Exhibit (10)(p)
CREDIT AGREEMENT
Dated as of June 29, 2001
among
POTLATCH CORPORATION
as Borrower
CERTAIN SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO
as Guarantors
THE LENDERS
FROM TIME TO TIME PARTY HERETO
and
BANK OF AMERICA, N.A.
as Administrative Agent
with
BANC OF AMERICA SECURITIES LLC
as Lead Arranger and Sole Book Manager
WACHOVIA SECURITIES, INC.
as Joint Lead Arranger
WACHOVIA BANK, N.A.
as Syndication Agent
and
NORTHWEST FARM CREDIT SERVICES, PCA
as Documentation Agent
TABLE OF CONTENTS
SECTION 1 DEFINITIONS...................................................................... 1
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1.1 Definitions.................................................................. 1
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1.2 Computation of Time Periods.................................................. 27
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1.3 Accounting Terms............................................................. 27
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SECTION 2 CREDIT FACILITIES................................................................ 28
2.1 Revolving Loans.............................................................. 28
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2.2 Letter of Credit Subfacility................................................. 30
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2.3 Term Loan.................................................................... 36
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SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES................................... 38
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3.1 Default Rate................................................................. 38
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3.2 Extension and Conversion..................................................... 38
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3.3 Prepayments.................................................................. 39
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3.4 Termination and Reduction of Revolving Committed Amount...................... 41
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3.5 Fees......................................................................... 42
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3.6 Capital Adequacy............................................................. 43
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3.7 Limitation on Eurodollar Loans............................................... 44
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3.8 Illegality................................................................... 44
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3.9 Requirements of Law.......................................................... 44
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3.10 Treatment of Affected Loans.................................................. 45
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3.11 Taxes........................................................................ 46
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3.12 Compensation................................................................. 47
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3.13 Pro Rata Treatment........................................................... 48
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3.14 Sharing of Payments.......................................................... 49
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3.15 Payments, Computations, Etc.................................................. 50
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3.16 Evidence of Debt............................................................. 52
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3.17 Replacement of Affected Lenders.............................................. 52
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SECTION 4 GUARANTY......................................................................... 53
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4.1 The Guaranty................................................................. 53
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4.2 Obligations Unconditional.................................................... 54
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4.3 Reinstatement................................................................ 55
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4.4 Certain Additional Waivers................................................... 55
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4.5 Remedies..................................................................... 55
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4.6 Rights of Contribution....................................................... 56
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4.7 Guarantee of Payment; Continuing Guarantee................................... 57
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SECTION 5 CONDITIONS....................................................................... 57
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5.1 Closing Conditions........................................................... 57
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5.2 Conditions to all Extensions of Credit....................................... 60
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SECTION 6 REPRESENTATIONS AND WARRANTIES................................................... 61
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6.1 Financial Condition.......................................................... 61
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6.2 No Material Change........................................................... 62
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6.3 Organization and Good Standing............................................... 62
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6.4 Power; Authorization; Enforceable Obligations................................ 62
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6.5 No Conflicts................................................................. 63
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6.6 No Default................................................................... 63
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6.7 Ownership.................................................................... 63
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6.8 Indebtedness................................................................. 63
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6.9 Litigation................................................................... 63
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6.10 Taxes........................................................................ 63
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6.11 Compliance with Law.......................................................... 64
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6.12 ERISA........................................................................ 64
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6.13 Corporate Structure; Capital Stock, Etc...................................... 65
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6.14 Governmental Regulations, Etc................................................ 66
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6.15 Purpose of Loans and Letters of Credit....................................... 66
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6.16 Environmental Matters........................................................ 66
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6.17 Intellectual Property........................................................ 67
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6.18 Solvency..................................................................... 68
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6.19 Investments.................................................................. 68
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6.20 Business Locations........................................................... 68
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6.21 Disclosure................................................................... 68
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6.22 No Burdensome Restrictions................................................... 68
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6.23 Brokers' Fees................................................................ 68
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6.24 Labor Matters................................................................ 69
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6.25 Mortgaged Property........................................................... 69
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SECTION 7 AFFIRMATIVE COVENANTS............................................................ 69
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7.1 Information Covenants........................................................ 69
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7.2 Preservation of Existence and Franchises..................................... 72
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7.3 Books and Records............................................................ 73
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7.4 Compliance with Law.......................................................... 73
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7.5 Payment of Taxes and Other Claims............................................ 73
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7.6 Insurance.................................................................... 73
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7.7 Maintenance of Property; Management of Timberlands........................... 74
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7.8 Use of Proceeds.............................................................. 74
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7.9 Audits/Inspections........................................................... 74
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7.10 Financial Covenants.......................................................... 75
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7.11 Additional Guarantors; Legal Opinions........................................ 75
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7.12 Pledged Assets............................................................... 76
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7.13 Notice of Ratings Change..................................................... 77
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7.14 Further Assurances Regarding Collateral...................................... 77
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7.15 Additional Collateral Effective Date......................................... 78
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7.16 Performance of Obligations................................................... 79
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SECTION 8 NEGATIVE COVENANTS............................................................... 79
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8.1 Indebtedness................................................................. 79
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8.2 Liens........................................................................ 80
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8.3 Nature of Business........................................................... 82
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8.4 Consolidation, Merger, Dissolution, etc...................................... 82
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8.5 Asset Dispositions........................................................... 83
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8.6 Investments.................................................................. 84
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8.7 Restricted Payments.......................................................... 85
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8.8 Limitation on Actions with Respect to Other Indebtedness..................... 86
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8.9 Transactions with Affiliates................................................. 87
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8.10 Fiscal Year; Organizational Documents........................................ 87
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8.11 Limitation on Restricted Actions............................................. 87
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8.12 Ownership of Subsidiaries.................................................... 88
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8.13 Sale Leasebacks.............................................................. 88
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8.14 Capital Expenditures......................................................... 88
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8.15 No Further Negative Pledges.................................................. 89
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8.16 Operating Lease Obligations.................................................. 89
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8.17 Subsidiaries................................................................. 89
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SECTION 9 EVENTS OF DEFAULT................................................................ 89
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9.1 Events of Default............................................................ 89
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9.2 Acceleration; Remedies....................................................... 92
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SECTION 10 AGENCY PROVISIONS............................................................... 93
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10.1 Appointment and Authorization of Agent....................................... 93
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10.2 Delegation of Duties......................................................... 94
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10.3 Liability of Agent........................................................... 94
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10.4 Reliance by Agent............................................................ 94
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10.5 Notice of Default............................................................ 95
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10.6 Credit Decision; Disclosure of Information by Agent.......................... 95
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10.7 Indemnification of Agent..................................................... 96
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10.8 Agent in its Individual Capacity............................................. 96
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10.9 Successor Agent.............................................................. 97
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10.10 Other Agents; Lead Managers.................................................. 97
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SECTION 11 MISCELLANEOUS................................................................... 98
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11.1 Notices...................................................................... 98
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11.2 Right of Set-Off; Adjustments................................................ 99
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11.3 Successors and Assigns....................................................... 100
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11.4 No Waiver; Remedies Cumulative............................................... 104
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11.5 Expenses; Indemnification.................................................... 104
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11.6 Amendments, Waivers and Consents............................................. 105
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11.7 Counterparts................................................................. 107
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11.8 Headings..................................................................... 107
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11.9 Survival..................................................................... 107
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11.10 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial....... 107
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11.11 Severability................................................................. 108
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11.12 Entirety..................................................................... 108
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11.13 Binding Effect; Termination.................................................. 109
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11.14 Confidentiality.............................................................. 109
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11.15 Source of Funds.a............................................................ 110
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11.16 Regulation D................................................................. 110
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11.17 Conflict..................................................................... 111
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11.18 Credit Improvement Date...................................................... 111
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SCHEDULES
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Schedule 2.1(a) Lenders
Schedule 2.2(a) Existing Letters of Credit
Schedule 2.2(l) Reimbursement Agreements
Schedule 6.4 Required Consents, Authorizations, Notices and Filings
Schedule 6.9 Litigation
Schedule 6.12 ERISA
Schedule 6.13 Subsidiaries
Schedule 6.16 Environmental Disclosures
Schedule 6.20(a) Mortgaged Properties
Schedule 6.20(b) Collateral Locations
Schedule 6.20(c) Chief Executive Offices/Principal Places of Business
Schedule 6.20(d) Other Real Properties
Schedule 7.6 Insurance
Schedule 8.1 Indebtedness
Schedule 8.2 Liens
Schedule 8.6 Investments
EXHIBITS
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Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.3(f) Form of Term Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 7.1(c) Form of Officer's Compliance Certificate
Exhibit 7.11 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment and Acceptance
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 29, 2001 (as amended, modified,
restated or supplemented from time to time, the "Credit Agreement"), is by and
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among POTLATCH CORPORATION, a Delaware corporation (the "Borrower"), the
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Subsidiary Guarantors (as defined herein), the Lenders (as defined herein) and
BANK OF AMERICA, N.A., as Administrative Agent for the Lenders (in such
capacity, the "Agent").
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W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide credit
facilities in an aggregate amount of $400,000,000 (the "Credit Facilities") for
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the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested Credit Facilities
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
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1.1 Definitions.
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As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Acquisition", by any Person, means the acquisition by such Person of
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all of the Capital Stock or all or substantially all of the Property of
another Person or a division or business unit thereof, whether or not
involving a merger or consolidation with such other Person.
"Additional Collateral" means all real and personal property of the
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Credit Parties, other than the Collateral, now existing or hereafter
acquired with respect to which Liens in favor of the Agent are purported to
be granted pursuant to and in accordance with the terms of the Additional
Collateral Documents.
"Additional Collateral Documents" means a collective reference to the
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additional mortgages, security agreements, financing statements and/or
other documents reasonably requested by the Agent to perfect its security
interest for the benefit of the secured parties referred to therein in the
Property of the Credit Parties required to be pledged to the Agent on or
after the Additional Collateral Effective Date pursuant to Section 7.15.
"Additional Collateral Effective Date" means any date (i) upon which
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there occurs an Event of Default, (ii) subsequent to the Closing Date on
which the Borrower's senior secured long term debt fails to be rated at or
above BB+ by S&P or at or above Ba1 by ▇▇▇▇▇'▇, or (iii) subsequent to a
Credit Improvement Date on which the Borrower's Leverage Ratio is greater
than 4.5 to 1.0.
"Adjusted Base Rate" means (i) in the case of Revolving Loans, the
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Base Rate plus the Applicable Percentage and (ii) in the case of the Term
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Loan, the Base Rate plus 1.75%.
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"Adjusted Eurodollar Rate" means (i) in the case of Revolving Loans,
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the Eurodollar Rate plus the Applicable Percentage and (ii) in the case of
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the Term Loan, the Eurodollar Rate plus 2.75%.
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"Affiliate" means, with respect to any Person, any other Person (i)
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directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding ten percent (10%) or more of the Capital Stock in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agency Services Address" means Bank of America, N.A., Agency
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Administration Services #5596, Mail Code: CA4-706-05-09, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇ or such
other address as may be identified by written notice from the Agent to the
Borrower.
"Agent" shall have the meaning assigned to such term in the heading
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hereof, together with any successors or assigns.
"Agent-Related Persons" means the Agent (including any successor
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administrative agent), together with its Affiliates (including, in the case
of Bank of America in its capacity as the Agent, Banc of America Securities
LLC), and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"Agent's Fee Letter" means that certain letter agreement, dated as of
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May 25, 2001 between the Agent and the Borrower, as amended, modified,
restated or supplemented from time to time.
"Applicable Lending Office" means, for each Lender, the office of such
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Lender (or of an Affiliate of such Lender) as such Lender may from time to
time specify to the Agent and the Borrower by written notice as the office
by which its Eurodollar Loans are made and maintained.
2
"Applicable Percentage" means, for purposes of calculating the
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applicable interest rate for any day for any Revolving Loan, the applicable
rate of the Unused Fee for any day for purposes of Section 3.5(a) or the
applicable rate of the Letter of Credit Fee for any day for purposes of
Section 3.5(b), the appropriate applicable percentage corresponding to the
Funded Indebtedness to Capitalization Ratio in effect as of the most recent
Calculation Date:
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Applicable Percentages
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Funded For For For Letter For Unused
Pricing Indebtedness to Eurodollar Base Rate of Credit Fee
Level Capitalization Ratio Loans Loans
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I *35% 1.75% 0.75% 1.75% 0.40%
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II **35% but *47.5% 2.00% 1.00% 2.00% 0.475%
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III **47.5% but *55% 2.25% 1.25% 2.25% 0.55%
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IV **55% but *62.5% 2.50% 1.50% 2.50% 0.625%
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V **62.5% 2.75% 1.75% 2.75% 0.75%
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The Applicable Percentages shall be determined and adjusted quarterly on
the date (each a "Calculation Date") one Business Day after the date by
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which the Credit Parties are required to provide the officer's certificate
in accordance with the provisions of Section 7.1(c) for the most recently
ended fiscal quarter of the Consolidated Parties; provided, however, that
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(i) the initial Applicable Percentages shall be based on Pricing Level IV
(as shown above) and shall remain at Pricing Level IV until the Calculation
Date relating to the fiscal quarter of the Consolidated Parties ending on
December 31, 2001, on and after which time the Pricing Level shall be
determined by the Funded Indebtedness to Capitalization Ratio as of the
last day of the most recently ended fiscal quarter of the Consolidated
Parties preceding the applicable Calculation Date and (ii) if the Credit
Parties fail to provide the officer's certificate to the Agency Services
Address as required by Section 7.1(c) for the last day of the most recently
ended fiscal quarter of the Consolidated Parties preceding the applicable
Calculation Date, the Applicable Percentage from such Calculation Date
shall be based on Pricing Level V until such time as an appropriate
officer's certificate is provided, whereupon the Pricing Level shall be
determined by the Funded Indebtedness to Capitalization Ratio as of the
last day of the most recently ended fiscal quarter of the Consolidated
Parties preceding such Calculation Date. Each Applicable Percentage shall
be effective from one Calculation Date until the next Calculation Date. Any
adjustment in the Applicable Percentages shall be applicable to all
existing Loans and Letters of Credit as well as any new Loans and Letters
of Credit made or issued.
"Application Period" means, in respect of any Asset Disposition, the period
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of one year (or such earlier date on which an Event of Default shall have
occurred or as provided for reinvestment of the proceeds thereof under the
Senior Subordinated Note Indenture), following the consummation of such
Asset Disposition.
* less than
** greater than or equal to
3
"Approved Fund" means any Fund that is administered or managed by (a)
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a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.
"Arranger" means Banc of America Securities LLC, in its capacity as
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lead arranger and sole book manager.
"Asset Disposition" means any disposition (including pursuant to a Sale
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and Leaseback Transaction) of any or all of the Property (including without
limitation the Capital Stock of a Subsidiary) of any Consolidated Party
whether by sale, lease, licensing, transfer or otherwise, but other than
pursuant to any casualty or condemnation event; provided, however, that (i)
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the term "Asset Disposition" shall be deemed to include any "Asset Sale"
(or any comparable term) under, and as defined in, the Senior Subordinated
Note Indenture or the documents evidencing or governing any Subordinated
Indebtedness, (ii) an Equity Issuance shall not constitute an Asset
Disposition and (iii) a sale of inventory, electricity, timber or other
assets in the ordinary course of business shall not constitute an Asset
Disposition.
"Asset Disposition Prepayment Event" means, with respect to any Asset
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Disposition, the failure of the Credit Parties to apply (or cause to be
applied) the Net Cash Proceeds of such Asset Disposition to Eligible
Reinvestments during the Application Period for such Asset Disposition to
the extent such Net Cash Proceeds exceed $5,000,000.
"Assignment and Acceptance" means an Assignment and Acceptance
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substantially in the form of Exhibit 11.3.
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"Bank of America" means Bank of America, N.A. and its successors.
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"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
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States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence of any
of the following: (i) the entry of a decree or order for relief by a court
or governmental agency in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
the appointment by a court or governmental agency of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or the
ordering of the winding up or liquidation of its affairs by a court or
governmental agency; or (ii) the commencement against such Person of an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or of any case, proceeding or other
action for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or liquidation of
its affairs, and such involuntary case or other case, proceeding or other
action shall remain undismissed for a period of sixty (60) consecutive
days, or the repossession or seizure by a creditor of such Person of a
substantial part of its Property; or (iii) such Person shall
4
commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to
the appointment of or the taking possession by a receiver, liquidator,
assignee, secured creditor, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
make any general assignment for the benefit of creditors; or (iv) such
Person shall be unable to, or shall admit in writing its inability to, pay
its debts generally as they become due.
"Base Rate" means, for any day, a fluctuating rate per annum equal to
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the higher of (a) the Federal Funds Rate in effect on such day plus 1/2 of
1% and (b) the Prime Rate in effect on such day.
"Base Rate Loan" means any Loan bearing interest at a rate determined
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by reference to the Base Rate.
"Borrower" means the Person identified as such in the heading hereof,
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together with any permitted successors and assigns.
"Business Day" means a day other than a Saturday, Sunday or other day
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on which commercial banks in San Francisco, California or New York, New
York are authorized or required by law to close, except that, when used in
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connection with a Eurodollar Loan, such day shall also be a day on which
dealings between banks are carried on in Dollar deposits in London,
England.
"Businesses" means, at any time, a collective reference to the
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businesses operated by the Consolidated Parties at such time.
"Calculation Date" shall have the meaning assigned to such term in the
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definition of "Applicable Percentage" set forth in this Section 1.1.
"Capital Lease" means, as applied to any Person, any lease of any
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Property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is required to be accounted for as a capital lease
on the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, capital stock,
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(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other interest or participation
that confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means, as at any date, (a) securities issued or
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directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition, (b) Dollar
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denominated time deposits and certificates of deposit of (i) any Lender,
(ii) any domestic commercial bank of recognized standing having capital and
surplus in excess of $500,000,000 or (iii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof
or from ▇▇▇▇▇'▇ is at least P-1 or the equivalent thereof (any such bank
being an "Approved Bank"), in each case with maturities of not more than
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270 days from the date of acquisition, (c) commercial paper and variable or
fixed rate notes issued by any Approved Bank (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by, any
domestic corporation rated A-1 (or the equivalent thereof) or better by S&P
or P-1 (or the equivalent thereof) or better by Moody's and maturing within
six months of the date of acquisition, (d) repurchase agreements entered
into by any Person with a bank or trust company (including any of the
Lenders) or recognized securities dealer having capital and surplus in
excess of $500,000,000 for direct obligations issued by or fully guaranteed
by the United States in which such Person shall have a perfected first
priority security interest (subject to no other Liens) and having, on the
date of purchase thereof, a fair market value of at least 100% of the
amount of the repurchase obligations and (e) Investments, classified in
accordance with GAAP as current assets, in money market investment programs
registered under the Investment Company Act of 1940, as amended, which are
administered by reputable financial institutions having capital of at least
$500,000,000 and the portfolios of which are limited to Investments of the
character described in the foregoing subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the following: (i)
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any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of more
than 35% of then outstanding Voting Stock of the Borrower, measured by
voting power rather than the number of shares; provided, however, that for
the purposes hereof any Person shall not be deemed to be a "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of shares tendered pursuant to a tender offer or exchange offer paid by or
on behalf of that Person or any Affiliate of that Person until the tendered
shares are accepted for purchase or exchange and, provided further,
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however, that no Person who is a "beneficial owner" of Voting Stock of the
Borrower as of the Closing Date (an "Existing Holder") or a Permitted
Transferee (as hereinafter defined) (collectively a "Permitted Holder")
shall be deemed to have become the "beneficial owner" of Voting Stock of
the Borrower as a result of the formation of a "syndicate" or "group" (each
within the meaning of Section 13d-3 of the Securities Exchange Act of 1934)
with one or more other Permitted Holders to the extent of the Voting Stock
of the Borrower as to which such other Permitted Holder or Permitted
Holders is a "beneficial owner" as of the Closing Date; (ii) the Borrower
shall merge or consolidate with any Person other than in a transaction
permitted under Section 8.4; (iii) Continuing Directors shall fail to
constitute a majority of the members of the board of directors of the
Borrower; (iv) any Asset Disposition shall be made that (of itself or when
combined with any or all other Asset Dispositions) constitutes a sale of
all or substantially all of the assets of the Borrower and its
Subsidiaries, taken as a whole; (v) any event shall occur that constitutes
a "Change of Control" (or any comparable term) under, and as defined in,
the documents evidencing or governing any Subordinated Indebtedness; or
(vi) any event shall occur that requires the
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Borrower or any Subsidiary to repay, redeem, or repurchase (or to offer to
repay, redeem or repurchase) any Indebtedness outstanding in a principal
amount in excess of $50,000,000 by reason of any change of ownership or
control affecting the Borrower or such Subsidiary. For the purposes hereof,
"Permitted Transferee" shall mean any direct or indirect transferee of
Voting Stock of the Borrower from an Existing Holder (1) by gift, bequest,
distribution from (or deposit into) a trust or other transfer without
consideration, (2) by succession or testamentary disposition upon death or
(3) to a spouse or former spouse pursuant to an agreement for division of
community property or other property settlement agreement in connection
with a marital dissolution or legal separation. A Permitted Transferee
shall be deemed to be the "beneficial owner" of any such Voting Stock as of
the Closing Date.
"Closing Date" means the date hereof.
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"Code" means the Internal Revenue Code of 1986, as amended, and any
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successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to (i) prior to the
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Additional Collateral Effective Date (a) all Property and interests in
Property of the Credit Parties encumbered by the Mortgages and the Pledge
Agreement, and all proceeds thereof, and (b) all accounts receivable and
inventory of the Credit Parties now existing or hereafter acquired
encumbered by the Security Agreement, and all proceeds thereof and (ii) on
and after the Additional Collateral Effective Date, in addition to the
Collateral set forth in clause (i) above, the Additional Collateral.
"Collateral Documents" means a collective reference to (i) prior to the
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Additional Collateral Effective Date, the Pledge Agreement, the Security
Agreement and the Mortgages and (ii) on and after the Additional Collateral
Effective Date, in addition to the Collateral Documents set forth in clause
(i) hereof, the Additional Collateral Documents.
"Commitment" means (i) with respect to each Lender, the Revolving
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Commitment of such Lender and the Term Loan Commitment of such Lender and
(ii) with respect to the Issuing Lender, the LOC Commitment.
"Compensation Period" shall have the meaning set forth in Section
-------------------
3.13(b)(ii)(B).
"Consolidated Capital Expenditures" means, as of any date for the four
---------------------------------
fiscal quarter period ending on such date with respect to the Consolidated
Parties on a consolidated basis, all capital expenditures, as determined in
accordance with GAAP; provided, however, that Consolidated Capital
-------- -------
Expenditures shall not include Eligible Reinvestments made with proceeds of
any Involuntary Disposition but shall include those capital expenditures
related to timberland operations.
7
"Consolidated Cash Taxes" means, as of any date for the four fiscal
-----------------------
quarter period ending on such date with respect to the Consolidated Parties
on a consolidated basis, the aggregate of all taxes, as determined in
accordance with GAAP, to the extent the same are paid in cash during such
period.
"Consolidated EBITDDA" means, as of any date for the four fiscal
--------------------
quarter period ending on such date with respect to the Consolidated Parties
on a consolidated basis, the sum of (i) Consolidated Net Income, plus (ii)
an amount which, in the determination of Consolidated Net Income, has been
deducted for (A) interest expense, (B) income taxes and (C) depreciation,
depletion and amortization expense, all as determined in accordance with
GAAP.
"Consolidated Interest Expense" means, as of any date for the four
-----------------------------
fiscal quarter period ending on such date with respect to the Consolidated
Parties on a consolidated basis, interest expense (including the
amortization of debt discount and premium, the interest component under
Capital Leases and the implied interest component under Synthetic Leases),
as determined in accordance with GAAP.
"Consolidated Net Income" means, as of any date for the four fiscal
-----------------------
quarter period ending on such date with respect to the Consolidated Parties
on a consolidated basis, net income (excluding extraordinary items) after
interest expense, income taxes and depreciation and amortization, all as
determined in accordance with GAAP.
"Consolidated Net Worth" means, as of any date with respect to the
----------------------
Consolidated Parties on a consolidated basis, shareholders' equity or net
worth, as determined in accordance with GAAP.
"Consolidated Parties" means a collective reference to the Borrower and
--------------------
its Subsidiaries, and "Consolidated Party" means any one of them.
------------------
"Consolidated Scheduled Funded Debt Payments" means, as of any date for
-------------------------------------------
the four fiscal quarter period ending on such date with respect to the
Consolidated Parties on a consolidated basis, the sum of all scheduled
payments of principal on Funded Indebtedness (including the implied
principal component of payments due on Capital Leases and Synthetic Leases,
but excluding voluntary prepayments or mandatory prepayments required
pursuant to Section 3.3), as determined in accordance with GAAP.
"Consolidated Total Capitalization" means, as of any date of
---------------------------------
determination with respect to the Consolidated Parties on a consolidated
basis, (i) Funded Indebtedness of the Consolidated Parties on a
consolidated basis as of such date plus (ii) Consolidated Net Worth of the
----
Consolidated Parties on a consolidated basis as of such date.
"Continue", "Continuation" and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 3.2 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
8
"Continuing Director" means, as of any date of determination, any
-------------------
member of the board of directors of the Borrower who (x) was a member of
the board of directors of the Borrower as of the Closing Date or (y) was
nominated for election or elected to such board of directors with the
approval of a majority of the Continuing Directors who were members of such
board at the time of such nomination or election.
"Convert", "Conversion" and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 3.2 or Sections 3.7 through 3.12, inclusive, of a Base
Rate Loan into a Eurodollar Loan.
"Credit Documents" means a collective reference to this Credit
----------------
Agreement, the Notes, the LOC Documents, each Joinder Agreement, the
Agent's Fee Letter, the Escrow Agreement and the Collateral Documents (in
each case as the same may be amended, modified, restated, supplemented,
extended, renewed or replaced from time to time), and "Credit Document"
---------------
means any one of them.
"Credit Facilities" shall have the meaning assigned to such term in the
-----------------
recitals hereto.
"Credit Improvement Date" means, any date subsequent to the Closing
-----------------------
Date on which the Borrower (i) delivers a certificate of an Executive
Officer of the Borrower demonstrating a Leverage Ratio of the Borrower of
less than 3.0 to 1.0 for two consecutive fiscal quarters together with the
financial statements referred to in Section 7.1(a) or (b), as applicable,
and (ii) the Term Loan shall have been repaid in full.
"Credit Parties" means a collective reference to the Borrower and the
--------------
Guarantors, and "Credit Party" means any one of them.
------------
"Credit Party Obligations" means, without duplication, (i) all of the
------------------------
obligations of the Credit Parties to the Lenders (including the Issuing
Lender) and the Agent, whenever arising, under this Credit Agreement, the
Notes, the Collateral Documents or any of the other Credit Documents
(including, but not limited to, any interest accruing after the occurrence
of a Bankruptcy Event with respect to any Credit Party, regardless of
whether such interest is an allowed claim under the Bankruptcy Code) and
(ii) all liabilities and obligations, whenever arising, owing from any
Credit Party to any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement.
"Debt Issuance" means the issuance by any Consolidated Party of any
-------------
Indebtedness of the type referred to in clause (a) or (b) of the definition
thereof set forth in this Section 1.1, other than any Indebtedness issued
under this Credit Agreement and the Senior Subordinated Notes.
"Debt Issuance Prepayment Event" means the receipt by any Consolidated
------------------------------
Party of proceeds from any Debt Issuance.
9
"Default" means any event, act or condition which with notice or lapse
-------
of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that, as determined
-----------------
by the Agent, (a) has failed to make a Loan or purchase a Participation
Interest required pursuant to the term of this Credit Agreement within one
Business Day of when due, (b) other than as set forth in (a) above, has
failed to pay to the Agent or any Lender an amount owed by such Lender
pursuant to the terms of this Credit Agreement within one Business Day of
when due, unless such amount is subject to a good faith dispute or (c) has
been deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or with respect to which (or with respect to any of the assets
of which) a receiver, trustee or similar official has been appointed.
"Dollars" and "$" means dollars in lawful currency of the United
-------
States.
"Domestic Subsidiary" means any direct or indirect Subsidiary of the
-------------------
Borrower which is incorporated or organized under the laws of any State of
the United States or the District of Columbia.
"Eligible Assignee" means (i) a Lender, (ii) an Affiliate of a Lender,
-----------------
(iii) an Approved Fund and (iv) any other Person (other than a natural
Person) approved by the Agent and, unless (x) such Person is taking
delivery of an assignment in connection with physical settlement of a
credit derivatives transaction or (y) a Default or an Event of Default has
occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed); provided, however, that neither the
-------- -------
Borrower nor an Affiliate of the Borrower shall qualify as an Eligible
Assignee.
"Eligible Reinvestment" means (i) any acquisition (whether or not
---------------------
constituting a capital expenditure, but not constituting an Acquisition) of
assets or any business (or any substantial part thereof) used or useful in
the same or a similar line of business as the Borrower and its Subsidiaries
were engaged in on the Closing Date (or any reasonable extensions or
expansions thereof) and (ii) any Permitted Acquisition. The term "Eligible
Reinvestment" shall not include any item which is not a permitted
application of proceeds of an "Asset Sale" (or any comparable term) under,
and as defined in the documents evidencing or governing any Subordinated
Indebtedness.
"Environmental Laws" means any and all applicable Federal, state, local
------------------
and foreign statutes, laws (including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Resource Conservation and Recovery Act of 1976, the Toxic
Substances Control Act, the Water Pollution Control Act, the Clean Air Act
and the Hazardous Materials Transportation Act), regulations, ordinances,
rules, judgments, orders, decrees, permits, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern into the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing,
10
distribution, use, treatment, storage, disposal, transport, or handling of
Materials of Environmental Concern.
"Equity Issuance" means any issuance by any Consolidated Party to any
---------------
Person of (a) shares of its Capital Stock, (b) any shares of its Capital
Stock pursuant to the exercise of options or warrants, (c) any shares of
its Capital Stock pursuant to the conversion of any debt securities to
equity or (d) any options or warrants relating to its Capital Stock. The
term "Equity Issuance" shall not be deemed to include (a) any Asset
Disposition or (b) issuances pursuant to (x) employee plans of the Borrower
that are in place as of the Closing Date to the extent such issuances are
permitted pursuant to the documentation governing those plans as in effect
as of the Closing Date or (y) new employee plans of the Borrower to the
extent such issuances are consistent with past practices of the Borrower.
"Equity Issuance Prepayment Event" means the receipt by any
--------------------------------
Consolidated Party of proceeds from any Equity Issuance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with
---------------
any Consolidated Party within the meaning of Section 4001(a)(14) of ERISA,
or is a member of a group which includes any Consolidated Party and which
is treated as a single employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the occurrence of a
-----------
Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any
Consolidated Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to terminate or
the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of
ERISA; (iv) the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of any
Consolidated Party or any ERISA Affiliate from a Multiemployer Plan; (vii)
the conditions for imposition of a lien under Section 302(f) of ERISA exist
with respect to any Plan; or (viii) the adoption of an amendment to any
Plan requiring the provision of security to such Plan pursuant to Section
307 of ERISA.
"Escrow Agreement" means that certain Escrow Agreement dated as of the
----------------
date hereof by and among the Borrower, the Agent and ▇▇▇▇▇ Fargo Bank
Northwest, National Association.
11
"Eurodollar Loan" means any Loan that bears interest at a rate based
---------------
upon the Eurodollar Rate.
"Eurodollar Rate" means for any Interest Period with respect to any
---------------
Eurodollar Loan, a rate per annum determined by the Agent to be equal to
the quotient obtained by dividing (a) the Interbank Offered Rate by (b) 1
minus the Eurodollar Reserve Percentage.
"Eurodollar Reserve Percentage" means, for any day during any Interest
-----------------------------
Period, the reserve percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on such day, whether or not applicable to
any Lender, under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The Eurodollar Rate for each
outstanding Eurodollar Rate Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" shall have the meaning assigned to such term in
----------------
Section 9.1.
"Excess Proceeds" shall have the meaning assigned to such term in
---------------
Section 7.6(b).
"Executive Officer" of any Person means any of the chief executive
-----------------
officer, chief operating officer, president, vice president, chief
financial officer or treasurer of such Person.
"Existing Letters of Credit" means the letters of credit outstanding on
--------------------------
the Closing Date and identified on Schedule 2.2(a).
---------------
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards to the nearest 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published
by the Federal Reserve Bank on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal Funds Rate
--------
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b)
if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate charged to Bank
of America on such day on such transactions as determined by the Agent.
"Fees" means all fees payable pursuant to Section 3.5.
----
"Fixed Charge Coverage Ratio" means, as of the end of any fiscal
---------------------------
quarter of the Consolidated Parties for the four fiscal quarter period
ending on such date with respect to the Consolidated Parties on a
consolidated basis, the ratio of (a) the sum of (i) Consolidated EBITDDA
for such period minus (ii) Consolidated Capital Expenditures for such
-----
period minus (iii) Consolidated Cash Taxes for such period to (b) the sum
-----
of (i) Consolidated
12
Interest Expense for such period plus (ii) Consolidated Scheduled Funded
----
Debt Payments for such period (excluding the $100,000,000 payment due March
15, 2002 on the Borrower's 6.25% debentures due on such date, which payment
shall be made with the proceeds of the escrow account held pursuant to the
Escrow Agreement) plus (iii) dividends paid by the Borrower to its
----
shareholders for such period. Notwithstanding the foregoing, for purposes
of calculating the Fixed Charge Coverage Ratio for the first three fiscal
quarters to end after the Closing Date (commencing with the fiscal quarter
ending September 30, 2001), the Fixed Charge Coverage Ratio shall be
determined by annualizing each of the foregoing components thereof such
that for the fiscal quarter ending September 30, 2001, such components
would be multiplied by four (4), for the fiscal quarter ending December 31,
2001, such components would be multiplied by two (2) and for the fiscal
quarter ending March 31, 2002, such components would be multiplied by one
and one-third (1 1/3).
"Foreign Subsidiary" means any direct or indirect Subsidiary of the
------------------
Borrower which is not a Domestic Subsidiary.
"Fully Satisfied" means, with respect to the Credit Party Obligations
---------------
as of any date, that, as of such date, (a) all principal of and interest
accrued to such date which constitute Credit Party Obligations shall have
been irrevocably paid in full in cash, (b) all fees, expenses and other
amounts then due and payable which constitute Credit Party Obligations
shall have been irrevocably paid in cash, (c) all outstanding Letters of
Credit shall have been (i) terminated, (ii) fully irrevocably cash
collateralized or (iii) secured by one or more letters of credit on terms
and conditions, and with one or more financial institutions, reasonably
satisfactory to the Issuing Lender and (d) the Commitments shall have been
expired or terminated in full. As used herein, "irrevocably" shall not
require the expiration of any applicable bankruptcy preference period.
"Fund" means any Person other than a natural Person that is (or will
----
be) engaged in making, purchasing, or holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of
its business.
"Funded Indebtedness" means, with respect to any Person, without
-------------------
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than
customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the deferred purchase price
of Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months of
the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) the implied principal component of all
obligations of such Person under Capital Leases, (f) the maximum amount of
all performance and standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (g)
all preferred Capital Stock issued by such Person and which by the terms
thereof could be (at the request of the holders thereof
13
or otherwise) subject to mandatory sinking fund payments, redemption or
other acceleration (other than as a result of a Change of Control or an
Asset Disposition that does not in fact result in a redemption of such
preferred Capital Stock) at any time prior to the Term Loan Maturity Date,
(h) the principal portion of all obligations of such Person under Synthetic
Leases, (i) all obligations of such Person to repurchase any securities
issued by such Person at any time prior to the Term Loan Maturity Date
which repurchase obligations are related to the issuance thereof,
including, without limitation, obligations commonly known as residual
equity appreciation potential shares, (j) the aggregate amount of
uncollected accounts receivable of such Person subject at such time to a
sale of receivables (or similar transaction) to the extent such transaction
is effected with recourse to such Person (whether or not such transaction
would be reflected on the balance sheet of such Person in accordance with
GAAP), (k) all Funded Indebtedness of others secured by (or for which the
holder of such Funded Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, Property owned or acquired by such Person, whether or not
the obligations secured thereby have been assumed, (l) all Guaranty
Obligations of such Person with respect to Funded Indebtedness of another
Person and (m) the Funded Indebtedness of any partnership or unincorporated
joint venture in which such Person is a general partner or a joint venturer
to the extent such Indebtedness is recourse to such Person.
"Funded Indebtedness to Capitalization Ratio" means, as of the end of
-------------------------------------------
any fiscal quarter of the Consolidated Parties with respect to the
Consolidated Parties on a consolidated basis, the ratio of (a) Funded
Indebtedness of the Consolidated Parties on a consolidated basis on the
last day of such period to (b) Consolidated Total Capitalization on the
last day of such period.
"GAAP" means generally accepted accounting principles in the United
----
States applied on a consistent basis and subject to the terms of Section
1.3 (except, in respect of Synthetic Leases, as otherwise treated herein).
"Governmental Authority" means any Federal, state, local or foreign
----------------------
court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantors" means a collective reference to each of the Subsidiary
----------
Guarantors, together with their successors and permitted assigns, and
"Guarantor" means any one of them.
---------
"Guaranty Obligations" means, with respect to any Person, without
--------------------
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other Person (including
without limitation keep well agreements, maintenance agreements, comfort
letters or similar
14
agreements or arrangements) for the benefit of any holder of Indebtedness
of such other Person, (iii) to lease or purchase Property, securities or
services primarily for the purpose of assuring the holder of such
Indebtedness, or (iv) to otherwise assure or hold harmless the holder of
such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal
amount (or maximum principal amount, if larger) of the Indebtedness in
respect of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection agreement or
------------------
foreign currency exchange agreement.
"Indebtedness" means, with respect to any Person, without duplication,
------------
(a) all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than
customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the deferred purchase price
of Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months of
the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay
or similar arrangements or under commodities agreements under which such
Person must make payments notwithstanding the failure of the counter-party
to deliver the goods or services which such counter-party is required to
deliver thereunder (and, for the avoidance of doubt shall not include
arrangements under which such Person must pay for capacity or availability
that must be delivered or made available to entitle the counter-party to
payment, notwithstanding that such Person may not use such capacity or
availability), (f) the implied principal component of all obligations of
such Person under Capital Leases, (g) all obligations of such Person under
Hedging Agreements, (h) the maximum amount of all performance and standby
letters of credit issued or bankers' acceptances facilities created for the
account of such Person and, without duplication, all drafts drawn
thereunder (to the extent unreimbursed), (i) all preferred Capital Stock
issued by such Person and which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking
fund payments, redemption or other acceleration (other than as a result of
a Change of Control or an Asset Disposition that does not in fact result in
a redemption of such preferred Capital Stock) at any time prior to the Term
Loan Maturity Date, (j) the principal portion of all obligations of such
Person under Synthetic Leases, (k) all obligations of such Person to
repurchase any securities issued by such Person at any time prior to the
Term Loan Maturity Date which repurchase obligations are related to the
issuance thereof, including, without limitation, obligations commonly known
as residual equity appreciation potential shares, (l) the aggregate amount
of uncollected accounts receivable of such Person subject at such time to a
sale of receivables (or similar transaction) to the extent such transaction
is effected with recourse to such Person (whether or not such transaction
would be reflected on the balance sheet of such Person in accordance with
GAAP), (m) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured
15
by) any Lien on, or payable out of the proceeds of production from,
Property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (n) all Guaranty Obligations of such
Person with respect to Indebtedness of another Person and (o) the
Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer to the extent such
Indebtedness is recourse to such Person.
"Indemnified Party" shall have the meaning assigned to such term in
-----------------
Section 11.5(b).
"Interbank Offered Rate" means, for any Eurodollar Loan for any
----------------------
Interest Period therefor, the rate per annum (rounded upwards to the
nearest 1/100/th/ of 1%) in each case determined by the Agent to be equal
to:
(a) the offered rate that appears on the Dow ▇▇▇▇▇ Telerate Screen Page
3750 (or any successor page) that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for
delivery on the first day of the applicable Interest Period) for a term
equivalent to the applicable Interest Period at approximately 11:00
A.M. (London time) two Business Days prior to the first day of the
applicable Interest Period; or
(b) if for any reason the foregoing rate in clause (i) is unavailable
or undeterminable, the offered rate on such other page or other service
that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day
of the applicable Interest Period) for a term equivalent to the
applicable Interest Period at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of the applicable Interest
Period; or
(c) if for any reason the foregoing rates in clauses (i) and (ii) are
unavailable or undeterminable, the rate of interest at which deposits
in Dollars for delivery on the first day of the applicable Interest in
same day funds in the approximate amount of the applicable Eurodollar
Loan for a term equivalent to the applicable Interest Period would be
offered by the London branch of Bank of America to major banks in the
offshore Dollar market at approximately 11:00 A.M. (London time) two
Business Days prior to the first day of the applicable Interest Period.
"Interest Payment Date" means (a) as to Base Rate Loans, the last
---------------------
Business Day of each March, June, September and December, the date of
repayment of principal of such Loan and the Maturity Date, and (b) as to
Eurodollar Loans, the last day of each applicable Interest Period, the date
of repayment of principal of such Loan and the Maturity Date, and in
addition where the applicable Interest Period for a Eurodollar Loan is
greater than three months, then also the date three months from the
beginning of the Interest Period and each three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a period of (i) one
---------------
week, in the case of the borrowings made under the Term Loan on the Closing
Date and (ii) in all other cases,
16
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
-------- -------
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day), (b) no
Interest Period shall extend beyond the Maturity Date and (c) where an
Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to
end, such Interest Period shall end on the last Business Day of such
calendar month.
"Investment" in any Person means (a) the acquisition (whether for cash,
----------
property, services, assumption of Indebtedness, securities or otherwise) of
assets (other than equipment, inventory and supplies in the ordinary course
of business and other than any acquisition of assets constituting a
Consolidated Capital Expenditure), Capital Stock, bonds, notes, debentures,
partnership, joint ventures or other ownership interests or other
securities of such other Person, (b) any deposit with, or advance, loan or
other extension of credit to, such Person (other than deposits made in
connection with the purchase of equipment inventory and supplies in the
ordinary course of business) or (c) any other capital contribution to or
investment in such Person, including, without limitation, any Guaranty
Obligations (including any support for a letter of credit issued on behalf
of such Person) incurred for the benefit of such Person and any Asset
Disposition to such Person for consideration less than the fair market
value of the Property disposed in such transaction, but excluding any
Restricted Payment to such Person. Investments which are capital
contributions or purchases of Capital Stock which have a right to
participate in the profits of the issuer thereof shall be valued at the
amount actually contributed or paid to purchase such Capital Stock as of
the date of such contribution or payment. Investments which are loans,
advances, extensions of credit or Guaranty Obligations shall be valued at
the principal amount of such loan, advance or extension of credit
outstanding as of the date of determination or, as applicable, the
principal amount of the loan or advance outstanding as of the date of
determination actually guaranteed by such Guaranty Obligation.
"Involuntary Disposition" means any loss of, damage to or destruction
-----------------------
of, or any condemnation or other taking for public use of, any Property of
any Consolidated Party.
"Involuntary Disposition Prepayment Event" means, with respect to any
----------------------------------------
Involuntary Disposition, the failure of the Credit Parties to apply (or
cause to be applied) an amount equal to the Excess Proceeds of such
Involuntary Disposition, if any, either (i) to prepay the Loans (and cash
collateralize the LOC Obligations) in accordance with the terms of Section
3.3(b)(ii)(B) or (ii) to make Eligible Reinvestments (including but not
limited to the repair or replacement of the Property affected by such
Involuntary Disposition) within the period of 180 days following the date
of receipt of such Excess Proceeds, subject to the terms and conditions of
Section 7.6(b).
"Issuing Lender" means (a) with respect to any Existing Letter of
--------------
Credit, the financial institution shown on Schedule 2.2(a) as the issuer of
---------------
such Letter of Credit, and (b)
17
with respect to any other Letter of Credit, Bank of America in its capacity
as issuer of such Letter of Credit.
"Joinder Agreement" means a Joinder Agreement substantially in the form
-----------------
of Exhibit 7.11 hereto, executed and delivered by a new Guarantor in
------------
accordance with the provisions of Section 7.11.
"Land" means the land that is subject to the Mortgages.
----
"Lender" means any of the Persons identified as a "Lender" on the
------
signature pages hereto, and any Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
"Letter of Credit" means any Existing Letter of Credit and any letter
----------------
of credit issued by the Issuing Lender for the account of the Borrower in
accordance with the terms of Section 2.2.
"Letter of Credit Application" means an application for a Letter of
----------------------------
Credit issuance from time to time in use by an Issuing Lender.
"Letter of Credit Fee" shall have the meaning assigned to such term in
--------------------
Section 3.5(b).
"Leverage Ratio" means, as of the end of any fiscal quarter of the
--------------
Consolidated Parties with respect to the Consolidated Parties on a
consolidated basis, the ratio of (a) Funded Indebtedness of the
Consolidated Parties on a consolidated basis on the last day of such period
to (b) Consolidated EBITDDA for such period.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, security interest, encumbrance, lien (statutory or otherwise)
or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement and any
lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans and/or the Term Loan (or a
---- -----
portion of any Revolving Loan or the Term Loan bearing interest at the
Adjusted Base Rate or the Adjusted Eurodollar Rate and referred to as a
Base Rate Loan or a Eurodollar Loan), individually or collectively, as
appropriate.
"LOC Commitment" means the commitment of the Issuing Lender to issue
--------------
Letters of Credit in an aggregate face amount at any time outstanding
(together with the amounts of any unreimbursed drawings thereon) of up to
the LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to such term in
--------------------
Section 2.2.
18
"LOC Documents" means, with respect to any Letter of Credit, such
-------------
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for (i)
the rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"LOC Obligations" means, at any time, without duplication, the sum of
---------------
(i) the maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding, assuming
compliance with all requirements for drawings referred to in such Letters
of Credit plus (ii) the aggregate amount of all drawings under Letters of
----
Credit honored by the Issuing Lender but not theretofore reimbursed by the
Borrower.
"Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
condition (financial or otherwise), operations, business, assets,
liabilities or prospects of the Consolidated Parties taken as a whole, (ii)
the ability of any Credit Party to perform any material obligation under
the Credit Documents to which it is a party or (iii) the material rights
and remedies of the Agent and the Lenders under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" means (i) as to the Revolving Loans and the Letters of
-------------
Credit (and the related LOC Obligations), June 29, 2004 and (ii) as to the
Term Loan, the Term Loan Maturity Date.
"Merchantable Timber" means standing timber that is (or, upon the
-------------------
completion of the growth cycle then in process, is expected to become)
timber of commercial quantity and merchantable quality.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor or
-------
assignee of the business of such company in the business of rating
securities.
"Mortgages" shall have the meaning assigned such term in Section
---------
5.1(e).
"Mortgaged Properties" means (i) prior to the Additional Collateral
--------------------
Effective Date, approximately 131,040 acres of timberlands and related
property located in Ashley, ▇▇▇▇▇▇▇, ▇▇▇▇ and Nevada Counties, as more
specifically described on Schedule 6.20(a) attached hereto and (ii) on and
----------------
after the Additional Collateral Effective Date, in addition to the Real
Properties set forth in clause (i) hereof, the Real Properties set forth on
Schedule 6.20(d) to the extent the Agent has reasonably requested that
----------------
Mortgages be delivered in connection therewith.
19
"Multiemployer Plan" means a Plan which is a "multiemployer plan" as
------------------
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan (other than a Multiemployer Plan)
----------------------
which any Consolidated Party or any ERISA Affiliate and at least one
employer other than the Consolidated Parties or any ERISA Affiliate are
contributing sponsors.
"Net Cash Proceeds" means the aggregate cash or Cash Equivalents
-----------------
proceeds received by any Consolidated Party in respect of any Asset
Disposition, Equity Issuance, Debt Issuance or Involuntary Disposition, net
of (a) direct costs (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) (b) taxes paid or payable
as a result thereof and (c) in the case of any Asset Disposition, the
amount necessary to prepay or retire any Indebtedness either secured by a
Permitted Lien (ranking senior to any Lien of the Agent) on the related
Property or incurred in connection with the Property that is included in
such Asset Disposition; it being understood that "Net Cash Proceeds" shall
include, without limitation, any cash or Cash Equivalents received upon the
sale or other disposition of any non-cash consideration received by any
such Consolidated Party in any Asset Disposition, Equity Issuance, Debt
Issuance or Involuntary Disposition. In addition, the "Net Cash Proceeds"
of any Asset Disposition shall include any other amounts which constitute
"Net Proceeds" (or any comparable term) of such transaction under, and as
defined in the documents evidencing or governing any Subordinated
Indebtedness.
"Note" or "Notes" means the Revolving Notes and/or the Term Notes,
---- -----
individually or collectively, as appropriate.
"Notice of Borrowing" means a written notice of borrowing in
-------------------
substantially the form of Exhibit 2.1(b)(i), as required by Section
-----------------
2.1(b)(i) or Section 2.3(b).
"Notice of Extension/Conversion" means the written notice of extension
------------------------------
or conversion in substantially the form of Exhibit 3.2, as required by
-----------
Section 3.2.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed) which
is not a Capital Lease other than any such lease in which that Person is
the lessor.
"Other Taxes" shall have the meaning assigned to such term in Section
-----------
3.11(b).
"Participant" shall have the meaning assigned to such term in Section
-----------
11.3(d).
"Participation Interest" means a purchase by a Lender of a
----------------------
participation in Letters of Credit or LOC Obligations as provided in
Section 2.2 or in any Loans as provided in Section 3.14.
20
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Acquisition" means an Acquisition by the Borrower or any
---------------------
Subsidiary of the Borrower permitted pursuant to the terms of Section
8.6(h).
"Permitted Asset Disposition" means any Asset Disposition permitted by
---------------------------
Section 8.5.
"Permitted Investments" means, at any time, Investments by the
---------------------
Consolidated Parties permitted to exist at such time pursuant to the terms
of Section 8.6.
"Permitted Liens" means, at any time, Liens in respect of Property of
---------------
the Consolidated Parties permitted to exist at such time pursuant to the
terms of Section 8.2.
"Person" means any individual, partnership, joint venture, firm,
------
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
----
ERISA) which is covered by ERISA and with respect to which any Consolidated
Party or any ERISA Affiliate is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer"
within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement dated as of the Closing
----------------
Date and executed in favor of the Agent by each of the Credit Parties, as
amended, modified, restated or supplemented from time to time.
"Prime Rate" means, for any day, the per annum rate of interest rate in
----------
effect for such day as publicly announced from time to time by Bank of
America as its "prime rate." Such rate is a rate set by Bank of America
based upon various factors including Bank of America's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or
below such announced rate. Any change in such rate announced by Bank of
America shall take effect at the opening of business on the day specified
in the public announcement of such change.
"Principal Amortization Payments" means a principal payment on the Term
-------------------------------
Loan as set forth in Section 2.3(d).
"Principal Amortization Payment Date" means the date a Principal
-----------------------------------
Amortization Payment is due.
"Principal Office" means the principal office of Bank of America,
----------------
presently located at San Francisco, California.
21
"Pro Forma Basis" means, for purposes of calculating (utilizing the
---------------
principles set forth in the second paragraph of Section 1.3) compliance
with each of the financial covenants set forth in Section 7.10(a)-(c) in
respect of a proposed transaction, that such transaction shall be deemed to
have occurred as of the first day of the four fiscal-quarter period ending
as of the most recent fiscal quarter end preceding the date of such
transaction with respect to which the Agent has received the Required
Financial Information. As used herein, "transaction" shall mean (i) any
-----------
incurrence or assumption of Indebtedness as referred to in Section 8.1(g),
(ii) any Asset Disposition as referred to in Section 8.5 or (iii) any
Acquisition as referred to in Section 8.6(h). In connection with any
calculation of the financial covenants set forth in Section 7.10(a)-(c)
upon giving effect to a transaction on a Pro Forma Basis:
(A) for purposes of any such calculation in respect of any incurrence or
assumption of Indebtedness as referred to in Section 8.1(g), any
Indebtedness which is retired in connection with such incurrence or
assumption shall be excluded and deemed to have been retired as of the
first day of the applicable period;
(B) for purposes of any such calculation in respect of any Asset
Disposition as referred to in Section 8.5, (1) income statement items
(whether positive or negative) attributable to the Property disposed
of shall be excluded and (2) any Indebtedness which is retired in
connection with such transaction shall be excluded and deemed to have
been retired as of the first day of the applicable period; and
(C) for purposes of any such calculation in respect of any Acquisition as
referred to in Section 8.6(h), (1) any Indebtedness incurred by any
Consolidated Party in connection with such transaction (x) shall be
deemed to have been incurred as of the first day of the applicable
period and (y) if such Indebtedness has a floating or formula rate,
shall have an implied rate of interest for the applicable period for
purposes of this definition determined by utilizing the rate which is
or would be in effect with respect to such Indebtedness as at the
relevant date of determination, (2) income statement items (whether
positive or negative) attributable to the Person or Property acquired
shall be included beginning as of the first day of the applicable
period and (3) pro forma adjustments may be included to the extent
that such adjustments would be permitted under GAAP and give effect to
events that are (x) directly attributable to such transaction, (y)
expected to have a continuing impact on the Consolidated Parties and
(z) factually supportable.
"Pro Forma Compliance Certificate" means a certificate of an Executive
--------------------------------
Officer of the Borrower delivered to the Agent in connection with (i) any
incurrence, assumption or retirement of Indebtedness as referred to in
Section 8.1(g), (ii) any Asset Disposition as referred to in Section 8.5 or
(iii) any Acquisition as referred to in Section 8.6(h), as applicable, and
containing reasonably detailed calculations, upon giving effect to the
applicable transaction on a Pro Forma Basis, of the Funded Indebtedness to
Capitalization Ratio, the Fixed Charge Coverage Ratio and Consolidated Net
Worth as of
22
the most recent fiscal quarter end preceding the date of the applicable
transaction with respect to which the Agent shall have received the
Required Financial Information.
"Property" means any interest in any kind of property or asset, whether
--------
real, personal or mixed, or tangible or intangible.
"Real Properties" means, at any time, a collective reference to each of
---------------
the facilities and real properties owned, leased or operated by the
Consolidated Parties at such time.
"Register" shall have the meaning assigned to such term in Section
--------
11.3(c).
"Regulation D, T, U, or X" means Regulation D, T, U or X, respectively,
------------------------
of the Board of Governors of the Federal Reserve System as from time to
time in effect and any successor to all or a portion thereof.
"Reimbursement Agreement" shall mean any agreement set forth on
-----------------------
Schedule 2.2(1) hereto.
"Reportable Event" means any of the events set forth in Section 4043(c)
----------------
of ERISA, other than those events as to which the notice requirement has
been waived by regulation.
"Required Financial Information" means, with respect to the applicable
------------------------------
Calculation Date, (i) the financial statements of the Consolidated Parties
required to be delivered pursuant to Section 7.1(a) or (b) for the fiscal
period or quarter ending as of such Calculation Date, and (ii) the
certificate of an Executive Officer of the Borrower required by Section
7.1(c) to be delivered with the financial statements described in clause
(i) above.
"Required Lenders" means, at any time, Lenders (other than Defaulting
----------------
Lenders) holding in the aggregate at least a majority of (i) the unfunded
Commitments (and Participation Interests therein) and the outstanding Loans
(and Participation Interests therein) or (ii) if all of the Commitments
have been terminated, the outstanding Loans, LOC Obligations and
Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit).
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or to which any of its material
property is subject.
"Restricted Payment" means (i) any dividend or other payment or
------------------
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any Consolidated Party, now or hereafter outstanding
(including without limitation any payment in connection with any
dissolution, merger, consolidation or disposition involving any
Consolidated Party), or to the holders, in their capacity as such, of any
shares of any class of Capital Stock of any
23
Consolidated Party, now or hereafter outstanding (other than dividends or
distributions payable in Capital Stock of the applicable Person and
dividends or distributions payable (directly or indirectly through
Subsidiaries) to any Credit Party), (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of Capital Stock of any
Consolidated Party, now or hereafter outstanding, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of Capital Stock of any
Consolidated Party, now or hereafter outstanding and, (iv) any payment or
prepayment of principal of, or premium, if any, on (including any
redemption, purchase, retirement, defeasance, sinking fund or similar
payment with respect to) the Senior Subordinated Notes.
"Revolving Commitment" means, with respect to each Lender, the
--------------------
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Revolving Commitment Percentage (if any)
of the Revolving Committed Amount, (i) to make Revolving Loans in
accordance with the provisions of Section 2.1(a) and (ii) to purchase
Participation Interests in Letters of Credit in accordance with the
provisions of Section 2.2(c).
"Revolving Commitment Percentage" means, for any Lender, the percentage
-------------------------------
identified as its Revolving Commitment Percentage on Schedule 2.1(a), as
---------------
such percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Revolving Committed Amount" shall have the meaning assigned to such
--------------------------
term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to such term in
---------------
Section 2.1(a).
"Revolving Note" shall have the meaning assigned to such term in
--------------
Section 2.1(e).
"S&P" means Standard & Poor's Ratings Services, a division of The
---
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor or assignee of the business
of such division in the business of rating securities.
"Sale and Leaseback Transaction" means any arrangement pursuant to
------------------------------
which any Consolidated Party, directly or indirectly, becomes liable as
lessee, guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any Property (a) which such
Consolidated Party has sold or transferred (or is to sell or transfer) to a
Person which is not a Consolidated Party or (b) which such Consolidated
Party intends to use for substantially the same purpose as any other
Property which has been sold or transferred (or is to be sold or
transferred) by such Consolidated Party to another Person which is not a
Consolidated Party in connection with such lease, provided that any
transaction that satisfies the conditions in preceding subsection (a) or
(b) shall not constitute a "Sale and Leaseback Transaction" where lessor
under such lease is organized under the laws of a jurisdiction outside of
the United States, the Property is located in the United
24
States and the obligations in respect of the lease or incurred in
connection therewith for which the Consolidated Party is liable have been
defeased.
"Securities Act" means the Securities Act of 1933, as amended, and all
--------------
regulations issued pursuant thereto.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
-----------------------
amended, and all regulations issued pursuant thereto.
"Security Agreement" means the security agreement dated as of the
------------------
Closing Date and executed in favor of the Agent by each of the Credit
Parties, as amended, modified, restated or supplemented from time to time.
"Senior Subordinated Note" means any one of the 10.0% Senior
------------------------
Subordinated Notes due 2011, issued by the Borrower in favor of the Senior
Subordinated Noteholders pursuant to the Senior Subordinated Note
Indenture, as such Senior Subordinated Notes may be amended, modified,
restated or supplemented and in effect from time to time in accordance with
the terms hereof.
"Senior Subordinated Note Indenture" means the Indenture, dated as of
----------------------------------
the Closing Date, by and among the Borrower and the Trustee for the Senior
Subordinated Noteholders, as the same may be amended, modified, restated or
supplemented and in effect from time to time in accordance with the terms
hereof.
"Senior Subordinated Noteholder" means any one of the holders from time
------------------------------
to time of the Senior Subordinated Notes.
"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Solvent" or "Solvency" means, with respect to any Person as of a
------- --------
particular date, that on such date (i) such Person is able to pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (ii) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay as such debts and liabilities mature in their
ordinary course, (iii) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person's Property would constitute unreasonably small capital
after giving due consideration to the prevailing practice in the industry
in which such Person is engaged or is to engage, (iv) the fair value of the
Property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person and
(v) the present fair salable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
25
"SPV" have the meaning set forth in Section 11.3(i).
---
"Subordinated Indebtedness" means Indebtedness outstanding under the
-------------------------
Senior Subordinated Note Indenture and the Senior Subordinated Notes and
any other Indebtedness of the Borrower which by its terms is subordinated
to the Credit Party Obligations in a manner and to an extent acceptable to
the Required Lenders.
"Subsidiary" means, as to any Person at any time, (a) any corporation
----------
more than 50% of whose Capital Stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at such time, any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at such time owned by such Person
directly or indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity of which such Person directly or
indirectly through Subsidiaries owns at such time more than 50% of the
Capital Stock of such entity.
"Subsidiary Guarantor" means each of the Persons identified as a
--------------------
"Subsidiary Guarantor" on the signature pages hereto and each Person which
may hereafter execute a Joinder Agreement pursuant to Section 7.11,
together with their successors and permitted assigns, and "Subsidiary
----------
Guarantor" means any one of them.
---------
"Synthetic Lease" means any synthetic lease, tax retention operating
---------------
lease, off-balance sheet loan or similar off-balance sheet financing
product where such transaction is considered borrowed money indebtedness
for tax purposes but is classified as an Operating Lease under GAAP.
"Taxes" shall have the meaning assigned to such term in Section
-----
3.11(a).
"Term Loan" shall have the meaning assigned to such term in Section
---------
2.3(a).
"Term Loan Commitment" means, with respect to each Lender, the
--------------------
commitment of such Lender to make its portion of the Term Loan in a
principal amount equal to such Lender's Term Loan Percentage (if any) of
the Term Loan Committed Amount.
"Term Loan Committed Amount" shall have the meaning assigned to such
--------------------------
term in Section 2.3(a).
"Term Loan Maturity Date" means June 29, 2005.
-----------------------
"Term Loan Percentage" means, for any Lender, the percentage identified
--------------------
as its Term Loan Percentage on Schedule 2.1(a), as such percentage may be
---------------
modified in connection with any assignment made in accordance with the
provisions of Section 11.3.
"Term Loan Prepayment Fee" shall have the meaning assigned to such term
------------------------
in Section 3.5(e).
26
"Term Note" shall have the meaning assigned to such term in Section
---------
2.3(f).
"Timber" means all trees, timber to be cut from the Land, timber,
------
whether severed or unsevered and including standing and down timber, stumps
and cut timber remaining on the land, and logs, wood chips and other forest
products located on the Land, whether now located on or hereafter planted
or growing in or on the Land or now or hereafter removed from the Land for
sale or other disposition.
"Timber Report" shall have the meaning set forth in Section 7.1(k).
-------------
"Unused Fee" shall have the meaning assigned to such term in
----------
Section 3.5(a).
"Unused Fee Calculation Period" shall have the meaning assigned to such
-----------------------------
term in Section 3.5(a).
"Unused Revolving Committed Amount" means, for any period, the amount
---------------------------------
by which (a) the then applicable Revolving Committed Amount exceeds (b) the
daily average sum for such period of (i) the outstanding aggregate
principal amount of all Revolving Loans plus (ii) the outstanding aggregate
----
principal amount of all LOC Obligations.
"Voting Stock" means, with respect to any Person, Capital Stock issued
------------
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to
vote has been suspended by the happening of such a contingency.
"Wholly Owned Subsidiary" means any Person 100% of whose Voting Stock
-----------------------
is at the time owned by the Borrower directly or indirectly through other
Persons 100% of whose Voting Stock is at the time owned, directly or
indirectly, by the Borrower.
1.2 Computation of Time Periods.
---------------------------
For purposes of computation of periods of time hereunder, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 Accounting Terms.
----------------
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis; provided, however, that calculations of the implied principal component
-------- -------
of all obligations under any Synthetic Lease or the implied interest component
of any rent paid under any Synthetic Lease shall be made by the Borrower in
accordance with accepted financial practice and consistent with the terms of
such Synthetic Lease. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise expressly
provided herein) be made by application of GAAP applied on a basis consistent
with the most recent annual
27
or quarterly financial statements delivered pursuant to Section 7.1 (or, prior
to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements as at March 31, 2001); provided,
--------
however, if (a) the Credit Parties shall object to determining such compliance
-------
on such basis at the time of delivery of such financial statements due to any
change in GAAP or the rules promulgated with respect thereto or (b) the Agent or
the Required Lenders shall so object in writing within 60 days after delivery of
such financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Credit
Parties to the Lenders as to which no such objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and agree that,
for purposes of all calculations made under the financial covenants set forth in
Section 7.10 (including without limitation for purposes of the definitions of
"Applicable Percentage" and "Pro Forma Basis" set forth in Section 1.1), (i)
after consummation of any Asset Disposition (A) income statement items (whether
positive or negative) and capital expenditures attributable to the Property
disposed of shall be excluded to the extent relating to any period occurring
prior to the date of such transaction and (B) Indebtedness which is retired
shall be excluded and deemed to have been retired as of the first day of the
applicable period and (ii) after consummation of any Acquisition (A) income
statement items (whether positive or negative) and capital expenditures
attributable to the Person or Property acquired shall, to the extent not
otherwise included in such income statement items for the Consolidated Parties
in accordance with GAAP or in accordance with any defined terms set forth in
Section 1.1, be included to the extent relating to any period applicable in such
calculations, (B) to the extent not retired in connection with such Acquisition,
Indebtedness of the Person or Property acquired shall be deemed to have been
incurred as of the first day of the applicable period and (C) pro forma
adjustments may be included to the extent that such adjustments would be
permitted under GAAP and give effect to items that are (x) directly attributable
to such transaction, (y) expected to have a continuing impact on the
Consolidated Parties and (z) factually supportable.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
---------------
(a) Revolving Commitment. Subject to the terms and conditions hereof
--------------------
and in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make available to the Borrower such
Lender's Revolving Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("Revolving Loans") from time to time
---------------
from the Closing Date until the Maturity Date, or such earlier date as the
Revolving Commitments shall have been terminated as provided herein;
provided, however, that the sum of the aggregate outstanding principal
-------- -------
amount of Revolving Loans shall not exceed TWO HUNDRED MILLION DOLLARS
($200,000,000) (as such aggregate maximum amount may be reduced from time
to time as provided in Section 3.4, the "Revolving Committed Amount");
--------------------------
provided, further, (A) with regard to each Lender individually, such
-------- -------
Lender's outstanding Revolving Loans shall not exceed such Lender's
28
Revolving Commitment Percentage of the Revolving Committed Amount, and (B)
the sum of the aggregate outstanding principal amount of Revolving Loans
plus LOC Obligations shall not exceed the Revolving Committed Amount.
Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrower may request; provided, however, that
-------- -------
no more than six (6) Eurodollar Loans which are Revolving Loans shall be
outstanding hereunder at any time (it being understood that, for purposes
hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same
date, although borrowings, extensions and conversions may, in accordance
with the provisions hereof, be combined at the end of existing Interest
Periods to constitute a new Eurodollar Loan with a single Interest Period).
Revolving Loans hereunder may be repaid and reborrowed in accordance with
the provisions hereof.
(b) Revolving Loan Borrowings.
-------------------------
(i) Notice of Borrowing. The Borrower shall request a
-------------------
Revolving Loan borrowing by written notice (or telephonic notice
promptly confirmed in writing) to the Agent not later than 10:00 A.M.
(San Francisco, California time) on the Business Day prior to the date
of the requested borrowing in the case of Base Rate Loans, and on the
third Business Day prior to the date of the requested borrowing in the
case of Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Revolving Loan is requested,
(B) the date of the requested borrowing (which shall be a Business
Day), (C) the aggregate principal amount to be borrowed, and (D)
whether the borrowing shall be comprised of Base Rate Loans, Eurodollar
Loans or a combination thereof, and if Eurodollar Loans are requested,
the Interest Period(s) therefor. If the Borrower shall fail to specify
in any such Notice of Borrowing (I) an applicable Interest Period in
the case of a Eurodollar Loan, then such notice shall be deemed to be a
request for an Interest Period of one month, or (II) the type of
Revolving Loan requested, then such notice shall be deemed to be a
request for a Base Rate Loan hereunder. The Agent shall give notice to
each affected Lender promptly upon receipt of each Notice of Borrowing
pursuant to this Section 2.1(b)(i), the contents thereof and each such
Lender's share of any borrowing to be made pursuant thereto.
(ii) Minimum Amounts. Except for Revolving Loans made for the
---------------
purpose of reimbursing the Issuing Lender in respect of a drawing under
a Letter of Credit pursuant to Section 2.2(e), each Eurodollar Loan or
Base Rate Loan that is a Revolving Loan shall be in a minimum aggregate
principal amount of $5,000,000 and integral multiples of $1,000,000 in
excess thereof (or the remaining amount of the Revolving Committed
Amount, if less).
(iii) Advances. Each Lender will make its Revolving Commitment
--------
Percentage of each Revolving Loan borrowing available to the Agent for
the account of the Borrower as specified in Section 3.15(a), or in such
other manner as the Agent may specify in writing, by 12:00 noon (San
Francisco, California time) on the date specified in the applicable
Notice of Borrowing in Dollars and in funds immediately
29
available to the Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by
the Agent.
(c) Repayment. The Borrower hereby promises to pay the principal
---------
amount of all outstanding Revolving Loans in full on the Maturity Date,
unless accelerated sooner pursuant to Section 9.2.
(d) Interest. Subject to the provisions of Section 3.1,
--------
(i) Base Rate Loans. During such periods as Revolving Loans
---------------
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the
Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as Revolving Loans
----------------
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Adjusted Eurodollar Rate.
The Borrower hereby promises to pay interest on Revolving Loans in arrears
on each applicable Interest Payment Date (or at such other times as may be
specified herein).
(e) Revolving Notes. The Borrower hereby agrees that, upon the
---------------
request to the Agent by any Lender, the Borrower will execute and deliver
to such Lender a promissory note evidencing the Revolving Loans of such
Lender, substantially in the form of Exhibit 2.1(e) (a "Revolving Note").
--------------
2.2 Letter of Credit Subfacility.
----------------------------
(a) Issuance. The Existing Letters of Credit have previously been
--------
issued by the applicable Issuing Lender and subject to the terms and
conditions hereof and in reliance upon the representations and warranties
set forth herein, Bank of America, in its capacity as an Issuing Lender,
agrees to issue, the applicable Issuing Lender agrees to renew, extend and
modify and each Lender with a Revolving Commitment severally agrees to
participate in the issuance by such Issuing Lender of, standby Letters of
Credit in Dollars from time to time from the Closing Date until the date
thirty (30) days prior to the Maturity Date as the Borrower may request, by
delivering a Letter of Credit Application to the applicable Issuing Lender;
provided, however, that (i) the LOC Obligations outstanding shall not at
-------- -------
any time exceed ONE HUNDRED TEN MILLION DOLLARS ($110,000,000) (the "LOC
---
Committed Amount") and (ii) the sum of the aggregate outstanding principal
----------------
amount of Revolving Loans plus LOC Obligations shall not at any time exceed
----
the Revolving Committed Amount. No Letter of Credit shall (x) have an
original expiry date more than one year from the date of issuance (provided
that any such Letter of Credit may contain customary "evergreen" provisions
pursuant to which the expiry date is automatically extended by a specific
time period unless the applicable Issuing Lender gives notice to the
beneficiary of such Letter of Credit at least a specified time period prior
to the expiry date
30
then in effect) or (y) as originally issued or as extended, have an expiry
date extending beyond the date thirty (30) days prior to the Maturity Date.
Each Letter of Credit shall comply with the related LOC Documents. The
issuance date of each Letter of Credit shall be a Business Day. All
Existing Letters of Credit shall be deemed to have been issued pursuant
hereto, and from and after the Closing Date shall be subject to and
governed by the terms and conditions hereof.
(b) Notice and Reports. The request for the issuance of a Letter of
------------------
Credit shall be submitted by the Borrower to the applicable Issuing Lender
and the Agent at least three (3) Business Days prior to the requested date
of issuance. The Agent will, at least quarterly and more frequently upon
request, disseminate to each of the Lenders a detailed report specifying
the Letters of Credit which are then issued and outstanding and any
activity with respect thereto which may have occurred since the date of the
prior report, and including therein, among other things, the beneficiary,
the face amount and the expiry date, as well as any payment or expirations
which may have occurred.
(c) Participation. Each Lender, upon issuance of a Letter of Credit,
-------------
shall be deemed to have purchased without recourse a Participation Interest
from the applicable Issuing Lender in such Letter of Credit (including each
Existing Letter of Credit) and the obligations arising thereunder and any
collateral relating thereto, in each case in an amount equal to its pro
rata share of the obligations under such Letter of Credit (based on the
respective Revolving Commitment Percentages of the Lenders) and shall
absolutely, unconditionally and irrevocably assume and be obligated to pay
to such Issuing Lender and discharge when due, its pro rata share of the
obligations arising under such Letter of Credit (including each Existing
Letter of Credit). Without limiting the scope and nature of each Lender's
Participation Interest in any Letter of Credit, to the extent that an
Issuing Lender has not been reimbursed as required hereunder or under any
such Letter of Credit, each such Lender shall pay to such Issuing Lender
its pro rata share of such unreimbursed drawing in same day funds on the
day of notification by such Issuing Lender of an unreimbursed drawing
pursuant to the provisions of subsection (d) below. The obligation of each
Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any such reimbursement
shall not relieve or otherwise impair the obligation of the Borrower to
reimburse the applicable Issuing Lender under any Letter of Credit,
together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
-------------
Credit, the applicable Issuing Lender will promptly notify the Borrower.
Unless the Borrower shall immediately notify such Issuing Lender that the
Borrower intends to otherwise reimburse such Issuing Lender for such
drawing, the Borrower shall be deemed to have requested that the Lenders
make a Revolving Loan in the amount of the drawing as provided in
subsection (e) below on the related Letter of Credit, the proceeds of which
will be used to satisfy the related reimbursement obligations. The Borrower
promises to reimburse the applicable Issuing Lender on the day of drawing
under any Letter of Credit (either with the proceeds of a Revolving Loan
obtained hereunder or otherwise) in same day funds. If the Borrower shall
fail to reimburse any Issuing Lender as provided hereinabove, the Borrower
31
promises to pay such Issuing Lender interest on the unreimbursed amount of
such drawing on demand at a per annum rate equal to the Adjusted Base Rate
plus 2%. The Borrower's reimbursement obligations hereunder shall be
absolute and unconditional under all circumstances irrespective of any
rights of setoff, counterclaim or defense to payment the Borrower may claim
or have against any Issuing Lender, the Agent, the Lenders, the beneficiary
of the Letter of Credit drawn upon or any other Person, including without
limitation any defense based on any failure of the Borrower or any other
Credit Party to receive consideration or the legality, validity, regularity
or unenforceability of the Letter of Credit. The applicable Issuing Lender
will promptly notify the Agent of the amount of any unreimbursed drawing
and each Lender shall promptly pay to the Agent for the account of such
Issuing Lender in Dollars and in immediately available funds, the amount of
such Lender's pro rata share of such unreimbursed drawing. Such payment
shall be made on the day such notice is received by such Lender from such
Issuing Lender if such notice is received at or before 12:00 noon (San
Francisco, California time), and otherwise such payment shall be made at or
before 1:00 P.M. (San Francisco, California time) on the Business Day next
succeeding the day such notice is received. If such Lender does not pay
such amount to the Agent in full upon such request, such Lender shall, on
demand, pay to the Agent for the account of such Issuing Lender interest on
the unpaid amount during the period from the date of such drawing until
such Lender pays such amount to such Issuing Lender in full at a rate per
annum equal to, if paid within two (2) Business Days of the date that such
Lender is required to make payments of such amount pursuant to the
preceding sentence, the Federal Funds Rate and thereafter at a rate equal
to the Base Rate. Each Lender's obligation to make such payment to the
applicable Issuing Lender, and the right of such Issuing Lender to receive
the same, shall be absolute and unconditional, shall not be affected by any
circumstance whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence of a Default
or Event of Default or the acceleration of the obligations of the Borrower
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment
by a Lender to an Issuing Lender, such Lender shall, automatically and
without any further action on the part of such Issuing Lender or such
Lender, acquire a Participation Interest in an amount equal to such payment
(excluding the portion of such payment constituting interest owing to such
Issuing Lender) in the related unreimbursed drawing portion of the LOC
Obligation and in the interest thereon and in the related LOC Documents,
and shall have a claim against the Borrower with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the Borrower
------------------------------
shall have requested, or been deemed to have requested, a Revolving Loan
advance to reimburse a drawing under a Letter of Credit, the Agent shall
give notice to the Lenders that a Revolving Loan has been requested or
deemed requested by the Borrower to be made in connection with a drawing
under a Letter of Credit, in which case a Revolving Loan advance comprised
of Base Rate Loans (or Eurodollar Loans to the extent the Borrower has
complied with the procedures of Section 2.1(b)(i) with respect thereto)
shall be immediately made to the Borrower by all Lenders (notwithstanding
any termination of the Commitments pursuant to Section 9.2) pro rata based
--- ----
on the respective Revolving Commitment Percentages of the Lenders
(determined before giving effect to any termination of the Commitments
pursuant to Section 9.2) and the proceeds thereof shall be paid directly to
the
32
applicable Issuing Lender for application to the respective LOC
Obligations. Each such Lender hereby irrevocably agrees to make its pro
rata share of each such Revolving Loan immediately upon any such request or
deemed request in the amount, in the manner and on the date specified in
the preceding sentence notwithstanding (i) the amount of such borrowing may
---------------
not comply with the minimum amount for advances of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in
Section 5.2 are then satisfied, (iii) whether a Default or an Event of
Default then exists, (iv) failure for any such request or deemed request
for Revolving Loan to be made by the time otherwise required hereunder, (v)
whether the date of such borrowing is a date on which Revolving Loans are
otherwise permitted to be made hereunder or (vi) any termination of the
Commitments relating thereto immediately prior to or contemporaneously with
such borrowing. In the event that any Revolving Loan cannot for any reason
be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any other Credit Party),
then each such Lender hereby agrees that it shall forthwith purchase (as of
the date such borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and prior to such
purchase) from the applicable Issuing Lender such Participation Interests
in the outstanding LOC Obligations as shall be necessary to cause each such
Lender to share in such LOC Obligations ratably (based upon the respective
Revolving Commitment Percentages of the Lenders (determined before giving
effect to any termination of the Commitments pursuant to Section 9.2)),
provided that at the time any purchase of Participation Interests pursuant
--------
to this sentence is actually made, the purchasing Lender shall be required
to pay to such Issuing Lender, to the extent not paid to such Issuing
Lender by the Borrower in accordance with the terms of subsection (d)
above, interest on the principal amount of Participation Interests
purchased for each day from and including the day upon which such borrowing
would otherwise have occurred to but excluding the date of payment for such
Participation Interests, at the rate equal to, if paid within two (2)
Business Days of the date of the Revolving Loan advance, the Federal Funds
Rate, and thereafter at a rate equal to the Base Rate.
(f) Designation of Consolidated Parties as Account Parties.
------------------------------------------------------
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a), a Letter of Credit
may be issued hereunder for the account of any Subsidiary of the Borrower,
provided that, the Borrower shall be the actual applicant for all purposes
of this Credit Agreement for such Letter of Credit and such statement shall
not affect the Borrower's reimbursement obligations hereunder with respect
to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter of
------------------
Credit shall, for purposes hereof, be treated in all respects the same as
the issuance of a new Letter of Credit hereunder.
(h) Applicability of ISP98. Unless otherwise expressly agreed by the
----------------------
applicable Issuing Lender and the Borrower when a Letter of Credit is
issued, the rules of the "International Standby Practices 1998" published
by the Institute of International Banking Law & Practice (or such later
version thereof as may be in effect at the time of issuance) shall apply to
each Letter of Credit.
33
(i) Indemnification; Nature of Issuing Lender's Duties.
--------------------------------------------------
(i) In addition to its other obligations under this Section
2.2, the Borrower hereby agrees to pay, and protect, indemnify and
save each Lender harmless from and against, any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that such Lender may incur or
be subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of such Lender to
honor a drawing under a Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority (all such acts
or omissions, herein called "Government Acts").
---------------
(ii) As between the Borrower and the Lenders (including each
Issuing Lender), the Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the beneficiary
thereof. No Lender (including an Issuing Lender) shall be responsible:
(A) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with
the application for and issuance of any Letter of Credit, even if it
should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) for the validity
or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason; (C) for errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or
not they be in cipher; (D) for any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under
a Letter of Credit or of the proceeds thereof; and (E) for any
consequences arising from causes beyond the control of such Lender,
including, without limitation, any Government Acts. None of the above
shall affect, impair, or prevent the vesting of an Issuing Lender's
rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted
by any Lender (including an Issuing Lender), under or in connection
with any Letter of Credit or the related certificates, if taken or
omitted in good faith, shall not put such Lender under any resulting
liability to the Borrower or any other Credit Party. It is the
intention of the parties that this Credit Agreement shall be construed
and applied to protect and indemnify each Lender (including each
Issuing Lender) against any and all risks involved in the issuance of
the Letters of Credit, all of which risks are hereby assumed by the
Borrower (on behalf of itself and each of the other Credit Parties),
including, without limitation, any and all Government Acts. No Lender
(including an Issuing Lender) shall, in any way, be liable for any
failure by such Lender or anyone else to pay any drawing under any
Letter of Credit as a result of any Government Acts or any other cause
beyond the control of such Lender.
34
(iv) Nothing in this subsection (i) is intended to limit the
reimbursement obligations of the Borrower contained in subsection (d)
above. The obligations of the Borrower under this subsection (i) shall
survive the termination of this Credit Agreement. No act or omission
of any current or prior beneficiary of a Letter of Credit shall in any
way affect or impair the rights of the Lenders (including each Issuing
Lender) to enforce any right, power or benefit under this Credit
Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (i), the Borrower shall have no obligation to indemnify any
Lender (including an Issuing Lender) in respect of any liability
incurred by such Lender (A) arising solely out of the gross negligence
or willful misconduct of such Lender, as determined by a court of
competent jurisdiction, or (B) caused by such Lender's failure to pay
under any Letter of Credit after presentation to it of a request
strictly complying with the terms and conditions of such Letter of
Credit, as determined by a court of competent jurisdiction, unless
such payment is prohibited by any law, regulation, court order or
decree.
(j) Responsibility of Each Issuing Lender. It is expressly understood
-------------------------------------
and agreed that the obligations of each Issuing Lender hereunder to the
Lenders are only those expressly set forth in this Credit Agreement and
that each Issuing Lender shall be entitled to assume that the conditions
precedent set forth in Section 5.2 have been satisfied unless it shall have
acquired actual knowledge that any such condition precedent has not been
satisfied; provided, however, that nothing set forth in this Section 2.2
-------- -------
shall be deemed to prejudice the right of any Lender to recover from any
Issuing Lender any amounts made available by such Lender to such Issuing
Lender pursuant to this Section 2.2 in the event that it is determined by a
court of competent jurisdiction that the payment with respect to a Letter
of Credit constituted gross negligence or willful misconduct on the part of
such Issuing Lender.
(k) Limitation on Obligation of Each Issuing Lender. Notwithstanding
-----------------------------------------------
anything contained herein to the contrary, no Issuing Lender shall be under
any obligation to issue, renew or extend any Letter of Credit if (i) any
order, judgment or decree of any Governmental Authority or arbitrator shall
by its terms purport to enjoin or restrain such Issuing Lender from issuing
a Letter of Credit, or any applicable law, rule or regulation or any
request or directive (whether or not having the force of law) from any
governmental with jurisdiction over the Issuing Lender shall prohibit, or
request that such Issuing Lender refrain from, the issuance of letters of
credit generally or any such Letter of Credit in particular, or shall
impose upon the Issuing Lender with respect to any such Letter of Credit
any restriction, reserve or capital requirement (for which such Issuing
Lender is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon such Issuing Lender any unreimbursed loss, costs
or expense which was not applicable on the Closing Date and which such
Issuing Lender should deem material to it in good faith, or (ii) the
issuance, renewal or extension would violate or otherwise contravene its
internal policy.
(l) Conflict with LOC Documents. In the event of any conflict between
---------------------------
this Credit Agreement and any LOC Document (including any Letter of Credit
Application), this
35
Credit Agreement shall control with respect to the Persons who are parties
to this Credit Agreement and such LOC Document. Notwithstanding the
generality of the foregoing, each of the Reimbursement Agreements set forth
on Schedule 2.2(1) is and shall be deemed amended such that the
---------------
representations and warranties, covenants and events of default (and
definitions related thereto) set out in such Reimbursement Agreements (the
"Existing Provisions"), except to the extent they relate specifically to
-------------------
the relevant bonds or relevant remarketing program, conform with the
representations and warranties, covenants and events of default (and
definitions related thereto) set out in this Credit Agreement (the
"Incorporated Provisions"). Such amendments shall survive (i) the payment
-----------------------
in full of all obligations due the Lenders by the Borrower under this
Credit Agreement, (ii) the termination (for any reason) of this Credit
Agreement, (iii) the sale or participation (in whole or in part) of a
Lender's interest in this Credit Agreement, or (iv) any other event which
has the effect of terminating the obligations of the Borrower to the
Lenders under this Credit Agreement. Upon the happening of one of the
events set forth in the immediately preceding sentence, the Borrower agrees
to promptly execute a modification of the relevant Reimbursement
Agreement(s) to confirm such amendment. Notwithstanding the preceding
sentence or the failure of any such modification to be executed, the
Borrower must remain in compliance with the Incorporated Provisions as if
set forth in the relevant Reimbursement Agreement(s). Any future
modification of or amendment to the Incorporated Provisions shall be a
modification of or amendment to the relevant Reimbursement Agreement(s) for
purposes of compliance with such agreements. Likewise, if the Agent and the
Required Lenders grant a waiver of compliance of the Incorporated
Provisions for any period, such waiver shall be deemed to be a waiver of
compliance of the relevant Reimbursement Agreement(s) for the limited
period of time for which the waiver was granted.
2.3 Term Loan.
---------
(a) Term Commitment. Subject to the terms and conditions hereof and
---------------
in reliance upon the representations and warranties set forth herein each
Lender severally agrees to make available to the Borrower, subject to the
escrow arrangements described in Sections 5.1(j) and 6.15, on the Closing
Date such Lender's Term Loan Percentage of a term loan in Dollars (the
"Term Loan") in the aggregate principal amount of TWO HUNDRED MILLION
---------
DOLLARS ($200,000,000) (the "Term Loan Committed Amount"). The Term Loan
--------------------------
may consist of Base Rate Loans or Eurodollar Loans, or a combination
thereof, as the Borrower may request; provided, however, that no more than
-------- -------
six (6) Eurodollar Loans which comprise the Term Loan shall be outstanding
hereunder at any time (it being understood that, for purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period). Amounts
repaid on the Term Loan may not be reborrowed.
(b) Borrowing Procedures. The Borrower shall submit an appropriate
--------------------
Notice of Borrowing to the Agent not later than 10:00 A.M. (San Francisco,
California time) on the Closing Date, with respect to the portion of the
Term Loan initially consisting of a Base Rate Loan, or on the third
Business Day prior to the Closing Date, with respect to the
36
portion of the Term Loan initially consisting of one or more Eurodollar
Loans. Such Notice of Borrowing shall be irrevocable and shall specify (i)
that the funding of a Term Loan is requested and (ii) whether the funding
of the Term Loan shall be comprised of Base Rate Loans, Eurodollar Loans or
a combination thereof, and if Eurodollar Loans are requested, the Interest
Period(s) therefor. If the Borrower shall fail to deliver such Notice of
Borrowing to the Agent by 10:00 A.M. (San Francisco, California time) on
the third Business Day prior to the Closing Date, then the full amount of
the Term Loan shall be disbursed on the Closing Date as a Base Rate Loan.
Each Lender shall make its Term Loan Percentage of the Term Loan available
to the Agent for the account of the Borrower, subject to the escrow
arrangements described in Sections 5.1(j) and 6.15, at the office of the
Agent specified in Schedule 2.1(a), or at such other office as the Agent
---------------
may designate in writing, by 12:00 noon (San Francisco, California time) on
the Closing Date in Dollars and in funds immediately available to the
Agent.
(c) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is
---------------
part of the Term Loan shall be in an aggregate principal amount that is not
less than $5,000,000 and integral multiples of $1,000,000 (or the then
remaining principal balance of the Term Loan, if less).
(d) Repayment of Term Loan. The Borrower hereby promises to pay the
----------------------
outstanding principal amount of the Term Loan in sixteen (16) quarterly
consecutive installments as follows (as such installments may hereafter be
adjusted as a result of prepayments made pursuant to Section 3.3) unless
accelerated sooner pursuant to Section 9.2:
================================================================
Principal Amortization Payment Term Loan Principal Amortization
Dates Payment
----------------------------------------------------------------
September 30, 2001 $500,000
----------------------------------------------------------------
December 31, 2001 $500,000
----------------------------------------------------------------
March 31, 2002 $500,000
----------------------------------------------------------------
June 30, 2002 $500,000
----------------------------------------------------------------
September 30, 2002 $500,000
----------------------------------------------------------------
December 31, 2002 $500,000
----------------------------------------------------------------
March 31, 2003 $500,000
----------------------------------------------------------------
June 30, 2003 $500,000
----------------------------------------------------------------
September 30, 2003 $500,000
----------------------------------------------------------------
December 31, 2003 $500,000
----------------------------------------------------------------
March 31, 2004 $500,000
----------------------------------------------------------------
June 30, 2004 $500,000
----------------------------------------------------------------
September 30, 2004 $48,500,000
----------------------------------------------------------------
December 31, 2004 $48,500,000
----------------------------------------------------------------
March 31, 2005 $48,500,000
----------------------------------------------------------------
Term Loan Maturity Date $48,500,000
================================================================
(e) Interest. Subject to the provisions of Section 3.1, the Term
--------
Loan shall bear interest at a per annum rate equal to:
37
(i) Base Rate Loans. During such periods as the Term Loan
---------------
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the
Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as the Term Loan
----------------
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to the
Adjusted Eurodollar Rate.
The Borrower hereby promises to pay interest on the Term Loan in arrears on
each applicable Interest Payment Date (or at such other times as may be
specified herein).
(f) Term Notes. The Borrower hereby agrees that, upon the request to
----------
the Agent by any Lender, the Borrower will execute and deliver to such
Lender a promissory note evidencing the Term Loan of such Lender,
substantially in the form of Exhibit 2.3(f) (a "Term Note").
-------------- ---------
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
----------------------------------------------
3.1 Default Rate.
------------
Upon the occurrence, and during the continuance, of an Event of Default,
(i) the principal of and, to the extent permitted by law, interest on the Loans
and any other amounts owing hereunder or under the other Credit Documents shall
bear interest, payable on demand, at a per annum rate 2% greater than the rate
which would otherwise be applicable (or if no rate is applicable, whether in
respect of interest, fees or other amounts, then the Adjusted Base Rate plus 2%)
----
and (ii) the Letter of Credit Fee shall accrue at a per annum rate 2% greater
than the rate which would otherwise be applicable.
3.2 Extension and Conversion.
------------------------
The Borrower shall have the option, on any Business Day, to extend existing
Loans into a subsequent permissible Interest Period or to convert Loans into
Loans of another interest rate type; provided, however, that (i) except as
-------- -------
provided in Section 3.8, Eurodollar Loans may be converted into Base Rate Loans
or extended as Eurodollar Loans for new Interest Periods only on the last day of
the Interest Period applicable thereto, (ii) Loans extended as, or converted
into, Eurodollar Loans shall be subject to the terms of the definition of
"Interest Period" set forth in Section 1.1 and shall be in such minimum amounts
---------------
as provided in, with respect to Revolving Loans, Section 2.1(b)(ii) or with
respect to the Term Loan, Section 2.3(c), (iii) no more than six (6) Eurodollar
Loans which are Revolving Loans and six (6) Eurodollar Loans which comprise the
Term Loan shall be outstanding hereunder at any time (it being understood that,
for purposes hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in accordance with the
provisions
38
hereof, be combined at the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period) and (iv) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Each such extension or conversion shall be effected by the Borrower by
giving a Notice of Extension/Conversion (or telephonic notice promptly confirmed
in writing) to the office of the Agent specified in Schedule 2.1(a), or at such
---------------
other office as the Agent may designate in writing, prior to 10:00 A.M. (San
Francisco, California time) on the Business Day of, in the case of the
conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the extension of a Eurodollar Loan as, or
conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
extension or conversion, specifying the date of the proposed extension or
conversion, the Loans to be so extended or converted, the types of Loans into
which such Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. In the event the Borrower fails to
request extension or conversion of any Eurodollar Loan in accordance with this
Section 3.2, or any such conversion or extension is not permitted or required by
this Section 3.2, then such Eurodollar Loan shall be automatically converted
into a Base Rate Loan at the end of the Interest Period applicable thereto. The
Agent shall give each Lender notice as promptly as practicable of any such
proposed extension or conversion affecting any Loan.
3.3 Prepayments.
-----------
(a) Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay Loans in whole or in part from time to time; provided, however, that each
-------- -------
partial prepayment of Loans shall be in a minimum principal amount of $5,000,000
and integral multiples of $1,000,000 in excess thereof (or the then remaining
principal balance of the Revolving Loans or the Term Loan, as applicable, if
less). Subject to the foregoing terms, amounts prepaid under this Section 3.3(a)
shall be applied as the Borrower may elect; provided that if the Borrower shall
--------
fail to specify with respect to any voluntary prepayment, such voluntary
prepayment shall be applied first to Revolving Loans and then to the Term Loan,
in each case first to Base Rate Loans and then to Eurodollar Loans in direct
order of Interest Period maturities. All prepayments under this Section 3.3(a)
shall be subject to Section 3.12, but otherwise without premium or penalty,
except for any applicable Term Loan Prepayment Fee, and shall be accompanied by
interest on the principal amount prepaid through the date of prepayment.
(b) Mandatory Prepayments.
---------------------
(i) (A) Revolving Committed Amount. If at any time, the sum of
--------------------------
the aggregate outstanding principal amount of Revolving
Loans plus LOC Obligations shall exceed the Revolving
----
Committed Amount, the Borrower immediately shall prepay the
Revolving Loans and (after all Revolving Loans have been
repaid) cash collateralize the LOC Obligations, in an amount
sufficient to eliminate such excess.
(B) LOC Committed Amount. If at any time, the sum of the
--------------------
aggregate principal amount of LOC Obligations shall exceed
the LOC Committed Amount, the Borrower immediately shall
cash
39
collateralize the LOC Obligations in an amount sufficient to
eliminate such excess.
(ii) (A) Asset Dispositions. Immediately upon the occurrence of
------------------
any Asset Disposition Prepayment Event the Borrower shall
prepay the Loans in an aggregate amount equal to 100% of the
Net Cash Proceeds of the related Asset Disposition not
applied (or caused to be applied) by the Credit Parties
during the related Application Period to make Eligible
Reinvestments as contemplated by the terms of Section 8.5(g)
(such prepayment to be applied as set forth in clause (v)
below).
(B) Involuntary Dispositions. Immediately upon the
------------------------
occurrence of an Involuntary Disposition Prepayment Event,
the Borrower shall prepay the Loans in an aggregate amount
equal to 100% of the Excess Proceeds (such prepayment to be
applied as set forth in clause (v) below).
(iii) Debt Issuances. Immediately upon the occurrence of a Debt
--------------
Issuance Prepayment Event, the Borrower shall prepay the Loans in an
aggregate amount equal to 100% of the Net Cash Proceeds of the related
Debt Issuance (such prepayment to be applied as set forth in clause
(v) below).
(iv) Equity Issuances. Immediately upon the occurrence of an
----------------
Equity Issuance Prepayment Event, the Borrower shall prepay the Loans
in an aggregate amount equal to 100% of the Net Cash Proceeds of the
related Equity Issuance (such prepayment to be applied as set forth in
clause (v) below).
(v) Application of Mandatory Prepayments. Subject to the next
------------------------------------
succeeding paragraph, all amounts required to be paid pursuant to this
Section 3.3(b) shall be applied as follows: (A) with respect to all
amounts prepaid pursuant to Section 3.3(b)(i)(A), to Revolving Loans
and (after all Revolving Loans have been repaid) to a cash collateral
account in respect of LOC Obligations, (B) with respect to all amounts
prepaid pursuant to Section 3.3(b)(i)(B), to a cash collateral account
in respect of LOC Obligations, (C) with respect to all amounts prepaid
pursuant to Section 3.3(b)(ii), pro rata to (1) the Term Loan and (2)
the Revolving Loans and (after all Revolving Loans have been repaid)
to a cash collateral account in respect of LOC Obligations (with a
corresponding reduction in the Revolving Committed Amount in an amount
equal to all amounts applied, or available to be applied, to Revolving
Loans and in respect of LOC Obligations pursuant to this clause (2))
and in the event the Term Loan shall have been fully repaid, all to
the Revolving Loans and (after all Revolving Loans have been repaid)
to a cash collateral account in respect of LOC Obligations (with a
corresponding reduction in the Revolving Committed Amount in an amount
equal to all amounts applied, or available to be applied, to Revolving
Loans and in respect of LOC Obligations pursuant to this clause (C))
and (D) with respect to all amounts prepaid pursuant to
40
Section 3.3(b)(iii) or (iv), to the Term Loan and, in the event that
the Term Loan shall have been fully repaid, the Revolving Loans and
(after all Revolving Loans have been repaid) to a cash collateral
account in respect of LOC Obligations (with a corresponding reduction
in the Revolving Committed Amount in an amount equal to all amounts
applied, or available to be applied, to Revolving Loans and in respect
of LOC Obligations pursuant to this clause (D)). Within the parameters
of the applications set forth above, prepayments shall be applied
first to Base Rate Loans and then to Eurodollar Loans in direct order
of Interest Period maturities. All prepayments under this Section
3.3(b) shall be subject to Section 3.12, but otherwise without premium
or penalty, except for any applicable Term Loan Prepayment Fee, and
shall be accompanied by interest on the principal amount prepaid
through the date of prepayment.
Notwithstanding the foregoing, (i) to the extent that any mandatory
prepayment required under this Section 3.3 would have the effect of
reducing the Revolving Committed Amount below the amount necessary to
support LOC Obligations, such portion of the prepayment shall be
applied to a cash collateral account in respect of such LOC
Obligations and the Revolving Committed Amount shall not be reduced
thereby and (ii) the Borrower shall not be required to reduce the
Revolving Committed Amount in connection with any mandatory prepayment
of Revolving Loans to the extent the then current book value of the
Properties of the Consolidated Parties after giving effect to the
relevant transaction is greater than or equal to $1,500,000,000.
(vi) Prepayment Account. If the Borrower is required to make a
------------------
mandatory prepayment of Eurodollar Loans under this Section 3.3(b),
the Borrower shall have the right, as long as no Default or Event of
Default then exists, in lieu of making such prepayment in full, to
deposit an amount equal to such mandatory prepayment with the Agent in
a cash collateral account maintained (pursuant to documentation
reasonably satisfactory to the Agent) by and in the sole dominion and
control of the Agent. Any amounts so deposited shall be held by the
Agent as collateral for the prepayment of such Eurodollar Loans and
shall be applied to the prepayment of the applicable Eurodollar Loans
at the end of the current Interest Periods applicable thereto. At the
request of the Borrower, amounts so deposited shall be invested by the
Agent in Cash Equivalents maturing prior to the date or dates on which
it is anticipated that such amounts will be applied to prepay such
Eurodollar Loans; any interest earned on such Cash Equivalents will be
for the account of the Borrower and the Borrower will deposit with the
Agent the amount of any loss on any such Cash Equivalents to the
extent necessary in order that the amount of the prepayment to be made
with the deposited amounts may not be reduced.
3.4 Termination and Reduction of Revolving Committed Amount.
-------------------------------------------------------
(a) Voluntary Reductions. The Borrower may from time to time
--------------------
permanently reduce or terminate the Revolving Committed Amount in whole or
in part (in minimum
41
aggregate amounts of $5,000,000 or in integral multiples of $1,000,000 in
excess thereof (or, if less, the full remaining amount of the then
applicable Revolving Committed Amount)) upon five Business Days' prior
written notice to the Agent; provided, however, no such termination or
-------- -------
reduction shall be made which would cause the sum of the aggregate
outstanding principal amount of Revolving Loans plus LOC Obligations to
----
exceed the Revolving Committed Amount, unless, concurrently with such
termination or reduction, the Revolving Loans are repaid to the extent
necessary to eliminate such excess. The Agent shall promptly notify each
affected Lender of receipt by the Agent of any notice from the Borrower
pursuant to this Section 3.4(a).
(b) Term Loan Commitments. The Term Loan Commitment of each Lender, if
----------------------
any, shall automatically terminate at such time as such Lender shall have
made available to the Borrower such Lender's share of the Term Loan.
(c) Mandatory Reductions. The Revolving Committed Amount automatically
--------------------
shall be permanently reduced from time to time in accordance with the terms
of Section 3.3(b)(v).
(d) Maturity Date. Unless terminated sooner pursuant to Section 3.4(a)
-------------
or Section 9.2, the Revolving Commitments of the Lenders and the LOC
Commitment of the Issuing Lender shall automatically terminate on the
Maturity Date.
(e) General. The Borrower shall pay to the Agent for the account of
-------
the Lenders in accordance with the terms of Section 3.5(a), on the date of
each termination or reduction of the Revolving Committed Amount, the Unused
Fee accrued through the date of such termination or reduction on the amount
of the Revolving Committed Amount so terminated or reduced.
3.5 Fees.
-----
(a) Unused Fee. In consideration of the Revolving Commitments of the
-----------
Lenders hereunder, the Borrower promises to pay to the Agent for the
account of each Lender a fee (the "Unused Fee") on the Unused Revolving
----------
Committed Amount computed at a per annum rate for each day during the
applicable Unused Fee Calculation Period (hereinafter defined) at a rate
equal to the Applicable Percentage in effect from time to time. The Unused
Fee shall commence to accrue on the Closing Date and shall be due and
payable in arrears on the last Business Day of each March, June, September
and December (and on any date that the Revolving Committed Amount is
reduced and on the Maturity Date) for the immediately preceding quarter (or
portion thereof) (each such quarter or portion thereof for which the Unused
Fee is payable hereunder being herein referred to as an "Unused Fee
----------
Calculation Period"), beginning with the first of such dates to occur after
-------------------
the Closing Date.
(b) Letter of Credit Fee. In consideration of the issuance of Letters
---------------------
of Credit hereunder, the Borrower promises to pay to the Agent for the
account of each Lender a fee (the "Letter of Credit Fee") on such Lender's
--------------------
Revolving Commitment Percentage of the average daily maximum amount
available to be drawn under each such Letter of Credit
42
computed at a per annum rate for each day from the date of issuance to the
date of expiration equal to the Applicable Percentage. The Letter of Credit
Fee will be payable quarterly in arrears on the last Business Day of each
March, June, September and December for the immediately preceding quarter
(or a portion thereof).
(c) Issuing Lender Fees. In addition to the Letter of Credit Fee
-------------------
payable pursuant to clause (b) above the Borrower promises to pay to each
Issuing Lender without sharing by the other Lenders (i) a letter of credit
fronting fee of 0.125% on the average daily maximum amount available to be
drawn under each Letter of Credit (other than the Existing Letters of
Credit except in connection with renewals, modifications or extension of
the Existing Letters of Credit) issued by such Issuing Lender computed at a
per annum rate for each day from the date of issuance to the date of
expiration (which fronting fee shall be payable quarterly in arrears on the
last day of each March, June, September and December for the immediately
preceding quarter (or a portion thereof)) and (ii) the customary charges
from time to time of the Issuing Lender with respect to the issuance,
amendment, transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit.
(d) Agent's Fees. The Borrower promises to pay to the Agent, for its
------------
own account, for the account of each Issuing Lender and for the account of
the Arranger, as applicable, the fees referred to in the Agent's Fee
Letter.
(e) Term Loan Prepayment Fee. If the Term Loan becomes due and payable
------------------------
or is prepaid in whole or in part, in each case on a day that is prior to
the second anniversary of the Closing Date, then the Borrower shall, on the
day on which the Term Loan becomes due and payable or is so prepaid, pay to
the Agent, for account of the Lenders holding the Term Loan, an amount in
Dollars equal to one percent (1%) of the amount of the Term Loan that has
become due and payable or is so prepaid (the "Term Loan Prepayment Fee").
------------------------
3.6 Capital Adequacy.
----------------
If any Lender has determined, after the date hereof, that the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any
applicable law, rule or regulation regarding capital adequacy, or compliance by
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy), then, upon notice from
such Lender to the Borrower, the Borrower shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto.
43
3.7 Limitation on Eurodollar Loans.
------------------------------
If on or prior to the first day of any Interest Period for any
Eurodollar Loan:
(a) the Agent determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans, Continue Eurodollar Loans, or to Convert Base
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans, either
prepay such Eurodollar Loans or Convert such Eurodollar Loans into Base Rate
Loans in accordance with the terms of this Credit Agreement.
3.8 Illegality.
----------
Notwithstanding any other provision of this Credit Agreement, in the event
that it becomes unlawful for any Lender or its Applicable Lending Office to
make, maintain, or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).
3.9 Requirements of Law.
-------------------
If, after the date hereof, the adoption of any applicable law, rule,
or regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any Eurodollar
Loans, its Notes, or its obligation to make Eurodollar Loans, or change the
basis of taxation of any amounts payable to such Lender (or its Applicable
Lending Office) under this Credit Agreement or its Notes in respect of any
Eurodollar Loans (other than taxes imposed on the overall net income of
such Lender by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
44
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than the
Eurodollar Reserve Percentage utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or other assets of,
or any deposits with or other liabilities or commitments of, such Lender
(or its Applicable Lending Office), including the Commitment of such Lender
hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or the London interbank market any other condition affecting this
Credit Agreement or its Notes or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar Loans, then the Borrower shall pay to
such Lender on demand such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests compensation by the
Borrower under this Section 3.9, the Borrower may, by notice to such Lender
(with a copy to the Agent), suspend the obligation of such Lender to make or
Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans,
until the event or condition giving rise to such request ceases to be in effect
(in which case the provisions of Section 3.10 shall be applicable); provided
that such suspension shall not affect the right of such Lender to receive the
compensation so requested. Each Lender shall promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Lender to compensation pursuant to this Section
3.9 and will designate a different Applicable Lending Office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Lender, be otherwise disadvantageous to it. Any
Lender claiming compensation under this Section 3.9 shall furnish to the
Borrower and the Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the absence of
manifest error. In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
3.10 Treatment of Affected Loans.
---------------------------
If the obligation of any Lender to make any Eurodollar Loan or to
Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Section 3.7, 3.8 or 3.9 hereof, such Lender's Eurodollar
Loans shall be automatically Converted into Base Rate Loans on the last day(s)
of the then current Interest Period(s) for such Eurodollar Loans (or, in the
case of a Conversion, on such earlier date as such Lender may specify to the
Borrower with a copy to the Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in Section 3.7, 3.8 or
3.9 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have
been so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Eurodollar Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as Eurodollar Loans shall be made or Continued instead as Base Rate Loans,
and all Base Rate
45
Loans of such Lender that would otherwise be Converted into Eurodollar
Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.7, 3.8 or 3.9 hereof that gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 3.10 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Loans held by the Lenders holding Eurodollar Loans and by such Lender are
held pro rata (as to principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Commitments.
3.11 Taxes.
-----
(a) Any and all payments by any Credit Party to or for the
account of any Lender or the Agent hereunder or under any other Credit
Document shall be made free and clear of and without deduction for any and
all present or future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding, in
---------
the case of each Lender and the Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
such Lender (or its Applicable Lending Office) or the Agent (as the case
may be) is organized or any political subdivision thereof (all such non-
excluded taxes, duties, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to as "Taxes"). If any Credit
-----
Party shall be required by law to deduct any Taxes from or in respect of
any sum payable under this Credit Agreement or any other Credit Document to
any Lender or the Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.11)
such Lender or the Agent receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Credit Party shall
make such deductions, (iii) such Credit Party shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) such Credit Party shall furnish to
the Agent, at its address referred to in Section 11.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this
Credit Agreement or any other Credit Document or from the execution or
delivery of, or otherwise with respect to, this Credit Agreement or any
other Credit Document (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower agrees to indemnify each Lender and the Agent
for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 3.11) paid by such
Lender or the Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto.
46
(d) Each Lender that is not a United States person under
Section 7701(a)(30) of the Code, on or prior to the date of its execution
and delivery of this Credit Agreement in the case of each Lender listed on
the signature pages hereof and on or prior to the date on which it becomes
a Lender in the case of each other Lender, and from time to time thereafter
if requested in writing by the Borrower or the Agent (but only so long as
such Lender remains lawfully able to do so), shall provide the Borrower and
the Agent with (i) Internal Revenue Service Form W-8 BEN or W-8 ECI, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces to
zero the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Credit Agreement is effectively
connected with the conduct of a trade or business in the United States,
(ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and/or (iii) any
other form or certificate required by any taxing authority (including any
certificate required by Sections 871(h) and 881(c) of the Internal Revenue
Code), certifying that such Lender is entitled to an exemption from tax on
payments pursuant to this Credit Agreement or any of the other Credit
Documents.
(e) For any period with respect to which a Lender has failed
to provide the Borrower and the Agent with the appropriate form pursuant to
Section 3.11(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to
indemnification under Section 3.11(a) or 3.11(b) with respect to Taxes
imposed by the United States; provided, however, that should a Lender,
-------- -------
which is otherwise exempt from withholding tax, become subject to Taxes
because of its failure to deliver a form required hereunder, the Borrower,
at the cost and expense of the Lender, shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.
(f) If any Credit Party is required to pay additional amounts
to or for the account of any Lender pursuant to this Section 3.11, then
such Lender will agree to use reasonable efforts to change the jurisdiction
of its Applicable Lending Office so as to eliminate or reduce any such
additional payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to such Lender.
(g) Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit
Parties contained in this Section 3.11 shall survive the repayment of the
Loans, LOC Obligations and other obligations under the Credit Documents and
the termination of the Commitments hereunder.
3.12 Compensation.
------------
Upon demand of any Lender (with a copy to the Agent) from time to
time, the Borrower shall promptly compensate such Lender for and hold such
Lender harmless from any loss, cost or expense incurred by it as a result of:
47
(a) any Continuation, Conversion, payment or prepayment of any Loan
other than a Base Rate Loan on a day other than the last day of the
Interest Period for such Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure
of such Lender to make a Loan) to prepay, borrow, Continue or Convert any
Loan other than a Base Rate Loan on the date or in the amount notified by
the Borrower; or
(c) any assignment of a Eurodollar Loan on a day other than the last
day of the Interest Period therefor as a result of a request by the
Borrower pursuant to Section 3.17;
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.12, each Lender shall be deemed to have funded each Eurodollar
Loan made by it at the Interbank Offered Rate for such Loan by a matching
deposit or other borrowing in the applicable offshore Dollar interbank market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Loan was in fact so funded. The covenants of the Borrower set forth
in this Section 3.12 shall survive the repayment of the Loans, LOC Obligations
and other obligations under the Credit Documents and the termination of the
Commitments hereunder.
3.13 Pro Rata Treatment.
------------------
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or (subject to the terms of Section
-----
3.3) prepayment of principal of any Loan or reimbursement obligations
arising from drawings under Letters of Credit, each payment of interest on
the Loans or reimbursement obligations arising from drawings under Letters
of Credit, each payment of Unused Fees, each payment of the Letter of
Credit Fee, each reduction of the Revolving Committed Amount and each
conversion or extension of any Loan, shall be allocated pro rata among the
Lenders in accordance with the respective principal amounts of their
outstanding Loans of the applicable type and Participation Interests in
Loans of the applicable type and Letters of Credit.
(b) Advances.
--------
(i) No Lender shall be responsible for the failure or delay by any
other Lender in its obligation to make its ratable share of a borrowing
hereunder; provided, however, that the failure of any Lender to fulfill its
-------- -------
obligations hereunder shall not relieve any other Lender of its obligations
hereunder.
48
(ii) Unless the Borrower or any Lender has notified the Agent prior to
the date any payment is required to be made by it to the Agent hereunder,
that the Borrower or such Lender, as the case may be, will not make such
payment, the Agent may assume that the Borrower or such Lender, as the case
may be, has timely made such payment and may (but shall not be so required
to), in reliance thereon, make available a corresponding amount to the
Person entitled thereto. If and to the extent that such payment was not in
fact made to the Agent in immediately available funds, then:
(A) if the Borrower failed to make such payment, each Lender
shall forthwith on demand repay to the Agent the portion of such
assumed payment that was made available to such Lender in immediately
available funds, together with interest thereon in respect of each day
from and including the date such amount was made available by the Agent
to such Lender to the date such amount is repaid to the Agent in
immediately available funds, at the Federal Funds Rate from time to
time in effect; and
(B) if any Lender failed to make such payment, such Lender shall
forthwith on demand pay to the Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the
date such amount was made available by the Agent to the Borrower to the
date such amount is recovered by the Agent (the "Compensation Period")
-------------------
at a rate per annum equal to the Federal Funds Rate from time to time
in effect. If such Lender does not pay such amount forthwith upon the
Agent's demand therefor, the Agent may make a demand therefor upon the
Borrower, and the Borrower shall pay such amount to the Agent, together
with interest thereon for the Compensation Period at a rate per annum
equal to the rate of interest applicable to the applicable Borrowing.
Nothing herein shall be deemed to relieve any Lender from its obligation to
fulfill its Commitment or to prejudice any rights that the Agent or the Borrower
may have against any Lender as a result of any default by such Lender hereunder.
A notice of the Agent to any Lender with respect to any amount owing under this
subsection (b) shall be conclusive, absent manifest error.
3.14 Sharing of Payments.
-------------------
The Lenders agree among themselves that, in the event that any Lender shall
obtain payment in respect of any Loan, LOC Obligations or any other obligation
owing to such Lender under this Credit Agreement through the exercise of a right
of setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a Participation Interest in such Loans, LOC Obligations and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their
49
respective ratable shares as provided for in this Credit Agreement. The Lenders
further agree among themselves that if payment to a Lender obtained by such
Lender through the exercise of a right of setoff, banker's lien, counterclaim or
other event as aforesaid shall be rescinded or must otherwise be restored, each
Lender which shall have shared the benefit of such payment shall, by repurchase
of a Participation Interest theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
The Borrower agrees that any Lender so purchasing such a Participation Interest
may, to the fullest extent permitted by law, exercise all rights of payment,
including setoff, banker's lien or counterclaim, with respect to such
Participation Interest as fully as if such Lender were a holder of such Loan,
LOC Obligations or other obligation in the amount of such Participation
Interest. Except as otherwise expressly provided in this Credit Agreement, if
any Lender shall fail to remit to the Agent or any other Lender an amount
payable by such Lender to the Agent or such other Lender pursuant to this Credit
Agreement on the date when such amount is due, such payments shall be made
together with interest thereon for each date from the date such amount is due
until the date such amount is paid to the Agent or such other Lender at a rate
per annum equal to the Federal Funds Rate. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 3.14 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.14 to share in
the benefits of any recovery on such secured claim.
3.15 Payments, Computations, Etc.
---------------------------
(a) Generally. The Credit Party Obligations shall not be deemed to be
---------
paid in full until the same are Fully Satisfied hereunder. Except as
otherwise specifically provided herein, all payments hereunder shall be
made to the Agent in Dollars in immediately available funds, without
condition or deduction for any counterclaim, defense, recoupment or setoff
of any kind, at the Agent's office specified in Schedule 2.1(a) not later
---------------
than 12:00 noon (San Francisco, California time) on the date when due.
Payments received after such time shall be deemed to have been received on
the next succeeding Business Day. The Agent may (but shall not be obligated
to) debit the amount of any such payment which is not made by such time to
any ordinary deposit account of the Borrower or any other Credit Party
maintained with the Agent (with notice to the Borrower or such other Credit
Party). The Borrower shall, at the time it makes any payment under this
Credit Agreement, specify to the Agent the Loans, LOC Obligations, Fees,
interest or other amounts payable by the Borrower hereunder to which such
payment is to be applied (and in the event that it fails so to specify, or
if such application would be inconsistent with the terms hereof, the Agent
shall distribute such payment to the Lenders in such manner as the Agent
may determine to be appropriate in respect of obligations owing by the
Borrower hereunder, subject to the terms of Section 3.13(a)). The Agent
will distribute such payments to such Lenders, if any such payment is
received prior to 12:00 noon (San Francisco, California time) on a Business
Day in like funds as received prior to the end of such Business Day and
otherwise the Agent will distribute such payment to such Lenders on the
next succeeding Business Day. Whenever any payment hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day (subject to accrual
of interest and Fees for the period of such extension), except that in the
case of Eurodollar
50
Loans, if the extension would cause the payment to be made in the next
following calendar month, then such payment shall instead be made on the
next preceding Business Day. Except as expressly provided otherwise herein,
all computations of interest and fees shall be made on the basis of actual
number of days elapsed over a year of 360 days, except with respect to
computation of interest on Base Rate Loans which shall be calculated based
on a year of 365 or 366 days, as appropriate. Interest shall accrue from
and include the date of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Acceleration. Notwithstanding any
-----------------------------------------
other provisions of this Credit Agreement to the contrary, after
acceleration of the Credit Party Obligations pursuant to Section 9.2, all
amounts collected or received by the Agent or any Lender on account of the
Credit Party Obligations or any other amounts outstanding under any of the
Credit Documents or in respect of the Collateral shall be paid over or
delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the Agent in connection with enforcing the rights of the Lenders under
the Credit Documents and any protective advances made by the Agent
with respect to the Collateral under or pursuant to the terms of the
Collateral Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest;
FOURTH, to the payment of the outstanding principal amount of the
Credit Party Obligations (including the payment or cash
collateralization of the outstanding LOC Obligations);
FIFTH, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the
Credit Documents or otherwise with respect to the Credit Party
Obligations owing to such Lender;
SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under the Credit
Documents or otherwise and not repaid pursuant to clauses "FIRST"
through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to whomever may
be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of the Lenders shall receive an amount equal
to its pro rata share (based on the proportion that the then outstanding
Loans and LOC Obligations held by such Lender bears to the
51
aggregate then outstanding Loans and LOC Obligations) of amounts available
to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH"
above; and (iii) to the extent that any amounts available for distribution
pursuant to clause "FIFTH" above are attributable to the issued but undrawn
amount of outstanding Letters of Credit, such amounts shall be held by the
Agent in a cash collateral account and applied (A) first, to reimburse the
Issuing Lender from time to time for any drawings under such Letters of
Credit and (B) then, following the expiration of all Letters of Credit, to
all other obligations of the types described in clauses "FIFTH" and "SIXTH"
above in the manner provided in this Section 3.15(b).
3.16 Evidence of Debt.
----------------
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time
to time under this Credit Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to promptly
update its account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section 11.3(c),
and a subaccount for each Lender, in which Register and subaccounts (taken
together) shall be recorded (i) the amount, type and Interest Period of
each such Loan hereunder, (ii) the amount of any principal or interest due
and payable or to become due and payable to each Lender hereunder and (iii)
the amount of any sum received by the Agent hereunder from or for the
account of any Credit Party and each Lender's share thereof. The Agent will
make reasonable efforts to maintain the accuracy of the subaccounts
referred to in the preceding sentence and to promptly update such
subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to clause (b) of this Section 3.16 (and, if consistent
with the entries of the Agent, clause (a)) shall be prima facie evidence of
the existence and amounts of the obligations of the Credit Parties therein
recorded; provided, however, that the failure of any Lender or the Agent to
-------- -------
maintain any such account, such Register or such subaccount, as applicable,
or any error therein, shall not in any manner affect the obligation of the
Credit Parties to repay the Credit Party Obligations owing to such Lender.
3.17 Replacement of Affected Lenders.
-------------------------------
If (i) any Lender having a Revolving Commitment becomes a Defaulting
Lender or otherwise defaults in its Revolving Commitment or (ii) any Credit
Party is required to make any payments to any Lender under Section 3.6,
Section 3.9 or Section 3.11 in excess of the proportionate amount (based on
the respective Commitments and/or Loans of the Lenders) of corresponding
payments required to be made to the other Lenders, the Borrower shall have
the right, if no Event of Default then exists, to replace such Lender (the
"Replaced Lender") with one or more other Eligible Assignee or Eligible
---------------
Assignees, none of whom shall constitute a Defaulting Lender at the time of
such replacement (collectively, the "Replacement Lender"), provided that
------------------ --------
(a) at the time of any replacement pursuant to this Section 3.17, the
Replaced
52
Lender and Replacement Lender shall enter into an Assignment and Acceptance
pursuant to which the Replacement Lender shall acquire all or a portion, as the
case may be, of the Commitments and outstanding Loans of, and participation in
Letters of Credit by, the Replaced Lender and (b) all obligations of the
Borrower owing to the Replaced Lender relating to the Loans so replaced
(including, without limitation, such increased costs and excluding those
specifically described in clause (a) above in respect of which the assignment
purchase price has been, or is concurrently being paid) shall be paid in full to
such Replaced Lender concurrently with such replacement. Upon the execution of
the appropriate Assignment and Acceptance, the payment of amounts referred to in
clauses (a) and (b) above and, if so requested by the Replacement Lender,
delivery to the Replacement Lender of the appropriate Note or Notes executed by
the Borrower, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder with respect to
such replaced Loans, except with respect to indemnification provisions under
this Credit Agreement, which shall survive as to such Replaced Lender.
Notwithstanding anything to the contrary contained above, (1) the Lender that
acts as the Issuing Lender may not be replaced hereunder at any time that it has
Letters of Credit outstanding hereunder unless arrangements satisfactory to the
Issuing Lender (including the furnishing of a back-up standby letter of credit
in form and substance, and issued by an issuer satisfactory to such Issuing
Lender or the depositing of cash collateral into a cash collateral account
maintained with the Agent in amounts and pursuant to arrangements satisfactory
to such Issuing Lender) have been made with respect to such outstanding Letters
of Credit and (2) the Lender that acts as the Agent may not be replaced
hereunder except in accordance with the terms of Section 10.9. The Replaced
Lender shall be required to deliver for cancellation its applicable Notes to be
canceled on the date of replacement, or if any such Note is lost or unavailable,
such other assurances or indemnification therefor as the Borrower may reasonably
request.
SECTION 4
GUARANTY
--------
4.1 The Guaranty.
------------
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Hedging Agreement, and the
Agent as hereinafter provided, as primary obligor and not as surety, the prompt
payment of the Credit Party Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) strictly in accordance with the terms thereof.
The Guarantors hereby further agree that if any of the Credit Party Obligations
are not paid in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or
otherwise), the Guarantors will, jointly and severally, promptly pay the same,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Credit Party Obligations, the same
will be promptly paid in full when due (whether at extended maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash collateralization or
otherwise) in accordance with the terms of such extension or renewal.
53
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, the obligations of each
Guarantor under this Credit Agreement and the other Credit Documents shall be
limited to an aggregate amount equal to the largest amount that would not render
such obligations subject to avoidance under Section 548 of the Bankruptcy Code
or any comparable provisions of any applicable state law.
4.2 Obligations Unconditional.
-------------------------
The obligations of the Guarantors under Section 4.1 are joint and several,
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Credit Party Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor for amounts paid under this Section 4 until
such time as the Credit Party Obligations have been Fully Satisfied. Without
limiting the generality of the foregoing, it is agreed that, to the fullest
extent permitted by law, the occurrence of any one or more of the following
shall not alter or impair the liability of any Guarantor hereunder which shall
remain absolute and unconditional as described above:
(a) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Credit Party Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any of the
Credit Documents, any Hedging Agreement between any Consolidated Party and
any Lender, or any Affiliate of a Lender, or any other agreement or
instrument referred to in the Credit Documents or such Hedging Agreements
shall be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall
be accelerated, or any of the Credit Party Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement between any Consolidated Party and
any Lender, or any Affiliate of a Lender, or any other agreement or
instrument referred to in the Credit Documents or such Hedging Agreements
shall be waived or any other guarantee of any of the Credit Party
Obligations or any security therefor shall be released, impaired or
exchanged in whole or in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Credit Party Obligations shall fail to
attach or be perfected; or
(e) any of the Credit Party Obligations shall be determined to be
void or voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or
54
shall be subordinated to the claims of any Person (including, without
limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging Agreement between any Consolidated Party and any Lender, or any
Affiliate of a Lender, or any other agreement or instrument referred to in the
Credit Documents or such Hedging Agreements, or against any other Person under
any other guarantee of, or security for, any of the Credit Party Obligations.
4.3 Reinstatement.
-------------
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
--------------------------
Each Guarantor agrees that such Guarantor shall have no right of recourse
to security for the Credit Party Obligations, except through the exercise of
rights of subrogation pursuant to Section 4.2 and through the exercise of rights
of contribution pursuant to Section 4.6.
4.5 Remedies.
--------
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Credit Party Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing the Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Credit Party
Obligations being deemed to have become automatically due and payable), the
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of Section
4.1. The Guarantors acknowledge and agree that their obligations hereunder are
secured in accordance with the terms of the Collateral Documents and that the
Lenders may exercise their remedies thereunder in accordance with the terms
thereof.
55
4.6 Rights of Contribution.
----------------------
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this Section 4.6 shall be subordinate
and subject in right of payment to the Credit Party Obligations until such time
as the Credit Party Obligations have been Fully Satisfied, and none of the
Guarantors shall exercise any right or remedy under this Section 4.6 against any
other Guarantor until such Credit Party Obligations have been Fully Satisfied.
For purposes of this Section 4.6, (a) "Excess Payment" shall mean the amount
--------------
paid by any Guarantor in excess of its Pro Rata Share of any Guaranteed
Obligations; (b) "Pro Rata Share" shall mean, for any Guarantor in respect of
--------------
any payment of Credit Party Obligations, the ratio (expressed as a percentage)
as of the date of such payment of Guaranteed Obligations of (i) the amount by
which the aggregate present fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of all of the Credit Parties exceeds the amount of all of the debts
and liabilities (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Credit Parties hereunder) of
the Credit Parties; provided, however, that, for purposes of calculating the Pro
-------- -------
Rata Shares of the Guarantors in respect of any payment of Credit Party
Obligations, any Guarantor that became a Guarantor subsequent to the date of any
such payment shall be deemed to have been a Guarantor on the date of such
payment and the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor in connection
with such payment; and (c) "Contribution Share" shall mean, for any Guarantor in
------------------
respect of any Excess Payment made by any other Guarantor, the ratio (expressed
as a percentage) as of the date of such Excess Payment of (i) the amount by
which the aggregate present fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of the Credit Parties other than the maker of such Excess Payment
exceeds the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Credit Parties) of the Credit Parties other than the maker of
such Excess Payment; provided, however, that, for purposes of calculating the
-------- -------
Contribution Shares of the Guarantors in respect of any Excess Payment, any
Guarantor that became a Guarantor subsequent to the date of any such Excess
Payment shall be deemed to have been a Guarantor on the date of such Excess
Payment and the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor in connection
with such Excess Payment. This Section 4.6 shall not be deemed to affect any
right of subrogation, indemnity, reimbursement or contribution that any
Guarantor may have under applicable law against the Borrower in respect of any
payment of Guaranteed Obligations. Notwithstanding the foregoing, all rights of
contribution against any Guarantor shall terminate from and after such time, if
ever, that such Guarantor shall be relieved of its obligations pursuant to
Section 8.5.
56
4.7 Guarantee of Payment; Continuing Guarantee.
------------------------------------------
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Credit Party
Obligations whenever arising.
SECTION 5
CONDITIONS
----------
5.1 Closing Conditions.
------------------
The obligation of the Lenders to enter into this Credit Agreement and to
make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions:
(a) Executed Credit Documents. Receipt by the Agent of duly executed
-------------------------
copies of: (i) this Credit Agreement, (ii) the Notes, (iii) the Collateral
Documents, (iv) the Agent's Fee Letter and (v) all other Credit Documents.
(b) Corporate Documents. Receipt by the Agent of the following:
-------------------
(i) Charter Documents. Copies of the articles or certificates of
-----------------
incorporation or other charter documents of each Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction
of its incorporation and certified by a secretary or assistant
secretary of such Credit Party to be true and correct as of the
Closing Date.
(ii) Bylaws. A copy of the bylaws of each Credit Party
------
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Closing Date.
(iii) Resolutions. Copies of resolutions of the Board of
-----------
Directors of each Credit Party approving and adopting the Credit
Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by a
secretary or assistant secretary of such Credit Party to be true and
correct and in force and effect as of the Closing Date.
(iv) Good Standing. Copies of (A) certificates of good
-------------
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing could reasonably be expected to have a Material Adverse
Effect and (B) to the extent available, a certificate indicating
payment of all corporate or comparable franchise taxes certified as of
a recent date by the appropriate governmental taxing authorities.
57
(v) Incumbency. An incumbency certificate of each Credit
----------
Party certified by a secretary or assistant secretary to be true and
correct as of the Closing Date.
(c) Opinions of Counsel. The Agent shall have received, in each case
-------------------
dated as of the Closing Date and in form and substance reasonably
satisfactory to the Agent:
(i) a legal opinion of Pillsbury Winthrop LLP, special counsel
for the Credit Parties with respect to the corporate authority of the
Borrower, enforceability of the Credit Documents, perfection of Liens
granted to the Agent and certain other matters; and
(ii) a legal opinion of special Arkansas counsel for the Credit
Parties for each State in which any Mortgaged Property is located.
(d) Personal Property Collateral. The Agent shall have received:
----------------------------
(i) searches of Uniform Commercial Code filings in the jurisdiction
of the chief executive office of each Credit Party and each
jurisdiction where any Collateral is located or where a filing would
need to be made in order to perfect the Agent's security interest in
the Collateral, copies of the financing statements on file in such
jurisdictions and evidence that no Liens exist other than Permitted
Liens;
(ii) duly executed UCC financing statements for each appropriate
jurisdiction as is necessary, in the Agent's sole discretion, to
perfect the Agent's security interest in the Collateral;
(iii) all certificates evidencing any certificated Capital Stock
pledged to the Agent pursuant to the Pledge Agreement, together with
duly executed in blank, undated stock powers attached thereto; and
(iv) all instruments and chattel paper in the possession of any of
the Credit Parties, together with allonges or assignments as may be
necessary or appropriate to perfect the Agent's security interest in
the Collateral;
(e) Mortgaged Property Collateral. The Agent shall have received, in
-----------------------------
form and substance reasonably satisfactory to the Agent:
(i) fully executed and notarized mortgages (each, as the same may
be amended, modified, restated or supplemented from time to time, a
"Mortgage" and collectively the "Mortgages") encumbering the fee
-------- ---------
interest of the Borrower in each of the properties designated in
Schedule 6.20(a) (each a "Mortgaged Property" and collectively the
---------------- ------------------
"Mortgaged Properties"); and
--------------------
58
(ii) updates on the title reports or title commitments that were
previously delivered to Bank of America by the Borrower in May, 2001.
(f) Evidence of Insurance. Receipt by the Agent of copies of
---------------------
insurance policies or certificates of insurance of the Consolidated Parties
evidencing liability and casualty insurance meeting the requirements set
forth in the Credit Documents, including, but not limited to, naming the
Agent as additional insured (in the case of liability insurance) or loss
payee (in the case of hazard insurance) on behalf of the Lenders.
(g) Officer's Certificates. The Agent shall have received a
----------------------
certificate or certificates executed by an Executive Officer of the
Borrower as of the Closing Date, in form and substance satisfactory to the
Agent, stating that (A) each Credit Party is in material compliance with
all existing financial obligations, (B) all governmental, shareholder and
third party consents and approvals, if any, required with respect to the
Credit Documents and the transactions contemplated thereby have been
obtained, (C) no action, suit, investigation or proceeding is pending, to
the knowledge of any Executive Officer of the Borrower, or threatened in
any court or before any arbitrator or governmental instrumentality that
purports to affect any Credit Party or any transaction contemplated by the
Credit Documents, if such action, suit, investigation or proceeding could
reasonably be expected to have a Material Adverse Effect, and (D)
immediately after giving effect to the initial borrowings hereunder, (1) no
Default or Event of Default exists, and (2) all representations and
warranties contained herein and in the other Credit Documents are true and
correct in all material respects.
(h) Senior Subordinated Notes. The Borrower shall have
-------------------------
beneficially received gross proceeds of at least $250,000,000 (excluding
any original issue discount and before taking into account any
underwriters' discount) from the issuance by the Borrower of the Senior
Subordinated Notes all on terms satisfactory to the Agent and the Lenders.
The Agent shall have received a copy certified by an Executive Officer of
the Borrower as true and complete of the Senior Subordinated Note
Indenture, as originally executed and delivered, together with all exhibits
and schedules thereto.
(i) Fees and Expenses. Payment by the Credit Parties to the
-----------------
Lenders and the Agent of all fees and expenses relating to the Credit
Facilities which are due and payable on the Closing Date, including,
without limitation, payment to the Agent of the fees set forth in the
Agent's Fee Letter.
(j) Escrow Account. The Borrower shall have established an
--------------
escrow account for the purposes of holding $96,600,000 of the proceeds of
the Term Loan made on the Closing Date, which the Borrower reasonably
believes is an amount sufficient (taking into account interest) to yield
$100,000,000 on March 15, 2002, which amount will be used solely to repay
$100,000,000 in principal amount of Senior Notes maturing on March 15,
2002, pursuant to the Escrow Agreement and other documentation satisfactory
in all respects to the Agent.
59
(k) Appraisals. The Borrower shall have delivered to the Agent
----------
timber appraisal reports with respect to all the timberlands owned by the
Consolidated Parties, the form, scope and results of which shall be agreed
to by the Agent and the Borrower.
(l) Audit. To the extent requested by the Agent, the Borrower
-----
shall have delivered a written audit of the accounts receivable, inventory,
payables, controls and systems of the Consolidated Parties, the form, scope
and results of which shall be satisfactory in all respect to the Agent.
(m) Other. Receipt by the Lenders of such other documents,
-----
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding litigation,
tax, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements,
property ownership and contingent liabilities of the Consolidated Parties.
5.2 Conditions to all Extensions of Credit.
--------------------------------------
The obligations of each Lender to make, convert or extend any Loan and of
the Issuing Lender to issue or extend any Letter of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of the
conditions set forth in Section 5.1:
(a) The Borrower shall have delivered (i) in the case of any
Revolving Loan or any portion of the Term Loan, an appropriate Notice of
Borrowing or Notice of Extension/Conversion or (ii) in the case of any
Letter of Credit, the Issuing Lender shall have received an appropriate
request for issuance in accordance with the provisions of Section 2.2(b);
(b) The representations and warranties set forth in Section 6 shall,
subject to the limitations set forth therein, be true and correct in all
material respects as of such date (except for those which expressly relate
to an earlier date); provided, however, that the representation in Section
-------- -------
6.12(f) shall be subject to the accuracy of the Lenders' representation in
Section 11.15 as of the same date;
(c) There shall not have been commenced against any Consolidated
Party an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed;
(d) No Default or Event of Default shall exist and be continuing
either prior to or after giving effect thereto; and
(e) Immediately after giving effect to the making of such Loan, in
the case of a request for a Revolving Loan, (and the application of the
proceeds thereof) or to the issuance
60
of such Letter of Credit, as the case may be, (i) the sum of the aggregate
outstanding principal amount of Revolving Loans plus LOC Obligations shall
not exceed the Revolving Committed Amount and (ii) the LOC Obligations
shall not exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing, Notice of Extension/Conversion and
each request for a Letter of Credit pursuant to Section 2.2(b) shall constitute
a representation and warranty by the Credit Parties of the correctness of the
matters specified in subsections (b), (c), (d) and (e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
------------------------------
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 Financial Condition.
-------------------
(a) The audited consolidated balance sheets and income statements of
the Consolidated Parties for the fiscal years ended December 31, 1998,
December 31, 1999 and December 31, 2000 (including the notes thereto) (i)
have been audited by KPMG LLP, (ii) have been prepared in accordance with
GAAP consistently applied throughout the periods covered thereby and (iii)
present fairly (on the basis disclosed in the footnotes to such financial
statements) the consolidated financial condition, results of operations and
cash flows of the Consolidated Parties as of such date and for such
periods. The unaudited interim balance sheets of the Consolidated Parties
as at the end of, and the related unaudited interim statements of earnings
and of cash flows for, each fiscal month and quarterly period ended after
December 31, 2000 and prior to the Closing Date (i) have been prepared in
accordance with GAAP consistently applied throughout the periods covered
thereby and (ii) present fairly (on the basis disclosed in the footnotes to
such financial statements) the consolidated financial condition, results of
operations and cash flows of the Consolidated Parties as of such date and
for such periods. During the period from December 31, 2000 to and including
the Closing Date, there has been no sale, transfer or other disposition by
any Consolidated Party of any material part of the business or property of
the Consolidated Parties, taken as a whole, and no purchase or other
acquisition by any of them of any business or property (including any
Capital Stock of any other Person) material in relation to the consolidated
financial condition of the Consolidated Parties, taken as a whole, in each
case, which is not reflected in the foregoing financial statements or in
the notes thereto and has not otherwise been disclosed in writing to the
Lenders on or prior to the Closing Date. As of the Closing Date, the
Borrower and its Subsidiaries have no material liabilities (contingent or
otherwise) that are not reflected in the foregoing financial statements or
in the notes thereto.
(b) The financial statements delivered pursuant to Section 7.1(a) and
(b) have been prepared in accordance with GAAP (except as may otherwise be
permitted under Section 7.1(a) and (b)) and present fairly (on the basis
disclosed in the footnotes to such
61
financial statements) the consolidated financial condition, results of
operations and cash flows of the Consolidated Parties as of such date and
for such periods.
6.2 No Material Change.
------------------
Except as disclosed in reports filed by the Borrower prior to the Closing
Date pursuant to the Securities Exchange Act, since December 31, 2000, there has
been no development or event relating to or affecting a Consolidated Party which
has had or could reasonably be expected to have a Material Adverse Effect.
6.3 Organization and Good Standing.
------------------------------
Each of the Consolidated Parties (a) is duly organized, validly existing
and is in good standing under the laws of the jurisdiction of its incorporation
or organization, (b) has the corporate or other necessary power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing would
not reasonably be expected to have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
---------------------------------------------
Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate or other
necessary action to authorize the borrowings and other extensions of credit on
the terms and conditions of this Credit Agreement and to authorize the
execution, delivery and performance of the Credit Documents to which it is a
party. No consent or authorization of, filing with, notice to or other similar
act by or in respect of, any Governmental Authority or any other Person is
required to be obtained or made by or on behalf of any Credit Party in
connection with the borrowings or other extensions of credit hereunder or with
the execution, delivery, performance, validity or enforceability of the Credit
Documents to which such Credit Party is a party, except for (i) consents,
authorizations, notices and filings described in Schedule 6.4, all of which have
------------
been obtained or made or have the status described in such Schedule 6.4 and (ii)
------------
filings to perfect the Liens created by the Collateral Documents. This Credit
Agreement has been, and each other Credit Document to which any Credit Party is
a party will be, duly executed and delivered on behalf of the Credit Parties.
This Credit Agreement constitutes, and each other Credit Document to which any
Credit Party is a party when executed and delivered will constitute, a legal,
valid and binding obligation of such Credit Party enforceable against such party
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
62
6.5 No Conflicts.
------------
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any Requirement of
Law or any other law, regulation (including, without limitation, Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit applicable to
it, (c) violate, contravene or conflict with contractual provisions of, or cause
an event of default under, any material indenture, loan agreement, mortgage,
deed of trust, contract or other agreement or instrument to which it is a party
or by which it may be bound or (d) result in or require the creation of any Lien
(other than those contemplated in or created in connection with the Credit
Documents) upon or with respect to its properties.
6.6 No Default.
----------
No Consolidated Party is in default in any respect under any contract,
lease, loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of its properties
is bound which default could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred or exists except as
previously disclosed in writing to the Lenders.
6.7 Ownership.
---------
Each Consolidated Party is the owner of, and has good and marketable title
to, all of its respective assets and none of such assets is subject to any Lien
other than Permitted Liens.
6.8 Indebtedness.
------------
Except as otherwise permitted under Section 8.1, the Consolidated Parties
have no Indebtedness.
6.9 Litigation.
----------
Except as disclosed in Schedule 6.9, there does not exist any pending or
------------
threatened action, suit or legal, equitable, arbitration or administrative
proceeding against any Consolidated Party which could reasonably be expected to
have a Material Adverse Effect.
6.10 Taxes.
-----
Each Consolidated Party has filed, or caused to be filed, all tax returns
(Federal, state, local and foreign) required to be filed and paid (a) all
amounts of taxes shown thereon to be due (including interest and penalties) and
(b) all other taxes, fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing
by it, except for such taxes (i) which are not yet delinquent or (ii) that are
being contested in good faith and by proper proceedings, and against which
adequate reserves are being maintained in
63
accordance with GAAP. No Credit Party is aware as of the Closing Date of any
proposed tax assessments against it or any other Consolidated Party.
6.11 Compliance with Law.
-------------------
Each Consolidated Party is in compliance with all Requirements of Law and
all other laws, rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its properties, unless
such failure to comply could not reasonably be expected to have a Material
Adverse Effect. No Requirement of Law could reasonably be expected to cause a
Material Adverse Effect.
6.12 ERISA.
-----
Except as disclosed and described in Schedule 6.12 attached hereto:
-------------
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred,
and, to the best knowledge of the Executive Officers of the Credit Parties,
no event or condition has occurred or exists as a result of which any ERISA
Event could reasonably be expected to occur, with respect to any Plan; (ii)
no "accumulated funding deficiency," as such term is defined in Section 302
of ERISA and Section 412 of the Code, whether or not waived, has occurred
with respect to any Plan; (iii) each Plan has been maintained, operated,
and funded in compliance with its own terms and in material compliance with
the provisions of ERISA, the Code, and any other applicable Federal or
state laws; and (iv) no Lien in favor of the PBGC or a Plan has arisen or
is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under each
Single Employer Plan, as of the last annual valuation date prior to the
date on which this representation is made or deemed made (determined, in
each case, in accordance with Financial Accounting Standards Board
Statement 87, utilizing the actuarial assumptions used in such Plan's most
recent actuarial valuation report), did not exceed as of such valuation
date the fair market value of the assets of such Plan.
(c) Neither any Consolidated Party nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Executive Officers of the Credit
Parties, could be reasonably expected to incur, any withdrawal liability
under ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither
any Consolidated Party nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if any Consolidated Party or any ERISA
Affiliate were to withdraw completely from all Multiemployer Plans and
Multiple Employer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made. Neither any
Consolidated Party nor any ERISA Affiliate has received any notification
that any Multiemployer Plan is in reorganization (within the meaning of
Section 4241 of ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title IV of ERISA),
64
and no Multiemployer Plan is, to the best knowledge of the Executive
Officers of the Credit Parties, reasonably expected to be in
reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) other than as exempted under Section 408
of ERISA or breach of fiduciary responsibility has occurred with respect to
a Plan which has subjected or may subject any Consolidated Party or any
ERISA Affiliate to any liability under Sections 406, 409, 502(i), or 502(l)
of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which any Consolidated Party or any ERISA Affiliate
has agreed or is required to indemnify any Person against any such
liability.
(e) Neither any Consolidated Party nor any ERISA Affiliates has any
material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined in Section
3(1) of ERISA) to which Sections 601-609 of ERISA and Section 4980B of the
Code apply has been administered in compliance in all material respects of
such sections.
(f) Neither the execution and delivery of this Credit Agreement nor
the consummation of the financing transactions contemplated thereunder will
involve any transaction which is subject to the prohibitions of Sections
404, 406 or 407 of ERISA or in connection with which a tax could be imposed
pursuant to Section 4975 of the Code. The representation by the Credit
Parties in the preceding sentence is made in reliance upon and subject to
the accuracy of the Lenders' representation in Section 11.15 with respect
to their source of funds and is subject, in the event that the source of
the funds used by the Lenders in connection with this transaction is an
insurance company's general asset account, to the application of Prohibited
Transaction Class Exemption 95-60, 60 Fed. Reg. 35,925 (1995), compliance
with the regulations issued under Section 401(c)(1)(A) of ERISA, or the
issuance of any other prohibited transaction exemption or similar relief,
to the effect that assets in an insurance company's general asset account
do not constitute assets of an "employee benefit plan" within the meaning
of Section 3(3) of ERISA or a "plan" within the meaning of Section
4975(e)(1) of the Code.
6.13 Corporate Structure; Capital Stock, Etc.
---------------------------------------
The corporate capital and ownership structure of the Consolidated Parties
as of the Closing Date is as described in Schedule 6.13. Set forth on Schedule
------------- --------
6.13 is a complete and accurate list as of the Closing Date with respect to each
----
of the Borrower's direct and indirect Subsidiaries of (i) jurisdiction of
incorporation, (ii) number of shares of each class of Capital Stock outstanding,
(iii) number and percentage of outstanding shares of each class owned (directly
or indirectly) by the Consolidated Parties and (iv) number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and all other similar rights with respect thereto as of the Closing
Date. The outstanding Capital Stock of all such Persons is validly issued, fully
paid and non-assessable and is owned by the Consolidated Parties, directly or
indirectly, in the manner set forth on Schedule 6.13, free and clear of all
-------------
Liens (other than those arising under or contemplated in connection with the
Credit Documents). Other than as set forth in Schedule 6.13, none of the
-------------
65
Borrower's Subsidiaries has outstanding any securities convertible into or
exchangeable for its Capital Stock nor does any such Person have outstanding any
rights to subscribe for or to purchase or any options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to its Capital Stock.
6.14 Governmental Regulations, Etc.
-----------------------------
(a) None of the transactions contemplated by this Credit
Agreement (including, without limitation, the direct or indirect use of the
proceeds of the Loans) will violate or result in a violation of the
Securities Act, the Securities Exchange Act or any of Regulations U and X.
If requested by any Lender or the Agent, the Borrower will furnish to the
Agent and each Lender a statement, in conformity with the requirements of
FR Form U-1 referred to in Regulation U, that no part of the Letters of
Credit or proceeds of the Loans will be used, directly or indirectly, for
the purpose of "buying" or "carrying" any "margin stock" within the meaning
of Regulations U and X, or for the purpose of purchasing or carrying or
trading in any securities.
(b) None of the Consolidated Parties is (i) an "investment
company", or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended, (ii) a "holding
company" as defined in, or otherwise subject to regulation under, the
Public Utility Holding Company Act of 1935, as amended or (iii) subject to
regulation under any other Federal or state statute or regulation which
limits its ability to incur Indebtedness.
6.15 Purpose of Loans and Letters of Credit.
--------------------------------------
The proceeds of the Loans hereunder shall be used solely by the Borrower
(a) to refinance existing Indebtedness (to which end $96,600,000 of the Term
Loan made on the Closing Date (which represents the Borrower's good faith
estimate of an amount sufficient (taking into account interest) to yield
$100,000,000 on March 15, 2002) shall be deposited on the Closing Date into an
escrow account, which amount shall be used to pay $100,000,000 in principal of
the Senior Subordinated Notes maturing on March 15, 2002) and (b) to provide for
working capital, commercial paper back up and any other lawful corporate
purposes of the Borrower and its Subsidiaries (including, without limitation,
Permitted Acquisitions). The Letters of Credit shall be used only for or in
connection with credit support required for bonds issued in respect of
financings for which a Credit Party is responsible for, directly or indirectly,
repayment, appeal bonds, reimbursement obligations arising in connection with
surety and reclamation bonds, reinsurance and obligations not otherwise
aforementioned relating to transactions entered into by the applicable account
party in the ordinary course of business.
6.16 Environmental Matters.
---------------------
Except as disclosed and described in Schedule 6.16 or except as could
-------------
not reasonably be expected to result in a Material Adverse Effect:
66
(a) Each of the Real Properties and all operations at the Real
Properties are in compliance with all applicable Environmental Laws, there
is no violation of any Environmental Law with respect to the Real
Properties or the Businesses, and to the best knowledge of the Executive
Officers of the Credit Parties, there are no conditions relating to the
Real Properties or the Businesses that could give rise to liability under
any applicable Environmental Laws.
(b) None of the Real Properties contains, or to the best knowledge of
the Executive Officers of the Credit Parties, has previously contained, any
Materials of Environmental Concern at, on or under the Real Properties in
amounts or concentrations that constitute or constituted a violation of, or
could give rise to liability under, Environmental Laws.
(c) No Consolidated Party has received any written or verbal notice
of, or inquiry from any Governmental Authority alleging any violation, non-
compliance, liability or potential liability pursuant to, or regarding
compliance with, Environmental Laws with regard to any of the Real
Properties or the Businesses, nor does any Executive Officer of any Credit
Party have knowledge or reason to believe that any such notice will be
received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Real Properties, or generated, treated, stored or
disposed of at, on or under any of the Real Properties or any other
location, in each case by or on behalf of any Consolidated Party in
violation of, or in a manner that to the best knowledge of the Executive
Officers of the Credit Parties could give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of the Executive Officers of the
Credit Parties, threatened, under any Environmental Law to which any
Consolidated Party is or will be named as a party, nor are there any
consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
under any Environmental Law with respect to the Consolidated Parties, the
Real Properties or the Businesses.
(f) There has been no release, or threat of release, of Materials of
Environmental Concern at or from the Real Properties, or arising from or
related to the operations (including, without limitation, disposal) of any
Consolidated Party in connection with the Real Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a
manner that to the best knowledge of the Executive Officers of the Credit
Parties could give rise to liability under Environmental Laws.
6.17 Intellectual Property.
---------------------
Each Consolidated Party owns, or has the legal right to use, all
trademarks, service marks, trade names, trade dress, patents, copyrights,
technology, know-how and processes necessary for
67
each of them to conduct its business as currently conducted except for those the
failure to own or have such legal right to use could not reasonably be expected
to have a Material Adverse Effect.
6.18 Solvency.
--------
The Credit Parties are Solvent on a consolidated basis.
6.19 Investments.
-----------
All Investments of each Consolidated Party are Permitted Investments.
6.20 Business Locations.
------------------
Set forth on Schedule 6.20(a) are the legal descriptions for the Mortgaged
----------------
Properties. Set forth on Schedule 6.20(b) is a list of all locations where any
----------------
tangible personal property of a Consolidated Party is located as of the Closing
Date. Set forth on Schedule 6.20(c) is the chief executive office, jurisdiction
----------------
of incorporation or formation and principal place of business of each
Consolidated Party as of the Closing Date. Set forth on Schedule 6.20(d) is a
list of all Real Properties (other than those Mortgaged Properties set forth on
Schedule 6.20(a)) located in the United States as of the Closing Date.
6.21 Disclosure.
----------
Neither this Credit Agreement nor any financial statements delivered to the
Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Consolidated Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein or herein not misleading.
6.22 No Burdensome Restrictions.
--------------------------
No Consolidated Party is a party to any agreement or instrument or subject
to any other obligation or any charter or corporate restriction or any provision
of any applicable law, rule or regulation which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
6.23 Brokers' Fees.
-------------
No Consolidated Party has any obligation to any Person in respect of any
finder's, broker's, investment banking or other similar fee in connection with
any of the transactions contemplated under the Credit Documents.
68
6.24 Labor Matters.
-------------
None of the Consolidated Parties has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years which
has had or could reasonably be expected to have a Material Adverse Effect.
6.25 Mortgaged Property.
------------------
(a) The Land and the Timber standing on the Land are in good condition and
are free from all pests, blight, fungus or disease that could reasonably be
expected to have a Material Adverse Effect.
(b) To the best of the Borrower's knowledge, as of the Closing Date, the
Mortgaged Property is comprised of at least 130,000 acres.
(c) The legal descriptions of the Land attached to the Mortgages creating
the Liens on the Land accurately reflect in the aggregate in all material
respects all such parcels of Real Property.
(d) As of the Closing Date, the Borrower owns good and marketable title,
in the case of Real Properties, and merchantable title, in the case of personal
property, if any, to all of the Mortgaged Property, subject to Permitted Liens.
SECTION 7
AFFIRMATIVE COVENANTS
---------------------
Each Credit Party hereby covenants and agrees that until such time as this
Credit Agreement has been terminated in accordance with the terms of Section
11.13:
7.1 Information Covenants.
---------------------
The Credit Parties will furnish, or cause to be furnished, to the Agent and
each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any
---------------------------
event within 90 days after the close of each fiscal year of the
Consolidated Parties, a consolidated balance sheet and income statement of
the Consolidated Parties as of the end of such fiscal year, together with
related consolidated statements of retained earnings and cash flows for
such fiscal year, in each case setting forth in comparative form
consolidated figures for the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and audited
by independent certified public accountants of recognized national standing
reasonably acceptable to the Agent and whose opinion shall be to the effect
that such financial statements have been prepared in accordance with GAAP
(except for changes with which such accountants concur) and shall not be
limited as to the scope of
69
the audit or qualified as to the status of the Consolidated Parties as a
going concern or any other material qualifications or exceptions.
(b) Quarterly Financial Statements. As soon as available, and in any
------------------------------
event within 45 days after the close of each of the first three fiscal
quarters of each fiscal year of the Consolidated Parties, a consolidated
balance sheet and income statement of the Consolidated Parties as of the
end of such fiscal quarter, together with related consolidated statements
of retained earnings and cash flows for such fiscal quarter, in each case
setting forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a certificate of an
Executive Officer of the Borrower to the effect that such quarterly
financial statements fairly present in all material respects the financial
condition of the Consolidated Parties and have been prepared in accordance
with GAAP, subject to changes resulting from audit and normal year-end
audit adjustments.
(c) Officer's Certificate. At the time of delivery of the
---------------------
financial statements provided for in Sections 7.1(a) and 7.1(b) above, a
certificate of an Executive Officer of the Borrower substantially in the
form of Exhibit 7.1(c), (i) demonstrating compliance with the financial
--------------
covenants contained in Section 7.10 by calculation thereof as of the end of
each such fiscal period, (ii) stating that no Default or Event of Default
exists, or if any Default or Event of Default does exist, specifying the
nature and extent thereof and what action the Credit Parties propose to
take with respect thereto, (iii) demonstrating pursuant to a Pro Forma
Compliance Certificate, that upon giving effect on a Pro Forma Basis to
each Asset Disposition in excess of $5,000,000 consummated in the
applicable period, the Credit Parties would be in compliance with the
financial covenants set forth in Section 7.10(a)-(c) and (iv) in the case
of the certificate delivered with the financial statements provided for in
Section 7.1(a) only, setting forth information regarding the amount of all
Asset Dispositions, Equity Issuances and Debt Issuances that were made
during the applicable fiscal year.
(d) Annual Budgets. At least 30 days after the end of each fiscal
--------------
year of the Borrower, beginning with the fiscal year ending December 31,
2001, an annual budget of the Consolidated Parties containing, among other
things, pro forma financial statements for the next fiscal year.
(e) Accountant's Certificate. Within the period for delivery
------------------------
of the annual financial statements provided in Section 7.1(a), a
certificate of the accountants conducting the annual audit stating that
they have reviewed this Credit Agreement as it relates to accounting and
other financial matters and stating further whether, in the course of their
audit, they have become aware of any Default or Event of Default and, if
any such Default or Event of Default exists, specifying the nature and
extent thereof, provided that such accountants shall not be liable by
--------
reason of any failure to obtain knowledge of any such Default or Event of
Default that would not be disclosed in the course of their audit
examination.
70
(f) Auditor's Reports. Promptly upon receipt thereof, a copy of any
-----------------
other report or "management letter" submitted by independent accountants to
any Consolidated Party in connection with any annual, interim or special
audit of the books of such Person.
(g) Reports. Promptly upon transmission or receipt thereof, (i)
-------
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of
all financial statements, proxy statements, notices and reports as any
Consolidated Party shall send to its shareholders or to a holder of any
Indebtedness owed by any Consolidated Party in its capacity as such a
holder and (ii) upon the reasonable request of the Agent, all reports and
material written information to and from the United States Environmental
Protection Agency, or any state or local agency responsible for
environmental matters, the United States Occupational Health and Safety
Administration, or any state or local agency responsible for health and
safety matters, or any successor agencies or authorities concerning
environmental, health or safety matters.
(h) Notices. Upon any Executive Officer of a Credit Party obtaining
-------
knowledge thereof, the Credit Parties will give written notice to the Agent
and the Lenders immediately of (i) the occurrence of an event or condition
consisting of a Default or Event of Default, specifying the nature and
existence thereof and what action the Credit Parties propose to take with
respect thereto, and (ii) the occurrence of any of the following with
respect to any Consolidated Party (A) the pendency or commencement of any
litigation, arbitral or governmental proceeding against such Person which
if adversely determined is likely to have a Material Adverse Effect or (B)
the institution of any proceedings against such Person with respect to, or
the receipt of notice by such Person of potential liability or
responsibility for violation, or alleged violation of any Federal, state or
local law, rule or regulation, including but not limited to, Environmental
Laws, the violation of which could have a Material Adverse Effect.
(i) ERISA. Upon any Executive Officer of a Credit Party obtaining
-----
knowledge thereof, the Credit Parties will give written notice to the Agent
promptly (and in any event within fifteen Business Days) of: (i) any event
or condition, including, but not limited to, any Reportable Event, that
constitutes, or might reasonably lead to, an ERISA Event; (ii) with respect
to any Multiemployer Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against the Credit Parties
or any ERISA Affiliates, or of a determination that any Multiemployer Plan
is in reorganization or insolvent (both within the meaning of Title IV of
ERISA); (iii) the failure to make full payment on or before the due date
(including extensions) thereof of all amounts which any Consolidated Party
or any ERISA Affiliate is required to contribute to each Plan pursuant to
its terms and as required to meet the minimum funding standard set forth in
ERISA and the Code with respect thereto; or (iv) any change in the funding
status of any Plan that could reasonably be expected to have a Material
Adverse Effect, together with a description of any such event or condition
or a copy of any such notice and a statement by an Executive Officer of the
Borrower briefly setting forth the details regarding such event, condition,
or notice, and the action, if any, which has been or is being taken or is
proposed to be taken by the Credit Parties with respect thereto. Promptly
upon request, the Credit Parties shall
71
furnish the Agent and the Lenders with such additional information
concerning any Plan as may be reasonably requested, including, but not
limited to, copies of each annual report/return (Form 5500 series), as well
as all schedules and attachments thereto required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant to ERISA
and the Code, respectively, for each "plan year" (within the meaning of
Section 3(39) of ERISA).
(j) Environmental. Upon the reasonable written request of the
-------------
Agent, the Credit Parties will furnish or cause to be furnished to the
Agent, at the Credit Parties' expense, a report of an environmental
assessment of reasonable scope, form and depth, (including, where
appropriate, invasive soil or groundwater sampling) by a consultant
reasonably acceptable to the Agent as to the nature and extent of the
presence of any Materials of Environmental Concern on any Real Properties
(as defined in Section 6.16) and as to the compliance by any Consolidated
Party with Environmental Laws at such Real Properties. If the Credit
Parties fail to deliver such an environmental report within seventy-five
(75) days after receipt of such written request then the Agent may arrange
for same, and the Consolidated Parties hereby grant to the Agent and their
representatives access to the Real Properties to reasonably undertake such
an assessment (including, where appropriate, invasive soil or groundwater
sampling). The reasonable cost of any assessment arranged for by the Agent
pursuant to this provision will be payable by the Credit Parties on demand
and added to the obligations secured by the Collateral Documents.
(k) Within 45 days after the end of each fiscal quarter of the
Borrower (commencing with the fiscal quarter ending September 30, 2001), an
independent third-party timber appraisal report updating the initial timber
appraisal on the Timber and the Land delivered in satisfaction of the
closing condition set forth in Section 5.1(k) (the "Initial Appraisal"), as
of the end (or approximately the end) of the immediately preceding fiscal
quarter, such report to be from a timber appraiser reasonably satisfactory
to the Borrower and the Agent, in form and using the same appraisal methods
and approaches of the Initial Appraisal (the "Timber Report").
(l) Other Information. With reasonable promptness upon any such
-----------------
request, such other information regarding the business, properties or
financial condition of any Consolidated Party as the Agent or any Lender
may reasonably request.
7.2 Preservation of Existence and Franchises.
----------------------------------------
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary not prohibited by Section 8.4 or Section 8.5, each
Credit Party will, and will cause each of its Subsidiaries to, do all things
necessary to preserve and keep in full force and effect its existence, and,
where failure to do so could reasonably be expected to have a Material Adverse
Effect, its rights, franchises and authority.
72
7.3 Books and Records.
-----------------
Each Credit Party will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.4 Compliance with Law.
-------------------
Each Credit Party will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its Property if
noncompliance with any such law, rule, regulation, order or restriction could
reasonably be expected to have a Material Adverse Effect.
7.5 Payment of Taxes and Other Claims.
---------------------------------
Each Credit Party will, and will cause each of its Subsidiaries to,
pay and discharge (a) all taxes, assessments and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its properties,
before they shall become delinquent and (b) all lawful claims (including claims
for labor, materials and supplies) which, if unpaid, might give rise to a Lien
upon any of its properties; provided, however, that no Consolidated Party shall
-------- -------
be required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith by appropriate proceedings and as to which
adequate reserves therefor have been established in accordance with GAAP, unless
the failure to make any such payment (i) could give rise to an immediate right
to foreclose on a Lien securing such amounts or (ii) could reasonably be
expected to have a Material Adverse Effect.
7.6 Insurance.
---------
(a) Each Credit Party will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect insurance (including
worker's compensation insurance, liability insurance, casualty insurance
and business interruption insurance) in such amounts, covering such risks
and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice. The Agent shall be named
as loss payee or mortgagee, 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 Agent, that it will give the Agent thirty (30)
days prior written notice before any such policy or policies shall be
altered or canceled. The present insurance coverage of the Consolidated
Parties is outlined as to carrier, policy number, expiration date, type and
amount on Schedule 7.6.
------------
(b) In the event that the Consolidated Parties receive Net Cash
Proceeds in excess of $5,000,000 in aggregate amount during any fiscal year
of the Consolidated Parties ("Excess Proceeds") on account of Involuntary
---------------
Dispositions, the Credit Parties shall, within the period of 180 days
following the date of receipt of such Excess Proceeds, apply (or cause to
be applied) an amount equal to such Excess Proceeds to (i) make Eligible
73
Reinvestments (including but not limited to the repair or replacement of
the related Property) or (ii) prepay the Loans (and cash collateralize LOC
Obligations) in accordance with the terms of Section 3.3(b)(ii)(B);
provided, however, that such Person shall not undertake replacement or
restoration of such Property unless, after giving pro forma effect to any
Funded Indebtedness to be incurred in connection with such replacement or
restoration, the Credit Parties would be in compliance with the financial
covenants set forth in Section 7.10(a)-(c) as of the most recent fiscal
quarter end preceding the date of determination with respect to which the
Agent has received the Required Financial Information (assuming, for
purposes hereof, that such Funded Indebtedness was incurred as of the first
day of the four fiscal-quarter period ending as of such fiscal quarter
end). All insurance proceeds shall be subject to the security interest of
the Agent (for the ratable benefit of the Lenders and the other secured
parties referred to in the applicable Collateral Documents) under the
Collateral Documents. Pending final application of any Excess Proceeds, the
Credit Parties may apply such Excess Proceeds to temporarily reduce the
Revolving Loans or to make Permitted Investments.
7.7 Maintenance of Property; Management of Timberlands.
--------------------------------------------------
Each Credit Party will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and Involuntary Dispositions excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses. Each Credit Party will, and will cause each of its
Subsidiaries to, manage its timberlands in accordance with the guidelines
established by the American Forest & Paper Association's Sustainable Forestry
Initiative.
7.8 Use of Proceeds.
---------------
The Borrower will use the proceeds of the Loans and will use the Letters of
Credit solely for the purposes set forth in Section 6.15.
7.9 Audits/Inspections.
------------------
Upon reasonable notice and during normal business hours, each Credit Party
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent or the Required Lenders, including, without limitation,
independent accountants, agents, attorneys, and appraisers to visit and inspect
its property, including its books and records, its accounts receivable and
inventory, its facilities and its other business assets, and to make photocopies
or photographs thereof and to write down and record any information such
representative obtains and shall permit the Agent or its representatives to
investigate and verify the accuracy of information provided to the Lenders and
to discuss all such matters with the officers, employees and representatives of
such Person. The Credit Parties agree that the Agent, and its representatives,
may conduct an annual audit of the Collateral, at the expense of the Credit
Parties.
74
7.10 Financial Covenants.
-------------------
(a) Funded Indebtedness to Capitalization Ratio. The Funded
-------------------------------------------
Indebtedness to Capitalization Ratio, as of the last day of each fiscal
quarter of the Consolidated Parties, shall be less than or equal to:
Period Ratio
------ -----
July 1, 2001 through and including December 31, 2001 65.0%
January 1, 2002 through and including December 31, 2002 62.5%
January 1, 2003 through and including December 31, 2003 60.0%
January 1, 2004 through and including December 31, 2004 55.0%
January 1, 2005 and thereafter 50.0%
(b) Consolidated Net Worth. At all times on and after July 1,
----------------------
2001 the Consolidated Net Worth of the Borrower shall be greater than or
equal to 85% of Consolidated Net Worth as of March 31, 2001 increased on a
cumulative basis as of the end of each fiscal quarter of the Consolidated
Parties, commencing with the fiscal quarter ending June 30, 2001, by an
amount equal to (x) 50% of Consolidated Net Income (to the extent positive)
for such fiscal quarter and (y) 100% of the Net Cash Proceeds of any Equity
Issuances consummated during such fiscal quarter.
(c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as
---------------------------
of the last day of each fiscal quarter of the Consolidated Parties, shall
be greater than or equal to:
Period Ratio
------ -----
July 1, 2001 through and including September 30, 2001 1.05 to 1.00
October 1, 2001 through and including December 31, 2001 1.15 to 1.00
January 1, 2002 through and including December 31, 2002 1.35 to 1.00
January 1, 2003 and thereafter 1.50 to 1.00
7.11 Additional Guarantors; Legal Opinions.
-------------------------------------
(a) As soon as practicable and in any event within 30 days after (a)
any Person becomes a direct or indirect Domestic Subsidiary of any Credit
Party or (b) any direct or indirect Subsidiary of any Credit Party
guarantees the Borrower's obligations under the Senior Subordinated Note
Indenture, the Credit Parties shall (i) provide the Agent with written
notice thereof and shall cause such Person to execute a Joinder Agreement
in substantially the same form as Exhibit 7.11, (ii) deliver such other
------------
documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, favorable opinions of counsel to
such Person (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the Joinder Agreement) and other items
of the types required to be delivered pursuant to
75
Section 5.1(b), all in form, content and scope reasonably satisfactory to
the Agent and (iii) otherwise comply with Section 7.12 in respect of such
Person.
(b) Prior to, or concurrently with, any Person becoming a Material
Subsidiary, the Credit Parties shall, in addition to complying with
subclause (a) hereof, to the extent applicable, deliver favorable opinions
of the Borrower's General Counsel reasonably satisfactory to the Agent with
respect to, among other things, the corporate authority, due organization,
valid existence, due qualification and due execution and delivery of the
Credit Documents by such Person. For purposes hereof "Material Subsidiary"
means as of any date of determination any Subsidiary, which together with
its Subsidiaries on a consolidated basis, accounts for (or to which may be
attributed) 1% or more of the net income or net assets (determined on a
consolidated basis) of the Borrower and its Subsidiaries.
7.12 Pledged Assets.
--------------
Each Credit Party will (i) cause all of its Property that constitutes (or
pursuant to the terms hereof is intended to constitute) Collateral to be subject
at all times to first priority, perfected Liens in favor of the Agent to secure
the Credit Party Obligations pursuant to the terms and conditions of the
Collateral Documents or, with respect to any such Property acquired subsequent
to the Closing Date, such other additional security documents as the Agent shall
reasonably request, subject in any case to Permitted Liens and (ii) in
connection with any Property that becomes Collateral after the Closing Date,
deliver, or, in the case of agreements or other documents that require the
consent of a non-Affiliate of the Borrower, use commercially reasonable efforts
to deliver, such other documentation as the Agent may reasonably request in
connection with the foregoing, including, without limitation, appropriate UCC-1
financing statements, real estate title insurance policies (but only after the
Additional Collateral Effective Date), surveys (but only after the Additional
Collateral Effective Date), environmental reports (but only after the Additional
Collateral Effective Date), landlord's waivers, 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 Agent's liens thereunder) and other items of the
types required to be delivered pursuant to Section 5.1(d) and (e), all in form,
content and scope reasonably satisfactory to the Agent. Without limiting the
generality of the above, the Credit Parties will cause (A) 100% of the issued
and outstanding Capital Stock of each Guarantor and each Domestic Subsidiary
formed or acquired after the Closing Date and (B) 65% (or such greater
percentage that, due to a change in an applicable Requirement of Law after the
date hereof, (1) would not cause the undistributed earnings of such Foreign
Subsidiary as determined for United States federal income tax purposes to be
treated as a deemed dividend to such Foreign Subsidiary's United States parent
and (2) could not reasonably be expected to cause any material adverse tax
consequences) of the issued and outstanding Capital Stock entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued
and outstanding Capital Stock not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) in each Foreign Subsidiary directly owned by the
Borrower or any Domestic Subsidiary to be subject at all times to a first
priority,
76
perfected Lien in favor of the Agent pursuant to the terms and conditions of the
Collateral Documents or such other security documents as the Agent shall
reasonably request.
7.13 Notice of Ratings Change.
------------------------
The Borrower shall, no later than fifteen Business Days after any Executive
Officer obtains knowledge of any such change, give notice to the Agent and the
Lenders (by telephone, followed promptly by written notice transmitted by
facsimile with a hard copy sent promptly thereafter) of any change (either
expressly or pursuant to a letter from S&P or ▇▇▇▇▇'▇ stating an "implied"
rating) in rating by S&P or ▇▇▇▇▇'▇ in respect of the Company's senior secured
long-term debt or senior unsecured non-credit enhanced long-term debt, together
with the details thereof, and of any announcement by S&P or ▇▇▇▇▇'▇ that its
rating in respect of such senior secured long-term debt or senior unsecured non-
credit enhanced long-term debt is "under review" or that any such debt rating
has been placed on a "CreditWatch List"(R) or "watch list" or that any similar
action has been taken by S&P or ▇▇▇▇▇'▇.
7.14 Further Assurances Regarding Collateral.
---------------------------------------
The Borrower 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 Agent or the Required Lenders
may reasonably request, for the purposes of implementing or effectuating
the provisions of this Agreement and the other Credit Documents or creating
or perfecting or ensuring the priority or sufficiency or enforceability or
enforcement of a Lien in favor of the Agent as security for the Credit
Party Obligations upon any or all of the Collateral (whether then owned or
thereafter acquired), or more fully perfecting or renewing any such Lien;
(ii) To the extent requested by the Agent, at its expense, if the
exercise by the Agent or any Lender of any power, right, privilege or
remedy pursuant to this Agreement or the other Loan 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 Borrower or any of its
Subsidiaries or may reasonably be requested for such governmental consent,
approval, recording, qualification or authorization;
(iii) At its expense, within 60 days following the destruction of,
material damage to or material diminution of value in all or part of the
Mortgaged Properties by a natural disaster or similar event (including but
not limited to the loss of Mortgaged Properties attributable to any
material defects in the title of any of the Mortgaged Property), provide
substitute Real Property as additional (or replacement) Collateral and in
connection therewith execute and deliver, or cause to be executed and
delivered, all instruments, certificates or documents necessary to create a
first priority perfected Lien in favor of the Agent as security for the
Credit Party Obligations on the replacement timberlands of equal or greater
value than the portion of the Mortgaged Properties so
77
destroyed, damaged or reduced in value; provided, however, that upon the
-------- -------
delivery by the Borrower of such Collateral, the Agent shall deliver to the
Borrower, upon the Borrower's request and at the Borrower's expense, such
documentation as is reasonably necessary to evidence the release of the
Agent's security interest in that portion of the Mortgaged Property so
destroyed, damaged or reduced in value, including without limitation,
amendments or terminations of UCC financing statements and the release of
mortgages.
(iv) Use its commercially reasonable efforts to obtain within sixty
days of the Closing Date (or in the case of locations which meet the
threshold set forth herein on a date subsequent to the Closing Date, within
60 days of the date on which an Executive Officer of the Borrower becomes
aware of such change) such landlord waiver and/or warehousemen and bailee
letters, as applicable, in form and substance satisfactory to the Agent
with respect to all Collateral located at leased locations or held by
warehouseman or bailees to the extent the aggregate value of the Collateral
at such location exceeds $15,000,000.
(v) Only harvest or sell the Timber on the Land or enter into any
agreement, contract or understanding that permits another party to harvest
or sell the Timber to the extent (A) such harvesting or sale is necessary
for normal thinning in accordance with silvicultural practices and
clearcutting operations in compliance with applicable forest practices acts
or (B) such harvest or sale during a fiscal quarter of the Borrower would
not cause the value of the Timber and the Land to fall below $150,000,000
as of the end of such fiscal quarter as set forth in the Timber Report
delivered to the Agent pursuant to Section 7.1(k); provided that to the
--------
extent the value of the Timber and the Land as of the last day of any
fiscal quarter shall fall below $150,000,000 as a result of such harvest or
sale, the Borrower shall by the last day of the fiscal quarter immediately
following that fiscal quarter for which the Borrower was in non-compliance
provide substitute Real Property as replacement Collateral or additional
Real Property as additional Collateral with a value equal to the value of
the Timber and the Land, the harvest or sale of which resulted in the value
of the Timber and the Land falling below $150,000,000.
(vi) deliver to the Agent, within 30 days of the Closing Date,
updates as of the Closing Date of the title commitments and/or reports
previously delivered to the Agent with respect to the Mortgaged Properties.
Notwithstanding the foregoing, the Borrower shall be permitted
to substitute new timberlands for the timberlands that are Mortgaged
Properties in accordance with the Mortgages.
7.15 Additional Collateral Effective Date.
------------------------------------
Promptly upon the occurrence of the Additional Collateral Effective Date,
the Borrower shall negotiate in good faith such Additional Collateral Documents,
and take such other related actions, as the Agent may reasonably request so as
to create promptly following such Additional Collateral Effective Date a first
priority perfected Lien in favor of the Agent, to secure the Credit
78
Party Obligations and subject only to Permitted Liens, in all Property of the
Credit Parties not then constituting Collateral (except for Property the Agent
reasonably deems to be non-material).
7.16 Performance of Obligations.
--------------------------
Each of the Credit Parties will, and will cause each of its Subsidiaries
to, perform in all material respects in accordance with customary trade
practices all of its obligations under the terms of all material agreements,
indentures, mortgages, security agreements or other debt instruments to which it
is a party or by which it is bound; provided, however, that such Credit Party or
-------- -------
Subsidiary may contest any such obligation in good faith and by proper
proceedings so long as adequate reserves are maintained with respect thereto to
the extent required by GAAP.
SECTION 8
NEGATIVE COVENANTS
------------------
Each Credit Party hereby covenants and agrees that until such time as this
Credit Agreement has been terminated in accordance with the terms of Section
11.13:
8.1 Indebtedness.
------------
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
(b) Indebtedness of the Borrower and its Subsidiaries set forth in
Schedule 8.1 (and renewals, refinancings and extensions thereof on terms
------------
and conditions no less favorable to such Person than such existing
Indebtedness);
(c) purchase money Indebtedness (including obligations in respect of
Capital Leases or Synthetic Leases) hereafter incurred by the Borrower or
any of its Subsidiaries to finance the purchase of fixed assets provided
--------
that (i) the total of all such Indebtedness for all such Persons taken
together shall not exceed an aggregate principal amount of $10,000,000 at
any one time outstanding; (ii) such Indebtedness when incurred shall not
exceed the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of the
principal balance outstanding thereon at the time of such refinancing;
(d) obligations of the Borrower in respect of Hedging
Agreements entered into in order to manage existing or anticipated interest
rate or exchange rate risks and not for speculative purposes;
(e) intercompany Indebtedness and Guarantees permitted under Section
8.6;
79
(f) Indebtedness arising under the Senior Subordinated Note Indenture
and the Senior Subordinated Notes;
(g) in addition to the Indebtedness otherwise permitted by this
Section 8.1, other Indebtedness hereafter incurred by the Borrower or any
of its Subsidiaries, provided that (i) the loan documentation with respect
--------
to such Indebtedness shall not contain covenants or default provisions
relating to any Consolidated Party that are more restrictive than the
covenants and default provisions contained in the Credit Documents, (ii)
the Borrower shall have delivered to the Agent a Pro Forma Compliance
Certificate demonstrating that, upon giving effect on a Pro Forma Basis to
the incurrence of such Indebtedness and to the concurrent retirement of any
other Indebtedness of any Consolidated Party, the Credit Parties would be
in compliance with the financial covenants set forth in Section 7.10(a)-
(c), (iii) the aggregate principal amount of such Indebtedness shall not
exceed $10,000,000 at any time and (iv) such Indebtedness is permitted
under the Senior Subordinated Note Indenture.
8.2 Liens.
-----
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Lien with respect to any of its
Property, whether now owned or hereafter acquired, except for:
(a) Liens in favor of the Agent to secure the Credit Party
Obligations and, with respect to the Additional Collateral, obligations
under the Borrower's senior note indentures listed on Schedule 8.1 to the
------------
extent required by the documentation therefor in effect as of the Closing
Date;
(b) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(c) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other Liens imposed by law or
pursuant to customary reservations or retentions of title arising in the
ordinary course of business, provided that such Liens secure only amounts
--------
not yet due and payable or, if due and payable, are unfiled and no other
action has been taken to enforce the same or are being contested in good
faith by appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the Property
subject to any such Lien is not yet subject to foreclosure, sale or loss on
account thereof);
(d) Liens (other than Liens created or imposed under ERISA) incurred
or deposits made by any Consolidated Party in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or
80
to secure the performance of tenders, statutory obligations, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(e) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the judgments secured shall, within
--------
30 days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall have been discharged within 30 days after
the expiration of any such stay;
(f) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(g) Liens on Property of any Person securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases) of such Person
permitted under Section 8.1(c), provided that any such Lien attaches to
--------
such Property concurrently with or within 90 days after the acquisition
thereof;
(h) leases or subleases granted to others not interfering in any
material respect with the business of any Consolidated Party;
(i) any interest of title of a lessor under, and Liens arising from
UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases permitted by this
Credit Agreement;
(j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(k) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.6;
(l) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(m) Liens of a collection bank arising under Section 4-210 of the
Uniform Commercial Code on items in the course of collection;
(n) Liens of sellers of goods to the Borrower and any of its
Subsidiaries arising under Article 2 of the Uniform Commercial Code or
similar provisions of applicable law in the ordinary course of business,
covering only the goods sold and securing only the unpaid purchase price
for such goods and related expenses;
(o) any interest of title of a buyer in connection with, and Liens
arising from UCC financing statements relating to, a sale of receivables
permitted by this Credit Agreement;
81
(p) Liens existing as of the Closing Date and set forth on Schedule
--------
8.2;
---
(q) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Borrower or any Subsidiary of
the Borrower; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Borrower or the Subsidiary;
(r) Liens on property existing at the time of acquisition of the
property by the Borrower or any Subsidiary of the Borrower, provided that
such Liens were in existence prior to the contemplation of such
acquisition;
(s) Liens incurred in the ordinary course of business of the Credit
Parties which are permitted under the Senior Subordinated Note Indenture
with respect to obligations that do not exceed $5,000,000 in the aggregate
at any one time outstanding;
(t) Liens created or assumed in the ordinary course of business of
exploring for, developing or producing oil, gas or other minerals
(including borrowings in connection therewith) on, or any interest in, or
on any proceeds from the sale of, property acquired for such purposes,
production therefrom (including the proceeds thereof), or material or
equipment located thereon;
(u) Liens arising from the pledge of any bonds, debentures, notes or
similar instruments which are purchased and held by any remarketing agent
for the account of, or as agent for, the Borrower; and
(v) any extension, renewal or replacement, in whole or in part, of
any Lien described in the foregoing clauses (a) through (u); provided that
any such extension, renewal or replacement shall be no more restrictive in
any material respect than the Lien extended, renewed or replaced and shall
not extend to any other Property of the Credit Parties other than such item
of Property originally covered by such Lien or by improvement thereof or
additions or accessions thereto.
8.3 Nature of Business.
------------------
The Credit Parties will not permit any Consolidated Party to substantively
alter the character or conduct of the business conducted by such Person as of
the Closing Date.
8.4 Consolidation, Merger, Dissolution, etc.
---------------------------------------
Except in connection with a Permitted Asset Disposition, the Credit
Parties will not permit any Consolidated Party to enter into any transaction of
merger or consolidation or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution); provided that, notwithstanding the foregoing
--------
provisions of this Section 8.4 but subject to the terms of Sections 7.11 and
7.12, (a) the Borrower may merge or consolidate with any of its Subsidiaries,
provided that the Borrower shall be the continuing or surviving corporation, (b)
--------
any Credit Party other than the Borrower may merge or consolidate with any other
Credit Party other than the Borrower, (c) any Consolidated
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Party which is not a Credit Party may be merged or consolidated with or into any
Credit Party other than the Borrower, provided that such Credit Party shall be
--------
the continuing or surviving corporation, (d) any Consolidated Party which is not
a Credit Party may be merged or consolidated with or into any other Consolidated
Party which is not a Credit Party, (e) any Subsidiary of the Borrower may merge
with any Person that is not a Credit Party in connection with an Asset
Disposition permitted under Section 8.5, (f) the Borrower or any Subsidiary of
the Borrower may merge with any Person other than a Consolidated Party in
connection with a Permitted Acquisition, provided that, if such transaction
--------
involves the Borrower, the Borrower shall be the continuing or surviving
corporation and (g) any Wholly Owned Subsidiary of the Borrower may dissolve,
liquidate or wind up its affairs at any time provided that such dissolution,
liquidation or winding up, as applicable, could not have a Material Adverse
Effect.
8.5 Asset Dispositions.
------------------
The Credit Parties will not permit any Consolidated Party to make any
Asset Disposition unless (a) the consideration paid in connection therewith
shall be cash or Cash Equivalents and shall be in an amount not less than the
fair market value of the Property disposed of, (b) if such transaction is a Sale
and Leaseback Transaction, such transaction is not prohibited by the terms of
Section 8.13, (c) such transaction does not involve the sale or other
disposition of a minority equity interest in any Consolidated Party, (d) such
transaction does not involve a sale or other disposition of receivables other
than receivables owned by or attributable to other Property concurrently being
disposed of in a transaction otherwise permitted under this Section 8.5, (e) the
aggregate net book value of all of the assets sold or otherwise disposed of by
the Consolidated Parties in (i) all such -transactions after the Closing Date in
which the Consolidated Parties prepay or retire Indebtedness with the proceeds
received therefrom in accordance with clause (c) of the definition of Net Cash
Proceeds shall not exceed $100,000,000, (ii) all such transactions after the
Closing Date in which the Consolidated Parties use the proceeds received
therefrom to make Eligible Reinvestments within the Application Period in
accordance with the terms of this Credit Agreement shall not exceed $100,000,000
and (iii) all such other transactions after the Closing Date shall not exceed
$100,000,000, (f) if such Asset Disposition is for consideration (cash and non-
cash) in excess of $20,000,000, no later than five (5) Business Days prior to
such Asset Disposition, the Borrower shall have delivered to the Agent (i) a Pro
Forma Compliance Certificate demonstrating that, upon giving effect on a Pro
Forma Basis to such transaction, the Credit Parties would be in compliance with
the financial covenants set forth in Section 7.10(a)-(c) and (ii) notification
from the Borrower in form and substance satisfactory to the Agent and specifying
the anticipated date of such Asset Disposition, briefly describing the assets to
be sold or otherwise disposed of and setting forth the net book value of such
assets, the aggregate consideration and the Net Cash Proceeds to be received for
such assets in connection with such Asset Disposition, (g) the Credit Parties
shall, to the extent required under this Credit Agreement, apply (or cause to be
applied) an amount equal to the Net Cash Proceeds of such Asset Disposition to,
as applicable, (i) prepay or retire debt in accordance with clause (c) of the
definition of Net Cash Proceeds, (ii) make Eligible Reinvestments or (iii)
prepay the Loans (and cash collateralize LOC Obligations) in accordance with the
terms of Section 3.3(b)(ii)(A) and (h) such Asset Disposition is permitted under
the Senior Subordinated Note Indenture. Pending final application of the Net
Cash Proceeds of any Asset Disposition, the Consolidated Parties may apply such
Net Cash Proceeds to temporarily reduce the Revolving Loans or to make
Investments in Cash Equivalents.
83
Upon a sale of assets or the sale of Capital Stock of a Consolidated
Party permitted by this Section 8.5, the Agent shall (to the extent applicable)
deliver to the Credit Parties, upon the Credit Parties' request and at the
Credit Parties' expense, such documentation as is reasonably necessary to
evidence the release of the Agent's security interest, if any, in such assets or
Capital Stock, including, without limitation, amendments or terminations of UCC
financing statements, if any, the return of stock certificates, if any, and the
release of such Consolidated Party from all of its obligations, if any, under
the Credit Documents.
8.6 Investments.
-----------
The Credit Parties will not permit any Consolidated Party to make any
Investments, except for:
(a) Investments consisting of cash and Cash Equivalents;
(b) Investments consisting of accounts receivable created, acquired
or made by any Consolidated Party in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(c) Investments consisting of Capital Stock, obligations, securities
or other property received by any Consolidated Party in settlement of
accounts receivable (created in the ordinary course of business) from
bankrupt obligors;
(d) Investments existing as of the Closing Date and set forth in
Schedule 8.6;
------------
(e) Investments consisting of advances or loans to directors,
officers, employees, agents, customers or suppliers that do not exceed
$1,000,000 in the aggregate at any one time outstanding;
(f) Investments in any Credit Party;
(g) any Eligible Reinvestment of the proceeds of any Involuntary
Disposition as contemplated by Section 7.6(b) or of any Asset Disposition
as contemplated by Section 8.5(g); or
(h) Investments consisting of an Acquisition by the Borrower or any
Subsidiary of the Borrower, provided that (i) the Property acquired (or the
--------
Property of the Person acquired) in such Acquisition is used or useful in
the same or a similar line of business as the Borrower and its Subsidiaries
were engaged in on the Closing Date (or any reasonable extensions or
expansions thereof), (ii) the Agent shall have received all items in
respect of the Capital Stock or Property acquired in such Acquisition
required to be delivered by the terms of Section 7.11 and/or Section 7.12,
(iii) in the case of an Acquisition of the Capital Stock of another Person,
the board of directors (or other comparable governing body) of such other
Person shall have duly approved such Acquisition, (iv) the Borrower shall
have delivered to the Agent (A) a Pro Forma Compliance Certificate
demonstrating that, upon
84
giving effect to such Acquisition on a Pro Forma Basis, the Credit Parties
would be in compliance with the financial covenants set forth in Section
7.10(a)-(c) and (B) a certificate of an Executive Officer of the Borrower
(1) demonstrating that, upon giving effect to such Acquisition, at least
90% of Consolidated EBITDDA for the most recently ended fiscal year period
for each of the Consolidated Parties and the acquired Person or Property
preceding the date of such Acquisition with respect to which the Agent
shall have received the Required Financial Information has been audited in
accordance with GAAP, in the case of the Borrower, as required by Section
7.1(a) and, in the case of the acquired Person or Property, by an
independent certified public accountants of recognized national standing
reasonably acceptable to the Agent (whose opinion shall not be limited as
to the scope or qualified as to going concern status or any other material
qualifications or exceptions) and (2) to the extent that audited financial
information for the acquired Person or Property is required under the terms
of the foregoing clause (1), certifying that the quarterly financial
statements with respect to the Person or Property acquired for each fiscal
quarter period ending after the date of the last audit and immediately
prior to the date of such Acquisition have been prepared in accordance with
GAAP (subject to audit adjustments and the absence of footnotes) and
reviewed by independent certified public accountants of recognized national
standing reasonably acceptable to the Agent, (v) the representations and
warranties made by the Credit Parties in any Credit Document shall be true
and correct in all material respects at and as if made as of the date of
such Acquisition (after giving effect thereto) except to the extent such
representations and warranties expressly relate to an earlier date, (vi) if
such transaction involves the purchase of an interest in a partnership
between the Borrower (or a Subsidiary of the Borrower) as a general partner
and entities unaffiliated with the Borrower or such Subsidiary as the other
partners, such transaction shall be effected by having such equity interest
acquired by a corporate holding company directly or indirectly wholly-owned
by the Borrower newly formed for the sole purpose of effecting such
transaction, (vii) after giving effect to such Acquisition, there shall be
at least $25,000,000 of availability existing under the Revolving Committed
Amount and (viii) the aggregate consideration (including cash and non-cash
consideration and any assumption of Indebtedness, but excluding
consideration consisting of any Capital Stock of the Borrower issued to the
seller of the Capital Stock or Property acquired in such Acquisition and
consideration consisting of the proceeds of any Equity Issuance by the
Borrower consummated subsequent to the Closing Date and the proceeds of any
Asset Disposition, or Involuntary Disposition consummated subsequent to the
Closing Date) paid by the Consolidated Parties for all such Acquisitions
occurring after the Closing Date shall not exceed $100,000,000; or
(i) Investments by a Credit Party in Potlatch Employee Benefits
Organization, Inc., Potlatch Foundation II and Potlatch Foundation for
Higher Education, in each case in accordance with past practices of such
Credit Party.
8.7 Restricted Payments.
-------------------
The Credit Parties will not permit any Consolidated Party to, directly
or indirectly, declare, order, make or set apart any sum for or pay any
Restricted Payment, except (a) to make dividends or other distributions payable
to any Credit Party (directly or indirectly through Subsidiaries), (b) as
85
permitted by Section 8.6, Section 8.8 or Section 8.9, (c) so long as such
payments are permitted under the Senior Subordinated Note Indenture, (i) from
the Closing Date until such time as the Borrower delivers a certificate of an
Executive Officer of the Borrower demonstrating a Leverage Ratio of the Borrower
of less than 3.0 to 1.0 for two consecutive fiscal quarters, together with the
financial statements referred to in Section 7.1(a) or (b), as applicable, the
Borrower shall be permitted to pay dividends to its shareholders in amount not
to exceed $4,125,000 in each fiscal quarter plus additional one-time dividends
----
of the Borrower in an aggregate amount for all quarters not to exceed
$16,500,000 during the term of this Agreement and (ii) from the date on which
the Borrower delivers a certificate of a Responsible Officer of the Borrower
demonstrating a Leverage Ratio of the Borrower of less than 3.0 to 1.0 for two
consecutive fiscal quarters and thereafter, the Borrower may pay dividends to
its shareholders as the Borrower may elect or (d) the purchase by the Borrower
of up to 50,000 shares of its Capital Stock on or after September 28, 2001
pursuant to those certain put options of the Borrower set forth on Schedule 8.1.
------------
8.8 Limitation on Actions with Respect to Other Indebtedness.
--------------------------------------------------------
No Credit Party will, nor will it permit any of its Subsidiaries to:
(a) (i) amend or modify any of the terms of any Indebtedness
of such Person (other than Indebtedness arising under the Credit
Documents) if such amendment or modification would add or change any
terms in a manner materially adverse to the Lenders, or (ii) materially
shorten the final maturity or average life to maturity thereof or
require any payment thereon to be made sooner than originally scheduled
or increase the interest rate or fees applicable thereto, or (iii) make
(or give any notice with respect thereto) any voluntary or optional
payment or prepayment thereof, or make (or give any notice with respect
thereto) any redemption or acquisition for value or defeasance
(including without limitation, by way of depositing money or securities
with the trustee with respect thereto before due for the purpose of
paying when due), refund, refinance or exchange with respect thereto,
other than prepayments made by a Credit Party in connection with any
Asset Disposition permitted under Section 8.5, in the amount necessary
to prepay or retire any Indebtedness either secured by a Permitted Lien
(ranking senior to any Lien of the Agent) on the related Property or
incurred in connection with any Property that is disposed of in
connection with such Asset Disposition;
(b) after the issuance thereof, amend or modify any of the
terms of any Subordinated Indebtedness of such Person if such amendment
or modification would (i) add or change any terms in a manner
materially adverse to such Person or to the Lenders, (ii) materially
shorten the final maturity or average life to maturity thereof, (iii)
require any payment thereon to be made sooner than originally
scheduled, (iv) increase the interest rate or fees applicable thereto
or (v) change any subordination provision thereof in a manner adverse
to the Lenders;
(c) make interest payments in respect of any Subordinated
Indebtedness in violation of the applicable subordination provisions;
86
(d) make (or give any notice with respect thereto) any
voluntary or optional payment or prepayment in respect of any
Subordinated Indebtedness;
(e) make (or give any notice with respect thereto) any
redemption, acquisition for value or defeasance (including without
limitation, by way of depositing money or securities with the trustee
with respect thereto before due for the purpose of paying when due),
refund, refinance or exchange of any Subordinated Indebtedness; or
(f) designate any other Indebtedness of such Person as
"Designated Senior Debt" (as such term is used in the Senior
Subordinated Note Indenture) other than Indebtedness designated as
"Designated Senior Debt" as of the Closing Date and identified as such
on Schedule 8.1.
------------
8.9 Transactions with Affiliates.
----------------------------
The Credit Parties will not permit any Consolidated Party to enter
into or permit to exist any transaction or series of transactions with any
officer, director, shareholder, Subsidiary or Affiliate of such Person other
than (a) advances of working capital to any Credit Party, (b) transfers of cash
and assets to any Credit Party, (c) intercompany transactions expressly
permitted by Section 8.1, Section 8.4, Section 8.5, Section 8.6, or Section 8.7,
(d) normal compensation and reimbursement of expenses of officers and directors,
(e) agreements and arrangements entered into with employees of the Credit
Parties in connection with termination of their employment therewith, and (f)
except as otherwise specifically limited in this Credit Agreement, other
transactions which are entered into in the ordinary course of such Person's
business on terms and conditions substantially as favorable to such Person as
would be obtainable by it in a comparable arms-length transaction with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year; Organizational Documents.
-------------------------------------
The Credit Parties will not permit any Consolidated Party to (a)
change its fiscal year or (b) amend, modify or change its articles of
incorporation (or corporate charter or other similar organizational document) or
bylaws (or other similar document) to the extent such change, amendment or
modification could reasonably be expected to have a Material Adverse Effect.
8.11 Limitation on Restricted Actions.
--------------------------------
The Credit Parties will not permit any Consolidated Party to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its Property to any Credit Party, or (e) act as a Credit Party
and pledge its assets pursuant to the Credit Documents or any renewals,
refinancings, exchanges, refundings or extension thereof, except (in respect of
any of the matters referred to in clauses (a)-(d) above) for such encumbrances
or restrictions existing under or by reason of (i) this Credit Agreement and the
other Credit Documents, (ii) the Senior Subordinated Note Indenture and the
Senior Subordinated Notes, in each case as in effect as of the Closing
87
Date, (iii) applicable law, (iv) any document or instrument governing
Indebtedness incurred pursuant to Section 8.1(c), provided that any such
--------
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith, (v) any Permitted Lien or any document or
instrument governing any Permitted Lien, provided that any such restriction
--------
contained therein relates only to the asset or assets subject to such Permitted
Lien or (vi) customary restrictions and conditions contained in any agreement
relating to the sale of any Property permitted under Section 8.5 pending the
consummation of such sale.
8.12 Ownership of Subsidiaries.
-------------------------
Notwithstanding any other provisions of this Credit Agreement to the
contrary, the Credit Parties will not permit any Consolidated Party to (i)
permit any Person (other than the Borrower or any Wholly Owned Subsidiary of the
Borrower) to own any Capital Stock of any Subsidiary of the Borrower, except (A)
to qualify directors where required by applicable law or to satisfy other
requirements of applicable law with respect to the ownership of Capital Stock of
Foreign Subsidiaries or (B) as a result of or in connection with a dissolution,
merger, consolidation or disposition of a Subsidiary not prohibited by Section
8.4 or Section 8.5, (ii) permit any Subsidiary of the Borrower to issue or have
outstanding any shares of preferred Capital Stock or (iii) permit, create,
incur, assume or suffer to exist any Lien on any Capital Stock of any Subsidiary
of the Borrower, except for Permitted Liens.
8.13 Sale Leasebacks.
---------------
The Credit Parties will not permit any Consolidated Party to enter
into any Sale and Leaseback Transaction.
8.14 Capital Expenditures.
--------------------
From the Closing Date until such time as the Borrower delivers a
certificate of an Executive Officer of the Borrower demonstrating a Leverage
Ratio of the Borrower of less than 3.00 to 1.00 for two consecutive fiscal
quarters, together with the financial statements referred to in Section 7.1(a)
or (b), as applicable, the Credit Parties will not permit Consolidated Capital
Expenditures to exceed for the following periods the amount set forth opposite
such period:
Period Amount
July 1, 2001 through December 31, 2001 $25,000,000
January 1, 2002 through December 31, 2002 $50,000,000
January 1, 2003 through December 31, 2003 $100,000,000
January 1, 2004 through December 31, 2004 $100,000,000
January 1, 2005 through June 29, 2005 $50,000,000
plus the unused amount available for Consolidated Capital Expenditures under
----
this Section 8.14 for the immediately preceding fiscal year (excluding any carry
forward available from any prior fiscal year or a portion thereof).
88
8.15 No Further Negative Pledges.
---------------------------
The Credit Parties will not permit any Consolidated Party to enter
into, assume or become subject to any agreement prohibiting or otherwise
restricting the existence of any Lien upon any of its Property in favor of the
Agent (for the benefit of the Lenders) for the purpose of securing the Credit
Party Obligations, whether now owned or hereafter acquired, or requiring the
grant of any security for any obligation if such Property is given as security
for the Credit Party Obligations, except (a) in connection with any document or
instrument governing Indebtedness incurred pursuant to Section 8.1(c), provided
--------
that any such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith, (b) in connection with any
Permitted Lien or any document or instrument governing any Permitted Lien,
provided that any such restriction contained therein relates only to the asset
--------
or assets subject to such Permitted Lien and (c) pursuant to customary
restrictions and conditions contained in any agreement relating to the sale of
any Property permitted under Section 8.5, pending the consummation of such sale.
8.16 Operating Lease Obligations.
---------------------------
The Credit Parties will not permit any Consolidated Party to enter
into, assume or permit to exist any obligations for the payment of rental under
Operating Leases which in the aggregate for all such Persons would exceed
$35,000,000 in any fiscal year.
8.17 Subsidiaries.
------------
The Credit Parties will not create, acquire or permit to exist any (a)
new Subsidiaries unless Section 7.12 hereof has been, or will be concurrently
complied with, or (b) Foreign Subsidiaries to the extent that the revenue,
assets and cash flows of the Foreign Subsidiaries would exceed in the aggregate
10% of the revenue, assets and cash flows of the Consolidated Parties on a
consolidated basis.
SECTION 9
EVENTS OF DEFAULT
-----------------
9.1 Events of Default.
-----------------
An Event of Default shall exist upon the occurrence and during the
continuance of any of the following specified events (each an "Event of
--------
Default"):
-------
(a) Payment. Any Credit Party shall
-------
(i) default in the payment when due of any principal of any of
the Loans or of any reimbursement obligations arising from drawings
under Letters of Credit, or
89
(ii) default, and such default shall continue for three (3) or
more Business Days, in the payment when due of any interest on the
Loans or on any reimbursement obligations arising from drawings under
Letters of Credit, or of any Fees or other amounts owing hereunder,
under any of the other Credit Documents or in connection herewith or
therewith; or
(b) Representations. Any representation, warranty or statement
---------------
made or deemed to be made by any Credit Party herein, in any of the other
Credit Documents, or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto shall prove untrue in any
material respect on the date as of which it was deemed to have been made;
or
(c) Covenants. Any Credit Party shall
---------
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.8, 7.10, 7.11 or
7.12 or Section 8;
(ii) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.1(a), (b), (c) or (d)
and such default shall continue unremedied for a period of at least 5
Business Days after the earlier of an Executive Officer of a Credit
Party becoming aware of such default or notice thereof by the Agent or
any Lender; or
(iii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1) contained
in this Credit Agreement or any other Credit Document and such default
shall continue unremedied for a period of at least 30 days (or such
longer period of time as may be provided for in the relevant Credit
Document) after the earlier of an Executive Officer of a Credit Party
becoming aware of such default or notice thereof by the Agent or any
Lender; or
(d) Other Credit Documents. Except as a result of or in connection
----------------------
with a dissolution, merger or disposition of a Subsidiary not prohibited by
Section 8.4 or Section 8.5, any Credit Document shall fail to be in full
force and effect or to give the Agent and/or the Lenders the Liens, rights,
powers and privileges purported to be created thereby, or any Credit Party
shall so state in writing; or
(e) Guaranties. Except as the result of or in connection with a
----------
dissolution, merger or disposition of a Subsidiary not prohibited by
Section 8.4 or Section 8.5, the guaranty given by any Guarantor hereunder
(including any Person after the Closing Date in accordance with Section
7.11) or any provision thereof shall cease to be in full force and effect,
or any Guarantor (including any Person after the Closing Date in accordance
with Section 7.11) hereunder or any Person acting by or on behalf of such
Guarantor shall deny or disaffirm such Guarantor's obligations under such
guaranty, or any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed
or observed pursuant to any guaranty; or
90
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
---------------
any Consolidated Party; or
(g) Defaults under Other Agreements.
-------------------------------
(i) Any Consolidated Party shall default in the performance or
observance (beyond the applicable grace period with respect thereto,
if any) or any material obligation or condition of any contract or
lease material to the Consolidated Parties taken as a whole if such
default could reasonably be expected to have a Material Adverse
Effect; or
(ii) With respect to any Indebtedness (other than Indebtedness
outstanding under this Credit Agreement) in excess of $5,000,000 in
the aggregate for the Consolidated Parties taken as a whole, (A)
either (1) default in any payment shall occur and continue (beyond the
applicable grace period with respect thereto, if any) with respect to
any such Indebtedness, or (2) a default in the observance or
performance relating to such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or exist, the effect of which
default or other event or condition is to cause, or permit, the holder
or holders of such Indebtedness (or trustee or agent on behalf of such
holders) to cause (determined without regard to whether any notice or
lapse of time is required), any such Indebtedness to become due prior
to its stated maturity; or (B) any such Indebtedness shall be declared
due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof;
or
(h) Judgments. One or more judgments or decrees shall be entered
---------
against one or more of the Consolidated Parties involving a liability of
$5,000,000 or more in the aggregate (to the extent not paid or fully
covered by insurance provided by a carrier who has acknowledged coverage
and has the ability to perform) and any such judgments or decrees shall not
have been vacated, discharged or stayed or bonded pending appeal within 30
days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if such event
-----
or condition could reasonably be expected to result in taxes, penalties,
and other liabilities to any Consolidated Party in an aggregate amount
greater than $10,000,000 in excess of any potential liability set forth on
Schedule 6.12: (i) any "accumulated funding deficiency," as such term is
-------------
defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, shall exist with respect to any Plan, or any lien shall arise on
the assets of any Consolidated Party or any ERISA Affiliate in favor of the
PBGC or a Plan; (ii) an ERISA Event shall occur with respect to a Single
Employer Plan, which is, in the reasonable opinion of the Agent, likely to
result in the termination of such Plan for purposes of Title IV of ERISA;
(iii) an ERISA Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion of the Agent,
likely to result in (A) the termination of such Plan for purposes of Title
IV of ERISA, or (B) any Consolidated
91
Party or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency (within the meaning of Section 4245 of ERISA) of such
Plan; or (iv) any prohibited transaction (within the meaning of Section 406
of ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
shall occur which may subject any Consolidated Party or any ERISA Affiliate
to any liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Code, or under any agreement or other instrument
pursuant to which any Consolidated Party or any ERISA Affiliate has agreed
or is required to indemnify any person against any such liability; or
(j) Senior Subordinated Debt Documentation. (i) There shall occur and
--------------------------------------
be continuing any "Event of Default" (or any comparable term) under, and as
defined in the documents evidencing or governing any Subordinated Debt,
(ii) any of the Credit Party Obligations for any reason shall cease to be
"Designated Senior Debt" (or any comparable term) under, and as defined in
the documents evidencing or governing any Subordinated Indebtedness, (iii)
any Indebtedness other than the Credit Party Obligations shall constitute
"Designated Senior Indebtedness" (or any comparable term) under, and as
defined in, the Senior Subordinated Note Indenture or any other documents
evidencing or governing any Subordinated Indebtedness or (iv) the
subordination provisions of the documents evidencing or governing any
Subordinated Indebtedness shall, in whole or in part, terminate, cease to
be effective or cease to be legally valid, binding and enforceable against
any holder of the applicable Subordinated Indebtedness; or
(k) Ownership. There shall occur a Change of Control.
---------
9.2 Acceleration; Remedies.
----------------------
Upon the occurrence and during the continuance of an Event of Default, the
Agent may or, upon the request and direction of the Required Lenders, shall, by
written notice to the Credit Parties take any of the following actions:
(a) Termination of Commitments. Declare the Commitments terminated
--------------------------
whereupon the Commitments shall be immediately terminated.
(b) Acceleration. Declare the unpaid Credit Party Obligations
------------
to be due, whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Credit Parties.
(c) Cash Collateral. Direct the Borrower to pay (and the Borrower
---------------
hereby promises to pay, upon receipt of such notice) to the Agent
additional cash, to be held by the Agent, for the benefit of the Lenders,
in a cash collateral account as additional security for the LOC Obligations
in respect of subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount which may be
drawn under all Letters of Credits then outstanding.
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(d) Enforcement of Rights. Enforce any and all rights and interests
---------------------
created and existing under the Credit Documents including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur with respect to the Borrower, then, without the giving of any
notice or other action by the Agent or the Lenders, (i) the Commitments
automatically shall terminate, (ii) all of the outstanding Credit Party
Obligations automatically shall immediately become due and payable and (iii) the
Borrower automatically shall be obligated (and hereby promises) to pay to the
Agent additional cash, to be held by the Agent, for the benefit of the Lenders,
in a cash collateral account as additional security for the LOC Obligations in
respect of subsequent drawings under all then outstanding Letters of Credit in
an amount equal to the maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.
SECTION 10
AGENCY PROVISIONS
-----------------
10.1 Appointment and Authorization of Agent.
--------------------------------------
(a) Each Lender hereby irrevocably (subject to Section 10.9)
appoints, designates and authorizes the Agent to take such action on its
behalf under the provisions of this Credit Agreement and each other Credit
Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Credit Agreement or any
other Credit Document, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary contained
elsewhere herein or in any other Credit Document, the Agent shall not have
any duties or responsibilities, except those expressly set forth herein,
nor shall the Agent have or be deemed to have any fiduciary relationship
with any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into
this Credit Agreement or any other Credit Document or otherwise exist
against the Agent. Without limiting the generality of the foregoing
sentence, the use of the term "Agent" herein and in the other Credit
Documents with reference to the Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
(b) The Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents associated
therewith until such time (and except for so long) as the Agent may agree
at the request of the Required Lenders to act for the Issuing Lender with
respect thereto; provided, however, that the Issuing Lender shall have all
-------- -------
of the benefits and immunities (i) provided to the Agent in this Section 10
with respect to any acts taken or omissions suffered by the Issuing Lender
in connection
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with Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the Letters
of Credit as fully as if the term "Agent" as used in this Section 10
included the Issuing Lender with respect to such acts or omissions, and
(ii) as additionally provided herein with respect to the Issuing Lender.
10.2 Delegation of Duties.
--------------------
The Agent may execute any of its duties under this Credit Agreement or any
other Credit Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel and other consultants or experts
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in the absence of gross negligence or willful misconduct.
10.3 Liability of Agent.
------------------
No Agent-Related Person shall (a) be liable for any action taken or omitted
to be taken by any of them under or in connection with this Credit Agreement or
any other Credit Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct in connection with its duties
expressly set forth herein), or (b) be responsible in any manner to any Lender
or participant for any recital, statement, representation or warranty made by
any Credit Party or any officer thereof, contained herein or in any other Credit
Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Credit Agreement or any other Credit Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Credit Agreement or any other
Credit Document, or for any failure of any Credit Party or any other party to
any Credit Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender or participant
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Credit Agreement or any other
Credit Document, or to inspect the properties, books or records of any Credit
Party or any Affiliate thereof.
10.4 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to any Credit
Party), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any
action under any Credit Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Credit Agreement or any other Credit Document in
accordance with a
94
request or consent of the Required Lenders or all the Lenders, if required
hereunder, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and participants. Where this
Credit Agreement expressly permits or prohibits an action unless the
Required Lenders otherwise determine, the Agent shall, and in all other
instances, the Agent may, but shall not be required to, initiate any
solicitation for the consent or a vote of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Lender that has signed this Credit Agreement
shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to
such Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory
to a Lender.
10.5 Notice of Default.
-----------------
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to the Agent for the
account of the Lenders, unless the Agent shall have received written notice from
a Lender or the Borrower referring to this Credit Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". The Agent will notify the Lenders of its receipt of any such notice.
The Agent shall take such action with respect to such Default or Event of
Default as may be directed by the Required Lenders in accordance with Section
9.2; provided, however, that unless and until the Agent has received any such
-------- -------
direction, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Lenders.
10.6 Credit Decision; Disclosure of Information by Agent.
---------------------------------------------------
Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Agent hereinafter
taken, including any consent to and acceptance of any assignment or review of
the affairs of any Credit Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Lender represents to the Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Credit
Parties and their respective Subsidiaries, and all applicable Requirements of
Law relating to the transactions contemplated hereby, and made its own decision
to enter into this Credit Agreement and to extend credit to the Borrower
hereunder. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement and the other Credit Documents, and to make such
investigations as it deems
95
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower and the other
Credit Parties. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent herein, the Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Credit Parties or any of
their respective Affiliates which may come into the possession of any Agent-
Related Person.
10.7 Indemnification of Agent.
------------------------
Whether or not the transactions contemplated hereby are consummated, the
Lenders shall indemnify upon demand each Agent-Related Person (to the extent not
reimbursed by or on behalf of any Credit Party and without limiting the
obligation of any Credit Party to do so), pro rata, and hold harmless each
Agent-Related Person from and against any and all claims, damages, losses,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' fees) that may be incurred by or asserted or awarded against any
Agent-Related Person, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation, or proceeding or preparation of defense in connection therewith) the
Credit Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans, except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such Agent-
Related Person's gross negligence or willful misconduct; provided, however, that
-------- -------
no action taken in accordance with the directions of the Required Lenders shall
be deemed to constitute gross negligence or willful misconduct for purposes of
this Section. Without limitation of the foregoing, each Lender shall reimburse
the Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including reasonable attorneys fees and the allocated costs of
internal counsel) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Credit Agreement,
any other Credit Document, or any document contemplated by or referred to
herein, to the extent that the Agent is not reimbursed for such expenses by or
on behalf of the Borrower. The undertaking in this Section shall survive
termination of the Commitments, the payment of all Credit Party Obligations
hereunder and the resignation or replacement of the Agent.
10.8 Agent in its Individual Capacity.
--------------------------------
Bank of America and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with each of the Credit Parties and their respective
Affiliates as though Bank of America were not the Agent or the Issuing Lender
hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, Bank of America or its Affiliates
may receive information regarding any Credit Party or its Affiliates (including
information that may be subject to confidentiality obligations in favor of such
Credit Party or such Affiliate) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its
96
Loans, Bank of America shall have the same rights and powers under this Credit
Agreement as any other Lender and may exercise such rights and powers as though
it were not the Agent or the Issuing Lender, and the terms "Lender" and
"Lenders" include Bank of America in its individual capacity.
10.9 Successor Agent.
---------------
The Agent may resign as Agent upon 30 days' notice to the Lenders. If the
Agent resigns under this Credit Agreement, the Required Lenders shall appoint
from among the Lenders a successor administrative agent for the Lenders which
successor administrative agent shall be consented to by the Borrower at all
times other than during the existence of an Event of Default (which consent of
the Borrower shall not be unreasonably withheld or delayed). If no successor
administrative agent is appointed prior to the effective date of the resignation
of the Agent, the Agent may appoint, after consulting with the Lenders and the
Borrower, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
administrative agent and the retiring Agent's appointment, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 10 and Sections 11.4 and 11.9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Credit Agreement. If no successor administrative agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of the Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
10.10 Other Agents; Lead Managers.
---------------------------
None of the Lenders identified on the facing page or signature pages of
this Credit Agreement as a "syndication agent", "documentation agent", "co-
agent" or "lead arranger" shall have any right, power, obligation, liability,
responsibility or duty under this Credit Agreement other than those applicable
to all Lenders as such. Without limiting the foregoing, none of the Lenders so
identified shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders so identified in deciding to enter into this Credit Agreement
or in taking or not taking action hereunder.
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SECTION 11
MISCELLANEOUS
-------------
11.1 Notices.
-------
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid (or pursuant to an invoice arrangement) to a
reputable national overnight air courier service, or (d) the third Business Day
following the day on which the same is sent by certified or registered mail,
postage prepaid, in each case to the respective parties at the address, in the
case of the Credit Parties and the Agent, set forth below, and, in the case of
the Lenders, set forth on Schedule 2.1(a), or at such other address as such
---------------
party may specify by written notice to the other parties hereto:
if to any Credit Party:
Potlatch Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President of Finance and Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Potlatch Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Agent:
For payments:
Bank of America, N.A.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Agency Administrative Services
ABA# ▇▇▇▇▇▇▇▇▇
Account #: 3750836479
Reference: Potlatch Corporation
98
For Notices of Borrowing and Notices of Extension/Conversion
Bank of America, N.A.
Agency Administrative Services
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Mail Code: CA4-706-05-09
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
For Letter of Credit Applications:
Bank of America, N.A.
Attn: ▇▇▇▇▇▇ ▇▇▇▇
Trade Finance - Standby Letters of Credit
Mail Code: CA9-703-19-23
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
For all other notices:
Bank of America, N.A.
San Francisco Credit Products
Mail Code: CA5-705-12-12
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
11.2 Right of Set-Off; Adjustments.
-----------------------------
Upon the occurrence and during the continuance of any Event of
Default, each Lender (and each of its Affiliates) is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender (or any of its Affiliates) to or for the credit or the account of any
Credit Party against any and all of the obligations of such Person now or
hereafter existing under this Credit Agreement, under the Notes, under any other
Credit Document or otherwise, irrespective of whether such Lender shall have
made any demand hereunder or thereunder and although such obligations may be
unmatured. Each Lender agrees promptly to notify any affected Credit Party after
any such set-off and application made by such Lender; provided, however, that
-------- -------
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of each
99
Lender under this Section 11.2 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that such Lender may
have.
11.3 Successors and Assigns.
----------------------
(a) The provisions of this Credit Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that none of the Credit
Parties may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by any Credit Party without such consent
shall be null and void). Nothing in this Credit Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the
parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, the Indemnified Parties)
any legal or equitable right, remedy or claim under or by reason of this
Credit Agreement.
(b) Any Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Credit Agreement
(including all or a portion of its Commitment and the Loans (including for
purposes of this subsection (b), its Participation Interests) at the time
owing to it); provided that (i) except in the case of an assignment of the
--------
entire remaining amount of the assigning Lender's Commitment and the Loans
at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or principal outstanding balance of the Term Loan
of the assigning Lender subject to each such assignment, determined as of
the date the Assignment and Acceptance with respect to such assignment is
delivered to the Agent, shall not be less than $5,000,000 in the case of
any assignment of a Revolving Commitment, or $1,000,000, in the case of any
assignment of a Term Loan, unless each of the Agent and, so long as no
Default or Event of Default has occurred and is continuing, the Borrower
otherwise consents (each such consent not to be unreasonably withheld or
delayed), (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations
under this Credit Agreement with respect to the Loans or the Commitments
assigned, except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among separate
tranches on a non pro rata basis, and (iii) the parties to each assignment
shall execute and deliver to the Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500. Subject to
acceptance and recording thereof by the Agent pursuant to subsection (c),
from and after the effective date specified in each Assignment and
Acceptance, the Eligible Assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Credit Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its
obligations under this Credit Agreement (and, in the case of an Assignment
and Acceptance covering all of the assigning Lender's rights and
obligations under this Credit Agreement, such Lender shall cease to be a
party hereto but
100
shall continue to be entitled to the benefits of Sections 3.11, 3.12 and
11.5). Upon request, the Borrower (at its expense) shall execute and
deliver new or replacement Notes to the assigning Lender and the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations
under this Credit Agreement that does not comply with this subsection shall
be treated for purposes of this Credit Agreement as a sale by such Lender
of a participation in such rights and obligations in accordance with
subsection (d) of this Section.
(c) The Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at is address referred to in Section 11.1 a copy
of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments
of, and principal amount of the Loans and LOC Obligations owing to, each
Lender pursuant to the terms hereof from time to time (the "Register"). The
--------
entries in the Register shall be conclusive absent manifest error, and the
Credit Parties, the Agent and the Lenders may treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Credit Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the
Credit Parties and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(d) Any Lender may, without the consent of, or notice to, the
Credit Parties or the Agent, sell participations to one or more banks or
other entities (a "Participant") in all or a portion of such Lender's
-----------
rights and/or obligations under this Credit Agreement (including all or a
portion of its Commitments and/or the Loans (including such Lender's
Participation Interests) owing to it); provided that (i) such Lender's
--------
obligations under this Credit Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Credit Parties, the Agent and
the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Credit Agreement. Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the
sole right to enforce this Credit Agreement and to approve any amendment,
modification or waiver of any provision of this Credit Agreement; provided
--------
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or
other modification that would (i) postpone any date upon which any payment
of money is scheduled to be paid to such Participant, (ii) reduce the
principal, interest, fees or other amounts payable to such Participant,
(iii) except as the result of or in connection with a dissolution, merger
or disposition of a Consolidated Party not prohibited by Section 8.4 or
8.5, release all or substantially all of the Guarantors from their
obligations under the Credit Documents or (iv) except as the result of or
in connection with an Asset Disposition not prohibited by Section 8.5,
release all or substantially all of the Collateral. Subject to subsection
(e) of this Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 3.6, 3.9, 3.11 and 3.12 to the same
extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 11.2 as
though it were a
101
Lender, provided such Participant agrees to be subject to Section 3.14 as
--------
though it were a Lender.
(e) A Participant shall not be entitled to receive any greater
payment under Section 3.6, 3.7 or 3.11 than the applicable Lender would
have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant
is made with the Borrower's prior written consent. A Participant that is
not a United States person under Section 7701(a)(30) of the Code shall not
be entitled to the benefits of Section 3.11 unless the Borrower is notified
of the participation sold to such Participant and such Participant agrees,
for the benefit of the Borrower, to comply with Section 3.11(d) as though
it were a Lender.
(f) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Credit Agreement (including
under its Notes, if any) to secure obligations of such Lender, including
any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided that no such pledge or assignment shall release a Lender from any
--------
of its obligations hereunder or substitute any such pledgee or assignee for
such Lender as a party hereto.
(g) If the consent of the Borrower to an assignment or to an Eligible
Assignee is required hereunder (including a consent to an assignment which
does not meet the minimum assignment threshold specified in clause (i) of
the proviso to the first sentence of Section 11.3(b)), the Borrower shall
be deemed to have given its consent five Business Days after the date
notice thereof has been delivered by the assigning Lender (through the
Agent) unless such consent is expressly refused by the Borrower prior to
such fifth Business Day.
(h) Notwithstanding anything to the contrary contained herein, if at
any time Bank of America assigns all of its Commitment and Loans pursuant
to subsection (b) above, Bank of America may, upon 30 days' notice to the
Borrower and the Lenders, resign as Issuing Lender. In the event of any
such resignation as Issuing Lender, the Borrower shall be entitled to
appoint from among the Lenders a successor Issuing Lender hereunder
(subject to the consent of such Lender so appointed); provided, however,
-------- -------
that no failure by the Borrower to appoint any such successor shall affect
the resignation of Bank of America as Issuing Lender. Bank of America shall
retain all the rights and obligations of the Issuing Lender hereunder with
respect to all Letters of Credit outstanding as of the effective date of
its resignation as Issuing Lender and all LOC Obligations with respect
thereto (including the right to require the Lenders to make Revolving Loans
or fund their Participation Interests pursuant to Section 2.2).
(i) (i) Notwithstanding anything to the contrary contained herein,
any Lender (a "Designating Lender") may grant to one or more special
------------------
purpose funding vehicles (each, an "SPV"), identified as such in
---
writing from time to time by the Designating Lender to the Agent and
the Borrower, the option to provide to the Borrower all or any part of
any Loan that such Designating Lender would otherwise be obligated to
make to the Borrower pursuant to this Credit
102
Agreement; provided that (A) nothing herein shall constitute a
commitment by any SPV to make any Loan, (B) if an SPV elects not to
exercise such option or otherwise fails to provide all or any part of
such Loan, the Designating Lender shall be obligated to make such Loan
pursuant to the terms hereof, (C) the Designating Lender shall remain
liable for any indemnity or other payment obligation with respect to
its Commitments hereunder and (D) each such SPV would satisfy the
requirements of Section 3.11 if such SPV was a Lender hereunder. The
making of a Loan by an SPV hereunder shall utilize the Commitment of
the Designating Lender to the same extent as a Loan made by, and as if
such Loan were made by, such Designating Lender.
(ii) As to any Loans or portion thereof made by it, each SPV
shall have all the rights that a Lender making such Loans or portion
thereof would have had under this Credit Agreement; provided, however
that each SPV shall have granted to its Designating Lender an
irrevocable power of attorney, to deliver and receive all
communications and notices under this Agreement (and any related
documents), including, without limitation, any Notice of Borrowing and
any Notice of Extension/Conversion, and to exercise on such SPV's
behalf, all of such SPV's voting rights under this Credit Agreement.
No additional Note shall be required to evidence the Loans or portion
thereof made by an SPV; and the related Designating Lender shall be
deemed to hold its Note as agent for such SPV to the extent of the
Loans or portion thereof funded by such SPV. In addition, any payments
for the account of any SPV shall be paid to its Designating Lender as
agent for such SPV.
(iii) Each party hereto hereby agrees that no SPV shall be liable
for any indemnity or payment under this Credit Agreement for which a
Lender would otherwise be liable for so long as, and to the extent,
the Designating Lender provides such indemnity or makes such payment.
In furtherance of the foregoing, each party hereto hereby agrees
(which agreement shall survive the termination of this Credit
Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding prior indebtedness of any SPV,
it will not institute against, or join any other person in instituting
against, such SPV any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or similar proceedings under the
laws of the United States or any State thereof.
(iv) In addition, notwithstanding anything to the contrary
contained in this Section 11.3 or otherwise in this Credit Agreement,
any SPV may (A) at any time and without paying any processing fee
therefor, assign or participate all or a portion of its interest in
any Loans to the Designating Lender (or to any other SPV of such
Designating Lender) or to any financial institutions providing
liquidity and/or credit support to or for the account of such SPV
to support the funding or maintenance of Loans and (B) disclose on a
confidential basis any non-public information relating to its Loans to
any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancements to such SPV.
103
This Section 11.3 may not be amended without the written consent of
any Designating Lender affected thereby.
11.4 No Waiver; Remedies Cumulative.
------------------------------
No failure or delay on the part of the Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Agent or any Lender and any of the Credit
Parties shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any Lender would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle the Credit Parties to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
11.5 Expenses; Indemnification.
-------------------------
(a) The Credit Parties jointly and severally agree to pay on demand
all costs and expenses of the Agent in connection with the syndication,
preparation, execution, delivery, administration, modification, and
amendment of this Credit Agreement, the other Credit Documents, and the
other documents to be delivered hereunder, including, without limitation,
the reasonable fees and expenses of counsel for the Agent (including the
cost of internal counsel) with respect thereto and with respect to advising
the Agent as to its rights and responsibilities under the Credit Documents.
The Credit Parties further jointly and severally agree to pay on demand all
costs and expenses of the Agent and the Lenders, if any (including, without
limitation, reasonable attorneys' fees and expenses and the cost of
internal counsel), in connection with any work-out or restructuring
relating to the Credit Facilities or any enforcement (whether through
negotiations, legal proceedings, or otherwise) of any of the Credit
Documents.
(b) The Credit Parties jointly and severally agree to indemnify and
hold harmless each Agent-Related Person and each Lender and each of their
Affiliates and their respective officers, directors, employees, agents,
trustees and advisors (each, an "Indemnified Party") from and against any
and all claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' fees) that may be
incurred by or asserted or awarded against any Indemnified Party, in each
-----------------
case arising out of or in connection with or by reason of (including,
without limitation, in connection with any investigation, litigation, or
proceeding or preparation of defense in connection therewith) the Credit
Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans, except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-
appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. In
the case of an investigation, litigation or other proceeding to which the
indemnity in this Section 11.5 applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by
any of
104
the Credit Parties, their respective directors, shareholders or creditors
or an Indemnified Party or any other Person or any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated. The Credit Parties agree not to assert any claim
against any Agent-Related Party, any Lender, any of their Affiliates, or
any of their respective directors, officers, employees, attorneys, agents,
and advisers, on any theory of liability, for special, indirect,
consequential, or punitive damages arising out of or otherwise relating to
the Credit Documents, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Credit Parties hereunder, the agreements and obligations of the Credit
Parties contained in this Section 11.5 shall survive the repayment of the
Credit Party Obligations and the termination of the Commitments hereunder.
11.6 Amendments, Waivers and Consents.
--------------------------------
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, each of the Credit Parties
party thereto and the Required Lenders, provided, however, that:
(a) without the written consent of each Lender affected thereby,
neither this Credit Agreement nor any other Credit Document may be amended,
changed, waived, discharged or terminated so as to
(i) extend any Commitment or the scheduled payment date or
the final maturity of any Loan or of any reimbursement obligation, or
any portion thereof, arising from drawings under Letters of Credit, or
extend or waive any Loan, or any portion thereof,
(ii) reduce the rate or extend the time of payment of interest
on any Loan or of any reimbursement obligation, or any portion
thereof, arising from drawings under Letters of Credit (other than as
a result of waiving the applicability of any post-default increase in
interest rates) or of any Fees ,
(iii) reduce or waive the principal amount of any Loan or of
any reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a waiver of any
condition precedent set forth in Section 5.2 or of any Default or
Event of Default or mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of any Lender),
105
(v) except as the result of or in connection with an Asset
Disposition not prohibited by Section 8.5 or a release of the
Collateral pursuant to Section 11.18, release all or substantially all
of the Collateral,
(vi) except as the result of or in connection with a
dissolution, merger or disposition of a Consolidated Party not
prohibited by Section 8.4 or Section 8.5, release the Borrower or
substantially all of the other Credit Parties from its or their
obligations under the Credit Documents,
(vii) amend, modify or waive any provision of Section 3.13,
(viii) amend, modify or waive any provision of this Section
11.6, provided that the class vote provisions of Section 11.6 can be
amended by written approval of each class (without the need for the
approval of each member of each class),
(ix) reduce any percentage specified in the definition of
Required Lenders, or
(x) consent to the assignment or transfer by the Borrower or
all or substantially all of the other Credit Parties of any of its or
their rights and obligations under (or in respect of) the Credit
Documents except as permitted thereby;
(b) without the written consent of Lenders (other than Defaulting
Lenders) holding in the aggregate at least a majority of the Revolving
Commitments (and Participation Interests therein) (or if the Revolving
Commitments have been terminated, the outstanding Revolving Loans (and
Participation Interests therein, including the Participation Interests of
the Issuing Lender in any Letters of Credit)), no Default or Event of
Default may be waived for purposes of Section 5.2(d);
(c) without the written consent of Lenders (other than Defaulting
Lenders) holding in the aggregate at least a majority of the outstanding
Term Loan (and Participation Interests therein), (i) Section 3.15 may not
be amended, changed, waived, discharged or terminated so as to alter the
manner of application of any payment in respect of the Credit Party
Obligations or proceeds of Collateral, (ii) Section 3.3(b)(v) may not be
amended, changed, waived, discharged or terminated so as to alter the
manner of application of proceeds of any mandatory prepayment required by
Section 3.3(b)(ii), (iii) or (iv) hereof and, (iii) except in the case of a
decrease in the Term Loan Prepayment Fee, in which case the written consent
of 100% of such Lenders shall be required no provision of Section 3.5(e)
may be amended, changed, waived, discharged or terminated and (iv) the
scheduled dates and amounts for amortization payments set forth in Section
2.3(d) may not be amended, changed, waived, discharged or terminated;
(d) without the written consent of the Agent, no provision of Section
10 may be amended, changed, waived, discharged or terminated; and
106
(e) without the written consent of the Issuing Lender, no provision
of Section 2.2 may be amended, changed, waived, discharged or terminated.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to
vote as such Lender sees fit on any bankruptcy reorganization plan that
affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders shall determine
whether or not to allow a Credit Party to use cash collateral in the
context of a bankruptcy or insolvency proceeding and such determination
shall be binding on all of the Lenders.
11.7 Counterparts.
------------
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed shall be an original, but all of which shall
constitute one and the same instrument. It shall not be necessary in making
proof of this Credit Agreement to produce or account for more than one such
counterpart for each of the parties hereto. Delivery by facsimile by any of the
parties hereto of an executed counterpart of this Credit Agreement shall be as
effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
11.8 Headings.
--------
The headings of the sections hereof are provided for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Credit Agreement.
11.9 Survival.
--------
All indemnities set forth herein, including, without limitation, in Section
2.2(i), 3.11, 3.12, 10.5 or 11.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Credit Parties herein shall survive
until this Credit Agreement shall be terminated in accordance with the terms of
Section 11.13(b).
11.10 Governing Law; Submission to Jurisdiction; Venue; Waiver of
-----------------------------------------------------------
Jury Trial.
----------
(a) THIS CREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY PROVIDED
THEREIN, THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal
action or proceeding with respect to this Credit Agreement or any other
Credit Document may be brought in the courts of the State of New York in
New York County, or of the United States for the Southern District of New
York, and, by execution and delivery of this Credit
107
Agreement, each of the Credit Parties hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. Each of the Credit Parties
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at
the address set out for notices pursuant to Section 11.1, such service to
become effective three (3) days after such mailing. Nothing herein shall
affect the right of the Agent or any Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to otherwise
proceed against any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) EACH PARTY TO THIS CREDIT AGREEMENT HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY CREDIT DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY
COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS CREDIT AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
11.11 Severability.
------------
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
--------
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements (including the Credit Agreement dated November 18, 1999, as amended,
between the Borrower, the financial institutions party thereto, and Bank of
America, N.A., as administrative agent) and understandings, oral or
108
written, if any, including any commitment letters or correspondence relating to
the Credit Documents or the transactions contemplated herein and therein.
11.13 Binding Effect; Termination.
---------------------------
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by each Credit
Party and the Agent, and the Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear the signatures of
each Lender, and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of each Credit Party, the Agent and each Lender and
their respective successors and assigns.
(b) The term of this Credit Agreement shall be until the Credit Party
Obligations are Fully Satisfied.
11.14 Confidentiality.
---------------
Each of the Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a)
to its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any regulatory authority; (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process; (d) to any other party to this Credit Agreement; (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Credit Agreement or the enforcement of rights
hereunder; (f) subject to an agreement containing provisions substantially the
same as those of this Section 11.14, to (i) any Eligible Assignee of or
Participant in, or any prospective Eligible Assignee of or Participant in, any
of its rights or obligations under this Credit Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty's or prospective counterparty's professional advisor)
to any credit derivative transaction relating to Credit Party Obligations; (g)
with the consent of the Borrower; (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section 11.14 or
(ii) becomes available to the Agent or any Lender on a nonconfidential basis
from a source other than the Consolidated Parties; or (i) to the National
Association of Insurance Commissioners or any other similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's or its Affiliates' investment portfolio in connection with ratings
issued with respect to such Lender or its Affiliates. For the purposes of this
Section, "Information" means all information received from the Credit Parties
-----------
relating to the Consolidated Parties or their business, other than any such
information that is available to the Agent or any Lender on a nonconfidential
basis prior to disclosure by the Consolidated Parties; provided that, in the
--------
case of information received from the Consolidated Parties after the date
hereof, such information is clearly identified in writing at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section 11.14 shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the
109
confidentiality of such Information as such Person would accord to its own
confidential information.
11.15 Source of Funds.
---------------
Each of the Lenders hereby represents and warrants to the Borrower that at
least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) the source is an insurance company's general asset account (as
defined in Prohibited Transaction Class Exemption ("PTE") 95-60, 60 Fed.
Reg. 35,925 (1995)), and (i) to the extent the assets in such account
support any policy issued by such insurance company before January 1, 1999,
such insurance company has complied with all of the requirements of the
regulations issued under Section 401(c)(1)(A) of ERISA, and (ii) if the
assets in such account support any policy issued on or after January 1,
1999, the aggregate amount of such general account's reserves and
liabilities for the contracts held by or on behalf of any employee benefit
plan does not exceed 10% of the total reserves and liabilities of such
account (as determined in accordance with PTE 95-60, excluding any separate
account liabilities, but including any applicable surplus) (and, for
purposes of this clause (a), all employee benefit plans maintained by the
same employer, affiliate thereof or employee organization are deemed to be
a single plan);
(b) the source is an insurance company's pooled separate account (as
defined in ▇▇▇ ▇▇-▇, ▇▇ Fed. Reg. 31,092 (1989)) or a bank's collective
investment fund (as defined in PTE 91-38, 56 Fed. Reg. 4,856 (1991)) and
the Lender has disclosed to the Borrower the name of each employee benefit
plan whose assets in such account or fund exceed 10% of the total assets of
such account (and, for purposes of this clause (b), all employee benefit
plans maintained by the same employer, affiliate thereof or employee
organization are deemed to be a single plan);
(c) the source is a governmental plan;
(d) the source is one or more employee benefit plans that the Lender
has identified in writing to the Borrower; or
(e) the source does not include assets of any employee benefit plan
that is not exempt from the coverage of ERISA.
As used in this Section 11.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
11.16 Regulation D.
------------
Each of the Lenders hereby represents and warrants to the Borrower
that it is a commercial lender, other financial institution or other
"accredited" investor (as defined in SEC Regulation D)
110
which makes or acquires or loans on the ordinary course of business and that it
will make or acquire Loans for its own account in the ordinary course of
business.
11.17 Conflict.
--------
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
11.18 Credit Improvement Date.
-----------------------
Upon the occurrence of a Credit Improvement Date, at the request of the
Borrower:
(a) the pledges and grants of security interests pursuant to the
Collateral Documents and the covenants and the agreements contained
therein, shall no longer be effective and shall otherwise cease and be of
no further force and effect; and
(b) the Agent shall, at the expense of the Borrower, deliver such
documentation as is reasonably necessary to evidence the release of the
Agent's security interest in the Collateral, including, without limitation,
terminations of UCC financing statements, mortgages and security
agreements, reconveyances, and the return of stock certificates, if any.
[Signature Pages to Follow]
111
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: POTLATCH CORPORATION
--------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
Title: Vice President
---------------------
[signature pages continue]
------------------------
SUBSIDIARY
----------
GUARANTORS: DULUTH & NORTHEASTERN RAILROAD CO.
----------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Secretary
-------------------------------
THE PRESCOTT AND NORTHWESTERN
RAILROAD COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Secretary and Ass't Treasurer
-------------------------------
ST. MARIES RIVER RAILROAD COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Secretary and Ass't Treasurer
-------------------------------
▇▇▇▇▇▇ AND SALINE RIVER RAILROAD
COMPANY
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Secretary and Ass't Treasurer
-------------------------------
[signature pages continue]
------------------------
2
LENDERS BANK OF AMERICA, N.A.
------- individually in its capacity as Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
Name:
--------------------
Title:
-------------------
[signature pages continue]
------------------------
3
AGENT: BANK OF AMERICA, N.A.
------ in its capacity as Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Title: MANAGING DIRECTOR
-------------------
[signature pages continue]
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4
▇▇▇▇▇ FARGO BANK, N.A.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: SVP
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By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: VP
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[signature pages continue]
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5
WACHOVIA BANK, N.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
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Title: Vice President
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[signature pages continue]
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6
NORTHWEST FARM CREDIT SERVICES, PCA
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President
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[signature pages continue]
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7
TRANSAMERICA BUSINESS CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: Senior Vice President
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▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Director
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9
COBANK, ACB
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President
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10