<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1997
REGISTRATION NO. 333-34389
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
(Exact name of registrant as specified in its charter)
DELAWARE 0800 93-1217136
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
6400 HIGHWAY 66, KLAMATH FALLS, OREGON 97601 (541) 884-2240
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------
U.S. TIMBERLANDS FINANCE CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 0800 91-1851612
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
6400 HIGHWAY 66, KLAMATH FALLS, OREGON 97601 (541) 884-2240
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------
AS TO BOTH REGISTRANTS:
JOHN J. STEPHENS, P.O. BOX 10, 6400 HIGHWAY 66, KLAMATH FALLS, OREGON 97601
(541) 884-2240
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------
Copies to:
ANDREWS & KURTH L.L.P. BAKER & BOTTS, L.L.P.
425 LEXINGTON AVENUE 910 LOUISIANA
NEW YORK, NEW YORK 10017 HOUSTON, TEXAS 77002
(212) 850-2800 (713) 229-1234
ATTN: JONATHAN P. CRAMER ATTN: JOSHUA DAVIDSON
------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuing basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the
same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
U.S. Timberlands Klamath Falls, L.L.C. and U.S. Timberlands Finance Corp.
have prepared this Amendment No. 4 to their Registration Statement on Form S-1
for the purposes of filing an exhibit with the Securities and Exchange
Commission and to complete Item 13 of Part II to the Registration Statement.
This Amendment No. 4 does not modify any provision of the prospectus included
in the Registration Statement; accordingly, such prospectus has not been
included herein.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below are the expenses (other than underwriting discounts and
commissions) expected to be incurred in connection with the issuance and
distribution of the securities registered hereby. With the exception of the
Securities and Exchange Commission registration fee, the NASD filing fee and
the NYSE filing fee, the amounts set forth below are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $ 68,182
NASD filing fee................................................. 23,000
NYSE filing fee................................................. 11,250
Printing and engraving expenses................................. 225,000
Legal fees and expenses......................................... 275,000
Accounting fees and expenses.................................... 75,000
Other professional fees......................................... 100,000
Trustee fees and expenses....................................... 21,000
Miscellaneous expenses.......................................... 1,568
--------
Total....................................................... $800,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Section of the Prospectus entitled "The Operating Company Agreement--
Indemnification" is incorporated herein by this reference.
Reference is made to Section 7 of the Underwriting Agreement filed as
Exhibit 1.1 to this Registration Statement.
Subject to any terms, conditions or restrictions set forth in the Operating
Company Agreement, Section 18-108 of the Delaware Limited Liability Company
Act empowers a Delaware limited liability company to indemnify and hold
harmless any member or manager or other person from and against all claims and
demands whatsoever.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
There has been no sale of securities of the Company within the past three
years.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
a. Exhibits
<TABLE>
<C> <S>
**1.1 --Form of Underwriting Agreement
**3.1 --Form of Amended and Restated Operating Agreement of U.S.
Timberlands Klamath Falls, L.L.C.
**3.2 --Certificate of Incorporation of U.S. Timberlands Finance Corp.
**3.3 --By-Laws of U.S. Timberlands Finance Corp.
**4.1 --Form of Indenture among U.S. Timberlands Klamath Falls, L.L.C.,
U.S. Timberlands Finance Corp. and State Street Bank & Trust
Company, as trustee
**5.1 --Opinion of Andrews & Kurth L.L.P. as to the legality of the
securities being registered
*10.1 --Form of Credit Agreement among U.S. Timberlands Klamath Falls,
L.L.C. and certain banks
+10.2 --Form of Contribution, Conveyance and Assumption Agreement among
U.S. Timberlands Klamath Falls, L.L.C. and certain other parties
+10.3 --Form of U.S. Timberlands Company, L.P. 1997 Long-Term Incentive
Plan
+10.4 --Forms of Employment Agreement for Messrs. Rudey, Stephens, Kobacker
and Morgan
**10.5 --Supply Agreement between U.S. Timberlands Klamath Falls, L.L.C. and
Collins Products LLC
**12.1 --Statement re computation of ratio of earnings to fixed charges
**21.1 --List of Subsidiaries
**23.1 --Consent of Arthur Andersen LLP
**23.2 --Consent of Mason, Bruce & Girard, Inc.
**23.3 --Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1)
**24.1 --Powers of Attorney
**25.1 --Statement of Eligibility of Trustee
**27.1 --Financial Data Schedule
</TABLE>
- --------
* Filed herewith
** Previously filed
+ Incorporated by reference to an exhibit to the Registration Statement on
Form S-1 (File No. 333-32811), as amended, of U.S. Timberlands Company, L.P.
b. Financial Statement Schedules
All financial statement schedules are omitted because the information is not
required, is not material or is otherwise included in the financial statements
or related notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-2
<PAGE>
The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be a part
of this Registration Statement as of the time it was declared
effective.
(ii) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE>
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on November 12, 1997.
U.S. Timberlands Klamath Falls,
L.L.C.
By: New Services, L.L.C.*
As Manager
By: /s/ John M. Rudey
----------------------------------
Name: John M. Rudey
Title: Chairman
- --------
* Upon the consummation of this offering, New Services, L.L.C. will change
its name to "U.S. Timberlands Services Company, L.L.C."
II-4
<PAGE>
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT 1933, AS AMENDED, THIS
AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND DATES INDICATED BELOW.
SIGNATURE TITLE DATE
/s/ John M. Rudey Chairman and
- ------------------------------------- Director November 12,
JOHN M. RUDEY 1997
* President, Chief
- ------------------------------------- Executive Officer November 12,
JOHN J. STEPHENS and Director 1997
* Executive Vice
- ------------------------------------- President, Chief November 12,
EDWARD J. KOBACKER Operating Officer 1997
and Director
* Vice President and
- ------------------------------------- Chief Financial November 12,
MICHAEL J. MORGAN Officer 1997
* Director
- ------------------------------------- November 12,
JOHN H. BEUTER 1997
* Director
- ------------------------------------- November 12,
AUBREY L. COLE 1997
* Director
- ------------------------------------- November 12,
GEORGE R. HORNIG 1997
* Director
- ------------------------------------- November 12,
ROBERT F. WRIGHT 1997
/s/ John M. Rudey
*By:_________________________________
JOHN M. RUDEY
ATTORNEY-IN-FACT
II-5
<PAGE>
U.S. TIMBERLANDS FINANCE CORP.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on November 12, 1997.
U.S. Timberlands Finance Corp.
By: /s/ John M. Rudey
----------------------------------
Name: John M. Rudey
Title: Chairman
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDMENT TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ John M. Rudey Chairman and
- ------------------------------------- Director November 12,
JOHN M. RUDEY 1997
* President and Chief
- ------------------------------------- Executive Officer November 12,
JOHN J. STEPHENS 1997
* Vice President,
- ------------------------------------- Secretary, Chief November 12,
MICHAEL J. MORGAN Financial Officer 1997
and Principal
Accounting Officer
/s/ John M. Rudey
*By:_________________________________
JOHN M. RUDEY
ATTORNEY-IN-FACT
II-6
<PAGE>
INDEX TO EXHIBITS
EXHIBITS
<TABLE>
<C> <S>
**1.1 --Form of Underwriting Agreement
**3.1 --Form of Amended and Restated Operating Agreement of U.S.
Timberlands Klamath Falls, L.L.C.
**3.2 --Certificate of Incorporation of U.S. Timberlands Finance Corp.
**3.3 --By-Laws of U.S. Timberlands Finance Corp.
**4.1 --Form of Indenture among U.S. Timberlands Klamath Falls, L.L.C.,
U.S. Timberlands Finance Corp. and State Street Bank & Trust
Company, as trustee
**5.1 --Opinion of Andrews & Kurth L.L.P. as to the legality of the
securities being registered
*10.1 --Form of Credit Agreement among U.S. Timberlands Klamath Falls,
L.L.C. and certain banks
+10.2 --Form of Contribution, Conveyance and Assumption Agreement among
U.S. Timberlands Klamath Falls, L.L.C. and certain other parties
+10.3 --Form of U.S. Timberlands Company, L.P. 1997 Long-Term Incentive
Plan
+10.4 --Forms of Employment Agreement for Messrs. Rudey, Stephens, Kobacker
and Morgan
**10.5 --Supply Agreement between U.S. Timberlands Klamath Falls, L.L.C. and
Collins Products LLC
**12.1 --Statement re computation of ratio of earnings to fixed charges
**21.1 --List of Subsidiaries
**23.1 --Consent of Arthur Andersen LLP
**23.2 --Consent of Mason, Bruce & Girard, Inc.
**23.3 --Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1)
**24.1 --Powers of Attorney
**25.1 --Statement of Eligibility of Trustee
**27.1 --Financial Data Schedule
</TABLE>
- --------
* Filed herewith
** Previously filed
+ Incorporated by reference to an exhibit to the Registration Statement on
Form S-1 (File No. 333-32811), as amended, of U.S. Timberlands Company, L.P.
<PAGE>
EXHIBIT 10.1
================================================================================
FORM OF CREDIT AGREEMENT
Dated as of November __, 1997
AMONG
U.S. TIMBERLANDS KLAMATH FALLS, L.L.C.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
AND
LETTER OF CREDIT ISSUING BANK
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANCAMERICA ROBERTSON STEPHENS
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
1.1 Certain Defined Terms.............................. 1
1.2 Other Interpretive Provisions...................... 21
1.3 Accounting Principles.............................. 22
ARTICLE II THE CREDITS 23
2.1 Amounts and Terms of Commitments................... 23
(a) The Acquisition Credit............................. 23
(b) The Working Capital Credit......................... 23
2.2 Evidence of Obligations............................ 23
2.3 Procedure for Borrowing............................ 24
2.4 Conversion and Continuation Elections.............. 25
2.5 Optional Prepayments............................... 26
2.6 Mandatory Prepayments of Loans; Mandatory
Commitment Reductions.............................. 26
(a) Mandatory Prepayments.............................. 26
(b) Mandatory Commitment Reductions.................... 28
2.7 Repayment.......................................... 28
(a) The W/C Revolving Credit........................... 28
(b) The Acquisition Revolving Credit................... 29
(c) The Swingline Credit............................... 29
(d) Letters of Credit.................................. 29
2.8 Interest........................................... 29
2.9 Swingline Loans.................................... 30
2.10 Fees............................................... 32
(a) Arrangement, Agency Fees........................... 32
(b) Commitment Fees.................................... 32
2.11 Computation of Fees and Interest................... 32
2.12 Payments by the Company............................ 33
2.13 Payments by the Banks to the Agent................. 33
2.14 Sharing of Payments, Etc........................... 34
2.15 Voluntary Termination of Commitments............... 35
2.16 Quarterly Adjustments....... ERROR! BOOKMARK NOT DEFINED.
ARTICLE III THE LETTERS OF CREDIT 35
3.1 The Letter of Credit Facility...................... 35
3.2 Issuance, Amendment and Renewal of Letters of
Credit............................................. 36
3.3 Risk Participations, Drawings and Reimbursements... 39
3.4 Repayment of Participations........................ 40
3.5 Role of the Issuing Bank........................... 41
3.6 Obligations Absolute............................... 41
3.7 Cash Collateral Pledge............................. 42
3.8 Letter of Credit Fees.............................. 43
3.9 Uniform Customs and Practice....................... 43
1
<PAGE>
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY 43
4.1 Taxes.............................................. 43
4.2 Illegality......................................... 45
4.3 Increased Costs and Reduction of Return............ 45
4.4 Funding Losses..................................... 46
4.5 Inability to Determine Rates....................... 47
4.6 Reserves on Offshore Rate Loans.................... 47
4.7 Certificates of Banks.............................. 47
4.8 Substitution of Banks.............................. 47
4.9 Survival........................................... 48
ARTICLE V CONDITIONS PRECEDENT 48
5.1 Conditions of Initial Loan......................... 48
(a) Credit Agreement................................... 48
(b) Authorization Documents............................ 48
(c) Legal Opinions..................................... 49
(d) Payment of Fees.................................... 49
(e) Certificates....................................... 49
(f) Other Documents.................................... 50
(g) Equity Offering.................................... 49
(h) Debt Offering...................................... 50
(i) Repayment of Existing Debt......................... 50
5.2 Conditions to Acquisition Revolving Loans.......... 50
5.3 Conditions to All Borrowings....................... 51
(a) Notice of Borrowing, Conversion/Continuation or
Letter of Credit Application....................... 51
(b) Continuation of Representations and Warranties..... 51
(c) No Existing Default................................ 51
ARTICLE VI REPRESENTATIONS AND WARRANTIES 51
6.1 Existence and Power................................ 51
6.2 Corporate Authorization; No Contravention.......... 52
6.3 Governmental Authorization......................... 52
6.4 Binding Effect..................................... 52
6.5 Litigation......................................... 53
6.6 No Default......................................... 53
6.7 ERISA Compliance................................... 53
6.8 Use of Proceeds; Margin Regulations................ 54
6.9 Title to Properties................................ 54
6.10 Taxes.............................................. 54
6.11 Financial Condition................................ 54
6.12 Environmental Matters.............................. 55
6.13 Regulated Entities................................. 56
6.14 No Burdensome Restrictions......................... 56
6.15 Copyrights, Patents, Trademarks and Licenses, etc.. 56
6.16 Subsidiaries....................................... 56
6.17 Insurance.......................................... 56
2
<PAGE>
6.18 Swap Obligations................................... 56
6.19 Full Disclosure.................................... 57
ARTICLE VII AFFIRMATIVE COVENANTS 57
7.1 Financial Statements............................... 57
7.2 Certificates; Other Information.................... 58
7.3 Notices............................................ 60
7.4 Preservation of Existence, Etc..................... 61
7.5 Maintenance of Property............................ 61
7.6 Insurance.......................................... 61
7.7 Payment of Obligations............................. 61
7.8 Compliance with Laws............................... 62
7.9 Compliance with ERISA.............................. 62
7.10 Inspection of Property and Books and Records....... 62
7.11 Environmental Laws................................. 62
7.12 Use of Proceeds.................................... 62
ARTICLE VIII NEGATIVE COVENANTS 63
8.1 Limitation on Liens................................ 63
8.2 Disposition of Assets.............................. 64
8.3 Consolidations and Mergers......................... 66
8.4 Loans and Investments.............................. 67
8.5 Limitation on Indebtedness......................... 67
8.6 Transactions with Affiliates....................... 68
8.7 Use of Proceeds.................................... 68
8.8 Contingent Obligations............................. 69
8.9 Joint Ventures..................................... 69
8.10 Lease Obligations.................................. 69
8.11 Restricted Payments................................ 70
8.12 ERISA.............................................. 70
8.13 Change in Business................................. 70
8.14 [Reserved]..................ERROR! BOOKMARK NOT DEFINED.
8.15 Minimum Pro Forma EBITDDA to Pro Forma Interest
Expense............................................ 71
8.16 Maximum Funded Debt to Pro Forma EBITDDA........... 71
8.17 Minimum Asset Value to Funded Debt Ratio........... 71
8.18 Accounting Changes................................. 71
8.19 Amendments to Partnership Documents................ 71
8.20 Limitation on Voluntary Payments on Senior Notes... 71
8.21 Harvesting Restrictions............................ 72
ARTICLE IX EVENTS OF DEFAULT 72
9.1 Event of Default..................................... 72
(a) Non-Payment.................................... 72
(b) Representation or Warranty..................... 73
(c) Specific Defaults.............................. 73
(d) Other Defaults................................. 73
(e) Cross-Default.................................. 73
3
<PAGE>
(f) Insolvency; Voluntary Proceedings.............. 74
(g) Involuntary Proceedings........................ 74
(h) ERISA.......................................... 74
(i) Monetary Judgments............................. 74
(j) Non-Monetary Judgments......................... 74
(k) Change of Control.......ERROR! BOOKMARK NOT DEFINED.
9.2 Remedies.............................................. 75
9.3 Rights Not Exclusive................................. 75
ARTICLE X THE AGENT 75
10.1 Appointment and Authorization; "Agent"......... 75
10.2 Delegation of Duties........................... 76
10.3 Liability of Agent............................. 76
10.4 Reliance by Agent.............................. 77
10.5 Notice of Default.............................. 77
10.6 Credit Decision................................ 77
10.7 Indemnification of Agent....................... 78
10.8 Agent in Individual Capacity................... 78
10.9 Successor Agent................................ 79
10.10 Withholding Tax................................ 79
ARTICLE XI MISCELLANEOUS 80
11.1 Amendments and Waivers......................... 80
11.2 Notices........................................ 81
11.3 No Waiver; Cumulative Remedies................. 82
11.4 Costs and Expenses............................. 82
11.5 Company Indemnification........................ 83
11.6 Payments Set Aside............................. 83
11.7 Successors and Assigns......................... 84
11.8 Assignments, Participations, etc............... 84
11.9 Confidentiality................................ 85
11.10 Set-off........................................ 86
11.11 Automatic Debits of Fees....................... 86
11.12 Notification of Addresses, Lending Offices, Etc. 87
11.13 Counterparts................................... 87
11.14 Severability................................... 87
11.15 No Third Parties Benefited..................... 87
11.16 Governing Law and Jurisdiction................. 87
11.17 Waiver of Jury Trial........................... 88
11.18 Entire Agreement............................... 88
SCHEDULES
Schedule 2.1 Commitments
Schedule 6.5 Litigation
Schedule 6.7 ERISA
4
<PAGE>
Schedule 6.11 Permitted Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.16 Subsidiaries and Minority Interests
Schedule 6.17 Insurance Matters
Schedule 8.1 Permitted Liens
Schedule 8.4(b) Cash Management Program
Schedule 8.4(g) Existing Investments
Schedule 8.5 Permitted Indebtedness
Schedule 8.8 Contingent Obligations
Schedule 11.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
Exhibit G Initial Timber Report
5
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of November __, 1997, among U.S.
Timberlands Klamath Falls, L.L.C., a Delaware limited liability company (the
"Company"), the several financial institutions from time to time party to this
- --------
Agreement (collectively, the "Banks"; individually, a "Bank"), and Bank of
----- ----
America National Trust and Savings Association, as letter of credit issuing bank
and as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company revolving
credit facilities with a letter of credit subfacility upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Certain Defined Terms.
---------------------
The following terms have the following meanings:
"Acquisition" means any transaction or series of related transactions for
-----------
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person (other than a natural
person), or of any business or division of a Person, (b) the acquisition of more
than 50% of the capital stock, partnership interests, membership interests or
equity of any Person having voting power for the election of directors or other
similar ability to control such Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other combination
with another Person (other than a Person that is a Subsidiary) provided that the
Company or the Subsidiary is the surviving entity.
"Acquisition Facility" means the Acquisition Revolving Commitments.
--------------------
"Acquisition Funding Date" means the date on which the funding of an
------------------------
Acquisition Revolving Loan under the Acquisition Facility occurs.
"Acquisition Revolving Commitment" has the meaning specified in subsection
--------------------------------
2.1(a).
"Acquisition Revolving Loans" has the meaning specified in subsection
---------------------------
2.1(a).
"Affiliate" means, as to any Person, any other Person which, directly or
---------
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
1
<PAGE>
"Agent" means BofA in its capacity as agent for the Banks hereunder, and
-----
any successor agent arising under Section 10.9.
"Agent-Related Persons" means BofA and any successor agent arising under
---------------------
Section 10.9 and any successor letter of credit issuing bank or Swingline Bank
hereunder, together with their respective Affiliates (including, in the case of
BofA, the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for payments set forth on
----------------------
Schedule 11.2 or such other address as the Agent may from time to time specify.
- -------------
"Agreement" means this Credit Agreement.
---------
"Annual Timber Report" has the meaning specified in subsection 7.2(f).
--------------------
"Applicable Margin" means, (a) with respect to any Offshore Rate Loan or
-----------------
Base Rate Loan, the per annum amounts set forth below under Applicable Margin
opposite the Pricing Level in effect on the date such Offshore Rate Loan or Base
Rate Loan is borrowed, continued or converted (notwithstanding any subsequent
change in the Pricing Level during the Interest Period applicable to such
Offshore Rate Loan) and (b) with respect to the commitment fee and letter-of-
credit fee, the per annum amounts set forth below under Applicable Margin
opposite the Pricing Level in effect from time to time; provided, however, that
-------- -------
until delivery of the Compliance Certificate pursuant to subsection 7.2(b) for
the period ending June 30, 1998, the Applicable Margin shall be (i) 50 basis
points in the case of the commitment fee, (ii) 250 basis points in the case of
the Offshore Rate, (iii) 150 basis points in the case of the Base Rate, and (iv)
250 basis points in the case of letter of credit fees:
<TABLE>
<CAPTION>
Applicable Margin
(in basis points per annum)
==========================================================================
Pricing Commitment Offshore Base Rate + Letter of
Level Fee Rate Credit Fee
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. 37.5 100.0 0.0 100.0
2. 37.5 137.5 37.5 137.5
3. 50.0 175.0 75.0 175.0
4. 50.0 225.0 125.0 225.0
5. 50.0 250.0 150.0 250.0
==========================================================================
</TABLE>
"Pricing Level" means, for each Pricing Period the pricing
-------------
level set forth below opposite the Leverage Ratio set forth in the
Compliance Certificate most recently delivered to Agent pursuant to
Section 7.1 below:
2
<PAGE>
Pricing Level Leverage Ratio
------------- --------------------------
1. less than or equal to 2.75 to 1.0
2. greater than 2.75 to 1.0 but less than
or equal to 3.50 to 1.0
3. greater than 3.50 to 1.0 but less than
or equal to 4.0 to 1.0
4. greater than 4.0 to 1.0 but less than
or equal to 4.50 to 1.0
5. greater than 4.50 to 1.0
provided, however, that if any Compliance Certificate is not
-------- -------
delivered by the date required by subsection 7.2(b), then, subject to
the other provisions of this Agreement, commencing on the date such
Compliance Certificate was required to be delivered until the date
such Compliance Certificate is delivered, the highest Applicable
Margin shall apply; from and after the date three Business Days after
such Compliance Certificate is received, the Applicable Margin
indicated by the Leverage Ratio set forth in such Compliance
Certificate shall apply.
"Pricing Level Change Date" means, beginning June 30, 1998,
-------------------------
the date five Business Days after the date upon which the Company
delivers a Compliance Certificate pursuant to subsection 7.2(b).
"Pricing Period" means each period commencing on each
--------------
Pricing Level Change Date and ending the day prior to the next Pricing
Level Change Date
"Arranger" means BancAmerica Robertson Stephens, a Delaware corporation.
--------
"Asset Value to Debt Ratio" means, at any date of determination, the ratio
-------------------------
of (a) 70% of the Retail Timberlands Value as of such date to (b) Funded Debt.
"Assignee" has the meaning specified in subsection 11.8(a).
--------
"Attorney Costs" means and includes all fees and disbursements of any law
--------------
firm or other external counsel, the allocated cost of internal legal services
and all disbursements of internal counsel.
"Available Cash" means, with respect to any fiscal quarter and without
--------------
duplication: (a) the sum of (i) all cash and cash equivalents of the Company
and its Subsidiaries on hand at the end of such quarter (excluding any amounts
on deposit pursuant to an Escrow Agreement) and (ii) all additional cash and
cash equivalents of the Company and its Subsidiaries on hand on the date of
determination of Available Cash with respect to such quarter resulting from
borrowings for working capital purposes made subsequent to the end of such
quarter, less (b) the amount of any cash reserves that is necessary or
----
appropriate in the reasonable discretion of the Managing Member to (i) provide
for the proper conduct of the business of the Company and its
3
<PAGE>
Subsidiaries (including reserves for future capital expenditures and for future
credit needs of the Partnership Group (as defined in the Partnership Agreement))
subsequent to such quarter, (ii) comply with applicable law or any loan
agreement, security agreement, mortgage, debt instrument or other agreement or
obligation to which the Company or any Related Entity is a party or by which it
is bound or its assets are subject (including the Loan Documents) and (iii)
provide funds for distributions to Partners in respect of any one or more of the
next four quarters; provided that disbursements made by the Company or a
Subsidiary or cash reserves established, increased or reduced after the end of
such quarter but on or before the date of determination of Available Cash with
respect to such quarter shall be deemed to have been made, established,
increased or reduced for purposes of determining Available Cash, within such
quarter if the Managing Member so determines. In addition, without limiting the
foregoing, Available Cash for any fiscal quarter shall reflect reserves equal to
(A) 50% of the interest projected to be paid on the Senior Notes in the next
succeeding fiscal quarter plus (B) [beginning with a date three fiscal quarters
before a scheduled principal payment date on the Senior Notes, 25% of the
aggregate principal amount thereof due on any such payment date in the third
succeeding fiscal quarter, 50% of the aggregate principal amount due on any such
payment date in the second succeeding fiscal quarter and 75% of the aggregate
principal amount due on any quarterly payment date in the next succeeding fiscal
quarter], plus (C) 100% of the aggregate amount of all accrued and unpaid
interest in respect the Loans on the date of determination.
"Bank" has the meaning specified in the introductory clause hereto.
----
References to the "Banks" shall include BofA, including in its capacity as a
Swingline Bank and an Issuing Bank; for purposes of clarification only, to the
extent that BofA may have any rights or obligations in addition to those of the
Banks due to its status as a Swingline Bank or an Issuing Bank, its status as
such will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
---------------
U.S.C. (S)101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum above
---------
the latest Federal Funds Rate; and (b) the rate of interest in effect for such
day as publicly announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is a rate set by
BofA based upon various factors including BofA's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by BofA shall take effect at
the opening of business on the day specified in the public announcement of such
change.
"Base Rate Loan" means an Acquisition Revolving Loan, W/C Revolving Loan,
--------------
or L/C Advance, that bears interest based on the Base Rate.
"BofA" means Bank of America National Trust and Savings Association, a
----
national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of the same
---------
Type made to the Company on the same day by the Banks, or a Swingline Loan made
to the Company on
4
<PAGE>
the same day by the Swingline Bank, in each case pursuant to Article II, and,
other than in the case of Base Rate Loans, having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under Section
--------------
2.3.
"Business Day" means any day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable London offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive of
---------------------------
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any Bank or of any corporation controlling a Bank.
"Capital Lease" means, as to any Person, any lease of any property by such
-------------
Person as lessee that is classified and accounted for as a "capital lease" on
the balance sheet of such Person prepared in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Capital Lease, the
------------------------
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such Person in respect of such Capital Lease.
"Cash Collateralize" means to pledge and deposit with or deliver to the
------------------
Agent, for the benefit of (i) in the case of L/C Obligations, the Agent, the
Issuing Bank and the Banks, and (ii) in the case of Offshore Rate Loans, the
Agent and the Banks, in each case as collateral for the L/C Obligations or the
Offshore Rate Loans, as applicable, cash or deposit account balances pursuant to
a cash collateral account agreement in form and substance satisfactory to the
Agent and the Majority Banks. Cash collateral shall be maintained in blocked,
interest bearing deposit accounts at BofA.
"Cash Equivalents" means Investments made or owned by the Company or any
----------------
Subsidiary in (i) any evidence of Indebtedness with a maturity of 365 days or
less issued by or directly, fully and unconditionally guaranteed or insured by
the United States of America or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of America is pledged in
support thereof); (ii) deposits, certificates of deposit or acceptances with a
maturity of 365 days or less of any institution that is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of not
less than $500,000,000; (iii) commercial paper with a maturity of 365 days or
less issued by a corporation (other than an Affiliate of the Company)
incorporated or organized under the laws of the United States or any state
thereof or the District of Columbia and rated at least "A-1" by S&P or "P-1" by
Moody's; (iv) repurchase agreements and reverse repurchase agreements relating
to marketable direct obligations issued by or directly, fully and
unconditionally guaranteed or insured by the United States of America or any
agency or instrumentality thereof , in each case maturing within 365 days from
the date of acquisition; (v) marketable direct obligations issued by any state
of the United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the date of
5
<PAGE>
acquisition thereof and having as at such date the highest rating obtainable
from either S&P or Moody's, or (vi) money market mutual or similar funds that
invest exclusively in obligations referred to in clauses (i) through (v) of this
definition, in each case having assets in excess of $100,000,000.
"Change of Control" means the occurrence of any of the following: the
-----------------
Managing Member ceases to be the managing member of the Company or the MLP
ceases to be a member of Company or reduces the percentage amount of its equity
interest in the Company below 98.9899%.
"Closing Date" means the date on which all conditions precedent set forth
------------
in Section 5.1 are satisfied (or, in the case of subsection 5.1(d), waived by
the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations promulgated
----
thereunder.
"Commitment", as to each Bank, means such Bank's Acquisition Revolving
----------
Commitment or W/C Credit Commitment, as applicable; in the case of the Swingline
Bank, its Swingline Commitment; and in the case of the Issuing Bank, its L/C
Commitment.
"Compliance Certificate" means a certificate substantially in the form of
----------------------
Exhibit C.
- ---------
"Contingent Obligation" means, as to any Person, any direct or indirect
---------------------
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
-------------------
Instrument (other than any Letter of Credit) issued for the account of that
Person or as to which that Person is otherwise liable for reimbursement of
drawings or payments; (c) to purchase any materials, supplies or other property
from, or to obtain the services of, another Person if the relevant contract or
other related document or obligation requires that payment for such materials,
supplies or other property, or for such services, shall be made regardless of
whether delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (d) in respect of
any Swap Contract. The amount of any Contingent Obligation (other than Swap
Contracts) shall be deemed equal to the lesser of (i) the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made and (ii) the stated determined amount for which such Person is liable,
or, if not stated or determinable, the
6
<PAGE>
maximum reasonably anticipated liability in respect thereof. The amount of any
Swap Contract shall be equal to the Swap Termination Value thereof.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section 2.4,
----------------------------
the Company (a) converts Loans of one Type to another Type, or (b) continues as
Loans of the same Type, but with a new Interest Period, Loans having Interest
Periods expiring on such date.
"Conveyance Agreements" means ____________________.
---------------------
"Credit Extension" means and includes (a) the making of any Loans or
----------------
Swingline Loans hereunder, and (b) the Issuance of any Letters of Credit
hereunder.
"Debt Offering" means a public offering of the Senior Notes.
-------------
"Default" means any event or circumstance which, with the giving of notice,
-------
the lapse of time, or both, would (if not cured or otherwise remedied during
such time) constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of the United States.
------- ------- -
"EBITDDA" means, for any fiscal quarter, the sum of (a) Net Income, plus
------- --- ----
(b) all amounts treated as expenses for depreciation and the amortization of
intangibles of any kind to the extent included in the determination of Net
Income, plus (c) all amounts treated as expenses for the depletion of Timber
----
from the Timberlands, plus (d) Net Interest Expense to the extent included in
----
the determination of Net Income, plus (e) nonrecurring non-cash charges to the
----
extent included in the determination of Net Income, plus (f) Net Proceeds from
----
sales of assets permitted under Section 8.2 not in excess of $15,000,000 for any
four fiscal quarters, all as calculated for the Company and its Subsidiaries on
a consolidated basis.
"Effective Amount" means (a) with respect to any Loans on any date, the
----------------
aggregate outstanding principal amount thereof after giving effect to any
Borrowings and prepayments or repayments of Loans occurring on such date; and
(b) with respect to any outstanding L/C Obligations on any date, the amount of
such L/C Obligations on such date after giving effect to any Issuances of
Letters of Credit occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any
reimbursements of outstanding unpaid drawings under any Letters of Credit or any
reductions in the maximum amount available for drawing under Letters of Credit
taking effect on such date. For purposes of subsection 2.6(a), the Effective
Amount shall be determined without giving effect to any mandatory prepayments
required to be made thereunder that have not been made.
"Eligible Assignee" means (a) a commercial bank organized under the laws of
-----------------
the United States, or any state thereof, and having a combined capital and
surplus of at least
7
<PAGE>
$250,000,000; (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of at least $250,000,000, provided that
such bank is acting through a branch or agency located in the United States; and
(c) a Person that is primarily engaged in the business of commercial banking and
that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters.
"Equity Offering" means a public offering of Common Units representing
---------------
limited partner interests in the MLP.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
-----
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
---------------
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;
-----------
(b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
"Escrow Agreement" means an agreement or agreements entered into by the
----------------
Company pursuant to subsection 8.2(b) or Section 8.20, substantially in the form
of Exhibit G.
---------
"Event of Default" means any of the events or circumstances specified in
----------------
Section 9.1.
8
<PAGE>
"Event of Loss" means any of the following: (a) any material loss,
-------------
destruction or damage of any property, including any destruction of Timber due
to fire, disease or infestation, or (b) any actual condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of any
property, or confiscation of any property or the requisition of the use of such
property to the extent compensation is paid for such loss, whether under an
insurance policy or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
------------
promulgated thereunder.
"Existing Credit Agreement" means the Credit Agreement dated as of July 14,
-------------------------
1997 among the Company, Old Services, the several financial institutions parties
thereto (as defined therein, the "Banks") and BofA, as agent for the Banks.
"FDIC" means the Federal Deposit Insurance Corporation, and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
------------------
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
----------
"Finance" means U.S. Timberlands Finance Corp., a Delaware corporation and
-------
a Wholly-Owned Subsidiary.
"FRB" means the Board of Governors of the Federal Reserve System, and any
---
Governmental Authority succeeding to any of its principal functions.
"Funded Debt" means, as calculated for the Company on a consolidated basis
-----------
as of any date of determination, (a) the total Indebtedness of the Company of
the type described in clauses (a), (b), (d) or (e) of the definition of
Indebtedness, excluding therefrom however all obligations representing the
deferred purchase price of property with respect to which recourse is limited to
the asset so acquired, minus (b) cash and Cash Equivalents on the Company on
-----
such date that are not on deposit pursuant to an Escrow Agreement and that are
subject to no Lien other than as Cash Collateral hereunder or a right of set-off
by the relevant depository institution.
"Further Taxes" means any and all present or future taxes, levies,
-------------
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 4.1.
9
<PAGE>
"GAAP" means generally accepted accounting principles set forth from time
----
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state or other
----------------------
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Gross Interest Expense" means, as calculated for the Company and its
----------------------
Subsidiaries on a consolidated basis for any period as at any date of
determination, cash interest expense for such period (including all commissions,
discounts, fees and other charges under letters of credit and similar
instruments and under any Swap Contract) classified and accounted for in
accordance with GAAP.
"Guaranty Obligation" has the meaning specified in the definition of
-------------------
"Contingent Obligation."
"Holdings Credit Agreement" means the Credit Agreement dated as of August
-------------------------
29, 1996 among ABN AMRO Bank, N.V., as agent, the banks party thereto, and U.S.
Timberlands Holdings, L.L.C., as affected by the assignment of the rights of ABN
AMRO Bank, N.V. thereunder to BofA.
"Honor Date" has the meaning specified in subsection 3.3(b).
----------
"Indebtedness" of any Person means, without duplication, (a) all
------------
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the Ordinary Course of Business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all outstanding obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property); (f) all obligations with respect to
Capital Leases; (g) all indebtedness referred to in clauses (a) through (f)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
and (h) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above.
10
<PAGE>
For all purposes of this Agreement, the Indebtedness of any Person shall
include all recourse Indebtedness of any partnership or joint venture or limited
liability company in which such Person is a general partner or a joint venturer
or a member.
"Indemnified Liabilities" has the meaning specified in Section 11.5.
-----------------------
"Indemnified Person" has the meaning specified in Section 11.5.
------------------
"Independent Auditor" has the meaning specified in subsection 7.1(a).
-------------------
"Insolvency Proceeding" means, with respect to any Person, (a) any case,
---------------------
action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Initial Timber Report" means the Quarterly Timber Report delivered on the
---------------------
Closing Date substantially in the form of Exhibit G.
---------
"Interest Payment Date" means, as to (a) any Offshore Rate Loan, the last
---------------------
day of each Interest Period applicable to such Loan, (b) as to any Base Rate
Loan, the last Business Day of each calendar quarter, and (c) with respect to
any Swingline Loan, the last Business Day of each calendar month or, if sooner,
the Revolving Termination Date; provided, however, that if any Interest Period
-------- -------
for an Offshore Rate Loan exceeds three months, the date that falls three months
after the beginning of such Interest Period shall also be an Interest Period.
"Interest Period" means, as to any Offshore Rate Loan, the period
---------------
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan,
and ending on the date one, two, three or six months thereafter (and any other
period that is 12 months or less and is consented to by each of the Banks in the
given instance) as selected by the Company in its Notice of Borrowing or Notice
of Conversion/Continuation; provided that:
--------
(a) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following
Business Day unless 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 preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of the calendar month at the end of such Interest
Period;
(c) no Interest Period for any W/C Revolving Loan shall extend beyond
the Revolving Termination Date;
11
<PAGE>
(d) no Interest Period for any Acquisition Revolving Loan shall extend
beyond the Revolving Termination Date, unless and until the Company
exercises its election to repay the Acquisition Loans in installments in
accordance with subsection 2.7(b), after which Interest Periods may extend
beyond the Revolving Termination Date so long as no Interest Period extends
beyond October 29, 2004; and
(e) no Interest Period applicable to any Acquisition Revolving Loan
after the Revolving Termination Date shall extend beyond any date upon
which any scheduled principal repayment is due pursuant to subsection
2.7(b) unless the aggregate principal amount of Acquisition Revolving Loans
represented by Base Rate Loans or Offshore Rate Loans having Interest
Periods that will expire on or before such date equals or exceeds the
amount of such principal payment.
"IRS" means the Internal Revenue Service, and any Governmental Authority
---
succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in subsection 3.1(a).
-------------
"Issue" means, with respect to any Letter of Credit, to incorporate the
-----
Existing BofA Letters of Credit into this Agreement, or to issue or to extend
the expiry of, or to renew or increase the amount of, such Letter of Credit; and
the terms "Issued," "Issuing" and "Issuance" have corresponding meanings.
------ ------- --------
"Issuing Bank" means BofA in its capacity as issuer of one or more Letters
------------
of Credit hereunder, together with any replacement letter of credit issuer
arising under subsection 10.1(b) or Section 10.9.
"Joint Venture" means a single-purpose corporation, partnership, limited
-------------
liability company, joint venture or other similar legal arrangement (whether
created by contract or conducted through a separate legal entity) now or
hereafter formed by the Company or any of its Subsidiaries with another Person
in order to conduct a common venture or enterprise with such Person.
"L/C Advance" means each Bank's participation in any L/C Borrowing in
-----------
accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for amendment of
-------------------------
outstanding standby or commercial documentary letters of credit as shall at any
time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C Application" means an application form for issuances of standby or
---------------
commercial documentary letters of credit as shall at any time be in use at the
Issuing Bank, as the Issuing Bank shall request.
"L/C Borrowing" means an extension of credit resulting from a drawing under
-------------
any Letter of Credit which shall not have been reimbursed on the date when made
nor converted into a Borrowing of W/C Revolving Loans under subsection 3.3(b).
12
<PAGE>
"L/C Commitment" means the commitment of the Issuing Bank to Issue, and the
--------------
commitment of the Banks severally to participate in, Letters of Credit from time
to time Issued or outstanding under Article III, in an aggregate amount not to
exceed on any date the amount of $10,000,000, as the same shall be reduced as a
result of a reduction in the L/C Commitment pursuant to Section 2.6; provided
that the L/C Commitment is a part of the combined W/C Commitments, rather than a
separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate undrawn
---------------
amount of all Letters of Credit then outstanding, plus (b) the amount of all
unreimbursed drawings under all Letters of Credit, including all outstanding L/C
Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C Applications,
---------------------
the L/C Amendment Applications and any other document relating to any Letter of
Credit, including any of the Issuing Bank's standard form documents for letter
of credit issuances.
"Lending Office" means, with respect to any Bank and the Swingline Bank,
--------------
the office or offices of the Bank specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office", as the case may be, on Schedule
--------
11.2, or such other office or offices as the Bank may from time to time notify
- ----
the Company and the Agent.
"Letters of Credit" means any letters of credit (whether standby letters of
-----------------
credit or commercial documentary letters of credit) Issued by the Issuing Bank
pursuant to Article III.
"Leverage Ratio" means, as calculated quarterly as of the last day of each
--------------
fiscal quarter on a Rolling Four Quarter Basis, the ratio of (a) Funded Debt to
(b) EBITDDA.
"Lien" means any security interest, mortgage, deed of trust, pledge,
----
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset described in such
financing statement as debtor, under the Uniform Commercial Code or any
comparable law) and any contingent or other agreement to provide any of the
foregoing, but not including the interest of a lessor under an operating lease
or a negative pledge clause.
"Loan" means an extension of credit by a Bank to the Company under Article
----
II or Article III in the form of an Acquisition Revolving Loan, W/C Revolving
Loan or an L/C Advance, and may be a Base Rate Loan or an Offshore Rate Loan
(each a "Type" of Loan) within the Acquisition Revolving Commitment or the W/C
Revolving Commitment.
"Loan Documents" means this Agreement, any Notes, the Fee Letters, the L/C-
--------------
Related Documents, and all other documents delivered to the Agent or any Bank in
connection herewith.
"Majority Banks" means at any time (a) Banks then holding at least 66-2/3%
--------------
of the then aggregate unpaid principal amount of the Loans, or (b) if no Loans
are outstanding, Banks then
13
<PAGE>
having at least 66-2/3% of the aggregate Commitments, or (c) if the Commitments
have been terminated, 66-2/3% of the Commitments as in effect immediately before
such termination.
"Managing Member" means U.S. Timberlands Services Company, L.L.C., a
---------------
Delaware limited liability company formerly named New Services L.L.C., as
managing member under the Operating Agreement.
"Margin Stock" means "margin stock" as such term is defined in Regulation
------------
G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
-----------------------
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company or the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of the
Company to perform under any Loan Document and to avoid any Event of Default; or
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability against the Company of any Loan Document.
"Maturity Date" means October 29, 2004.
-------------
"Maximum Amount" means, for any calendar year, $15,000,000 for each of
--------------
calendar years 1998, 1999, and 2000, but not in excess of $30,000,000 for all
three of those calendar years, and $10,000,000 for each calendar year
thereafter. Net Proceeds deposited in an escrow account shall be credited
against the Maximum Amount in the year in which such Net Proceeds were so
deposited. The period from the Closing Date through the end of 1997 shall be
considered part of calendar year 1998 for purposes of determining Maximum Amount
for calendar year 1998.
"Merchantable Timber" means any tree which will produce a log (a) at least
-------------------
sixteen (16) feet long, (b) at least five and a half (5.5) inches in diameter
inside the brake at the small end and (c) at least twenty-five percent (25%)
sound.
"Merchantable Timber Inventory" means the [Merchantable Timber Inventory]
-----------------------------
as set forth in the Initial Timber Report as thereafter adjusted for purchases
and sales, Timber Harvest and growth and as set forth in each Quarterly Timber
Report and as verified in and adjusted retroactively pursuant to each Annual
Timber Report.
"MLP" means U.S. Timberlands Company, L.P., a Delaware limited partnership.
---
"Multiemployer Plan" means a "multiemployer plan", within the meaning of
------------------
Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes,
is making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"Net Income" means, as calculated for the Company and its Subsidiaries on a
----------
consolidated basis for any period as at any date of determination, the net
income (or loss) of the Company and its Subsidiaries for such period taken as a
single accounting period.
14
<PAGE>
"Net Interest Expense" means, as calculated on a consolidated basis for the
--------------------
Company and its Subsidiaries for any period as at any date of determination, (a)
Gross Interest Expense, minus (b) interest income for that period and Swap
-----
Contract payments received.
"Net Issuance Proceeds" means, as to any issuance of equity or debt
---------------------
securities by any Person, cash proceeds received or receivable by such Person in
connection therewith, net of reasonable out-of-pocket costs and expenses,
including underwriting spread, paid or incurred in connection therewith in favor
of any Person not an Affiliate of such Person, such costs and expenses not to
exceed 8% of the gross proceeds of such issuance.
"Net Proceeds" means, (x) as to any sale of Timberlands or other assets by
------------
a Person, proceeds in cash, checks or other cash equivalent financial
instruments as and when received by such Person, net of: (a) the direct costs
------
relating to such sale excluding amounts payable to such Person or any Affiliate
of such Person, except (in the case the Company or its Subsidiaries) as are paid
or payable to any such Affiliate in compliance with Section 8.6 and as have been
(except in the case of payments between the Company and its Subsidiaries)
approved in advance by the Majority Banks, (b) sale, use or other transaction
taxes paid or payable by such Person as a direct result thereof, and (c) amounts
required to be applied to repay principal, interest and prepayment premiums and
penalties on Indebtedness secured by a Lien on the asset which is the subject of
such sale; (y) as to any Event of Loss, proceeds paid on account of any Event of
Loss, net of (a) all money actually applied to repair or reconstruct the damaged
property or property affected by the condemnation or taking, (b) all of the
costs and expenses reasonably incurred in connection with the collection of such
proceeds, award or other payments, and (c) any amounts retained by or paid to
parties having superior rights to such proceeds, awards or other payments; and
(z) as to any excess Timber Harvest, the net proceeds of such excess Timber
Harvest based upon the average prices received on the sale of all Timber Harvest
during the relevant calendar year and a reasonable allocation of direct cash
expenses incurred in connection with the harvesting and sale of Timber during
that year.
"Note" means a promissory note executed by the Company in favor of a Bank
----
pursuant to subsection 2.2(b), in substantially the form of Exhibit F.
---------
"Notice of Borrowing" means a notice in substantially the form of Exhibit
------------------- -------
A.
"Notice of Conversion/Continuation" means a notice in substantially the
---------------------------------
form of Exhibit B.
---------
"Obligations" means all advances, debts, liabilities, obligations,
-----------
covenants and duties arising under any Loan Document owing by the Company to any
Bank, the Issuing Bank, the Swingline Bank, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by assignment of
rights under the Loan Documents), absolute or contingent, due or to become due,
now existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with respect to Offshore
-------------
Rate Loans comprising part of the same Borrowing, the rate of interest per annum
(rounded upward to the next 1/16th of 1%) of the rates of interest per annum
determined by the Agent as the rate of interest at which dollar deposits in the
approximate amount of the amount of the Loan to be
15
<PAGE>
made or continued as, or converted into, an Offshore Rate Loan by the Bank that
acts as Agent and having a maturity comparable to such Interest Period would be
offered to major banks in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
"Offshore Rate Loan" means a Loan that bears interest based on the Offshore
------------------
Rate.
"Old Services" means U.S. Timberlands Management Company, L.L.C., a
------------
Delaware limited liabilty company formerly named U.S. Timberlands Services
Company, L.L.C.
"Operating Agreement" means the Operating Agreement of the Company.
-------------------
"Operating Lease" means, with respect to any Person, any lease of any
---------------
property by such Person as lessee (including leases which may be terminated by
the lessee at any time) that is, or should be, classified and accounted for as
an "operating lease" on the balance sheets, or notes thereto, of such Person
prepared in accordance with GAAP.
"Operating Lease Obligations" means, with respect to any Operating Lease,
---------------------------
the amount of the obligations of the lessee thereunder that, in accordance with
GAAP. would appear on a balance sheet of such Person in respect of such
Operating Lease or otherwise be disclosed in a note to such balance sheet.
"Ordinary Course of Business" means, in respect of any transaction
---------------------------
involving the Company or any Subsidiary, as the case may be, the ordinary course
of such Person's business, as conducted by such Person in accordance with past
practice and undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Loan Document.
"Organization Documents" means, (a) for any corporation, the certificate or
----------------------
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation; or (b) for any limited
liability company, the certificate of formation, operating agreement,
resolutions, and membership list.
"Other Taxes" means any present or future stamp, court or documentary taxes
-----------
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery, performance,
enforcement or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents.
"Participant" has the meaning specified in subsection 11.8(d).
-----------
"Partners" means the General Partner, the Limited Partners, and holders of
--------
Common Units, Subordinated Units and Incentive Distribution Rights (all of the
foregoing as defined in the Partnership Agreement).
"Partnership Agreement" means the Agreement of Limited Partnership of the
---------------------
MLP.
16
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental
----
Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
------------
subject to Title IV of ERISA which the Company sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"Permitted Asset Dispositions" has the meaning specified in Section 8.2.
----------------------------
"Permitted Business" means any business engaged in by the Company on the
------------------
Closing Date, and any business substantially similar or related to any such
business in the United States, which shall not include pulp or paper
manufacturing.
"Permitted Liens" has the meaning specified in Section 8.1.
---------------
"Permitted Swap Obligations" means all obligations (contingent or
--------------------------
otherwise) of the Company or any Subsidiary existing or arising under Swap
Contracts, provided that each of the following criteria is satisfied: (a) such
obligations are (or were) entered into by such Person in the Ordinary Course of
Business for the purpose of directly mitigating risks associated with
liabilities, commitments or assets held or reasonably anticipated by such
Person, or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited
hereunder, and not for purposes of speculation or taking a "market view;" (b)
such Swap Contracts do not contain any provision ("walk-away" provision)
exonerating the non-defaulting party from its obligation to make payments on
outstanding transactions to the defaulting party, and (c) the counterparty to
such Swap Contract is a Bank or an Affiliate of a Bank.
"Person" means an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
----
which the Company sponsors or maintains or to which the Company makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Planned Volume" shall mean, for calendar year 1997, 125,000,000 board
--------------
feet, and for each subsequent calendar year, 5.56% of the Merchantable Timber
Inventory as reported in the Annual Timber Report required to be delivered
pursuant to subsection 7.2(f) with respect to the prior fiscal year, unless the
Planned Volume determined in accordance with the foregoing formula is not less
than 95% nor more than 105% of the Planned Volume for the prior calendar year,
in which case the Planned Volume for such calendar year shall be the same as for
the prior calendar year.
"Pro Forma EBITDDA" means, at any date of determination, on a Rolling Four
-----------------
Quarter Basis, the sum of the following calculated on a pro forma basis for the
Company and its Subsidiaries on a consolidated basis for the four fiscal quarter
period ending on the last day of
17
<PAGE>
the most recent quarter for which financial reports pursuant to subsections
7.1(a) and (b) and a Compliance Certificate pursuant to subsection 7.2(b) having
been delivered:
(i) EBITDDA; and
(ii) plus and minus, as applicable, in connection with any
---- -----
timberlands to be acquired by the Company with the proceeds of an
Acquisition Revolving Loan or previously acquired within such four fiscal
quarters, an amount equal to a good faith estimate of such additional
amounts that would be included in clause (i) above had such timberlands
been owned by the Company for such four fiscal quarters, as certified (in a
certificate containing such detail as the Majority Banks may reasonably
request) by the chief financial officer of the Company based upon such
chief financial officer's good faith estimates of applicable revenues and
expenses arising from such timberlands and assuming aggregate Timber
Harvest in an amount that does not require proceeds to be placed in an
escrow or cash collateral account pursuant to Section 8.20.
"Pro Forma Interest Expense" means, at any date of determination, on a
--------------------------
Rolling Four Quarter Basis, the sum of the following calculated for the Company
and its Subsidiaries on a consolidated basis for the four fiscal quarter period
ending on the last day of the most recent quarter for which financial reports
pursuant to subsections 7.1(a) and (b) and a Compliance Certificate pursuant to
subsection 7.2(b) have been delivered:
(a) interest expense payable during such four fiscal quarter period on
all Indebtedness of the Company and its Subsidiaries; plus
----
(b) interest expense that would have been payable during such four
fiscal quarter period in respect of (i) any Indebtedness proposed to be
incurred on such date of determination, including any Loan requested
hereunder or other Senior Debt, and (ii) Indebtedness incurred after the
end of such four fiscal quarter period and before such date of
determination, in each case based upon the interest rate applicable on such
date of determination to such Indebtedness and giving effect as of the
beginning of such four fiscal quarter period (A) to the incurrence of all
such Indebtedness described in clauses (i) and (ii), and (B) to the
application of any such Indebtedness to the substantially concurrent
repayment of any other Indebtedness outstanding during such four fiscal
quarter period.
"Pro Rata Share" means, as to any Bank at any time, the percentage
--------------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the aggregate Commitments, or, if the
Commitments have expired or been terminated, the percentage equivalent
(expressed as a decimal, rounded to the ninth decimal place) at such time of the
Effective Amount of such Bank's Loans divided by the aggregate Effective Amount
of all Loans.
"Quarterly Timber Report" has the meaning specified in subsection 7.2(e).
-----------------------
"Reference Bank" means BofA.
--------------
"Related Entities" means the Managing Member and the MLP.
----------------
18
<PAGE>
"Replacement Bank" has the meaning specified in Section 4.8.
----------------
"Reportable Event" means, any of the events set forth in Section 4043(c) of
----------------
ERISA or the regulations thereunder, other than any such event for which the 30-
day notice requirement under ERISA has been waived in regulations issued by the
PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or legally binding upon the
Person or any of its property or to which the Person or any of its property is
subject.
"Responsible Officer" means any managing director, chief executive officer,
-------------------
or chief financial officer of the managing member of the Managing Member acting
in its capacity as Managing Member on behalf of the Company.
"Restricted Payments" has the meaning specified in Section 8.11.
-------------------
"Retail Timberlands Value" means, for any date, the product of (a) the
------------------------
arithmetic average price per thousand board feet of sawlogs weighted by grade
and species (as reported by the most recent California State Board of
Equalization Timber Value Area 6 report or, if such report is unavailable, an
outside index or reporting service acceptable to the Agent and the Majority
Banks) (net of any applicable log and haul costs per thousand board feet during
such twelve months) (the foregoing shall be completed for future fiscal quarters
in the same fashion as reflected for the fiscal quarter ending September 30,
1997 in the Initial Timber Report); and (b) the Merchantable Timber Inventory of
the Company and its Subsidiaries as adjusted on or most recently before such
date pursuant to the definition thereof in this Section 1.1.
"Revolving Termination Date" means the earlier to occur of:
--------------------------
(a) October 31, 2000; and
(b) the date on which the W/C Revolving Commitments and Acquisition
Revolving Commitments terminate in accordance with the provisions of this
Agreement.
"Rolling Four Quarter Basis" means with respect to the calculation of any
--------------------------
financial ratio in Article VIII, such ratio as measured on the last day of the
most recently completed fiscal quarter for the period comprising such fiscal
quarter and the three preceding fiscal quarters, provided that (i) for the
fiscal quarters ending September 30 and December 31, 1997, any calculation of
Pro Forma EBITDDA or Pro Forma Interest Expense shall be determined by
multiplying the actual Pro Forma EBITDDA or Pro Forma Interest Expense for that
fiscal quarter by four (4), (ii) for the fiscal quarter ending on March 31,
1998, any calculation of Pro Forma EBITDDA or Pro Forma Interest Expense shall
be determined by multiplying the actual Pro Forma EBITDDA or Pro Forma Interest
Expense for that fiscal quarter and the prior fiscal quarter by two (2), and
(iii) for the fiscal quarter ending on June 30, 1997, any calculation of Pro
Forma EBITDDA or Pro Forma Interest Expense shall be determined by multiplying
the actual Pro Forma EBITDDA or Pro Forma Interest Expense for the period of
such quarter and the two preceding quarters by one and one-third (1-1/3).
19
<PAGE>
"S-1" means the Registration Statement on Form S-1, dated as of August 4,
---
1997, as amended, filed by the MLP with the SEC.
"SEC" means the Securities and Exchange Commission, or any Governmental
---
Authority succeeding to any of its principal functions.
"Senior Debt" means Indebtedness of the Company under the Senior Notes and
-----------
the Obligations (including L/C Obligations).
"Senior Notes" means the Notes issued pursuant to the Senior Note
------------
Agreement.
"Senior Note Agreement" means the Indenture dated as of ______, 1997, among
---------------------
the Company, Finance, and State Street Bank & Trust Company, as trustee.
"Subsidiary" of a Person means any corporation, association, partnership,
----------
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity interests (in
the case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Company.
"Surety Instruments" means all letters of credit (including standby and
------------------
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Swap Contract" means any agreement, whether or not in writing, relating to
-------------
any transaction that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap or option, bond,
note or bill option, interest rate option, forward foreign exchange transaction,
cap, collar or floor transaction, currency swap, cross-currency rate swap,
swaption, currency option or any other, similar transaction (including any
option to enter into any of the foregoing) or any combination of the foregoing,
and, unless the context otherwise clearly requires, any master agreement
relating to or governing any or all of the foregoing.
"Swap Termination Value" means, in respect of any one or more Swap
----------------------
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include any Bank).
"Swingline Bank" means BofA or its assignee under Section 11.8.
--------------
"Swingline Clean-Up Day" has the meaning specified in subsection 2.7(c).
----------------------
"Swingline Commitment" has the meaning specified in Section 2.9.
--------------------
20
<PAGE>
"Swingline Loan" has the meaning specified in Section 2.9.
--------------
"Taxes" means any and all present or future taxes, levies, assessments,
-----
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, respectively, taxes imposed on or measured by its net income by the
jurisdiction (or any political subdivision thereof) under the laws of which such
Bank or the Agent, as the case may be, is organized or maintains a lending
office.
"Timber" means all crops and all trees, timber, whether severed or
------
unsevered and including standing and down timber, stumps and cut timber, and
logs, wood chips and other forest products, whether now located on or hereafter
planted or growing in or on the Timberlands or otherwise or now or hereafter
removed from the Timberlands or otherwise for sale or other disposition.
"Timber Harvest" means the harvest of Timber from the Timberlands or the
--------------
disposition of the rights of the Company or any Subsidiary to Timber on the
Timberlands, including by means of timber deed, bulk, pay-as-cut, and stumpage
sales. In the case of timber deed, bulk, pay-as-cut, and stumpage sales, the
Timber so sold shall be deemed harvested for purposes of this definition in
equal monthly amounts over the life of the contract, regardless of when the
purchaser actually severs the Timber.
"Timberlands" means, at any date of determination, all real property owned
-----------
by or leased to the Company or any Subsidiary that is suitable for timber
production.
"Type" has the meaning specified in the definition of "Loan."
----
"Unfunded Pension Liability" means the excess of a Plan's benefit
--------------------------
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.
"United States" and "U.S." each means the United States of America.
------------- ----
"Wholly-Owned Subsidiary" means any corporation in which (other than
-----------------------
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Company, or by one or more of the
other Wholly-Owned Subsidiaries, or both.
"W/C Revolving Commitment" has the meaning specified in subsection 2.1(b).
------------------------
"W/C Revolving Loans" has the meaning specified in subsection 2.1(b).
-------------------
1.2 Other Interpretive Provisions.
-----------------------------
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
21
<PAGE>
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms. Unless otherwise expressly provided,
any reference to any action of the Agent or the Banks by way of consent,
approval or waiver shall be deemed modified by the phrase "in its/their sole
discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks' involvement in their preparation.
1.3 Accounting Principles.
---------------------
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
22
<PAGE>
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
ARTICLE II
THE CREDITS
-----------
2.1 Amounts and Terms of Commitments.
--------------------------------
(a) The Acquisition Credit.
----------------------
Each Bank severally agrees, on the terms and conditions set forth
herein, to make loans to the Company (each such loan, an "Acquisition Revolving
---------------------
Loan") from time to time on any Business Day from the Closing Date to the
- ----
Revolving Termination Date in an aggregate amount not to exceed the amount set
forth opposite such Bank's name under the heading "Acquisition Revolving
Commitment" on Schedule 2.1 (such Bank's "Acquisition Revolving Commitment");
------------ --------------------------------
provided, however, after giving effect to any Borrowing of Acquisition Revolving
- -------- -------
Loans, the Effective Amount of all Acquisition Revolving Loans shall not at any
time exceed the aggregate Acquisition Revolving Commitments. Within the limits
of each Bank's Acquisition Revolving Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this subsection 2.1(a),
prepay under Section 2.5 and reborrow under this subsection 2.1(a).
(b) The Working Capital Credit.
--------------------------
Each Bank severally agrees, on the terms and conditions set forth
herein, to make loans to the Company (each such loan, a "W/C Revolving Loan")
------------------
from time to time on any Business Day during the period from the Closing Date to
the Revolving Termination Date, in an aggregate amount not to exceed at any time
outstanding, together with such Bank's Pro Rata Share of Swingline Loans and L/C
Obligations outstanding at such time, the amount set forth opposite such Bank's
name under the heading "W/C Revolving Commitment" on Schedule 2.1 (such Bank's
------------
"W/C Revolving Commitment"); provided, however, that, after giving effect to any
- ------------------------- -------- -------
Borrowing of W/C Revolving Loans, (1) the Effective Amount of all W/C Revolving
Loans, Swingline Loans and L/C Obligations shall not at any time exceed the
aggregate W/C Revolving Commitments. Within the limits of each Bank's W/C
Revolving Commitment, and subject to the other terms and conditions hereof, the
Company may borrow under this subsection 2.1(b), prepay under Section 2.5 and
reborrow under this subsection 2.1(b).
2.2 Evidence of Obligations.
-----------------------
(a) The Loans made by each Bank (including the Swingline Bank) shall
be evidenced by one or more loan accounts or records maintained by such Bank in
the Ordinary Course of Business. The loan accounts or records maintained by the
Agent, the Issuing Bank, the Swingline Bank, and each Bank shall be conclusive
absent manifest error of the amount of the Loans made by the Banks to the
Company and the interest and payments thereon. Any failure so to record or any
error in doing so shall not, however, limit or otherwise affect the
23
<PAGE>
obligation of the Company hereunder to pay any amount owing with respect to the
Loans or Letters of Credit.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of or in
addition to loan accounts. Each such Bank shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the Company with respect
thereto. Each such Bank is irrevocably authorized by the Company to endorse its
Note(s) and each Bank's record shall be conclusive absent manifest error;
provided, however, that the failure of a Bank to make, or an error in making, a
- -------- -------
notation thereon with respect to any Loan shall not limit or otherwise affect
the obligations of the Company hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing.
-----------------------
(a) Each Borrowing shall be made upon the Company's irrevocable
written notice delivered to the Agent in the form of a Notice of Borrowing
(which notice must be received by the Agent prior to (i) 9:00 a.m. (San
Francisco time) three Business Days prior to the requested Borrowing Date, in
the case of Offshore Rate Loans; or (ii) 8:30 a.m. (San Francisco time) on the
requested Borrowing Date, in the case of Base Rate Loans, specifying:
(i) the amount of the Borrowing, which shall be in an aggregate
minimum amount of $2,000,000 or any multiple of $500,000 in excess thereof;
(ii) the requested Borrowing Date, which shall be a Business Day;
(iii) the Type of Loans comprising the Borrowing; and
(iv) the duration of the Interest Period applicable to such Loans
included in such notice. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprising Offshore Rate
Loans, such Interest Period shall be one month.
(b) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Company at the Agent's
Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date
requested by the Company in funds immediately available to the Agent. Except as
provided in the next sentence, the proceeds of all Loans will then be made
available to the Company by the Agent at such office by crediting the account of
the Company on the books of BofA with the aggregate of the amounts made
available to the Agent by the Banks and in like funds as received by the Agent
by 1:00 p.m. (San Francisco time) on the Borrowing Date. The proceeds of
Acquisition Revolving Loans may, at the election of the Agent or of the Majority
Banks, be made available to the Company by wire transfer pursuant to such escrow
arrangements as the Agent shall determine acceptable to confirm the satisfaction
of the conditions precedent to such Loans, in like funds as received by the
Agent.
(c) After giving effect to any Borrowing, unless the Agent shall
otherwise consent, there may not be more than five (5) different Interest
Periods in effect.
24
<PAGE>
2.4 Conversion and Continuation Elections.
-------------------------------------
(a) The Company may, upon irrevocable written notice to the Agent in
accordance with subsection 2.4(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of Offshore Rate Loans, to convert any such Loans (or any part thereof in
an amount not less than $2,000,000, or that is in an integral multiple of
$500,000 in excess thereof) into Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest Period,
to continue any Offshore Rate Loans having Interest Periods expiring on
such day (or any part thereof in an amount not less than $2,000,000, or
that is in an integral multiple of $500,000 in excess thereof);
provided that if at any time the aggregate amount of Offshore Rate Loans in
- -------- ----
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $2,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into, Offshore
Rate Loans, as the case may be, shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Agent not later than (i) 9:00 a.m. (San Francisco time) at
least three Business Days in advance of the Conversion/Continuation Date, if the
Loans are to be converted into or continued as Offshore Rate Loans; and (ii)
8:30 a.m. (San Francisco time) on the Conversion/Continuation Date, if the Loans
are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed conversion
or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans or if any Default or Event
of Default then exists, the Company shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation for Loans, or, if no timely notice is provided
by the Company, the
25
<PAGE>
Agent will promptly notify each Bank of the details of any automatic conversion.
All conversions and continuations shall be made ratably according to the
respective outstanding principal amounts of the Loans with respect to which the
notice was given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during the existence
of a Default or Event of Default, the Company may not elect to have a Loan
converted into or continued as a Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
unless the Agent shall otherwise consent, there may not be more than five (5)
different Interest Periods in effect with respect to Loans.
2.5 Optional Prepayments.
--------------------
Subject to Section 4.4, the Company may, at any time or from time to time,
upon not less than (a) in the case of Offshore Rate Loans, three Business Days'
irrevocable notice to the Agent delivered by 9:00 a.m. (San Francisco time), (b)
in the case of Base Rate Loan, one Business Day's irrevocable notice to the
Agent, and (c) in the case of Swingline Loans, notice to the Agent by 8:30 a.m.
on the same day, ratably prepay Loans in whole or in part, in minimum amounts of
$2,000,000 or any multiple of $500,000 in excess thereof or, in the case of
Swingline Loans, in minimum amounts of $250,000 or any multiple of $100,000 in
excess thereof. Such notice of prepayment shall specify the date and amount of
such prepayment, the Type(s) of Loans to be prepaid, and whether such Loans are
Swingline Loans, W/C Revolving Loans or Acquisition Revolving Loans. The Agent
will promptly notify each Bank of its receipt of any such notice with respect to
W/C Revolving Loans and Acquisition Revolving Loans, and of such Bank's Pro Rata
Share of such prepayment. The payment amount specified in such notice shall be
due and payable on the date specified therein, together with accrued interest to
each such date on the amount prepaid and any amounts required pursuant to
Section 4.4. Optional prepayments of Acquisition Revolving Loans, after the
Company exercised or declined to exercise its option to repay the Acquisition
Revolving Loans in installments pursuant to Section 2.7 shall be applied to the
remaining principal repayments of the Acquisition Revolving Loans in the inverse
order of their maturity.
2.6 Mandatory Prepayments of Loans; Mandatory Commitment Reductions.
---------------------------------------------------------------
(a) Mandatory Prepayments.
---------------------
(i) (A) If the Company or any of its Subsidiaries shall at any time
or from time to time make, agree to, or suffer a disposition of properties
permitted by subsection 8.2(b), or have a Timber Harvest in excess of that
permitted by Section 8.20, then (1) in the case of such a disposition of
properties, the Company shall prepay, purchase, or Cash Collateralize such
Senior Debt as the Company may elect in the amount, if any, by which the Net
Proceeds of such disposition that the Company has elected not to reinvest in
accordance with subsection 8.2(b) in any calendar year exceeds the Maximum
Amount for that year, and (2) in the case of excess Timber Harvest, the Company
shall prepay, purchase, or Cash Collateralize such Senior Debt as the Company
may elect in an amount equal to the Net Proceeds of such excess Timber Harvest
that the Company has elected not to reinvest in accordance with
26
<PAGE>
Section 8.20; provided that, in each case, unless no
--------
Loans or Letters of Credit are outstanding hereunder, the Company may not
prepay or purchase Senior Debt other than the Obligations pursuant to this
subsection 2.6(a)(i)(A) unless the Company shall also prepay or Cash
Collateralize the Obligations in an aggregate amount as shall be necessary
to cause the Banks to share such prepayment, purchase, or Cash
Collateralization with the other Senior Debt at least pro rata.
Prepayments to be made with respect to the Loans pursuant to this
subsection 2.6(a)(i) shall be applied first, to prepay any Acquisition
-----
Revolving Loans that are Base Rate Loans then outstanding, second, at the
------
Company's option, to Cash Collateralize (which cash collateral shall be
applied on the maturity date of their Interest periods to prepay then
outstanding Acquisition Revolving Loans that are Offshore Rate Loans in the
order of their maturities) or to prepay any Acquisition Revolving Loans
that are Offshore Rate Loans (in the order of their maturities), third, to
-----
prepay any W/C Revolving Loans that are Base Rate Loans, fourth, at the
------
Company's option, to Cash Collateralize (which cash collateral shall be
applied on the maturity date of their Interest periods to prepay then
outstanding W/C Revolving Loans that are Offshore Rate Loans in the order
of their maturities) or to prepay any W/C Revolving Loans that are Offshore
Rate Loans (in the order of their maturities), and fifth to Cash
-----
Collateralize L/C Obligations (which cash collateral shall be applied to
such L/C Obligations upon any drawings under outstanding Letters of Credit
and released from time to time to the extent such cash collateral exceeds
the Effective Amount of the L/C Obligations).
(ii) Subject to payment of any amounts owing under Section 4.4, if the
Effective Amount of all W/C Revolving Loans, L/C Obligations, and Swingline
Loans then outstanding exceeds the aggregate W/C Revolving Commitments, the
Company shall immediately, and without notice or demand, prepay the outstanding
principal amount of the W/C Revolving Loans by an amount equal to the applicable
excess. Any such prepayment shall be applied first, to prepay any W/C
-----
Revolving Loans that are Base Rate Loans, second, to Cash Collateralize
(which cash collateral shall be applied on the maturity date of their Interest
periods to prepay then outstanding W/C Revolving Loans that are Offshore Rate
Loans in the order of their maturities) or to prepay any W/C Revolving Loans
that are Offshore Rate Loans (in the order of their maturities), and third to
-----
Cash Collateralize any L/C Obligations.
(iii) Subject to payment of any amounts owing under Section 4.4, if the
Effective Amount of all Acquisition Revolving Loans then outstanding exceeds the
aggregate Acquisition Revolving Commitments, the Company shall immediately, and
without notice or demand, prepay the outstanding principal amount of the
Acquisition Revolving Loans by an amount equal to the applicable excess. Any
such prepayment shall be applied first, to prepay any Acquisition Revolving
-----
Loans that are Base Rate Loans, second, to Cash Collateralize (which cash
------
collateral shall be applied on the maturity date of their Interest periods to
prepay then outstanding Acquisition Revolving Loans that are Offshore Rate Loans
in the order of their maturities) or to prepay any W/C Revolving Loans that are
Offshore Rate Loans (in the order of their maturities).
(iv) The Company shall repay the W/C Revolving Loans and Swingline Loans
from time to time so as to cause, at the end of any calendar month, there to
have been a period of at least 30 consecutive days during the prior 12 calendar
months when there were no W/C Revolving Loans and Swingline Loans outstanding.
27
<PAGE>
(v) After the Revolving Termination Date, all prepayments shall be
applied in the inverse order of maturity to the principal payments required
under subsection 2.7(b)(ii).
(vi) Upon the occurrence of a Change of Control, the Company shall
notify the Agent thereof and, upon demand by the Agent at the direction of the
Required Lenders within 90 days after the later of such Change of Control or
receipt of such notice, the Company shall repay the Loans in full.
(b) Mandatory Commitment Reductions.
-------------------------------
(i) The aggregate Acquisition Revolving Commitments and aggregate W/C
Revolving Commitments, in that order of priority, shall be permanently reduced
from time to time by the amount of any mandatory prepayment or Cash
Collateralization of the Obligations required by subsection 2.6(a); provided
that to the extent a sale of assets, an Event of Loss or Timber Harvest shall
not result in any prepayment of the Loans pursuant to subsection 2.6(a) because
the Loans have been repaid in full, first, the aggregate Acquisition Revolving
Commitment and, second, the aggregate W/C Revolving Commitment, shall be
permanently reduced in an amount equal to the amount that would otherwise be
applied to a prepayment or Cash Collateralization of the Obligations by
operation of subsection 2.6(a). Such permanent reduction shall take effect upon
the date the corresponding mandatory prepayment is or would (if Loans were
outstanding) be required by subsection 2.6(a) or, in the case of funds actually
deposited as Cash Collateral under that subsection, upon the application of such
cash collateral to the W/C Revolving Loans or Acquisition Revolving Loans, as
applicable.
(ii) Upon the occurrence of a Change of Control, the Company shall
notify the Agent thereof and, upon notice to the Company by the Agent at the
direction of the Required Lenders within 90 days after the later of such Change
of Control or receipt of such notice of Change of Control, the aggregate
Acquisition Revolving Commitment and the aggregate W/C Revolving Commitment
shall be permanently reduced to $0 and terminated.
(iii) Upon any permanent reduction in the aggregate Acquisition
Revolving Commitments or aggregate W/C Revolving Commitments, the corresponding
Acquisition Revolving Commitment or W/C Revolving Commitment, as the case may
be, of each Bank shall automatically be reduced by an amount equal to such
Bank's ratable share of the reduction, effective as of the earlier of the date
that any corresponding prepayment is made or the date by which such prepayment
is due and payable hereunder. All accrued commitment fees to, but not including
the effective date of any reduction or termination of the Commitments shall be
paid on the effective date of such reduction or termination.
2.7 Repayment.
---------
(a) The W/C Revolving Credit.
------------------------
The Company shall repay on the Revolving Termination Date the
aggregate outstanding principal amount of W/C Revolving Loans outstanding on
such date.
28
<PAGE>
(b) The Acquisition Revolving Credit.
--------------------------------
(i) Repayment on Revolving Termination Date. Unless the Company
---------------------------------------
shall have exercised its election to repay the Acquisition Revolving Loans
outstanding on the Revolving Termination Date in installments pursuant to
and in strict compliance with this subsection 2.7(b), the Company shall
repay to the Banks in full on the Revolving Termination Date the aggregate
principal amount of any Loans outstanding on the Revolving Termination
Date.
(ii) Installment Election. So long as (A) no Default or Event of
--------------------
Default then exists, and (B) the representations and warranties in Article
VI are true and correct with the same effect as if made on and as of such
date (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they are true and correct as of
such earlier date), in each case of clauses (A) and (B) above on the date
of such election and on the Revolving Termination Date, at least 60 days
before the Revolving Termination Date the Company may, in lieu of repaying
Acquisition Revolving Loans on the Revolving Termination Date under
subsection 2.7(b)(i), elect to repay the aggregate principal amount of
Acquisition Revolving Loans outstanding on the Revolving Termination Date
in sixteen (16) consecutive quarterly equal installments, each in an amount
equal to one-sixteenth of the Effective Amount of the Acquisition Revolving
Loans on the Revolving Termination Date and payable on the last Business
Day of each January, April, July and October through the Maturity Date,
commencing on January 31, 2001. The Company shall request such repayment
election by delivering to the Agent an irrevocable written request in
substantially the form of Exhibit G. The Agent shall promptly deliver a
---------
copy of such notice to the Banks.
(c) The Swingline Credit.
--------------------
The Company shall repay Swingline Loans to the Swingline Bank on each
Business Day upon which there have been, for the seven (7) immediately preceding
Business Days, outstanding Swingline Loans (the "Swingline Clean-Up Day"), which
----------------------
Swingline Loans may not be reborrowed until such Swingline Clean-Up Day has
ended.
(d) Letters of Credit.
-----------------
The Company shall reimburse the Issuing Bank on or before the date
each drawing under a Letter of Credit is to be paid by the Issuing Bank for the
amount of such drawing.
2.8 Interest.
--------
(a) Each Loan shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at a rate per annum equal to the
Offshore Rate or the Base Rate, as the case may be (and subject to the Company's
right to convert to other Types of Loans under Section 2.4), plus the Applicable
----
Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Offshore Rate Loans under
29
<PAGE>
Section 2.5 or 2.6 for the portion of the Offshore Rate Loans so prepaid and
upon payment (including prepayment) in full thereof and, during the existence of
any Event of Default, interest shall be paid on demand of the Agent at the
request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any Event of
Default exists or after acceleration, the Company shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Obligations, at a rate per annum which is
determined by adding 2% per annum to the Applicable Margin then in effect for
such Loans and, in the case of Obligations not subject to an Applicable Margin,
at a rate per annum equal to the Base Rate plus 2%; provided, however, that, on
---- -------- -------
and after the expiration of any Interest Period applicable to any Offshore Rate
Loan outstanding on the date of occurrence of such Event of Default or
acceleration, the principal amount of such Loan shall, during the continuation
of such Event of Default or after acceleration, bear interest at a rate per
annum equal to the Base Rate plus 2% plus the Applicable Margin for Base Rate
---- ----
Loans.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
2.9 Swingline Loans.
---------------
(a) Subject to the terms and conditions hereof, the Swingline Bank
severally agrees to make a portion of the Aggregate W/C Revolving Commitments
available to the Company by making swingline loans (individually, a "Swingline
---------
Loan"; collectively, the "Swingline Loans") to the Company on any Business Day
- ---- ---------------
during the period from the Closing Date to the Revolving Termination Date in
accordance with the procedures set forth in this Section in an aggregate
principal amount at any one time outstanding not to exceed $10,000,000,
notwithstanding the fact that such Swingline Loans, when aggregated with the
Swingline Bank's outstanding W/C Revolving Loans, may exceed the Swingline
Bank's W/C Revolving Commitment (the amount of such commitment of the Swingline
Bank to make Swingline Loans to the Company pursuant to this subsection 2.9(a),
as the same may be reduced as a result of any assignment pursuant to Section
11.8, the Swingline Bank's "Swingline Commitment"); provided, that at no time
-------------------- -------- ----
shall (i) the sum of the Effective Amount of all Swingline Loans, L/C
Obligations, and W/C Revolving Loans exceed the Aggregate W/C Revolving
Commitments, or (ii) the Effective Amount of all Swingline Loans exceed the
Swingline Commitment. Additionally, no more than three (3) Swingline Loans may
be outstanding at any one time, and except as otherwise provided in subsection
2.8(c), all Swingline Loans shall at all times bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin, unless otherwise agreed to by
----
the Swingline Bank in its sole discretion. Within the foregoing limits, and
subject to the other terms and conditions hereof, the Company
30
<PAGE>
may borrow under this subsection 2.9(a), prepay pursuant to subsection 2.5 and
reborrow pursuant to this subsection 2.9(a).
(b) The Company shall provide the Agent (with a copy to the Swingline
Bank) irrevocable written notice in the form of a Notice of Borrowing of any
Swingline Loan requested hereunder (which notice must be received by the
Swingline Bank and the Agent prior to 12:00 noon (San Francisco time) on the
requested Borrowing date) specifying (i) the amount to be borrowed, and (ii) the
requested Borrowing date, which must be a Business Day.
Upon receipt of the Notice of Borrowing, the Swingline Bank will
immediately confirm with the Agent (by telephone or in writing) that the Agent
has received a copy of the Notice of Borrowing from the Company and, if not, the
Swingline Bank will provide the Agent with a copy thereof. Unless the Swingline
Bank has received notice prior to 12:00 Noon (San Francisco time) on such
Borrowing date from the Agent (A) directing the Swingline Bank not to make the
requested Swingline Loan as a result of the limitations set forth in the proviso
-------
set forth in the first sentence of subsection 2.9(a); or (B) that one or more
conditions specified in Article V are not then satisfied; then, subject to the
terms and conditions hereof, the Swingline Bank will, not later than 2:00 p.m.
(San Francisco time) on the Borrowing date specified in such Notice, make the
amount of its Swingline Loan available to the Agent for the account of the
Company at the Agent's Payment Office in funds immediately available to the
Agent. The proceeds of such Swingline Loan will then promptly be made available
to the Company by the Agent crediting the account of the Company on the books of
BofA with the aggregate of the amounts made available to the Agent by the
Swingline Bank and in like funds as received by the Agent. Each Borrowing
pursuant to this Section shall be in an aggregate principal amount equal to two
hundred fifty thousand dollars ($250,000) or an integral multiple of one hundred
thousand dollars ($100,000) in excess thereof, unless otherwise agreed by the
Swingline Bank.
(c) If (i) any Swingline Loans shall remain outstanding at 9:00 a.m.
(San Francisco time) on the Business Day immediately prior to a Swingline Clean-
Up Day and by such time on such Business Day the Agent shall have received
neither (A) a Notice of Borrowing delivered pursuant to Section 2.3 requesting
that W/C Revolving Loans be made pursuant to Section 2.1 on the Swingline Clean-
Up Day in an amount at least equal to the aggregate principal amount of such
Swingline Loans, nor (B) any other notice indicating the Company's intent to
repay such Swingline Loans with funds obtained from other sources, or (ii) any
Swingline Loans shall remain outstanding during the existence of a Default or
Event of Default and the Swingline Bank shall in its sole discretion notify the
Agent that the Swingline Bank desires that such Swingline Loans be converted
into W/C Revolving Loans, then the Agent shall be deemed to have received a
Notice of Borrowing from the Company pursuant to Section 2.3 requesting that
Base Rate W/C Revolving Loans be made pursuant to Section 2.1 on such Swingline
Clean-Up Day (in the case of the circumstances described in clause (i) above) or
on the first Business Day after the date of such notice from the Swingline Bank
(in the case of the circumstances described in clause (ii) above) in an amount
equal to the aggregate amount of such Swingline Loans, and the procedures set
forth in subsections 2.3(b) and 2.3(c) shall be followed in making such Base
Rate Loans; provided, that such Base Rate W/C Revolving Loans shall be made
-------- ----
notwithstanding the Company's failure to comply with subsections 5.3(b) and
5.3(c); and provided, further, that if a Borrowing of Base Rate W/C
-------- -------
31
<PAGE>
Revolving Loans becomes legally impracticable and if so required by the
Swingline Bank at the time such Base Rate W/C Revolving Loans are required to be
made by the Banks in accordance with this subsection 2.9(c), each Bank agrees
that in lieu of making Base Rate W/C Revolving Loans as described in this
subsection 2.9(c), such Bank shall purchase a participation from the Swingline
Bank in the applicable Swingline Loans in an amount equal to such Bank's Pro
Rata Share of such Swingline Loans, and the procedures set forth in subsections
2.3(b) and 2.3(c) shall be followed in connection with the purchases of such
participations. The proceeds of such Base Rate W/C Revolving Loans, or
participations purchased, shall be applied to repay such Swingline Loans. A copy
of each notice given by the Agent to the Banks pursuant to this subsection
2.9(c) with respect to the making of Loans, or the purchases of participations,
shall be promptly delivered by the Agent to the Company. Each Bank's obligation
in accordance with this Agreement to make the W/C Revolving Loans, or purchase
the participations, as contemplated by this subsection 2.9(c), shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any set-off, counterclaim, recoupment, defense or other right which such Bank
may have against the Swingline Bank, the Company or any other Person for any
reason whatsoever; (B) the occurrence or continuance of a Default, an Event of
Default or a Material Adverse Change; or (C) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.
2.10 Fees.
----
(a) Arrangement, Agency Fees.
------------------------
The Company shall pay an arrangement fee to the Arranger for the
Arranger's own account, and shall pay an agency fee to the Agent for the Agent's
own account, as required by the letter agreement ("Fee Letter") between the
----------
Company and the Arranger and the Agent dated October 23, 1997.
(b) Commitment Fees.
---------------
The Company shall pay to the Agent for the account of each Bank a
commitment fee on the average daily unused portion of such Bank's W/C Revolving
Commitment and Acquisition Revolving Commitment, computed on a quarterly basis
in arrears on the last Business Day of each calendar quarter based upon the
average daily utilization for that quarter as calculated by the Agent, equal to
the Applicable Margin. Such commitment fee shall accrue in the case of the W/C
Revolving Commitment and the Acquisition Revolving Commitment, from the Closing
Date to the Revolving Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter commencing on December
31, 1997 through the Revolving Termination Date, with the final payment to be
made on the Revolving Termination Date. The commitment fees provided in this
subsection shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions in Article V are
not met.
2.11 Computation of Fees and Interest.
--------------------------------
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by BofA's "reference rate" shall be made on the basis of a
year of 365 or 366 days,
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as the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the last day
thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Company and the Banks in the absence of manifest
error. The Agent will, at the request of the Company or any Bank, deliver to the
Company or the Bank, as the case may be, a statement showing the quotations used
by the Agent in determining any interest rate and the resulting interest rate.
2.12 Payments by the Company.
-----------------------
(a) All payments to be made by the Company shall be made without set-
off, recoupment or counterclaim. Except in the case of Swingline Loans and as
otherwise expressly provided herein, all payments by the Company shall be made
to the Agent for the account of the Banks at the Agent's Payment Office, and
shall be made in dollars and in immediately available funds, no later than 11:00
a.m. (San Francisco time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 11:00 a.m. (San Francisco time) shall
be deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Agent receives notice from the Company prior to the
date on which any payment is due to the Banks that the Company will not make
such payment in full as and when required, the Agent may assume that the Company
has made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Agent, each Bank shall repay to the Agent on demand such
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Bank
until the date repaid.
2.13 Payments by the Banks to the Agent.
----------------------------------
(a) Unless the Agent receives notice from a Bank on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at least
one Business Day prior to the date of such Borrowing, that such Bank will not
make available as and when required hereunder to the Agent for the account of
the Company the amount of that Bank's Pro Rata Share of the Borrowing, the Agent
may assume that each Bank has made such amount available to the Agent in
immediately available funds on the Borrowing Date and the Agent may (but
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<PAGE>
shall not be so required), in reliance upon such assumption, make available to
the Company on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Agent in immediately
available funds and the Agent in such circumstances has made available to the
Company such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the Agent
submitted to any Bank with respect to amounts owing under this subsection (a)
shall be conclusive, absent manifest error. If such amount is so made available,
such payment to the Agent shall constitute such Bank's Loan on the date of
Borrowing for all purposes of this Agreement. If such amount is not made
available to the Agent on the Business Day following the Borrowing Date, the
Agent will notify the Company of such failure to fund and, upon demand by the
Agent, the Company shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the time
to the Loans comprising such Borrowing (but without payment of the amounts that
would have been owing under Section 4.4 on account of such prepayment had such
Loan been made by the defaulting Bank as an Offshore Rate Loan).
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc.
------------------------
If, other than as expressly provided elsewhere herein, any Bank shall
obtain on account of the Obligations in its favor any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its ratable share (or other share contemplated
hereunder), such Bank shall immediately (a) notify the Agent of such fact, and
(b) purchase from the other Banks such participations in the Loans made by them
as shall be necessary to cause such purchasing Bank to share the excess payment
pro rata with each of them; provided, however, that if all or any portion of
-------- -------
such excess payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank shall repay to
the purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's ratable share (according to the proportion of (i)
the amount of such paying Bank's required repayment to (ii) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from another Bank
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 11.10) with respect to
such participation as fully as if such Bank were the direct creditor of the
Company in the amount of such participation. The Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section 2.14 and will in each case notify
the Banks following any such purchases or repayments.
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2.15 Voluntary Termination of Commitments.
------------------------------------
The Company may, upon not less than three Business Days' prior notice to
the Agent, terminate the W/C Revolving Commitment or the Acquisition Revolving
Commitment in full but not in part as long as such termination is accompanied by
the simultaneous prepayment in full of all outstanding W/C Revolving Loans and
Acquisition Revolving Loans, respectively, and the termination, or Cash
Collateralization, of all outstanding L/C Obligations. Once terminated in
accordance with this Section, the W/C Revolving Commitment and the Acquisition
Revolving Commitment may not be reinstated. All accrued commitments fees to,
but not including the effective date of such termination, shall be paid on the
effective date of such termination.
ARTICLE III
THE LETTERS OF CREDIT
---------------------
3.1 The Letter of Credit Facility.
-----------------------------
(a) On the terms and conditions set forth herein, (i) the Issuing Bank
agrees, (A) from time to time on any Business Day during the period from the
Closing Date until 30 days before the Revolving Termination Date to issue
Letters of Credit for the account of the Company, and to amend or renew Letters
of Credit previously issued by it, in accordance with subsections 3.2(c) and
3.2(d), and (B) to honor drafts under the Letters of Credit; and (ii) the Banks
severally agree to participate in Letters of Credit Issued for the account of
the Company; provided, that the Issuing Bank shall not be obligated
-------- ----
to Issue, and no Bank shall be obligated to participate in, any Letter of Credit
if, as of the date of Issuance of such Letter of Credit (the "Issuance Date"),
-------------
(A) the Effective Amount of all L/C Obligations, W/C Revolving
Loans, and Swingline Loans exceeds the aggregate W/C Revolving Commitments, (B)
the participation of any Bank in the Effective Amount of all L/C Obligations
plus the Effective Amount of the W/C Revolving Loans of such Bank plus the
----
participation of such Bank, if any, in the Effective Amount of all Swingline
Loans exceeds such Bank's W/C Revolving Commitment, or (C) the Effective Amount
of L/C Obligations exceeds the L/C Commitment. Within the foregoing limits, and
subject to the other terms and conditions hereof, the Company's ability to
obtain Letters of Credit shall be fully revolving, and, accordingly, the Company
may, during the foregoing period, obtain Letters of Credit to replace Letters of
Credit which have expired or which have been drawn upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue any Letter of
Credit if:
(i) any order, judgment or decree of any Governmental Authority
or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank
from Issuing such Letter of Credit, or any Requirement of Law applicable to such
Issuing Bank or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over such Issuing Bank
shall prohibit, or request that such Issuing Bank refrain from, the Issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Issuing Bank with respect to such Letter of Credit any
restriction, reserve or
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capital requirement (for which such Issuing Bank is not otherwise compensated
hereunder), or shall impose upon such Issuing Bank any unreimbursed loss, cost
or expense;
(ii) the Issuing Bank has received written notice from any Bank, the
Agent or the Company, on or prior to the Business Day prior to the requested
date of Issuance of such Letter of Credit, that one or more of the applicable
conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (A) more
than one calendar year after the date of Issuance, unless the Majority Banks
have approved such expiry date in writing, or (B) less than 30 days prior to the
Revolving Termination Date, unless all of the Banks have approved such expiry
date in writing ;
(iv) the expiry date of any requested Letter of Credit is prior to the
maturity date of any financial obligation to be supported by the requested
Letter of Credit, unless such Letter of Credit is issued in connection with
worker's compensation or to secure self-insurance deductibles or environmental
clean-up obligations;
(v) any requested Letter of Credit does not provide for drafts, or is
not otherwise in form and substance reasonably acceptable to such Issuing Bank,
or the Issuance of a Letter of Credit may violate any policies of the Issuing
Bank;
(vi) any standby Letter of Credit is for the purpose of supporting the
issuance of any letter of credit by any other Person;
(vii) such Letter of Credit is in a face amount less than $100,000 or
to be denominated in a currency other than Dollars; or
(viii) the requested Letter of Credit provides for payment thereunder
sooner than the Business Day following the presentation to such Issuing Bank of
the documentation required thereunder.
3.2 Issuance, Amendment and Renewal of Letters of Credit.
----------------------------------------------------
(a) Each Letter of Credit shall be issued upon the irrevocable written
request of the Company received by the Issuing Bank (with a copy sent by the
Company to the Agent) at least five days (or such shorter time as such Issuing
Bank may agree in a particular instance in its sole discretion) prior to the
proposed date of issuance. Each such request for issuance of a Letter of Credit
shall be made by an original writing or by facsimile, confirmed immediately in
an original writing, in the form of an L/C Application, and shall specify in
form and detail satisfactory to such Issuing Bank:
(i) the proposed date of issuance of the Letter of Credit (which shall
be a Business Day);
(ii) the face amount of the Letter of Credit;
(iii) the expiry date of the Letter of Credit;
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(iv) the name and address of the beneficiary thereof;
(v) the documents to be presented by the beneficiary of the Letter of
Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and
(vii) such other usual and customary matters as the Issuing Bank may
require.
(b) At least three Business Days prior to the Issuance of any Letter of
Credit or any amendment or renewal of a Letter of Credit, the Issuing Bank will
confirm with the Agent (by telephone or in writing) that the Agent has received
a copy of the L/C Application or L/C Amendment Application from the Company and,
if not, such Issuing Bank will provide the Agent with a copy thereof. Unless
such Issuing Bank has received notice on or before the Business Day immediately
preceding the date such Issuing Bank is to issue, amend or renew a requested
Letter of Credit from the Agent (i) directing such Issuing Bank not to issue,
amend or renew such Letter of Credit because such issuance amendment or renewal
is not then permitted under subsection 3.1(a) as a result of the limitations set
forth in clauses (A) through (C) thereof or subsection 3.1(b)(ii); or (ii) that
one or more conditions specified in Article V are not then satisfied; then,
subject to the terms and conditions hereof, such Issuing Bank shall, on the
requested date, issue a Letter of Credit for the account of the Company or amend
or renew a Letter of Credit, as the case may be, in accordance with such Issuing
Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and prior
to the Revolving Termination Date, the Issuing Bank will, upon the written
request of the Company received by such Issuing Bank (with a copy sent by the
Company to the Agent) at least five days (or such shorter time as such Issuing
Bank may agree in a particular instance in its sole discretion) prior to the
proposed date of amendment, amend any Letter of Credit issued by it. Each such
request for amendment of a Letter of Credit shall be made by an original writing
or by facsimile, confirmed immediately in an original writing, made in the form
of an L/C Amendment Application and shall specify in form and detail
satisfactory to such Issuing Bank:
(i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of Credit (which
shall be a Business Day);
(iii) the nature of the proposed amendment; and
(iv) such other usual and customary matters as such Issuing Bank may
require.
Such Issuing Bank shall be under no obligation to amend any Letter of Credit if:
(A) such Issuing Bank would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms of this Agreement; or (B) the
beneficiary of any such letter of
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Credit does not accept the proposed amendment to the Letter of Credit. The Agent
will promptly notify the Banks of the receipt by it of any L/C Application or
L/C Amendment Application.
(d) The Issuing Bank and the Banks agree that, while a Letter of Credit
is outstanding and prior to the Revolving Termination Date, at the option of the
Company and upon the written request of the Company received by the Issuing Bank
(with a copy sent by the Company to the Agent) at least five days (or such
shorter time as such Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of notification of renewal, such Issuing
Bank shall be entitled to authorize the automatic renewal of any Letter of
Credit issued by it. Each such request for renewal of a Letter of Credit shall
be made by an original writing or by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application, and shall specify
in form and detail satisfactory to such Issuing Bank:
(i) the Letter of Credit to be renewed;
(ii) the proposed date of notification of renewal of the Letter of
Credit (which shall be a Business Day);
(iii) the revised expiry date of the Letter of Credit; and
(iv) such other usual and customary matters as the Issuing Bank may
require.
The Issuing Bank shall be under no obligation so to renew any Letter of Credit
if: (A) such Issuing Bank would have no obligation at such time to issue or
amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed renewal of the Letter of Credit. If any outstanding Letter of
Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from such Issuing Bank that such Letter of
Credit shall not be renewed, and if at the time of renewal such Issuing Bank
would be entitled to authorize the automatic renewal of such Letter of Credit in
accordance with this subsection 3.2(d) upon the request of the Company but the
Issuing Bank shall not have received any L/C Amendment Application from the
Company with respect to such renewal or other written direction by the Company
with respect thereto, the Issuing Bank shall nonetheless be permitted to allow
such Letter of Credit to renew, and the Company and the Banks hereby authorize
such renewal, and, accordingly, the Issuing Bank shall be deemed to have
received an L/C Amendment Application from the Company requesting such renewal.
(e) In connection with Letters of Credit that automatically renew or
extend their expiry date, the Issuing Bank may, at its election (or as required
by the Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than 30 days before the Revolving Termination
Date.
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(f) This Agreement shall control in the event of any conflict or
inconsistency with any L/C-Related Document.
(g) The Issuing Bank will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
(h) The Issuing Bank shall deliver to the Agent such reports with
respect to the Letters of Credit as the Agent may reasonably request from time
to time.
3.3 Risk Participations, Drawings and Reimbursements.
------------------------------------------------
(a) Immediately upon the Issuance of each Letter of Credit, each Bank
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank a participation in such Letter of Credit and each
drawing thereunder in an amount equal to the product of (i) the Pro Rata Share
of such Bank, times (ii) the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively. For purposes of
Section 2.1, each Issuance of a Letter of Credit shall be deemed to utilize the
W/C Revolving Commitment of each Bank by an amount equal to the amount of such
participation.
(b) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the Issuing Bank will promptly notify
the Company. The Company shall reimburse the Issuing Bank, directly or with the
proceeds of a Loan, prior to 10:00 a.m. (San Francisco time), on each date that
any amount is paid by such Issuing Bank under any Letter of Credit (each such
date, an "Honor Date"), in an amount equal to the amount so paid by such Issuing
----------
Bank. If the Company fails to reimburse the Issuing Bank for the full amount of
any drawing under any Letter of Credit by 10:00 a.m. (San Francisco time) on the
Honor Date, the Issuing Bank will promptly notify the Agent and the Agent will
promptly notify each Bank thereof, and the Company shall be deemed to have
requested that Base Rate W/C Revolving Loans be made by the Banks to be
disbursed on the Honor Date under such Letter of Credit, subject to the amount
of the unutilized portion of the Aggregate W/C Revolving Commitment and subject
to the conditions set forth in Section 5.3. Any notice given by such Issuing
Bank or the Agent pursuant to this subsection 3.3(b) may be oral if immediately
confirmed in writing (including by facsimile); provided that the lack of such an
-------- ----
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.
(c) Each Bank shall upon any notice pursuant to subsection 3.3(b) make
available to the Agent for the account of the relevant Issuing Bank an amount in
Dollars and in immediately available funds equal to its Pro Rata Share of the
amount of the drawing, whereupon the participating Banks shall (subject to
subsection 3.3(d)) each be deemed to have made a Loan consisting of a Base Rate
W/C Revolving Loan to the Company in that amount. If any Bank so notified fails
to make available to the Agent for the account of such Issuing Bank the amount
of such Bank's Pro Rata Share of the amount of the drawing by no later than
12:00 noon (San Francisco time) on the Honor Date, then interest shall accrue on
such Bank's obligation to make such payment, from the Honor Date to the date
such Bank makes such payment, at a rate per annum equal to the Federal Funds
Rate in effect from time to time during
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<PAGE>
such period. The Agent will promptly give notice of the occurrence of the Honor
Date, but failure of the Agent to give any such notice on the Honor Date or in
sufficient time to enable any Bank to effect such payment on such date shall not
relieve such Bank from its obligations under this Section 3.3.
(d) With respect to any unreimbursed drawing that is not converted
into Base Rate W/C Revolving Loans to the Company in whole or in part, because
of the Company's failure to satisfy the conditions set forth in Section 5.3 or
for any other reason, the Company shall be deemed to have incurred from the
relevant Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at a rate per annum equal to the Base Rate plus 2% per annum, and
----
each Bank's payment to such Issuing Bank pursuant to subsection 3.3(c) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Bank in satisfaction of its participation
obligation under this Section 3.3.
(e) Each Bank's obligation in accordance with this Agreement to make
the Loans or L/C Advances, as contemplated by this Section 3.3, as a result of a
drawing under a Letter of Credit, shall be absolute and unconditional and
without recourse to the Issuing Bank and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against such Issuing Bank, the Company or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default, an Event of Default or a Material Adverse Change; or (iii) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided, however, that each Bank's obligation to make W/C
-------- -------
Revolving Loans under this Section 3.3 is subject to the conditions set forth in
Section 5.3.
3.4 Repayment of Participations.
---------------------------
(a) Upon (and only upon) receipt by the Agent for the account of the
Issuing Bank of immediately available funds from the Company (i) in
reimbursement of any payment made by the Issuing Bank under a Letter of Credit
with respect to which any Bank has paid the Agent for the account of the Issuing
Bank for such Bank's participation in the Letter of Credit pursuant to Section
3.3 or (ii) in payment of interest thereon, the Agent will pay to each Bank, in
the same funds as those received by the Agent for the account of the Issuing
Bank, the amount of such Bank's Pro Rata Share of such funds, and the Issuing
Bank shall receive the amount of the Pro Rata Share of such funds of any Bank
that did not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to return
to the Company, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Company to the Agent for the account of such Issuing Bank pursuant to subsection
3.4(a) in reimbursement of a payment made under the Letter of Credit or interest
or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the
Agent or such Issuing Bank the amount of its Pro Rata Share of any amounts so
returned by the Agent or such Issuing Bank plus interest thereon from the date
----
such demand is
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made to the date such amounts are returned by such Bank to the Agent or the
Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect from
time to time.
3.5 Role of the Issuing Bank.
------------------------
(a) Each Bank and the Company agree that, in paying any drawing under
a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain
any document (other than any sight draft and certificates expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy
of any such document or the authority of the Person executing or delivering any
such document.
(b) No Agent-Related Person nor any correspondents, participant or
assignee of the Issuing Bank shall be liable to any Bank for: (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Banks (including the Majority Banks, as applicable); (ii) any action taken
or omitted in the absence of gross negligence or willful misconduct; or (iii)
the due execution, effectiveness, validity or enforceability of any L/C-Related
Document.
(c) The Company hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
- -------- -------
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No Agent-
Related Person nor any of the correspondents, participants or assignees of the
Issuing Bank shall be liable or responsible for any of the matters described in
clauses (a) through (g) of Section 3.6; provided, however, notwithstanding
-------- -------
anything in such clauses, that the Company may have a claim against the Issuing
Bank, and the Issuing Bank may be liable to the Company, to the extent, but only
to the extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Company which the Company proves were caused by the Issuing
Bank's willful misconduct or gross negligence or the Issuing Bank's willful or
grossly negligent failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing: (i) each Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) such Issuing Bank shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.6 Obligations Absolute.
--------------------
The obligations of the Company under this Agreement and any L/C-Related
Document to reimburse the Issuing Bank for a drawing under a Letter of Credit,
and to repay any L/C Borrowing and any drawing under a Letter of Credit
converted into Loans shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other L/C-
Related Document under all circumstances, including the following:
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(a) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Company in respect of any
Letter of Credit or any other amendment or waiver of or any consent to departure
from all or any of the L/C-Related Documents;
(c) the existence of any claim, set-off, defense or other right that
the Company may have at any time against any beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;
(d) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit;
(e) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by the Issuing Bank
under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of any Letter of Credit, including any arising in connection
with any Insolvency Proceeding;
(f) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Company in respect of any
Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Company or a
guarantor.
3.7 Cash Collateral Pledge.
----------------------
Upon the request of the Agent, if (a) the Issuing Bank has honored any
full or partial drawing request on any Letter of Credit and such drawing has
resulted in an L/C Borrowing hereunder, or (b) if, as of the Revolving
Termination Date, any Letters of Credit may for any reason remain outstanding
and partially or wholly undrawn, then, the Company shall immediately Cash
Collateralize the L/C Obligations in an amount equal to the L/C Obligations. The
Company hereby grants to the Agent, for the benefit of the Agent, the Issuing
Bank and the Banks, a security interest in all such cash and deposit account
balances used to Cash Collateralize the Company's obligations hereunder.
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3.8 Letter of Credit Fees.
---------------------
(a) The Company shall pay to the Agent for the account of each of the
Banks a letter of credit fee with respect to the Letters of Credit on the
average daily maximum amount available to be drawn of the outstanding Letters of
Credit, computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter based upon Letters of Credit outstanding for that quarter
as calculated by the Agent, equal to the Letter of Credit Rate. Such letter of
credit fees shall be due and payable quarterly in arrears on the last Business
Day of each calendar quarter during which Letters of Credit are outstanding,
commencing on the first such quarterly date to occur after the Closing Date,
through the Revolving Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be made
on the Revolving Termination Date (or such later expiration date).
(b) The Company shall pay to the Agent for the account of the Issuing
Bank a letter of credit fronting fee equal to 0.125% per annum of the average
daily maximum amount available to be drawn under outstanding Letters of Credit,
computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter. Such fronting fees shall be due and payable quarterly in
arrears on the last Business Day of each calendar quarter during which Letters
of Credit are outstanding, commencing on the first such quarterly date to occur
after the Closing Date, through the Revolving Termination Date (or such later
date upon which the outstanding Letters of Credit shall expire), with the final
payment to be made on the Revolving Termination Date (or such later expiration
date).
(c) The Company shall pay to the Issuing Bank from time to time on
demand the normal issuance, presentation, amendment and other processing fees,
and other standard costs and charges, of the Issuing Bank relating to letters of
credit as from time to time in effect.
3.9 Uniform Customs and Practice.
----------------------------
The Uniform Customs and Practice for Documentary Credits as published by
the International Chamber of Commerce ("UCP") most recently at the time of
---
issuance of any Letter of Credit shall (unless otherwise expressly provided in
the Letters of Credit) apply to the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
4.1 Taxes.
-----
(a) Subject to subsection 4.1(f), any and all payments by the Company
to each Bank or the Agent under this Agreement and any other Loan Document shall
be made free and clear of, and without deduction or withholding for, any Taxes.
In addition, the Company shall pay all Other Taxes.
43
<PAGE>
(b) If the Company shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section),
such Bank or the Agent, as the case may be, receives and retains an amount
equal to the sum it would have received and retained had no such deductions
or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or withheld
to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Company shall also pay to each Bank or the Agent for the
account of such Bank, at the time interest is paid, Further Taxes in the
amount that the respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank and
the Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii) Further
Taxes in the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed, and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank or
the Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to such Bank or the Agent.
(e) If the Company is required to pay any amount to any Bank or the
Agent pursuant to subsection (b) or (c) of this Section, then such Bank shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if such change in
the sole judgment of such Bank is not otherwise disadvantageous to such Bank.
(f) The Company will not be required to pay any additional amounts in
respect of Taxes constituting United States federal income tax to the Agent or
any Bank for the account of any Lending Office of such Bank: (i) if the
obligation to pay such additional amounts would not have arisen but for a
failure by such Bank to comply with its obligations under Section 12.10 in
respect of such Lending Office, or (ii) if such Bank shall have delivered to the
Company a Form 4224, Form 1001, or Form W-8 in respect of such Lending Office
pursuant to Section 12.10 and such Bank shall not at any time be entitled to
exemption from
44
<PAGE>
deduction or withholding of United States federal income tax in respect of
payments by the Company hereunder for the account of such Lending Office for any
reason other than a change in United States law or regulation or in the official
interpretation or administration thereof (whether or not having the force of
law) after the date of delivery of such form.
4.2 Illegality.
----------
(a) If any Bank determines that the introduction of any Requirement of
Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for that Bank or its applicable Lending Office to make Offshore Rate Loans,
then, on notice thereof by the Bank to the Company through the Agent, any
obligation of that Bank to make Offshore Rate Loans shall be suspended until the
Bank notifies the Agent and the Company that the circumstances giving rise to
such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any Offshore
Rate Loan, the Company shall, upon its receipt of notice of such fact and demand
from such Bank (with a copy to the Agent), prepay in full such Offshore Rate
Loans of that Bank then outstanding, together with interest accrued thereon and
amounts required under Section 4.4, either on the last day of the Interest
Period thereof, if the Bank may lawfully continue to maintain such Offshore Rate
Loans to such day, or immediately, if the Bank may not lawfully continue to
maintain such Offshore Rate Loan. If the Company is required to so prepay any
Offshore Rate Loan, then concurrently with such prepayment, the Company shall
borrow from the affected Bank, in the amount of such repayment, a Base Rate
Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank through the Agent that all Loans which would otherwise be
made by that Bank as Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of that Bank, be
illegal or otherwise disadvantageous to that Bank.
4.3 Increased Costs and Reduction of Return.
---------------------------------------
(a) Without duplication of amounts that may be required to be paid
pursuant to subsection 4.3(b) but subject to Section 4.7, if any Bank determines
that, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation after the date hereof, or (ii) the
compliance by that Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law)
promulgated or made after the date hereof, there shall be any increase in the
cost to such Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans or issuing or maintaining any Letter of Credit, then the
Company shall be liable for, and shall from time to time, upon demand (with
45
<PAGE>
a copy of such demand to be sent to the Agent), pay to the Agent for the account
of such Bank, additional amounts as are sufficient to compensate such Bank for
such increased costs.
(b) Subject to Section 4.7, if any Bank determines that (i) the
introduction of any Capital Adequacy Regulation after the date hereof, (ii) any
change in any Capital Adequacy Regulation, or (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof affects or would affect the amount of capital required or
expected to be maintained by that Bank (or any Lending Office) or any
corporation controlling such Bank and (taking into consideration such Bank's or
such corporation's policies with respect to capital adequacy and such Bank's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its W/C Revolving, Acquisition Revolving, L/C, or
Swingline Commitments, loans, credits or obligations under this Agreement, then,
upon demand of such Bank to the Company through the Agent, the Company shall pay
to such Bank, from time to time as specified by such Bank, additional amounts
sufficient to compensate such Bank for such increase.
4.4 Funding Losses.
--------------
Subject to Section 4.7, the Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any payment
of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert an
Offshore Rate Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment of an Offshore
Rate Loan in accordance with any notice delivered under Section 2.5;
(d) the prepayment (including pursuant to Section 2.6) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Banks under this Section and
under subsection 4.3(a), each Offshore Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
46
<PAGE>
4.5 Inability to Determine Rates.
----------------------------
If the Agent or the Majority Banks determine that for any reason adequate
and reasonable means do not exist for determining the Offshore Rate for any
requested Interest Period with respect to a proposed Offshore Rate Loan or that
the Offshore Rate applicable pursuant to subsection 2.8(a) for any requested
Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to such Banks of funding such Loan, the
Agent will promptly so notify the Company and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans, as the case may
be, hereunder shall be suspended until the Agent upon the instruction of the
Majority Banks revokes such notice in writing. Upon receipt of such notice, the
Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by it. If the Company does not revoke such Notice, the Banks
shall make, convert or continue the Loans, as proposed by the Company, in the
amount specified in the applicable notice submitted by the Company, but such
Loans shall be made, converted or continued as Base Rate Loans instead of
Offshore Rate Loans, as the case may be.
4.6 Reserves on Offshore Rate Loans.
-------------------------------
The Company shall pay to each Bank, as long as such Bank shall be required
under regulations of the FRB to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits (currently
known as "Eurocurrency liabilities"), additional costs on the unpaid principal
------------------------
amount of each Offshore Rate Loan equal to the actual costs of such reserves
allocated to such Loan by the Bank (as determined by the Bank in good faith,
which determination shall be conclusive) payable on each date on which interest
is payable on such Loan, provided the Company shall have received at least 15
days' prior written notice (with a copy to the Agent) of such additional
interest from the Bank. If a Bank fails to give notice 15 days prior to the
relevant Interest Payment Date, such additional interest shall be payable 15
days from receipt of such notice.
4.7 Certificates of Banks; Limitation on Demand.
-------------------------------------------
Any Bank claiming reimbursement or compensation under this Article IV shall
deliver to the Company (with a copy to the Agent) a certificate setting forth in
reasonable detail the amount payable to the Bank hereunder and such certificate
shall be conclusive and binding on the Company in the absence of manifest error.
No Bank shall be entitled to claim reimbursement or compensation pursuant to
Sections 4.3 or 4.4 for any period more than 180 days before the date such
certificate is so delivered.
4.8 Substitution of Banks.
---------------------
Upon the receipt by the Company from any Bank (an "Affected Bank") of a
-------------
claim for compensation under Section 4.1, 4.3, or 4.6 or an assertion of
illegality that is not applicable to all Banks pursuant to Section 4.2, the
Company may: (i) request the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution (in each case, which shall be an
Eligible Assignee) satisfactory to the Company and to the Agent (a "Replacement
-----------
Bank") to acquire and assume all or a ratable part of all of such Affected
- ----
Bank's Loans, L/C Obligations,
47
<PAGE>
participations in Swingline Loans, and W/C Revolving Commitment and Acquisition
Revolving Commitment, as applicable, and if such Affected Bank or any Affiliate
thereof is a Swap Provider, all Swap Contracts of such Affected Bank and
Affiliate; (ii) request one more of the other Banks to acquire and assume all or
part of such Affected Bank's Loans and Commitment; or (iii) designate a
Replacement Bank. Any such designation of a Replacement Bank under clause (i) or
(iii) shall be effected in accordance with the assignment provisions contained
in Section 11.8); provided, however, that the Company shall be liable for any
-------- -------
amounts arising pursuant to Section 4.4 as a result of the substitution of any
Bank(s) under this Section 4.8 on a date other than the last day of an Interest
Period with respect to outstanding Offshore Rate Loans.
4.9 Survival.
--------
The agreements and obligations of the Company in this Article IV shall
survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
--------------------
5.1 Conditions of Initial Loan.
--------------------------
The obligation of each Bank to make its initial Loan hereunder, is subject
to the condition that the Agent shall have received all of the following, in
form and substance satisfactory to the Agent and each Bank, and in sufficient
copies for each Bank:
(a) Credit Agreement.
----------------
This Agreement executed by each party thereto, and Notes (for those
Banks having requested them) executed by the Company;
(b) Authorization Documents.
-----------------------
For each of the Company and the Managing Member, a certificate
executed by the Secretary of such Person dated the Closing Date, certifying that
(i) such Person has the authority to execute, deliver and perform its
obligations under each of the Loan Documents or the Operating Agreement, as
applicable, (ii) attached behind Exhibit A to such certificate is a true,
---------
correct and complete copy of (A) the operating agreement of such Person then in
full force and effect, and (B) the certificate of formation such Person
certified by the Secretary of State of the State of Delaware as of a date not
more than ten (10) Business Days prior to the Closing Date, (iii) attached
behind Exhibit B to such certificate is a true, correct and complete copy of the
---------
resolutions adopted by the members such Person then in full force and effect
authorizing the execution, delivery and performance by such Person of each of
the Loan Documents, (iv) attached behind Exhibit C to such certificate is a
---------
true, correct and complete copy of such Person's membership list, (v) attached
behind Exhibit D to such certificate is a certificate of the Secretary of State
---------
of the state of Delaware and of each of the states set forth under such Person's
name in Schedule 5.1(a), in each case dated as of a date not more than fifteen
---------------
(15)
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<PAGE>
Business Days prior to the Closing Date, stating that such Person is in
good standing in such states, (vi) the name(s) of the Person(s) authorized to
execute Loan Documents or the Operating Agreement, as applicable, on behalf of
such Person, together with a sample of the true signatures of such Person(s),
and (vii) the Banks and the Agent may conclusively rely on such certificate
unless and until such Person shall have delivered to the Agent a further
certificate canceling or amending such prior certificate;
(c) Legal Opinions.
--------------
An opinion of Andrews & Kurth, L.L.P., special counsel to the Company,
addressed to the Agent and the Banks, substantially in the form of Exhibit I;
(d) Payment of Fees.
---------------
Evidence of payment by the Company of all accrued and unpaid fees,
costs and expenses to the extent due and payable pursuant to the terms of any
Loan Document on the Closing Date, together with Attorney Costs of BofA to the
extent invoiced prior to or on the Closing Date, plus such additional amounts of
----
Attorney Costs as shall constitute BofA's reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude final settling of accounts between
the Company and BofA), including any such costs, fees and expenses arising under
or referenced in subsections 2.10(a) and 11.4(a).
(e) Certificates.
------------
Certificates signed by an authorized officer of the Company, dated as
of the Closing Date, stating that:
(i) the representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and as of
such date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and
correct as of such earlier date);
(ii) no Default or Event of Default exists or would result from
the initial Borrowing; and
(iii) the Conveyance Agreements have been duly executed and
delivered by Old Services.
(f) Equity Offering.
---------------
The MLP shall have received gross issuance proceeds from the Equity
Offering in a minimum aggregate amount of $155,000,000, and the Net Issuance
Proceeds thereof shall have been contributed to the Company as equity;
49
<PAGE>
(g) Debt Offering.
-------------
The Company shall have received gross issuance proceeds from the Debt
Offering in a minimum aggregate amount of $225,000,000;
(h) Repayment of Existing Debt.
--------------------------
All Obligations (as defined therein) under the Existing Credit
Agreement and all Obligations (as defined therein) under the Holdings Credit
Agreement shall have been repaid in full (or satisfactory arrangements for
simultaneous repayment in full shall have been made) and all commitments of the
lenders thereunder terminated;
(i) Compliance Certificate.
----------------------
A Compliance Certificate for the fiscal quarter ended on September 30,
1997 dated as of the last day of such fiscal quarter, duly executed by a
Responsible Officer, with appropriate insertions satisfactory to the Agent and
the Majority Banks, which Compliance Certificate will evidence computation of
the relevant financial ratios set forth in Sections 8.14, 8.15, and 8.16 even
though the covenants relating thereto are not applicable with respect to such
fiscal quarter; such Compliance Certificate need not evidence compliance with
such financial covenants;
(j) Quarterly Timber Report.
-----------------------
A Quarterly Timber Report for the fiscal quarter ended on September
30, 1997 complying with the requirements of subsection 7.2(e).
(k) Other Documents.
---------------
Such other approvals, opinions, documents or materials as the Agent or
any Bank may reasonably request.
5.2 Conditions to Acquisition Revolving Loans.
-----------------------------------------
The obligation of each Bank to make Acquisition Revolving Loans hereunder
(other than the initial Acquisition Loans to be made on the Closing Date to
repay Indebtedness under the Existing Credit Agreement in an aggregate amount
not to exceed $26,000,000) is subject to the condition that the Agent has
received a certificate of a Responsible Officer, in form and substance
reasonably satisfactory to the Agent and the Majority Banks, with sufficient
copies for each Bank, confirming, together with supporting financial information
and with such level of detail as the Agent or the Majority Banks may reasonably
request, that, on a pro forma basis after giving effect to the Acquisition in
question, the Company would have been in compliance with the financial covenants
contained in Sections 8.14 through 8.18, inclusive, at the last day of the most
recently ended fiscal quarter of the Company for which financial statements have
been delivered hereunder giving pro forma effect on a consolidated basis to such
Acquisition and to the repayment or prepayment of any Indebtedness repaid or
prepaid in connection thereiwth and to the incurrence of any Indebtedness
arising therefrom (including the requested
50
<PAGE>
Acquisition Revolving Loans) in each case on the first day of each relevant
period for testing such compliance.
5.3 Conditions to All Borrowings and Issuances of Letters of Credit.
----------------------------------------------------------------
The obligation of each Bank, including the Swingline Bank and Issuing Bank,
to make any Loan to be made by it or to issue any Letter of Credit (including
its initial Loan or Letter of Credit) or to continue or convert any Loan as or
into an Offshore Rate Loan under Section 2.4 or to amend or extend any Letter of
Credit is subject to the satisfaction of the following conditions precedent on
the relevant Borrowing Date, Conversion/Continuation Date or date of issuance:
(a) Notice of Borrowing, Conversion/Continuation or Letter of Credit
----------------------------------------------------------------
Application.
-----------
The Agent shall have received (with, in the case of the initial Loan
only, a copy for each Bank) a Notice of Borrowing, Notice of
Conversion/Continuation, or Letter of Credit Application, as applicable;
(b) Continuation of Representations and Warranties.
----------------------------------------------
The representations and warranties in Article VI shall be true and
correct on and as of such date with the same effect as if made on and as of such
date (except to the extent such representations and warranties expressly refer
to an earlier date, in which case they shall be true and correct as of such
earlier date); and
(c) No Existing Default.
-------------------
No Default or Event of Default shall exist or shall result from such
Borrowing, continuation, conversion or Issuance.
Each Notice of Borrowing, Notice of Conversion/Continuation and Letter of Credit
Obligation submitted by the Company hereunder shall constitute a representation
and warranty by the Company hereunder, as of the date of each such notice and as
of each Borrowing Date, Conversion/Continuation Date, or issuance date, as
applicable, that the conditions in this Section 5.3 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company, represents and warrants to the Agent and each Bank that:
6.1 Existence and Power. The Company, each of its Subsidiaries and each Related
-------------------
Entity:
(a) is a corporation, limited liability company or limited partnership
duly formed or organized, validly existing and in good standing under the laws
of the jurisdiction of its formation or organization, as the case may be;
51
<PAGE>
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to (i) own its assets, carry on its
business and (ii) in the case of the Company, to execute, deliver, and perform
its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation, limited liability
company or limited partnership and is licensed and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clauses (b)(i), (c) or (d), to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.2 Corporate Authorization; No Contravention.
-----------------------------------------
The execution, delivery and performance by the Company of this Agreement
and each other Loan Document have been duly authorized by all necessary
corporate action, and do not and will not:
(a) contravene the terms of any of its Organization Documents;
(b) result in any breach or contravention of, or the creation of any
Lien under, any document evidencing any material Contractual Obligation to which
it is a party or any order, injunction, writ or decree of any Governmental
Authority to which it or its property is subject; or
(c) violate any Requirement of Law.
6.3 Governmental Authorization.
--------------------------
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Company of this Agreement or any other Loan Document except (1)
routine informational filings to be made after the Closing Date that do not
affect the enforcability of the Loan Documents and (2) reconveyances and
terminations of Liens securing the Existing Credit Agreement.
6.4 Binding Effect.
--------------
This Agreement and each other Loan Document to which the Company is a party
constitute the legal, valid and binding obligations of the Company, enforceable
against it in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting the enforcement of creditors' rights generally or by general
equitable principles whether considered in a proceeding at law or in equity
(including principles of materiality, reasonableness, good faith, and fair
dealing).
52
<PAGE>
6.5 Litigation.
----------
There are no actions, suits, proceedings, claims or disputes pending, or to
the best knowledge of the Company, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, against the
Company, its Subsidiaries, the Related Entities or any of their respective
properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, the Debt Offering, the Equity Offering, or any of the transactions
contemplated hereby or thereby; or
(b) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
6.6 No Default.
----------
No Default or Event of Default exists or would result from the incurring of
any Obligations by the Company. As of the Closing Date, neither the Company nor
any Subsidiary is in default under or with respect to any Contractual Obligation
in any respect which, individually or together with all such defaults, could
reasonably be expected to have a Material Adverse Effect, or that would, if such
default had occurred after the Closing Date, constitute an Event of Default
under subsection 9.1(e).
6.7 ERISA Compliance. Except as specifically disclosed in Schedule 6.7:
---------------- ------------
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Company, nothing has occurred which would cause the loss of such qualification.
The Company and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Company nor any
53
<PAGE>
ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Company
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
6.8 Use of Proceeds; Margin Regulations.
-----------------------------------
The proceeds of the Loans are to be used solely for the purposes set forth
in and permitted by Section 7.12 and Section 8.7. Neither the Company nor any
Subsidiary is generally engaged in the business of purchasing or selling Margin
Stock or extending credit for the purpose of purchasing or carrying Margin
Stock.
6.9 Title to Properties.
-------------------
The Company and each Subsidiary have good record and marketable title in
fee simple to, or valid leasehold interests in, all real property necessary or
used in the ordinary conduct of their respective businesses, except for such
defects in title as could not, individually or in the aggregate, have a Material
Adverse Effect. As of the Closing Date, the property of the Company and its
Subsidiaries is subject to no Liens, other than Permitted Liens. The Conveyance
Agreements will be, as of the Closing Date, legally sufficient to transfer or
convey to the Company all properties not already held by it that are,
individually or in the aggregate, required to enable the Company to conduct its
operations as contemplated by the S-1.
6.10 Taxes.
-----
The Company and its Subsidiaries have filed (or have obtained extensions
with respect to) all Federal and other material tax returns and reports required
to be filed, and have paid all Federal and other material taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against the Company or any Subsidiary that would, if made, have a
Material Adverse Effect.
6.11 Financial Condition.
-------------------
(a) The audited combined balance sheets of the Company and Old
Services dated December 31, 1996 and unaudited combined balance sheets of the
Company and Old Services dated June 30, 1997 provided to the Agent and the
Banks, and the related consolidated statements of income or operations, members'
equity and cash flows for the fiscal year and two fiscal quarters, respectively,
ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
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(ii) fairly present the financial condition of the Company and
Old Sevices as of the dates thereof and results of operations for the
period covered thereby; and
(iii) show all material indebtedness and other liabilities,
direct or contingent, of the Company and Old Services as of the dates
thereof, including liabilities for taxes, material commitments and
Contingent Obligations.
(b) The pro forma unaudited consolidated financial statements of the
Company dated June 30, 1997 provided to the Agent and the Banks, and the related
pro forma consolidated statements of income or operations, members' equity and
cash flows for the two fiscal quarters ended on that date, fairly present on a
pro forma basis the effect of the transfer of the assets of Old Services to the
Company at the beginning of such period upon the combined financial performance
of the Company and Old Services described in the financial statements referenced
in subsection 6.11(a) for the two fiscal quarters ending on that date. The
Company will, upon execution and delivery of the Conveyance Agreements on the
Closing Date, succeed in all material respects to the business, assets,
properties, liabilities and operations reflected by those pro forma financial
statements of the Company other than $1,000,000 in cash or cash equivalents
being retained in Old Services.
(c) All projections heretofore or hereafter furnished to the Agent and
the Banks for purposes of or in connection with this Agreement have been
prepared in good faith on the basis of the assumptions stated therein, which
assumptions are, in the opinion of the management of the Company, fair in the
light of conditions existing at the time of delivery of such projections; and at
the time of delivery, the management of the Company believed that the forecasts
of the Company's future financial performance set forth in the projections were
reasonable and attainable.
(d) Since June 30, 1997, there has been no Material Adverse Effect.
6.12 Environmental Matters.
---------------------
The Company conducts in the Ordinary Course of Business a review of the
effect of existing Environmental Laws and existing Environmental Claims on its
business, operations and properties, and as a result thereof the Company has
reasonably concluded that, except as specifically disclosed in Schedule 6.12,
-------------
such Environmental Laws and Environmental Claims could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
6.13 Regulated Entities.
------------------
None of the Company, any Related Entity, any Person controlling the
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. Neither the Company nor any Related Entity is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code
to which it is subject, or any other statute or regulation of the United States
or any such state limiting its ability to incur Indebtedness.
55
<PAGE>
6.14 No Burdensome Restrictions.
--------------------------
Neither the Company nor any Subsidiary nor any Related Entity is a party to
or bound by any Contractual Obligation, or subject to any restriction in any
Organization Document, or any Requirement of Law, which could reasonably be
expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc.
-------------------------------------------------
The Company or its Subsidiaries own or are licensed or otherwise have the
right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Company or any Subsidiary infringes upon any rights held by any
other Person. Except as specifically disclosed in Schedule 6.5, no claim or
------------
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
6.16 Subsidiaries.
------------
As of the Closing Date, the Company has no Subsidiaries other than Finance
and has no equity investments in any other corporation or entity.
6.17 Insurance.
---------
The properties of the Company and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the
Company, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or such Subsidiary operates.
6.18 Swap Obligations.
----------------
Neither the Company nor any of its Subsidiaries has incurred any
outstanding obligations under any Swap Contracts, other than Permitted Swap
Obligations. The Company has undertaken its own independent assessment of its
consolidated assets, liabilities and commitments and has considered appropriate
means of mitigating and managing risks associated with such matters and has not
relied on any swap counterparty or any Affiliate of any swap counterparty in
determining whether to enter into any Swap Contract.
6.19 Full Disclosure.
---------------
None of the representations or warranties made by the Company in the Loan
Documents as of the date such representations and warranties are made or deemed
made, and
56
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none of the statements contained in any exhibit, written report, statement or
certificate furnished by or on behalf of the Company or any Subsidiary in
connection with the Loan Documents or the S-1 (including the offering and
disclosure materials delivered by or on behalf of the Company to the Banks prior
to the Closing Date), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
ARTICLE VII
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall have any W/C Revolving Commitment or Acquisition
Revolving Commitment hereunder, or the Swingline Bank shall have any Swingline
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the
Majority Banks waive compliance in writing:
7.1 Financial Statements.
--------------------
The Company shall deliver to the Agent, in form and detail satisfactory to
the Agent and the Majority Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the end of
each fiscal year (commencing with the fiscal year ended December 31, 1997), a
copy of the audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidated statements
of income or operations, members' equity and cash flows for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
and accompanied by the opinion of Arthur Andersen L.L.P. or another nationally-
recognized independent public accounting firm ("Independent Auditor"), which
-------------------
report shall state that such consolidated financial statement presents fairly
the financial position of the Company and its Subsidiaries for the periods
indicated in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise stated therein). Such opinion shall not be qualified or
limited because of a restricted or limited examination by the Independent
Auditor of any material portion of the Company's or any Subsidiary's records;
(b) as soon as available, but not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year (commencing with the
fiscal quarter ended March 31, 1998), a copy of the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the end of such quarter
and the related consolidated statements of income, members' equity and cash
flows for the period commencing on the first day and ending on the last day of
such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to the absence of footnotes and ordinary year-end
audit adjustments), the financial position and the results of operations of the
Company and its Subsidiaries.
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7.2 Certificates; Other Information.
-------------------------------
The Company shall furnish to the Agent, with sufficient copies for each
Bank:
(a) concurrently with each delivery of financial statements of the Company
pursuant to subsection 7.1(a), a certificate of the Independent Auditor (i)
stating that their audit examination has included a review of the terms of this
Agreement as it relates to accounting matters, (ii) stating whether, in
connection with their audit examination, any condition or event which
constitutes a Default or an Event of Default as they relate to accounting
matters has come to their attention, and if such a condition or event has come
to their attention, specifying the nature and period of existence thereof, and
(iii) stating that based on their audit examination nothing has come to their
attention which causes them to believe that the matters set forth in the
Compliance Certificate delivered therewith for the applicable fiscal year are
not stated in accordance with the terms of this Agreement; provided that such
-------- ----
accountants shall not be liable by reason of any failure to obtain knowledge of
any such Default or Event of Default that would not be disclosed in the course
of their audit examination;
(b) concurrently with the delivery of the financial statements referred to
in subsections 7.1(a) and (b), a Compliance Certificate executed by a
Responsible Officer, which Compliance Certificate for the fourth fiscal quarter
in each fiscal year shall also include a reconciliation of the Quarterly Timber
Reports for such fiscal year with the Annual Timber Report for such fiscal year;
(c) promptly, copies, within 15 days of the filing thereof, of all
financial statements and reports that the Company, its Subsidiaries or any
Related Entity sends to its shareholders, and copies of all financial statements
and regular, periodical or special reports (including Forms 10K, 10Q and 8K)
that the Company, its Subsidiaries or any Related Entity may make to, or file
with, the SEC;
(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the Agent, at
the request of any Bank, may from time to time reasonably request;
(e) as soon as practicable and in any event within sixty (60) days after
the end of each fiscal quarter, a certificate duly executed by a Responsible
Officer, certifying and setting forth a complete report of all Timber Harvest
for such fiscal quarter (the "Quarterly Timber Report"), including the
-----------------------
following:
(i) a summary of activity, including a breakdown of harvesting under
stumpage agreements and under other types of agreements, during such fiscal
quarter under (A) all outstanding timber cutting contracts or log sale
agreements or auctions or sales of logs conducted orally on the Timberlands
whereby the Company, as seller, is or may become obligated to cut, harvest or
otherwise remove Timber from the Timberlands and to sell or deliver such Timber
to third Persons, and (B) all stumpage and other Timber cutting contracts;
(ii) a summary of the total amount of Timber cut during such fiscal
quarter classified by species, total volumes removed and acreage disposed of
with such additional details as the Majority Banks may reasonably request;
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<PAGE>
(iii) an estimate of Timber growth during such fiscal quarter,
provided that, regardless of the actual amount of such estimate, the addition to
Merchantable Timber Inventory for any fiscal Quarter based upon such estimate
shall not exceed 1% of Merchantable Timber Inventory at the end of the
immediately preceding fiscal quarter;
(iv) all dispositions of Timberlands or other material assets by the
Company or any Subsidiary during such fiscal quarter;
(v) all proceeds received and revenues generated by such cutting,
harvesting, sale, exchange, or disposition during such fiscal quarter and any
other receipts from operation of the Timberlands such as wood use fees;
(vi) a summary of operating costs incurred in connection with such
cutting, harvesting, or removal during such fiscal quarter; and
(vii) a summary of the status of timber-harvesting and similar
permits applied for and received by the Company as of the end of such fiscal
quarter;
(f) as soon as practicable, and in any event within sixty (60)) days after
the end of each fiscal year commencing with fiscal year 1998, a written
appraisal prepared by an independent timber appraiser of recognized standing
satisfactory to the Majority Banks and the Agent as to the volume and fair
market value of the Merchantable Timber standing on the Timberlands (an "Annual
------
Timber Report");
- -------------
(g) no later than sixty (60)) days after the end of each fiscal year
commencing with fiscal year 1998, a one (1) year and five (5) year harvesting
plan for the Timberlands for the next succeeding fiscal year and five (5) fiscal
years, showing, in each case for each month during each such fiscal year, the
total harvest volume by species, the location of proposed cutting, the
specifications and size of trees to be cut and how such trees shall be
designated, the time period in which harvesting is to occur, logging methods to
be used and the Planned Volume of annual harvests; and
(h) no later than sixty (60)) days after the end of each fiscal year
commencing with fiscal year 1998, a one (1) year (prepared on a quarterly basis)
and five (5) year budget and business plan for the next fiscal year, each
including a pro forma balance sheet and statements of income and cash flows and
showing projected operating revenues, expenses and debt service of the Company
and its Subsidiaries and the volume of harvesting anticipated to be done under
stumpage agreements and under other types of agreements, and a certification by
a Responsible Officer that, based on such financial forecasts and the one year
harvesting plans being simultaneously furnished to the Agent and the Banks
pursuant to subsection 7.2(g), the Company will be able to comply with its
financial covenants set forth in Article VIII during the next fiscal year.
7.3 Notices.
-------
The Company shall promptly notify the Agent and each Bank:
(a) upon a Responsible Officer obtaining knowledge thereof, of the
occurrence of any Default or Event of Default, or of the occurrence or existence
of any event or circumstance that foreseeably will become a Default or Event of
Default;
59
<PAGE>
(b) upon a Responsible Officer obtaining knowledge thereof, of any matter
that has resulted or may result in a Material Adverse Effect, including (i)
breach or non-performance of, or any default under, a Contractual Obligation of
the Company or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding between the Company or any Subsidiary and any Governmental Authority
or the suspension of any permit issued by any Governmental Authority for the
benefit of the Company or any Subsidiary; or (iii) the commencement of, or any
material and adverse development in, any litigation or proceeding affecting the
Company or any Subsidiary; including pursuant to any applicable Environmental
Laws;
(c) of the occurrence of any of the following events affecting the Company
or any ERISA Affiliate (but in no event more than 10 days after such event), and
deliver to the Agent and each Bank a copy of any notice with respect to such
event that is filed with a Governmental Authority and any notice delivered by a
Governmental Authority to the Company or any ERISA Affiliate with respect to
such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability.
(d) of any material change in accounting policies or financial reporting
practices by the Company or any of its consolidated Subsidiaries; and
(e) upon the request from time to time of the Agent, the Swap Termination
Values, together with a description of the method by which such values were
determined, relating to any then-outstanding Swap Contracts to which the Company
or any of its Subsidiaries is party.
Each notice under subsections (a), (b), (c) or (d) of this Section shall be
accompanied by a written statement by a Responsible Officer setting forth
details of the occurrence referred to therein, and stating what action the
Company or any affected Subsidiary proposes to take with respect thereto and at
what time. Each notice under subsection 7.3(a) shall describe with
particularity any and all clauses or provisions of this Agreement or other Loan
Document that have been (or foreseeably will be) breached or violated.
7.4 Preservation of Existence, Etc.
------------------------------
The Company shall, and shall cause each Related Entity and each Subsidiary
to:
(a) preserve and maintain in full force and effect its limited
liability company, limited partnership, or corporate existence and good standing
under the laws of its state or jurisdiction of formation or of incorporation;
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<PAGE>
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business except in connection with
transactions permitted by Section 8.3 and sales of assets permitted by Section
8.2;
(c) use reasonable efforts, in the Ordinary Course of Business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
7.5 Maintenance of Property.
-----------------------
The Company shall maintain, and shall cause each Subsidiary to maintain,
and preserve all its property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted, and make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect, except as permitted by Section 8.2.
7.6 Insurance.
---------
The Company shall maintain, and shall cause each Subsidiary to maintain,
with financially sound and reputable independent insurers, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.7 Payment of Obligations.
----------------------
The Company shall, and shall cause each Subsidiary to, pay and discharge as
the same shall become due and payable, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets; and
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property;
unless the same are being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained by the Company or
such Subsidiary.
7.8 Compliance with Laws.
--------------------
The Company shall comply, and shall cause each Subsidiary to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act), except such as may be contested in good faith or as to which a
bona fide dispute may exist.
61
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7.9 Compliance with ERISA.
---------------------
The Company shall, and shall cause each of its ERISA Affiliates to: (a)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; and (c) make all required contributions to any Plan subject to
Section 412 of the Code.
7.10 Inspection of Property and Books and Records.
--------------------------------------------
The Company shall maintain and shall cause each Subsidiary to maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Company and
such Subsidiary. The Company shall permit, and shall cause Related Entity and
each Subsidiary to permit, representatives and independent contractors of the
Agent or any Bank to visit and inspect any of their respective properties, to
examine their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and independent
public accountants, all at the expense of the Company and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Company; provided, however, when an Event
of Default exists the Agent or any Bank may do any of the foregoing at the
expense of the Company at any time during normal business hours and without
advance notice.
7.11 Environmental Laws.
------------------
The Company shall, and shall cause each Subsidiary to, conduct its
operations and keep and maintain its property in compliance with all
Environmental Laws except for such violations that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
7.12 Use of Proceeds.
---------------
The Company shall use the proceeds of the (a) W/C Revolving Loans for
working capital and general corporate purposes, and (b) the Acquisition
Revolving Loans for the cost (including related fees, commissions and expenses)
of the acquisition of timberlands, standing timber, and related assets, and with
respect to only the initial Acquisition Revolving Loan to be made on the Closing
Date, to repay existing Indebtedness of the Company in an amount not to exceed
$26,000,000, in all cases not in contravention of any Requirement of Law or of
any Loan Document.
ARTICLE VIII
NEGATIVE COVENANTS
------------------
So long as any Bank shall have any W/C Revolving Commitment or Acquisition
Revolving Commitment hereunder, or the Swingline Bank shall have any Swingline
62
<PAGE>
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the
Majority Banks waive compliance in writing:
8.1 Limitation on Liens.
-------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
directly or indirectly, make, create, incur, assume or suffer to exist any Lien
upon or with respect to any part of its property, whether now owned or hereafter
acquired, other than the following ("Permitted Liens"):
---------------
(a) any Lien existing on property of the Company or any Subsidiary on the
Closing Date and set forth in Schedule 8.1 securing Indebtedness outstanding on
------------
such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges which
are not delinquent or remain payable without penalty, or to the extent that non-
payment thereof is permitted by Section 7.7, provided that no notice of lien has
been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', loggers', landlords',
materialmen's, repairmen's or other similar Liens (whether arising by operation
of law, contract, or otherwise) arising in the Ordinary Course of Business which
are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges or
deposits required in the Ordinary Course of Business in connection with workers'
compensation, unemployment insurance and other social security legislation;
(f) Liens on the property of the Company or its Subsidiary securing (i)
the non-delinquent performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, (ii) contingent obligations on surety and
appeal bonds, and (iii) other non-delinquent obligations of a like nature; in
each case, incurred in the Ordinary Course of Business;
(g) Liens consisting of judgment or judicial attachment liens that do not
constitute an Event of Default;
(h) easements, rights-of-way, road use rights, restrictions and other
similar encumbrances incurred in the Ordinary Course of Business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries;
(i) Liens securing obligations in respect of Capital Leases on assets
subject to such leases, provided that such Capital Leases are not otherwise
prohibited hereunder;
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<PAGE>
(j) purchase money security interests on any property acquired or held by
the Company or its Subsidiaries in the Ordinary Course of Business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property; provided that (i) any such Lien attaches to
such property concurrently with or within [30] days after the acquisition
thereof, (ii) such Lien attaches solely to the property so acquired in such
transaction, (iii) the principal amount of the debt secured thereby does not
exceed 100% of the cost of such property, and (iv) the principal amount of the
Indebtedness secured by any and all such purchase money security interests shall
not at any time exceed, together with Indebtedness permitted under subsections
8.5(e) and (without duplication) 8.5(h), $10,000,000;
(k) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution; and
(l) Liens on accounts receivable, inventory and proceeds thereof to secure
the W/C Revolving Loans, the L/C Obligations, and the Swingline Loans.
8.2 Disposition of Assets.
---------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
directly or indirectly, sell, convey, transfer or otherwise dispose of any
property (including, except as permitted by subsection 8.1(l), accounts and
notes receivable, with or without recourse) or permit or suffer to occur an
Event of Loss with respect to any of its properties, or enter into any agreement
to do any of the foregoing, except:
(a) Timber Harvest in compliance with Section 8.20;
(b) sales for fair market value thereof of assets not otherwise permitted
hereunder to Persons who are not Affiliates of the Company, and Events of Loss
with respect to properties of the Company and its Subsidiaries, if:
(i) except in cases of Events of Loss, at the time of such sale no
Default or Event of Default exists or shall result from such sale; and
(ii) the Net Proceeds of such sale or Event of Loss, if and to the
extent the aggregate of all Net Proceeds of all such sales and Events of Loss
received by the Company or its Subsidiaries in any calendar year exceed the
Maximum Amount for such year, (A) are applied, within 180 days of receipt of
such excess Net Proceeds, to the purchase of productive assets in a Permitted
Business (including purchases not consummated during such 180 days if a binding
agreement for such purchase is entered into during such period and such purchase
is completed within 90 days after the expiry of such 180 day period), or (B) are
applied within 180 days of such disposition to the purchase, repayment, or Cash
Collateralization of such Senior Debt as the Company may elect to so repay;
provided, however, the Company shall not be required to apply any excess Net
- -------- -------
Proceeds pursuant to clause (A) or (B) above if and to the
64
<PAGE>
extent that, when received, such excess Net Proceeds do not exceed cash
expenditures by the Company for the purchase of productive assets in a Permitted
Business during the preceding 90 days (excluding any purchase to the extent
financed by a Loan or to the extent such purchase was previously applied as a
credit to reduce repayments, repurchases, or Cash Collateralization of Senior
Debt required by this subsection 8.2(b) or Section 8.20); and, provided further,
-------- -------
that (1) at any time the Company shall elect to repay or purchase Senior Debt
other than the Loans, the Company shall also repay or Cash Collateralize
Obligations by at least a pro rata amount (based on the then outstanding
principal of amount of all Senior Debt), (2) a Responsible Officer shall have
notified the Agent promptly after its determination to so apply the Net Proceeds
and shall have certified the receipt of fair market value for such assets and
the proper application of such Net Proceeds in accordance with this subsection
8.2(b), and (3) if, during the aforementioned periods, the Net Proceeds of all
such sales which have not been applied to the purchase of productive assets in a
Permitted Business or distributed to the holders of Senior Debt for application
to the repayment of such Senior Debt exceeds at any time during any calendar
year in aggregate the Maximum Amount for that calendar year, all such net
proceeds in excess of the Maximum Amount shall be placed immediately upon
receipt thereof in an escrow account, pursuant to an Escrow Agreement, for the
purpose of application in accordance with clauses (A) and (C) above. The Company
shall apply any Net Proceeds withdrawn from escrow pursuant to an Escrow
Agreement to the applications required by clauses (A) or (C) above within three
Business Days after such withdrawal;
(c) sales of used, worn-out or surplus equipment, in the Ordinary Course
of Business;
(d) sales of equipment to the extent that such equipment is exchanged for
credit against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to the purchase price of
such replacement equipment; and
(e) simultaneous exchanges by the Company of Timberlands for other
timberlands in the Ordinary Course of Business, with Persons who are not
Affiliates of the Company, if:
(i) at the time of such exchange, no Event of Default exists or shall
result from such exchange;
(ii) the aggregate fair market value of all Timberlands so exchanged
by the Company do not exceed on a cumulative basis $100,000,000 during the term
of this Agreement;
(iii) the timberlands to be received in exchange are of at least an
equivalent fair market value to the Timberlands to be exchanged or, if such
other timberlands are not of at least an equivalent fair market value, the
amount of any shortfall shall constitute a sale under subsection 8.2(b) subject
to the requirements of subsection 2.6(a); and
(iv) the Agent has received, in form and substance satisfactory to the
Agent and the Majority Banks, copies of appraisals or valuations for the
Timberlands to be exchanged and the other timberlands to be received in the
exchange, which appraisals or valuation shall, in the case of any exchange where
the Company is transferring properties (in one or a series of related
transactions) having a fair market value in excess of $25,000,000, to be
prepared by an
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independent appraiser acceptable to the Agent and the Majority Banks, and in all
other cases the appraisal or other valuation may be prepared by the Company in
such form and content as is usual and customary in accordance with past
practices of the Company;
provided, however, that any exchange permitted by this subsection 8.2(e) may be
- -------- -------
in the form of a tax deferred exchange and the conditions described in clauses
(iii) and (iv) above may be satisfied up to 180 days after the sale of the
Timberlands, so long as the aggregate sale price of the Timberlands with respect
to which timberlands have not yet been received in exchange in accordance with
this subsection 8.2(e) do not at any one time exceed $25,000,000, or, if such
sale price exceeds $25,000,000, all Net Proceeds of such sales in excess of
$25,000,000 shall be placed immediately upon receipt thereof in an escrow
account, pursuant to an Escrow Agreement, for the purpose of application in
accordance with clauses (b)(ii)(A) and (b)(ii)(C) above. The Company shall
apply any Net Proceeds withdrawn from escrow pursuant to an Escrow Agreement to
the applications required by clauses (b)(ii)(A) or (b)(ii)(C) above within three
Business Days after such withdrawal.
8.3 Consolidations and Mergers.
--------------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
merge, consolidate with or into, or convey, transfer, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation; and
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise), to the Company or another Wholly-
Owned Subsidiary.
8.4 Loans and Investments.
---------------------
The Company shall not purchase or acquire, or suffer or permit any
Subsidiary to purchase or acquire, or make any commitment therefor, any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or make or commit to make any Acquisitions, or make or
commit to make any advance, loan, extension of credit or capital contribution to
or any other investment in, any Person including any Affiliate of the Company
(together, "Investments"), except for:
-----------
(a) subject to compliance with Section 8.20 or subsection 8.2(d), as
applicable, Acquisitions by the Company of assets constituting Timber and
Timberlands;
(b) Investments in Cash Equivalents and demand deposit accounts,
including those maintained with BofA, in each case in the manner described in
the Company's cash management program attached as Schedule 8.4(b);
---------------
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(c) agreements between the Company and any other Person with respect
to the disposition of Timberlands or the grant of the right to harvest any
Timber pursuant to which the payment obligation for such Timberlands or such
Timber to be harvested by such other Person is in whole or in part deferred as
long as (i) such disposition of such Timber or Timberlands is permitted by
Section 8.2 and payment therefor is required at least proportionately with the
actual harvesting of the Timber in question and (ii) the aggregate amount
outstanding under all such arrangements does not at any time exceed $25,000,000;
(d) loans and advances to officers, directors, and employees made in
the Ordinary Course of Business not to exceed $1,000,000 in the aggregate at any
one time outstanding;
(e) Permitted Swap Contracts;
(f) extensions of trade credit in the Ordinary Course of Business and
Investments acquired by reason of the exercise of customary creditors' rights
upon default or pursuant to the bankruptcy, insolvency, or reorganization of
debtors; and
(g) Investments set forth on Schedule 8.4(g).
---------------
8.5 Limitation on Indebtedness.
--------------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
create, incur, assume, suffer to exist, or otherwise become or remain directly
or indirectly liable with respect to, any Indebtedness, except:
(a) the Senior Notes;
(b) the Obligations;
(c) Indebtedness incurred pursuant to Permitted Swap Contracts;
(d) accounts payable to trade creditors for goods and services and current
operating liabilities (not the result of the borrowing of money) incurred in the
Ordinary Course of Business in accordance with customary terms and paid within
the specified time, unless contested in good faith by appropriate proceedings
and reserved for in accordance with GAAP;
(e) Indebtedness existing on the Closing Date and set forth on Schedule
--------
8.5;
- ---
(f) endorsements for collection or deposit in the Ordinary Course of
Business;
(g) Indebtedness incurred in connection with Capital Leases permitted
pursuant to Section 8.10; and
(h) Indebtedness representing the deferred purchase price of specific
property acquired by the Company or a Subsidiary, whether or not secured by
Liens permitted by subsection 8.1(j), as long as the aggregate amount of such
Indebtedness, together with Indebtedness permitted by subsection 8.5(e), does
not at any time exceed $10,000,000.
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8.6 Transactions with Affiliates.
----------------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
enter into any transaction with any Affiliate of the Company, except (i) as
permitted by subsection 8.4(d), (ii) Restricted Payments permitted by Section
8.11, and (iii) other transactions upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary. Notwithstanding the foregoing, the permitted transactions set forth
in the foregoing sentence shall not permit the payment to an Affiliate of
compensation in the nature of investment banking fees, placement fees or similar
fees for financial advice or consulting services without the prior consent of
the Majority Banks.
8.7 Use of Proceeds.
---------------
(a) The Company shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds or any Letter of Credit,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Company or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly, use any portion of
the Loan proceeds or any Letter of Credit (i) knowingly to purchase Ineligible
Securities from the Arranger during any period in which the Arranger makes a
market in such Ineligible Securities, (ii) knowingly to purchase during the
underwriting or placement period Ineligible Securities being underwritten or
privately placed by the Arranger, or (iii) to make payments of principal or
interest on Ineligible Securities underwritten or privately placed by the
Arranger and issued by or for the benefit of the Company or any Affiliate of the
Company. The Arranger is a registered broker-dealer and permitted to underwrite
and deal in certain Ineligible Securities; and "Ineligible Securities" means
---------------------
securities which may not be underwritten or dealt in by member banks of the
Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C.
(S) 24, Seventh), as amended.
8.8 Contingent Obligations.
----------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
create, incur, assume or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the Ordinary Course of
Business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 8.8; and
------------
(d) Contingent Obligations with respect to Surety Instruments other
than those described in subsection 8.8(f) below incurred in the Ordinary Course
of Business and not
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exceeding at any time $1,000,000 in the aggregate in respect of the Company and
its Subsidiaries on a consolidated basis;
(e) L/C Obligations;
(f) (i) non-delinquent bids, trade contracts (other than for borrowed
money), and statutory obligations, (ii) Contingent Obligations under surety and
appeal bonds supporting performance obligations of the Company or its
Subsidiaries, and (iii) other non-delinquent obligations of a like nature; in
each case, incurred in the Ordinary Course of Business; and
(g) Guaranty Obligations of the Company or its Subsidiaries for the
Indebtedness of the Company or its Wholly-Owned Subsdiaries not otherwise
prohibited hereunder.
8.9 Joint Ventures.
--------------
The Company shall not, and shall not suffer or permit any Subsidiary to
enter into any Joint Venture, other than to engage in a Permitted Business.
8.10 Lease Obligations.
-----------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
create or suffer to exist any obligations for the payment of rent for any
property under lease or agreement to lease, except for:
(a) leases of the Company and of Subsidiaries in existence on the
Closing Date and any renewal, extension or refinancing thereof;
(b) Operating Leases entered into by the Company or any Subsidiary
after the Closing Date in the Ordinary Course of Business; provided that the
--------
aggregate annual rental payments for all such Operating Leases shall not exceed
$1,000,000 in any fiscal year for the Company and its Subsidiaries on a
consolidated basis; and
(c) Capital Leases other than those permitted under clauses (a) and
(c) of this Section, entered into by the Company or any Subsidiary after the
Closing Date to finance the acquisition of equipment; provided that the
--------
aggregate annual rental payments for all such Capital Leases shall not exceed in
any fiscal year $1,000,000 for the Company and its Subsidiaries on a
consolidated basis.
8.11 Restricted Payments.
-------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any shares of
any class of its capital stock, or purchase, redeem or otherwise acquire for
value any shares of its capital stock or any warrants, rights or options to
acquire such shares, now or hereafter outstanding (any of the foregoing, a
"Restricted Payment"); except that the Company and any Subsidiary may:
- -------------------
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(a) declare and make dividend payments or other distributions payable
solely in kind;
(b) any Subsidiary may make Restricted Payments to the Company or any
Wholly-Owned Subsidiary; and
(c) if no Default or Event of Default exists or would result from such
action, the Company may declare and make during each fiscal quarter one or more
Restricted Payments if such Restricted Payments in an aggregate amount do not
exceed Available Cash for the immediately preceding fiscal quarter.
8.12 ERISA.
-----
The Company shall not, and shall not suffer or permit any of its ERISA
Affiliates to: (a) engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
could reasonably expected to result in liability of the Company and its
Subsidiaries on a consolidated basis in an aggregate amount in excess of
$5,000,000; or (b) engage in a transaction that could be subject to Section 4069
or 4212(c) of ERISA.
8.13 Change in Business.
------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
engage in any material line of business other than a Permitted Business.
8.14 Minimum Pro Forma EBITDDA to Pro Forma Interest Expense.
-------------------------------------------------------
The Company shall not permit the ratio at the end of any fiscal quarter for
the four quarters then ending of Pro Forma EBITDDA to Pro Forma Interest Expense
(as measured on a Rolling Four Quarter Basis) to be less than (a) from the
Closing Date through June 30, 1998, 2.10:1.0, (b) thereafter and through June
30, 1999, 2.25:1.0, and (c) thereafter, 2.35:1.0.
8.15 Maximum Funded Debt to Pro Forma EBITDDA.
----------------------------------------
The Company shall not permit the ratio of Funded Debt to Pro Forma EBITDDA
(as measured on a Rolling Four Quarter Basis) to be greater than (a) from the
Closing Date through June 30, 1998, 5.25:1.0, (b) thereafter and through June
30, 1998, 4.75:1.0, and (c) thereafter, 4.50:1.0.
8.16 Minimum Asset Value to Funded Debt Ratio.
----------------------------------------
The Company shall not permit the Asset Value to Funded Debt Ratio, as
measured as of the last day of any fiscal quarter, to be less than 1.75:1.0.
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<PAGE>
8.17 Accounting Changes.
------------------
The Company shall not, and shall not suffer or permit any Subsidiary to,
make any significant change in accounting treatment or reporting practices,
except as required or permitted by GAAP.
8.18 Amendments to Documents.
-----------------------
The Company shall not, and shall not suffer or permit any other Person to
amend, modify, supplement, waive or otherwise modify any of the terms and
provisions contained in the Partnership Agreement or Operating Agreement (or any
document executed or delivered in connection with such Partnership Agreement or
Operating Agreement), or the partnership certificate of the MLP, or the Senior
Note Agreement, if such amendment, supplement or other modification shall impair
the Company's ability to perform its obligations under the Loan Documents,
further impair the rights of the Company to grant security for the Obligations,
expand the circumstances under which an event of default could arise under the
Senior Note Agreement, or increase any of its financial obligations to any of
its members.
8.19 Limitation on Voluntary Payments on Senior Notes.
------------------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to make
any voluntary or optional payment or prepayment on or redemption or acquisition
for value of (including by way of depositing with respect thereto money or
securities before due for the purpose of paying when due) the Senior Notes,
except pro rata prepayments thereof with the Loans as permitted under subsection
2.6(a).
8.20 Harvesting Restrictions.
-----------------------
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, in any calendar year commencing with 1998, permit aggregate
Timber Harvest in excess of:
(a) in any one such calendar year, 150% of the Planned Volume for that
calendar year;
(b) in any two such consecutive calendar years, 140% of the Planned
Volume for such calendar years;
(c) in any three such consecutive calendar years, 130% of the Planned
Volume for such calendar years; and
(d) in any four such consecutive calendar years, 120% of the Planned
Volume for such calendar years;
unless the Net Proceeds from such excess Timber Harvest are, within ten Business
Days after the end of such period, placed in an escrow account, pursuant to an
Escrow Agreement, to be applied within 180 days after the end of such period (i)
to the repayment, purchase, or Cash Collateralization of such Senior Debt as the
Company may elect to so prepay provided that at any time the Company shall elect
--------
to repay or purchase Senior Debt other than the Loans, the
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<PAGE>
Company shall also repay or Cash Collateralize Obligations by at least a pro
rata amount (based on the outstanding principal of all Senior Debt), or (ii) to
purchase or commit to purchase timber or timberlands located in the United
States (including purchases not consummated during such 180 days if a binding
agreement for such purchase is entered into during such period and such purchase
is completed within 90 days after the expiry of such 180 day period) for not
more than fair market value (in the good faith judgment of the Responsible
Officer as certified in writing to the Agent and the Banks). The Company shall
apply any such Net Proceeds withdrawn from the escrow account pursuant to an
Escrow Agreement to the applications required by clauses (i) or (ii) above
within three Business Days after such withdrawal.
ARTICLE IX
EVENTS OF DEFAULT
-----------------
9.1 Event of Default.
----------------
Any of the following shall constitute an "Event of Default":
----------------
(a) Non-Payment.
-----------
The Company fails to pay, when and as required to be paid herein, (i)
any amount of principal of any Loan or of any L/C Obligation, or (ii) any
interest, fee or any other amount payable hereunder or under any other Loan
Document, and in the case of this clause (ii), such failure continues for three
Business Days; or
(b) Representation or Warranty.
--------------------------
Any representation or warranty by the Company or any Subsidiary made
or deemed made herein, in any other Loan Document, or which is contained in any
certificate, document or financial or other statement by the Company, any
Subsidiary, or any Responsible Officer, furnished at any time under this
Agreement, or in or under any other Loan Document, is incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults.
-----------------
The Company (i) fails to perform or observe any term, covenant or
agreement contained in any of Section 7.1, Section 7.2, or subsections 7.3(b),
(c), (d), or (e) and such failure continues for 20 days, or (ii) fails to
perform or observe any term, covenant or agreement contained in subsection
7.3(a) or Article VIII; or
(d) Other Defaults.
--------------
The Company or any Subsidiary party thereto fails to perform or
observe any other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of 20 days
after the earlier of (i) the date upon
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<PAGE>
which a Responsible Officer knew or reasonably should have known of such failure
or (ii) the date upon which written notice thereof is given to the Company by
the Agent or any Bank; or
(e) Cross-Default.
-------------
(i) The Company or any Subsidiary (A) fails to make any payment in
respect of any Indebtedness or Contingent Obligation (other than in respect of
Swap Contracts), having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $10,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date of such
failure; or (B) fails to perform or observe any other condition or covenant, or
any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Contingent Obligation, and such
failure continues after the applicable grace or notice period, if any, specified
in the relevant document on the date of such failure if the effect of such
failure, event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to become payable or
cash collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (1) any event of default under such Swap Contract as to which the
Company or any Subsidiary is the Defaulting Party (as defined in such Swap
Contract) or (2) any Termination Event (as so defined) as to which the Company
or any Subsidiary is an Affected Party (as so defined), and, in either event,
the Swap Termination Value owed by the Company or such Subsidiary as a result
thereof is greater than $10,000,000; or
(f) Insolvency; Voluntary Proceedings.
---------------------------------
The Company or any Subsidiary (i) ceases or fails to be solvent, or
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings.
-----------------------
(i) Any involuntary Insolvency Proceeding is commenced or filed
against the Company or any Subsidiary, or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against a
substantial part of the Company's or any Subsidiary's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded within 60 days after commencement, filing or levy; (ii) the Company
or any Subsidiary admits the material allegations of a petition against it in
any Insolvency Proceeding, or an order for relief (or similar order under non-
U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any
Subsidiary acquiesces in the appointment of a receiver, trustee,
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<PAGE>
custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or a substantial portion of its property or
business; or
(h) ERISA.
-----
(i) An ERISA Event shall occur with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $10,000,000;
the aggregate amount of Unfunded Pension Liability among all Pension Plans at
any time exceeds $10,000,000; or (iii) the Company or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$10,000,000; or
(i) Monetary Judgments.
------------------
One or more non-interlocutory judgments, non-interlocutory orders,
decrees or arbitration awards is entered against the Company or any Subsidiary
involving in the aggregate a liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) as to
any single or related series of transactions, incidents or conditions, of
$10,000,000 or more, and the same shall remain unsatisfied, unvacated and
unstayed pending appeal for a period of 10 days after the entry thereof; or
(j) Non-Monetary Judgments.
----------------------
Any non-monetary judgment, order or decree is entered against the
Company or any Subsidiary which does or would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
9.2 Remedies.
--------
If any Event of Default occurs, the Agent shall, at the request of, or may,
with the consent of, the Majority Banks,
(a) declare the commitment of each Bank and the Swingline Commitment
of the Swingline Bank to make Loans and any obligation of the Issuing Bank to
Issue Letters of Credit to be terminated, whereupon such commitments and
obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate amount that is or
at any time thereafter may become available for drawing under any outstanding
Letters of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable as Cash
Collateral for the L/C Obligations, and declare the unpaid principal amount of
all outstanding Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Company;
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<PAGE>
(c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law; and
provided, however, that upon the occurrence of any event specified in subsection
- -------- -------
(f) or (g) of Section 9.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
and the Swingline Bank to make Loans and any obligation of the Issuing Bank to
Issue Letters of Credit shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable without further act of the Agent, the
Issuing Bank, the Swingline Bank or any Bank.
9.3 Rights Not Exclusive.
--------------------
The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
ARTICLE X
THE AGENT
---------
10.1 Appointment and Authorization; "Agent".
--------------------------------------
(a) Each Bank hereby irrevocably (subject to Section 10.9) appoints,
designates and authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Bank, 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 Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
(b) The Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Agent may agree at the request of the
Majority Banks to act for such Issuing Bank with respect thereto; provided,
however, that the Issuing Bank shall have all of the benefits and immunities (i)
provided to the Agent in this Article X with respect to any acts taken or
omissions suffered by the Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and agreements
for letters of credit
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<PAGE>
pertaining to the Letters of Credit as fully as if the term "Agent", as used in
this Article X, included the Issuing Bank with respect to such acts or
omissions, and (ii) as additionally provided in this Agreement with respect to
the Issuing Bank.
10.2 Delegation of Duties.
--------------------
The Agent may execute any of its duties under this Agreement or any other
Loan Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects with reasonable care.
10.3 Liability of Agent.
------------------
None of the Agent-Related Persons shall (i) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company's Subsidiaries
or Affiliates.
10.4 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Banks or the Majority Banks, as the case may be, as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Banks or the Majority Banks, as the case may be, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all of the
Banks.
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(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
10.5 Notice of Default.
-----------------
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to the Agent for the
account of the Banks, unless the Agent shall have received written notice from a
Bank or the Company referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". The
Agent will notify the Banks of its receipt of any such notice. The Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Majority Banks in accordance with Article IX; provided,
however, that unless and until the Agent has received any such request, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Banks.
10.6 Credit Decision.
---------------
Each Bank acknowledges that none of the Agent-Related Persons has made any
representation or warranty to it, and that no act by the Agent hereinafter
taken, including any review of the affairs of the Company and its Subsidiaries,
shall be deemed to constitute any representation or warranty by any Agent-
Related Person to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company and its Subsidiaries hereunder.
Each Bank also represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
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10.7 Indemnification of Agent.
------------------------
Whether or not the transactions contemplated hereby are consummated, the
Banks shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Company and without limiting the obligation of
the Company to do so), pro rata, from and against any and all Indemnified
Liabilities; provided, however, that no Bank shall be liable for the payment to
the Agent-Related Persons of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank shall reimburse the Agent upon
demand for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on behalf of the
Company. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
10.8 Agent in Individual Capacity.
----------------------------
BofA and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Company and its Subsidiaries and Affiliates as though BofA
were not the Agent, the Swingline Bank or the Issuing Bank hereunder and without
notice to or consent of the Banks. The Banks acknowledge that, pursuant to such
activities, BofA or its Affiliates may receive information regarding the Company
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary) and acknowledge that the
Agent shall be under no obligation to provide such information to them. With
respect to its Loans, BofA shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Agent or the Issuing Bank.
10.9 Successor Agent.
---------------
The Agent may, and at the request of the Majority Banks shall, resign as
Agent upon 30 days' notice to the Banks. If the Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks, which successor agent, unless a Default or Event of Default
exists, shall be approved by the Company. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Banks and the Company, a successor agent from
among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article X and Sections 11.4 and 11.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent
by the date which is 30 days following a
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retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as the Majority Banks
appoint a successor agent as provided for above. Notwithstanding the foregoing,
however, BofA may not be removed as the Agent at the request of the Majority
Banks unless BofA shall also simultaneously be replaced as "Issuing Bank" and
"Swingline Bank" hereunder pursuant to documentation in form and substance
reasonably satisfactory to BofA.
10.10 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership or trust" within
the meaning of the Code and such Bank claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees
with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed and
executed copies of IRS Form 1001 before the payment of any interest in the first
calendar year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Bank, two properly completed and
executed copies of IRS Form 4224 before the payment of any interest is due in
the first taxable year of such Bank and in each succeeding taxable year of such
Bank during which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from, or reduction
of, United States withholding tax. Such Bank agrees to promptly notify the Agent
of any change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding tax
under a United States tax treaty by providing IRS Form 1001 and such Bank sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Bank, such Bank agrees to notify the Agent of
the percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax by
filing IRS Form 4224 with the Agent sells, assigns, grants a participation in,
or otherwise transfers all or part of the Obligations of the Company to such
Bank, such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
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(d) If any Bank is entitled to a reduction in the applicable withholding
tax, the Agent may withhold from any interest payment to such Bank an amount
equivalent to the applicable withholding tax after taking into account such
reduction. However, if the forms or other documentation required by subsection
(a) of this Section are not delivered to the Agent, then the Agent may withhold
from any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax imposed by
Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that the Agent did not properly withhold tax
from amounts paid to or for the account of any Bank (because the appropriate
form was not delivered or was not properly executed, or because such Bank failed
to notify the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Banks under this subsection shall survive
the payment of all Obligations.
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Amendments and Waivers.
----------------------
No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by the Company therefrom,
shall be effective unless the same shall be in writing and signed by the
Majority Banks (or by the Agent at the written request of the Majority Banks)
and the Company and acknowledged by the Agent, and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that
-------- -------
(a) no such waiver, amendment or consent shall, unless in writing and
signed by all Banks and the Company, with receipt acknowledged by the Agent, do
any of the following:
(i) increase or extend the Commitments of any Bank, or increase or
extend the Swingline Commitment of the Swingline Bank (or reinstate any such
Commitment terminated pursuant to Section 8.2); or
(ii) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document,
including any prepayments specified under Section 2.6, or reduce the amount due
to the Banks (or any of them) on any such date; or
(iii) reduce the principal of, or the rate of interest or commitment
fee specified herein on, any Loan or the Commitments or, subject to clause (C)
the proviso below,
-------
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any other amounts payable to the Banks (or any of them) hereunder or under any
other Loan Document; or
(iv) amend any provision herein providing for consent or other action
by all Banks; or
(v) amend the definition of Majority Banks contained in Section 1.1;
and, provided, further, that (A) no amendment, waiver or consent shall, unless
-------- -------
in writing and signed by the Issuing Bank in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Issuing
Bank under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (B) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the
Administrative Lender under this Agreement or any other Loan Document, (C) the
Fee Letter may be amended, or rights or privileges thereunder waived, in a
writing executed by the parties thereto, and (D) no amendment, waiver or consent
shall, unless in writing and signed by the Swingline Bank in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights or duties
of the Swingline Lender under this Agreement or any other Loan Document.
11.2 Notices.
-------
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Company by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 11.2, and
------------
(ii) shall be followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered, to the address or facsimile number specified for
notices on Schedule 11.2; or, as directed to the Company or the Agent, to such
-------------
other address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and the
Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or X to the Agent shall not be effective
until actually received by the Agent, and notices pursuant to Article III to the
Issuing Bank shall not be effective until actually received by the Issuing Bank
at the address specified for the "Issuing Bank" on the applicable signature page
hereof.
(c) Any agreement of the Agent and the Banks herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Company. The Agent and the Banks shall be entitled to rely on
the authority of any Person purporting to be a Person authorized by the Company
to give such notice and the Agent and the Banks shall not have any liability to
the Company or other Person on account of any action
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taken or not taken by the Agent or the Banks in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent by any failure by
the Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent and the Banks of a confirmation
which is at variance with the terms understood by the Agent and the Banks to be
contained in the telephonic or facsimile notice.
11.3 No Waiver; Cumulative Remedies.
------------------------------
No failure to exercise and no delay in exercising, on the part of the Agent
or any Bank, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
11.4 Costs and Expenses. The Company shall:
------------------
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent and
Issuing Bank) within five Business Days after demand (subject to subsection
5.1(d)) for all reasonable costs and expenses incurred by BofA (including in its
capacity as Agent and Issuing Bank) in connection with the development,
preparation, delivery, administration, execution and initial syndication of, and
any amendment, supplement, waiver or modification to (in each case, whether or
not consummated), this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by BofA (including in its capacity as Agent and Issuing Bank)
with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each Bank within five
Business Days after demand (subject to subsection 5.1(d)) for all costs and
expenses (including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during the existence of an Event
of Default or after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding).
11.5 Company Indemnification.
-----------------------
Whether or not the transactions contemplated hereby are consummated, the
Company shall indemnify, defend and hold the Agent-Related Persons, and each
Bank and each of its respective officers, directors, employees, counsel, agents
and attorneys-in-fact (each, an "Indemnified Person") harmless from and against
------------------
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
reasonable Attorney Costs) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans, the termination of
the Letters of Credit and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted against
any such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the
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transactions contemplated hereby, the Debt Offering, the Equity Offering, or any
action taken or omitted by any such Person under or in connection with any of
the foregoing, including with respect to any investigation, litigation or
proceeding (including any Insolvency Proceeding or appellate proceeding) related
to or arising out of this Agreement or the Loans or Letters of Credit or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified Liabilities");
-----------------------
provided, that the Company shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities resulting solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in
this Section shall survive payment of all other Obligations.
11.6 Payments Set Aside.
------------------
To the extent that the Company makes a payment to the Agent or the Banks,
or the Agent or the Banks exercise their right of set-off, and such payment or
the proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Agent upon demand its pro rata share of any
amount so recovered from or repaid by the Agent.
11.7 Successors and Assigns.
----------------------
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the Agent
and each Bank.
11.8 Assignments, Participations, etc.
--------------------------------
(a) Any Bank may, with the written consent of the Company (at all
times other than during the existence of an Event of Default), the Agent and the
Issuing Bank, which consent of the Company shall not be unreasonably withheld,
at any time assign and delegate to one or more Eligible Assignees (provided that
no written consent of the Company, the Agent or the Issuing Bank shall be
required in connection with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all,
--------
or any ratable part of all, of the Loans, the Commitments, the L/C Obligations
and the other rights and obligations of such Bank hereunder, in a minimum amount
of $10,000,000; provided, however, that (i) such assignment shall be null and
-------- -------
void if not undertaken on a pro rata basis between the Acquisition Revolving
Loans and Commitments and the W/C Revolving Loans and Commitments; (ii) the
Company and the Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until written notice of
such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Company
and the Agent by such Bank and
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the Assignee; (iii) such Bank and its Assignee shall have delivered to the
Company and the Agent an Assignment and Acceptance in the form of Exhibit E
---------
("Assignment and Acceptance") together with any Note or Notes subject to such
-------------------------
assignment; and (iv) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $3,500. In connection with any assignment by
BofA, its Swingline Commitment may be in whole but not in part included as part
of the assignment transaction, and the Assignment and Acceptance may be
appropriately modified to include an assignment and delegation of its Swingline
Commitment and any outstanding Swingline Loans.
(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and, to the extent required by subsection 11.8(a),
provided its consent with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Bank under the Loan Documents, and (ii) the
assignor Bank shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the Agent
that it has received an executed Assignment and Acceptance and payment of the
processing fee, (and provided that it consents to such assignment in accordance
with subsection 11.8(a)), upon the request of the Assignee, the Company shall
execute and deliver to the Agent, upon the request of any Assignee, new Notes
evidencing such Assignee's assigned Loans and Commitment and, if the assignor
Bank has retained a portion of its Loans and its Commitment, replacement Notes
(if any) in the principal amount of the Loans retained by the assignor Bank
(such Notes to be in exchange for, but not in payment of, the Notes held by such
Bank). Immediately upon each Assignee's making its processing fee payment under
the Assignment and Acceptance, this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
-----------
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
----------------
provided, however, that (i) such participation shall be null and void unless
- -------- -------
undertaken on a pro rata basis between the Acquisition Revolving Loans and
Commitments and the W/C Revolving Loans and Commitments, (ii) the originating
Bank's obligations under this Agreement shall remain unchanged, (iii) the
originating Bank shall remain solely responsible for the performance of such
obligations, (iv) the Company, the Issuing Bank and the Agent shall continue to
deal solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (v) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous
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consent of the Banks as described in the first proviso to Section 11.1. In the
case of any such participation, the Participant shall be entitled to the benefit
of Sections 4.1, 4.3 and 11.5 as though it were also a Bank hereunder, and if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
11.9 Confidentiality.
---------------
Each Bank agrees to take and to cause its Affiliates to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information identified as "confidential" or "secret" by the Company and
provided to it by the Company or any Subsidiary, or by the Agent on the
Company's or such Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with the Company or any Subsidiary; except to
the extent such information (i) was or becomes generally available to the public
other than as a result of disclosure by that Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality agreement with the
Company known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent, any
Bank or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Banks hereunder; (H) as to any
Bank or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company or any
Subsidiary is party or is deemed party with such Bank or such Affiliate; and (I)
subject to such Bank's undertaking on behalf of its Affiliates in the first
sentence of this Section, to its Affiliates.
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11.10 Set-off.
-------
In addition to any rights and remedies of the Banks provided by law, if an
Event of Default exists or the Loans have been accelerated, each Bank is
authorized at any time and from time to time, without prior notice to the
Company, any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Bank to or for the credit or the account
of the Company against any and all Obligations owing to such Bank, now or
hereafter existing, irrespective of whether or not the Agent or such Bank shall
have made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Each Bank agrees promptly to notify
the Company and the Agent after any such set-off and application made by such
Bank; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application.
11.11 Automatic Debits of Fees.
------------------------
With respect to any fee, or any other cost or expense (including Attorney
Costs) due and payable to the Agent, the Issuing Bank, the Swingline Bank, BofA
or the Arranger under the Loan Documents, the Company hereby irrevocably
authorizes BofA to debit any deposit account of the Company with BofA in an
amount such that the aggregate amount debited from all such deposit accounts
does not exceed such fee or other cost or expense. If there are insufficient
funds in such deposit accounts to cover the amount of the fee or other cost or
expense then due, such debits will be reversed (in whole or in part, in BofA's
sole discretion) and such amount not debited shall be deemed to be unpaid. No
such debit under this Section shall be deemed a set-off.
11.12 Notification of Addresses, Lending Offices, Etc.
------------------------------------------------
Each Bank shall notify the Agent in writing of any changes in the address
to which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
11.13 Counterparts.
------------
This Agreement may be executed in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument.
11.14 Severability.
------------
The illegality or unenforceability of any provision of this Agreement or
any instrument or agreement required hereunder shall not in any way affect or
impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
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11.15 No Third Parties Benefited.
--------------------------
This Agreement is made and entered into for the sole protection and legal
benefit of the Company, the Banks, the Swingline Bank, the Agent and the Agent-
Related Persons, and their permitted successors and assigns, and no other Person
shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents. Neither the Agent, the Senior Co-Agent, the Swingline
Bank, the Issuing Bank nor any Bank shall have any obligation to any Person not
a party to this Agreement or other Loan Documents.
11.16 Governing Law and Jurisdiction.
------------------------------
(a) THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COUNTY AND STATE OF
NEW YORK, THE COURTS OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF THE STATE
OF NEW YORK, THE COURTS OF THE STATE OF CALIFORNIA LOCATED IN THE CITY AND
COUNTY OF SAN FRANCISCO, OR THE COURTS OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF
THE COMPANY, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
COMPANY, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY NEW YORK OR CALIFORNIA LAW.
11.17 Waiver of Jury Trial.
--------------------
THE COMPANY, THE BANKS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-
RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE AGENT EACH
AGREE THAT ANY SUCH CLAIM
87
<PAGE>
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
11.18 Entire Agreement.
----------------
This Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding among the Company, the Banks, the Swingline
Bank and the Agent, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
U.S. TIMBERLANDS KLAMATH FALLS,
L.L.C.
By:
-----------------------------------
Title:
--------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent, as a Bank, as Issuing Bank,
and as Swingline Bank
By:
-----------------------------------
Title:
--------------------------------
88
<PAGE>
SCHEDULE 2.1
COMMITMENTS AND PRO RATA SHARES
-------------------------------
Bank Commitment Pro Rata Share
- ---- ---------- --------------
Bank of America National
Trust and Savings
Association __,000,000 ___%
TOTAL __,000,000 100%
<PAGE>
SCHEDULE 11.2
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
---------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
Bank of America National Trust
and Savings Association
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Vice President
Telephone: (415) 622-
Facsimile: (415) 622-4894
AGENT'S PAYMENT OFFICE:
[Address]
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Domestic and Offshore Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
[Address]
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Issuing Bank
Address for Notices:
International Trade
Banking Division #5655
333 S. Beaudry Ave., 19th Floor
Los Angeles, CA 90017
