, and agrees not to
plead or claim, any such immunity and consents to such relief and enforcement.

 

13.           This
Unlimited Guaranty constitutes the entire agreement between the Guarantor and the
Beneficiaries with respect to the subject matter hereof and supersedes any
prior understandings and agreements between such parties with respect thereto.  There are no representations, warranties,
terms, conditions, understandings or collateral agreements, expressed, implied
or statutory between the parties other than as expressly set forth in this Unlimited
Guaranty.

 

14.           This
Unlimited Guaranty shall bind the respective representatives, successors and
assigns of Guarantor and each Beneficiary and shall inure to the benefit of the
successors and assigns of each Beneficiary. 
The invalidity, illegality or unenforceability of any other provision of
this Unlimited Guaranty shall not affect the validity, legality or
enforceability of any other provision of this Unlimited Guaranty.  This Unlimited Guaranty shall be governed by,
and be construed in accordance with, the laws of the State of Arizona.  None of the terms or provisions of this Unlimited
Guaranty may be amended, waived or modified except by a writing signed by the
party against which enforcement of such amendment, waiver or modification is
sought.

 

15.           The
rights of each Beneficiary under this Unlimited Guaranty may, subject to the
terms and conditions set forth in the Credit Agreement (including notice to the
Administrative Agent, or in the case of an assignment by the Administrative
Agent, subject to the provisions thereof relating to the replacement of the
Administrative Agent), be assigned by such Beneficiary without prior consent of
the Borrower or the Guarantor.  The
Guarantor may not assign its obligations under this Unlimited Guaranty.

 

16.           All notices, requests and demands to or upon the
respective parties hereto shall be in writing and shall be deemed to have been
given or made when delivered to the party to whom it is addressed as follows:

 

If to
Guarantor:

 

Smurfit-Stone Container Enterprises, Inc.

Six CityPlace Drive

Creve Coeur, MO 63141

Attention:  Charles A. Hinrichs

Telephone:  314-656-5276

Facsimile:   314-787-6162

 

 

With a copy to:

 

Winston & Strawn LLP

35 W. Wacker Drive

Chicago, IL  60601

Attention:  Brian S. Hart

Telephone:  312-558-5702

Facsimile:  312-558-5700

 

If to the
Administrative Agent or any other Beneficiary:

 

The CIT Group/Equipment Financing, Inc., as Administrative Agent

305 Fellowship Road

Suite 300

Mount Laurel, NJ  08054

Attention:  Martin Healey

Telephone:  856-813-2623

Facsimile:  856-727-5203

 

With
a copy to:

 

The CIT Group/Equipment Financing, Inc

305 Fellowship Road

Suite 300

Mount Laurel, NJ  08054

Attention:  Cole Silver

Telephone:  856-813-2696

Facsimile:  856-813-2996

 

17.           Guarantor
hereby further expressly covenants and agrees that, if at any time Guarantor ceases
to file periodic reports with the Securities and Exchange Commission pursuant
to the Securities and Exchange Act of 1934 and the regulations promulgated
thereunder, then Guarantor shall promptly deliver to Administrative Agent
copies of (i) all notices, requests and other documents received by
Guarantor or any of its Subsidiaries under or pursuant to the Credit Agreement
dated as of November 1, 2004 among Guarantor, Smurfit Stone Container
Corporation, Smurfit-Stone Container Canada, Inc., JPMorgan Chase Bank, as
Senior Agent, Deutsche Bank Trust Company Americas, as Senior Agent and
Administrative Agent, Deutsche Bank AG, as Canadian Administrative Agent, and
the lenders party thereto or any of the “Loan Documents” as defined therein
regarding any event that could materially impair the value of the interests or
the rights of any Loan Party or otherwise have a Material Adverse Effect, (ii) any
amendment, modification or waiver of any provision of any document described in
clause (i) above, and (iii) from time to time, such information and
reports regarding the documents described in clause (i) above as the
Administrative Agent may reasonably request.

 

[SIGNATURE PAGE FOLLOWS.]

 

 

IN WITNESS WHEREOF the Guarantor has executed
this Unlimited Guaranty as of the day and year first above written.

 

	
   

  	
  SMURFIT-STONE CONTAINER

  ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
   

  
	
   

  	
  Name:
  Charles A. Hinrichs

  
	
   

  	
   

  
	
   

  	
  Title:
  Senior Vice President and Chief

  Financial Officer

  

 

 

ACKNOWLEDGED
AND AGREED.

 

THE CIT
GROUP/EQUIPMENT FINANCING, INC.,

  as Administrative Agent

 

	
  By:

  	
  /s/ Raymond
  M. Crouse

  	
   

  
	
  Name:
  Raymond M. Crouse

  	
   

  
	
  Title:   Senior Vice PresidentExhibit 10.3

 

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

 

(a)                                 WHEREAS, Guarantor is a leading U.S. integrated
manufacturer of various paperboard and paper-based packaging material;

 

(b)                                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;

 

(c)                                 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”);

 

(d)                                WHEREAS, Guarantor has agreed to guarantee the
Obligations of Borrower;

 

(e)                                 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;

 

(f)                                   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

 

(g)                                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.

 

NOW, THEREFORE,
in consideration of the foregoing premises, to induce the

 

 

Borrower
and Bank to enter into the Sixth Amendment, Guarantor and Bank hereby agree as
follows:

 

1.                                      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 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.

 

2.                                      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.

 

 

3.                                      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.

 

4.                                      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 Borrower, any defense that any
other indemnity, guaranty or security was to be obtained, any claim that Bank
has made Guarantor’s obligations more burdensome or more burdensome than
Borrower’s obligations, and the use of any proceeds of the Obligations other
than as intended or understood by Bank or Guarantor; (c) all presentments,
demands for performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, notices of acceptance of this Guaranty and the
existence or creation of new or additional Obligations, and all other notices
or demands to which Guarantor might otherwise be entitled; (d) all rights
to file a claim in connection with the Obligations in an Insolvency Proceeding
filed by or against Borrower except as subordinate to Bank’s claim; (e) all
rights to require Bank to enforce any of its remedies; and (f) until the
Obligations are satisfied and fully and finally paid with such payment not
subject to return (i) all rights of subrogation, contribution,
indemnification or reimbursement, (ii) all rights of recourse to any
assets or property of Borrower, or to any collateral or credit support for the
Obligations except as subordinate to Bank’s rights, (iii) all rights to
participate in or benefit from any security or credit support Bank may have or acquire,
and (iv) all rights, remedies and defenses Guarantor may have or acquire
against Borrower.  Guarantor understands
that if Bank forecloses by trustee’s sale on a deed of trust securing any of
the Obligations, Guarantor would then have a defense preventing Bank from
thereafter enforcing Guarantor’s liability for the unpaid balance of the
secured Obligations.  This defense arises
because the trustee’s sale would eliminate Guarantor’s right of subrogation,
and therefore Guarantor would be unable to obtain reimbursement from
Borrower.  Guarantor specifically waives
this defense and all rights and defenses that Guarantor may have against Bank
because the Obligations are secured by real property.  This means, among other things: (A) Bank
may collect from Guarantor without first foreclosing on any real property
collateral pledged by Borrower; and (B) if Bank forecloses on any real
property collateral pledged by Borrower, then: (I) the amount of

 

 

the Obligations may be reduced only by the price for which the
collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price, and (II) Bank may collect from Guarantor even if
Bank, by foreclosing on the real property collateral, has destroyed any right
Guarantor may have to collect from Borrower. 
This is an unconditional and irrevocable waiver of any rights and
defenses Guarantor may have because the Obligations are secured by real
property.  These rights and defenses
include, but are not limited to, any rights or defenses based upon Section 580a,
580b, 580d or 726 of the California Code of Civil Procedure or similar laws in
other states.  In addition, Guarantor
waives all rights and defenses arising out of an election of remedies by Bank,
even though that election of remedies, such as non-judicial foreclosure with
respect to security for a secured obligation, may have destroyed Guarantor’s
rights of subrogation by the operation of Section 580d of the California
Code of Civil Procedure or otherwise.

 

5.                                      Guarantor to Keep Informed. 
Guarantor warrants having established with Borrower adequate means of
obtaining, on an ongoing basis, such information as Guarantor may require
concerning all matters bearing on the risk of nonpayment or nonperformance of
the Obligations.  Guarantor assumes sole,
continuing responsibility for obtaining such information from sources other
than from Bank.  Bank has no duty to
provide any information to Guarantor until Bank receives Guarantor’s written
request for specific information in Bank’s possession and Borrower has
authorized Bank to disclose such information to Guarantor.

 

6.                                      Intentionally Omitted.

 

7.                                      Authorization.  Where
Borrower is a corporation, partnership or other entity, Bank need not inquire
into or verify the powers of Borrower or authority of those acting or
purporting to act on behalf of Borrower, and this Guaranty shall be enforceable
with respect to any Obligations Bank grants or creates in reliance on the
purported exercise of such powers or authority.

 

8.                                      Assignments. 
Without notice to Guarantor, Bank may assign the Obligations and this
Guaranty, in whole or in part, in accordance with the terms of the Loan
Agreement and may disclose to any prospective or actual purchaser of all or
part of the Obligations any and all information Bank has or acquires concerning
Guarantor, this Guaranty and any security for this Guaranty.

 

9.                                      Counsel Fees and Costs.  The
prevailing party shall be entitled to reasonable attorneys’ fees and all other
reasonable out-of-pocket costs and expenses which it may incur in connection
with the enforcement or preservation of its rights under, or defense of, this
Guaranty or in connection with any other dispute or proceeding relating to this
Guaranty whether or not incurred in any Insolvency Proceeding, arbitration, litigation
or other proceeding.

 

10.                                Multiple Guarantors/Borrowers.  When
there is more than one Borrower named herein or when this Guaranty is executed
by more than one Guarantor, then the words “Borrower” and “Guarantor”,
respectively, shall mean all and any one or more of them,

 

 

and their respective successors and assigns, including, without
limitation, debtors-in-possession and bankruptcy trustees; words used herein in
the singular shall be considered to have been used in the plural where the
context and construction so requires in order to refer to more than one
Borrower or Guarantor, as the case may be.

 

11.                               Integration/Severability/Amendments.  This
Guaranty is intended by Guarantor and Bank as the complete, final expression of
their agreement concerning its subject matter. 
It supersedes all prior understandings or agreements with respect
thereto and may be changed only by a writing signed by Guarantor and Bank.  No course of dealing, or parole or extrinsic
evidence shall be used to modify or supplement the express terms of this
Guaranty.  If any provision of this
Guaranty is found to be illegal, invalid or unenforceable, such provision shall
be enforced to the maximum extent permitted, but if fully unenforceable, such
provision shall be severable, and this Guaranty shall be construed as if such
provision had never been a part of this Guaranty, and the remaining provisions
shall continue in full force and effect.

 

12.                               Joint and Several.  If
more than one Guarantor signs this Guaranty, the obligations of each under this
Guaranty are joint and several, and independent of the Obligations and of the
obligations of any other person or entity. 
A separate action or actions may be brought and prosecuted against any
one or more guarantors, whether action is brought against Borrower or other
guarantors of the Obligations, and whether Borrower or others are joined in any
such action.

 

13.                               Notice.  Any
notice, including, without limitation, notice of revocation, given by any party
under this Guaranty shall be effective only upon its receipt by the other party
and only if (a) given in writing and (b) personally delivered, sent
by United States mail, postage prepaid, or sent out by facsimile transmission
(with such facsimile promptly confirmed by delivery of a copy by personal
delivery or United States mail as otherwise provided in this paragraph), and
addressed to Bank or Guarantor at their respective addresses for notices
indicated below.  Guarantor and Bank may
change the place to which notices, requests, and other communications are to be
sent to them by giving written notice of such change to the other.

 

14.                               Governing Law.  This
Guaranty shall be governed by and construed according to the laws of
California, and Guarantor submits to the nonexclusive jurisdiction of the state
or federal courts in California.

 

15.                               Patriot Act.  Bank
is subject to the Patriot Act and hereby notifies Guarantor that pursuant to
the requirements of the Patriot Act, Bank is required to obtain, verify and
record information that identifies Guarantor, which information includes the
name and address of Guarantor and other information that will allow Bank to
identify Guarantor in accordance with the Patriot Act.

 

16.                               JUDICIAL REFERENCE. 
TO THE EXTENT PERMITTED BY LAW, IN CONNECTION WITH ANY CLAIM, CAUSE OF
ACTION, PROCEEDING OR OTHER DISPUTE CONCERNING THE LOAN DOCUMENTS (EACH A
“CLAIM”), THE PARTIES TO THIS AGREEMENT EXPRESSLY, INTENTIONALLY, AND
DELIBERATELY WAIVE ANY RIGHT THAT EACH OF 
THEM MAY

 

 

OTHERWISE HAVE TO
TRIAL BY JURY.  IN THE EVENT THAT THE
WAIVER OF JURY TRIAL SET FORTH IN THE PREVIOUS SENTENCE IS  NOT ENFORCEABLE UNDER THE LAW APPLICABLE  TO THIS AGREEMENT, THE PARTIES TO THIS
AGREEMENT AGREE THAT ANY CLAIM, INCLUDING ANY QUESTION OF LAW OR FACT RELATING
THERETO, SHALL, AT THE WRITTEN REQUEST OF ANY PARTY, BE DETERMINED BY JUDICIAL
REFERENCE PURSUANT TO THE STATE LAW APPLICABLE TO THIS AGREEMENT.  THE PARTIES SHALL SELECT A SINGLE NEUTRAL
REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL JUDGE.  IN THE EVENT THAT THE PARTIES CANNOT AGREE
UPON A REFEREE, THE COURT SHALL APPOINT THE REFEREE.  THE REFEREE SHALL REPORT A STATEMENT OF
DECISION TO THE COURT.  NOTHING IN THIS SECTION 16 SHALL LIMIT  THE RIGHT OF ANY PARTY AT ANY TIME TO
EXERCISE SELF-HELP REMEDIES, FORECLOSE AGAINST COLLATERAL OR OBTAIN  PROVISIONAL REMEDIES.  THE PARTIES SHALL BEAR THE FEES AND EXPENSES
OF THE REFEREE EQUALLY, UNLESS THE REFEREE ORDERS OTHERWISE.  THE REFEREE SHALL ALSO DETERMINE ALL ISSUES
RELATING TO THE APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS SECTION 16.  THE PARTIES ACKNOWLEDGE THAT IF A
REFEREE  IS SELECTED TO DETERMINE THE
CLAIMS, THEN THE CLAIMS WILL NOT BE DECIDED BY A JURY.

 

17.                               Counterparts.  This
Guaranty may be executed in any number of counterparts, which shall, collectively
and separately, constitute one agreement. 
Delivery of an executed counterpart of a signature page hereto by
facsimile transmission shall be effective as delivery of a manually executed
counterpart thereof.

 

[Remainder of Page Intentionally Left Blank]

 

 

Executed
as of the date first written above, Guarantor acknowledges having received a
copy of this Guaranty and having made each waiver contained in this Guaranty
with full knowledge and consequences.

 

 

	
  “Bank”:

  	
   

  	
  “Guarantor”:

  
	
   

  	
   

  	
   

  
	
  UNION
  BANK OF CALIFORNIA, N.A.,

  	
   

  	
  SMURFIT-STONE
  CONTAINER

  ENTERPRISES, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Shawn Lipman

  	
   

  	
  By:

  	
  /s/
  Charles A. Hinrichs

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Shawn
  Lipman

  	
   

  	
  Name:

  	
  Charles
  A. Hinrichs

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice
  President

  	
   

  	
  Title:
  

  	
  Senior
  Vice President and Chief

  
	
   

  	
   

  	
   

  	
  Financial
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Addresses for Notices:

  	
   

  	
  Addresses
  for Notices:

  
	
   

  	
   

  	
   

  
	
  Union Bank of
  California, N.A.

  	
   

  	
  Smurfit-Stone Container
  Enterprises, Inc.

  
	
  445 South Figueroa
  Street, G13-300

  	
   

  	
  Six CityPlace Drive

  
	
  Los Angeles, California
  90071

  	
   

  	
  Creve Coeur, MO 63141

  
	
  Attn: Commercial
  Finance Division

  	
   

  	
  Attn: Charles A. Hinrichs

  
	
  Telephone No.: (213)
  236-5301

  	
   

  	
  Telephone No.: (314)
  656-5276

  
	
  Facsimile No.: (213)
  236-6089

  	
   

  	
  Facsimile No.: (314)
  787-6162

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
  McDermott
  Will & Emery LLP

  	
   

  	
  Winston & Strawn
  LLP

  
	
  2049 Century Park East,
  38th Floor

  	
   

  	
  35 W. Wacker Drive

  
	
  Los Angeles, CA 90067

  	
   

  	
  Chicago, IL 60601

  
	
  Attn: Gary B.
  Rosenbaum, Esq.

  	
   

  	
  Attn: Brian S. Hart

  
	
  Telephone No.: (310)
  284-6133

  	
   

  	
  Telephone No.: (312)
  668-5702

  
	
  Facsimile No.: (310)
  277-4730

  	
   

  	
  Facsimile No.: (312)
  558-5700

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