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EXHIBIT 10.5
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REPLACEMENT CREDIT AGREEMENT
by and among
PIONEER RESOURCES, LLC
as Borrower
and
FIRST UNION NATIONAL BANK
Individually and as Administrative Agent
and Letter of Credit Issuer
and
ABN AMRO BANK N.V.
Individually and as Syndication Agent
and
NATIONSBANK, N.A.
Individually and as Documentation Agent
and
the other
Lenders
which are or become parties hereto
Dated as of October 9, 1998
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TABLE OF CONTENTS
SECTION 1. THE CREDIT FACILITIES..................................................................1
Section 1.1. The Revolving Credit...................................................................1
Section 1.2. The Term Credit........................................................................4
Section 1.3. Manner of Borrowing....................................................................5
(a) Generally..............................................................................5
(b) Administrative Agent Reliance on Lender Funding........................................5
(c) Requests...............................................................................6
SECTION 1.4. BORROWING PRO RATA.....................................................................6
SECTION 2. INTEREST...............................................................................6
Section 2.1. Options................................................................................6
Section 2.2. Base Rate Portion......................................................................6
Section 2.3. LIBOR Portions.........................................................................6
Section 2.4. Computation............................................................................7
Section 2.5. Minimum Amounts........................................................................7
Section 2.6. Manner of Rate Selection...............................................................7
SECTION 3. THE NOTES, FEES, PREPAYMENTS, TERMINATIONS AND APPLICATION OF PAYMENTS.................8
Section 3.1. Commitment Fee.........................................................................8
Section 3.2. Administrative Agent's Fees............................................................8
Section 3.3. Letter of Credit Fees..................................................................8
Section 3.4. Prepayments............................................................................8
Section 3.5. Commitment Terminations...............................................................11
Section 3.6. Place and Application of Payments.....................................................12
Section 3.7. Notations and Requests................................................................13
Section 3.8. Capital Adequacy......................................................................14
SECTION 4. THE COLLATERAL AND COMPUTATION OF VALUE OF MERCHANTABLE TIMBER........................14
Section 4.1. The Collateral........................................................................14
Section 4.2. Determination of Value of Merchantable Timber.........................................15
SECTION 5. DEFINITIONS...........................................................................18
Section 5.1. Certain Definitions...................................................................18
Section 5.2. Accounting Terms......................................................................31
SECTION 6. REPRESENTATIONS AND WARRANTIES........................................................31
Section 6.1. Organization and Qualification........................................................31
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Section 6.2. Financial Reports......................................................................31
Section 6.3. Litigation; Tax Returns; Approvals.....................................................32
Section 6.4. Regulation U...........................................................................32
Section 6.5. No Default.............................................................................32
Section 6.6. ERISA..................................................................................32
Section 6.7. Enforceability.........................................................................33
Section 6.8. Restrictive Agreements.................................................................33
Section 6.9. No Default Under Other Agreements......................................................33
Section 6.10. Status Under Certain Laws..............................................................33
Section 6.11. Full Disclosure........................................................................33
Section 6.12. Compliance with Law....................................................................34
Section 6.13. Solvency, etc..........................................................................34
Section 6.14. Concerning the Timberland..............................................................34
Section 6.15. The Frontier Stumpage Contract.........................................................35
Section 6.16. Concerning the Acquisition Agreement and the Management Agreement......................35
Section 6.17. Year 2000 Compliance...................................................................35
SECTION 7. CONDITIONS PRECEDENT...................................................................35
Section 7.1. Initial Credit Utilization.............................................................35
Section 7.2. Each Credit Obligation.................................................................39
SECTION 8. COVENANTS..............................................................................40
Section 8.1. Maintenance of Property................................................................40
Section 8.2. Taxes..................................................................................40
Section 8.3. Maintenance of Insurance...............................................................40
Section 8.4. Financial Reports......................................................................40
Section 8.5. Inspection.............................................................................42
Section 8.6. Consolidation and Merger...............................................................42
Section 8.7. Transactions with Affiliates...........................................................42
Section 8.8. Capital Expenditures and Acquisitions..................................................42
Section 8.9. Restricted Payments....................................................................43
Section 8.10. Liens..................................................................................43
Section 8.11. Borrowings and Guaranties..............................................................44
Section 8.12. Investments, Loans, Advances and Acquisitions..........................................45
Section 8.13. Sale of Property.......................................................................46
Section 8.14. ERISA..................................................................................47
Section 8.15. Compliance with Laws, etc..............................................................47
Section 8.16. Sale and Leaseback Transactions........................................................48
Section 8.17. Fiscal Year............................................................................48
Section 8.18. Maintenance of Existence...............................................................48
Section 8.19. Leverage Ratio.........................................................................48
Section 8.20. Interest Coverage Ratio................................................................48
Section 8.21. Fixed Charge Coverage Ratio............................................................49
Section 8.22. Interest Rate Protection...............................................................49
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Section 8.23. Timber Coverage Ratio..................................................................49
Section 8.24. Change in the Nature of Business.......................................................49
Section 8.25. General Timber Management Obligations..................................................50
Section 8.26. The Frontier Stumpage Contract and Other Stumpage Rights...............................51
Section 8.27. Future Subsidiaries....................................................................51
Section 8.28. The Management Agreement and the Acquisition Agreement.................................51
Section 8.29. Year 2000 Assessment...................................................................51
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.........................................................52
Section 9.1. Events of Default......................................................................52
Section 9.2. Remedies for Non-Bankruptcy Defaults...................................................53
Section 9.3. Remedies for Bankruptcy Defaults.......................................................54
Section 9.4. Collateral for Undrawn Letters of Credit...............................................54
SECTION 10. CHANGE IN CIRCUMSTANCES REGARDING LIBOR PORTIONS.......................................54
Section 10.1. Change of Law..........................................................................54
Section 10.2. Unavailability of Deposits or Inability to Ascertain the Adjusted LIBOR
Rate...............................................................................54
Section 10.3. Taxes and Increased Costs..............................................................55
Section 10.4. Funding Indemnity......................................................................56
Section 10.5. Lending Branch.........................................................................56
Section 10.6. Discretion of Lenders as to Manner of Funding..........................................57
Section 10.7. Lender Replacement.....................................................................57
SECTION 11. THE GUARANTEES.........................................................................58
Section 11.1. The Guarantees.........................................................................58
Section 11.2. Guarantee Unconditional................................................................58
Section 11.3. Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances......................................................................59
Section 11.4. Subrogation............................................................................59
Section 11.5. Waivers................................................................................59
Section 11.6. Stay of Acceleration...................................................................60
SECTION 12. THE AGENTS.............................................................................60
Section 12.1. Appointment and Authorization..........................................................60
Section 12.2. Rights as a Lender.....................................................................60
Section 12.3. Standard of Care.......................................................................61
Section 12.4. Costs and Expenses.....................................................................62
Section 12.5. Indemnity..............................................................................62
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SECTION 13. MISCELLANEOUS..........................................................................62
Section 13.1. Holidays...............................................................................62
Section 13.2. No Waiver, Cumulative Remedies.........................................................62
Section 13.3. Waivers, Modifications and Amendments..................................................62
Section 13.4. Costs and Expenses.....................................................................63
Section 13.5. Stamp Taxes............................................................................63
Section 13.6. Survival of Representations............................................................64
Section 13.7. Construction...........................................................................64
Section 13.8. Accounting Principles..................................................................64
Section 13.9. Headings...............................................................................64
Section 13.10. Severability of Provisions.............................................................64
Section 13.11. Counterparts...........................................................................64
Section 13.12. Binding Nature, Governing Law, Etc.....................................................64
Section 13.13. Notices................................................................................64
Section 13.14. Participants...........................................................................65
Section 13.15. Concerning the Guarantors..............................................................65
Section 13.16. Assignment Agreements..................................................................65
Section 13.17. Submission and Waiver of Jury Trial....................................................66
Section 13.18. Entire Agreement.......................................................................66
Section 13.19. Withholding Taxes......................................................................66
Section 13.20. Set-off Sharing........................................................................68
Signature Page...................................................................................................69
OMITTED EXHIBITS:
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EXHIBIT A - Revolving Credit Note
EXHIBIT B - Term Credit Note
EXHIBIT C - Compliance Certificate
EXHIBIT D - The Transferred Assets
EXHIBIT E - The Transferred Liabilities
EXHIBIT F - Assignment Agreement
EXHIBIT G - Borrowing Certificate
SCHEDULE 6.2 - Contingent Liabilities
SCHEDULE 6.3 - Disclosed Claims; Existing Litigation; Tax Returns; Approvals
SCHEDULE 8.7 - Transactions with Affiliates
SCHEDULE 8.10 - Permitted Liens
SCHEDULE 8.11 - Permitted Debt
SCHEDULE 8.12 - Certain Permitted Investments, Loans and Advances
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PIONEER RESOURCES, LLC
REPLACEMENT CREDIT AGREEMENT
To: The Agents
and the other Lenders from time to time party hereto
Gentlemen:
The undersigned, Pioneer Resources, LLC, an Oregon limited liability
company (the "Borrower"), applies to you for your several commitments, subject
to all of the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, to make credit available
to the Borrower, all as more fully hereinafter set forth.
SECTION 1. THE CREDIT FACILITIES
Section 1.1. The Revolving Credit.
(a) General Terms. Subject to all of the terms and
conditions hereof, each Lender, by its acceptance hereof, severally
agrees to extend a Revolving Credit to the Borrower in the amount of
its Revolving Credit Commitment which may be availed of by the Borrower
in its discretion from time to time, be repaid and used again, during
the period from the date hereof to and including the Termination Date.
The Revolving Credit, subject to all of the terms and conditions
hereof, may be utilized by the Borrower in the form of Revolving Credit
Loans and Letters of Credit, all as more fully hereinafter set forth;
provided, however, that the aggregate amount of the Credit Utilizations
under the Revolving Credit shall at no time exceed the Revolving Credit
Commitments as then in effect; provided further, however, that the
aggregate amount outstanding at any time of L/C Obligations shall be
further limited to $35,000,000.
(b) Revolving Credit Loans. Subject to all of the terms
and conditions hereof, the Revolving Credit may be availed of in the
form of loans ("Revolving Credit Loans"). Each Borrowing of Revolving
Credit Loans shall be made ratably from the Lenders in accordance with
their Revolving Credit Commitments and shall be in a minimum amount of
$500,000. All Revolving Credit Loans made by a Lender to the Borrower
shall be evidenced by a single Revolving Credit Note of the Borrower
(individually a "Revolving Credit Note" and collectively the "Revolving
Credit Notes") payable to the order of such Lender, each Revolving
Credit Note to be in the form (with appropriate insertions) attached
hereto as Exhibit A and to mature on the Termination Date. Without
regard to the face principal amount of each Lender's Revolving Credit
Note, the actual principal amount at any time outstanding and owing by
the Borrower on account thereof shall be the sum of all Revolving
Credit Loans
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then or theretofore made thereon by such Lender to the Borrower
less all payments actually received thereon.
(c) Letters of Credit.
(i) General Terms. Subject to the terms,
conditions and limitations hereof (including those set forth
in Section 1.1 hereof), as part of the Revolving Credit, the
Issuer shall issue Letters of Credit (each a "Letter of
Credit") at the request of the Borrower. Each Letter of Credit
shall be issued by the Issuer, but each Lender shall be
obligated to reimburse the Issuer for its pro rata share of
the amount of each drawing thereunder and, accordingly, the
undrawn face amount of each Letter of Credit shall constitute
a pro rata usage of the Revolving Credit Commitments. Each
Letter of Credit shall conform to the Issuer's policies as to
form and shall be a Letter of Credit which the Issuer may
lawfully issue.
(ii) Applications. At any time more than 30 days
in advance of the scheduled Termination Date, the Issuer
shall, subject to all of the terms and conditions hereof, at
the request of the Borrower, issue one or more Letters of
Credit for the account of the Borrower, in a form satisfactory
to the Issuer, in an aggregate face amount up to that set
forth above, upon the receipt of an application for the
relevant Letter of Credit in the form customarily prescribed
by the Issuer for the type of Letter of Credit in question,
duly executed by the Borrower (each an "Application"). Each
Letter of Credit issued hereunder shall (a) be payable in U.S.
dollars and (b) expire not later than one year from issuance
(or be terminable at the option of the Issuer within one year
of issuance) but in any event not beyond the scheduled
Termination Date. Notwithstanding anything contained in any
Application to the contrary, (i) the Borrower's obligation to
pay fees in connection with each Letter of Credit shall be as
set forth in Section 3.3 hereof, (ii) prior to the existence
of an Event of Default, the Issuer will not call for the
funding by the Borrower of any amount under a Letter of
Credit, or any other form of collateral security for the
Borrower's obligations in connection with such Letter of
Credit, before being presented with a drawing thereunder, and
(iii) if the Issuer is not timely reimbursed for the amount of
any drawing under a Letter of Credit on the date such drawing
is paid, the Borrower's obligation to reimburse the Issuer for
the amount of such drawing shall bear interest (which the
Borrower hereby promises to pay upon demand) from and after
the date such drawing is paid at a rate per annum equal at all
times to the interest rate applicable to the Base Rate
Portions when overdue, as such rate is from time to time in
effect. If the Issuer issues any Letters of Credit with an
expiration date that is automatically extended unless the
Issuer gives notice that the expiration date will not so
extend beyond its then scheduled expiration date, the Issuer
will give such notice of non-renewal before the time necessary
to prevent such automatic extension if before such required
notice (i) the expiration date of such Letter of Credit if so
extended would be after the Termination Date, (ii) the
Revolving Credit
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Commitments have been terminated, or (iii) an Event of Default
exists and in any such instance the Required Lenders have
given the Issuer instructions not to so permit the extension
of the expiration date of such Letter of Credit. Without
limiting the generality of the foregoing, the Issuer's
obligation to issue, amend or extend the expiration date of a
Letter of Credit is subject to the conditions of Section 7,
the other terms of this Section 1.1 and the other provisions
of this Agreement and the Issuer will not issue, amend or
extend the expiration date of any Letter of Credit if any
Lender notifies the Issuer of any failure to satisfy or
otherwise comply with such conditions, terms and other
provisions and directs the Issuer not to take such action.
(iii) The Reimbursement Obligation. Subject to
Section 1.1(c)(ii) hereof, the obligation of the Borrower to
reimburse the Issuer for all drawings under a Letter of Credit
issued for the Borrower's account (a "Reimbursement
Obligation") shall be governed by the Application related to
such Letter of Credit, except that reimbursement of each
drawing shall be made in immediately available funds at the
designated office of the Issuer by not later than 1:00 p.m.
(local time at the issuing office of the Issuer) on the date
when such drawing is paid if the Borrower has been notified on
or before noon Charlotte time that the Issuer has or will be
paying such draft; otherwise on the next Business Day. If the
Borrower does not make any such reimbursement payment on the
date due and the Participating Lenders fund their
participations therein in the manner set forth in Section
1.1(c)(iv) below, then all payments thereafter received by the
Issuer in discharge of any of the relevant Reimbursement
Obligations shall be distributed in accordance with Section
1.1(c)(iv) below.
(iv) The Participating Interests. Each Lender, by
its acceptance hereof, severally agrees to purchase from the
Issuer, and the Issuer hereby agrees to sell to each such
Lender (a "Participating Lender"), an undivided percentage
participating interest (a "Participating Interest"), to the
extent of its pro rata share of the Revolving Credit
Commitments, in each Letter of Credit issued by, and each
Reimbursement Obligation owed to, the Issuer. Upon any failure
by the Borrower to pay any Reimbursement Obligation in respect
of a Letter of Credit issued for the Borrower's account at the
time required on the date the related drawing is paid, as set
forth in Section 1.1(c)(iii) above, or if the Issuer is
required at any time to return to the Borrower or to a
trustee, receiver, liquidator, custodian or other Person any
portion of any payment of any Reimbursement Obligation, each
Participating Lender shall, not later than the Business Day it
receives a certificate from the Issuer to such effect, if such
certificate is received before 1:00 p.m. (local time at the
officer of the Issuer), or not later than the following
Business Day, if such certificate is received after such time,
pay to the Issuer an amount equal to its pro rata share of
such unpaid Reimbursement Obligation or returned amount
together with interest on such amount accrued from the date
the related payment was made by the Issuer to the date of such
payment by such Participating Lender at a rate per annum equal
to
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(i) from the date the related payment was made by the Issuer
to the date two (2) Business Days after payment by such
Participating Lender is due hereunder, the Fed Funds Rate for
each such day and (ii) from the date two (2) Business Days
after the date such payment is due from such Participating
Lender to the date such payment is made by such Participating
Lender, the Fed Funds Rate for each such day plus the
Applicable Margin for LIBOR Portions in effect for each such
day. Each such Participating Lender shall thereafter be
entitled to receive its pro rata share of each payment
received in respect of the relevant Reimbursement Obligation
and of interest paid thereon, with the Issuer retaining its
pro rata share as a Lender hereunder.
The several obligations of the Participating Lenders to the
Issuer under this Section 1.1(c)(iv) shall be absolute,
irrevocable and unconditional under any and all circumstances
whatsoever (except, to the extent the Borrower is relieved
from its obligation to reimburse the Issuer for a drawing
under a Letter of Credit because of the Issuer's gross
negligence or willful misconduct in determining that documents
received under the Letter of Credit comply with the terms
thereof) and shall not be subject to any setoff, counterclaim
or defense to payment which any Participating Lender may have
or have had against any one or more of the Borrower, the
Issuer, the Administrative Agent, any other Lender or any
other Person whatsoever. Without limiting the generality of
the foregoing, such obligations shall not be affected by any
Potential Default or Event of Default or by any reduction or
termination of the Revolving Credit Commitment of any Lender,
and each payment by a Participating Lender under this Section
1.1(c)(iv) shall be made without any offset, abatement,
withholding or reduction whatsoever. The Administrative Agent
shall be entitled to offset amounts received for the account
of a Lender under this Agreement against unpaid amounts due
from such Lender hereunder (whether as fundings of
participations, indemnities or otherwise).
(v) Indemnification. Each of the Participating
Lenders shall, to the extent of their respective pro rata
shares, indemnify the Issuer (to the extent not reimbursed by
the Borrower) against any cost, expense (including reasonable
counsel fees and disbursements), claim, demand, action, loss
or liability (except such as result from the Issuer's gross
negligence or willful misconduct) that the Issuer may suffer
or incur in connection with any Letter of Credit. The
obligations of the Participating Lenders under this Section
1.1(c)(v) and all other parts of this Section 1.1(c) shall
survive termination of this Agreement and of all other L/C
Documents.
Section 1.2. The Term Credit. Subject to all of the terms and
conditions hereof, each Lender agrees to make a term loan to the Borrower
(individually a "Term Loan" and collectively the "Term Loans") in the amount set
forth opposite its signature hereto under the heading "Term Credit Commitment"
or on an Assignment Agreement to which it is party (its "Term Credit Commitment"
and collectively the "Term Credit Commitments"). There shall be a single
Borrowing of the Term Loans and the obligations of the Lenders to make
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the Term Loans shall expire on October 9, 1998 unless sooner terminated as
herein provided. The obligations of the Lenders hereunder are several and not
joint and no Lender shall under any circumstances be obligated to make a Term
Loan in excess of its Term Credit Commitment. The Term Loan made by each Lender
shall be evidenced by a Term Credit Note (individually a "Term Credit Note" and
collectively the "Term Credit Notes") in the form (with appropriate insertions)
annexed hereto as Exhibit B. Unless required to be sooner paid, the Borrower
promises to pay the Term Loans in sixteen quarterly installments commencing on
December 31, 1999 and continuing on the last day of each calendar quarter
thereafter to and including September 30, 2003. The first four of such
installments shall each aggregate $2,500,000 as to all Term Credit Notes, the
next four of such installments shall each aggregate $6,250,000 as to all Term
Credit Notes, the next four of such installments shall each aggregate $8,750,000
as to all Term Credit Notes, the next three such installments shall each
aggregate $10,000,000 as to all Term Credit Notes and the last and final
installment shall aggregate $100,000,000 or such other amount as shall be
necessary to pay the Term Credit Notes in full. The Lenders shall each be
entitled to a pro rata share of each such payment of principal in accord with
the amounts of their Term Loans. Amounts prepaid on the Term Loans may not be
reborrowed.
Section 1.3. Manner of Borrowing. (a) Generally. The Borrower shall
give the Administrative Agent notice (which may be written or oral, but if oral,
promptly confirmed in writing) by 1:00 p.m. (Charlotte Time) on any Business Day
of each request for a Borrowing, in each case specifying the amount of such
Borrowing and the date such Borrowing is to be made, which shall be not less
than one Business Day hence. The Administrative Agent shall promptly notify each
Lender of its receipt of each such notice. Not later than 2:00 p.m. (Charlotte
Time) on the date specified for any Borrowing, each Lender shall make the
proceeds of its Loan comprising part of such Borrowing available in immediately
available funds to the Administrative Agent in Charlotte, North Carolina which
shall in turn make such proceeds available to the Borrower.
(b) Administrative Agent Reliance on Lender Funding. Unless the
Administrative Agent shall have been notified by a Lender before the time when
such Lender is scheduled to make payment to the Administrative Agent of the
proceeds of a Loan that such Lender does not intend to make such payment, the
Administrative Agent may assume that such Lender has made such payment when due
and the Administrative Agent may in reliance upon such assumption (but shall not
be required to) make available to the Borrower the proceeds of the Loan to be
made by such Lender and if any Lender has not in fact made such payment to the
Administrative Agent, such Lender shall, on demand, pay to the Administrative
Agent the amount made available to such Borrower attributable to such Lender
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to Lender and ending on
(but excluding) the date such Lender pays such amount to the Administrative
Agent at a rate per annum equal to the Fed Funds Rate. If such amount is not
received from such Lender by the Administrative Agent immediately upon demand,
the Borrower will, on demand, repay to the Administrative Agent the proceeds of
the Loan attributable to such Lender with interest thereon at a rate per annum
equal to the interest rate applicable to the relevant Loan.
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(c) Requests. All requests for Borrowings and selection of interest
rates to be applicable thereto may be written or by facsimile transmission. The
Borrower agrees that the Administrative Agent may rely on any such notice given
by any person the Administrative Agent in good faith believes is an Authorized
Representative without the necessity of independent investigation (the Borrower
hereby indemnifying the Administrative Agent and Lenders from any liability or
loss ensuing from such reliance).
Section 1.4. Borrowing Pro Rata. Each Borrowing under the Commitments
shall be made pro rata from the Lenders in accordance with the respective
amounts of the Commitments under which such Borrowing is being effected and no
Lender shall under any circumstances be obligated to extend credit hereunder in
excess of the amount of its Commitments, the obligations of the Lenders under
this Agreement to be several and not joint.
SECTION 2. INTEREST.
Section 2.1. Options. Subject to all of the terms and conditions of
this Section 2, portions of the principal indebtedness evidenced by each Class
of Notes (all of the indebtedness evidenced by each Class of Notes bearing
interest at the same rate for the same period of time being hereinafter referred
to as a "Portion") may, at the option of the Borrower, bear interest with
reference to the Base Rate (a "Base Rate Portion") or with reference to the
Adjusted LIBOR Rate ("LIBOR Portions"), and Portions may be converted from time
to time from one basis to the other. All of the indebtedness evidenced by each
Class of Notes which is not part of LIBOR Portion shall constitute a single Base
Rate Portion. All of the indebtedness evidenced by each Class of Notes which
bears interest with reference to a particular Adjusted LIBOR Rate for a
particular Interest Period shall constitute a single LIBOR Portion. The Borrower
promises to pay interest on each Portion at the rates and times specified in
this Section 2.
Section 2.2. Base Rate Portion. Each Base Rate Portion shall bear
interest (which the Borrower promises to pay at the times herein provided), at
the rate per annum determined by adding the Applicable Margin to the Base Rate
as in effect from time to time, provided that if a Base Rate Portion is not paid
when due (whether by lapse of time, acceleration or otherwise), such Portion
shall bear interest (which the Borrower promises to pay at the times hereinafter
provided), whether before or after judgment, for the period from the date such
Portion became due and until payment in full thereof, at the rate per annum
determined by adding 2% to the interest rate which would otherwise be applicable
thereto from time to time. Interest on the Base Rate Portions shall be payable
on the last day of each March, June, September and December in each year and at
maturity of the Notes and interest after maturity shall be due and payable upon
demand.
Section 2.3. LIBOR Portions. Each LIBOR Portion shall bear interest
(which the Borrower promises to pay at the times herein provided) for each
Interest Period selected therefor at a rate per annum equal to the Adjusted
LIBOR Rate for such Interest Period plus the Applicable Margin, provided that if
any LIBOR Portion is not paid when due (whether by lapse of time, acceleration
or otherwise) such Portion shall bear interest (which the
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Borrower promises to pay at the times hereinafter provided) whether before or
after judgment, for the period from the date such Portion became due and until
payment in full thereof, through the end of the Interest Period then applicable
thereto at the rate per annum determined by adding 2% to the interest rate
otherwise applicable thereto, and effective at the end of such Interest Period
such LIBOR Portion shall automatically be converted into and added to the
applicable Base Rate Portion and shall thereafter bear interest at the interest
rate applicable to such Base Rate Portion after default. Interest on each LIBOR
Portion shall be due and payable on the last day of each Interest Period
applicable thereto and, if an Interest Period is longer than three months, then
at the end of each three month period and at the end of such Interest Period,
and interest after maturity shall be due and payable upon demand. The Borrower
shall notify the Administrative Agent on or before 1:00 p.m. (Charlotte time) on
the third Business Day preceding the end of an Interest Period applicable to a
LIBOR Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in
which event the Borrower shall notify the Administrative Agent of the new
Interest Period selected therefor, and in the event the Borrower shall fail to
so notify the Administrative Agent, such LIBOR Portion shall automatically be
converted into and added to the applicable Base Rate Portion as of and on the
last day of such Interest Period. The Administrative Agent shall promptly notify
each Lender of each notice received from the Borrower pursuant to the foregoing
provisions. Anything contained herein to the contrary notwithstanding, the
obligation of the Lenders to create, continue or effect by conversion any LIBOR
Portion shall be conditioned upon the fact that at the time no Potential Default
or Event of Default shall have occurred and be continuing. There shall be not
more than six LIBOR Portions extant at any one time.
Section 2.4. Computation. Interest on the Notes and all fees, charges
and commissions due hereunder shall be computed on the basis of a year of 360
days for the actual number of days elapsed.
Section 2.5. Minimum Amounts. Each LIBOR Portion shall be in a minimum
amount of $3,000,000 and thereafter in integral multiples of $100,000.
Section 2.6. Manner of Rate Selection. The Borrower shall notify the
Administrative Agent by 1:00 p.m. (Charlotte time) at least three Business Days
prior to the date upon which it requests that any LIBOR Portion be created or
that any part of the Base Rate Portion be converted into a LIBOR Portion (such
notice to specify in each instance the amount thereof and the Interest Period
selected therefor) and the Administrative Agent shall promptly advise each
Lender of each such notice. If any request is made to convert a LIBOR Portion
into the applicable Base Rate Portion, such conversion shall only be made so as
to become effective as of the last day of the Interest Period applicable
thereto. All requests for the creation, continuance or conversion of Portions
under this Agreement shall be irrevocable. Such requests may be written or by
facsimile transmission or telecopy and the Administrative Agent is hereby
authorized to honor requests for creations, continuances and conversions
received by it from any person purporting to be a person authorized to act on
behalf of the Borrower hereunder, the Borrower hereby indemnifying the
Administrative Agent and the Lenders from any liability or loss ensuing from so
acting.
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SECTION 3. THE NOTES, FEES, PREPAYMENTS, TERMINATIONS AND APPLICATION OF
PAYMENTS.
Section 3.1. Commitment Fee. For the period from the date hereof to and
including the Termination Date, the Borrower shall pay to the Administrative
Agent for the ratable account of the Lenders with Revolving Credit Commitments a
commitment fee at the rate per annum equal to the Applicable Margin for
commitment fees as from time to time in effect on the average daily unused
amount of the Revolving Credit Commitments. Such fee shall be payable quarterly
in arrears on the last day of each March, June, September and December and on
the Termination Date, unless the Revolving Credit Commitments are terminated in
whole on an earlier date, in which event the fees for the period from the date
of the last payment made pursuant to this Section 3.1 through the effective date
of such termination in whole shall be paid on the date of such earlier
termination in whole.
Section 3.2. Administrative Agent's Fees. The Borrower shall pay to and
for the sole account of the Administrative Agent such fees as the Borrower and
the Administrative Agent may agree upon in writing from time to time. Such fees
shall be in addition to any fees and charges the Administrative Agent may be
entitled to receive under the other Loan Documents.
Section 3.3. Letter of Credit Fees. The Borrower shall pay to the
Administrative Agent for the ratable account of the Lenders in accord with the
respective amounts of their Revolving Credit Commitments, a Letter of Credit fee
computed at the Applicable Margin for LIBOR Portions on the maximum amount of
the Letters of Credit from time to time outstanding and undrawn, such fee to be
paid quarterly in arrears on the last day of each December, March, June and
September in each year to and including, and on, the Termination Date. In
addition, on the date of issuance of each Letter of Credit the Borrower shall
pay the Issuer for its own account a fee computed at the rate of 1/8 of 1% per
annum on the face amount of such Letter of Credit for the period from the date
of issuance to the scheduled expiry date thereof (or if such scheduled expiry
date is longer than a year, then for such first year, with the fee for each full
year or portion thereof thereafter to be paid on the annual anniversary dates of
such Letter of Credit), such fee to be retained by the Issuer for its own
account. In addition, the Borrower shall pay to the Issuer such issuing,
processing, drawing, amendment and other fees and charges as the Issuer
customarily imposes in connection with the issuance of letters of credit of the
type in question, the payment of drafts thereunder or amendments thereto.
Section 3.4. Prepayments. (a) Optional Prepayments. The Borrower shall
have the privilege of prepaying without premium or penalty and in whole or in
part (but if in part, then in a minimum amount of $500,000) any Borrowing at any
time upon prior facsimile transmission or telephonic notice from the Borrower to
the Administrative Agent on or before 1:00 p.m. (Charlotte time) on the Business
Day of such prepayment. Any amount prepaid under the Revolving Credit
Commitments may, subject to the terms and conditions of this Agreement, be
borrowed, repaid and borrowed again.
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(b) Mandatory Prepayments.
(i) Commitment Reductions. If the outstanding amount of
Credit Utilizations under the Revolving Credit Commitments shall at any time
exceed the amount of the Revolving Credit Commitments as the same may from time
to time be reduced pursuant hereto, the Borrower shall promptly prepay the
Revolving Credit Loans by the amount of such excess, provided if and when the
Revolving Credit Loans are paid in full there are L/C Obligations outstanding,
the amount of the prepayment (but not more than the L/C Obligations) shall
instead be paid to the Administrative Agent to be held as collateral security
for the L/C Obligations.
(ii) Asset Sale Proceeds. An amount equal to any and all
net cash proceeds (i.e., gross proceeds net of out-of-pocket expenses and
property, transfer and similar taxes (i.e., taxes other than those measured by
income, gross receipts or capital gains)) incurred by the Borrower in effecting
the sale or other disposition) received by the Borrower and its Subsidiaries
from the sale or disposition (whether voluntary or involuntary) of fixed or
capital assets (in any event including the proceeds of sales of Timberland and
other land but not including ordinary course of business sales of stumpage and
cutting rights where payment is to be made primarily over time as Timber is
harvested by the purchaser of such rights or other sales of such rights if made
in the ordinary course of business if (i) the aggregate amount of advance
payments received or to be received by the Borrower (i.e., payments other than
payments made as and for Timber actually taken by the purchaser and within 30
days of the taking thereof) under each such contract or series of related
contracts does not exceed $15,000,000, (ii) each such contract shall provide for
the severance and taking of the Timber in question within not more than two
years of the date the contract in question becomes effective and (iii) the
Administrative Agent shall be notified of each such contract and the
Administrative Agent shall reduce the Value of Merchantable Timber by removing
therefrom the amount of such value which the Administrative Agent believes is
represented by the amount of advance payments made or due thereon (based on the
percentage such advance payment represents of the total appraised value of the
Timber subject to such contract), such reduction to be made effective as and
when such payments are received) shall be paid over promptly (but in any event
within two Business Days of receipt) to the Administrative Agent for application
as set forth in clause (vi) of this Section 3.4(b); provided, however, that (i)
the foregoing provisions shall be inapplicable to funds received by the
Administrative Agent under the Collateral Documents if and so long as, pursuant
to the terms of the Collateral Documents, the same are to be held by the
Administrative Agent and disbursed for (or to reimburse the Borrower and its
Subsidiaries for the cost of) the restoration, repair or replacement of the
property in respect of which such proceeds were received, (ii) no prepayment
shall be required with respect to net proceeds received from the ordinary course
of business sale or other disposition of personal property which is worn out,
obsolete or, in the good faith judgment of the Borrower and its Subsidiaries no
longer necessary to the efficient conduct of their business as then conducted
and (iii) no prepayment shall be required out of $5,000,000 of net proceeds
received by the Borrower and its Subsidiaries in any calendar year which are not
otherwise excepted from prepayment hereunder but if the net proceeds from a
single transaction or series of substantially concurrent transactions exceeds
$2,500,000, then such proceeds shall be remitted to the
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Administrative Agent for application hereunder. Nothing herein contained shall
in any manner impair or otherwise affect the prohibitions against the sale or
other disposition of Collateral or other assets contained herein.
(iii) Excess Cash Flow. On the 31st day of March of each
year (commencing March 31, 1999) the Borrower shall pay over to the
Administrative Agent for application as set forth in clause (vi) of this Section
3.4(b) an amount equal to 75% of Excess Cash Flow for the immediately preceding
fiscal year, provided that (i) if as of the last day of any fiscal year the
Timber Coverage Ratio is less than 55%, no payment shall be required under this
clause (iii) with respect to such fiscal year and (ii) Excess Cash Flow for the
fiscal year ended December 31, 1998 shall be computed solely for the period from
the date the Restructuring is consummated to December 31, 1998.
(iv) Equity Offerings. Promptly (but in any event within
two Business Days of receipt) upon receipt thereof by the issuer or seller, the
Borrower shall pay over to the Administrative Agent for application as set forth
in clause (vi) of this Section 3.4(b), an amount equal to one hundred percent of
all net cash proceeds received by the issuer or seller from Equity Offerings,
provided that (aa) no such prepayment shall be required out or in respect of the
portion of such net cash proceeds applied to the payment of the Bridge Loan,
(ab) no such prepayment shall be required out of the issuance and sale of a
limited partnership interest in STP II if and to the extent that such proceeds
are either (A) applied to the redemption or acquisition of the equity interest
of Mach One in STP II and the amount expended for such redemption or acquisition
does not exceed the agreed value specified therefor in the October 9, 1998 First
Amended and Restated Agreement of Limited Partnership for STP II as in existence
on the date hereof and in the form provided to the Lenders (the "STP II
Partnership Agreement"), and such sale and redemption or acquisition does not
result in a Change of Control or (B) applied to the redemption or acquisition of
the interest of members of the ▇▇▇▇▇▇ Group in STP II and if but only if the
Required Lenders consent thereto, the Bridge Loan has been paid in full, the
Final Covenant Levels have been attained, the amount expended for such
redemption or acquisition does not exceed the agreed value of the interest
redeemed or repurchased as set forth in the STP II Partnership Agreement, after
giving effect to such sale and purchase or redemption a Change of Control shall
not have occurred and the ▇▇▇▇▇▇ (Immediate) Group shall retain an interest in
STP II of a size such that the matters reflected on Exhibit G of the STP II
Partnership Agreement cannot occur if the ▇▇▇▇▇▇ (Immediate) Group objects
thereto; and (ac) if the Bridge Loan has been paid in full and the Final
Covenant Levels have been attained, no such prepayment shall be required out of
the proceeds of an Equity Offering if and to the extent such proceeds are used
within 30 days of the date of receipt to pay for the purchase by the Borrower of
Timberland satisfying the criteria set forth in, and if the Borrower takes the
steps set forth in, Section 4.2(c) hereof. The foregoing to the contrary
notwithstanding, up to $3,000,000 of the proceeds of an Equity Offering by STT
II or STP II may be utilized by them to make an ▇▇▇▇▇▇▇ money of similar deposit
on timberland to be acquired by them rather than to prepay the Obligations if
but only if (i) no Default or Event of Default has occurred and is continuing
and (ii) the only recourse of the seller of such timberland for breach of any
obligations in connection with such acquisition to such deposit.
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(v) September Harvest Confirmation Holdback. Any amounts
payable to STP II under the Escrow Agreement dated October 9, 1998 between First
Union National Bank as escrowee, Frontier, STP II and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as
member representative, shall be paid over to the Administrative Agent for
application to the Revolving Credit Notes.
(vi) Application of Certain Prepayments. Payments which
the Borrower is required to make pursuant to clauses (ii) through (iv),
inclusive, of this Section 3.4(b) shall be first applied as and for a mandatory
prepayment of the Term Credit Notes until payment in full thereof, then to the
prepayment of Revolving Credit Loans until payment in full thereof, then to be
held by the Administrative Agent as collateral security for the L/C Obligations
up to the full amount thereof and with any balance remaining released back to
the Borrower.
Section 3.5. Commitment Terminations.
(a) Voluntary Terminations. The Borrower shall have the right at
any time and from time to time upon not less than five Business Days prior
notice to the Administrative Agent (which shall promptly notify the Lenders) to
terminate the Commitments in whole or in part (but if in part then in a minimum
amount of $5,000,000 or such lesser amount as will terminate the Commitments in
full). No termination of the Commitments hereunder (whether voluntary or
required) may be reinstated.
(b) Mandatory Reductions. The Revolving Credit Commitments shall
be automatically and ratably reduced by the positive difference, if any, between
(i) each payment required to be made by the Borrower pursuant to clause (ii)
through (iv), inclusive, of Section 3.4(b) hereof (including any amount of such
payment which exceeds the amount of the Credit Utilizations as then outstanding)
and (ii) the amount of such payment which, pursuant to Section 3.4(b)(vi) is
applied as and for a mandatory prepayment of the Term Credit Notes.
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Section 3.6. Place and Application of Payments. All payments hereunder
shall be made to the Administrative Agent at its office at One First Union
Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and in
immediately available funds, prior to 1:00 p.m. (Charlotte time) on the date of
such payment. All such payments shall be made without setoff or counterclaim and
without reduction for, and free from, any and all present and future levies,
imposts, duties, fees, charges, deductions withholdings, restrictions or
conditions of any nature imposed by any government or any political subdivision
or taxing authority thereof. Any payments received after 1:00 p.m. (Charlotte
time) shall be deemed received upon the following Business Day. The
Administrative Agent shall remit to each Lender its proportionate share of each
payment of principal, interest and fees received by the Administrative Agent
from the Borrower by 1:00 p.m. (Charlotte time) on the day of its receipt and
its proportionate share of each such payment received by the Administrative
Agent after 1:00 p.m. (Charlotte time) on the Business Day following the day of
its receipt by the Administrative Agent. In the event the Administrative Agent
does not remit any amount to any Lender when required by the preceding sentence,
the Administrative Agent shall pay to such Lender interest on such amount until
paid at a rate per annum equal to the Fed Funds Rate. The Borrower hereby
authorizes the Administrative Agent to automatically debit any of its accounts
with it for any principal, interest and fees when due under the Notes or this
Agreement and to transfer the amount so debited from such account to the
Administrative Agent for application as herein provided. The Administrative
Agent shall notify the Borrower of each such debit promptly after it is made,
but its failure to do so will not impair the validity of such debit or result in
any liability of the Administrative Agent to the Borrower. Unless the Borrower
otherwise directs, payments shall be deemed first applied to the Base Rate
Portion until payment in full thereof, with any balance applied to the
applicable LIBOR Portions in the order in which their Interest Periods expire.
Prepayments of the Term Credit Notes shall be applied pro rata to the reduction
of the remaining installment maturities due thereon. All payments (whether
voluntary or required) shall be accompanied by any amount due the Lenders under
Section 10.4 hereof, but no acceptance of such a payment without requiring
payment of amounts due under Section 10.4 shall preclude a later demand by the
Lenders for any amount due them under Section 10.4 in respect of such payment.
In the event that any mandatory prepayment called for by Section 3.4(b)
hereof would necessitate a prepayment of a LIBOR Portion on a day other than the
last day of the Interest Period applicable thereto and such prepayment would
require the Borrower to make a payment to any of the Lenders under Section 10.4
hereof, then in lieu of making such a prepayment the Borrower may instead
deposit the amount of the prepayment with the Administrative Agent to be held by
it until the same can be applied to the applicable Loans without requiring the
Borrower to make a payment under Section 10.4 hereof. The amount so held by the
Administrative Agent may, at the option of the Borrower, be invested in
investments of the types permitted by clauses (c), (d), (e), (f), (g) or (i) of
Section 8.12 hereof or in deposit accounts of the Administrative Agent or any
bank affiliate thereof provided that the same mature on or before the first day
or which the same can be applied to the applicable Loans without requiring a
payment under Section 10.4 hereof. If and so long as no Potential Default or
Event of Default has occurred and is continuing hereunder all earnings on such
investments shall be released from time to time to the Borrower. All
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amounts deposited pursuant hereto and all investments and proceeds thereof shall
be (and hereby are) pledged by the Borrower to the Administrative Agent to
secure the Obligations, the Borrower agreeing to execute and deliver such
additional documents as the Administrative Agent may reasonably require to
effectuate the foregoing, and all of such may be applied to the reduction of the
Obligations upon the occurrence of an Event of Default hereunder.
Anything contained herein to the contrary notwithstanding, all payments
and collections received in respect of the Loan Documents received, in each
instance, by the Administrative Agent or any of the Lenders after the occurrence
of an Event of Default shall be remitted to the Administrative Agent and
distributed as follows:
(a) first, to the payment of any outstanding reasonable costs
and expenses incurred by the Administrative Agent or Issuer in
monitoring, verifying, protecting, preserving or enforcing the liens on
the Collateral or in protecting, preserving or enforcing rights under
the Loan Documents and in any event including all reasonable costs and
expenses of a character which the Borrower has agreed to pay under
Section 13.4 hereof (such funds to be retained by the Administrative
Agent and Issuer for its own account unless it has previously been
reimbursed for such costs and expenses by the Lenders, in which event
such amounts shall be remitted to the Lenders to reimburse them for
payments theretofore made to the Administrative Agent and Issuer);
(b) second, to the payment of any outstanding interest or
other fees or amounts due under the Notes, L/C Documents or this
Agreement other than for principal, ratably as among the Lenders in
accord with the amount of such interest and other fees or amounts owing
each;
(c) third, to the payment of the principal of the Notes, the
Reimbursement Obligations and the Hedging Liabilities and to be held by
the Administrative Agent to secure L/C Obligations which are not yet
Reimbursement Obligations up to the full amount thereof, pro rata in
accordance with the then amount of each;
(d) fourth, to the Lenders ratably in accord with the amounts
of any other indebtedness, obligations or liabilities of the Borrower
or Guarantors owing to each of them and secured by the Collateral
Documents unless and until all such indebtedness, obligations and
liabilities have been fully paid and satisfied; and
(e) fifth, to the Borrower or whoever may be lawfully
entitled thereto.
Section 3.7. Notations and Requests. All advances made against the
Notes, the status of all amounts evidenced by the Notes as constituting part of
a Base Rate Portion or LIBOR Portion and the rates of interest and Interest
Periods applicable to such Portions shall be recorded by the Lenders on their
books or, at their option in any instance, endorsed on the reverse side of the
Notes and the unpaid principal balances and status, rates and Interest Periods
so recorded or endorsed by the Lenders shall be prima facie evidence in any
court
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or other proceeding brought to enforce the Notes of the principal amount
remaining unpaid thereon, the status of the borrowings evidenced thereby and the
interest rates and Interest Periods applicable thereto. Prior to any negotiation
of any Note the Lender holding such Note shall endorse thereon the status of all
amounts evidenced thereby as constituting part of the applicable Base Rate
Portion or a LIBOR Portion and the rates of interest and the Interest Periods
applicable thereto.
Section 3.8. Capital Adequacy. If any Lender shall determine that any
change in applicable law, rule or regulation regarding capital adequacy, 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 such Lender (or its lending office) 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 as
a consequence of its obligations hereunder or credit extended by it hereunder or
the Letters of Credit or its participation therein to a level below that which
such Lender could have achieved but for such law, rule, regulation, change or
compliance (taking into consideration such Lender's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then from
time to time as specified by such Lender the Borrower shall pay such additional
amount or amounts as will compensate such Lender for such reduction. Any Lender
claiming compensation hereunder shall submit a certificate to the Borrower
setting forth the computation of the amount due and such certificate shall be
deemed prima facie correct. In making any such computation, the affected Lender
may use reasonable averaging and attribution methods.
SECTION 4. THE COLLATERAL AND COMPUTATION OF VALUE OF MERCHANTABLE
TIMBER.
Section 4.1. The Collateral. The Obligations shall be secured by valid
and perfected first liens on the inventory, accounts receivable, contract rights
(including rights under the Acquisition Agreement) or proceeds thereof, notes
receivable, general intangibles (including rights in and to bank and other
depository accounts except that the Borrower and the Guarantors need not take
any steps to perfect a lien on accounts maintained in proximity to its
operations for the purpose of paying amounts owing (as opposed to receiving
collections) provided that the total balance on deposit in such accounts shall
not exceed $250,000), fixtures, furniture, equipment (other than aircraft and
vehicles covered by a certificate of title law), Timberland (provided that the
Timberland which is the subject of the Frontier Stumpage Contract will be
subject to the rights of Frontier and its successors and assigns thereunder) and
other land of the Borrower and the Guarantors, by the capital stock or other
equity interests in the Subsidiaries owned by the Borrower, by the rights of STT
II in the escrow referred to in Section 3.4(b)(v) hereof and by all equity
interests in the Borrower and STP II, in each instance whether now owned or
hereafter acquired (collectively the "Collateral"), and the Borrower and the
Guarantors agree that they will from time to time at the request of the
Administrative Agent or the Required Lenders execute and deliver and cause to be
executed and delivered such documents and do such acts and things as the
Administrative Agent or Required Lenders may reasonably request in order to
provide for
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or perfect such liens. The foregoing to the contrary notwithstanding, (i) unless
and until an Event of Default has occurred and is continuing the Borrower need
not deliver any note receivable to the Administrative Agent which has a
principal balance of $1,000,000 or less, (ii) the Administrative Agent's liens
on the equity interests in the Borrower and STP II shall be subordinate to a
lien thereon securing the Bridge Loan and (iii) the Collateral shall not include
the Transferred Assets.
The Borrower and the Guarantors agree to promptly, but in any event
within 30 days of the date hereof, make such arrangements as shall be necessary
or appropriate to assure that all proceeds of the Collateral are deposited (in
the same form as received) in accounts maintained with, or under the dominion
and control of, the Administrative Agent, such accounts to constitute special
restricted accounts, the Borrower and the Guarantors acknowledging that the
Administrative Agent has (and is hereby granted) a first priority lien on such
accounts and all funds contained therein to secure the Obligations. If and to
the extent that proceeds are deposited in accounts maintained with financial
institutions other than the Administrative Agent, it shall be a condition to the
Borrower's and the Guarantors' right to so effect such deposits more than 30
days after the date hereof that the banks of account have delivered to the
Administrative Agent letters satisfactory to the Administrative Agent in form
and substance pursuant to which such banks of account acknowledge the
Administrative Agent's lien thereon, waive any right of offset or bankers' liens
thereon (other than with respect to account maintenance charges and returned
items) and that collected amounts on deposit in such accounts will only be
transferred to the Administrative Agent from and after notice from the
Administrative Agent to that effect. The Lenders agree with the Borrower and the
Guarantors that if and so long as no Event of Default has occurred or is
continuing hereunder, amounts on deposit in the accounts maintained with the
Administrative Agent will (subject to the rules and regulations of the
Administrative Agent as from time to time in effect applicable to demand deposit
accounts) be made available to the Borrower and the Guarantors for use in the
conduct of their businesses and the Administrative Agent will give no notice to
other banks of account pursuant to the immediately preceding sentence. Upon the
occurrence of an Event of Default, the Administrative Agent may apply the funds
on deposit in such accounts to the Obligations.
Section 4.2. Determination of Value of Merchantable Timber.
(a) Quarterly Determinations. The Value of Merchantable Timber
shall be determined from time to time based upon appraisals of the same and
other factors as hereinafter set forth. Within 30 days after the close of each
calendar quarter, the Borrower shall cause ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. or another
independent appraiser of national reputation in the appraisal of timberlands who
is acceptable to the Required Lenders (an "Acceptable Appraiser") to submit an
appraisal to the Lenders appraising the value of the Merchantable Timber as of
the close of such calendar quarter in accord with sound timber appraisal
methods, generally using both the comparable sales and income approaches to a
determination of value. Each such appraisal shall generally use the methodology
set forth in the appraisal of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. as of August 31, 1998
and heretofore delivered to the Lenders (the "Initial Appraisal") and shall
include an update on endangered species and fire damage issues and any
regulatory issues which impact the amount or cost of
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harvesting Timber from the Timberland, provided that future appraisals shall be
based in part on a current independent cruise of portions of the Timberland in
accord with prudent industry practice if and to the extent that the Borrowers's
normal random Timberland cruise samplings reveal variances outside industry
norms. The Value of Merchantable Timber shall then be adjusted by the Borrower
by (i) deleting any amounts included in the appraisal in respect of land values
or values for pre-Merchantable Timber or Timber which is not mortgaged, (ii)
adjusting the value of Merchantable Timber included consisting of Stumpage
Rights to account for any obligations of the Borrower or the Guarantors to the
owners of the land underlying such Merchantable Timber and (iii) making
adjustments on account of the Frontier Stumpage Contract and advance payments or
prepayments under stumpage sales and similar arrangements. The Borrower shall
then notify the Administrative Agent of its determination of the Value of
Merchantable Timber and the Administrative Agent shall make such other
adjustments as the Administrative Agent in good ▇▇▇▇▇ ▇▇▇▇▇ appropriate under
the circumstances (including adjustments in discount rates and factors and
selecting among appraisal methodologies). The Administrative Agent shall consult
with the Borrower in connection with such adjustments but its determination
shall be final and conclusive absent bad faith. The Administrative Agent shall
then notify the Borrower and the Lenders of the Value of Merchantable Timber to
be used until the next redetermination.
(b) Exogenous Factors. In the event (i) that any material amount
of the Merchantable Timber is damaged or destroyed by fire or other casualty or
(ii) of the imposition of any new or more restrictive Governmental Requirements
not accounted for in the most recent appraisal which could materially impact the
value of the Merchantable Timber or the ability to harvest the same or (iii) of
the termination of any Stumpage Rights, the Borrower shall notify the
Administrative Agent and the Administrative Agent shall after consultation with
the Borrower and the Acceptable Appraiser, to the extent appropriate, adjust the
Value of Merchantable Timber to account for the event which has occurred and
notify the Borrower and the Lenders of such adjustment.
(c) Acquisitions. Promptly upon each acquisition of Timberland by
the Borrower, the Borrower shall promptly mortgage such Timberland to the
Administrative Agent to secure the Obligations and shall comply with the
requirements of clauses (iii) and (vi) below. If the Borrower desires that such
Timberland be included in the Value of Merchantable Timber it shall comply with
the following conditions and the Value of Merchantable Timber shall be
redetermined under the procedures set forth in Section 4.2(a) hereof and the
Administrative Agent shall notify the Borrower and the Lenders of such
redetermination. The conditions to inclusion of acquired Timberland in the Value
of Merchantable Timber are as follows:
(i) the Administrative Agent shall have been provided
with such information concerning the Timberland to be acquired as it
may reasonably request;
(ii) in the case of acquisitions of Stumpage Rights, the
Administrative Agent shall have been provided with copies of all deeds
or other agreements providing for such stumpage rights and shall have
approved the same in form and substance;
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(iii) the Administrative Agent shall have received such
mortgages, deeds of trust and other Collateral Documents as it may
reasonably require granting it a first lien on the Timberland being
acquired to secure the Obligations and the same shall be duly filed for
record as required to be effective as against purchasers and creditors;
(iv) the Administrative Agent shall have been provided
with a mortgagee's policy or policies of title insurance (or binding
commitment therefor) or an endorsement to the policies theretofore
issued to it insuring the liens of those Collateral Documents creating
Liens on such Timberland to be valid first liens subject to no defects
or objections which are reasonably unacceptable to the Administrative
Agent, together with such endorsements as the Administrative Agent may
require;
(v) the Administrative Agent shall, if it so requests,
have received a report satisfactory to it from an acceptable
independent consultant as to any endangered species, disease,
infestation, fire damage or regulatory issues concerning the Timberland
being acquired;
(vi) if the additional Timberland in question is located
in a state other than one in which Timberland have been previously
mortgaged, the Administrative Agent shall have received an opinion of
counsel reasonably acceptable to it with respect to the mortgage on
such Timberland to the effect that the mortgages and deeds of trust
creating liens on real property or rights to Timber are adequate under
local law for their intended purposes, contain remedial provisions as
customarily required by prudent mortgagees in the state in question and
will not subject the Administrative Agent or the Lenders to taxation in
such state and to the effect that the Borrower is duly licensed or
qualified to do business in the state in question;
(vii) the Administrative Agent shall have received an
appraisal of the additional Timberland being acquired from an
Acceptable Appraiser and conforming to the appraisal requirements set
forth in Section 4.2(a) hereof;
(viii) the Timberlands to be acquired shall be located
within the states of Washington, Oregon, Idaho, California, Montana,
Colorado or Utah; and
(ix) the Borrower shall be deemed to have repeated all of
the representations contained in Section 6.14 hereof with respect to
such additional Timberland as of the date of the acquisition in
question; and
(x) the Timberland in question shall be owned by the
Borrower.
(d) Sales. If Timberland is sold, the Value of Merchantable Timber
shall be adjusted as and if contemplated by Section 8.13(e) hereof.
(e) Conclusiveness of Determination. All determinations by the
Administrative Agent pursuant to the provisions of this Section 4.2 shall be
final and conclusive provided that it has acted in good faith in connection
therewith.
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(f) Initial Determination. The Administrative Agent has determined
that the Value of Merchantable Timber as of September 30, 1998 is at least
$410,000,000 which number shall be used until redetermined or adjusted pursuant
to this Section 4.2. In addition to the other adjustments provided for in this
Section 4.2, the Value of Merchantable Timber shall be adjusted by the
Administrative Agent to reflect Timber harvested from the Timberland between
August 31, 1998 and the date of the initial Borrowing hereunder (to the extent
not already adjusted) upon receipt by the Administrative Agent of the requisite
information concerning the Timber so harvested.
SECTION 5. DEFINITIONS.
Section 5.1. Certain Definitions. The terms hereinafter set forth when
used herein shall have the following meanings, such definitions to be equally
applicable to the singular and plural of the terms defined:
"Acceptable Appraiser" is defined in Section 4.2.
"Acquisition Agreement" shall mean the Acquisition and Contribution
Agreement dated as of October 9, 1998 among STT II, STP II, Strategic Timber Two
Operating Co., LLC, the ▇▇▇▇▇▇ Group and Frontier and all exhibits and schedules
thereto, all as amended or modified from time to time as and to the extent
permitted hereby.
"Adjusted LIBOR Rate" shall mean a rate per annum determined pursuant
to the following formula:
Adjusted LIBOR Rate = LIBOR Rate
---------------------------------
100% - Reserve Percentage
"Administrative Agent" shall mean First Union National Bank and any
successor thereto appointed pursuant to Section 12.1 hereof.
"Agents" shall mean the Administrative Agent, ABN AMRO Bank N.V. in its
capacity as Syndication Agent and NationsBank, N.A. in its capacity as
Documentation Agent.
"Affiliate" shall mean any Person, directly or indirectly controlling
or controlled by, or under direct or indirect common control with, another
Person. A Person shall be deemed to control another Person for the purposes of
this definition if such first Person possesses, directly or indirectly, the
power to direct, or cause the direction of, the management and policies of the
second Person, whether through the ownership of voting securities, common
directors, trustees or officers, by contract or otherwise.
"Agreement" shall mean this Replacement Credit Agreement as
supplemented and amended from time to time.
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"Applicable Margin" shall mean, with respect to each type of Portion
and the computation of each fee described below, the rate per annum shown below
for the range of Leverage Ratio specified below:
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
Leverage Ratio
(expressed as <4.0 <4.5 but <5.0 but <5.5 but >5.5 to
a ratio to 1) - - >4.0 - >4.5 - >5.0
Base Rate Portion .25% .50% .75% 1.00% 1.25%
LIBOR Portions and 1.75% 2.00% 2.25% 2.50% 2.75%
L/C Fee
Commitment Fee .375% .50% .50% .50% .50%
The Applicable Margins will be adjusted upon receipt of the Borrower's
quarterly consolidated financial statements for each fiscal quarter of the
Borrower and the related Compliance Certificate, commencing with the quarter
ended March 31, 1999 and shall be at Level IV prior to the determination to be
made as of March 31, 1999. Not later than 5 Business Days after receipt by the
Administrative Agent of the financial statements called for by Section 8.4
hereof for each fiscal quarter of the Borrower ending on or after March 31,
1999, the Administrative Agent shall determine the Leverage Ratio for the
applicable period and shall promptly notify the Borrower and the Lenders of such
determination and of any change in the Applicable Margins resulting therefrom.
Any such change in the Applicable Margins shall be effective as of the date the
Administrative Agent so notifies the Borrower and the Lenders and shall apply to
all Loans outstanding on such date or thereafter made and all computations of
letter of credit and commitment fees for the period from and after such date
(provided that a change resulting in an increase in Applicable Margins shall
become effective no later than 5 Business Days after such quarterly financial
statements should have been received in the event they are not timely
delivered), and such new Applicable Margins shall continue in effect until the
effective date of the next redetermination in accordance with this Section. Each
determination of the Leverage Ratio and Applicable Margins by the Administrative
Agent in accordance with this Section shall be conclusive and binding on the
Borrower and the Lenders absent manifest error and provided it has acted in good
faith in connection therewith.
"Application" is defined in Section 1.1(c)(ii).
"Assignment Agreement" is defined in Section 13.16.
"Auditors" is defined in Section 8.4(b).
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"Authorized Representative" shall mean any of the following and such
other persons as may be designated as such from time to time by the Borrower in
a written notice to the Administrative Agent: Chief Executive Officer, Chief
Financial Officer or any other person designated by either of them.
"Base Rate" shall mean for any day the greater of:
(i) the rate of interest announced by First Union
National Bank from time to time as its prime commercial rate (it being
understood that such rate may not be such Lender's best or lowest
rate), with any change in the Base Rate resulting from a change in said
prime commercial rate to be effective as of the date of the relevant
change in said prime commercial rate; and
(ii) the sum of (x) the rate for that day set forth
opposite the caption "Federal Fund (Effective)" in the daily
statistical release designated as "Composite 3:30 P.M. Quotations for
U.S. Government Securities", or any successor publication, published by
the Federal Reserve Bank of New York or, if such publication shall be
suspended or terminated, the arithmetic average of the rates determined
by the Administrative Agent as the prevailing rates per annum (rounded
upward, if necessary, to the next higher 1/100 of 1%) bid at
approximately 10:00 A.M. (Charlotte time) (or as soon thereafter as is
practicable) on such day by two or more New York or Chicago Federal
funds dealers of recognized standing selected by the Administrative
Agent for the purchase at face value of Federal funds in the secondary
market in an amount comparable to the principal amount owed to the
Administrative Agent for which such rate is being determined and (y)
the rate of 1/2 of 1% per annum.
"Base Rate Portion" shall have the meaning specified in Section 2.1
hereof.
"Borrower" shall mean Pioneer Resources, LLC.
"Borrowing" shall mean the aggregate amount of Loans of a given type
made on a given date and, if part of a LIBOR Portion, having the same Interest
Period.
"Bridge Loan" shall mean the loan in the amount of $35,000,000 made to
STT II having terms (including maturity, interest rate and covenants) acceptable
to the Agents (which shall be assumed in the event that they are the providers
of such Bridge Loan).
"Business Day" shall mean any day except Saturday or Sunday on which
banks are open for business in Chicago, Illinois and New York, New York and,
with respect to LIBOR Portions, dealing in United States dollar deposits in
London, England.
"Capitalized Lease" shall mean any lease or obligation for rentals
which is required to be capitalized on a consolidated balance sheet of the
Borrower and its Subsidiaries in accordance with generally accepted accounting
principles, consistently applied.
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"Capitalized Lease Obligation" shall mean the present discounted value
of the rental obligations under any Capitalized Lease determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied.
"Change of Control" shall mean the occurrence of any one or more of the
following events: (i) the Borrower ceases at any time and for any reason to be a
wholly-owned Subsidiary of STP II or (ii) the ▇▇▇▇▇▇ Group ceases at any time
and for any reason to own both legally and beneficially, at least 33% of the
equity interest in STP II or (iii) any of the equity interest of any member of
the ▇▇▇▇▇▇ (Immediate) Group is sold as transferred or (iv) any Person shall at
any time be a general partner of STP II other than a Person which is a
wholly-owned subsidiary of STTII or (v) any Person or group of Persons acting in
concert (other than the present equity owners of STT II and STP II and/or the
▇▇▇▇▇▇ Group) shall at any time own, either legally or beneficially, more than
25% of the equity interest in STT II or STP II or more than 25% of the voting
equity interest in either of such entities.
"Class of Notes" shall mean the Revolving Credit Notes (taken as a
group) and the Term Credit Notes (taken as a group).
"Collateral" is defined in Section 4.1.
"Collateral Documents" shall mean all mortgages, deeds of trust,
pledges, security agreements, financing statements and other documents as shall
from time to time secure the Obligations.
"Commitments" shall mean the Revolving Credit Commitments and the Term
Credit Commitments.
"Compliance Certificate" shall mean the certificate which is required
to be delivered to the Lenders pursuant to Section 8.4(c) hereof in the form of
Exhibit C.
"Consolidated Debt" shall mean Debt of the Borrower and its
Subsidiaries (other than Debt described in clause (b) of the definition of that
term) computed on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" for any period shall mean the net income of
the Borrower and its Subsidiaries for such period as computed on a consolidated
basis in accordance with GAAP; but excluding any extraordinary profits and
losses and also excluding any taxes on such extraordinary profit and any tax
benefit attributable to such extraordinary loss, it being acknowledged that
gains and losses from ordinary course of business sales of Timber, Timberland
and rights therein are not extraordinary for this purpose.
"Credit Utilizations" shall mean the Loans and L/C Obligations.
"Debt" of any Person shall mean as of any time the same is to be
determined, the aggregate (without duplication) of:
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(a) all indebtedness with respect to borrowed money;
(b) all reimbursement and other obligations with respect
to letters of credit, payment or performance bonds, banker's
acceptances, customer advances and other extensions of credit whether
or not representing obligations for borrowed money;
(c) the aggregate amount of Capitalized Lease
Obligations;
(d) all indebtedness secured by any lien or any security
interest on any Property or assets of such Person, (other than advance
payment arrangements approved in writing by the Administrative Agent)
whether or not the same would be classified as a liability on a balance
sheet;
(e) all indebtedness representing the deferred purchase
price of Property (including all amounts payable in respect of Stumpage
Rights and similar obligations), but excluding all trade payables
incurred in the ordinary course of business; and
(f) all guaranties (other than the subordinated guarantee
of the Bridge Loan permitted by Section 8.11(c), hereof), endorsements
(other than any liability arising out of the endorsement of items for
deposit or collection in the ordinary course of business) and other
contingent obligations in respect or designed to assess payment of, or
any obligations to purchase or otherwise acquire, of any of the
foregoing.
"▇▇▇▇▇▇ Group" shall mean (i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇. ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇, their wives and lineal descendants and/or
trusts for the benefit of any of the same and King Investment Group, Inc. and
Old Pioneer, LLC.
"▇▇▇▇▇▇ (Immediate) Group" shall mean (i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, his wife
and lineal descendants and/or trusts for the benefit of any of the same and (ii)
any corporations, partnerships or limited liability companies which the parties
named in clause (i) of this definition control (i.e.; such parties have the
legal power to direct (either directly or through persons elected by them) the
management and policies of such entities, including controlling the actions such
entities take with respect to their investment in STP II).
"EBITDDA" shall mean, with reference to any period, Consolidated Net
Income for such period plus all amounts deducted in arriving at Consolidated Net
Income in respect of (i) Interest Expense for such period, plus (ii) federal,
state and local income taxes of the Borrower and its Subsidiaries for such
period, plus (iii) all amounts properly charged for depreciation, depletion
and/or amortization of assets during such period on the books of the Borrower
and its Subsidiaries The foregoing to the contrary notwithstanding, for all
purposes of this Agreement EBITDDA for the calendar quarter ending March 31,
1998 shall be deemed to be $3,800,000, for the calendar quarter ended June 30,
1998 shall be deemed to be $11,400,000, and for the calendar quarter ended
September 30, 1998 shall be deemed to be $15,200,000.
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"Environmental Indemnity" shall mean an indemnity of the Lenders, the
Issuer and the Agents from the Borrower and STT II as to environmental
liabilities satisfactory in form and substance to the Agents.
"Environmental Laws" shall mean all federal, state and local
environmental, health and safety statutes and regulations, including without
limitation all statutes and regulations establishing quality criteria and
standards for air, water, land and toxic or hazardous wastes and substances.
"Equity Offering" shall mean a direct or indirect public offering,
private placement or other issuance or sale of capital stock or other equity or
membership interests (or warrants, options or other rights therefor) of STT II,
or of STP II or any general or limited partner of STP II other than STT II, the
▇▇▇▇▇▇ Group or Mach One.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Event of Default" shall mean any event or condition identified as such
in Section 9.1 hereof.
"Excess Cash Flow" shall mean for the Borrower and its Subsidiaries on
a consolidated basis for any period for which the same is to be computed,
EBITDDA for such period less the sum for such period of regularly scheduled
principal payments and voluntary prepayments made by the Borrower and its
Subsidiaries on Consolidated Debt (other than principal payments made on
Revolving Credit Loans and on any other loans if and to the extent that the
Borrower has the contractual right to reborrow the funds so paid) paid during
such period, Interest Expense paid in cash during such period, cash payments of
income and similar taxes paid during such period, Restricted Payments paid
during such period and capital expenditures (as defined and classified in
accordance with GAAP) funded during such period.
"Fed Funds Rate" shall mean the rate defined in clause (ii)(x) of the
definition of the term "Base Rate".
"Fee Timberland" is defined within the definition of the term
"Timberland."
"Final Covenant Levels" shall mean as of any time the same is to be
determined that the Timber Coverage Ratio is 50% or less, the Leverage Ratio as
of the most recent date of computation was 4.50 to 1 or less and the Interest
Coverage Ratio as of the most recent date of computation was 2.00 to 1 or
greater.
"Fixed Charge Coverage Ratio" shall mean, as at any time the same is to
be determined, the ratio for the period of four consecutive fiscal quarters
ending on the date of computation, of EBITDDA to the sum for such period of
Interest Expense, Restricted Payments and capital expenditures of the Borrower
and its Subsidiaries (as defined and classified in accordance with GAAP). The
foregoing to the contrary notwithstanding, amounts included in computations of
the Fixed Charge Coverage Ratio in respect of Interest
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Expense, Restricted Payments and capital expenditures for the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998 shall be as follows:
DEEMED DEEMED
FOR THE CALENDAR DEEMED INTEREST RESTRICTED CAPITAL
QUARTER ENDED: EXPENSE PAYMENTS EXPENDITURES
3/31/98 $6,175,000 $963,000 $114,000
6/30/98 $6,175,000 $963,000 $424,000
9/30/98 $6,175,000 $963,000 $516,000
"Frontier" shall mean Frontier Resources, LLC, an Oregon limited
liability company.
"Frontier Stumpage Contract" shall mean the Timber Deed dated as of
October 9, 1998 by and between Frontier and the Borrower in the form heretofore
delivered to the Lenders as the same may hereafter be amended as and to the
extent permitted by the terms of this Agreement.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time subject to Section 13.8 and applied on a basis which is
consistent with those used in the preparation of the audit report of the
Borrower referred to in Section 6.2 hereof.
"Governmental Body" shall mean the United States of America or any
state or political subdivision thereof any other nation or political subdivision
thereof or any agency, department, commission, board, bureau or instrumentality
of any of them which exercises jurisdiction over the Borrower or any of its
Subsidiaries or any of their assets or the conduct the business of the Borrower
or any of its Subsidiaries in any such jurisdiction.
"Governmental Requirements" shall mean any law, ordinance, order, rule
or regulation by a Governmental Body.
"Guarantors" shall mean any future Subsidiaries of the Borrower and,
from and after payment in full of the Bridge Loan, STP II. Persons providing
guaranties of the Obligations as to which the only recourse is to such Person's
equity interest in the Borrower or STP II shall not, solely as a result thereof,
be deemed Guarantors hereunder.
"Hedging Liabilities" shall mean liabilities of the Borrower to the
Lenders or any of them or to any of their Affiliates arising in connection with
the interest rate hedging activities constituting part of the Hedging Program.
"Hedging Program" is defined is Section 8.22 hereof.
"Initial Appraisal" is defined in Section 4.2(a).
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"Interest Coverage Ratio" shall mean, as of any time the same is to be
determined the ratio, for the period of four consecutive fiscal quarters ending
on the date of computation, of EBITDDA to Interest Expense. The foregoing to the
contrary notwithstanding, computations of the Interest Coverage Ratio as of
March 31, 1998, June 30, 1998 and September 30, 1998 shall be made by utilizing
Interest Expense of $6,175,000 for each of such quarters.
"Interest Expense" shall mean, with reference to any period, the sum of
all interest charges (including imputed interest charges with respect to
Capitalized Lease Obligations, and amortization of debt discount and expense) of
the Borrower and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP; provided, however, that for purposes of
determining whether the Final Covenant Levels have been attained and determining
compliance with Sections 8.20 and 8.21 during the four quarters subsequent to
the occurrence of one of the events referred to in the last sentence of Section
8.20, if Debt is repaid substantially concurrently with or in contemplation of
such events, interest on the amount so repaid may be excluded from Interest
Expense.
"Interest Period" shall mean with respect to any LIBOR Portion, the
period used for the computation of interest commencing on the date the relevant
LIBOR Portion is made, continued or effected by conversion and concluding on the
date one, two, three or six months thereafter as selected by the Borrower in its
notice as provided herein; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(a) if any Interest Period would otherwise end on a day
which is not a Business Day, that Interest Period shall be extended to
the next succeeding Business Day, unless in the case of an Interest
Period for a LIBOR Portion the result of such extension would be to
carry such Interest Period into another calendar month in which event
such Interest Period shall end on the immediately preceding Business
Day;
(b) no Interest Period may extend beyond the scheduled
Termination Date;
(c) the interest rate to be applicable to each LIBOR
Portion for each Interest Period shall apply from and including the
first day of such Interest Period to but excluding the last day
thereof; and
(d) no Interest Period may be selected if after giving
effect thereto the Borrower will be unable to make a principal payment
anticipated to become due during such Interest Period without paying
part of a LIBOR Portion on a date other than the last day of the
Interest Period applicable thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
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"Issuer" shall mean First Union National Bank and any successor to
First Union National Bank as Issuer.
"L/C Documents" means the Letters of Credit, any draft or other
document presented in connection with a drawing thereunder, the Applications and
this Agreement.
"L/C Obligations" shall mean the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations to the
Issuer in respect of drafts drawn and paid under Letters of Credit.
"Letter of Credit" is defined in Section 1.1(c)(i).
"Lenders" shall mean First Union National Bank, the other Lenders
signing this Agreement as lenders and all other lenders becoming parties hereto
pursuant to Section 13.16 hereof.
"Leverage Ratio" shall mean, as of any date of determination, the ratio
of (a) Consolidated Debt as of such date to (b) EBITDDA of the Borrower and its
Subsidiaries (determined on a consolidated basis) for the four fiscal quarters
of the Borrower ending on such date of determination.
"LIBOR Index Rate" shall mean, for any Interest Period applicable to a
LIBOR Portion, the rate per annum (rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period, which appears on the
Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day two
Business Days before the commencement of such Interest Period.
"LIBOR Portion" is defined in Section 2.1.
"LIBOR Rate" shall mean for each Interest Period applicable to a LIBOR
Portion, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available, and (b) if the LIBOR Index Rate cannot be determined, the arithmetic
average of the rates of interest per annum (rounded upwards or downwards, if
necessary, to the nearest 1/100 of 1%) at which deposits in U.S. dollars in
immediately available funds are offered to the Administrative Agent at 11:00
a.m. (London, England time) two (2) Business Days before the beginning of such
Interest Period by three (3) or more major Lenders in the interbank eurodollar
market selected by the Administrative Agent for a period equal to such Interest
Period and in an amount equal or comparable to the principal amount of the LIBOR
Portion scheduled to be made by the Administrative Agent during such Interest
Period.
"Loan" shall mean each loan made pursuant to this Agreement.
"Loan Documents" shall mean this Agreement, the Notes, the Collateral
Documents, the L/C Documents, agreements between the Borrower and any of the
Lenders or any of their Affiliates entered into as part of or pursuant to the
Hedging Program, the Environmental Indemnity, any agreement between the Borrower
and the Administrative
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Agent concerning fees, and all instruments and documents delivered by the
Borrower or any Guarantor under or pursuant to any of the foregoing, all as
amended or modified from time to time pursuant to the terms hereof or thereof.
"Loans" shall mean the Revolving Credit Loans and the Term Loans.
"Mach One" shall mean Mach One Partners, a Georgia limited liability
company.
"Management Agreement" shall mean the Management Services Agreement
made as of October 9, 1998 among Strategic Timber Operating Co., LLC, a Georgia
limited liability company and the Borrowers and all exhibits and schedules
thereto.
"Master Grazing Agreement" shall mean the Grazing Lease dated as of
October 9, 1998 from Pioneer to Frontier.
"Material Adverse Effect" shall mean any material adverse effect on the
(i) financial condition, results of operations or business prospects of the
Borrower and its Subsidiaries taken as a whole, (ii) the validity or
enforceability of any Loan Document, (iii) the ability of the Borrower to pay or
perform its Obligations or to avoid an Event of Default, (iv) the value or
priority of the liens of the Administrative Agent, for the benefit of the
Lenders and the Agents and the Issuer in the Collateral or (v) the ability of
the Agents or any Lender to enforce any of their legal remedies pursuant to the
Loan Documents.
"Merchantable Timber" shall mean all standing trees consisting of
ponderosa ▇▇▇▇, ▇▇▇▇▇▇▇ fir, redwoods, western larch, white fir, lodgepole pine
and other commercially exploitable species which is located upon the Timberland,
is free of known disease and defect, is not in a location where it is
commercially unfeasible to harvest the same and, at the time of determination,
could be harvested in compliance with all Governmental Requirements and is of a
size and grade such that the harvesting and sale of same could then be
accomplished consistent with all Governmental Requirements and sound
silvicultural practices and which also meets all applicable criteria of
merchantability set forth in consultant's report prepared by ▇▇▇▇▇, ▇▇▇▇▇ &
▇▇▇▇▇▇, Inc. for the benefit of the Lenders dated as of October 3, 1998 as to
the initial Timberlands or as to acquisitions in the same general geographic
areas as the initial Timberlands and, in the case of Timberlands located
elsewhere, also satisfies objective criteria of merchantability reasonably
satisfactory to the Administrative Agent and which are consistent with prudent
practice in the area in question.
"Notes" shall mean the Revolving Credit Notes and the Term Credit
Notes.
"Obligations" shall mean all indebtedness, obligations and liabilities
of the Borrower and the Guarantors under the Loan Documents.
"Participating Lenders" is defined in Section 1.1(c)(iv).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
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"Person" shall mean any individual, corporation, limited liability
company, voluntary association, partnership, joint venture, trust,
unincorporated organization or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean any employee benefit plan covering any officers or
employees of any Borrower or any Subsidiary, any benefits of which are, or are
required to be, guaranteed by the PBGC.
"Portion" is defined in Section 2.1.
"Potential Default" shall mean any event or condition which, with the
lapse of time, or giving of notice, or both, would constitute an Event of
Default.
"Property" shall mean all assets and properties of any nature
whatsoever, whether real or personal, tangible or intangible, including without
limitation intellectual property.
"Reimbursement Obligation" is defined in Section 1.1(c)(iii).
"Required Lenders" shall mean any Lender or Lenders which in the
aggregate hold at least 66-2/3% of the sum of the aggregate unpaid principal
balance of the Loans, the aggregate credit risk incident to the Letters of
Credit, the unfunded Revolving Credit Commitments and, if the determination is
made prior to the funding of the Term Loans, the Term Credit Commitments.
"Reserve Percentage" shall mean the daily arithmetic average maximum
rate at which reserves (including, without limitation, any supplemental,
marginal and emergency reserves) are imposed on member banks of the Federal
Reserve System during the applicable Interest Period by the Board of Governors
of the Federal Reserve System (or any successor) under Regulation D on
"eurocurrency liabilities" (as such term is defined in Regulation D), subject to
any amendments of such reserve requirement by such Board or its successor,
taking into account any transitional adjustments thereto. For purposes of this
definition, the LIBOR Portions shall be deemed to be eurocurrency liabilities as
defined in Regulation D without benefit or credit for any prorations, exemptions
or offsets under Regulation D.
"Restricted Payments" is defined in Section 8.9.
"Restructuring" shall mean, collectively, (i) the acquisition by STP II
of 100% of the equity and members interest in the Borrower, (ii) the transfer by
the Borrower of the Transferred Assets to Frontier and (iii) the assumption by
Frontier of the Transferred Liabilities, all on and as provided for in the
Acquisition Agreement and otherwise in a manner acceptable to the Agents.
"Revolving Credit Commitments" shall mean the commitments of the
Lenders to extend credit pursuant to Section 1.1 hereof in the amounts set forth
under the heading "Revolving Credit Commitment" opposite their signatures hereto
or on an Assignment Agreement to which they are a party all as reduced from time
to time pursuant to the terms
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of this Agreement. The initial aggregate amount of the Revolving Credit
Commitments is $70,000,000.
"Revolving Credit" shall mean the credit facility established pursuant
to Section 1.1 hereof.
"Revolving Credit Loans" is defined in Section 1.1 hereof.
"Revolving Credit Notes" is defined in Section 1.1 hereof.
"Stumpage Rights" is defined within the definition of the term
"Timberland."
"STP II" shall mean Strategic Timber Partners II, LP, a Georgia limited
partnership.
"STP II Partnership Agreement" is defined in Section 3.4(b)(iv) hereof.
"STT II" shall mean Strategic Timber Trust II, LLC, a Georgia limited
liability company.
"Subsidiary" shall mean, for any Person, any Person of which more than
fifty percent (50%) of the outstanding stock or comparable equity interests
having ordinary voting power for the election of the board of directors, board
of managers or similar governing body (irrespective of whether or not, at the
time, stock or other equity interests of any other class or classes of such
corporation or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned by
such Person or by one or more of its Subsidiaries. Unless otherwise expressly
provided, all references herein to a "Subsidiary" or "Subsidiaries," shall mean
a Subsidiary or Subsidiaries of the Borrower. A Subsidiary shall be deemed
"wholly owned" by a Person only if all equity interests in such Subsidiary
(whether or not voting) are directly owned by the Person in question.
"Telerate Page 3750" shall mean the display designated as "Page 3750"
on the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"Term Credit Commitments" shall mean the commitments of the Lenders to
extend credit pursuant to Section 1.2 hereof in the amounts set forth under the
heading "Term Credit Commitment" opposite their signatures hereto or on an
Assignment Agreement to which they are a party. The Term Credit Commitments are
in the amount of $200,000,000.
"Term Credit Notes" is defined in Section 1.2 hereof.
"Term Loans" is defined in Section 1.2 hereof.
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"Termination Date" shall mean September 30, 2003 or such earlier date
on which the Commitments are terminated in whole pursuant to Sections 3.5, 9.2
or 9.3 hereof.
"Timber" shall mean all trees, timber, whether severed or unsevered,
and including standing and downed timber, stumps and cut timber and all logs and
other forest products.
"Timber Coverage Ratio" shall mean, as of any time the same is to be
determined, the ratio (expressed as a percentage) of Consolidated Debt to the
Value of Merchantable Timber.
"Timberland" shall mean (i) all lots and tracts of land owned by the
Borrower or any of the Guarantors the primary value of which consists of the
Timber located thereon ("Fee Timberland") and (ii) all lots and tracts of land
owned by others on which there is located standing or downed Timber which is
owned by the Borrower or the Guarantors under arrangements such that the rights
of the Borrower or the Guarantors as the case may be to sever and remove such
Timber are indefeasible and superior to the rights of the owners of such tracts
of land and their creditors ("Stumpage Rights"). Anything contained hereinabove
to the contrary notwithstanding, unless the context otherwise requires, all
references to Timberland shall be deemed to include a reference to the Timber
located thereon. Timberland shall not include cut over lands and, accordingly,
the Administrative Agent shall, at the request and expense of the Borrower,
release its lien from cut over lands if such lands are not needed for access to
Timberland and no Default or Event of Default has occurred and is continuing.
"Transferred Assets" shall mean the assets of the Borrower listed on
Exhibit D hereto.
"Transferred Liabilities" shall mean the liabilities of the Borrower
listed on Exhibit E hereto.
"Value of Merchantable Timber" shall mean the value of Merchantable
Timber as determined by the Borrower and approved by the Administrative Agent
and adjusted from time to time pursuant to the provisions of Sections 4.2 and
8.13(d) hereof; provided however that (i) only Merchantable Timber on which the
Administrative Agent has a valid and perfected first lien (subject, however, to
the rights of any other purchaser of stumpage rights as to which the
Administrative Agent's lien has been subordinated) to secure the Obligations
shall be included in such calculations and (ii) any hereafter acquired
Merchantable Timber shall only be included in the Merchantable Timber if it is
owned by the Borrower and it has complied with all requirements of Section
4.2(c) hereof.
"Year 2000 Problem" means any significant risk that computer hardware,
software, or equipment containing embedded microchips essential to the business
or operations of the Borrower or any of its Subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
efficiently and reliably as in the case of times or time periods occurring
before January 1, 2000, including the making of accurate leap year calculations.
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Section 5.2. Accounting Terms. Any accounting term not otherwise
specifically defined in this Agreement shall have the meaning customarily given
to such term in accordance with GAAP as in effect on the date hereof, and
consistent with those used in the preparation of the financial statements of the
Borrower and its Subsidiaries audited by the Auditors and referred to in Section
6.2 hereof. Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purpose of this Agreement,
it shall be done in accordance with GAAP, to the extent applicable, except where
such principles are inconsistent with the requirements of this Agreement. If a
change in GAAP occurs, the financial statements called for by Section 8.4 may be
prepared on the basis of GAAP as then in effect, but computations of compliance
with the covenants herein contained shall be based on GAAP as in effect on the
date hereof.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lenders as follows:
Section 6.1. Organization and Qualification. The Borrower and its
Subsidiaries are duly organized, validly existing and in good standing under the
laws of their respective states of incorporation or organization, have full and
adequate corporate power to carry on their business as now conducted and are
duly licensed or qualified in all jurisdictions wherein the nature of their
activities requires such licensing or qualifying and in which the failure to be
so licensed or qualified could result in a Material Adverse Effect. The Borrower
and each Guarantor has full right, power and authority to enter into this
Agreement and the other Loan Documents to which it is a party, the Borrower has
full right, power and authority to make the Borrowings herein provided for and
to execute and issue its Notes in evidence thereof, and the Borrower and the
Guarantors have full right, power and authority to perform each and all of the
matters and things herein and therein provided for. Immediately after giving
effect to the Restructuring, the Borrower will have no Subsidiaries.
Section 6.2. Financial Reports. The Borrower has heretofore delivered
to each Lender a copy of the consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 1997 and the related consolidated statements of
income, changes in equity and cash flows for the twelve month period then ending
as audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and a copy of consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at June 30, 1998 and of
consolidated and consolidating income statements and cash flow statements for
the Borrower and its Subsidiaries for the quarterly fiscal period then ending
and for the year to date. Such financial statements have been prepared in
accordance with GAAP and fairly reflect the financial position of the Borrower
and its Subsidiaries as of the dates thereof, and the results of their
operations for the periods covered thereby. The Borrower and its Subsidiaries
have no known material contingent liabilities other than as indicated on said
financial statements or as set forth on Schedule 6.2. Since said date of June
30, 1998, there has been no change in the financial condition or results of
operations of the Borrower and its Subsidiaries taken as a whole, except those
disclosed in writing to the Lenders prior to the date of this Agreement and
those which could not have a Material Adverse Effect. The Borrower has also
delivered to the Lenders (i) a pro forma balance
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sheet of the Borrower immediately after giving effect to the Restructuring and
(ii) projections of financial performance for the Borrower for the five-year
period ended December 31, 2003. Such pro forma balance sheet reflects fairly the
financial position of the Borrower immediately after giving effect to the
Restructuring. Such projections reflect the Borrower's best estimate of its
financial performance over the period covered by such statements based upon the
information currently available to the Borrower and upon estimates and
assumptions which it believes to be reasonable.
Section 6.3. Litigation; Tax Returns; Approvals. Except as set forth on
Schedule 6.3, there is as of the date hereof no litigation, labor controversy or
governmental proceeding pending, nor to the knowledge of the Borrower
threatened, against the Borrower or any Subsidiary thereof involving a
reasonable possibility of an outcome which could result in a Material Adverse
Effect. All United States federal and material state and local income tax
returns for the Borrower and its Subsidiaries required to be filed have been
filed on a timely basis (taking into account any extension of time within which
to file), and all amounts required to be paid as shown by said returns have been
paid, except for amounts that are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in accordance
with GAAP. Except as set forth on Schedule 6.3, there are no claims for taxes
being asserted against the Borrower and its Subsidiaries for any fiscal year
involving a reasonable possibility of an outcome which could result in a
Material Adverse Effect. No authorization, consent, license, exemption or filing
or registration with any court or governmental department, agency or
instrumentality, is or will be necessary to the valid execution, delivery or
performance by the Borrower or any Guarantor of the Loan Documents to which it
is a party.
Section 6.4. Regulation U. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System) and no part of the proceeds of
any Loan or other extension of credit hereunder will be used to purchase or
carry any margin stock or to extend credit to others for such a purpose.
Section 6.5. No Default. No Potential Default or Event of Default
exists on the date hereof.
Section 6.6. ERISA. The Borrower and its Subsidiaries are in compliance
in all material respects with ERISA to the extent applicable to them and neither
the Borrower nor any Subsidiary thereof has received any notice to the contrary
from the PBGC or any other governmental entity or agency except where such
noncompliance could not result in a Material Adverse Effect. No steps have been
taken to terminate any Plan other than a "standard termination" meeting the
requirements of Section 4041(b) of ERISA, and no contribution failure has
occurred with respect to any Plan sufficient to give rise to a lien under
Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Plan which is reasonably likely to result in the
incurrence by the Borrower or any Subsidiary thereof of any fine, penalty or
liability (other than the liability for making contributions when due to such
Plan in accordance with Section 302 of ERISA)
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which could have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary thereof has any contingent liability with respect to any
post-retirement benefit, other than liability for continuation coverage
described in Part 6 of Title I of ERISA that could reasonably be expected to
have a Material Adverse Effect, except as disclosed in writing to the Lenders
prior to the date hereof.
Section 6.7. Enforceability. This Agreement and the other Loan
Documents are the legal, valid and binding agreements of the Borrower and
Guarantors, enforceable against them in accordance with their terms, except as
may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other similar laws or judicial decisions for the relief
of debtors or the limitation of creditors' rights generally and (b) any
equitable principles relating to or limiting the rights of creditors generally
or any equitable remedy which may be granted to cure any defaults.
Section 6.8. Restrictive Agreements. Neither the Borrower nor any
Guarantor is a party to any contract or agreement, or subject to any charge or
other corporate restriction, which affects its ability to execute, deliver and
perform the Loan Documents to which it is a party and repay its indebtedness,
obligations and liabilities under the Loan Documents or which materially and
adversely affects or, insofar as the Borrower can reasonably foresee, could
result in a Material Adverse Effect or would in any respect materially and
adversely affect the Borrower's or such Guarantor's legal ability to repay the
indebtedness, obligations and liabilities under the Loan Documents, or any
Lender's or the Administrative Agent's rights under the Loan Documents.
Section 6.9. No Default Under Other Agreements. Neither the Borrower
nor any Subsidiary is in default with respect to any note, indenture, loan
agreement, mortgage, lease, deed, or other agreement to which it is a party or
by which it or its Property is bound, which default could materially and
adversely affect any Lender's or any Administrative Agent's rights under the
Loan Documents or result in a Material Adverse Effect.
Section 6.10. Status Under Certain Laws. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a person directly or indirectly
controlled by or acting on behalf of an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company," within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Section 6.11. Full Disclosure. The statements and information furnished
to the Administrative Agent and the Lenders in connection with the negotiation
of this Agreement and the commitments by the Lenders to provide all or part of
the financing contemplated hereby, do not, taken as a whole, contain any untrue
statement of a material fact or omit a material fact necessary, in the context
in which it is furnished, to make the material statements contained therein or
herein not misleading except for such thereof as were corrected in subsequent
written statements furnished the Lenders, the Lenders acknowledging that as to
any projections furnished to any Lender, the Borrower only
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represents that the same were prepared on the basis of information and
estimates the Borrower believes to be reasonable.
Section 6.12. Compliance with Law. (a) The Borrower and its
Subsidiaries are not in default under any Governmental Requirement, license or
demand (including without limitation ERISA, the Occupational Safety and Health
Act of 1970 and laws and regulations establishing quality criteria and standards
for air, water, land and toxic waste) of any Governmental Body, default with
respect to or under which might have consequences which may result in a Material
Adverse Effect.
(b) Without limiting the generality of the foregoing, the Borrower and
its Subsidiaries are in compliance with all applicable state and federal
environmental, health and safety statutes and regulations, including, without
limitation, regulations promulgated under the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. ss.ss.6901 et seq., except where failure to be in
compliance would not result in a Material Adverse Effect and, will not have
acquired, incurred or assumed, directly or indirectly, any contingent liability
in connection with the release of any toxic or hazardous waste or substance into
the environment and the Borrower and its Subsidiaries have received no notice
from any Governmental Body which is contrary to any of the foregoing except
contingent liabilities which could not result in a Material Adverse Effect.
Insofar as known to the responsible officers of the Borrower and its
Subsidiaries, the Borrower and its Subsidiaries will not be the subject of any
evaluation under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. ss.ss.9601 et seq except to the extent
such evaluation could not result in any Material Adverse Effect.
Section 6.13. Solvency, etc. Immediately after giving effect to the
Restructuring, (i) the assets of the Borrower and of each Guarantor, at a fair
valuation, will exceed its liabilities, including contingent liabilities, (ii)
the remaining capital of the Borrower and of each Guarantor will not be
unreasonably small to conduct or in relation to its business or any transaction
in which it intends to engage, and (iii) the Borrower and each Guarantor will
not have incurred debts, and does not intend to incur debts, beyond its ability
to pay such debts as they mature. For purposes of this Section, "debt" means any
liability on a claim, and "claim" means (i) right to payment, whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured; or (ii) right to an equitable remedy for breach of performance if
such breach gives rise to a payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured.
Section 6.14. Concerning the Timberland. The Borrower has legal or
practical access, for forest management and timber harvest purposes, sufficient
to remove the Timber from the Timberland on a commercially feasible basis, to
all portions of the Timber on the Timberland over existing public roads, over
easements appurtenant to the Timberland or over roads across the Timberland or
otherwise and such title and access are free and clear of all Liens not
permitted hereunder. To the best knowledge of the Borrower, the Timber
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located on and forming part of the Timberland is in good condition, is
marketable and substantially free from pests, blight, fungus, disease or other
infestation and from any other condition which would materially impair its value
and the Borrower will be able to harvest the Timber in the ordinary course of
its business not impeded, prohibited or delayed by any current or prospective
private contract or Governmental Requirement. The Borrower has delivered to the
Administrative Agent true and correct copies of all contracts or agreements for
the sale of Timber on the Timberland and there are no defaults under such
contracts or agreements. The Borrower has delivered true and correct copies of
all deeds, contracts and agreements creating Stumpage Rights to the Lenders, all
such deeds, contracts and agreements are unamended and in full force and effect
and, subject to their terms, create rights in and to the related Timber prior
and superior to the rights of the owners of the lands on which such Timber is
located and their creditors and the Borrower and the other parties to such
deeds, contracts and agreements are in compliance with all of their respective
material obligations thereunder.
Section 6.15. The Frontier Stumpage Contract. The Borrower has delivered
to the Administrative Agent a true copy of the Frontier Stumpage Contract and
all amendments thereto. Both the Borrower and Frontier are in compliance with
all of their material obligations under the Frontier Stumpage Contract and the
Borrower has received no notice from Frontier to the contrary.
Section 6.16. Concerning the Acquisition Agreement and the Management
Agreement. The Borrower has delivered true copies of the Acquisition Agreement
and the Management Agreement and all amendments and modifications thereto to the
Lenders. The Borrower (and, to the best of its knowledge, the other parties
thereto) are in full compliance with their obligations under the Acquisition
Agreement and the Management Agreement and the same are in full force and
effect.
Section 6.17. Year 2000 Compliance. The Borrower has conducted a
comprehensive review and assessment of the computer applications of the Borrower
and has made inquiry of its material suppliers, vendors (including data
processors) and customers, with respect to any defect in computer software, data
bases, hardware, controls and peripherals related to the occurrence of the year
2000 or the use at any time of any data which is before, on or after December
31, 1999, in connection therewith. Based on the foregoing review, assessment and
inquiry, the Borrower believes that no such defect could reasonably be expected
to have a material adverse effect on the business or financial affairs of the
Borrower.
SECTION 7. CONDITIONS PRECEDENT.
Section 7.1. Initial Credit Utilization. At or prior to the time
of the initial Credit Utilization, the following conditions precedent shall have
been satisfied:
(a) the Administrative Agent shall have received the
following for the account of the Lenders (each to be properly executed
and completed) and the same shall have been approved as to form and
substance by the Agents:
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(i) the Notes;
(ii) copies (executed or certified as may be
appropriate) for each Lender of all legal documents or
proceedings taken in connection with the execution and
delivery of the Loan Documents, to the extent the Agents or
their counsel may reasonably request, together with
appropriate certificates of incumbency;
(iii) the Collateral Documents and any financing
statements reasonably requested by the Administrative Agent in
connection therewith;
(iv) the partnership agreements, by-laws,
operating agreements, management agreements and good standing
certificates for the Borrower and each Guarantor;
(v) a mortgagee's policy or policies of title
insurance (or binding commitments therefor) in the aggregate
amount of at least $270,000,000 from an acceptable title
insurer insuring the liens of those Collateral Documents
creating liens on real property or standing Timber to be valid
first liens (subject to the rights of Frontier and its
successors and assigns in the case of the Timber subject to
the Frontier Stumpage Contract) subject to no defects or
objections which are reasonably unacceptable to the Agents,
together with such direct access reinsurance agreements and
endorsements (including without limitation a revolving credit
endorsement and variable rate endorsements) as the Agents may
require;
(vi) evidence of the maintenance of insurance by
the Borrower and Guarantors as required hereby or by the
Collateral Documents together with mortgagee loss payable and
notice of cancellation clauses, in favor of the Administrative
Agent and acceptable to the Agents;
(vii) financial projections for the Borrower
running at least through the Termination Date;
(viii) receipt and verification of satisfactory
adjustments to the Initial Appraisal reflecting the
elimination of any assets otherwise included therein which are
Transferred Assets, making adjustments (which shall not be
material and may be estimates) for Timber harvested between
the date of the Initial Appraisal and the date of the initial
Credit Utilization hereunder and providing for any adjustments
in prices and pricing assumptions (none of which shall be
material) since the date thereof;
(ix) copies of the Borrower's current and
proposed Timber harvesting plans for the Timberland (including
a ten year harvesting plan under so called "Option A" for the
Timberland of the Borrower formerly owned by Coastal
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Forestlands, Ltd.) and a report from an independent consultant
acceptable to the Agents attesting to the feasibility of such
plans;
(x) a report from a consultant acceptable to the
Agents reviewing the existence, and the historic and potential
damage due to, disease and infestation in the Timberlands and
with respect to endangered or threatened species on the
Timberlands;
(xi) a satisfactory review of the insurance
program of the Borrower and the Guarantors;
(xii) completion by the Agents of a satisfactory
review of the Borrower's and its affiliates' legal and
ownership structure and of the Borrower's plans for the
management of its Timberlands and of harvesting therefrom;
(xiii) copies of all deeds, contracts and
agreements creating Stumpage Rights; and
(xiv) a certificate of an Authorized
Representative attesting to the fact that the Agents have
received true copies of the Acquisition Agreement, the
Management Agreement, all amendments thereto, and all material
agreements transferring the Transferred Assets and Transferred
Liabilities (copies of all of such to be attached to such
Certificate).
(b) the liens of the Collateral Documents shall have been
duly perfected in the manner required by law so as to be effective
against all creditors of and purchasers from the Borrower and
Guarantors;
(c) the Agents shall be reasonably satisfied with
environmental matters;
(d) arrangements shall have been made reasonably
satisfactory to the Agents for the discharge of all liens on assets of
the Borrower and Guarantors which, pursuant to the terms hereof, are
not permitted to exist beyond the initial Borrowing hereunder and all
Debt which is not permitted hereby to remain outstanding after the
initial Borrowing hereunder shall have been paid or its payment duly
provided for in a manner acceptable to the Agents;
(e) the Agents shall be satisfied that after giving
effect to the Restructuring and any harvesting adjustment for Timber
harvested through September 30, 1998 the Value of Merchantable Timber
shall be in excess of $410,000,000 and that the aggregate Value of
Merchantable Timber after giving effect to such harvesting adjustment,
together with the value of the Borrower's premerchantable Timber and
other real property shall be in excess of $470,000,000;
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(f) the Restructuring shall have been consummated as
contemplated hereby and by the Acquisition Agreement without any change
or modification to the Acquisition Agreement or waiver of any
conditions set forth therein except for such modifications and waivers
as may be approved by the Agents, all Governmental Requirements with
respect thereto shall have been satisfied and all requisite consents,
approvals and withholdings of objection from Governmental Bodies shall
have been obtained (or the period within which the same can be lodged
shall have expired, in the case of withholdings of objection);
(g) the Management Agreement shall be in full force and
effect and shall not have been amended or modified in any respect;
(h) the Agents shall have received evidence satisfactory
to them that no event has occurred or condition exists which could have
a Material Adverse Effect on the Borrower after giving effect to the
Restructuring;
(i) the Agents shall have received evidence satisfactory
to them that the Bridge Loan has been funded and that the proceeds
thereof have been advanced to STP II as equity capital, that STP II has
received additional equity capital from sources other than borrowed
money of not less than $10,000,000 and that not less $65,000,000 of the
purchase price for STT II's acquisition of all equity interests in the
Borrower has either been satisfactorily deferred or funded through
additional equity contributions to STP II.
(j) all legal matters incident to the transactions
contemplated hereby (including the Restructuring) shall be acceptable
to the Lenders and their counsel and the Agents shall have received for
the account of the Lenders the favorable written opinion of acceptable
counsel in form and substance and subject to such conditions,
qualifications and assumptions as shall be reasonably satisfactory to
the Agents and their counsel with respect to:
(i) the existence and good standing of the
Borrower and Guarantors in the jurisdictions of their
incorporation or organization and their qualification to do
business in each state where Timberland included in the Value
of Merchantable Timber is located;
(ii) the power and authority of the Borrower and
Guarantors to enter into the Loan Documents and to perform and
observe their obligations thereunder;
(iii) the fact that the execution and delivery of
the Loan Documents will not, nor will the observance or
performance of any of the matters or things herein or therein
provided for, contravene (x) any provision of law or (y) of
the charter or bylaws or organizational documents of the
Borrower or Guarantors or (z) of any material agreement known
to counsel and binding
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upon the Borrower or Guarantors or affecting a substantial
portion of their properties or assets taken as a whole;
(iv) the due authorization for and the validity
and enforceability (except to the extent affected by
bankruptcy, insolvency or other laws relating to or affecting
the enforcement of creditors' rights and remedies generally)
of the Loan Documents;
(v) the fact no governmental authorization or
consent or approval of any other person, firm or corporation
or of the stockholders or members of the Borrower or
Guarantors is, required with respect to the lawful execution,
delivery and performance of the Loan Documents or the
Restructuring;
(vi) the absence, to the knowledge of counsel, of
any material pending or threatened litigation or
administrative proceeding which, if adversely determined,
could reasonably be expected to result in a Material Adverse
Effect;
(vii) the fact that the mortgages and deeds of
trust creating liens on real property or rights to Timber are
adequate under local law for their intended purposes, contain
remedial provisions as customarily required by prudent
mortgagees in the state in question, will not require the
Administrative Agent to qualify to do business in the state in
question and will not subject the Agents or the Lenders to
taxation in such state; and
(viii) such other matters as the Agents or their
counsel may reasonably require.
Section 7.2. Each Credit Obligation. The obligation of the Lenders to
make any Loan (including the first Loan) and of the Issuer to issue each Letter
of Credit shall be subject to the following conditions precedent:
(a) each of the representations and warranties set forth
in Section 6 hereof shall be and remain true and correct as of said
time, except that the representations and warranties made under Section
6.2 (except the last sentence thereof) shall be deemed to refer to the
most recent financial statements furnished to the Lenders pursuant to
Section 8.4 hereof;
(b) no Potential Default or Event of Default shall have
occurred and be continuing;
(c) in the case of the issuance of any Letter of Credit,
the Issuer shall have received a properly completed Application
therefor and, in the case of an extension or increase in the amount of
the Letter of Credit, the Issuer shall have received a written request
therefor, in a form acceptable to the Issuer, with such Application or
written request, in each case to be accompanied by the fees required by
this Agreement;
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(d) such Credit Utilization will not cause the total
outstanding Credit Utilizations hereunder to exceed the amount of the
Administrative Agent's title insurance on the Timberland (provided that
the Administrative Agent may in writing approve lesser coverages as to
specific tracts if the aggregate of coverages on all tracts equals or
exceeds such amount); and
(e) the Administrative Agent shall have received (which
may be by facsimile transmission) a Borrowing Certificate in the form
annexed hereto as Exhibit G.
SECTION 8. COVENANTS.
It is understood and agreed that so long as credit is in use or
available under this Agreement or any amount remains unpaid on any Note or any
Hedging Liability or Letter of Credit is outstanding except to the extent
compliance in any case or cases is waived in writing by the Required Lenders:
Section 8.1. Maintenance of Property. The Borrower will, and will cause
each Subsidiary to, keep and maintain all of its Properties necessary or useful
in its business in good condition, and make all necessary renewals,
replacements, additions, betterments and improvements thereto, except where the
failure to do so could not result in a Material Adverse Effect.
Section 8.2. Taxes. The Borrower will, and will cause each Subsidiary
to, duly pay and discharge all material taxes, rates, assessments, fees and
governmental charges upon or against the Borrower or any Subsidiary or against
its Properties in each case before the same becomes delinquent and before
penalties accrue thereon unless and to the extent that the same is being
contested in good faith and by appropriate proceedings.
Section 8.3. Maintenance of Insurance. The Borrower will, and will
cause each Subsidiary to, (i) maintain insurance with insurers recognized as
financially sound and reputable by prudent business persons in such forms and
amounts and against such risks as is usually carried by companies engaged in
similar business and owning similar Properties in the same general areas in
which the Borrower or such Subsidiary operates and (ii) comply with the
insurance requirements of the Collateral Documents. The Borrower shall provide
the Administrative Agent with copies of all insurance policies maintained by it
upon the Administrative Agent's request.
Section 8.4. Financial Reports. The Borrower will, and will cause each
Subsidiary to, maintain a system of accounting in accordance with sound
accounting practice and will furnish promptly to each of the Lenders and their
duly authorized representatives such information respecting the business and
financial condition of the Borrower and its Subsidiaries as may be reasonably
requested and, without any request, will furnish each Lender:
(a) as soon as available, and in any event within 45 days
after the close of each quarterly fiscal period of the Borrower a copy
of consolidated and consolidating
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balance sheets, income statements and cash flow statements for the
Borrower and its Subsidiaries for such quarterly period and the year to
date and for the corresponding periods of the preceding fiscal year,
all in reasonable detail, prepared by the Borrower and certified by the
chief financial officer of the Borrower;
(b) as soon as available, and in any event within 90 days
after the close of each fiscal year of the Borrower, a copy of an
unqualified audit report for such year and accompanying financial
statements, including consolidated balance sheets, change in
stockholder or member's equity, statements of income and statements of
cash flow for the Borrower and its Subsidiaries showing in comparative
form the figures for the previous fiscal year of the Borrower and its
Subsidiaries, all in reasonable detail, prepared and certified by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP or other independent public accountants of
nationally recognized standing selected by the Borrower and reasonably
satisfactory to the Required Lenders (the "Auditors");
(c) as soon as available, and in any event within 45 days
after the close of each quarterly fiscal period of the Borrower a
certificate of the chief financial officer of the Borrower, setting
forth a computation in reasonable detail of compliance with Sections
8.8, 8.9, 8.19, 8.20, 8.21 and 8.23, hereof and computations of the
Leverage Ratio as of the last day of such quarterly fiscal period (and,
in the case of the last quarterly fiscal period of each year of Excess
Cash Flow for the fiscal year then completed (or, in the case of fiscal
year 1998, for the period from the date the Restructuring is
consummated to December 31, 1998)) and to state that no Potential
Default or Event of Default exists hereunder as of the date of such
certificate, or if such a Potential Default or Event of Default exists,
the nature thereof shall be specified; such certificate to also include
a report on sales of land not constituting Timberland;
(d) no later than forty-five (45) days after the close of
each fiscal quarter of the Borrower, a report prepared by the
management of the Borrower as to a discussion and analysis of the
Borrower's operations, including harvest activities, market conditions
and near term prospects.
(e) on or before the fifteenth day of each month a report
signed by an Authorized Representative setting forth for the
immediately preceding month, (i) the volumes of all Merchantable Timber
cut or removed from the Timberlands, (ii) data concerning the Frontier
Stumpage Contract including volumes of merchantable logs harvested,
(iii) the volume of Timber cut or removed by any Person other than
Persons authorized by the Borrower or which has been lost, damaged or
destroyed by fire, windstorm, condemnation, disease, infestation, act
of any Governmental Body or third parties (specifying the species and
volume of Timber which has been so destroyed or damaged) and (iv) such
other information as the Administrative Agent may reasonably specify
from time to time with respect to the management of and activities on
the Timberlands;
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(f) by December 1 of each year, the Borrower shall
furnish to the Lenders a report signed by an Authorized Representative
showing its timber harvesting plan for the ensuing year;
(g) promptly after knowledge thereof shall have come to
the attention of any responsible officer of the Borrower, written
notice of any threatened or pending litigation or governmental
proceeding against the Borrower or any Subsidiary which could result in
a Material Adverse Effect and of the occurrence of any Potential
Default or Event of Default; and
(h) by December 1 of each year, financial projections for
the Borrower and its Subsidiaries through the Termination Date in such
detail and with such supporting data and statements of assumptions as
is reasonably acceptable to the Administrative Agent.
Section 8.5. Inspection. The Borrower shall, and shall cause each
Subsidiary to, permit each of the Lenders, by their representatives and agents,
to inspect any of its Properties, corporate books and financial records of the
Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and its Subsidiaries and to
discuss the affairs, finances and accounts of the Borrower and its Subsidiaries
with, and to be advised as to the same by, its officers at such reasonable times
and reasonable intervals as either the Administrative Agent or the Required
Lenders may request. The Borrower shall pay the reasonable costs and expenses of
the Administrative Agent in connection with any audit or inspection of the
Borrower's and its Subsidiaries' books and records which occurs while a
Potential Default or Event of Default is continuing.
Section 8.6. Consolidation and Merger. The Borrower will not, and will
not permit any Subsidiary to, consolidate with or merge into any Person, or
permit any other Person to merge into it, except that any Subsidiary may merge
into the Borrower or into any other wholly-owned Subsidiary.
Section 8.7. Transactions with Affiliates. Except as set forth on
Schedule 8.7, the Borrower will not, and will not permit any Subsidiary to,
enter into any transaction, including without limitation, the purchase, sale,
lease or exchange of any Property, or the rendering of any service, with any
Affiliate of the Borrower except pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable than Borrower or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Borrower or such Subsidiary.
Section 8.8. Capital Expenditures and Acquisitions. The Borrower will
not, and will not permit any Subsidiary to, expend or become obligated for
capital expenditures (as defined and classified in accordance with GAAP
consistently applied but in any event including the liability of the Borrower
and its Subsidiaries in respect of Capitalized Leases, costs of improvements to
land and acquisitions of land) or acquire all or any substantial part
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of the stock, assets or business of any other Person if after giving effect
thereto the aggregate amount expended by the Borrower and its Subsidiaries
during any fiscal year on account of such capital expenditures and acquisitions
would exceed $3,000,000 provided that the Borrower may acquire Timberland out of
the proceeds of Equity Offerings if and to the extent permitted by Section
3.4(b)(iv)(ac) hereof or in exchange for equity interests if but only if it has
demonstrated to the reasonable satisfaction of the Administrative Agent in each
instance that it will be able to remain in compliance with the terms of this
Agreement throughout its term after giving effect to the acquisition in
question.
Section 8.9. Restricted Payments. The Borrower shall not during any
fiscal year declare or pay any distributions in respect of any membership
interest of the Borrower or directly or indirectly purchase, redeem or otherwise
acquire or retire any membership interest of the Borrower (collectively,
"Restricted Payments"); provided, however, that (a) the Borrower may make
Restricted Payments during any fiscal year of up to $1,000,000 if but only if
(i) each such Restricted Payment is made within thirty days after receipt by the
Lenders of financial reports pursuant to Section 8.4(b) hereof and (ii) after
giving effect to the Restricted Payment no Potential Default or Event of Default
has occurred and is continuing and such Restricted Payments shall not exceed the
amount necessary to satisfy the income tax liabilities of its members solely
with respect to their pro rata share of the Borrower's nonseparately computed
income and other separately stated items of income, loss, deduction or credit of
the Borrower (all within the meaning of Section 1366 of the Internal Revenue
Code of 1986) and any comparable income tax liability imposed on such members by
any State or other locality, and (b) so long as no Potential Default or Event of
Default shall then exist or result therefrom, the Borrower may make additional
Restricted Payments of not more than $4,200,000 per fiscal year each of which
shall not exceed the amount of interest which will become due on the Bridge Loan
within ten days of the date of the Restricted Payment in question.
Section 8.10. Liens. The Borrower will not, and will not permit any
Subsidiary to, pledge, mortgage or otherwise encumber or subject to or permit to
exist upon or be subjected to any lien, charge or security interest of any kind
(including any conditional sale or other title retention agreement and any lease
in the nature thereof), on any of its Properties of any kind or character at any
time owned by the Borrower or any Subsidiary, other than:
(a) liens, pledges or deposits for worker's compensation,
unemployment insurance, old age benefits or social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith deposits made in connection with tenders, contracts
or leases to which the Borrower or a Subsidiary is a party or other
deposits required to be made in the ordinary course of business,
provided in each case the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate proceedings
and adequate reserves have been provided therefor in accordance with
GAAP and that the obligation is not for borrowed money, customer
advances or trade payables;
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(b) the pledge of assets for the purpose of securing an
appeal or stay or discharge in the course of any legal proceedings,
provided that the aggregate amount of liabilities of the Borrower or a
Subsidiary so secured by a pledge of property permitted under this
subsection (b) including interest and penalties thereon, if any, shall
not be in excess of $500,000 at any one time outstanding;
(c) the liens created under the Collateral Documents;
(d) liens for property taxes and assessments or
governmental charges or levies which are not yet due and payable or
which are being contested in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with
GAAP;
(e) liens incidental to the conduct of business or the
ownership of properties and assets (including, without limitation,
warehousemen's, and attorneys' liens and statutory landlords' liens) or
other liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money, provided in
each case, the obligation secured is not more than 30 days overdue or,
if overdue, is being contested in good faith by appropriate actions or
proceedings;
(f) survey exceptions or encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and
other similar purposes, or zoning or other restrictions as to the use
of real properties, which are necessary or desirable for the conduct of
the activities of the Borrower and its Subsidiaries or which
customarily exist on properties of persons engaged in similar
activities and similarly situated and which do not in any event
materially impair their use in the operation of the business of the
Borrower and its Subsidiaries;
(g) liens discharged (or arrangements for the discharge
thereof satisfactory to the Administrative Agent have been made)
concurrently with the initial extension of credit hereunder;
(h) liens identified on Schedule 8.10 hereto;
(i) liens on hereafter acquired personal Property
securing payment of the purchase price thereof or Debt incurred to
finance such purchase price provided that the Debt secured thereby is
permitted by Section 8.11(f) hereof; and
(j) extensions, renewals and replacements of any lien
described in Sections 8.10(a) through (f) or (i) above, provided that
the principal amount of the Debt secured thereby is not increased and
that the lien is not extended to other property.
Section 8.11. Borrowings and Guaranties. The Borrower will not, and will
not permit any Subsidiary to, issue, incur, assume, create or have outstanding
any Debt, nor be
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or remain liable, whether as endorser, surety, guarantor or otherwise, for or in
respect of any Debt of any other Person, other than:
(a) Debt of the Borrower and Guarantors arising under or
pursuant to this Agreement or the other Loan Documents;
(b) the liability of the Borrower and its Subsidiaries
arising out of the endorsement for deposit or collection of commercial
paper received in the ordinary course of business;
(c) the guaranty by the Borrower of the Bridge Loan
provided that the obligations of the Borrower thereunder are
subordinated in right of payment to the prior payment of the
Obligations pursuant to written subordination provisions acceptable to
the Agents;
(d) Debt in the form of payment obligations for Stumpage
Rights provided that such payments are scheduled over time such that it
is reasonable to assume the same can be repaid from the proceeds of
sale of the related Timber;
(e) Debt listed on Schedule 8.11 hereto; and
(f) Debt not otherwise permitted hereby aggregating not
more than $500,000 at any one time outstanding.
Section 8.12. Investments, Loans, Advances and Acquisitions. The
Borrower will not, and will not permit any Subsidiary to, make or retain any
investment (whether through the purchase of stock, obligations or otherwise) in
or make any loan or advance to, any other Person, or acquire substantially as an
entirety the Property or business of any other Person, other than:
(a) loans and advances from any existing Subsidiary to
the Borrower, from the Borrower to any existing Subsidiary and from any
existing Subsidiary to any existing Subsidiary;
(b) acquisitions permitted by Section 8.8 hereof;
(c) investments in certificates of deposit having a
maturity of one year or less issued by any Lender or any United States
commercial bank having capital and surplus of not less than
$250,000,000, and investments in Eurodollar deposits with branches or
offices located outside of the United States of any of the Lenders;
(d) investments in commercial paper rated P-1 by ▇▇▇▇▇'▇
Investors Service, Inc. or A-1 by Standard & Poor's Ratings Group, a
division of McGraw Hill Companies maturing within 270 days of the date
of issuance thereof;
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(e) marketable obligations for which the full faith and
credit of the United States is pledged for the repayment of principal
and interest thereof; provided that such obligations have a final
maturity of no more than one year from the date acquired;
(f) repurchase, reverse repurchase agreements and
security lending agreements collateralized by securities of the type
described in subsection (e), provided that the Borrower or Subsidiary,
as the case may be, which is a party to such arrangement shall hold
(individually or through an Administrative Agent) all securities
relating thereto during the entire term of each such arrangement;
(g) investments, loans and advances existing on the date
hereof and listed on Schedule 8.12;
(h) loans and advances to employees of the Borrower or
its Subsidiaries for reasonable travel, entertainment and relocation
expenses in the ordinary course of business;
(i) shares of so-called "money market funds" registered
under the Investment Company Act of 1940, as amended, organized and
operating in the United States of America, having total net assets of
$250,000,000 or more and investing primarily in securities of the
character described in Sections 8.12(c), (d) and (e);
(j) advances, deposits, down payments and prepayments on
account of firm purchase orders made in the ordinary course of
business; and
(k) investments, loans and advances not otherwise
permitted hereby aggregating not more than $500,000 at any one time
outstanding.
Section 8.13. Sale of Property. The Borrower will not and will not
permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of
all or a material part of their Property or any Timberland or any interest
therein to any other Person; provided, however, that if and so long as no
Potential Default or Event of Default has occurred and is continuing or would
result therefrom the Borrower and its Subsidiaries may make:
(a) sales and other dispositions of inventory (including
sales of cut timber harvested by the buyer) in the ordinary course of
business and whether pursuant to long term contract or otherwise;
(b) sales, leases or other dispositions of machinery,
equipment and land not constituting Timberland that is obsolete,
unusable or not needed for the Borrower's or such Subsidiary's
operations in the ordinary course of its business;
(c) grazing leases, cabin leases, grants of fishing,
hunting and mineral rights, rights of access, easements and rights of
way provided in each case that the same do
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not impair the value of any tract of the Timberland in any material
respect or interfere with the efficient harvesting of Timber therefrom;
(d) sales of stumpage and cutting rights on market terms
and in the ordinary course of business of the type exempted from
prepayment by the third parenthetical clause of Section 3.4(b)(ii)
hereof; and
(e) cash sales of Timberland, provided that (i) the
Administrative Agent shall have reduced the Value of Merchantable
Timber to account for the sale in question (such adjustment to include
an adjustment to the value of the remainder of the Timberland if the
Administrative Agent believes that its value will be impaired by the
sale of the tract or tracts in question) and shall be satisfied that
after giving effect thereto the Timber Coverage Ratio will not be
greater than that required by Section 8.23 hereof; (ii) the sale of the
tracts in question will not impair access to the remainder of the
Timberland or the amount of Timber which may be harvested therefrom
over any period; (iii) the Administrative Agent shall have received
such information as it may reasonably require to evaluate the sale in
question and to make the determinations called for by clauses (i) and
(ii) above, including opinions of the Acceptable Appraiser if requested
and (iv) arrangements shall have been made which are satisfactory to
the Administrative Agent for its receipt of any prepayment required by
Section 3.4(b)(ii) hereof in connection with such sale.
The Administrative Agent shall at the request and expense of the
Borrower release its liens on Property sold in compliance with the foregoing
requirements if and so long as no Potential Default or Event of Default has
occurred and is continuing.
For purposes of this Section, "material part" shall mean Property
having an aggregate fair market value (as determined in good faith by the
Borrower's or Subsidiary's board of directors or managers) in excess of
$500,000.
Section 8.14. ERISA. The Borrower will, and will cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed may to result in the
imposition of a lien against any of its Property, and will promptly notify the
Administrative Agent of (a) the occurrence of any reportable event (as defined
in ERISA) for which the notice requirement has not been waived by the PBGC and
which is reasonably likely to result in the termination by the PBGC of any Plan,
(b) receipt of any notice from PBGC of its intention to seek termination of any
such Plan or appointment of a trustee therefor, and (c) its intention to
terminate or withdraw from any Plan, other than a "standard termination" meeting
the requirements of Section 4041(b) of ERISA. The Borrower will not, and will
not permit any Subsidiary to, terminate any such Plan or withdraw therefrom
unless it shall be in compliance with all of the terms and conditions of this
Agreement after giving effect to any liability to PBGC resulting from such
termination or withdrawal.
Section 8.15. Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
Governmental Requirements,
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including Environmental Laws, except where the failure to do so would not have
a Material Adverse Effect.
Section 8.16. Sale and Leaseback Transactions. Neither the Borrower nor
any of its Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for the Borrower or such a Subsidiary to
lease or rent Property that the Borrower or any Subsidiary has or will sell or
otherwise transfer to such Person.
Section 8.17. Fiscal Year. The Borrower and every Subsidiary thereof
shall have a fiscal year ending on December 31.
Section 8.18. Maintenance of Existence. The Borrower shall, and shall
cause each Subsidiary to, maintain its legal existence except for mergers
permitted by Section 8.6 hereof. The Borrower will not amend its operating
agreement in any manner which may materially and adversely affect the Lenders.
Section 8.19. Leverage Ratio. As of the last day of each fiscal quarter
the Borrower shall have a Leverage Ratio of not more than that specified for
such quarter below:
For fiscal quarters ending between Leverage Ratio shall not exceed
The date hereof through March 31, 2000 7.25 to 1
April 1, 2000 through March 31, 2001 6.00 to 1
April 1, 2001 through March 31, 2002 5.00 to 1
April 1, 2002 and all fiscal quarters ended 4.50 to 1
thereafter
The forgoing to the contrary notwithstanding, if any of the proceeds of
an Equity Offering are used to acquire or redeem any of the interest of the
▇▇▇▇▇▇ Group in STP II or to pay for the purchase of Timberland by the Borrower
then the Borrower shall thereafter have a Leverage Ratio as of the last day of
each fiscal quarter of not more than 4.5 to 1.
Section 8.20.Interest Coverage Ratio. The Borrower shall have an Interest
Coverage Ratio as of the last day of each fiscal quarter of not less than that
specified for such fiscal quarter below:
For fiscal quarters ending between Interest Coverage Ratio shall not be less than
The date hereof through March 31, 2000 1.40 to 1
April 1, 2000 through March 31, 2001 1.50 to 1
April 1, 2001 through March 31, 2002 1.75 to 1
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April 1, 2002 and all fiscal quarters 2.00 to 1
ended thereafter
The forgoing to the contrary notwithstanding, if any of the proceeds of
an Equity Offering are used to acquire or redeem any of the interest of the
▇▇▇▇▇▇ Group in STP II or to pay for the purchase of Timberland by the Borrower
then the Borrower shall thereafter have an Interest Coverage Ratio as of the
last day of each fiscal quarter of not less than 2.0 to 1.
Section 8.21. Fixed Charge Coverage Ratio. The Borrower shall have a
Fixed Charge Coverage Ratio as of the last day of each fiscal quarter of not
less than 1.2 to 1.
Section 8.22. Interest Rate Protection. Within 30 days from the date
hereof, the Borrower shall enter into an interest rate hedging program with a
party and on terms reasonably acceptable to the Administrative Agent pursuant to
which the Borrower will, at least, be protected against an increase in the LIBOR
Rate for three month Interest Period above a rate reasonably acceptable to the
Administrative Agent as to a notional principal amount of $100,000,000 through
September 30, 2003 (such ▇▇▇▇▇▇ and any other interest rate hedging approved in
writing by the Administrative Agent is herein referred to as the "Hedging
Program"). The Borrower will on a regular basis review its interest rate risk
and hedging strategy with a view to managing its interest rate risk prudently
and economically.
Section 8.23. Timber Coverage Ratio. The Borrower shall at all times
maintain a Timber Coverage Ratio of not greater than that specified below:
Timber Coverage Ratio shall
From and Including To and Including not be greater than
The date hereof March 31, 2000 65%
April 1, 2000 March 31, 2001 60%
April 1, 2001 March 31, 2002 55%
April 1, 2002 At all times thereafter 50%
The forgoing to the contrary notwithstanding, if any of the proceeds of
an Equity Offering are used to acquire or redeem any of the interest of the
▇▇▇▇▇▇ Group in STP II or to pay for the purchase of Timberland by the Borrower
then the Borrower shall thereafter have a Timber Coverage Ratio of not more than
50% at all times.
Section 8.24. Change in the Nature of Business. The Borrower will
not, and will not permit any of its Subsidiaries to engage in any business or
activity other than the ownership
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and management of Timberland, the sale of Timber produced therefrom and
activities incidental thereto.
Section 8.25. General Timber Management Obligations. The Borrower
will cause the Timberland to be operated in accord with sound silvicultural
practices. The Borrower further covenants and agrees:
(a) Harvesting Operations. Harvesting of Timber shall be
carried out in a manner consistent with applicable Governmental
Requirements and with a view to optimizing the commercial return from
the Timberlands.
(b) Restrictions on Grazing and Use of Fire. The Borrower
shall not permit grazing of livestock on the Fee Timberland in such a
way as to be materially injurious to forest regeneration, soils or
forest growth (it being acknowledged by the Lenders that the rights
granted by the Master Grazing Agreement shall not be deemed to have
such an effect), or use fire on the Timberland for eradication of
noxious growth or for any other reason, provided, however, application
of fire in a controlled manner for the benefit of Timber production
("prescribed burning") may be utilized in the management of the
Timberlands or the Timber if (a) local fire protection agencies are
notified and all fire protection and other applicable Governmental
Requirements are followed, (b) appropriate equipment and trained
personnel are available and utilized, (c) fire is applied only when
weather conditions are favorable, and (d) the prescribed burning area
is isolated from other areas by appropriate natural or man-made fire
breaks.
(c) Salvage. To the extent economically feasible, all
trees which are dead, diseased, fallen or otherwise damaged by
casualty, shall be salvaged and harvested in accordance with sound
silvicultural practices.
(d) Fire Protection. All measures shall be taken which
are reasonably necessary and economically feasible to protect the
Timberland and the Timber from loss by fire, which measures shall be at
least equal to fire-control practices generally followed by prudent
owners of timber-producing property in the same general area, including
the adoption of suitable prevention and control measures, the
maintenance of adequate fire-fighting equipment, proper disposal of
slash and slabs, and full cooperation with local, state and federal
agencies on matters of fire prevention and control. The Borrower shall
maintain membership in forest protective associations where any of the
Timberland falls within a forest protective district under the
jurisdiction of any such association, and shall pay as due any forest
patrol assessments of any state forester, or of such forest protective
association.
(e) Maintenance of Roads. To the extent economically
feasible, an adequate system of roads and roadways shall be maintained
in such a manner as to permit access of mobile fire-fighting equipment
to all parts of the Timberland.
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(f) Control of Disease and Insects. There shall be
maintained at all times in accordance with sound silvicultural
practices all reasonable and effective measures to prevent the
development of, and to control the spread of, disease and insect
infestation on the Timberland and the Timber, including, but not
limited to, the shifting of logging operations to remove diseased or
insect-infested trees and other trees threatened with disease or insect
infestation, and all other accepted forest sanitation and control
measures as are necessary to prevent the development and spread of
disease and insect infestation.
Section 8.26. The Frontier Stumpage Contract and Other Stumpage Rights.
The Borrower will not amend, modify or terminate the Frontier Stumpage Contract.
The Borrower will perform all of its obligations under the Frontier Stumpage
Contract and will not waive compliance by Frontier with any of its obligations
thereunder. The Borrower shall and shall cause its Subsidiaries to comply with
all of their obligations under any deed, contract or agreement creating Stumpage
Rights and will not amend, modify or terminate same without the written consent
of the Administrative Agent.
Section 8.27. Future Subsidiaries. If the Borrower acquires or forms any
Subsidiary after the date hereof it shall promptly (i) cause such Subsidiary to
guaranty the Obligations by joining in this Agreement as a Guarantor in a manner
acceptable to the Administrative Agent, (ii) shall grant the Administrative
Agent liens on those assets of such Subsidiary embraced within the term
"Collateral" and shall cause such liens to be properly perfected in the manner
required by law and shall deliver to the Administrative Agent such title
insurance policies and searches of public records as the Administrative Agent
may reasonably require in order to assure that perfection and priority of such
liens and (iii) shall cause such Subsidiary to deliver such other documents
(including resolutions and opinions of counsel) as the Administrative Agent may
reasonably require to assure the due organization in existence of such
Subsidiary, its power and authority to become a Guarantor hereunder and to grant
liens on those of its assets embraced within the term "Collateral" and to assure
that the documentation providing for such is valid and enforceable. Promptly
upon payment in full of the Bridge Loan, the Borrower shall cause STT II to
become a Guarantor hereunder and to take the actions specified in clauses (i)
and (iii) of the immediately preceding sentence.
Section 8.28. The Management Agreement and the Acquisition Agreement.
The Borrower shall keep the Management Agreement in full force and effect and
shall not amend, modify or terminate the same. The Borrower shall not consent to
any material amendment of or modification to the Acquisition Agreement and shall
diligently and in good faith enforce its rights thereunder.
Section 8.29. Year 2000 Assessment. The Borrower shall take all actions
necessary and commit adequate resources to assure that its computer-based and
other systems (and those of all Subsidiaries) are able to effectively process
dates, including dates before, on and after January 1, 2000, without
experiencing any Year 2000 Problem that could cause a Material Adverse Effect on
the business or financial affairs of the Borrower and its Subsidiaries taken on
a consolidated basis. At the request of the Administrative Agent, the
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Borrower will provide the Administrative Agent with written assurances and
substantiations (including, but not limited to, the results of internal or
external audit reports prepared in the ordinary course of business) reasonably
acceptable to the Administrative Agent as to the capability of the Borrower and
its Subsidiaries to conduct its and their businesses and operations before, on
and after January 1, 2000, without experiencing a Year 2000 Problem causing a
Material Adverse Effect.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
Section 9.1. Events of Default. Any one or more of the following
shall constitute an Event of Default:
(a) Default in the payment when due (whether by lapse of
time, acceleration, requirement for mandatory prepayment under Section
3.4(b) hereof or otherwise) of any principal of any Note, whether at
the stated maturity thereof or at any other time provided in this
Agreement or default for three Business Days in the payment when due of
any interest, fee or other amount payable by the Borrower pursuant to
this Agreement or any other Loan Document;
(b) Default in the observance or performance of any
covenant set forth in Sections 8.6, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12,
8.13, 8.16 or 8.19 through 8.23 or 8.26 or 8.28 hereof, or of any
provision of any Collateral Document requiring the maintenance of
insurance on the Collateral subject thereto or dealing with the use or
remittance of proceeds of such Collateral;
(c) Default in the observance or performance of any other
covenant, condition, agreement or provision hereof or any of the other
Loan Documents and such default shall continue for 30 days after
written notice thereof to the Borrower by the Administrative Agent or
the Required Lenders;
(d) Default shall occur under any Debt in a principal
amount exceeding $1,000,000 of the Borrower or any Subsidiary or
Guarantor, or under any mortgage, agreement or other similar instrument
under which the same may be issued or secured and such default shall
continue for a period of time sufficient to permit the acceleration of
maturity of any indebtedness evidenced thereby or outstanding or
secured thereunder or default in the payment when due of any such Debt
exceeding $1,000,000, subject to the lapse of any period of grace;
(e) Any representation or warranty made herein or in any
Loan Document or in any statement or certificate furnished by it
pursuant hereto or thereto, proves untrue or misleading in any material
respect as of the date made or deemed made pursuant to the terms
hereof;
(f) Any judgment or judgments, writ or writs, or warrant
or warrants of attachment, or any similar process or processes in an
aggregate amount in excess of $1,000,000 shall be entered or filed
against the Borrower or any Subsidiary or
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Guarantor or against any of their respective Property or assets and
remain unstayed and undischarged for a period of 30 days from the date
of its entry;
(g) Any reportable event (as defined in ERISA) which
constitutes grounds for the termination of any Plan or for the
appointment by the appropriate United States District Court of a
trustee to administer or liquidate any such Plan, shall have occurred
and be continuing thirty (30) days after written notice to such effect
shall have been given to the Borrower by any Lender; or any such Plan
shall be terminated other than in a "standard termination" meeting the
requirements of Section 4041(b) of ERISA; or a trustee shall be
appointed by the appropriate United States District Court to administer
any such Plan; or the Pension Benefit Guaranty Corporation shall
institute proceedings to administer or terminate any such Plan;
(h) A Change of Control shall occur;
(i) The Borrower or any Subsidiary thereof or any
Guarantor shall (i) have entered involuntarily against it an order for
relief under the Bankruptcy Code of 1978, as amended, (ii) admit in
writing its inability to pay, or not pay, its debts generally as they
become due or suspend payment of its obligations, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent
to, or acquiesce in, the appointment of a receiver, custodian, trustee,
conservator, liquidator or similar official for it or any substantial
part of its Property, (v) file a petition seeking relief or institute
any proceeding seeking to have entered against it an order for relief
under the Bankruptcy Code of 1978, as amended or any similar statute,
to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, marshalling of assets,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail
to file an answer or other pleading denying the material allegations of
any such proceeding filed against it, or (vi) fail to contest in good
faith any appointment or proceeding described in Section 9.1(i) hereof;
or
(j) A custodian, receiver, trustee, conservator,
liquidator or similar official shall be appointed for the Borrower, any
Subsidiary or any Guarantor or any substantial part of its respective
Property, or a proceeding described in Section 9.1(i)(v) shall be
instituted against the Borrower or any Subsidiary and such appointment
continues undischarged or any such proceeding continues undismissed or
unstayed for a period of 30 days.
Section 9.2. Remedies for Non-Bankruptcy Defaults. When any Event of
Default, other than an Event of Default described in subsections (i) and (j) of
Section 9.1 hereof, has occurred and is continuing, the Administrative Agent, if
directed by the Required Lenders, shall give notice to the Borrower and take any
or all of the following actions: (a) terminate the remaining Commitments
hereunder on the date (which may be the date thereof) stated in such notice, (b)
declare the principal of and the accrued interest on the Notes to be forthwith
due and payable and thereupon the Notes including both principal and interest,
shall be and become immediately due and payable without further demand,
presentment, protest or notice
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of any kind, and (c) take any action or exercise any remedy under any of the
Loan Documents or exercise any other action, right, power or remedy permitted by
law. Any Lender may exercise the right of set off with regard to any deposit
accounts or other accounts or investments maintained by the Borrower or any
Guarantor with any of the Lenders.
Section 9.3. Remedies for Bankruptcy Defaults. When any Event of
Default described in subsections (i) or (j) of Section 9.1 hereof has occurred
and is continuing, then the Notes and other Obligations shall immediately become
due and payable without presentment, demand, protest or notice of any kind, and
the obligation of the Lenders to extend further credit pursuant to any of the
terms hereof shall immediately terminate.
Section 9.4. Collateral for Undrawn Letters of Credit. If and when (x)
any Event of Default, other than an Event of Default described in subsections
(i) or (j) of Section 9.1, has occurred and is continuing, the Borrower shall,
upon demand of the Issuer, and (y) any Event of Default described in subsections
(i) or (j) of Section 9.1 has occurred, the Borrower shall, without notice or
demand from the Issuer, immediately pay to the Issuer the full amount of each
Letter of Credit to be held by it as a security for the Obligations, the
Borrower agreeing to immediately make each such payment and acknowledging and
agreeing the Issuer would not have an adequate remedy at law for failure of the
Borrower to honor any such demand and that the Issuer shall have the right to
require the Borrower to specifically perform such undertaking whether or not any
draws had been made under the Letters of Credit.
SECTION 10. CHANGE IN CIRCUMSTANCES REGARDING LIBOR PORTIONS.
Section 10.1. Change of Law. Notwithstanding any other provisions of
this Agreement or any Note to the contrary, if at any time after the date hereof
with respect to LIBOR Portions, any Lender shall determine in good faith that
any change in applicable law or regulation or in the interpretation thereof
makes it unlawful for such Lender to create or continue to maintain any LIBOR
Portion or to give effect to its obligations as contemplated hereby, such Lender
shall promptly give notice thereof to the Borrower and to the Administrative
Agent to such effect, and such Lender's obligation to create, continue or
convert any such affected LIBOR Portions under this Agreement shall terminate
until it is no longer unlawful for such Lender to create or maintain such
affected Portion. The Borrower shall prepay the outstanding principal amount of
any such affected LIBOR Portion, together with all interest accrued thereon and
all other amounts due and payable to the Lenders under Section 10.4 of this
Agreement, on the earlier of the last day of the Interest Period applicable
thereto and the first day on which it is illegal for such Lender to have such
LIBOR Portion outstanding; provided, however, the Borrower may convert the LIBOR
Portions into a Base Rate Portion, subject to all of the terms and conditions of
this Agreement.
Section 10.2. Unavailability of Deposits or Inability to Ascertain the
Adjusted LIBOR Rate. Notwithstanding any other provision of this Agreement or
any Note to the contrary, if prior to the commencement of any Interest Period
the Administrative Agent or Required
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Lenders shall determine (i) that deposits in the amount of any LIBOR Portion
scheduled to be outstanding are not available to it in the relevant market or
(ii) by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Adjusted LIBOR Rate, then the
Administrative Agent or Required Lenders shall promptly give telephonic or
facsimile notice thereof to the Borrower, the Administrative Agent and the other
Lenders (such notice to be confirmed in writing), and the obligation of the
Lenders to create, continue or convert any such LIBOR Portion in such amount and
for such Interest Period shall terminate until deposits in such amount and for
the Interest Period selected by the Borrower shall again be readily available in
the relevant market and adequate and reasonable means exist for ascertaining the
Adjusted LIBOR Rate. Upon the giving of such notice, the Borrower may elect to
either (i) pay or prepay, as the case may be, such affected Portion or (ii)
convert the LIBOR Portions into a Base Rate Portion, subject to all terms and
conditions of this Agreement.
Section 10.3. Taxes and Increased Costs. With respect to the LIBOR
Portions, if any Lender shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any new
law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over such Lender or its lending branch or the LIBOR Portions
contemplated by this Agreement (whether or not having the force of law) ("Change
in Law") shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirements against assets held by, or
deposits in or for the account of, or loans by, or any other
acquisition of funds or disbursements by, such Lender (other than
reserves included in the determination of the Adjusted LIBOR Rate);
(ii) subject such Lender, any LIBOR Portion or any Note to
any tax (including, without limitation, any United States interest
equalization tax or similar tax however named applicable to the
acquisition or holding of debt obligations and any interest or
penalties with respect thereto), duty, charge, stamp tax, fee,
deduction or withholding in respect of this Agreement, any LIBOR
Portion or any Note except such taxes (x) as may be measured by the
overall net income of such Lender or its lending branch and imposed by
the jurisdiction, or any political subdivision or taxing authority
thereof, in which such Lender's principal executive office or its
lending branch is located, and (y) any U.S. Taxes (as defined in
Section 13.19(c) hereof) that are deductible or otherwise directly
payable by the Borrower, which shall be governed exclusively by Section
13.19 hereof;
(iii) change the basis of taxation of payments of principal
and interest due from the Borrower to such Lender hereunder or under
any Note (other than by a change in taxation of the overall net income
of such Lender); or
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(iv) impose on such Lender any penalty with respect to the
foregoing or any other condition regarding this Agreement, any LIBOR
Portion or any Note;
and such Lender shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such
Lender of making or maintaining any LIBOR Portion hereunder or to reduce the
amount of principal or interest received by such Lender, then the Borrower shall
pay to such Lender from time to time as specified by such Lender such additional
amounts as such Lender shall reasonably determine are sufficient to compensate
and indemnify it for such increased cost or reduced amount. If any Lender makes
such a claim for compensation, it shall provide to the Borrower a certificate
setting forth such increased cost or reduced amount as a result of any event
mentioned herein specifying such Change in Law, and such certificate shall be
conclusive and binding on the Borrower as to the amount thereof except in the
case of manifest error. Upon the imposition of any such cost, the Borrower may
prepay any affected Loan, subject to the other provisions of this Agreement. If
any Lender makes a claim under this Section 10.3 or Section 3.7 hereof it will,
at the request of the Borrower assign its Loans and Commitments to another
financial institution pursuant to and in accordance with the conditions and
requirements of Section 13.16 except that it shall be entitled to compensation
under Section 10.4 hereof as though its LIBOR portions had been prepaid rather
than assigned.
Section 10.4. Funding Indemnity. (a) In the event any Lender shall incur
any loss, cost, expense or premium (including, without limitation, any loss,
cost, expense or premium incurred by reason of the liquidation or re-employment
of deposits or other funds acquired by such Lender to fund or maintain any LIBOR
Portion or the relending or reinvesting of such deposits or amounts paid or
prepaid to such Lender) as a result of:
(i) any payment or prepayment of a LIBOR Portion on a
date other than the last day of the then applicable Interest Period for
any reason;
(ii) any failure by the Borrower to borrow, continue or
convert any LIBOR Portion on the date specified in the notice given
pursuant to this Agreement; or
(iii) the occurrence of any Event of Default;
then, upon the demand of such Lender, the Borrower shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense.
(b) If any Lender makes a claim for compensation under this
Section 10.4, it shall provide to the Borrower a certificate setting forth the
amount of such loss, cost or expense in reasonable detail and such certificate
shall be deemed prima facie correct.
Section 10.5. Lending Branch. Each Lender may, at its option, elect to
make, fund or maintain its LIBOR Portions hereunder at the branch or office
specified opposite its signature on the signature page hereof or such other of
its branches or offices as such Lender may from time to time elect.
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Section 10.6. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Loans in any manner it sees fit, it being understood however, that for the
purposes of this Agreement all determinations hereunder shall be made as if the
Lenders had actually funded and maintained each LIBOR Portion during each
Interest Period for such LIBOR Portion through the purchase of deposits in the
relevant interbank market having a maturity corresponding to such Interest
Period and bearing an interest rate equal to the LIBOR Rate, for such Interest
Period.
Section 10.7. Lender Replacement. Unless the Required Lenders seek
indemnification, payment, or reimbursement under, or invoke the provisions of,
Section 3.8, 10 or Section 13.19(c) hereof, if the Borrower is obligated to pay
to any Lender any amount under Section 3.8, 10, or Section 13.19(c), or if a
Lender requests that its LIBOR Portions be converted into a Base Rate Portion,
the Borrower may, so long as no Potential Default or Event of Default then
exists, replace such Lender with a new Lender reasonably acceptable to the
Administrative Agent, and such Lender hereby agrees to be so replaced subject to
the following:
(a) The obligations of the Borrower hereunder to the
Lender to be replaced (including such increased or additional costs
incurred from the date of notice to the Borrower of such increase or
additional costs through the date such Lender is replaced hereunder)
shall be paid in full to such Lender concurrently with such replacement
together with any amount which would be due such Lender under Section
10.4 hereof in connection with payment of its Loans;
(b) The replacement Lender shall be a Lender that is not
subject to the increased costs arising under such Sections which may
have effectuated the Borrower's election to replace any Lender
hereunder;
(c) Each such replacement Lender shall execute and
deliver to the Administrative Agent such documentation reasonably
satisfactory to the Administrative Agent pursuant to which such Lender
is to become a party hereto with Commitments equal to those of the
Lender being replaced and shall make a Loan or Loans in the aggregate
principal amount equal to the aggregate outstanding principal amount of
the Loan or Loans of the Lender being replaced;
(d) Upon such execution of such documents referred to in
clause (c) and repayment of the amounts referred to in clause (a), the
replacement Lender shall be a "Lender" with Commitment as specified
hereinabove and all rights and obligations of a Lender hereunder and
the Lender being replaced shall cease to be a "Lender" hereunder,
except with respect to indemnification provisions under this Agreement,
which shall survive as to such replaced Lender;
(e) The Administrative Agent shall reasonably cooperate
in effectuating the replacement of any Lender hereunder, but at no time
shall the Administrative Agent be obligated to initiate any such
replacement; and
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(f) Any Lender replaced hereunder shall be replaced at
the Borrower's sole cost and expense and at no cost or expense to the
Administrative Agent.
SECTION 11. THE GUARANTEES.
Section 11.1. The Guarantees. To induce the Lenders to provide the
credits described herein and in consideration of benefits expected to accrue to
each Guarantor by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, each Guarantor hereby
unconditionally and irrevocably guarantees jointly and severally to the
Administrative Agent, the Lenders, the Issuer and each other holder of any of
the Borrower's obligations under the Loan Documents, the due and punctual
payment of all present and future indebtedness, obligations and liabilities of
the Borrower evidenced by or arising out of the Loan Documents, including, but
not limited to, the due and punctual payment of principal of and interest on the
Notes and the due and punctual payment of all other obligations now or hereafter
owed by the Borrower under the Loan Documents as and when the same shall become
due and payable, whether at stated maturity, by acceleration or otherwise,
according to the terms hereof and thereof. In case of failure by the Borrower
punctually to pay any indebtedness guaranteed hereby, each Guarantor hereby
unconditionally agrees jointly and severally to make such payment or to cause
such payment to be made punctually as and when the same shall become due and
payable, whether at stated maturity, by acceleration or otherwise, and as if
such payment were made by the Borrower.
Section 11.2. Guarantee Unconditional. The obligations of each Guarantor
as a guarantor under this Section 11 shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Borrower or of
any other Guarantor under this Agreement or any other Loan Document or
by operation of law or otherwise;
(b) any modification or amendment of or supplement to
this Agreement or any other Loan Document;
(c) any change in the existence, structure or ownership
of, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting, the Borrower, any other Guarantor, or any of
their respective assets, or any resulting release or discharge of any
obligation of the Borrower or of any other Guarantor contained in any
Loan Document;
(d) the existence of any claim, set-off or other rights
which the Guarantor may have at any time against the Administrative
Agent, any Lender or any other Person, whether or not arising in
connection herewith;
(e) any failure to assert, or any assertion of, any claim
or demand or any exercise of, or failure to exercise, any rights or
remedies against the Borrower, any other Guarantor or any Collateral;
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(f) any application of any sums by whomsoever paid or
howsoever realized to any obligation of the Borrower, regardless of
what obligations of the Borrower remain unpaid,
(g) any invalidity or unenforceability relating to or
against the Borrower or any other Guarantor for any reason of this
Agreement or of any other Loan Document or any provision of applicable
law or regulation purporting to prohibit the payment by the Borrower of
the principal of or interest on any Note or any other amount payable by
it under the Loan Documents; or
(h) any other act or omission to act or delay of any kind
by any Administrative Agent, any Lender or any other Person or any
other circumstance whatsoever that might, but for the provisions of
this paragraph, constitute a legal or equitable discharge of the
obligations of the Guarantor under this Section 11.
Section 11.3. Discharge Only Upon Payment in Full; Reinstatement in
Certain Circumstances. Each Guarantor's obligations under this Section 11 shall
remain in full force and effect until the Commitments are terminated and the
principal of and interest on the Notes, the L/C Obligations and all other
amounts payable by the Borrower under this Agreement and all other Loan
Documents shall have been paid in full. If at any time any payment of the
principal of or interest on any Note or any other amount payable by the Borrower
under the Loan Documents is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy or reorganization of the Borrower or of a
Guarantor, or otherwise, each Guarantor's obligations under this Section 11 with
respect to such payment shall be reinstated at such time as though such payment
had become due but had not been made at such time.
Section 11.4. Subrogation. No Guarantor will exercise any rights which
it may acquire by way of subrogation by any payment made hereunder, or
otherwise, until the Notes, the L/C Obligations and all other amounts payable by
the Borrower under the Loan Documents shall have been paid in full and after the
termination of the Commitments. If any amount shall be paid to a Guarantor on
account of such subrogation rights at any time prior to the later of (a) the
payment in full of the Notes and the L/C Obligations and all other amounts
payable by such Guarantor hereunder and (y) the termination of all the
Commitments, such amount shall be held in trust for the benefit of the
Administrative Agent and the Lenders and shall forthwith be paid to the
Administrative Agent and the Lenders or be credited and applied upon the
Borrower's obligations under the Loan Documents, whether matured or unmatured,
in accordance with the terms of this Agreement. Notwithstanding any other
provision hereof, the right to recovery against each Guarantor under this
Section 11 shall not exceed $1.00 less than the amount which would render such
Guarantor's obligations under this Section 11 void or voidable under applicable
law, including without limitation fraudulent conveyance law.
Section 11.5. Waivers. Each Guarantor irrevocably waives acceptance
hereof, presentment, demand, protest and any notice not provided for herein, as
well as any
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requirement that at any time any action be taken by any Administrative Agent,
any Lender or any other Person against the Borrower, another Guarantor or any
other Person.
Section 11.6. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Borrower under this Agreement or any other
Loan Document is stayed upon the insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement or the other Loan Documents shall nonetheless be payable jointly
and severally by the Guarantors hereunder forthwith on demand by any
Administrative Agent or any Lender.
SECTION 12. THE AGENTS.
Section 12.1. Appointment and Authorization. Each Lender hereby appoints
and authorizes each bank named herein as an Agent to take such action as Agent
on its behalf and to exercise such powers hereunder and under the Loan Documents
as are designated to such Agent by the terms hereof and thereof together with
such powers as are reasonably incidental thereto. The Agents shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agents have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agents in such respective capacities. Any Agent or
the Issuer may resign at any time by sending twenty (20) days prior written
notice to the Borrower and the Lenders and may be removed by the Required
Lenders upon twenty (20) days' prior written notice to the Borrower and the
Lenders. In the event of any such resignation or removal the Required Lenders
may appoint a replacement Agent or Issuer, subject to the reasonable approval of
the Borrower if no Potential Default or Event of Default has occurred and is
continuing, which shall succeed to all the rights, powers and duties of the
resigning or removed Agent or Issuer hereunder and under the other Loan
Documents. Any resigning or removed Agent or Issuer shall be entitled to the
benefit of all the protective provisions hereof with respect to its acts as an
Agent or Issuer hereunder, but no successor Administrative Agent or Issuer shall
in any event be liable or responsible for any actions of its predecessor. If the
Agent resigns or is removed and no successor is appointed, the rights and duties
of the Agent shall be automatically assumed by the Required Lenders (i) the
Borrower shall be directed to make all payments due each Lender hereunder
directly to such Lender and (ii) the Agent's rights in the Collateral Documents
shall be assigned without representation, recourse or warranty to the Lenders as
their interests may appear.
Section 12.2. Rights as a Lender. The Agents and Issuer have and reserve
all of the rights, powers and duties under the Loan Documents as any Lender may
have and may exercise the same as though they were not Agents or the Issuer and
the terms "Lender" or "Lenders" as used herein and in all of such documents
shall, unless the context otherwise expressly indicates, include the Agents and
Issuer in their individual capacities as Lenders. Without limiting the
generality of the forgoing, each Agent 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 or other
business with the Borrower
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and its Affiliates as though it were not an Agent hereunder and under the other
Loan Documents and without notice to or consent of the Lenders.
Section 12.3. Standard of Care. The Lenders acknowledge that they have
received and approved copies of the Loan Documents, the Acquisition Agreement,
the Management Agreement and such other information and documents concerning the
transactions contemplated and financed hereby as they have requested to receive
and/or review. The Agents and Issuer make no representations or warranties of
any kind or character to the Lenders or each other with respect to the validity,
enforceability, genuineness, perfection, value, worth or collectibility hereof
or of the other Loan Documents or of the liens provided for thereby or of any
other documents called for hereby or thereby or of the Collateral. The Agents
need not verify the worth, value or existence of the Collateral and may rely
exclusively on reports of the Borrower in making computations hereunder. Neither
any Agent nor the Issuer nor any director, officer employee, Agent or
representative thereof (including any security trustee therefor) shall in any
event be liable for any clerical errors or errors in judgment, inadvertence or
oversight, or for action taken or omitted to be taken by it or them under the
Loan Documents or in connection herewith or therewith except for its or their
own gross negligence or willful misconduct. The Agents shall not be liable for
the acts and omissions of each other. Neither the Agents nor the Issuer shall
incur liability under or in respect of the Loan Documents by acting upon any
notice, certificate, warranty, instruction or statement (oral or written) of
anyone (including anyone in good faith believed by it to be authorized to act on
behalf of the Borrower), unless it has actual knowledge of the untruthfulness of
same. Either the Administrative Agent or the Issuer may execute any of its
duties hereunder by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Lenders for the default or misconduct of any such
agents or attorneys-in-fact selected with reasonable care. The Agents and the
Issuer shall be entitled to advice of counsel concerning all matters pertaining
to the agencies hereby created and its duties hereunder, and shall incur no
liability to anyone and be fully protected in acting upon the advice of such
counsel with respect to such matters. The Administrative Agent and the Issuer
shall be entitled to assume that no Potential Default or Event of Default exists
unless notified to the contrary by a Lender. The Agents and the Issuer shall in
all events be fully protected in acting or failing to act in accord with the
instructions of the Required Lenders. Upon the occurrence of an Event of Default
hereunder, the Administrative Agent shall take such action with respect to the
enforcement of its liens on the Collateral and the preservation and protection
thereof as it shall be directed to take by the Required Lenders but unless and
until the Required Lenders have given such direction, the Administrative Agent
shall take or refrain from taking such actions as it deems appropriate and in
the best of interest of all Lenders. The Agents and the Issuer shall in all
cases be fully justified in failing or refusing to act hereunder unless it shall
be indemnified to its reasonable 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 Administrative Agent may treat the owner
of any Note as the holder thereof until written notice of transfer shall have
been filed with it signed by such owner in form satisfactory to the
Administrative Agent. Each Lender acknowledges that it has independently and
without reliance on the Agents and the Issuer or any other Lender and based upon
such information, investigations and inquiries as it deems appropriate made its
own credit analysis and decision to extend credit to the Borrower. It shall be
the
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responsibility of each Lender to keep itself informed as to the creditworthiness
of the Borrower and Guarantors and the Agents and the Issuer shall have no
liability to any Lender with respect thereto. Any subagent for the
Administrative Agent or the Issuer shall be entitled to the benefit of the
foregoing provisions as though specifically named therein.
Section 12.4. Costs and Expenses. Each Lender agrees to reimburse the
Agents and the Issuer for all out-of-pocket costs and expenses suffered or
incurred by such Agents or any security trustee in performing its duties
hereunder and under the other Loan Documents or in the exercise of any right or
power imposed or conferred upon such Administrative Agent hereby or thereby, to
the extent the Agents are not promptly reimbursed for same by the Borrower or
out of the Collateral, all such costs and expenses to be borne by the Lenders
ratably in accordance with the amounts of their respective Commitments.
Section 12.5. Indemnity. The Lenders shall ratably indemnify and hold
the Agents, the Issuer and their directors, officers, employees, agents or
representatives (including as such any security trustee therefor) harmless from
and against any liabilities, losses, costs or expenses suffered or incurred by
them under the Loan Documents or in connection with the transactions
contemplated hereby or thereby, regardless of when asserted or arising, except
to the extent they are promptly reimbursed for the same by the Borrower or out
of the Collateral and except to the extent that any event giving rise to a claim
was caused by the gross negligence or willful misconduct of the party seeking to
be indemnified. If the Administrative Agent has remitted any funds to any Lender
in reliance upon the assumption that such funds are in the course of being
remitted to it by the Borrower or is ever required to return any funds remitted
to a Lender then and in any such event such Lender agrees to promptly remit
and/or return the funds in question to the Administrative Agent.
SECTION 13. MISCELLANEOUS.
Section 13.1. Holidays. If any principal of any of the Notes shall fall
due on a Saturday, Sunday or on another day which is a legal holiday for lenders
in the States of Illinois, North Carolina or New York, interest at the rates
such Notes bear for the period prior to maturity shall continue to accrue on
such principal from the stated due date thereof to and including the next
succeeding Business Day on which the same is payable.
Section 13.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of any Administrative Agent or Lender in the exercise of any power or right
shall operate as a waiver thereof, nor as an acquiescence in any default nor
preclude any other or further exercise thereof, or the exercise of any other
power or right, and the rights and remedies hereunder of the Administrative
Agent and the Lenders are cumulative to, and not exclusive of, any rights or
remedies which any of them would otherwise have.
Section 13.3. Waivers, Modifications and Amendments. Any provision of
the Loan Documents (other than documents creating Hedging Liabilities) may be
amended, modified, waived or released and any Potential Default or Event of
Default and its consequences may be rescinded and annulled upon the written
consent of the Required Lenders; provided, however, that without the consent of
each Lender no such amendment, modification or
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waiver shall increase the amount or decrease the pro rata share or extend the
terms of such Lender's Commitments or reduce the interest rate applicable to or
extend the scheduled maturity of its Notes or reduce the amount of the fees to
which it is entitled hereunder and without the consent of all Lenders no such
amendment, modification, release or waiver shall change any provision of this
sentence or release all or any substantial (in value) part of the collateral
security afforded by the Collateral Documents, except in connection with a sale
or other disposition, thereof, or release the Guarantors or amend or waive
Section 8.23 hereof. No amendment, modification or waiver of the Agents' or
Issuer's protective provisions shall be effective without the prior written
consent of the affected Agent or Issuer, as applicable. The Administrative Agent
may, without the consent of any Lender, (i) release its lien on any portion of
the Collateral which is being sold or disposed of by the Borrower or owning
Guarantor if any prepayment required as a result of such sale is made and (ii)
subordinate its lien to easements, possessory rights, cutting rights and
permitted sales of stumpage and timber rights and enter into other arrangements
concerning its liens which will not in its reasonable judgment materially impair
the value thereof.
Section 13.4. Costs and Expenses. The Borrower agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Agents and Issuer in
connection with the negotiation, preparation, execution, delivery, recording
and/or filing and/or release of the Loan Documents and the other instruments and
documents to be delivered hereunder or thereunder or in connection with the
transactions contemplated hereby or thereby or in connection with any consents
hereunder or thereunder or waivers or amendments hereto or thereto, including
the reasonable fees and out-of-pocket expenses of counsel for the Agents and
Issuer with respect to all of the foregoing, and all recording, filing, title
insurance, subagent's or other fees, costs and taxes incident to perfecting a
lien upon the Collateral, and all costs and expenses (including reasonable
attorneys' fees), incurred by the Agents, the Issuer, the Lenders or any other
holders of a Note in connection with a default or the enforcement of the Loan
Documents and the other instruments and documents to be delivered hereunder or
thereunder. The Borrower agrees to reimburse the Administrative Agent for the
costs of all examinations and audits of the Collateral and all costs of
appraisers and consultants. The Borrower agrees to indemnify and save the
Lenders, the Agents, the Issuer any subagent and any security trustee for the
Lenders harmless from any and all liabilities, losses, costs and expenses
incurred by the Lenders or the Agents or the Issuer any security trustee or any
subagent in connection with any action, suit or proceeding brought against the
Agents or the Issuer, security trustee or any Lender by any Person which arises
out of the transactions contemplated or financed hereby or by the other Loan
Documents or out of any action or inaction by any Agent, any security trustee or
any Lender hereunder or thereunder, except for such thereof as is caused by the
gross negligence or willful misconduct of the party indemnified. The provisions
of this Section 13.4 and the other protective provisions of this Agreement
hereof shall survive payment of the Notes.
Section 13.5. Stamp Taxes. Although the Borrower is of the opinion, and
has been so advised by its counsel, that no documentary or similar taxes are
payable in respect to the Loan Documents, the Borrower agrees that they will pay
such taxes, including interest and penalties, in the event any such taxes are
assessed, irrespective of when such assessment is made and whether or not any
credit to it is then in use or available.
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Section 13.6. Survival of Representations. All representations and
warranties made in the Loan Documents or in certificates given pursuant hereto
shall survive the execution and delivery of the Loan Documents, and shall
continue in full force and effect with respect to the date as of which they were
made as long as any credit is in use or available hereunder.
Section 13.7. Construction. The parties hereto acknowledge and agree
that the Loan Documents shall not be construed more favorably in favor of one
than the other based upon which party drafted the same, it being acknowledged
that all parties hereto contributed substantially to the negotiation and
preparation of this Agreement and the Loan Documents.
Section 13.8. Accounting Principles. All computations of compliance with
the financial terms hereof shall be made on the basis of GAAP as in effect on
the date hereof except to the extent otherwise explicitly herein provided.
Section 13.9. Headings. Article and Section headings used in this
Agreement are for convenience of reference only and are not a part of this
Agreement for any other purpose.
Section 13.10. Severability of Provisions. Any provision of this
Agreement which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. All rights, remedies
and powers provided in the Loan Documents may be exercised only to the extent
that the exercise thereof does not violate any applicable mandatory provisions
of law, and all the provisions of the Loan Documents are intended to be subject
to all applicable mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render the Loan Documents
invalid or unenforceable.
Section 13.11. Counterparts. This Agreement may be executed in any
number of counterparts, and by different parties hereto on separate
counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
Section 13.12. Binding Nature, Governing Law, Etc. This Agreement shall
be binding upon the Borrower and Guarantors and their successors and assigns,
and shall inure to the benefit of the Lenders, the Agents and the Issuer and the
benefit of their successors and assigns, including any subsequent holder of an
interest of the Notes. This Agreement and the Notes and the rights and duties of
the parties hereto shall be construed and determined in accordance with, and
shall be governed by the internal laws of the State of Illinois without regard
to principles of conflicts of law. This Agreement, together with the other Loan
Documents, constitutes the entire understanding of the parties with respect to
the subject matter hereof and any prior agreements, whether written or oral,
with respect thereto are superseded hereby except for prior understandings
related to fees payable to the Agents. The Borrower may not assign its rights
hereunder without the written consent of the Lenders.
Section 13.13. Notices. All communications provided for herein shall be
in writing or by telecopy, except as otherwise specifically provided for
hereinabove, addressed to the
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appropriate party at their respective addresses set forth opposite their
respective signatures hereto, or at such other address as shall be designated by
any party hereto in a written notice to each other party pursuant to this
Section 13.13. Any notice shall be in writing and shall be deemed to have been
given or made when served personally or when received if sent by United States
mail, and any notice given by telex or telecopy means shall be deemed given when
transmitted (receipt confirmed by the sender's transmission equipment); provided
that any notice to the Administrative Agent or any Lender under Sections 1 and 2
hereof shall only be effective upon receipt.
Section 13.14. Participants. Each Lender shall have the right at its own
cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made by such Lender at any time and
from time to time to one or more other financial institutions, provided that no
such participant shall have any rights under this Agreement or any other Loan
Documents (the participant's rights against the Lender granting its
participation to be those set forth in the participation agreement between the
participant and such Lender). Each such Lender shall be entitled to the benefits
of the yield protection provisions hereof to the extent such Lender would have
been so entitled had no such participation been sold. In connection with the
sale of any such participation, no Lender shall agree with a participant not to
grant amendments, modifications or waivers hereunder except for amendments,
modifications and waivers of a character which can only be made with consent of
such Lender acting alone, or with the consent of all Lenders, pursuant to the
terms of Section 13.3 hereof.
Section 13.15. Concerning the Guarantors. All references to the
"Guarantors" herein shall be deemed references to the Guarantors and to each of
them, jointly and severally except to the extent that the context explicitly
otherwise requires.
Section 13.16. Assignment Agreements. Each Lender may, from time to time,
with the consent of the Borrower, the Issuer and Administrative Agent (which
will not in any instance be unreasonably withheld and which consents shall not
be required in the case of an assignment to an Affiliate of the assigning
Lender), sell or assign to other institutions part of the indebtedness evidenced
by the Notes and participation in the Letter of Credit then owned by it pursuant
to written agreements executed by the assignor, the assignee and the Borrower,
which agreements shall specify in each instance the portion of the indebtedness
evidenced by the Notes which is to be assigned to each such assignor and the
portion of the Commitments and credit risk incident to the Letters of Credit of
the assignor to be assumed by it (the "Assignment Agreements"), provided that
the Borrower, the Issuer and Administrative Agent may in their sole discretion
withhold their consent to any assignment by a Lender of less than $5,000,000 of
its Commitments, or Loans, further provided that nothing herein contained shall
restrict, or be deemed to require any consent as a condition to, or require
payment of any fee in connection with, any sale, discount or pledge by any
Lender of any Note or other obligation hereunder to a Federal Reserve Bank. The
Assignment Agreements shall be in the form annexed hereto as Exhibit F as in
such other form as all signatories thereto shall approve. Upon the execution of
each Assignment Agreement by the assignor, the assignee and the Borrower and
consent thereto by the Administrative Agent and the Issuer, if applicable (i)
such assignee shall thereupon become a
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"Lender" for all purposes of this Agreement with Commitments in the amounts set
forth in such Assignment Agreement and with all the rights, powers and
obligations afforded a Lender hereunder, (ii) the assignor shall have no further
liability for funding the portion of its Commitment assumed by such other Lender
and (iii) the address for notices to such Lender shall be as specified in the
Assignment Agreement, and the Borrower shall execute and deliver Notes to the
assignee Lender, all such Notes to constitute "Notes" for all purposes of this
Agreement, and there shall be paid to the Administrative Agent, as a condition
to such assignment, an administration fee of $3,500 plus any reasonable
out-of-pocket costs and expenses incurred by it in effecting such assignment,
such fee to be paid by the assignor or the assignee as they may mutually agree,
but under no circumstances shall any portion of such fee be payable by or
charged to the Borrower.
Section 13.17. Submission and Waiver of Jury Trial. EACH PARTY HERETO
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS (EASTERN DIVISION) AND OF ANY
ILLINOIS STATE COURT SITTING IN CHICAGO FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. EACH OF THE BORROWER, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 13.18. Entire Agreement. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof and any
prior agreements, whether written or oral, with respect thereto are superseded
hereby.
Section 13.19. Withholding Taxes.
(a) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Administrative Agent on or before the date the
initial Borrowing is made hereunder or, if later, the date such Lender becomes a
Lender hereunder, two duly completed and signed copies of either Form 1001
(relating to such Lender and entitling it to a complete exemption from
withholding on all amounts to be received by such Lender, including fees,
pursuant to this Agreement and the Loans) or Form 4224 (relating to all amounts
to be received by such Lender, including fees, pursuant to this Agreement and
the Loans) of the United States Internal Revenue Service. Thereafter and from
time to time, each such Lender shall submit to the Borrower and the
Administrative Agent such additional duly completed and signed copies of one or
the other of such Forms (or such successor forms as shall be adopted from time
to time by the relevant United States taxing authorities) as may be (i) notified
by the Borrower or Administrative Agent to such Lender and (ii)
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required under then-current United States law or regulations to avoid or reduce
United States withholding taxes on payments in respect of all amounts to be
received by such Lender, including fees, pursuant to this Agreement or the
Loans. Upon the request of the Borrower or Administrative Agent, each Lender
that is a United States person (as such term is defined in Section 7701(a)(30)
of the Code) shall submit to the Borrower a certificate to the effect that it is
such a United States person.
(b) Inability of Lender to Submit Forms. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower any form or certificate that such Lender is obligated to submit
pursuant to subsection (a) of this Section 13.19, or that such Lender is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise become ineffective or inaccurate, such
Lender shall promptly notify the Borrower and Administrative Agent of such fact
and the Lender shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.
(c) Payment of Additional Amounts. If, as a result of any change in
applicable law, regulation or treaty, or in any official application or
interpretation thereof after the date of this Agreement or, if later, the date a
Lender becomes a Lender hereunder, the Borrower is required by law or regulation
to make any deduction, withholding or backup withholding of any taxes, levies,
imposts, duties, fees, liabilities or similar charges of the United States of
America, any possession or territory of the United States of America (including
the Commonwealth of Puerto Rico) or any area subject to the jurisdiction of the
United States of America ("U.S. Taxes") from any payments to a Lender in respect
of Loans then or thereafter outstanding, or other amounts owing hereunder, the
amount payable by the Borrower will be increased to the amount which, after
deduction from such increased amount of all U.S. Taxes required to be withheld
or deducted therefrom, will yield the amount required under this Agreement to be
payable with respect thereto; provided that the Borrower shall not be required
to pay any additional amount pursuant to this subsection (c) to any Lender that
(i) is not, on the date this Agreement is executed by such Lender or, if later,
the date such Lender became a Lender hereunder, either (x) entitled to submit
Form 1001 relating to such Lender and entitling it to a complete exemption from
withholding on all amounts to be received by such Lender, including fees,
pursuant to this Agreement and the Loans or Form 4224 relating to all amounts to
be received by such Lender, including fees, pursuant to this Agreement and the
Loans or (y) a U.S. person (as such term is defined in Section 7701(a)(30) of
the Code), or (ii) has failed to submit any form or certificate that it was
required to file pursuant to subsection (a) of this Section 13.19 and entitled
to file under applicable law, or (iii) is no longer entitled to submit Form 1001
or Form 4224 as a result of any change in circumstances other than a change in
applicable law, regulation or treaty or in any official application or
interpretation thereof. Within 30 days after the Borrower's payment of any such
U.S. Taxes, the Borrower shall deliver to the Administrative Agent, for the
account of the relevant Lender(s), originals or certified copies of official tax
receipts evidencing such payment. The obligations of the Borrower under this
subsection (c) shall survive the payment in full of the Loans and the
termination of the Commitments. If any Lender or the Administrative Agent
determines it has received or
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been granted a credit against or relief or remission for, or repayment of, any
taxes paid or payable by it because of any U.S. Taxes paid by a Borrower and
evidenced by such a tax receipt, such Lender or the Administrative Agent shall,
to the extent it can do so without prejudice to the retention of the amount of
such credit, relief, remission or repayment, pay to the Borrower such amount as
such Lender or Administrative Agent determines is attributable to such deduction
or withholding and which will leave such Lender or Administrative Agent (after
such payment) in no better or worse position than it would have been in if such
Borrower had not been required to make such deduction or withholding. Nothing in
this Agreement shall interfere with the right of each Lender and the
Administrative Agent to arrange its tax affairs in whatever manner it thinks fit
nor oblige any Lender or the Administrative Agent to disclose any information
relating to its tax affairs or any computations in connection with such taxes.
Section 13.20. Set-off Sharing. Each Lender agrees with each other Lender
a party hereto that in the event such Lender shall receive and retain any
payment, whether by set-off or application of deposit balances or otherwise
("Set-off"), on or in respect of any Note or other obligation outstanding under
the Loan Documents in excess of the amount to which it is entitled under this
Agreement, then such Lender shall purchase for cash at face value, but without
recource, ratably from each of the other Lenders such amount of the Notes or
other Obligations held by each such other Lender (or interest therein) as shall
be necessary to cause such payment to be shared in accord with Section 3.6
hereof; provided, however, that if any such purchase is made by any Lender, and
if such excess payment or part thereof is thereafter recovered from such
purchasing Lender, the related purchases from the other Lenders shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest. Each Lender agrees that it
will not exercise rights of set off without the consent of the Administrative
Agent.
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Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of October 9, 1998.
PIONEER RESOURCES, LLC
By /s/ [illegible]
-------------------------------------
Its
----------------------------------
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UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US
AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE
NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
US TO BE ENFORCEABLE.
Accepted and agreed to as of the day and year last above written.
Revolving Credit Commitment: FIRST UNION NATIONAL BANK
$11,666,666.68 Individually and as Administrative Agent
and Letter of Credit Issuer
By /s/ [illegible]
--------------------------------------------
Its Vice President
----------------------------------------
Term Credit Commitment: Address: One First Union Center
$33,333,333.32 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ Santa ▇▇▇▇
Lending Office:
[Same As Above
Attention: Operations]
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Revolving Credit Commitment: ABN AMRO BANK N.V., individually and
$11,666,666.67 as Syndication Agent
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Its Vice President
--------------------------------------
By /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Its Group Vice President
--------------------------------------
Term Credit Commitment: Address: ABN AMRO Bank N.V.
$33,333,333.33 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Credit Administration
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
One Union Square
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
[Same As Above
Attention: Operations]
77
Revolving Credit Commitment: NATIONSBANK, N.A.
$8,944,444.44 individually and as Documentation Agent
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Its Vice President
-------------------------------------
Term Credit Commitment: Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
$25,555,555.56 NC1-007-08-05
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
One Independent Center
NC1-001-15-03
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
78
Revolving Credit Commitment: U. S. BANK NATIONAL ASSOCIATION
$10,500,000.00
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Its Vice President
------------------------------------
Term Credit Commitment: Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
$30,000,000.00 ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
[Same As Above]
79
Revolving Credit Commitment: KEYBANK NATIONAL ASSOCIATION
$6,481,481.48
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Its Commercial Banking Officer
------------------------------------
Term Credit Commitment: Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇-▇▇-▇▇▇▇
$18,518,518.52 ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
[Same As Above]
80
Revolving Credit Commitment: THE BANK OF NOVA SCOTIA
$6,481,481.48
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Its Officer
------------------------------------
Term Credit Commitment: Address: ▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
$18,518,518.52 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
[Same As Above]
81
Revolving Credit Commitment: UNION BANK OF CALIFORNIA, N.A.
$6,481,481.48
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
Its Vice President
-------------------------------------
Term Credit Commitment: Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
$18,518,518.52 ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
[Same As Above]
82
Revolving Credit Commitment: AMSOUTH BANK
$2,592,592.59
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Its Vice President
------------------------------------
Term Credit Commitment: Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
$7,407,407.41 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
[Same As Above]
83
Revolving Credit Commitment: BANQUE NATIONALE DE PARIS
$2,592,592.59
By /s/ ▇▇▇▇▇ ▇. Low
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Its Vice President
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Term Credit Commitment: Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
$7,407,407.41 ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
[Same As Above]
84
Revolving Credit Commitment: FIRST SECURITY BANK, N.A.
$2,592,592.59
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Its Senior V.P.
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Term Credit Commitment: Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
$7,407,407.41 ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office:
[Same As Above]