<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ........... TO ............
COMMISSION FILE NUMBER 1-6780
RAYONIER INC.
Incorporated in the State of North Carolina
I.R.S. Employer Identification Number l3-2607329
l177 Summer Street, Stamford, Connecticut 06905-5529
(Principal Executive Office)
Telephone Number: (203) 348-7000
Indicate by check mark whether the registrant (l) has filed all
reports required to be filed by Section l3 or l5(d) of the Securities
Exchange Act of l934 during the preceding l2 months and (2) has been
subject to such filing requirements for the past 90 days.
YES (X) NO ( )
As of November 3, 1999, there were outstanding 27,464,308 Common Shares of the
Registrant.
----------
<PAGE> 2
<TABLE>
<CAPTION>
RAYONIER INC.
TABLE OF CONTENTS
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item l. Financial Statements
Statements of Consolidated Income for the
Three Months and Nine Months Ended September 30, 1999 and 1998 1
Consolidated Balance Sheets as of September 30, 1999
and December 3l, 1998 2
Statements of Consolidated Cash Flows for the
Nine Months Ended September 30, 1999 and 1998 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 5-8
Item 3. Selected Operating Data 9
Selected Supplemental Financial Data 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 11
Exhibit Index 12
</TABLE>
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited financial statements reflect, in the opinion of Rayonier
Inc. (Rayonier or the Company), all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the results of
operations, the financial position and the cash flows for the periods presented.
For a full description of accounting policies, please refer to Notes to
Consolidated Financial Statements in the l998 Annual Report on Form l0-K.
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------------- -------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
SALES $ 255,453 $ 258,740 $ 739,872 $ 738,165
------------- ------------- ------------- -------------
Costs and expenses
Cost of sales 217,950 223,663 621,829 618,143
Selling and general expenses 6,771 7,960 26,021 25,719
Other operating (income) expense, net (1,381) 1,749 (3,286) (394)
------------- ------------- ------------- -------------
223,340 233,372 644,564 643,468
------------- ------------- ------------- -------------
OPERATING INCOME 32,113 25,368 95,308 94,697
Interest expense (7,306) (9,092) (22,693) (26,076)
Interest and miscellaneous income (expense), net 114 64 595 561
------------- ------------- ------------- -------------
Income before income taxes 24,921 16,340 73,210 69,182
Provision for income taxes (7,787) (3,499) (23,869) (19,705)
------------- ------------- ------------- -------------
NET INCOME $ 17,134 $12,841 $ 49,341 $ 49,477
============= ============= ============= =============
NET INCOME PER COMMON SHARE
Basic EPS $ 0.62 $ 0.46 $ 1.78 $ 1.75
============= ============= ============= =============
Diluted EPS $ 0.61 $ 0.45 $ 1.75 $ 1.72
============= ============= ============= =============
</TABLE>
1
<PAGE> 4
RAYONIER INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
---------------- ---------------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 3,666 $ 6,635
Accounts receivable, less allowance for doubtful
accounts of $5,066 and $4,843 106,308 118,762
Inventories
Finished goods 63,080 47,109
Work in process 14,845 15,762
Raw materials 12,787 13,212
Manufacturing and maintenance supplies 24,601 22,827
---------------- ---------------
Total inventories 115,313 98,910
Timber purchase agreements 31,135 35,776
Other current assets 11,256 13,192
Deferred income taxes 7,398 8,559
---------------- ---------------
Total current assets 275,076 281,834
OTHER ASSETS 57,858 65,988
TIMBER PURCHASE AGREEMENTS 18,974 20,922
TIMBER, TIMBERLANDS AND LOGGING ROADS,
NET OF DEPLETION AND AMORTIZATION 543,431 544,190
PROPERTY, PLANT AND EQUIPMENT
Land, buildings, machinery and equipment 1,340,527 1,304,188
Less - accumulated depreciation 664,915 616,266
---------------- ---------------
675,612 687,922
---------------- ---------------
$ 1,570,951 $ 1,600,856
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 68,014 $ 65,844
Bank loans and current maturities 6,504 4,094
Accrued taxes 14,722 8,728
Accrued payroll and benefits 23,058 21,460
Accrued interest 11,001 6,182
Other current accrued liabilities 40,348 44,279
Current reserves for dispositions and discontinued operations 18,483 22,167
---------------- ---------------
Total current liabilities 182,130 172,754
DEFERRED INCOME TAXES 126,006 115,405
LONG-TERM DEBT 432,544 485,850
NON-CURRENT RESERVES FOR DISPOSITIONS
AND DISCONTINUED OPERATIONS 151,987 159,198
OTHER NON-CURRENT LIABILITIES 28,279 28,690
SHAREHOLDERS' EQUITY
Common Shares, 60,000,000 shares authorized,
27,558,308 and 27,767,309 shares issued and outstanding 67,118 79,561
Retained earnings 582,887 559,398
---------------- ---------------
650,005 638,959
---------------- ---------------
$ 1,570,951 $ 1,600,856
================ ===============
</TABLE>
2
<PAGE> 5
RAYONIER INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-------------------
1999 1998
---------------- ----------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 49,341 $ 49,477
Non-cash items included in income
Depreciation, depletion and amortization 77,313 74,601
Deferred income taxes 7,772 7,427
Decrease in other non-current liabilities (411) (1,226)
Change in accounts receivable, inventories
and accounts payable (1,779) (3,242)
Decrease (increase) in current timber purchase agreements 4,641 (5,706)
Decrease in other current assets 1,936 213
Change in accrued liabilities 8,480 (17,938)
--------- ---------
CASH FROM OPERATING ACTIVITIES 147,293 103,606
--------- ---------
INVESTING ACTIVITIES
Capital expenditures, net of sales and retirements
of $442 and $4,714 (64,244) (64,836)
Acquisition of Rayonier Timberlands, L.P. Class A Units - (48,821)
Expenditures for dispositions and discontinued operations,
net of tax benefits of $3,990 and $4,234 (6,905) (7,308)
Change in timber purchase agreements and other assets 10,078 (4,118)
--------- ---------
CASH USED FOR INVESTING ACTIVITIES (61,071) (125,083)
--------- ---------
FINANCING ACTIVITIES
Issuance of debt 116,879 204,877
Repayments of debt (167,775) (122,480)
Dividends paid (25,852) (26,193)
Repurchase of Common Shares (16,438) (21,890)
Issuance of Common Shares 3,995 2,252
Buyout of minority interest - (16,959)
--------- ---------
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (89,191) 19,607
--------- ---------
CASH AND SHORT-TERM INVESTMENTS
Decrease in cash and short-term investments (2,969) (1,870)
Balance, beginning of period 6,635 10,661
--------- ---------
Balance, end of period $ 3,666 $ 8,791
========= =========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 18,188 $ 21,519
========= ==========
Income taxes $ 12,094 $ 12,547
========= ==========
</TABLE>
3
<PAGE> 6
RAYONIER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
1. EARNINGS PER COMMON SHARE
The following table provides details of the calculation of basic and diluted EPS
in accordance with Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share" for the three months and nine months ended September 30,
1999 and 1998.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $ 17,134 $ 12,841 $ 49,341 $ 49,477
========= ========= ========= =========
Shares used for determining basic EPS 27,698,598 28,079,736 27,763,251 28,219,896
Dilutive effect of:
Stock options 270,402 241,123 269,705 283,410
Contingent shares 240,000 231,084 240,000 231,084
------- ------- ------- -------
Shares used for determining diluted EPS 28,209,000 28,551,943 28,272,956 28,734,390
========== ========== ========== ==========
Basic EPS $ 0.62 $ 0.46 $ 1.78 $ 1.75
============== ============== ============= =============
Diluted EPS $ 0.61 $ 0.45 $ 1.75 $ 1.72
============== ============== ============= =============
</TABLE>
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SEGMENT INFORMATION
Rayonier operates in two major business segments: Timber and Wood Products, and
Specialty Pulp Products. The Timber and Wood Products segment includes two
reportable business units: Forest Resources and Trading, and Wood Products.
Chemical Cellulose, and Fluff and Specialty Paper Pulps are product lines within
the Specialty Pulp Products segment.
The amounts and relative contributions to sales and operating income
attributable to each of Rayonier's reportable business units for the three
months and nine months ended September 30, 1999 and 1998 were as follows
(thousands of dollars):
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1999 1998 1999 1998
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
SALES
Timber and Wood Products
Forest Resources and Trading $ 111,255 $ 105,828(a) $ 330,399 $ 289,902(a)
Wood Products 31,995 32,079 89,409 93,562
------------- ------------- ------------- -------------
Total Timber and Wood Products 143,250 137,907 419,808 383,464
------------- ------------- ------------- -------------
Specialty Pulp Products
Chemical Cellulose 67,072 74,848 199,857 218,379
Fluff and Specialty Paper Pulps 45,442 46,293 120,767 138,191
------------- ------------- ------------- -------------
Total Specialty Pulp Products 112,514 121,141 320,624 356,570
------------- ------------- ------------- -------------
Intersegment Eliminations (311) (308) (560) (1,869)
------------- ------------- ------------- -------------
TOTAL SALES $ 255,453 $ 258,740 $ 739,872 $ 738,165
============= ============= ============= =============
OPERATING INCOME
Timber and Wood Products
Forest Resources and Trading $ 20,517 $ 17,411(b) $ 78,926 $87,117(b)
Wood Products 1,745 (2,163) 2,808 (11,393)
------------- ------------- ------------- -------------
Total Timber and Wood Products 22,262 15,248 81,734 75,724
Specialty Pulp Products 10,394 12,585 22,416 28,170
Corporate and Other (543) (2,465) (8,842) (9,197)
------------- ------------- ------------- -------------
TOTAL OPERATING INCOME $ 32,113 $ 25,368 $ 95,308 $ 94,697
============= ============= ============= =============
</TABLE>
(a) Includes salvage timber sales of $1.7 million.
(b) Operating income was reduced by $6.7 million resulting from Southeast U.S.
forest fires during the third quarter of 1998, including $4.0 million on
lower pricing for salvage timber and $2.7 million on the write-off of
destroyed timber assets and other fire related expenses.
RESULTS OF OPERATIONS
SALES AND OPERATING INCOME
Sales for the third quarter of 1999 were $255 million, $3 million lower than the
third quarter of 1998, while sales for the nine months ended September 30, 1999
of $740 million were $2 million higher than the prior year. Third quarter sales
decreased in the Specialty Pulp Products segment, as a result of reduced
chemical cellulose prices and lower pulp volume, and were partly offset by
improved sales in Timber and Wood Products due to higher Southeast U.S. timber
volume and prices. Year-to-date September sales increased
5
<PAGE> 8
due to higher Forest Resources and Trading activity, partially offset by weaker
U.S. timber prices and reduced sales in the Specialty Pulp Products segment due
to lower chemical cellulose prices and pulp volume.
Operating income for the third quarter of 1999 of $32 million was $7 million
above prior year while operating income for the nine-month period ended
September 30, 1999 of $95 million was $1 million above prior year. Wood Products
improved over prior year, as a result of a strong domestic lumber market and
higher medium-density fiberboard (MDF) margins. This was partially offset by the
decline in Specialty Pulp Products, due to reduced chemical cellulose prices
and lower pulp volume, weaker Forest Resources and Trading results, due to lower
U.S. timber prices, and the negative impact from weather-related disruptions
caused by Hurricane Floyd of $1 million.
The 1998 results for Forest Resources and Trading include the negative impact of
last summer's Southeast U.S. forest fires which reduced sales and operating
income by $4.0 million and $6.7 million, respectively.
TIMBER AND WOOD PRODUCTS
Timber and Wood Products' sales for the third quarter were $143 million, $5
million higher than prior year due to higher timber sales volumes and log
trading activity. Sales for the nine-month period were $420 million, $36 million
higher than the prior year, resulting from higher trading activity partially
offset by lower timber prices and Wood Products sales. Operating income for the
third quarter of $22 million was $7 million above prior year due to stronger
Southeast U.S. timber sales volumes and prices, higher U.S. lumber prices and
improved margins for MDF. Year-to-date operating income of $82 million increased
$6 million from last year due to higher Wood Products results partially offset
by lower income from Forest Resources and Trading.
FOREST RESOURCES AND TRADING
Forest Resources and Trading sales for the third quarter were $111
million, $5 million above prior year resulting from growth of wood
products trading activities and higher U.S. timber volume. For the nine
month period ending September 30, 1999 sales were $330 million, $40
million above 1998 principally due to the higher wood products trading
activity and improved log trading volume in Asian and U.S. domestic
markets, partially offset by lower U.S. timber prices and Southeast U.S.
land sales.
Operating income for the third quarter was $21 million, $3 million above
1998, resulting from higher Southeast U.S. sales volume. Third quarter
1998 operating income included the $6.7 million adverse impact associated
with the Southeast U.S. forest fires. Operating income for the nine-month
period of 1999 of $79 million was $8 million below prior year due to
reduced timber prices partially offsetting an increase in Northwest U.S.
sales volume. Timber prices were unusually high in Southeast U.S. markets
during the first half of 1998 due to unusually wet weather that led to
restricted supply because of difficult logging conditions. In 1999, prices
declined in the Northwest U.S. due to the impact of the Asian economic
crisis on export products and in the Southeast U.S. due to reduced
pulpwood demand resulting from pulp and paper mill closures and downtime
in the region.
WOOD PRODUCTS
Wood Products sales for the third quarter were $32 million, relatively
unchanged from the prior year, and for the nine month period were $89
million, $4 million below 1998. The decrease was due to reduced lumber
volume resulting from the absence of sales from the Company's Plummer, ID
mill. This lumber mill was closed in July 1998, after the facility was
damaged by fire, and subsequently sold in September 1999. This sales
decline was partly offset by a strong Southeast U.S. lumber market and
improved volume and sales prices for the Company's MDF plant.
Operating income for the third quarter was $2 million, $4 million higher
than prior year. Operating income for the nine months was $3 million, $14
million above prior year. The improvement resulted from higher prices for
both lumber and MDF and lower operating costs for MDF. During the third
quarter of 1999, the MDF margin contribution increased $2 million over the
prior year.
SPECIALTY PULP PRODUCTS
Sales of Specialty Pulp Products for the third quarter were $113 million, $9
million below prior year due to reduced volume and lower chemical cellulose
prices. For the nine-month period sales were $321 million, $36 million lower
than 1998. The decline was primarily due to weaker demand for both fluff and
chemical cellulose pulps and lower chemical cellulose pricing.
Operating income of $10 million and $22 million for the third quarter and the
nine-month period of 1999, respectively, were $2 million and $6 million below
prior year. The decline resulted from lower fluff and chemical cellulose pulp
volumes, lower chemical cellulose pricing and market related shutdown costs for
the Fernandina Beach, FL pulp mill, partially offset by lower wood, chemical and
maintenance costs.
6
<PAGE> 9
CORPORATE AND OTHER
Corporate and other costs for the third quarter were below 1998 levels
reflecting lower management incentive compensation expense related to share
performance plans. On a year-to-date basis, Corporate and other costs were
comparable to the prior year.
OTHER INCOME / EXPENSE
Interest expense of $23 million for the nine-month period of 1999 was $3 million
below 1998 due to lower average interest rates and debt balances.
The effective tax rate of 32.6 percent for the nine-month period of 1999
compared to 28.5 percent in 1998. The lower 1998 rate reflects increased tax
benefits from foreign operations and higher prior years' research and
development tax credits.
NET INCOME
Net income for the third quarter of 1999 was $17.1 million or $0.61 per Common
Share, compared to $12.8 million or $0.45 per Common Share in 1998. Net income
for the nine months ended September 30, 1999 was $49.3 million or $1.75 per
share compared to $49.5 million or $1.72 per share last year.
Third quarter 1999 earnings reflect a two cent per share negative impact from
weather related disruptions caused by Hurricane Floyd. Third quarter 1998
earnings were reduced by approximately 15 cents per share due to the forest
fires in the Southeast U.S. in early July. The impact of the forest fires
included a charge of 5 cents per share to reflect the loss of pre-merchantable
timber and a reduction in earnings of 10 cents per share from the sale of
fire-damaged timber.
OTHER ITEMS
In its third quarter earnings release on October 18, the Company indicated that
it is optimistic about market conditions in the coming months as the improving
Asian markets are benefiting most aspects of its business, both in the U.S. and
New Zealand. Specialty Pulp results are expected to improve as fluff and
specialty paper demand and pricing continue to strengthen and because of the
Company's continuous focus on cost reduction. However, the Company expects to
take some downtime at its Fernandina Beach, FL pulp mill due to softness in
chemical cellulose markets, which typically lag the recovery in fluff and paper.
In the fourth quarter, strengthening U.S. timber and log sales may be offset
somewhat by lower lumber prices.
On October 29th, the Company completed the previously announced sale of a
non-strategic marine terminal and related assets for $9.5 million, resulting in
a one-time after tax gain of $5.8 million, or 20 cents per share. This gain will
be essentially offset by a fourth quarter non-cash charge for an unrelated
contract dispute of $2.9 million, or 10 cents per share, and $2.4 million, or 8
cents per share, related to expenses of the previously announced corporate
headquarters relocation to Jacksonville, FL.
In an October 25 press release, the Company announced the completion of the
969,000-acre timberland asset purchase from Smurfit-Stone Container Corporation
for $710 million. The Company expects EBITDA and free cash flow per share from
the acquisition to be accretive to the Company's results in the year 2000, on a
pro forma basis, by approximately $2.65 per share and 37 cents per share,
respectively. Quarterly earnings will be reduced next year by approximately 18
cents per share due to higher interest expense and timber depletion costs.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operating activities of $147 million for the nine-month period of
1999 increased $44 million from 1998 principally as a result of decreased
working capital requirements. EBITDA for the nine-month period of 1999 of $173
million increased $3 million from 1998 results primarily due to higher cash
operating income. Cash from operating activities helped to finance capital
expenditures of $65 million, dividends of $26 million and the repurchase of
Common Shares for $16 million and also reduce debt by $51 million. In 1999,
third quarter ending debt was $439 million and the debt-to-capital-ratio was
40.3 percent compared to debt of $490 million and a debt-to-capital ratio of
43.4 percent at December 31, 1998.
The Company repurchased 373,300 of its shares during the nine-month period of
1999 at an average cost of $44.03 for a total cost of $16 million. Over the same
period of 1998, the Company repurchased 516,079 shares, at an average cost of
$42.42 per share for a total cost of $22 million.
The Company has unsecured credit facilities totaling $300 million, which were
used as support for $95 million of outstanding commercial paper. At September
30, 1999, the Company had $205 million available under its revolving credit
facilities. In addition, the Company has on file with the Securities and
Exchange Commission shelf registration statements to offer $150 million of new
7
<PAGE> 10
public debt securities. The Company believes that internally generated funds,
combined with available external financing, will enable Rayonier to fund capital
expenditures, share repurchases, working capital and other liquidity needs for
the foreseeable future.
YEAR 2000 COMPLIANCE
Rayonier began its company-wide Year 2000 Project in 1996. The Project was
designed to identify Year 2000 problems and take corrective action covering
business and process control systems, networking communications, personal
computer applications, embedded microprocessors and third party supplier and
customer risks. As of the end of the third quarter of 1999, all internal systems
are compliant. All third party supplier and customer risks have been evaluated
and contingency plans have been developed as needed. We will continue to monitor
supplier Y2K status through the turn of the century. The Company has engaged
outside consultants to advise on, assist in and monitor compliance. The project
team reports directly to the Company's senior executive officers and regularly
provides program updates to the Audit Committee of the Board of Directors.
The total amount expended on the Year 2000 Project through the third quarter of
1999 was approximately $3.5 million. Many of the Company's systems were upgraded
or replaced in the ordinary course of business during the last five years, and
costs related to those upgrades and replacements are not included in the Year
2000 Project expenses.
The Company believes that the risks have been minimized and the possibility of
significant interruptions of operations reduced. However, if the Company and its
third party suppliers and customers do not complete in a timely manner, their
assessment, remediation and testing for Year 2000 compliance, there can be no
assurance that Year 2000 problems will not materially adversely affect the
Company's results of operations or its relationships with its suppliers and
customers. The Company has prepared contingency plans for critical systems to
deal with any areas where risks of non-compliance are significant. The Company
has identified its hypercritical systems, the failure of which could constitute
a worst case scenario, and has finalized contingency plans to deal with any Year
2000 related failures.
SAFE HARBOR
Comments about market trends, anticipated earnings and future activities,
including disclosures about the Company's Year 2000 project, are forward-looking
and are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Changes in factors referred to in such
disclosures, and changes in the following additional important factors, among
others, could cause actual results to differ materially from those expressed in
the forward-looking statements: failure of the Asian markets to recover as
expected; fluctuations in demand for specialty chemical cellulose and fluff
pulps, export and domestic logs, and wood products; the impact of such market
factors on the Company's timber sales in the U.S. and New Zealand; production
costs for wood products and for specialty pulps, particularly for raw materials
such as wood and chemicals; failure to realize operation efficiencies; actual
costs of relocation varying significantly from cost estimates; adverse weather
conditions in the Company's operating areas; the possibility of forest fires;
governmental policies and regulations affecting the environment, import and
export controls, and taxes; and stock market, interest rate and currency
movements.
8
<PAGE> 11
ITEM 3. SELECTED OPERATING DATA
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
TIMBER AND WOOD PRODUCTS
Log trading sales volume
North America, in millions of board feet 57 61 132 130
New Zealand, in thousands of cubic meters 306 174 897 550
Other, in thousands of cubic meters 157 47 429 136
Timber sales volume
Northwest U.S., in millions of board feet 33 30 165 154
Southeast U.S., in thousands of short green tons 664 558(a) 1,795 1,788
New Zealand, in thousands of cubic meters 324 280 915 650
Lumber sales volume, in millions of board feet 65 84 (b) 189 241(b)
Medium-density fiberboard sales volume,
in thousands of cubic meters 33 24 91 61
Intercompany timber sales volume
Northwest U.S., in millions of board feet 3 3 21 8
Southeast U.S., in thousands of short green tons 15 12 26 62
New Zealand, in thousands of cubic meters 159 103 428 257
SPECIALTY PULP PRODUCTS
Pulp sales volume
Chemical cellulose, in thousands of metric tons 80 82 235 245
Fluff and specialty paper pulp, in thousands of metric tons 85 87 231 262
Production as a percent of capacity 95.4% 98.6% 94.7% 98.6%
</TABLE>
(a) Includes salvage timber sales of 177 resulting from the Southeast U.S.
forest fires.
(b) Includes sales for the three months and for the nine months ended September
30, 1998 of 11 and 48, respectively, by the Plummer, ID lumber mill. This
mill was closed in July 1998 after fire damaged the facility, and
subsequently sold in September 1999.
9
<PAGE> 12
SELECTED SUPPLEMENTAL FINANCIAL DATA (thousands of dollars, except per share
data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
GEOGRAPHICAL DATA (NON-U.S.)
Sales
New Zealand $ 20,678 $ 15,349 $ 60,483 $ 42,960
Other 9,662 2,981 30,745 11,094
--------- --------- --------- -----------
Total $ 30,340 $ 18,330 $ 91,228 $ 54,054
========= ========= ========= ===========
Operating Income
New Zealand $ (2,462) $ (3,361) $ (5,165) $ (11,863)
Other (352) (363) (620) (2,530)
---------- --------- --------- -----------
Total $ (2,814) $ (3,724) $ (5,785) $ (14,393)
========= ========= ========= ===========
FOREST RESOURCES
Sales
Northwest U.S. $ 11,488 $ 11,609 $ 59,070 $ 59,032
Southeast U.S. 19,701 15,139(a) 51,397 60,274(a)
New Zealand 6,035 7,058 18,827 16,392
--------- --------- --------- -----------
Total $ 37,224 $ 33,806 $ 129,294 $ 135,698
========= ========= ========= ===========
Operating Income
Northwest U.S. $ 6,576 $ 7,486 $ 43,846 $ 42,961
Southeast U.S. 14,597 7,218(b) 37,592 41,560(b)
New Zealand 1,277 1,616 4,742 4,717
--------- --------- --------- -----------
Total $ 22,450 $ 16,320 $ 86,180 $ 89,238
========= ========= ========= ===========
EBITDA per Share
Northwest U.S. $ 0.26 $ 0.30 $ 1.65 $ 1.60
Southeast U.S. 0.62 0.37 1.61 1.74
New Zealand 0.16 0.15 0.51 0.41
---- ---- ---- ----
Total $ 1.04 $ 0.82 $ 3.77 $ 3.75
==== ==== ==== ====
</TABLE>
(a) Includes salvage timber sales of $1.7 million.
(b) Operating income was reduced by $6.7 million resulting from the Southeast
U.S. forest fires during the third quarter of 1998, including $4.0 million
on lower pricing for salvage timber and $2.7 million on the write-off of
destroyed timber assets and other fire related expenses.
10
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Rayonier's 10-K for 1998 reported that the U.S. Court of Appeals for the
Eleventh Circuit on March 10, 1999 affirmed summary judgment in favor of
Rayonier in an action brought by Powell-Duffryn Terminals. Subsequently, on
March 31, 1999, Powell-Duffryn filed a motion for rehearing by the same court.
This motion was denied on May 11, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index.
(b) Rayonier Inc. filed current reports on Form 8-K dated July 29, 1999 and
August 23, 1999 including press releases issued on each of those dates.
Rayonier Inc. also filed a Form 8-K on November 9, 1999 and a Form 8-K/A,
Amendment No. 1 on November 12, 1999.
SIGNATURE
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
RAYONIER INC. (Registrant)
---------------------------
BY GEORGE C. KAY
-------------------------
George C. Kay
Vice President and
Corporate Controller
November 15, 1999 (Chief Accounting Officer)
11
<PAGE> 14
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION LOCATION
----------- ----------- --------
<S> <C> <C>
2 Plan of acquisition, reorganization,
arrangement, liquidation or succession None
3.1 Amended and restated articles of incorporation No amendments
3.2 By-laws No amendments
4.1 Credit Agreement dated as of October 25, 1999 Filed herewith
between Rayonier Timberlands Operating Company,
L.P. and Credit Suisse First Boston , Morgan Stanley
Senior Funding, Inc. and Citibank, N.A.,.
4.2 Note Purchase Agreement dated as of October 25, 1999 Filed herewith
between Rayonier Timberlands Operating Company , L.P.
and Timber Capital Holdings LLC.
10 Material Contracts None
11 Statement re computation of per share earnings Not required to be filed
12 Statement re computation of ratios Filed herewith
15 Letter re unaudited interim financial information None
18 Letter re change in accounting principles None
19 Report furnished to security holders None
22 Published report regarding matters
submitted to vote of security holders None
23 Consents of experts and counsel None
24 Power of attorney None
27 Financial data schedule Filed herewith
99 Additional exhibits None
</TABLE>
12
<PAGE> 1
Exhibit 4.1
================================================================================
CREDIT AGREEMENT
Dated as of October 25, 1999
among
RAYONIER TIMBERLANDS OPERATING COMPANY, L.P.,
THE LENDERS NAMED HEREIN
and
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent
MORGAN STANLEY SENIOR FUNDING, INC.
CITIBANK, N.A.,
as Co-Syndication Agents
-----------------------------------------
CREDIT SUISSE FIRST BOSTON
Lead Arranger
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
Page
----
ARTICLE I
Definitions
SECTION 1.01. Defined Terms .......................................................................1
SECTION 1.02. Terms Generally ....................................................................22
SECTION 1.03. Accounting and Financial Terms......................................................22
ARTICLE II
The Credits
SECTION 2.01. Commitments ........................................................................22
SECTION 2.02. Loans ............................................................................23
SECTION 2.03. Borrowing Procedure.................................................................23
SECTION 2.04. Evidence of Debt; Repayment of Loans................................................24
SECTION 2.05. Fees ............................................................................24
SECTION 2.06. Interest on Loans...................................................................25
SECTION 2.07. Default Interest ...................................................................25
SECTION 2.08. Alternate Rate of Interest..........................................................25
SECTION 2.09. Termination and Reduction of Commitments............................................25
SECTION 2.10. Conversion and Continuation of Borrowings..........................................26
SECTION 2.11. Optional Prepayments. ..............................................................27
SECTION 2.12. Mandatory Prepayments...............................................................27
SECTION 2.13. Reserve Requirements; Change in Circumstances.......................................29
SECTION 2.14. Change in Legality..................................................................30
SECTION 2.15. Indemnity ..........................................................................30
SECTION 2.16. Pro Rata Treatment..................................................................31
SECTION 2.17. Sharing of Setoffs..................................................................31
SECTION 2.18. Payments ...........................................................................31
SECTION 2.19. Taxes ...................................................................32
SECTION 2.20. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate.............33
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers................................................................34
SECTION 3.02. Authorization ......................................................................34
SECTION 3.03. Enforceability .....................................................................34
SECTION 3.04. Governmental Approvals..............................................................34
SECTION 3.05. Financial Statements................................................................34
SECTION 3.06. No Material Adverse Change..........................................................35
SECTION 3.07. Title to Properties; Possession Under Leases........................................35
SECTION 3.08. Litigation; Compliance with Laws....................................................35
SECTION 3.09. Agreements .........................................................................36
SECTION 3.10. Federal Reserve Regulations.........................................................36
SECTION 3.11. Investment Company Act; Public Utility Holding Company Act..........................36
</TABLE>
<PAGE> 3
Contents, p.3
<TABLE>
<S> <C> <C>
SECTION 3.12. Use of Proceeds .....................................................36
SECTION 3.16. Environmental Matters................................................37
SECTION 3.17. Insurance ...........................................................38
SECTION 3.18. Labor Matters .......................................................38
SECTION 3.19. Solvency ............................................................38
SECTION 3.20. Year 2000 ...........................................................38
SECTION 3.21. Acquisition Agreement................................................38
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Borrowings ......................................................39
SECTION 4.02. Initial Borrowing....................................................39
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties, Insurance......................41
SECTION 5.02. Obligations and Taxes................................................42
SECTION 5.03. Financial Statements, Reports, etc...................................42
SECTION 5.04. Litigation and Other Notices.........................................43
SECTION 5.05. Employee Benefits....................................................43
SECTION 5.06. Maintaining Records; Access to Properties and Inspections............44
SECTION 5.07. Use of Proceeds .....................................................44
SECTION 5.08. Compliance with Environmental Laws...................................44
SECTION 5.09. Guarantee Requirement................................................44
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness ........................................................45
SECTION 6.02. Restricted Payments..................................................46
SECTION 6.03. Liens .....................................................47
SECTION 6.04. Transactions with Affiliates.........................................48
SECTION 6.05. Certain Restrictions on Subsidiaries.................................49
SECTION 6.06. Sale and Lease-Back Transactions.....................................49
SECTION 6.07. Merger, Consolidation or Sale of Assets..............................49
SECTION 6.08. Business of the Borrower and the Subsidiaries........................50
SECTION 6.09. Limitation on Non-Guarantor Subsidiaries.............................50
SECTION 6.10. Asset Sales .........................................................50
SECTION 6.11. Limitation on Harvesting.............................................51
SECTION 6.12. Amendment of Material Documents......................................52
SECTION 6.13. Prepayments, Redemptions and Repurchases of Debt.....................52
SECTION 6.14. Fiscal Year .........................................................52
SECTION 6.15. Consolidated Leverage Ratio..........................................52
SECTION 6.16. Consolidated Fixed Charge Coverage Ratio.............................53
SECTION 6.17. Managing General Partner.............................................53
</TABLE>
<PAGE> 4
Contents, p.4
<TABLE>
<S> <C>
ARTICLE VII
Events of Default......................................53
ARTICLE VIII
The Agent...........................................55
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices....................................................................57
SECTION 9.02. Survival of Agreement......................................................57
SECTION 9.03. Binding Effect ............................................................58
SECTION 9.04. Successors and Assigns.....................................................58
SECTION 9.05. Expenses; Indemnity........................................................61
SECTION 9.06. Right of Setoff ...........................................................61
SECTION 9.07. Applicable Law ............................................................61
SECTION 9.08. Waivers; Amendment.........................................................61
SECTION 9.09. Interest Rate Limitation...................................................62
SECTION 9.10. Entire Agreement...........................................................62
SECTION 9.11. WAIVER OF JURY TRIAL.......................................................62
SECTION 9.12. Severability ..............................................................63
SECTION 9.13. Counterparts ..............................................................63
SECTION 9.14. Headings ..................................................................63
SECTION 9.15. Jurisdiction; Consent to Service of Process................................63
SECTION 9.16. Confidentiality ...........................................................63
Schedule 1.01(a) Subsidiary Guarantors and Material Subsidiaries
Schedule 1.01(b) Existing Investments
Schedule 2.01 Commitments
Schedule 3.09 Affiliate Agreements
Schedule 3.15 Post-Retirement Benefit Obligations
Schedule 3.16 Environmental Matters
Schedule 3.17 Insurance
Schedule 6.05 Existing Restrictions
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Subsidiary Guarantee Agreement
Exhibit E Form of Indemnity, Subrogation and Contribution Agreement
Exhibit F-1 Form of Opinion of John Canning, Esq., Corporate Secretary and Associate General Counsel of the
Borrower
Exhibit F-2 Form of Opinion of Andrews & Kurth L.L.P., counsel for the Borrower
Exhibit G-1 Form of Existing Rayonier Subordinated Note
Exhibit G-2 Form of New Rayonier Subordinated Note
</TABLE>
<PAGE> 5
CREDIT AGREEMENT dated as of October
25, 1999 (this "Agreement"), among RAYONIER
TIMBERLANDS OPERATING COMPANY, L.P., a Delaware
limited partnership (the "Borrower"); the Lenders
(as defined in Article I); MORGAN STANLEY SENIOR
FUNDING, INC. and CITIBANK, N.A., as Co-
Syndication Agents; and CREDIT SUISSE FIRST
BOSTON, a bank organized under the laws of
Switzerland, acting through its New York Branch
("CSFB"), as administrative agent (in such
capacity, the "Administrative Agent").
The Borrower, a wholly owned subsidiary of Rayonier Inc.
("Rayonier"), intends to acquire (the "Acquisition") all the Fernandina and
Brewton timberlands assets located in Georgia, Florida and Alabama owned by
Jefferson Smurfit Corporation (U.S.) (the "Seller") pursuant to the Acquisition
Agreement (such term and each other capitalized term used and not otherwise
defined herein being used with the meaning assigned to it in Section 1.01). The
consideration payable in connection with the Acquisition will consist of
$225,000,000 in cash and the Installment Notes in an aggregate principal amount
of $500,000,000.
The Borrower has requested the Lenders to extend credit in the form
of (a) Term Loans on the Closing Date in an aggregate principal amount not in
excess of $200,000,000 and (b) Revolving Loans at any time and from time to time
on and after the Closing Date and prior to the Revolving Credit Maturity Date in
an aggregate principal amount at any time outstanding not in excess of
$75,000,000. The proceeds of the Term Loans and of Revolving Loans (the amount
of which Revolving Loans shall not exceed $36,000,000) made on the Closing Date
are to be used by the Borrower solely (i) to finance the Acquisition, (ii) to
fund a distribution of $142,000,000 to Rayonier Timberlands, L.P. and ultimately
to Rayonier, which will purchase the New Rayonier Subordinated Indebtedness for
a like amount and (iii) to pay related fees and expenses. The proceeds of the
remaining Revolving Loans are to be used by the Borrower for general partnership
purposes.
The Lenders are willing to extend such credit to the Borrower on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, including
in the preamble hereto, the following terms shall have the meanings specified
below:
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Alternate Base Rate in accordance with
the provisions of Article II.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
<PAGE> 6
2
"Acquired Indebtedness" shall mean, with respect to any specified
person (a) Indebtedness of any other person existing at the time such other
person merged with or into or became a subsidiary of such specified person,
including Indebtedness incurred in connection with, or in contemplation of, such
other person merging with or into or becoming a subsidiary of such specified
person and (b) Indebtedness encumbering any asset acquired by such specified
person.
"Acquisition" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Acquisition Agreement" shall mean the Purchase and Sale Agreement
made as of July 28, 1999, between the Seller and Rayonier, as amended by the
letter agreement dated October 21, 1999 between the Seller and Rayonier.
"Additional Rayonier Subordinated Indebtedness" shall mean
Indebtedness of the Borrower to Rayonier incurred after the Closing Date that
(a) is not by its terms required to be repaid, prepaid, redeemed, purchased or
defeased prior to the Term Maturity Date, (b) is subordinated to the Obligations
on terms at least as favorable to the Lenders as the terms of the Existing
Rayonier Subordinated Indebtedness and the New Rayonier Subordinated
Indebtedness and (c) contains covenants, events of default and other provisions
not less favorable to the Borrower and the Lenders than those in the Existing
Rayonier Subordinated Indebtedness and the New Rayonier Subordinated
Indebtedness.
"Adjusted Asset Sales Amount" means $100,000,000 as increased by 10%
of the purchase price of Asset Acquisitions (other than like-kind exchanges)
subsequent to the Closing Date.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum equal to the
product of (a) the LIBO Rate in effect for such Interest Period and (b)
Statutory Reserves.
"Administrative Agent" shall have the meaning assigned to such term
in the preamble to this Agreement.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the greater of (a) the Prime Rate in effect on such day and (b) the sum of
(i) the Federal Funds Effective Rate in effect on such day and (ii) 1/2 of 1%.
If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability of the Administrative Agent to obtain sufficient quotations in
accordance with the terms of the definition thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the preceding sentence until
the circumstances giving rise to such inability no longer exist. Any change in
the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
<PAGE> 7
3
"Applicable Percentage" shall mean, for any day, (a) with respect to
any Eurodollar Loan or ABR Loan, the applicable percentage set forth below under
the caption "ABR Spread" or "Eurodollar Spread", respectively, and (b) with
respect to the Commitment Fee, the applicable percentage set forth below under
the caption "Commitment Fee", in each case determined by reference to the
highest Level applicable based upon the ratings by S&P and Moody's in effect on
such date for the Designated Indebtedness:
<TABLE>
<CAPTION>
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
--------------------- --------------------- --------------------- --------------------- ---------------------
RATINGS [ ]BBB/[ ]Baa3 OR [ ]BBB- AND [ ]BBB-/[ ]Ba1 OR [ ]BB+ AND [ ]BB+ OR
(S&P/MOODY'S) [ ]BBB-/[ ]Baa2 [ ]Baa3 [ ]BB+/[ ]Baa3 [ ]Ba1 [ ]Ba1
--------------------- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C>
ABR Spread 0.25% 0.50% 0.75% 1.25% 1.75%
- ----------
Eurodollar Spread 1.25% 1.50% 1.75% 2.25% 2.75%
- -----------------
Commitment Fee 0.25% 0.325% 0.375% 0.50% 0.50%
- --------------
</TABLE>
provided that for the period of six months commencing on the Closing Date, the
Applicable Percentage shall be determined by reference to Level 2. For purposes
of the foregoing, (i) if either Moody's or S&P shall not have in effect a rating
for the Designated Indebtedness (other than by reason of the circumstances
referred to in the last sentence of this paragraph), then such rating agency
shall be deemed to have established a rating below BB+ or Ba1, as the case may
be; and (ii) if the ratings established or deemed to have been established by
Moody's or S&P for the Designated Indebtedness shall be changed (other than as a
result of a change in the rating system of Moody's or S&P), such change shall be
effective as of the date on which it is first announced by the applicable rating
agency. Each change in the Applicable Percentage shall apply for purposes of
determining interest on the outstanding Loans and the Commitment Fee during the
period commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the rating
system of Moody's or S&P shall change, or if either such rating agency shall
cease to be in the business of rating corporate debt obligations, the Borrower
and the Lenders shall negotiate in good faith to amend this definition to
reflect such changed rating system or the absence of ratings from such rating
agency and, pending the effectiveness of such amendment, the Applicable
Percentage shall be determined by reference to the rating most recently in
effect prior to such change or cessation.
"Arranger and Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Arranger" shall mean CSFB.
"Asset Acquisition" shall mean (a) an Investment by the Borrower or
any Subsidiary in any other person pursuant to which such person shall become a
Subsidiary or shall be merged with or into the Borrower or any Subsidiary, (b)
the acquisition by the Borrower or any Subsidiary of the assets of any person
(other than a Subsidiary) which constitute all or substantially all of the
assets of such person, (c) the acquisition by the Borrower or any Subsidiary of
merchantable Timber or Timberlands outside the ordinary course of business, or
(d) the acquisition by the Borrower or any Subsidiary of any division or line of
business of any person (other than a Subsidiary).
"Asset Sale" shall have the meaning assigned to such term in Section
6.10(a).
<PAGE> 8
4
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Attributable Debt" shall mean, with respect to any sale and
leaseback transaction not giving rise to Capital Lease Obligations, as of any
date of determination, the total obligation (discounted to present value at the
rate of interest implicit in the lease included in such transaction) of the
lessee for rental payments (other than amounts required to be paid on account of
property taxes, maintenance, repairs, insurance, assessments, utilities,
operating and labor costs and other items which do not constitute payments for
property rights) during the remaining portion of the term (including extensions
which are at the sole option of the lessor) of the lease included in such
transaction (and in the case of any lease which is terminable by the lessee upon
the payment of a penalty, such rental obligation shall also include the amount
of such penalty, but no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so terminated).
"Available Cash" shall mean, on any date,
(a) the sum of (i) all cash and cash equivalents of the
Borrower and the Subsidiaries at the most recent fiscal quarter end
and (ii) all additional cash and cash equivalents of the Borrower and
the Subsidiaries on such date representing the proceeds of working
capital borrowings permitted hereby after the most recent fiscal
quarter end; provided that the amounts under clauses (i) and (ii)
shall be reduced in determining Available Cash on any date to the
extent the aggregate amount of unused Revolving Credit Commitments on
such date are less than the aggregate amount of all interest payments
anticipated to become due in respect of Indebtedness of the Borrower
or any of the Subsidiaries (other than the Rayonier Subordinated
Indebtedness) during the period of three calender months following
such date (determined on the assumption that any floating rate
Indebtedness will continue to bear interest at the rate or rates in
effect on such date), minus
(b) the aggregate amount of all Restricted Payments made by
the Borrower and the Subsidiaries after the most recent fiscal
quarter end, minus
(c) any cash or cash equivalents of the Borrower and the
Subsidiaries that are subject to Liens or other arrangements that in
either case would prevent the Borrower and the Subsidiaries from
applying such assets to the payment of their liabilities and
obligations, and any cash or cash equivalents of Subsidiaries that,
by reason of legal or contractual restrictions, could not be
distributed to the Borrower, or that would be subject to withholding
in the event of any such distribution under applicable tax laws or
regulations, minus
(d) the amount of Net Cash Proceeds of Asset Sales and
Excess Harvests that the Borrower and the Subsidiaries have not yet
applied for a purpose permitted under Section 6.10 or 6.11, minus
(e) the amount of cash reserves (other than for items
referred to in the preceding clauses) reasonably determined by the
Board of Directors of the Managing General Partner to be necessary or
appropriate (i) to provide for the proper conduct of the business of
the Borrower and the Subsidiaries (including reserves for future
capital expenditures, for amounts by which cash operating expenses
are expected to exceed cash receipts from operations during the
period of three calender months following such date and for
anticipated future credit needs of the Borrower and the Subsidiaries)
or (ii) to comply with applicable law or any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation
to which the Borrower or any Subsidiary is a party or by or to which
it is bound or its assets are subject.
<PAGE> 9
5
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Borrower's Environmental Disclosure Report" shall mean the
Environmental Disclosure Report prepared by the Borrower regarding certain
environmental matters and delivered to the Administrative Agent prior to the
date hereof.
"Borrowing" shall mean a group of Loans of a single Type made,
converted or continued by the Lenders on a single date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or
day on which banks in New York, New York are authorized or required by law to
close; provided, however, that when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Acquisition" shall mean any transaction in which the
Borrower or a Subsidiary of the Borrower acquires (through an asset acquisition,
merger, stock acquisition or other form of investment) control over all or a
portion of the assets, properties or business of another Person for the purpose
of increasing (through an increase in acreage or increase in inventory of
Timber) the operating capacity of the Borrower or a Subsidiary of the Borrower
over the operating capacity immediately prior to such transaction. Where Capital
Expenditures are made in part for a Capital Acquisition and in part for other
purposes, the portion applicable to the Capital Acquisition will be determined
based on the Managing General Partner's reasonable allocation.
"Capital Expenditures" shall mean, for any period, additions to
property, plant and equipment and other expenditures of the Borrower and the
Subsidiaries, required to be capitalized in accordance with GAAP, that are (or
would be) set forth in a consolidated statement of cash flows of the Borrower
for such period prepared in accordance with GAAP.
"Capital Lease Obligations" of any person shall mean the obligations
of such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
A "Change in Control" shall be deemed to have occurred if (a) one of
(i) Rayonier Timberlands Management, Inc., (ii) Rayonier or (iii) a subsidiary
of Rayonier in which Rayonier owns a majority of the voting Equity Interests,
shall fail to be the sole managing general partner of the Borrower or shall fail
to Control the Borrower; (b) Rayonier shall fail to Control the Managing General
Partner; (c) if Rayonier Timberlands Management, Inc. is the Managing General
Partner, Rayonier fails to own at least 33% of the voting Equity Interests of
Rayonier Timberlands Management, Inc. and a greater percentage of such voting
Equity Interests than any other person or group; (d) the Borrower ceases to be a
consolidated subsidiary of Rayonier for purposes of Rayonier's GAAP financial
statements; or (e) Rayonier fails to own, directly or indirectly, Equity
Interests representing at least 33% of the equity of the Borrower.
<PAGE> 10
6
"Closing Date" shall mean October 25, 1999, the date of the initial
borrowing hereunder.
"Closing Date Transactions" shall mean the Acquisition, the issuance
of the Installment Notes, the Borrowings hereunder on the Closing Date and the
execution and delivery of the Subsidiary Guarantee Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitments" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated September 1999.
"Consolidated Cash Flow Available for Fixed Charges" shall mean, with
respect to the Borrower and the Subsidiaries for any period, the sum of, without
duplication, the amounts for such period, taken as a single accounting period,
of (a) Consolidated Net Income, (b) Consolidated Non-Cash Charges, (c)
Consolidated Interest Expense, (d) interest on the Rayonier Subordinated
Indebtedness (to the extent such interest is deducted in the determination of
Consolidated Net Income) and (e) Consolidated Income Tax Expense.
"Consolidated Fixed Charge Coverage Ratio" shall mean, with respect
to the Borrower and the Subsidiaries, the ratio of the aggregate amount of
Consolidated Cash Flow Available for Fixed Charges for the most recent four full
fiscal quarters for which financial information in respect thereof is available
immediately preceding the date of the transaction (the "Transaction Date")
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (such most recent four full fiscal quarter period being referred to herein
as the "Four Quarter Period") to the aggregate amount of Consolidated Fixed
Charges for the Four Quarter Period. In addition to and without limitation of
the foregoing, for purposes of this definition, "Consolidated Cash Flow
Available for Fixed Charges" and "Consolidated Fixed Charges" shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to, without duplication (a) the incurrence or repayment of any
Indebtedness of the Borrower or any of the Subsidiaries (and, in the case of any
incurrence, the application of the net proceeds thereof) during the period
commencing on the first day of the Four Quarter Period to and including the
Transaction Date (the "Reference Period"), including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make such calculation
(and the application of the net proceeds thereof), as if such incurrence (and
application) occurred on the first day of the Reference Period (including any
actual interest payments made with respect to Indebtedness under this Agreement,
and (b) any Asset Sales or Asset Acquisitions (including, without limitation,
any Asset Acquisition giving rise to the need to make such calculation as a
result of the Borrower or one of the Subsidiaries (including any Person who
becomes a Subsidiary as a result of the Asset Acquisition) incurring, assuming
or otherwise being liable for Acquired Indebtedness) occurring during the
Reference Period, as if such Asset Sale or Asset Acquisition occurred on the
first day of the Reference Period; provided, however, that (i) Consolidated
Fixed Charges shall be reduced by amounts attributable to businesses or assets
that are so disposed of or discontinued only to the extent that the obligations
giving rise to such Consolidated Fixed Charges would no longer be obligations
contributing to the Consolidated Fixed Charges subsequent to the date of
determination of the Consolidated Fixed Charge Coverage Ratio and (ii)
Consolidated Cash Flow Available for Fixed Charges generated by an acquired
business or asset shall be determined (x) in the case of an Asset Acquisition of
Timber or Timberlands by the Borrower or a Subsidiary (which for purposes of
this definition shall include the acquisition pursuant to the Acquisition
Agreement of the limited liability
<PAGE> 11
7
company member interests referred to therein) during such period, by using the
projected net cash flow of the Timber or Timberlands so acquired, based on the
harvest plan prepared in the ordinary course of business and in good faith by
the Managing General Partner, for the first 12 full months of operations of the
acquired Timber or Timberlands following the date of the Asset Acquisition;
provided that such harvest plan shall not assume the harvesting or sale of more
than 10% of the total merchantable Timber so acquired in the first 12 full
months following the date of the Asset Acquisition; and provided further, in
determining projected cash flow from acquired Timber or Timberlands, prices
shall be assumed to equal the average prices realized by the Borrower for
comparable Timber sold during such prior period, and (y) in the case of all
other Asset Acquisitions during such period, by using the actual gross profit
(revenues minus cost of goods sold) of such acquired business or asset during
the Four Quarter Period minus the pro forma expenses that would have been
incurred by the Borrower and the Subsidiaries in the operation of such acquired
business or asset during such period computed on the basis of personnel expenses
for employees retained or to be retained by the Borrower and the Subsidiaries in
the operation of the acquired business or asset and non-personnel costs and
expenses incurred by the Borrower and the Subsidiaries in the operation of the
Borrower's business at similarly situated facilities. If the applicable
Reference Period for any calculation of the Consolidated Fixed Charge Coverage
Ratio shall include a portion prior to the Closing Date, then such Consolidated
Fixed Charge Coverage Ratio shall be calculated based upon the Consolidated Cash
Flow Available for Fixed Charges and the Consolidated Fixed Charges of the
Borrower on a pro forma basis for such portion of the Reference Period prior to
the Closing Date, giving effect to the transactions occurring on the Closing
Date, and the Consolidated Cash Flow Available for Fixed Charges and the
Consolidated Fixed Charges for the remaining portion of the Reference Period on
and after the Closing Date, giving pro forma effect, as described in the two
foregoing sentences, to all applicable transactions occurring on the Closing
Date or otherwise. Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the "Consolidated Fixed Charge Coverage Ratio" (i)
interest on outstanding Indebtedness (other than Indebtedness referred to in
clause (ii) below) determined on a fluctuating basis as of the last day of the
Four Quarter Period and which will continue to be so determined thereafter shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on such date; (ii) only actual interest
payments associated with Indebtedness consisting of revolving credit borrowings
or commercial paper during the Four Quarter Period shall be included in such
calculation; and (iii) if interest of any Indebtedness actually incurred on such
date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the last day of the Four Quarter Period will
be deemed to have been in effect during such period.
"Consolidated Fixed Charges" shall mean, for any period, the sum of
(i) Consolidated Interest Expense for such period and (ii) Capital Expenditures
during such period, other than (x) Capital Acquisitions and (y) Capital
Expenditures made from the reinvestment of the proceeds of Asset Sales.
"Consolidated Income Tax Expense" shall mean, with respect to any
period, all provisions for Federal, state, local and foreign income taxes of the
Borrower and the Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" shall mean, with respect to the
Borrower and the Subsidiaries for any period, without duplication, the sum of
(a) the interest expense (not including any amounts paid or accrued in respect
of any Preferred Stock or Redeemable Equity Interests) of the Borrower and the
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, including, without limitation, (i) any amortization of debt discount,
(ii) the net cost under Hedging Agreements designed to protect the Borrower or
any Subsidiary from fluctuation in interest rates, (iii) the interest portion of
any deferred payment obligation, (iii) all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers' acceptance
financings that
<PAGE> 12
8
constitute Indebtedness, and (iv) all accrued interest and (b) the interest
component of Capital Lease Obligations paid or scheduled to be paid or accrued
by the Borrower and the Subsidiaries during such period, determined on a
consolidated basis in accordance with GAAP. Consolidated Interest Expense shall
not include interest on the Rayonier Subordinated Indebtedness.
"Consolidated Leverage Ratio" shall mean, at any time, the ratio of
(a) Consolidated Total Debt at such time to (b) Consolidated Cash Flow Available
for Fixed Charges for the most recently ended period of four fiscal quarters,
all as determined on a consolidated basis in accordance with GAAP. Solely for
purposes of this definition, if, at any time the Consolidated Leverage Ratio is
being determined, the Borrower or any Subsidiary shall have completed a Material
Acquisition (including the Acquisition) or Material Disposition since the
beginning of the relevant four fiscal quarter period, the Consolidated Leverage
Ratio shall be determined on a pro forma basis as if such Material Acquisition
or Material Disposition, and any related incurrence or repayment of
Indebtedness, had occurred at the beginning of such period (and such pro forma
determination, insofar as it relates to Consolidated Cash Flow Available for
Fixed Charges, will be made in accordance with subclause (ii) of the proviso of
the definition of Consolidated Fixed Charge Coverage Ratio).
"Consolidated Net Income" shall mean, for any period, the net income
of the Borrower and the Subsidiaries, determined on a consolidated basis in
accordance with GAAP and adjusted to exclude (a) net after-tax extraordinary
gains or losses, (b) net after-tax gains or losses attributable to Asset Sales,
(c) the net income or loss of any person which is not a Subsidiary and which is
accounted for by the equity method of accounting, provided that Consolidated Net
Income shall include the amount of dividends or distributions actually paid to
the Borrower or any Subsidiary by any such person, (d) the net income or loss of
any person accrued prior to the date it becomes a Subsidiary or is merged into
or consolidated with the Borrower or any Subsidiary or the date that such
person's assets are acquired by the Borrower or any Subsidiary, (e) the net
income of any Subsidiary to the extent that dividends or distributions of such
net income are not at the date of determination permitted by the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
other regulation, and (f) the cumulative effect of any changes in accounting
principles.
"Consolidated Non-Cash Charges" shall mean, with respect to the
Borrower and the Subsidiaries for any period, the aggregate depreciation,
depletion, amortization and any other non-cash charges, in each case reducing
Consolidated Net Income of the Borrower and the Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Assets" shall mean, at any time, the total assets
and properties of the Borrower and the Subsidiaries which would be shown as
assets on a consolidated balance sheet of the Borrower and the Subsidiaries as
of such time prepared in accordance with GAAP.
"Consolidated Total Debt" shall mean, as of any date of
determination, without duplication, the aggregate principal amount of
Indebtedness of the Borrower and the Subsidiaries outstanding as of such date,
determined on a consolidated basis in accordance with GAAP.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"CSFB" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
<PAGE> 13
9
"Designated Indebtedness" shall mean the Borrower's senior,
unsecured, non-credit enhanced long term Indebtedness for borrowed money.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiary" shall mean a Subsidiary incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Action" shall mean any (a) administrative, regulatory
or judicial action, suit, written demand, demand letter, written claim, notice
of noncompliance or violation, notice of liability or potential liability,
investigation, proceeding, consent order or consent agreement relating in any
way to any Environmental Law, Environmental Permit or Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
environment including, without limitation, (i) by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages and (ii) by any governmental or regulatory authority for damages,
contribution, indemnification, cost recovery, compensatory or injunctive relief;
and (b) any administrative, regulatory or judicial action, suit or proceeding
brought by any third party properly before a forum of competent jurisdiction
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling, transportation, storage, treatment or disposal
of any Hazardous Material or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections 9601 et seq.
(collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Sections 6901 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Sections 1251
et seq., the Clean Air Act of 1970, as amended 42 U.S.C. Sections 7401 et seq.,
the Toxic Substances Control Act of 1976, 15 U.S.C. Sections 2601 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Sections 651
et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Sections 11001 et seq., the Safe Drinking Water Act of 1974, as amended,
42 U.S.C. Sections 300(f) et seq., the Hazardous Materials Transportation Act,
49 U.S.C. Sections 5101 et seq., and any similar or implementing state or local
law, and all amendments or regulations promulgated under any of the foregoing.
<PAGE> 14
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"Environmental Permit" shall mean any permit, approval,
authorization, certificate, license, variance, filing or permission required by
or from any Governmental Authority pursuant to any Environmental Law.
"Equity Interests" shall mean, with respect to any person, shares of
the capital stock, partnership interests or other equity interests in such
person or any warrants, options or other rights to acquire Equity Interests.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of the Borrower or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by the Borrower or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of the Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which the Borrower or any such Subsidiary could otherwise be liable;
and (i) any other event or condition with respect to a Plan or Multiemployer
Plan that could reasonably be expected to result in material liability of the
Borrower.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or
Eurodollar Term Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Harvest" means a harvest of Timber (including timber deed,
bulk, pay-as-cut and stumpage sales), to the extent in excess in the aggregate
of the following limitations: (a) 140% of the Planned Volume during any fiscal
year of the Borrower, (b) 135% of the Planned Volume during any period of two
consecutive fiscal years of the Borrower, (c) 130% of the Planned Volume during
any period of three consecutive fiscal years of the Borrower, (d) 125% of the
Planned Volume during any
<PAGE> 15
11
period of four consecutive fiscal years of the Borrower, and (e) 120% of the
Planned Volume during any period of five consecutive fiscal years of the
Borrower. In the event that the Borrower or any Subsidiary sells Timber pursuant
to a timber deed, bulk, pay-as-cut or stumpage contract, the Timber shall be
deemed harvested in equal monthly amounts over the life of the contract,
regardless of when the purchaser actually severs the Timber.
"Excluded Taxes" shall mean, with respect to the Administrative
Agent, any Lender, or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income or that of its holding company
by the United States of America or by the jurisdiction under the laws of which
such recipient or such holding company is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in clause
(a) above and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 2.20(a)), any withholding
tax that (i) is in effect and would apply to amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office), except to the extent that the prior lending
office or the assignor, as applicable, of such Foreign Lender was entitled, at
the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.19(a), or (ii) is attributable to such Foreign Lender's
failure to comply with Section 2.19(e).
"Existing Rayonier Subordinated Indebtedness" shall mean $285,000,000
aggregate principal amount of subordinated indebtedness of the Borrower owed to
Rayonier and its Affiliates evidenced by the Existing Rayonier Subordinated
Notes.
"Existing Rayonier Subordinated Notes" shall mean promissory notes of
the Borrower in the form of Exhibit G-1 hereto evidencing the Existing Rayonier
Subordinated Indebtedness.
"Existing Rayonier Subordinated Indebtedness Indemnity Agreement"
shall mean the indemnity agreement dated as of October 19, 1999, among Rayonier
Forest Resources Co., a Delaware corporation, Rayonier Forest Resources Company,
a Delaware corporation, Rayonier Timberlands Management, Inc., Rayonier and the
Borrower.
"Fair Market Value" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
the day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Payment Date" shall have the meaning assigned to such term in
Section 2.05(a).
"Fees" shall mean the Commitment Fees and the Arranger and Agent
Fees.
"Financial Officer" of any person shall mean the chief financial
officer, principal accounting officer, treasurer or controller of such person.
<PAGE> 16
12
"Foreign Lender" shall mean any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean United States generally accepted accounting
principles applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" as applied to any person, means any direct or indirect
liability, contingent or otherwise, of such person with respect to any
Indebtedness, lease, cash dividend or other obligation of another, including,
without limitation (a) any such obligation directly or indirectly guaranteed or
endorsed (otherwise than for collection or deposit in the ordinary course of
business) by such person, or in respect of which such person is otherwise
directly or indirectly liable, (b) any other obligation under any contract
which, in economic effect, is substantially equivalent to a guarantee,
including, without limitation, any such obligation of a partnership in which
such person is a general partner or of a joint venture in which such person is a
joint venturer, or (c) any obligation in effect guaranteed by such person
through any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet or other financial condition of the obligor of
such obligation, or to make payment for any products, materials or supplies or
for any transportation or services regardless of the non-delivery or
nonfurnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof.
"Guarantee Requirement" shall mean, at any time, that the Subsidiary
Guarantee Agreement (or a supplement referred to in Section 20 thereof) shall
have been executed by each Material Subsidiary (other than any Foreign
Subsidiary, to the extent and for so long as the execution of the Subsidiary
Guarantee Agreement by such Foreign Subsidiary would result in adverse tax
consequences for the Borrower or any of its Affiliates) existing at such time,
shall have been delivered to the Administrative Agent and shall be in full force
and effect.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" shall mean any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or similar agreement or arrangement designed to protect the Borrower
or any Subsidiary from fluctuations in interest rates, currency exchange rates
or commodity prices.
"Indebtedness" shall mean as applied to any person (without
duplication):
(a) any indebtedness for borrowed money and all obligations
evidenced by any bond, note, debenture or other similar instrument or letter of
credit (or reimbursement agreements in respect
<PAGE> 17
13
thereof) which such person has directly or indirectly created, incurred or
assumed (other than obligations with respect to letters of credit securing
obligations (other than obligations described in paragraphs (a) through (c) of
this definition) entered into in the ordinary course of business of such person
to the extent such letters of credit are not drawn upon, or, if and to the
extent drawn upon, such drawing is reimbursed no later than the fifth Business
Day following receipt by such person of a demand for reimbursement following
payment on the letter of credit);
(b) any indebtedness for borrowed money and all obligations
evidenced by any bond, note, debenture or other similar instrument secured by
any Lien in respect of property owned by such person, whether or not such person
has assumed or become liable for the payment of such indebtedness; provided that
the amount of such indebtedness, if such person has not assumed the same or
become liable therefor, shall in no event be deemed to be greater than the Fair
Market Value from time to time (as determined in good faith by such person) of
the property subject to such Lien;
(c) any indebtedness, whether or not for borrowed money
(excluding trade payables and accrued expenses arising in the ordinary course of
business), with respect to which such person has become directly or indirectly
liable and which represents the deferred purchase price (or a portion thereof)
or has been incurred to finance the purchase price (or a portion thereof) of any
property or service or business acquired by such person, whether by purchase,
consolidation, merger or otherwise;
(d) Capital Lease Obligations to the extent such
obligations would, in accordance with GAAP, appear on a balance sheet of such
person;
(e) All Attributable Debt of such person in respect of sale
and leaseback transactions not giving rise to Capital Lease Obligations;
(f) any indebtedness of any other person of the character
referred to in clause (a), (b), (c), (d) or (e) of this definition with respect
to which the person whose Indebtedness is being determined has become liable by
way of a Guarantee;
(g) all Redeemable Equity Interests of any subsidiary of
such person valued at the greater of its voluntary or involuntary maximum fixed
repurchase price;
(h) any Preferred Stock (other than Redeemable Equity
Interests) of any subsidiary of such person that is not a Subsidiary Guarantor
valued at the liquidation preference thereof or any mandatory redemption payment
obligations in respect thereof;
(i) all net obligations of such person in respect of
Hedging Agreements; and
(j) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to in
clauses (a) through (i) above
For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Equity Interests which do not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Equity Interests as
if such Redeemable Equity Interests were purchased on any date as of which
Indebtedness shall be required to be determined, and if such price is based
upon, or measured by, the Fair Market Value of such Redeemable Equity Interests,
such Fair Market Value shall be determined in good faith by the board of
directors of the issuer of such Redeemable Equity Interests.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Indemnitee" shall have the meaning assigned to such term in Section
9.05(b).
<PAGE> 18
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"Indemnity, Subrogation and Contribution Agreement" shall mean an
Indemnity, Subrogation and Contribution Agreement substantially in the form of
Exhibit E among the Borrower, the Subsidiary Guarantors and the Administrative
Agent.
"Installment Note Agreement" shall mean the Note Purchase Agreement
dated as of October 25, 1999, between the Borrower and the Seller, in the form
heretofore delivered to the Lenders.
"Installment Notes" shall mean (a) $112,500,000 aggregate principal
amount of the Borrower's Series A Senior Notes due December 31, 2007, (b)
$162,500,000 aggregate principal amount of the Borrower's Series B Senior Notes
due December 31, 2009, (c) $112,500,000 aggregate principal amount of the
Borrower's Series C Senior Notes due December 31, 2011, and (d) $112,500,000
aggregate principal amount of the Borrower's Series D Senior Notes due December
31, 2014, all issued pursuant to the Installment Note Agreement.
"Interest Payment Date" shall mean (a) with respect to any ABR
Borrowing, the last Business Day of each March, June, September and December,
and (b) with respect to any Eurodollar Borrowing, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part and, in the case
of a Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day that would have been an Interest Payment Date had successive
Interest Periods of three months' duration been applicable to such Borrowing,
and, in addition, the date of any prepayment of a Eurodollar Borrowing or
conversion of a Eurodollar Borrowing to an ABR Borrowing.
"Interest Period" shall mean, with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day (or, if there is no numerically corresponding day,
on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter,
as the Borrower may elect; provided, however, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the succeeding Business Day unless, such succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"Investment" shall mean, as applied to any person, any direct or
indirect purchase or other acquisition by such person of Equity Interests or
other securities of any other person, or any direct or indirect loan, advance or
capital contribution by such person to any other person, and any other item
which would be classified as an "investment" on a balance sheet of such person
prepared in accordance with GAAP, including, without limitation, any direct or
indirect contribution by such person of property or assets to a joint venture,
partnership or other business entity in which such person retains an interest
(it being understood that a direct or indirect purchase or other acquisition by
such person of assets of any other person (other than stock or other securities)
shall not constitute an "Investment." The amount of Investments made during any
period shall be the aggregate cost to the Borrower and the Subsidiaries of all
such Investments made during such period, determined in accordance with GAAP,
but without regard to unrealized increases or decreases in value, or write-ups,
write-downs or write-offs, of such Investments and without regard to the
existence of any undistributed earnings or accrued interest with respect thereto
accrued after the respective dates on which such Investments were made, less any
net return of capital realized during such period upon the sale, repayment or
other liquidation of such Investments (determined in accordance with GAAP, but
without regard to any amounts received during such period as earnings (in the
form of dividends not constituting a return of capital, interest or otherwise)
on such Investments or as loans from any person in whom such Investments have
been made).
<PAGE> 19
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"Lenders" shall mean (a) the financial institutions listed on
Schedule 2.01 and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance (in either case other than any such
financial institution that has ceased to be a party hereto pursuant to an
Assignment and Acceptance).
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate per annum determined by the Administrative Agent
at approximately 11:00 a.m., London time, on the date which is two Business Days
prior to the beginning of such Interest Period by reference to the British
Bankers' Association Interest Settlement Rates for deposits in dollars (as set
forth by any service selected by the Administrative Agent which has been
nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying rates) for a period equal to such Interest
Period, provided that, to the extent that an interest rate is not ascertainable
pursuant to the foregoing provisions of this definition, the "LIBO Rate" shall
be the interest rate per annum determined by the Administrative Agent equal to
the rate per annum at which deposits in dollars are offered for such Interest
Period by the Administrative Agent in the London interbank market in London,
England at approximately 11:00 a.m., London time, on the date which is two
Business Days prior to the beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities. The term "Lien"
shall not include a negative pledge agreement.
"Loan Documents" shall mean this Agreement, the Subsidiary Guarantee
Agreement and the Indemnity, Subrogation and Contribution Agreement.
"Loan Parties" shall mean the Borrower and each Subsidiary that is
party to the Subsidiary Guarantee Agreement.
"Loans" shall mean the Revolving Loans and the Term Loans.
"Managing General Partner" shall mean the managing general partner of
the Borrower, which on the date hereof is Rayonier Timberlands Management, Inc.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Acquisition" shall mean the acquisition by the Borrower or
any Subsidiary, including through a merger or consolidation or a purchase of
capital stock, of any other person or any division or business unit of any other
person or any assets, in which the consolidated total assets of such person,
division, business unit or assets exceeds 1% of the Consolidated Total Assets of
the Borrower and the Subsidiaries, each as of the beginning of the Borrower's
fiscal year.
"Material Adverse Effect" shall mean one or more events, changes or
effects which, individually or in the aggregate, could reasonably be expected to
have a materially adverse effect on (a) the business, assets, results of
operations or condition (financial or otherwise) of the Borrower and the
Subsidiaries, taken as a whole, or on the ability of the Borrower and the
Subsidiary Guarantors to perform their obligations under the Loan Documents, or
(b) the validity or enforceability of any material provision of any Loan
Document or any other document entered into in connection with the Transactions
or the other transactions contemplated hereby or the material rights, remedies
or benefits available to the parties thereunder.
<PAGE> 20
16
"Material Disposition" shall mean the sale or transfer by the
Borrower or any Subsidiary, including through a merger or consolidation or a
sale of capital stock, of any subsidiary, division or business unit of the
Company or such Subsidiary or any assets (other than inventory sold in the
ordinary course of business), in which the consolidated total assets of such
person, division, business unit or assets exceeds 1% of the Consolidated Total
Assets of the Borrower and the Subsidiaries, each as of the beginning of the
Borrower's fiscal year.
"Material Indebtedness" shall mean Indebtedness (other than the
Loans), or obligations in respect of one or more Hedging Agreements, of any one
or more of the Borrower and the Subsidiaries in an aggregate principal amount
for all such Indebtedness and obligations of $10,000,000 or more. For purposes
of determining Material Indebtedness, the "principal amount" of the obligations
of the Borrower or any Subsidiary in respect of any Hedging Agreement at any
time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower or such Subsidiary would be required to pay if
such Hedging Agreement were terminated at such time.
"Material Subsidiary" shall mean any Subsidiary (a) the consolidated
net revenues of which for the most recent period of four fiscal quarters of the
Borrower for which financial statements have been delivered pursuant to Section
5.03 were greater than 1% of the Borrower's consolidated net revenues for such
period or (b) the Consolidated Total Assets of which as of the end of such
period were greater than 1% of the Borrower's Consolidated Total Assets as of
the end of such period; provided that (i) if at any time the aggregate amount of
the consolidated net revenues or Consolidated Total Assets of all Subsidiaries
that are not Material Subsidiaries exceeds 5% of the Borrower's consolidated net
revenues for any such period or 5% of the Borrower's Consolidated Total Assets
as of the end of any such period, the Borrower (or, in the event the Borrower
has failed to do so within 10 days, the Administrative Agent) shall designate
sufficient Subsidiaries (which shall be Domestic Subsidiaries to the extent
there are Domestic Subsidiaries that have not been so designated) as "Material
Subsidiaries" to eliminate such excess, and such designated Subsidiaries shall
for all purposes of this Agreement constitute Material Subsidiaries and (ii) any
Subsidiary that Guarantees the Installment Notes or any other Indebtedness of
the Borrower shall in any event be deemed to be a Material Subsidiary. For
purposes of making the determinations required by this definition, revenues and
assets of Foreign Subsidiaries shall be converted into dollars at the rates used
in preparing the consolidated balance sheet of the Borrower included in the
applicable financial statements. The Material Subsidiaries on the date hereof
are identified in Schedule 1.01 hereto.
"Merchantable Timber" shall be defined (a) with respect to pine,
hardwood and cypress located in the Southeastern United States, as trees aged 15
years or more with minimum diameters at breast-height ("D.B.H.") of 5 inches,
(b) with respect to Western hemlock, Douglas fir, Western red cedar, Sitka
spruce and hardwoods located in the Northwestern United States, as trees aged 21
years or more that contain a minimum of 10 board feet, Scribner log scale, and
(c) with respect to other species and geographic locations, in accordance with
industry norms.
"Merchantable Timber Ratio" shall mean, at any time, the ratio of (a)
the number of tons of Merchantable Timber owned by the Borrower and the
Subsidiaries to (b) the amount of Consolidated Total Debt (excluding the
Rayonier Subordinated Indebtedness) of the Borrower.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale or
Excess Harvest, the proceeds thereof in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations when received in
the form of cash or cash equivalents (except to the extent that
<PAGE> 21
17
such deferred payment obligations are financed or sold with recourse to the
Borrower or any Subsidiary), and any insurance or condemnation proceeds, net of
(a) brokerage commissions and other fees and expenses (including, without
limitation, fees and expenses of legal counsel and accountants and fees,
expenses, discounts or commissions of underwriters, placement agents and
investment bankers) related to such Asset Sale or Excess Harvest, (b) provisions
for all taxes payable as a result of such Asset Sale or Excess Harvest, (c)
amounts required to be paid to any Person (other than the Borrower or any
Subsidiary) owning a beneficial interest in the assets subject to such Asset
Sale or Excess Harvest, (d) appropriate amounts to be provided by the Borrower
or any Subsidiary, as the case may be, as a reserve required in accordance with
GAAP against liabilities associated with such Asset Sale or Excess Harvest and
retained by the Borrower or a Subsidiary after such Asset Sale or Excess
Harvest, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale or Excess Harvest, and (e) amounts required to be applied to the repayment
of Indebtedness secured by a Lien on the asset or assets sold in such Asset Sale
or Excess Harvest.
"New Rayonier Subordinated Indebtedness" shall mean $142,000,000
subordinated loan to be made to the Borrower on the Closing Date and evidenced
by the New Rayonier Subordinated Note.
"New Rayonier Subordinated Note" shall mean a promissory note of the
Borrower in the form of Exhibit G-2 hereto evidencing the New Rayonier
Subordinated Indebtedness.
"Obligations" shall mean (a) the due and punctual payment by the
Borrower or the other Loan Parties, as applicable, of (i) the principal of and
premium, if any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, and (ii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Administrative Agent, the Lenders or any other person
under this Agreement and the other Loan Documents, whether such amounts shall
have accrued prior to, on or after the Closing Date, (b) the due and punctual
payment and performance of all covenants, agreements, obligations and
liabilities of the Loan Parties, monetary or otherwise, under or pursuant to the
Loan Documents, and (c) the due and punctual payment and performance of all
obligations of the Borrower or any Subsidiary, monetary or otherwise, under each
Hedging Agreement entered into to limit interest rate risk with a counterparty
that was a Lender (or an Affiliate of a Lender) at the time such Hedging
Agreement was entered into.
"Other Taxes" shall mean any and all present or future stamp,
recording, documentary, transfer, sales, property or similar taxes, charges or
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA.
"Permitted Investments" shall mean, at any time, all of the
following:
(a) Investments made or owned by the Borrower 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
<PAGE> 22
18
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 Borrower) 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 (provided that
the full faith and credit of the United States of America is pledged
in support 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 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 in obligations
referred to in clauses (i) through (v) of this definition, in each
case having assets in excess of $100,000,000;
(b) the acquisition by the Borrower or any Subsidiary,
whether in a single transaction or in a series of related
transactions, of ownership interests of a person engaged in
substantially the same business as the Borrower such that upon the
completion of such transaction or series of transactions, such person
becomes a Subsidiary;
(c) the making or ownership by the Borrower or any
Subsidiary of Investments (in addition to Investments permitted by
clauses (a), (b), (d), (e), (f) and (g)) in any person which is
engaged in substantially the same business as the Borrower, provided
that the aggregate amount of all such Investments made by the
Borrower and the Subsidiaries following the date hereof and
outstanding pursuant to this clause (c) shall not at any date of
determination exceed 5% of Consolidated Total Assets;
(d) the making or ownership by the Borrower or any
Subsidiary of Investments (i) arising out of loans and advances to
employees incurred in the ordinary course of business, (ii) arising
out of extensions of trade credit or advances to third parties in the
ordinary course of business and (iii) acquired by reason of the
exercise of customary creditors' rights upon default or pursuant to
the bankruptcy, insolvency or reorganization of a debtor;
(e) the creation or incurrence of liability by the Borrower
or any Subsidiary with respect to any Guarantee constituting an
obligation, warranty or indemnity, not guaranteeing Indebtedness of
any person, which is undertaken or made in the ordinary course of
business;
(f) the creation or incurrence of liability by the Borrower
or any Subsidiary with respect to any Hedging Agreements designed to
protect the Borrower or any Subsidiary from fluctuations in interest
rates;
(g) the guarantees by the Subsidiaries of the Obligations
and of the Installment Notes and any assumption of the Obligations
guaranteed thereby;
(h) the making by the Borrower or any Subsidiary of
Investments in the Borrower or any Subsidiary; and
(i) investments existing on the date hereof and set forth
on Schedule 1.01(b).
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"person" shall mean any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
charitable foundation, partnership or government, or any agency or political
subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Planned Volume" means 6,700,000 tons for the calendar year 2000 and
shall increase 2% per year thereafter. In the event of the acquisition of
merchantable Timber or Timberlands (other than in a like-kind exchange of Timber
or Timberlands for other Timber or Timberlands and other than Timber or
Timberlands acquired with the Net Cash Proceeds of an Excess Harvest)
constituting an Asset Acquisition, Planned Volume will be increased for 10 years
by 10% of the volume of merchantable Timber so acquired. In the event of a
disposition of merchantable Timber or Timberlands constituting an Asset Sale,
Planned Volume will be reduced by 10% of the volume of merchantable Timber sold
in such Asset Sale. In the event of an Excess Harvest, Planned Volume will be
reduced by 10% of the amount of the Excess Harvest. For purposes of this
definition, all volumes of Timber harvested that are denominated in board feet
shall be converted to tons on the basis of 7.2 tons per thousand board feet.
"Preferred Stock" shall mean, as applied to the Equity Interests of
any person, means Equity Interests of any class or classes (however designated),
which is preferred as to the payment of distributions, dividends, or upon any
voluntary or involuntary liquidation or dissolution of such person, over shares
or units of Equity Interests of any other class of such person.
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its prime rate in
effect at its principal office in New York City, New York; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective.
"Projections" shall mean the projections included in the Confidential
Memorandum under the heading "Projected Financial Information".
"Rayonier" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Rayonier Timberlands Management, Inc." shall mean Rayonier
Timberlands Management, Inc., a Delaware corporation.
"Rayonier Subordinated Indebtedness" shall mean the Existing Rayonier
Subordinated Indebtedness, the New Rayonier Subordinated Indebtedness and any
Additional Rayonier Subordinated Indebtedness.
"Redeemable Equity Interest" means any Equity Interest, that, either
by the terms thereof, by the terms of any security into which it is convertible
or exchangeable or which it entitles a holder to purchase, by contract or
otherwise, is, or upon the happening of an event or passage of time would be,
(i) required to be redeemed prior to the Term Maturity Date, (ii) redeemable at
the option of the holder thereof, or (iii) convertible into or exchangeable for
Indebtedness.
"Register" shall have the meaning assigned to such term in Section
9.04(d).
<PAGE> 24
20
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Fund" shall mean, with respect to any Lender that is a fund
that invests in loans, any other fund that invests in loans and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Hazardous
Material in, into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (i) clean
up, remove, treat, abate or in any other way address any Hazardous Material in
the environment; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not migrate or endanger or
threaten to endanger public health, welfare or the environment; or (iii) perform
studies and investigations in connection with, or as a precondition to, clause
(i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Loans and
unused Revolving Credit Commitments and Term Loan Commitments representing more
than 50% of the sum of all Loans outstanding and unused Revolving Credit
Commitments and Term Loan Commitments at such time.
"Responsible Officer" of any person shall mean any executive officer
or Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of the relevant portion of this Agreement.
"Restricted Payment" shall have the meaning assigned to such term in
Section 6.02.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans hereunder as set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender shall have assumed its Revolving Credit Commitment, as applicable,
as the same may be (a) reduced from time to time pursuant to Section 2.09 and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender.
"Revolving Credit Lender" shall mean a Lender that has a Revolving
Credit Commitment (or that had such a Commitment at the time the Revolving
Credit Commitments were terminated).
"Revolving Credit Maturity Date" shall mean the fifth anniversary of
the Closing Date.
"Revolving Loans" shall mean the revolving loans made by the Lenders
to the Borrower pursuant to clause (b) of Section 2.01. Each Revolving Loan
shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.
<PAGE> 25
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"S&P" shall mean Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc. and its successors.
"Seller" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Senior Indebtedness" means Indebtedness of the Borrower or any
Subsidiary which is not Subordinated Indebtedness.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board for Eurocurrency Liabilities (as defined in Regulation
D of the Board). Such reserve percentages shall include those imposed pursuant
to such Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Subordinated Indebtedness" means Indebtedness of the Borrower or any
Subsidiary which is expressly subordinated in right of payment to any of the
Obligations.
"Subsidiary" shall mean, with respect to any person (herein referred
to as the "parent"), any corporation, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or more than 50% of
the general partnership interests are, at the time any determination is being
made, owned, controlled or held, (b) that is, at the time any determination is
made, otherwise Controlled, by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent or (c) in
which such person, one or more Subsidiaries thereof or such person and one or
more Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, has at least majority ownership interest entitled to vote in the
election of directors, manager, general partners or trustees thereof (or other
person performing similar functions) or, if such persons are not elected, to
vote on any matter that is submitted to the vote of all persons holding
ownership interests in such entity.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Subsidiary Guarantee Agreement" shall mean a Subsidiary Guarantee
Agreement substantially in the form of Exhibit D.
"Subsidiary Guarantors" shall mean each person listed on Schedule
1.01 and designated as such and each other person that becomes party to the
Subsidiary Guarantee Agreement as a Subsidiary Guarantor, and the permitted
successors and assigns of each such person.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Term Loans as set forth on Schedule 2.01 or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Term Commitment, as applicable, as the same
<PAGE> 26
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may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.
"Term Lender" shall mean a Lender with a Term Commitment or with
outstanding Term Loans.
"Term Maturity Date" shall mean the fifth anniversary of the Closing
Date.
"Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to clause (a) of Section 2.01. Each Term Loan shall be either
a Eurodollar Term Loan or an ABR Term Loan.
"Timber" means all crops and all trees, timber (whether severed or
unsevered and including standing and down timber, stumps and cut timber), 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.
"Timberlands" means, at any date of determination, all real property
owned by or leased to the Borrower or any Subsidiary that is suitable for Timber
production.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Transactions" shall mean the execution, delivery and performance by
each Loan Party of each of the Loan Documents, the Closing Date Transactions and
the Borrowings hereunder after the Closing Date.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"Wholly Owned Subsidiary" shall mean, as to any person, a subsidiary
of such person of which securities (except for directors' qualifying shares) or
other ownership interests representing at least 99% of the equity or at least
99% of the ordinary voting power or at least 99% of the general partnership
interests are, at the time any determination is being made, owned, controlled or
held, directly or indirectly, by such person or one or more of its wholly owned
subsidiaries.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, any reference in this Agreement to any Loan Document
shall mean such document as amended, restated, supplemented or otherwise
modified from time to time.
SECTION 1.03. Accounting and Financial Terms. (a) Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with
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23
GAAP, as in effect from time to time; provided, however, that, if the Borrower
notifies the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the date
hereof in GAAP or in the application thereof on the operation of such provision
(or if the Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith. References herein to the computation of balance sheet or
income statement items in accordance with GAAP shall be construed as if all
Subsidiaries, including any the accounts of which would not under GAAP be
consolidated with those of the Borrower, were required to be so consolidated
under GAAP.
(b) All computations required to be made hereunder to demonstrate pro
forma compliance with any covenant after giving effect to any acquisition,
investment, sale, disposition or similar event shall reflect on a pro forma
basis such event and, to the extent applicable, the historical earnings and cash
flows associated with the assets acquired or disposed of and any related
incurrence or reduction of Indebtedness, but shall not take into account any
projected synergies or similar benefits expected to be realized as a result of
such event except to the extent such benefits would be permitted to be taken
into account in the preparation of pro forma financial statements complying with
Regulation S-X of the Securities and Exchange Commission and are approved by the
Borrower's independent certified public accountants.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, (a) to make a Term Loan to the Borrower on
the Closing Date in a principal amount equal to its Term Commitment and (b) to
make Revolving Loans to the Borrower, at any time and from time to time on or
after the Closing Date and until the earlier of the Revolving Credit Maturity
Date and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in such Lender's Revolving Credit Exposure
exceeding such Lender's Revolving Credit Commitment. Within the limits set forth
in clause (b) of the preceding sentence and subject to the terms, conditions and
limitations set forth herein, the Borrower may borrow, pay or prepay and
reborrow Revolving Loans. Amounts paid or prepaid in respect of Term Loans may
not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their applicable Commitments; provided, that the failure of any Lender to make
any Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
other Lender). The Loans comprising any Borrowing shall be in an aggregate
principal amount that is (i) an integral multiple of $1,000,000 and not less
than $5,000,000 or (ii) equal to the remaining available balance of the
applicable Commitments.
(b) Subject to Sections 2.08 and 2.14, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of
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24
the Borrower to repay such Loan in accordance with the terms of this Agreement.
Borrowings of more than one Type may be outstanding at the same time; provided,
however, that the Borrower shall not be entitled to request any Borrowing that,
if made, would result in more than ten Eurodollar Borrowings outstanding
hereunder at any time. For purposes of the foregoing, Borrowings having
different Interest Periods, regardless of whether they commence on the same
date, shall be considered separate Borrowings.
(c) Each Lender shall make each Loan to be made by it hereunder on
the proposed date thereof by wire transfer of immediately available funds to
such account in New York City as the Administrative Agent may designate not
later than 12:00 (noon) in the case of a Eurodollar Borrowing and 2:00 pm in the
case of an ABR Borrowing, in each case New York City time, and the
Administrative Agent shall promptly transfer the amounts so received to an
account in the name of the Borrower designated by the Borrower in the applicable
Borrowing Request or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts
so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Revolving Credit Borrowing if the
Interest Period requested with respect thereto would end after the Revolving
Credit Maturity Date.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing,
the Borrower shall hand deliver or telecopy to the Administrative Agent a duly
completed Borrowing Request (a) in the case of a Eurodollar Borrowing, not later
than 12:00 (noon), New York City time, three Business Days before a proposed
Borrowing, and (b) in the case of an ABR Borrowing, not later than 11:00 a.m.,
New York City time, on the Business Day of a proposed Borrowing. Each Borrowing
Request shall be irrevocable, shall be signed by or on behalf of the Borrower
and shall specify the following information: (i) whether the Borrowing then
being requested is to be a Term Borrowing or a Revolving Credit Borrowing, and,
subject to the third sentence of Section 2.02(b), whether such Borrowing is to
be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing
(which shall be a Business Day), (iii) the number and location of the account to
which funds are to be disbursed; (iv) the amount of such Borrowing; and (v) if
such Borrowing is to be a Eurodollar Borrowing, the Interest Period with respect
thereto; provided, however, that, notwithstanding any contrary specification in
any Borrowing Request, each requested Borrowing shall comply with the
requirements set forth in Section 2.02. If no election as to the Type of
Borrowing is specified in any such notice, then the requested Borrowing shall be
an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing
is specified in any such notice, then the Borrower shall be
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25
deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall promptly advise the applicable Lenders of any notice
given pursuant to this Section 2.03 (and the contents thereof), and of each
Lender's portion of the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender (i) the then unpaid principal amount of each Revolving
Loan on the Revolving Credit Maturity Date and (ii) the then unpaid principal
amount of each Term Loan on the Term Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender from time to time, including
the amounts of principal and interest payable and paid such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the failure
of any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the
event any Lender shall request and receive a promissory note payable to such
Lender and its registered assigns, the interests represented by such note shall
at all times (including after any assignment of all or part of such interests
pursuant to Section 9.04) be represented by one or more promissory notes payable
to the payee named therein or its registered assigns.
SECTION 2.05. Fees. The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the last day of each calendar quarter
commencing with the first such day after the date hereof (or, if any such day
shall not be a Business Day, the next preceding Business Day), and on the date
on which the last of the Commitments of such Lender shall expire or be
terminated as provided herein (each such day being called a "Fee Payment Date"),
a commitment fee (a "Commitment Fee") which shall accrue at the Applicable
Percentage on the average daily unused amount of the Commitments of such Lender
during the preceding quarter (or other period commencing with the date hereof or
ending with the date on which the last of the Commitments of such Lender shall
expire or be terminated). All Commitment Fees shall be computed on the basis of
the actual number of days elapsed in a year of 360 days. The Commitment Fee due
to each Lender shall commence to accrue on the date hereof and shall cease to
accrue on the date on which the last of the Commitments of such Lender shall
expire or be terminated as provided herein.
(b) The Borrower agrees to pay to the Arranger and to the
Administrative Agent, for their own accounts, the fees separately agreed upon by
the Borrower, the Arranger and the Administrative Agent (the "Arranger and Agent
Fees").
(c) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders. Once paid, none of the Fees shall be refundable
to the Borrower.
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SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is determined by
reference to the Prime Rate and over a year of 360 days at all other times) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Percentage
in effect for such Loans from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Percentage in effect for such Loans from time to time.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus 2%
per annum and (b) in all other cases, at the rate per annum applicable at such
time to ABR Loans comprising Term Borrowings plus 2% per annum.
SECTION 2.8. Alternate Rate of Interest. In the event and on each
occasion that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately reflect the cost to any Lender of making or maintaining its
Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or telecopy notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City time,
on the Closing Date. The Revolving Credit Commitments shall automatically
terminate at 5:00 p.m., New York City time, on the Revolving Credit Maturity
Date. Notwithstanding the foregoing, all the Commitments shall automatically
terminate at 5:00 p.m., New York City time, on October 29, 1999, if the
conditions set forth in Section 4.02 shall not have been met by such time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Term Commitments or the Revolving Credit Commitments; provided, however,
that (i) each partial reduction of the Term Commitments or the Revolving Credit
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
amount of $1,000,000
<PAGE> 31
27
and (ii) the Total Revolving Credit Commitment shall not be reduced to an amount
that is less than the Aggregate Revolving Credit Exposure at the time.
(c) Each reduction in the Term Commitments or the Revolving Credit
Commitments hereunder shall be made ratably among the Lenders in accordance with
their respective applicable Commitments. The Borrower shall pay to the
Administrative Agent for the accounts of the Revolving Credit Lenders, on the
date of each termination or reduction, the Commitment Fees due on the amount of
the Revolving Credit Commitments so terminated or reduced accrued to but
excluding the date of such termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right (subject to the limitations specified in Section 2.02) at
any time upon prior irrevocable notice to the Administrative Agent (a) not later
than 11:00 am, New York City time, on the Business Day of conversion, to convert
any Eurodollar Borrowing into an ABR Borrowing, (b) not later than 12:00 (noon),
New York City time, three Business Days prior to conversion or continuation, to
convert any ABR Borrowing into a Eurodollar Borrowing or to continue any
Eurodollar Borrowing as a Eurodollar Borrowing for an additional Interest
Period, and (c) not later than 12:00 (noon), New York City time, three Business
Days prior to conversion, to convert the Interest Period with respect to any
Eurodollar Borrowing to another permissible Interest Period, subject in each
case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of
any Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and (b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and
the Administrative Agent by recording for the account of such Lender
the new Loan of such Lender resulting from such conversion and
reducing the Loan (or portion thereof) of such Lender being converted
by an equivalent principal amount; accrued interest on any Eurodollar
Loan (or portion thereof) being converted shall be paid by the
Borrower at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time
other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.15;
(v) any portion of a Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued
as a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be
converted into or continued as a Eurodollar Borrowing by reason of
the immediately preceding clause shall be automatically converted at
the end of the Interest Period in effect for such Borrowing into an
ABR Borrowing;
(vii) no Interest Period may be selected for any Term
Borrowing that is a Eurodollar Borrowing that would end later than a
Term Loan Repayment Date occurring on or after the first day of such
Interest Period if, after giving effect to such selection, the
aggregate outstanding amount of (A) the Term Borrowings that are
Eurodollar Borrowings with Interest Periods ending on or prior to
such Term Loan Repayment Date and (B) the Term Borrowings
<PAGE> 32
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that are ABR Borrowings would not be at least equal to the principal
amount of Term Borrowings to be paid on such Term Loan Repayment
Date; and
(viii) upon notice to the Borrower from the Administrative
Agent given at the request of the Required Lenders, after the
occurrence and during the continuance of a Default or Event of
Default, no outstanding Loan may be converted into, or continued as,
a Eurodollar Loan. The foregoing is without prejudice to the other
rights and remedies available hereunder upon an Event of Default.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be continued as a Eurodollar Borrowing or converted to a
Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a
conversion, the date of such conversion (which shall be a Business Day) and (iv)
if such Borrowing is to be converted to or continued as a Eurodollar Borrowing,
the Interest Period with respect thereto. If no Interest Period is specified in
any such notice with respect to any conversion to or continuation as a
Eurodollar Borrowing, the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall advise the
Lenders of any notice given pursuant to this Section 2.10 and of each Lender's
portion of any converted or continued Borrowing. If the Borrower shall not have
given notice in accordance with this Section 2.10 to continue any Eurodollar
Borrowing into a subsequent Interest Period (and shall not otherwise have given
notice in accordance with this Section 2.10 to convert such Borrowing into an
ABR Borrowing), such Borrowing shall, at the end of the Interest Period
applicable thereto (unless repaid pursuant to the terms hereof), automatically
be continued as an ABR Borrowing.
SECTION 2.11. Optional Prepayments. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole or in
part, upon at least three Business Days' prior written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to the
Administrative Agent before 12:00 noon, New York City time; provided, however,
that each partial prepayment shall be in an amount that is an integral multiple
of $1,000,000 and not less than $5,000,000.
(b) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid, shall
be irrevocable and shall commit the Borrower to prepay such Borrowing by the
amount stated therein on the date stated therein. All prepayments of Borrowings
under this Section 2.11 shall be subject to Section 2.15, but otherwise without
premium or penalty. All prepayments under this Section 2.11 shall be accompanied
by accrued interest on the principal amount being prepaid to the date of
payment.
SECTION 2.12. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall repay or
prepay all the outstanding Revolving Credit Borrowings on the date of such
termination. In the event of any partial reduction of the Revolving Credit
Commitments, then (i) at or prior to the effective date of such reduction, the
Administrative Agent shall notify the Borrower and the Revolving Credit Lenders
of the Aggregate Revolving Credit Exposure after giving effect thereto and (ii)
if the Total Revolving Credit Commitment after giving effect to such reduction
or termination would be less than the Aggregate Revolving Credit Exposure at the
time, then the Borrower shall, on the date of such reduction or termination,
repay or prepay Revolving Credit Borrowings in an amount sufficient to eliminate
such deficiency.
(b) In the event that the Borrower shall be required to offer to
apply the Excess Proceeds or Excess Harvest Proceeds pursuant to Section 6.10(b)
or 6.11 to the prepayment of Term Loans (other than pursuant to the penultimate
sentence of Section 6.10(b) or 6.11), the Borrower will give prompt
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written notice (a "Borrower Notice") of such election to all Term Lenders, with
a copy to the Administrative Agent. The Borrower Notice shall (i) describe in
reasonable detail the facts and circumstances giving rise to such Borrower
Notice, (ii) set forth the aggregate amount of such Excess Proceeds which it
intends to offer to apply to the prepayment of Term Loans, (iii) contain an
offer by the Borrower to prepay on a stated date (the "Prepayment Date"), which
shall be a Business Day not more than 60 days and not less than 45 days after
such Borrower Notice, a principal amount of the Term Loans, ratably in
proportion to the unpaid principal amounts thereof held by each such Term Lender
which bears the same relationship to the aggregate amount of such Excess
Proceeds available to prepay the Term Loans as the aggregate principal amount of
all Term Loans held by such Term Lender bears to the aggregate principal amount
of all then outstanding Term Loans, together with interest on the principal
amount of Term Loans to be prepaid to the Prepayment Date (showing in such offer
the amount of interest which would be paid on such Prepayment Date), and (iv)
request each Term Lender to notify the Borrower in writing by a stated date,
which date shall be not less than 30 days after such Term Lender's receipt of
the Borrower Notice, of its acceptance or rejection of such prepayment offer, it
being understood that such prepayment offer may be accepted in part and rejected
in part. If a Term Lender does not notify the Borrower as provided in clause
(iv) above, then such holder shall be deemed to have rejected such offer. The
Borrower shall prepay on the date specified in the Borrower Notice an amount
equal to the lesser of (i) the amount of the Excess Proceeds or Excess Harvest
Proceeds required to be offered to the Lenders and (ii) the aggregate amount of
the outstanding Term Loans of the Term Lenders as to which such offer shall have
been accepted. In the event that the Borrower shall be required to offer to
apply any of such Excess Proceeds or Excess Harvest Proceeds pursuant to the
penultimate sentence of Section 6.10(b) or 6.11, the Borrower will give prompt
written notice (a "Subsequent Borrower Notice") of such election to all Term
Lenders that have accepted the initial prepayment offer made with respect to the
applicable Excess Proceeds or Excess Harvest Proceeds (with a copy of such
Subsequent Borrower Notice to the Administrative Agent), and will promptly
prepay the Term Loans of each such Lender that shall have accepted within 10
days of the Subsequent Borrower Notice the offer contained therein in an amount
equal to the lesser of (i) the amount of the Excess Proceeds or Excess Harvest
Proceeds required to be offered to such Lenders pursuant to such penultimate
sentence of Section 6.10(b) or 6.11 and (ii) the aggregate amount of the
outstanding Term Loans of such Lenders as to which such offer shall have been
accepted. The Borrower shall be required to provide the Administrative Agent
with written copies of all information received from Term Lenders pursuant to
this paragraph (b) as such information is received.
(c) The Borrower shall deliver to the Administrative Agent, at the
time of each prepayment made under this Section 2.12, a certificate signed by a
Financial Officer of the Borrower or the Managing General Partner setting forth
in reasonable detail the calculation of the amount of such prepayment. Each
notice of prepayment shall specify the prepayment date and the Type and
principal amount of each Loan (or portion thereof) to be prepaid. All
prepayments under this Section 2.12 shall be subject to Section 2.15, but shall
otherwise be without premium or penalty.
(d) Amounts to be applied pursuant to this Section 2.12 to the
prepayment of Term Loans of any Lender shall be applied first to reduce
outstanding ABR Term Loans of such Lender and then to prepay Eurodollar Term
Loans of such Lender. In the event the amount of any prepayment required to be
made pursuant to this Section shall exceed the aggregate principal amount of the
ABR Term Loans outstanding (the amount of any such excess being called the
"Excess Amount"), the Borrower shall have the right, in lieu of making such
prepayment in full, to prepay all the outstanding applicable ABR Loans of the
applicable class and to deposit an amount equal to the Excess Amount with the
Administrative Agent in a cash collateral account maintained (pursuant to
documentation reasonably satisfactory to the Administrative Agent) by and in the
sole dominion and control of the Administrative Agent. Any amounts so deposited
shall be held by the Administrative Agent as collateral for the Obligations and
applied to the prepayment of the applicable Eurodollar Loans at the ends of the
current Interest Periods applicable thereto. At the request of the Borrower,
amounts so
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deposited shall be invested by the Administrative Agent in Permitted Investments
maturing prior to the date or dates on which it is anticipated that such amounts
will be applied to prepay Eurodollar Loans; any interest earned on such
Permitted Investments will be for the account of the Borrower, and the Borrower
will deposit with the Administrative Agent the amount of any loss on any such
Permitted Investment to the extent necessary in order that the amount of the
prepayment to be made with the deposited amounts may not be reduced.
SECTION 2.13. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) (i) shall change the basis of taxation of payments to any Lender of the
principal of or interest on any Eurodollar Loan made by such Lender or any Fees
or other amounts payable hereunder (other than changes in respect of taxes
imposed on the overall net income of such Lender or such Lender's holding
company by the jurisdiction in which such Lender or such Lender's holding
company has its principal office or applicable lending office or by any
political subdivision or taxing authority therein), (ii) shall impose, modify or
deem applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by any Lender
(except any such reserve requirement which is reflected in the Adjusted LIBO
Rate) or (iii) shall impose on such Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by such
Lender, and the result of any of the foregoing changes shall be to increase the
cost to such Lender of making or maintaining any Eurodollar Loan or to reduce
the amount of any sum received or receivable by such Lender hereunder (whether
of principal, interest or otherwise) by an amount deemed by such Lender to be
material, then the Borrower will pay to such Lender upon demand such additional
amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered.
(b) If any Lender shall have determined that the adoption after the
date hereof of any law, rule, regulation, agreement or guideline regarding
capital adequacy, or any change after the date hereof in any such law, rule,
regulation, agreement or guideline (whether such law, rule, regulation,
agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive issued after the date hereof regarding capital adequacy (whether or
not having the force of law) of any Governmental Authority has or would have the
effect of reducing the rate of return on such Lender's capital or on the capital
of such Lender's holding company, if any, as a consequence of this Agreement or
the Loans made pursuant hereto to a level below that which such Lender or such
Lender's holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender's and the
policies of such Lender's holding company with respect to capital adequacy) by
an amount deemed by such Lender to be material, then from time to time the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such reduction
suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as applicable, as
specified in paragraph (a) or (b), together with supporting documentation or
computations, above shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate delivered by it within 10 days after its receipt of
the same.
(d) The failure or delay on the part of any Lender to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's right to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender pursuant to this Section 2.13 for
any increased costs or
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reductions incurred more than 180 days prior to the date that such Lender
notifies the Borrower of the change in law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the change in law giving rise to such increased costs
or reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof. The protection of
this Section 2.13 shall be available to each Lender regardless of any possible
contention of invalidity or inapplicability of law, regulation or condition
which shall have been imposed. The protection of this Section shall be available
to each Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement, guideline or other
change or condition that shall have occurred or been imposed.
SECTION 2.14. Change in Legality (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful
for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or, for such duration, be continued for additional
Interest Periods and ABR Loans will not thereafter (for such
duration) be converted into Eurodollar Loans), whereupon any request
for a Eurodollar Borrowing (or to convert an ABR Borrowing to a
Eurodollar Borrowing or to continue a Eurodollar Borrowing for an
additional Interest Period) shall, as to such Lender only, be deemed
a request for an ABR Loan (or a request to continue an ABR Loan as
such for an additional Interest Period or to convert a Eurodollar
Loan into an ABR Loan, as the case may be), unless such declaration
shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding
Eurodollar Loans made by it be converted to ABR Loans, in which event
all such Eurodollar Loans shall be automatically converted to ABR
Loans as of the effective date of such notice as provided in
paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower (with
a copy to the Administrative Agent) by any Lender shall be effective as to each
Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest
Period currently applicable to such Eurodollar Loan; in all other cases such
notice shall be effective on the date of receipt by the Borrower.
SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving any amount on account of the principal of any Eurodollar Loan prior to
the end of the Interest Period in effect therefor (including by reason of any
assignment pursuant to Section 2.20), (ii) the conversion of any Eurodollar Loan
to an ABR Loan, or the conversion of the Interest Period with respect to any
Eurodollar Loan, in each case other than on the last day of the Interest Period
in effect therefor, or (iii) any Eurodollar Loan to be made by such Lender
(including any Eurodollar Loan to be made pursuant to a conversion or
continuation under Section 2.10) not being made after notice of such
<PAGE> 36
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Loan shall have been given by the Borrower hereunder (any of the events referred
to in this clause (a) being called a "Breakage Event") or (b) any default in the
making of any payment or prepayment required to be made hereunder. In the case
of any Breakage Event, such loss shall include an amount equal to the excess, as
reasonably determined by such Lender, of (i) its cost of obtaining funds for the
Eurodollar Loan that is the subject of such Breakage Event for the period from
the date of such Breakage Event to the last day of the Interest Period in effect
(or that would have been in effect) for such Loan (which shall be deemed to be
equal to the LIBO Rate) over (ii) the amount of interest that such Lender
determines in good faith it will realize in redeploying the funds released or
not utilized by reason of such Breakage Event for such period. A certificate of
any Lender setting forth any amount or amounts which such Lender is entitled to
receive pursuant to this Section 2.15, together with supporting documentation or
computations, shall be delivered to the Borrower and shall be conclusive absent
manifest error.
SECTION 2.16. Pro Rata Treatment. Except as required under Sections
2.12 and 2.14, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the Commitment
Fees, each reduction of the Term Commitments or the Revolving Credit Commitments
and each conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their applicable outstanding Loans), and the Borrower and
each Lender agrees to take all such actions as shall be necessary to give effect
to such requirement. Each Lender agrees that in computing such Lender's portion
of any Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing to the next higher
or lower whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower or any other Loan Party, or pursuant to a secured claim
under Section 506 of Title 11 of the United States Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law, or by
any other means, obtain payment, voluntary or involuntary, in respect of any
Loan or Loans as a result of which the unpaid principal portion of its Term
Loans and Revolving Loans shall be proportionately less than the unpaid
principal portion of the Term Loans and Revolving Loans of any other Lender, it
shall be deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for, a
participation in the Term Loans or Revolving Loans, as the case may be, of such
other Lender, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate unpaid principal amount of the
Term Loans and Revolving Loans and participations in Term Loans and Revolving
Loans held by the Lenders; provided, however, that (i) if any such
participations are purchased pursuant to this Section 2.17 and the payment
giving rise thereto shall thereafter be recovered, such participations shall be
rescinded to the extent of such recovery and the purchase price restored without
interest, and (ii) the provisions of this paragraph shall not be construed to
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any of the
Subsidiaries or any Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower expressly consents to the foregoing
arrangements and agrees that any Lender holding a participation in a Term Loan
or Revolving Loan deemed to have been so purchased may, to the extent permitted
by law, exercise any and all rights of banker's lien, setoff or counterclaim
with respect to any and all moneys owing by the Borrower to such Lender by
reason of such participation as fully as if such Lender had made a Loan directly
to the Borrower in the amount of such participation.
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SECTION 2.18. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder and under any other Loan Document not later than 1:00 p.m.,
New York City time, on the date when due in immediately available dollars,
without setoff, defense or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. Each such payment (other than payments pursuant to Sections
2.13, 2.15, 2.19 and 9.05 or pursuant to other Loan Documents, which shall be
made directly to the persons entitled thereto) shall be made to the
Administrative Agent at its offices at Eleven Madison Avenue, New York, New York
10010, or as otherwise directed.
(b) The Administrative Agent shall distribute any such payments
received by it for the account of any other person to the appropriate recipient
promptly following receipt thereof. Whenever any payment (including principal of
or interest on any Borrowing or any Fees or other amounts) hereunder or under
any other Loan Document shall become due, or otherwise would occur, on a day
that is not a Business Day, except as otherwise provided in this Agreement, such
payment may be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of interest or Fees, if
applicable.
(c) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.
SECTION 2.19. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender,
as the case may be, receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each
Lender within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrower by a Lender, or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such
<PAGE> 38
34
payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Administrative Agent.
(e) Each Lender that is not a "United States person" within the
meaning of Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Borrower (with a copy to the Administrative Agent) two copies of either
United States Internal Revenue Service Form 1001 or Form 4224, or, in the case
of a Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or successors thereto
(and, if such Non-U.S. Lender delivers a Form W-8, a certificate representing
that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the
Code, is not a 10-percent shareholder of the Borrower (within the meaning of
Section 871(h)(3)(B) of the Code) and is not a controlled foreign corporation
related to the Borrower (within the meaning of Section 864(d)(4) of the Code)),
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. Federal withholding tax on payments
by the Borrower under this Agreement or any other Loan Document. Such forms
shall be delivered by each Non-U.S. Lender on or before the date it becomes a
party to this Agreement or designates a new lending office. In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence,
expiration or invalidity of any form previously delivered by such Non-U.S.
Lender. Notwithstanding any other provision of this Section 2.19, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this Section
2.19(e) that such Non-U.S. Lender is not legally able to deliver.
SECTION 2.20. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender delivers a certificate
requesting compensation pursuant to Section 2.13, (ii) any Lender delivers a
notice described in Section 2.14 or (iii) the Borrower is required to pay any
amount to any Lender or any Governmental Authority on account of any Lender
pursuant to Section 2.19, the Borrower may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender and the Administrative Agent,
require such Lender to transfer and assign, without recourse (in accordance with
and subject to the restrictions contained in Section 9.04), all of its
interests, rights and obligations under this Agreement to an assignee designated
by the Borrower that shall assume such assigned obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (w) such
assignment will result in a reduction in the claim for compensation under
Section 2.13 or in the withdrawal of the notice under Section 2.14 or in the
reduction of payments under Section 2.19, as the case may be, (x) such
assignment shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority having jurisdiction, (y) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, and (z) the Borrower or such
assignee shall have paid to the affected Lender in immediately available funds
an amount equal to the sum of the principal of and interest accrued to the date
of such payment on the outstanding Loans of such Lender plus all Fees and other
amounts accrued for the account of such Lender hereunder (including any amounts
under Section 2.13 and Section 2.19); provided further that, if prior to any
such transfer and assignment the circumstances or event that resulted in such
Lender's claim for compensation under Section 2.13 or notice under Section 2.14
or the amounts paid pursuant to Section 2.19, as the case may be, cease to cause
such Lender to suffer increased costs or reductions in amounts received or
receivable or reduction in return on capital, or cease to have the consequences
specified in Section 2.14, or cease to result in amounts being payable under
Section 2.19, as the case may be (including as a result of any action taken by
such Lender pursuant to paragraph (b) below), or if such Lender shall waive its
right to claim further compensation under Section 2.13 in respect of such
circumstances or event or shall withdraw its notice under Section 2.14 or shall
waive its right to further payments under Section 2.19 in respect of such
circumstances or event, as the case may be, then such Lender shall not
thereafter be required to make any such transfer and assignment hereunder.
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(b) If (i) any Lender requests compensation under Section 2.13, (ii)
any Lender delivers a notice described in Section 2.14 or (iii) the Borrower is
required to pay any amount to any Lender or any Governmental Authority on
account of any Lender pursuant to Section 2.19, then such Lender shall use
reasonable efforts (which shall not require such Lender to incur an unreimbursed
loss or unreimbursed cost or expense or otherwise take any action inconsistent
with its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Borrower or (y)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.13 or enable it to
withdraw its notice pursuant to Section 2.14 or would reduce amounts payable
pursuant to Section 2.19, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such filing or assignment, delegation and transfer.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent and
each of the Lenders that:
SECTION 3.01. Organization; Powers. The Borrower and each of the
Subsidiaries (a) is duly organized or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization or formation,
(b) has all requisite power and authority, and all material requisite licenses
and permits from Governmental Authorities, to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business, and is in good standing, in every jurisdiction where
such qualification is required, except where the failure so to qualify could not
reasonably be expected to result in a Material Adverse Effect, and (d) has the
power and authority to execute, deliver and perform its obligations under each
of the Loan Documents and each other agreement or instrument contemplated hereby
to which it is or will be a party and, in the case of the Borrower, to borrow
hereunder.
SECTION 3.02. Authorization. The Transactions (a) have been duly
authorized by all requisite action including member or partnership action and
(b) will not (i) violate (A) any material provision of law, statute, rule or
regulation, or of the constitutive documents or by-laws of the Borrower or any
of the Subsidiaries, (B) any order of any Governmental Authority or (C) any
provision of any indenture, or any material agreement or other instrument, to
which the Borrower or any of the Subsidiaries is a party or by which any of them
or any of their property is or may be bound, (ii) breach or constitute (alone or
with notice or lapse of time or both) a default under, or give rise to any right
to accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, material agreement or other instrument or
(iii) result in the creation or imposition of any Lien upon or with respect to
any property or assets now owned or hereafter acquired by the Borrower or any of
the Subsidiaries except as expressly set forth herein and in the documents
executed and delivered in connection with the Transactions.
SECTION 3.03. Enforceability. This Agreement has been duly executed
and delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by each Loan Party thereto will constitute, a legal,
valid and binding obligation of the Borrower or such Loan Party enforceable
against the Borrower or such Loan Party in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditor's rights generally from time to time in
effect and to general principles of equity.
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SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
such as have been made or obtained and are in full force and effect and, as to
Transactions other than the Closing Date Transactions, such as are expected to
be obtained and in full force and effect at the times required.
SECTION 3.05. Financial Statements. (a) The Borrower has heretofore
delivered to the Lenders combined balance sheets for the combined Rayonier
timberlands operations (the "Operations") as of December 31, 1997 and December
31, 1998 and combined statements of income and statements of cash flows for the
Operations for the years ended December 31, 1996, 1997 and 1998, all audited by
Arthur Andersen LLP, independent public accountants. The Borrower has also
heretofore delivered to the Lenders unaudited combined balances sheets,
statements of income, statements of cash flows and statements of changes in
equity for the Operations as at and for the six months ended June 30, 1998 and
1999, certified by a Financial Officer of the Borrower or the Managing General
Partner. Such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of the Operations as of the dates thereof.
Such financial statements were prepared in accordance with GAAP applied on a
consistent basis.
(b) The Borrower has heretofore delivered to the Lenders unaudited
pro forma combined balance sheets for the Operations as at December 31, 1998 and
June 30, 1999, unaudited pro forma combined statements of income for the years
ended December 31, 1996, 1997 and 1998, and unaudited pro forma combined
statements of income for the twelve months and the six months ended June 30,
1999, in each case prepared giving effect to the Closing Date Transactions as if
they had occurred on each such date and at the beginning of each such periods.
Such financial statements have been prepared in good faith by the Borrower and
the Subsidiaries, based on the assumptions used to prepare the pro forma
financial information contained in the Confidential Information Memorandum
(which assumptions are believed by the Borrower and the Subsidiaries to be
reasonable), are based on the best information available to the Borrower and the
Subsidiaries as of the date of delivery thereof, accurately reflect all
adjustments required to be made to give effect to the Closing Date Transactions
and present fairly on a pro forma basis the consolidated financial condition and
results of operations of the Operations as of the dates and for the periods set
forth therein, assuming that the Closing Date Transactions had actually occurred
at such dates and at the beginnings of such periods.
(c) All financial statements, historical or pro forma, referred to in
paragraphs (a) and (b) above comply with the requirements of Regulation S-X of
the Securities and Exchange Commission for inclusion in a registration statement
for a public offering registered under the Securities Act of 1933, except with
respect to the presentation of certain periods covered by such pro forma
financial statements not permitted under Regulation S-X .
(d) The Borrower and the Subsidiaries do not have any Indebtedness
outstanding on the date hereof, except for Indebtedness reflected in the pro
forma financial statements referred to in paragraph (b) above.
SECTION 3.06. No Material Adverse Change. Since December 31, 1998,
there has occurred or become known no event, condition or change in or affecting
the Borrower or the Subsidiaries that, individually or in the aggregate with
other such events, conditions or changes, has had or could reasonably be
expected to have a Material Adverse Effect.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) The
Borrower and each of the Subsidiaries has good and sufficient title to, or valid
leasehold interests in, all its material properties and assets, except for minor
defects in title that could not reasonably be expected to have a
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Material Adverse Effect. All such material properties and assets are free and
clear of Liens, other than Liens expressly permitted by Section 6.03.
(b) The Borrower and each Subsidiary has complied with all material
obligations under all material leases to which it is a party and all such leases
are in full force and effect in all material respects and the Borrower and each
Subsidiary enjoys peaceful and undisturbed possession under all such material
leases to which it is a party.
SECTION 3.08. Litigation; Compliance with Laws. (a) There are not any
actions, including Environmental Actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower or, threatened against or affecting the Borrower or
any of the Subsidiaries or any business, property or rights of any such person
(i) that involve any Loan Document or the Transactions, (ii) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (iii) that could materially and adversely
affect the ability of the Loan Parties fully and timely to perform their
respective payment and other material obligations under the Loan Documents or
the other documents executed in connection with the Transactions or the ability
of the parties to consummate the Transactions.
(b) The Borrower and each Subsidiary is in compliance with all laws,
regulations, consent decrees and orders of any Governmental Authority applicable
to it or its property and all indentures, agreements and other instruments
binding upon it or its property, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.
(c) None of the Borrower, any Subsidiary or any of their respective
material properties or assets is in violation of, nor will the continued
operation of their material properties and assets as currently conducted
violate, any law, rule or regulation (including any zoning, building,
Environmental Law, ordinance, code or approval or any building permit) or any
restrictions of record or agreements affecting such material properties or
assets, or is in default with respect to any judgment, writ, injunction, decree
or order of any Governmental Authority, where any such violation or default
could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.09. Agreements. (a) Neither the Borrower nor any of the
Subsidiaries is in default in any manner under any provision of any indenture or
other material agreement or instrument evidencing Indebtedness, or any other
material agreement or instrument to which it is a party or by which it or any of
its properties or assets are or may be bound, where such default could
reasonably be expected to result in a Material Adverse Effect.
(b) Schedule 3.09 sets forth each material agreement currently in
effect between the Borrower or any Subsidiary on the one hand and Rayonier or
any of its Affiliates (other than the Borrower or any Subsidiary) on the other
hand that will be in effect on the Closing Date.
SECTION 3.10. Federal Reserve Regulations. (a) Neither the Borrower
nor any of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry Margin Stock or to refinance Indebtedness originally incurred
for that purpose, or for any purpose that entails a violation of, or that is
inconsistent with, the provisions of the Regulations of the Board, including
Regulation U or X.
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SECTION 3.11. Investment Company Act: Public Utility Holding Company
Act. Neither the Borrower nor any of the Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.12. Use of Proceeds. The proceeds of the Loans will be
used only for the purposes specified in the preamble to this Agreement.
SECTION 3.13. Tax Returns. The Borrower and each Subsidiary has filed
or caused to be filed all Federal, state, local and foreign income tax returns
and all other material Federal, state, local and foreign tax returns required to
have been filed by it and has paid or caused to be paid all taxes due and
payable by it and all assessments received by it, except taxes that are being
contested in good faith by appropriate proceedings and for which the Borrower or
such Subsidiary, as applicable, shall have set aside on its books reserves
therefor as required by GAAP.
SECTION 3.14. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit, schedule or document furnished by or on behalf of the
Borrower or the Subsidiaries to the Administrative Agent or any Lender in
connection with the negotiation of any Loan Document or included therein or
delivered pursuant thereto, contained, contains or will, when delivered (and
taken together with all other information then or theretofore so delivered),
contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading;
provided that to the extent any such information, report, financial statement,
exhibit, schedule or document was based upon or constituted a forecast or
projection, the Borrower represents only that it acted in good faith and
utilized reasonable assumptions and due care in the preparation of such
information, report, financial statement, exhibit or schedule.
SECTION 3.15. Employee Benefit Plans. Each of the Borrower and each
ERISA Affiliate is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in material liability of the Borrower or
any ERISA Affiliate. The present value of all benefit liabilities under each
Plan (based on those assumptions used to fund such Plan) did not, as of the last
annual valuation date applicable thereto, exceed the fair market value of the
assets of such Plan, and the present value of all benefit liabilities of all
underfunded Plans (based on those assumptions used to fund each such Plan) did
not, as of the last annual valuation dates applicable thereto, exceed the fair
market value of the assets of all such underfunded Plans. Except as set forth in
Schedule 3.15, the Borrower and the Subsidiaries have no material liability with
respect to 'accumulated post-retirement benefit obligations" within the meaning
of Statement of Financial Accounting Standards No. 106.
SECTION 3.16. Environmental Matters. Except as set forth in Schedule
3.16:
(a) Except as set forth in the Borrower's Environmental
Disclosure Report, the operations and properties of the Borrower and each of the
Subsidiaries comply in all material respects with all Environmental Laws, all
material and necessary Environmental Permits have been obtained and are in
effect for the operations and properties of the Borrower and each of the
Subsidiaries, and the Borrower and each of the Subsidiaries are in compliance in
all material respects with all such Environmental Permits.
(b) Except as set forth in the Borrower's Environmental
Disclosure Report, to the knowledge of the Borrower, there are no circumstances
that are reasonably likely to form the basis of
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39
an Environmental Action against the Borrower or any of the Subsidiaries that
could reasonably be expected to result in a Material Adverse Effect.
(c) Except as set forth in the Borrower's Environmental
Disclosure Report, none of the properties currently or formerly owned or
operated by the Borrower or any of the Subsidiaries is listed or, to the
knowledge of the Borrower, proposed for listing on the National Priorities List
under CERCLA (the "NPL") or on the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency ("CERCLIS") or any analogous state list; and no
underground storage tanks, as such term is defined in 42 U.S.C. Section 6991,
are located on any property currently or formerly owned or operated by the
Borrower or any of the Subsidiaries that could reasonably be expected to result
in a Material Adverse Effect.
(d) Except as set forth in the Borrower's Environmental
Disclosure Report, to the knowledge of the Borrower, neither the Borrower nor
any of the Subsidiaries has transported or arranged for the transportation of
any Hazardous Materials to any location that is listed or proposed for listing
on the NPL or on the CERCLIS, which could reasonably be likely to lead to claims
against the Borrower or such Subsidiary for any remedial work, damage to natural
resources or personal injury that have had or could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.17. Insurance. Schedule 3.17 sets forth a true, complete
and correct description of all insurance maintained by the Borrower or the
Subsidiaries as of the Closing Date (other than title insurance). As of the
Closing Date, such insurance is in full force and effect and all premiums have
been duly paid. The Borrower and the Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice.
SECTION 3.18. Labor Matters. As of the Closing Date, there are no
strikes, lockouts or slowdowns against the Borrower or any of the Subsidiaries
pending or, to the knowledge of the Borrower or any of the Subsidiaries,
threatened which could reasonably be expected to have a Material Adverse Effect.
SECTION 3.19. Solvency. Immediately after the consummation of the
Closing Date Transactions, (i) the fair value of the assets of each Loan Party
will exceed its debts and liabilities, subordinated, contingent or otherwise;
(ii) the present fair saleable value of the property of each Loan Party will be
greater than the amount that will be required to pay its probable liability on
its debts and other liabilities, subordinated, contingent or otherwise, as such
debts and other liabilities become absolute and matured; (iii) each Loan Party
will be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (iv)
each Loan Party will not have unreasonably small capital with which to conduct
the business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date.
SECTION 3.20. Year 2000. Any reprogramming required to prevent the
occurrence of a material adverse effect upon the business or properties of the
Borrower and the Subsidiaries taken as a whole or upon the ability of the
Borrower to perform its obligations under this Agreement, in and following the
year 2000, of (a) the computer systems of the Borrower and the Subsidiaries and
(b) equipment containing embedded microchips (including systems and equipment
supplied by others or with which the systems of the Borrower or any of the
Subsidiaries interface) and the testing of all mission critical systems and
equipment, as so reprogrammed, has been completed. The cost to the Borrower of
such reprogramming and testing and of the reasonably foreseeable consequences of
year 2000 to the Borrower and the Subsidiaries (including reprogramming errors
and the failure of others' systems or equipment) will not result in a Default or
an Event of Default nor could such costs reasonably be expected to have a
material adverse effect upon the business or properties of the
<PAGE> 44
40
Borrower and the Subsidiaries taken as a whole or upon the ability of the
Borrower to perform its obligations under this Agreement. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrower and the Subsidiaries
are and, with ordinary course upgrading and maintenance, will continue for the
term of this Agreement to be, sufficient to permit the Borrower and the
Subsidiaries to conduct their businesses without a material adverse effect upon
the business or properties of the Borrower and the Subsidiaries taken as a whole
or upon the ability of the Borrower to perform its obligations under this
Agreement.
SECTION 3.21. Acquisition Agreement. The Borrower is not aware of any
material inaccuracy of the representations and warranties made by Rayonier or
the Seller contained in the Acquisition Agreement.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans hereunder are subject to
the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. On the date of each borrowing
hereunder:
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03).
(b) The representations and warranties set forth in Article III shall
be true and correct in all material respects on and as of the date of such
borrowing with the same effect as though made on and as of such date, except to
the extent such representations and warranties expressly relate to an earlier
date.
(c) The Borrower and each other Loan Party shall be in compliance
with all the terms and provisions set forth herein and in each other Loan
Document on its part to be observed or performed, and at the time of and
immediately after such borrowing, no Event of Default or Default shall have
occurred and be continuing.
Each borrowing shall be deemed to constitute a representation and
warranty by the Borrower on the date of such borrowing as to the satisfaction of
the conditions set forth in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. Initial Borrowing. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of itself
and the Lenders, favorable written opinions of (i) John Canning, Esq., Corporate
Secretary and Associate General Counsel of the Borrower, substantially to the
effect set forth in Exhibit F-1, and (ii) Andrews & Kurth L.L.P., special
counsel for the Borrower and the Subsidiaries, substantially to the effect set
forth in Exhibit F-2 satisfactory to the Administrative Agent, in each case
dated the Closing Date, addressed to the Administrative Agent and the Lenders,
and the Borrower hereby requests such counsel to deliver such opinions.
(b) The Administrative Agent shall have received (i) a copy of such
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization or formation, existence and good
standing of the Loan Parties; (ii) a certificate of the
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41
Secretary or Assistant Secretary of the Managing General Partner dated the
Closing Date and certifying (A) that attached thereto is a true and complete
copy of the by-laws of the Managing General Partner as in effect on the Closing
Date and at all times since a date prior to the date of the resolutions
described in clause (B) below, (B) that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of the Managing
General Partner authorizing the execution, delivery and performance of the Loan
Documents to which each Loan Party is a party and, in the case of the Borrower,
the Borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that the certificate
or articles of incorporation of the Managing General Partner has not been
amended since the date of the last amendment thereto shown on the certified copy
thereof furnished pursuant to clause (i) above, and (D) as to the incumbency and
specimen signature of each officer of the Managing General Partner executing any
Loan Document or any other document delivered in connection herewith on behalf
of such Loan Party; (iii) a certificate of another officer of the Managing
General Partner as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to (ii) above; and (iv)
such other documents as the Lenders or the Administrative Agent may reasonably
request.
(c) The Administrative Agent shall have received a certificate, dated
the Closing Date and signed by a Financial Officer of the Managing General
Partner, confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.01.
(d) The Administrative Agent shall have received all Fees and other
amounts due and payable on or prior to the Closing Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder or under any other Loan
Document.
(e) The Administrative Agent shall be reasonably satisfied with the
terms and conditions of all agreements of the Borrower existing at the time of
or entered into in connection with the Acquisition, including the Acquisition
Agreement, the Installment Notes, the Installment Note Agreement, the New
Rayonier Subordinated Note and all management or other agreements between the
Borrower and Rayonier or its Affiliates.
(f) The Acquisition shall have been, or shall substantially
simultaneously with the initial borrowing be, consummated in accordance with the
Acquisition Agreement and applicable law and on terms consistent in all material
respects with the Projections, without any amendment to or waiver of any
material terms or conditions of the Acquisition Agreement not approved by the
Lenders. All conditions to the consummation of the Acquisition in the
Acquisition Agreement shall have been satisfied. The Lenders shall have received
executed copies of the Acquisition Agreement and all certificates, opinions and
other documents delivered in connection therewith, all certified by a Financial
Officer of the Managing General Partner as complete and correct.
(g) All the assets, properties and interests acquired by Rayonier
pursuant to the Acquisition Agreement, all other Timberlands or interests in
Timberlands owned directly or indirectly by Rayonier (other than certain of such
other timberlands with a market value not to exceed $50,000,000 that Rayonier
will have the right to designate and receive from the Borrower without payment
of any consideration) and all related contracts or agreements shall have been
transferred by Rayonier to the Borrower.
(h) The Installment Notes and the New Rayonier Subordinated
Indebtedness shall have been, or shall substantially simultaneously with the
initial borrowing be, issued in accordance with applicable law and, in the case
of the Installment Notes, the Installment Note Agreement, without any amendment
to or waiver of any material terms or conditions of the Installment Note
Agreement or the New Rayonier Subordinated Note, as applicable, not approved by
the Lenders, and the Borrower shall
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42
have received cash proceeds from the issuance of the New Rayonier Subordinated
Indebtedness in an amount not less than $142,000,000. The Lenders shall have
received copies of the Installment Note Agreement and the New Rayonier
Subordinated Note and all other material documents delivered in connection
therewith, all certified by a Financial Officer of the Managing General Partner
as complete and correct.
(i) The Guarantee Requirement shall be satisfied.
(j) All requisite Governmental Authorities and third parties shall
have approved or consented to the Transactions and the other transactions
contemplated in connection therewith to the extent required and all required
consents, waivers and amendments shall have been obtained under Rayonier's
existing credit facilities, and there shall be no action by any Governmental
Authority, actual or threatened, that has a reasonable likelihood of
restraining, preventing or imposing burdensome conditions on the Transactions or
the other transactions contemplated in connection therewith.
(k) The Administrative Agent shall be satisfied with the terms and
conditions of the Existing Rayonier Subordinated Indebtedness and of the
Existing Rayonier Subordinated Note, and the Existing Rayonier Subordinated Note
shall have been executed and delivered by the parties thereto and shall be in
full force and effect.
(l) The Administrative Agent shall be reasonably satisfied with all
legal, tax and accounting matters related to the Transactions and with the
Borrower's legal and capital structure following the Closing Date Transactions.
(m) The Borrower shall have no outstanding Indebtedness other than
Obligations and the Indebtedness permitted under this Agreement.
(n) The Administrative Agent and the Lenders shall have received the
financial statements described in clauses (a) and (b) of Section 3.05 and each
such statement shall comply with the requirements of Regulation S-X of the
Securities and Exchange Commission for inclusion in a registration statement for
a public offering registered under the Securities Act of 1933.
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full, unless the Required Lenders shall otherwise consent in writing, it will,
and will cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties, Insurance. (a) At
all times preserve and keep in full force and effect and obtain, as applicable,
(i) its existence as a limited partnership and (ii) the corporate, limited
liability company or partnership existence, as the case may be, of each of the
Material Subsidiaries (unless any such Subsidiary is merged or liquidated into
the Borrower or a Subsidiary in a transaction permitted under Section 6.07) and
(iii) all rights, licenses, permits, franchises, patents, trademarks, copyrights
and tradenames of the Borrower and the Material Subsidiaries (unless, in the
good faith judgment of the Borrower, the termination of or failure to preserve
and keep in full force and effect any such right, license, permit, franchise,
patent, trademark, copyright or tradename could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect).
<PAGE> 47
43
(b) Maintain and keep, or cause to be maintained and kept, its
properties and assets in good repair, working order and condition (subject to
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this paragraph shall not
prevent the Borrower or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties or assets if such discontinuance is
desirable in the conduct of its business and the Borrower has concluded that
such discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(c) Comply with all applicable laws, ordinances or governmental rules
or regulations to which it is subject, except to the extent that noncompliance
with such laws, ordinances or governmental rules or regulations could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(e) Maintain, with financially sound and reputable insurers,
insurance with respect to its properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained on its books with respect thereto in accordance with GAAP) as is
customary (with respect to such types, terms, amounts and reserves) in the case
of entities of established reputation engaged in the same or a similar business
and similarly situated.
SECTION 5.02. Obligations and Taxes. File and cause the Subsidiaries
to file all tax returns required to be filed by it in any jurisdiction, pay and
discharge and cause the Subsidiaries to pay and discharge all taxes shown to be
due and payable on such returns and all other material taxes, assessments,
governmental charges, or levies imposed on it or any of its properties, assets,
income or franchises, to the extent such taxes and assessments have become due
and payable and before they have become delinquent; provided that neither the
Borrower nor any Subsidiary need pay any such tax, assessment, governmental
charge or levy if (a) the amount, applicability or validity thereof is contested
by the Borrower or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Borrower or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Borrower
or such Subsidiary or (b) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.03. Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent, with sufficient copies for each
Lender:
(a) within 120 days after the end of each fiscal year, a
consolidated balance sheet and related consolidated statements of
income, changes in partners' equity and cash flows showing the
consolidated financial condition of the Borrower and the Subsidiaries
as of the close of such fiscal year and the results of its operations
and the operations of such Subsidiaries during such year and the
immediately preceding year, all audited by Arthur Andersen LLP or
other independent public accountants of recognized national standing
and accompanied by an opinion of such accountants (which shall not be
qualified in any respect relating to the scope of the audit or the
status of the Borrower as a going concern) to the effect that such
financial statements present fairly, in all material respects, the
financial position of the entities being reported upon and their
results of operations and cash flows and have been prepared on a
consolidated basis in conformity with GAAP, and that the examination
of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards,
and that such audit provides a reasonable basis for such report in
the circumstances;
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44
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year, a consolidated balance sheet and
related consolidated statements of income, changes in partners'
equity and cash flows showing the consolidated financial condition of
the Borrower and the Subsidiaries as of the close of such fiscal
quarter and the results of its operations and the operations of such
Subsidiaries during such fiscal quarter and the then elapsed portion
of the fiscal year and during the corresponding periods in the
immediately preceding fiscal year, all in reasonable detail, prepared
on a consolidated basis in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a
Financial Officer of the Borrower or the Managing General Partner as
fairly presenting, in all material respects, the financial position
of the entities being reported on and their results of operations and
cash flows, subject to changes resulting from normal, recurring
year-end adjustments;
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a consolidated balance sheet and
related consolidated statements of income, changes in partners'
equity and cash flows showing as of the applicable date or for the
applicable period (and the corresponding period in the prior year)
the financial condition and the results of operations of each
Subsidiary the accounts of which have not been consolidated with
those of the Borrower for purposes of preparing such financial
statements, all in reasonable detail, prepared in accordance with
GAAP applicable to quarterly financial statements generally, and
certified by a Financial Officer of the Borrower or the Managing
General Partner as fairly presenting, in all material respects, the
financial position of the Subsidiary being reported on and its
results of operations and cash flows, subject, in the case of
quarterly statements, to changes resulting from normal, recurring
year-end adjustments;
(d) concurrently with any delivery of financial statements
under paragraph (a) above, a certificate of the accountants auditing
such statements stating that they have reviewed this Agreement and
stating further whether, in making their audit, they have become
aware of any financial condition or event that then constitutes a
Default or an Event of Default as it relates to accounting matters,
and, if they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof (it being
understood that such accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of any Default or
Event of Default;
(e) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial
Officer of the Borrower or the Managing General Partner(i) certifying
that no Default or Event of Default has occurred and is continuing
or, if such a Default or Event of Default has occurred and is
continuing, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto
and (ii) setting forth computations in reasonable detail satisfactory
to the Administrative Agent demonstrating compliance with the
financial covenants contained in Sections 6.15 and 6.16;
(f) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and other
materials filed by the Borrower or any of the Subsidiaries with the
Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with
any national securities exchange; and
(g) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Borrower or any of the Subsidiaries, or compliance with the terms
of any Loan Document, as the Administrative Agent or any Lender may
reasonably request at the request of any Lender and which is
susceptible of being obtained, produced or generated by any of them
or of which any of them have knowledge.
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SECTION 5.04. Litigation and Other Notices. Furnish to the
Administrative Agent prompt written notice of the following promptly after any
officer of the Borrower or the Managing General Partner obtains knowledge
thereof:
(a) any Event of Default or Default, specifying the nature
and extent thereof and the corrective action (if any) taken or
proposed to be taken with respect thereto;
(b) the filing or commencement of any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Subsidiary as to
which there is a reasonable possibility of an adverse determination
and which if adversely determined to the Borrower or any Subsidiary
could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any development or event or any
change in the business, assets, results of operations or financial
condition of the Borrower and the Subsidiaries, taken as a whole that
has resulted in, or could reasonably be expected to result in a
Material Adverse Effect.
SECTION 5.05. Employee Benefits. (a) Comply in all material respects
with the applicable provisions of ERISA except where noncompliance could not
reasonably be expected to result in a Material Adverse Effect and (b) furnish to
the Administrative Agent (i) as soon as possible, and in any event within 30
days, after any Responsible Officer of the Borrower, the Managing General
Partner or any ERISA Affiliate knows or has reason to know that any ERISA Event
has occurred that, alone or together with any other ERISA Events that have
occurred could reasonably be expected to result in liability of the Borrower
and/or the Subsidiaries in an aggregate amount exceeding $5,000,000 or requiring
payments exceeding $1,000,000 in any year, a statement of a Financial Officer of
the Borrower or the Managing General Partner setting forth details as to such
ERISA Event and the action, if any, proposed to be taken with respect thereto
and (ii) promptly after receipt thereof, a copy of any notice that the Borrower
or any Subsidiary may receive from the PBGC relating to the intention of the
PBGC to terminate any Plan or Plans (other than a Plan maintained by an ERISA
Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Section 414 of the Code) or to appoint a trustee to administer any
Plan or Plans, (iii) within 10 days after the due date for filing by the
Borrower or any Subsidiary with the PBGC pursuant to Section 4.12(n) of the Code
of a notice of failure to make a required installment or other payment with
respect to a Plan, a statement of a Financial Officer of the Borrower or the
Managing General Partner setting forth details as to such failure and the action
proposed to be taken with respect thereto and (iv) promptly and in any event
within 30 days after receipt thereof by the Borrower or any sponsor of a
Multiemployer Plan, a copy of each notice concerning (A) the imposition of any
Withdrawal Liability in an amount exceed $5,000,000 or (B) a determination that
a Multiemployer Plan is, or is expected to be, terminated or in reorganization,
both within the meaning of Title IV of ERISA, which in each case, is expected to
result in an increase in annual contributions of the Borrower or any Subsidiary
to such Multiemployer Plan in an amount exceeding $5,000,000.
SECTION 5.06. Maintaining Records; Access to Properties and
Inspections. Keep and maintain proper books of record and account and a system
of accounting established and administered in accordance with sound business
practice and adequate to permit the preparation of the financial statements
required to be delivered under Section 5.03, and upon reasonable notice permit
representatives of the Lenders to have access to such books of record and
account and the premises of the Borrower or any Subsidiary at reasonable times
and to make such excerpts from such books of record of account as such
representative deem necessary in connection with their evaluation of the ability
of the Borrower and the other Loan Parties to repay the Loans and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of
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the Borrower, the Managing General Partner or any of the Subsidiaries with the
officers thereof and independent accountants therefor.
SECTION 5.07. Use of Proceeds. Use the proceeds of the Loans only for
the purposes set forth in the preamble to this Agreement.
SECTION 5.08. Compliance with Environmental Laws. Comply in a timely
manner with all Environmental Laws, except where the failure to do so could not
reasonably be expected to result in a Material Adverse Effect, and provide
prompt written notice to the Administrative Agent following the receipt of any
notice from any Governmental Authority charged with enforcing such Environmental
Laws or the receipt of any other information regarding events or conditions, in
any such case, which, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.09. Guarantee Requirement. Cause the Guarantee Requirement
to be satisfied at all times.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full, unless the Required Lenders shall otherwise consent in writing:
SECTION 6.01. Indebtedness. The Borrower will not, and will not
permit any Subsidiary to, incur, create, guarantee or in any manner become
directly or indirectly liable, contingently or otherwise, for the payment of (in
each case,"incur") any Indebtedness (it being understood that the acquisition of
any assets or any Subsidiary that shall be subject to or liable for the payment
of any Indebtedness will be deemed an incurrence of such Indebtedness), unless
after giving effect to such incurrence and to the application of the proceeds
thereof the Merchantable Timber Ratio would not be less than 0.1025 to 1.00;
provided that the foregoing limitation shall not apply to:
(a) Indebtedness created hereunder and under the other Loan
Documents;
(b) the Installment Notes and the guarantees thereof and
any assumption of the obligations guaranteed thereby;
(c) (i) the Existing Rayonier Subordinated Indebtedness in
an aggregate outstanding principal amount not to exceed $285,000,000,
(ii) the New Rayonier Subordinated Indebtedness in an aggregate
outstanding principal amount not to exceed $142,000,000 and (iii)
Additional Rayonier Subordinated Indebtedness;
(d) Indebtedness of the Borrower to any Guarantor and of
any Guarantor to the Borrower or any other Guarantor;
(e) Indebtedness of the Borrower created under Hedging
Agreements entered into in the ordinary course of business to hedge
or mitigate risks to which the Borrower or any Subsidiary is exposed
in the conduct of its business or the management of its liabilities
and not for speculative purposes;
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(f) Indebtedness consisting of reimbursement obligations
under letters of credit supporting (i) obligations under workers'
compensation laws and (ii) the repayment of Indebtedness, the
incurrence of which is not prohibited by this Section 6.01;
(g) Surety and appeal bonds required in the ordinary course
of business or in connection with the enforcement of rights or claims
of the Borrower or any Subsidiary or in connection with judgments
that have not resulted in a Default or Event of Default;
(h) Indebtedness incurred to repay, refund or refinance
Indebtedness existing prior to the Closing Date or permitted under
clause (a), (b), (c) or (f) above if (i) the principal amount of such
new Indebtedness does not exceed the principal or accrued amount plus
the amount of accrued and unpaid interest (and any required
redemption premium) of the Indebtedness so repaid, refunded or
refinanced, (ii) such new Indebtedness ranks no more favorably in
right of payment with respect to the Obligations than the
Indebtedness so repaid, refunded or refinanced, (iii) such new
Indebtedness has a weighted average life to maturity and a stated
maturity equal to or longer than the Indebtedness so repaid, refunded
or refinanced, (iv) no Subsidiary is an obligor in respect of such
new Indebtedness that was not an obligor in respect of the
Indebtedness so repaid, refunded or refinanced, (v) such new
Indebtedness has covenants, events of default and mandatory
prepayment, redemption or repurchase requirements not less favorable
to the Borrower or the Lenders than those of the Indebtedness being
refinanced, and (vi) in the case of any such Indebtedness refinancing
Rayonier Subordinated Indebtedness, the obligee in respect thereof
shall at all times be Rayonier or an Affiliate of Rayonier; and
(i) up to $100,000,000 aggregate principal amount of other
Indebtedness of the Borrower.
SECTION 6.02. Restricted Payments. The Borrower will not, and will
not permit any Subsidiary to, directly or indirectly (a) declare or pay any
dividend or make any other distribution or payment on or in respect of Equity
Interests of the Borrower or any Subsidiary or any payment made to the direct or
indirect holders (in their capacities as such) of Equity Interests of the
Borrower or any Subsidiary (other than (i) dividends or distributions payable
solely in Equity Interests of the Borrower or such Subsidiary (other than
Redeemable Equity Interests), (ii) the declaration or payment of dividends or
other distributions to the extent declared or paid to the Borrower or any
Subsidiary, and (iii) the declaration or payment of dividends or other
distributions by any Subsidiary to all holders of Equity Interests of such
Subsidiary on a pro rata basis; (b) purchase, redeem, defease or otherwise
acquire or retire for value any Equity Interests of the Borrower or any
Subsidiary (other than any such Equity Interests owned by a Wholly Owned
Subsidiary); (c) make any Investment (other than any Permitted Investment) in
any person, or (d) make any interest payment on the Rayonier Subordinated
Indebtedness (such payments or Investments described in the preceding clauses
(a), (b), (c) and (d) being collectively referred to as "Restricted Payments")
unless, at the time of and after giving effect to each Restricted Payment (i) no
Default or Event of Default shall have occurred and be continuing and (ii) such
Restricted Payment, together with the aggregate amount of all other Restricted
Payments made by the Borrower and the Subsidiaries during the fiscal quarter
during which such Restricted Payment is made shall not exceed (A) if the
Consolidated Fixed Charge Coverage Ratio of the Borrower shall be greater than
1.75 to 1.00, an amount equal to Available Cash or (B) if the Consolidated Fixed
Charge Coverage Ratio of the Borrower shall be equal to or less than 1.75 to
1.00, an amount equal to the sum of (x) $25,000,000, plus (y) to the extent not
theretofore used as the basis for a Restricted Payment pursuant to clauses (ii)
or (iii) of the last sentence of this paragraph, the aggregate net cash proceeds
of any substantially concurrent (i) capital contribution to the Borrower by any
person (other than a Subsidiary) or (ii) issuance and sale of Equity Interests
(other than Redeemable Equity Interests) of the Borrower to any person (other
than to a Subsidiary), in either case made after the date hereof and not later
than substantially concurrently with the making of such
<PAGE> 52
48
Restricted Payment, minus (z) the aggregate amount of all Restricted Payments
(including such Restricted Payment) made pursuant to this clause (B) after the
date hereof (other than any Restricted Payment excluded from the restrictions of
this Section by clauses (ii), (iii), (iv) or (v) of the last sentence of this
Section). The amount of any such Restricted Payment, if other than cash, shall
be the Fair Market Value (as determined in good faith by the Board of Directors
of the Managing General Partner) on the date of such Restricted Payment of the
assets proposed to be transferred by the Borrower or such Subsidiary, as the
case may be, pursuant to such Restricted Payment. None of the foregoing
provisions of this Section shall prohibit: (i) the payment of any dividend or
distribution within 60 days after the date of its declaration, if at the date of
declaration such payment would be permitted by the foregoing provisions of this
Section; (ii) the redemption, repurchase or other acquisition or retirement of
any Equity Interest of the Borrower or any Subsidiary in exchange for, or out of
the net cash proceeds of, a substantially concurrent (A) capital contribution to
the Borrower from any person (other than a Subsidiary) or (B) issue and sale of
other Equity Interests (other than Redeemable Equity Interests of a Subsidiary)
of the Borrower to any person (other than to a Subsidiary); provided, that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase or other acquisition or retirement shall be excluded from the
calculation of Available Cash; (iii) any refinancing of Rayonier Subordinated
Indebtedness permitted under Section 6.01(h), (iv) a one-time extraordinary
distribution by the Borrower on the Closing Date to Rayonier Timberlands Holding
Corp. and/or its Affiliates in an aggregate amount not exceeding $142,000,000,
or (v) a one-time distribution by the Borrower on the Closing Date to Rayonier
or an Affiliate of Rayonier of the right to receive certain Timberlands
designated by Rayonier during the period of 90 days following the Closing Date
with a Fair Market Value not to exceed $50,000,000, without payment of any
consideration to the Borrower, and the distribution of such Timberlands to
Rayonier.
SECTION 6.03. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or assets (including stock or other securities of any person, including any
Subsidiary) now owned or hereafter acquired by it or on any income or revenues
or rights in respect thereof (including any deferred payment obligations
received as consideration for asset sales), or assign or transfer any such
income or revenues or rights in respect thereof, except:
(a) Liens for taxes, assessments or other governmental
charges the payment of which is not yet due or is being contested in
good faith by appropriate proceedings promptly initiated and
diligently conducted and as to which reserves or other appropriate
provision, if any, satisfying the requirements of GAAP and adequate
in the good faith judgment of the Borrower shall have been made;
(b) Liens of lessors, landlords and carriers, vendors,
loggers, warehousemen, mechanics, materialmen, repairmen and other
like Liens incurred in the ordinary course of business for sums not
yet due or the payment of which is being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted
and as to which reserves or other appropriate provision, if any,
satisfying the requirements of GAAP and adequate in the good faith
judgment of the Borrower shall have been made, to the extent such
Liens are not incurred or made in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the
deferred purchase price of property, or banker's Liens in the nature
of rights of set off arising in the ordinary course of business of
the Borrower and the Subsidiaries in connection with Indebtedness
permitted by Section 6.01;
(c) Liens (other than any Lien imposed by ERISA) incurred
or deposits made in the ordinary course of business (i) in connection
with workers' compensation, unemployment insurance and other types of
social security or (ii) to secure (or to obtain letters of credit
that secure) the performance of tenders, statutory obligations,
surety and appeal bonds, bids,
<PAGE> 53
49
leases, performance bonds, purchase, construction or sales contracts
and other similar obligations, in each case not incurred or made in
connection with the borrowing of money;
(d) other deposits made to secure liabilities to insurance
carriers under insurance or self-insurance arrangements;
(e) Liens securing reimbursement obligations under letters
of credit, provided in each case that such Liens cover only the title
documents and related goods (and any proceeds thereof) covered by the
related letter of credit;
(f) any attachment or judgment Lien relating to a judgment
that does not constitute an Event of Default;
(g) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances
which, in each case, (i) are granted, entered into or created in the
ordinary course of the business of the Borrower or any Subsidiary or
(ii) do not materially impair the value or intended use of the
property covered thereby;
(h) Liens on property or assets of any Subsidiary securing
Indebtedness of such Subsidiary owing to the Borrower or another
Subsidiary;
(i) Liens (i) existing on any property of any person at the
time it becomes a Subsidiary, (ii) existing at the time of
acquisition upon any property acquired by the Borrower or any
Subsidiary through purchase, merger or consolidation or otherwise,
whether or not assumed by the Borrower or such Subsidiary, or (iii)
created to secure Indebtedness incurred to pay all or any part of the
purchase price or cost of construction or improvement of real
property (including Timberlands) or equipment (or Equity Interests of
persons owning such real property or equipment) acquired by the
Borrower or a Subsidiary (Liens described in this clause (iii) being
called "Purchase Money Liens"); provided that (A) any such Lien shall
be confined solely to such item or items of property and other
property which is an improvement to or is acquired for use
specifically in connection with such acquired property, or, in the
case of construction, related unimproved land, (B) in the case of a
Purchase Money Lien, the principal amount of the Indebtedness secured
by such Purchase Money Lien shall at no time exceed 100% of the
purchase price or cost of construction or improvement to the Borrower
and the Subsidiaries of such property, (C) any such Purchase Money
Lien shall be created not later than 180 days after the acquisition
of such property, (D) any such Lien shall not have been created or
assumed in contemplation of such Person's becoming a Subsidiary or
(except in the case of a Purchase Money Lien) such acquisition of
property by the Borrower or a Subsidiary and (E) the aggregate amount
of (i) the obligations secured by Liens permitted under this clause
(i) (or clause (k) of this Section with respect to the renewals or
extensions of such Liens) and outstanding at any time, (ii) the
obligations secured by Liens permitted under clause (m) of this
Section and (iii) the Attributable Debt in respect of all sale and
lease-back transactions permitted under Section 6.06 shall in no
event exceed $50,000,000 at any time;
(j) easements, exceptions or reservations in any property
of the Borrower or any Subsidiary granted or reserved for the purpose
of pipelines, roads, the removal of oil, gas, coal or other minerals
and other like purposes, or for the joint or common use of real
property, facilities and equipment, which are incidental to, and do
not materially interfere with, the ordinary conduct of the business
of the Borrower or any Subsidiary;
(k) any Lien renewing or extending any Lien permitted by
clause (a) or (i), provided that (i) the principal amount of the
Indebtedness secured by any such Lien shall not exceed the principal
amount of such Indebtedness outstanding immediately prior to the
renewal or
<PAGE> 54
50
extension of such Lien, and (ii) no assets encumbered by
any such Lien other than the assets encumbered immediately prior to
such renewal or extension shall be encumbered thereby; and
(l) other Liens, provided that the aggregate amount of (i)
the obligations secured by all such other Liens, (ii) the obligations
secured by Liens permitted under clause (i) above (or clause (k)
above with respect to the renewals or extensions of such Liens) and
(iii) the Attributable Debt in respect of all sale and lease-back
transactions permitted under Section 6.06 shall not exceed
$50,000,000 at any time.
SECTION 6.04. Transactions with Affiliates. The Borrower will not,
and will not permit any Subsidiary to, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, transfer, disposition, purchase, exchange or lease of assets, property
or services) with, or for the benefit of, any Affiliate of the Borrower unless
(a) such transaction or series of related transactions is between the Borrower
and one or more Subsidiaries or between two or more Subsidiaries or (b) such
transaction or series of related transactions is on terms that are no less
favorable to the Borrower or Subsidiary, as the case may be, than those which
would have been obtained in a comparable transaction at such time from persons
who are not Affiliates of the Borrower; provided, however, that this covenant
will not apply to (i) any employment agreement, stock option agreement,
restricted stock agreement, consulting agreement or similar agreement entered
into in the ordinary course of business, (ii) transactions permitted by Section
6.02, (iii) any agreement or other obligation in effect on the Closing Date or
any amendment thereto (so long as the agreement, as amended by such amendment,
is no less favorable (taken as a whole) to the holders of the Notes than the
original agreement as in effect on the Closing Date) and any transactions
contemplated thereby, and (iv) the payment of reasonable fees to, and
indemnities provided on behalf of, officers, directors, employees or consultants
of the Borrower or any Subsidiary or of the Managing General Partner in the
ordinary course of business.
SECTION 6.05. Certain Restrictions on Subsidiaries. The Borrower will
not permit any Subsidiary to create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or consensual restriction on the
ability of such Subsidiary to (a) pay dividends, in cash or otherwise, or make
any other distributions on or in respect of its Equity Interests, (b) pay any
Indebtedness owed to the Borrower or any other Subsidiary, (c) make loans or
advances to, or any investment in, the Borrower or any other Subsidiary, or (d)
transfer any of its properties or assets to the Borrower or any other Subsidiary
(collectively, "Payment Restrictions"), except for such encumbrances or
restrictions existing under or by reason of (i) applicable law, rules or
regulations, or any order or ruling by any Governmental Authority; (ii) any
agreement in effect on the date hereof and described in Schedule 6.05; (iii)
customary non-assignment provisions of any contract, license or any lease
governing a leasehold interest of any Subsidiary; (iv) customary restrictions on
cash or other deposits imposed by customers under contracts entered into in the
ordinary course of business; (v) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (d) above on the property so acquired; (vi) contracts
for the sale of assets, including, without limitation, customary restrictions
with respect to a Subsidiary pursuant to an agreement that has been entered into
for a sale of all or substantially all the Equity Interests or assets of such
Subsidiary, to the extent such sale is permitted by this Agreement; (vii) any
agreement or instrument governing Indebtedness, Preferred Stock or Redeemable
Equity Interests of a person acquired by the Borrower or any Subsidiary (or of a
Subsidiary of such person) in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any person, properties or assets other than the person acquired,
its subsidiaries and their properties and assets; (viii) provisions contained in
agreements or instruments relating to Indebtedness which prohibit the transfer
of all or substantially all the assets of the obligor thereunder unless the
transferee shall assume the obligations of the obligor or issuer under such
agreement or instrument; or (ix) encumbrances or restrictions contained in any
agreement or
<PAGE> 55
51
instrument governing Indebtedness permitted by Section 6.01(i); provided that
the encumbrances or restrictions contained in such agreement or instrument are
no more restrictive (taken as a whole) than those contained in the agreement
governing the Indebtedness being refinanced.
SECTION 6.06. Sale and Lease-Back Transactions. The Borrower will
not, and will not permit any Subsidiary to, enter into any arrangement, directly
or indirectly, with any person whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred, except that the Borrower and the Subsidiaries may
enter into such transactions to the extent that the aggregate amount of (a) the
Attributable Debt in respect of all such transactions, (b) the obligations
secured by Liens permitted under Section 6.03(i) (or Section 6.03(k) with
respect to the renewals or extensions of such Liens) and (c) the obligations
secured by Liens permitted under Section 6.03(m) shall not exceed $50,000,000 at
any time.
SECTION 6.07. Merger, Consolidation or Sale of Assets. (a) The
Borrower will not, and will not permit any Subsidiary to, consolidate or merge
with or into any other person (whether or not the Borrower is the surviving
person), or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one transaction or in a series
of transactions, unless (i) the Borrower or such Subsidiary is the surviving
person, or the person formed by or surviving such consolidation or merger (if
other than the Borrower or such Subsidiary) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made is a
limited partnership (or, in the case of a consolidation or merger of a
Subsidiary, a corporation or limited liability company) organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the person formed by or surviving any such consolidation or
merger (if other than the Borrower or such Subsidiary) or the person to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the Obligations of the Borrower or such Subsidiary
(and in the case of a transaction or series of transactions whereby the Borrower
consolidates or merges with or into any other person, or sells, assigns,
transfers, leases, conveys or otherwise disposes of all or substantially all of
its properties or assets in one transaction or in a series of transactions,
shall be deemed to be the "Borrower" for the purposes of the definition of the
term "Change of Control" ); and (iii) immediately after such transaction no
Default or Event of Default exists.
(b) The Borrower will not, and will not permit any Subsidiary to,
sell, assign, transfer, lease, convey or otherwise dispose of any Equity
Interest in or Indebtedness of a Subsidiary, or cause or permit any Subsidiary
to issue Equity Interests to any person other than the Borrower or a Subsidiary;
provided that the Borrower may sell all the Equity Interests in any Subsidiary
directly or indirectly owned by it in a single transaction complying with the
requirements of Section 6.10.
SECTION 6.08. Business of the Borrower and the Subsidiaries. Engage
to any material extent in any business other than (a) the acquisition,
ownership, management, harvesting, marketing and selling of Timber and
activities reasonably related or reasonably incidental thereto, including but
not limited to the ownership, management and sale of properties acquired as part
of Timberland acquisitions in the ordinary course of business that have a higher
and better use than the growing of timber, and (b) the ownership, operation and
sale of facilities used in the processing of timber into products, but only to
the extent that acquisitions of any such facilities acquired after the date
hereof are merely incidental to acquisitions of Timberlands (and to the extent
such facilities acquired after the date hereof and held at any time represent
more than 5% of the Borrower's Consolidated Total Assets, the Borrower will use
its best efforts to dispose of such facilities as promptly as is commercially
reasonable).
<PAGE> 56
52
SECTION 6.09. Limitation on Non-Guarantor Subsidiaries. The Borrower
will not permit any Subsidiary that is not a Subsidiary Guarantor to be liable
under any Guarantee of any Indebtedness of the Borrower unless such Subsidiary
is a party to and a Subsidiary Guarantor under the Subsidiary Guarantee
Agreement, and with respect to any guarantee of Subordinated Indebtedness by a
Subsidiary, any such Guarantee shall be subordinated to such Subsidiary's
Obligations as a Subsidiary Guarantor at least to the same extent as such
Subordinated Indebtedness is subordinated to the Obligations. Further, a pledge
of assets to secure any Indebtedness for which the pledgor is not otherwise
liable shall not be considered a Guarantee giving rise to any requirement for
the execution of the Subsidiary Guarantee Agreement under this Section 6.09.
SECTION 6.10. Asset Sales. (a) The Borrower will not, and will not
permit any Subsidiary to, (i) sell, lease, convey or otherwise dispose of any
assets other than sales in the ordinary course of business and consistent with
past practice (provided, that the sale, lease, conveyance or other disposition
of all or substantially all of the assets of the Borrower shall be governed by
the provisions of Section 6.07 hereof and not by the provisions of this Section
6.10) or (ii) issue or sell Equity Interests of any of the Subsidiaries, in the
case of either clause (i) or (ii) above whether in a single transaction or a
series of related transactions, that have a Fair Market Value (as determined in
good faith by the Board of Directors of the Managing General Partner) in excess
of $10,000,000 or for net cash proceeds in excess of $10,000,000 (each of the
foregoing, an "Asset Sale"), unless at least 75% of the consideration therefor
received by the Borrower or such Subsidiary is in the form of cash or cash
equivalents; provided, however, that the amount of (A) any liabilities (as shown
on the Borrower's or such Subsidiary's most recent audited balance sheet or in
the notes thereto) of the Borrower or any Subsidiary that are assumed by the
transferee of any such assets and (B) any notes or other obligations received by
the Borrower or any such Subsidiary from such transferee that are converted (by
means of a sale, non-recourse loan or otherwise) by the Borrower or such
Subsidiary into cash (to the extent of the cash received) within 120 days of
such Asset Sale, shall be deemed to be cash for purposes of this provision; and
provided further, that the 75% limitation set forth above shall not apply to any
Asset Sale in which the cash portion of the consideration received therefrom,
determined in accordance with the foregoing proviso, is equal to or greater than
what the after-tax proceeds would have been had such Asset Sale complied with
the aforementioned 75% limitation. Notwithstanding the foregoing, Asset Sales
shall not be deemed to include (a) any transfer of assets or Equity Interests by
the Borrower or any of the Subsidiaries to a Wholly Owned Subsidiary of the
Borrower, (b) any transfer of assets that constitutes the making of a Permitted
Investment, (c) the sale of Timberlands in a like-kind exchange for a like
interest in other Timberlands having a Fair Market Value (as determined in good
faith by the Board of Directors of the Managing General Partner) at least equal
to the Fair Market Value (as determined in good faith by the Board of Directors
of the Managing General Partner) of the Timberlands sold, (d) the sale of not
more than 100,000 acres in the aggregate of Timberlands designated in good faith
by the Board of Directors of the Managing General Partner for a higher and
better use, (e) a disposition of obsolete equipment in the ordinary course of
business, (f) timber deed, bulk, pay-as-cut and stumpage sales in the ordinary
course of business and (g) any transaction permitted by Section 6.02.
(b) In the event that the aggregate Net Cash Proceeds received by the
Borrower or any of the Subsidiaries from one or more Asset Sales since the
Closing Date exceed the Adjusted Asset Sales Amount, the Borrower or any
Subsidiary may, within 270 days after the date such aggregate Net Cash Proceeds
exceed such amount, apply the amount of such aggregate Net Cash Proceeds in
excess of the Adjusted Asset Sales Amount (less the amount of any such Net Cash
Proceeds previously applied during such fiscal year for the purposes set forth
in clause (i) and/or (ii) below) to (i) reduce Senior Indebtedness of the
Borrower secured as permitted under Section 6.03 or Senior Indebtedness of a
Subsidiary (with a permanent reduction of availability in the case of any
facility that permits amounts repaid or prepaid to be reborrowed) or (ii) make,
or commit, pursuant to a binding written contract (provided that the contract is
consummated substantially in accordance with the terms thereof within 30 days
after the end of the 270-day period), to make, an investment in assets used or
useful in the
<PAGE> 57
53
business of the Borrower or such Subsidiary. Pending the final application of
any such Net Cash Proceeds, the Borrower or any Subsidiary may temporarily
reduce borrowings under this Agreement or otherwise invest such Net Cash
Proceeds in any manner that is not prohibited by this Agreement. Any such Net
Cash Proceeds that are not applied or invested as provided in the first sentence
of this Section 6.10(b) will be deemed to constitute "Excess Proceeds". When the
aggregate amount of Excess Proceeds exceeds $50,000,000, the Borrower shall make
an offer to the Lenders and, to the extent (and only to the extent) required by
the terms of the Installment Notes or any other Senior Indebtedness of the
Borrower, to the holders of the Installment Notes or such other Senior
Indebtedness (an "Asset Sale Offer"), to prepay the maximum principal amount of
the Term Loans and, if applicable, the Installment Notes or such other Senior
Indebtedness that may be prepaid out of the Excess Proceeds; provided that the
amount of the prepayment offered or made to the holders of Installment Notes or
such other Senior Indebtedness shall not exceed their ratable share of such
Excess Proceeds (based on the aggregate outstanding principal amount of the
Installment Notes or such other Senior Indebtedness, on the one hand, and the
aggregate outstanding principal amount of the Loans (including Revolving Loans)
on the other). To the extent that the aggregate principal amount of Term Loans,
Installment Notes and other Senior Indebtedness tendered pursuant to an Asset
Sale Offer is less than the Excess Proceeds, the Borrower shall offer to prepay
any remaining Term Loans (and, to the extent required by the governing
agreements applicable thereto, the Installment Notes or other Senior
Indebtedness) with the amount of such deficiency. Upon completion of such Asset
Sale Offer and any subsequent offer to the holders of Term Loans, the amount of
Excess Proceeds shall be reset at zero.
SECTION 6.11. Limitation on Harvesting. The Borrower or any
Subsidiary may, within 270 days after the date on which it receives Net Cash
Proceeds from any Excess Harvest, apply the amount of such aggregate Net Cash
Proceeds (less the amount of any such Net Cash Proceeds previously applied
during such fiscal year for the purposes set forth in clause (a) and/or (b)
below) to (a) reduce Senior Indebtedness of the Borrower secured as permitted
under Section 6.03 or Senior Indebtedness of a Subsidiary (with a permanent
reduction of availability in the case of any facility that permits amounts
repaid or prepaid to be reborrowed) or (b) make, or commit, pursuant to a
binding written contract (provided that the contract is consummated
substantially in accordance with the terms thereof within 30 days after the end
of the 270-day period), to make an investment in assets used or useful in the
business of the Borrower or such Subsidiary. Pending the final application of
any such Net Cash Proceeds, the Borrower or any Subsidiary may temporarily
reduce borrowings under this Agreement or otherwise invest such Net Cash
Proceeds in any manner that is not prohibited by this Agreement. Any such Net
Cash Proceeds that are not applied or invested as provided in the first sentence
of this Section 6.11 will be deemed to constitute "Excess Harvest Proceeds."
When the aggregate amount of Excess Harvest Proceeds exceeds $100,000,000, the
Borrower shall make an offer to the Lenders and, to the extent (and only to the
extent) required by the terms of the Installment Notes or any other Senior
Indebtedness of the Borrower, to the holders of the Installment Notes or such
other Senior Indebtedness (an "Excess Harvest Offer"), to prepay the maximum
principal amount of the Term Loans and, if applicable, the Installment Notes or
such other Senior Indebtedness that may be prepaid out of the Excess Harvest
Proceeds; provided that the amount of the prepayment offered or made to the
holders of Installment Notes or such other Senior Indebtedness shall not exceed
their ratable share of such Excess Harvest Proceeds (based on the aggregate
outstanding principal amount of the Installment Notes or such other Senior
Indebtedness, on the one hand, and the aggregate outstanding principal amount of
the Loans (including Revolving Loans) on the other). To the extent that the
aggregate principal amount of Term Loans, Installment Notes and other Senior
Indebtedness tendered pursuant to an Excess Harvest Offer is less than the
Excess Harvest Proceeds, the Borrower shall offer to prepay any remaining Term
Loans (and, to the extent required by the governing agreements applicable
thereto, the Installment Notes or other Senior Indebtedness) with the amount of
such deficiency. Upon completion of such Excess Harvest Offer and any subsequent
offer to the holders of Term Loans, the amount of Excess Harvest Proceeds shall
be reset at zero.
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54
SECTION 6.12. Amendment of Material Documents. Amend, modify or waive
in any material respect the Installment Note Agreement, the Existing Rayonier
Subordinated Notes, the New Rayonier Subordinated Note, any management or other
agreements with Affiliates or any other material agreements if any such
amendment, modification or waiver, taken together with any related amendments,
modifications or waivers, could reasonably be expected to be adverse in any
material respect to the Borrower, the Subsidiaries or to the rights or interests
of the Lenders.
SECTION 6.13. Prepayments, Redemptions and Repurchases of Debt. Make
any payment, whether in cash, property, securities or a combination thereof, in
respect of, or pay, or offer or commit to pay, or otherwise directly or
indirectly redeem, repurchase, retire or otherwise acquire for consideration or
defease, the Installment Notes or any Subordinated Indebtedness of the Borrower
or any of the Subsidiaries, or set apart any sum for the aforesaid purposes,
except that the Borrower and the Subsidiaries may (a) make scheduled or
mandatory payments of principal, interest or Capital Lease Obligations as and
when due (to the extent not prohibited by applicable subordination provisions),
(b) pay, redeem, repurchase, retire or otherwise acquire for consideration or
defease any Installment Notes or Subordinated Indebtedness with the proceeds of
any contribution to the capital of or issuance and sale of Equity Interests
(other than Redeemable Equity Interests) by the Borrower and (c) in the case of
the Borrower, prepay Installment Notes to the extent contemplated by Section
2.12(b), 6.01(h), 6.10 and 6.11.
SECTION 6.14. Fiscal Year. Change the end of its fiscal year from
December 31 to any other date.
SECTION 6.15. Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio at any time during any period set forth below to be in excess of
the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Date Ratio
---- -----
<S> <C>
Closing Date through 4.50 to 1.00
December 31, 2001
Each quarter end thereafter 4.25 to 1.00
</TABLE>
SECTION 6.16. Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any four-fiscal-quarter period
ending during any period set forth below to be less than the ratio set forth
below opposite such period:
<TABLE>
<CAPTION>
Date Ratio
---- -----
<S> <C>
Closing Date through 1.60 to 1.00
December 31, 2001
Thereafter 1.65 to 1.00
</TABLE>
SECTION 6.17. Managing General Partner. Permit the Borrower to have
any general partner other than the Managing General Partner.
<PAGE> 59
55
ARTICLE VII
Events of Default
In case of the happening of any of the following events
("Events of Default"):
(a) any representation or warranty made or deemed made in
or in connection with any Loan Document or the Borrowings hereunder,
or any representation, warranty, statement or information made,
deemed made or furnished in connection with or pursuant to any Loan
Document, in each case to the extent in writing or communicated to
the Administrative Agent or the Lenders in any formal presentation,
shall prove to have been false or misleading in any material respect
when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal
of any Loan when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or of any Fee or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as
the same shall become due and payable, and such default shall
continue unremedied for a period of five days;
(d) default shall be made in the due observance or
performance by the Borrower or any of the Subsidiaries of any
covenant, condition or agreement contained in Section 5.01(a)(i),
5.04(a), 5.07 or 5.09 or in Article VI;
(e) default shall be made in the due observance or
performance by the Borrower or any of the Subsidiaries of any
covenant, condition or agreement contained in any Loan Document
(other than those specified in (b), (c) or (d) above) and such
default shall continue unremedied for a period of 30 days (or 15 days
in the case of a default under Section 5.04(b) or (c)) after notice
thereof from the Administrative Agent or any Lender to the Borrower,
or for a period of 30 days (or 15 days in the case of a default under
Section 5.04(b) or (c)) after a Responsible Officer of the Borrower
or the Managing General Partner shall obtain actual knowledge of such
default;
(f) (i) the Borrower or any of the Subsidiaries shall fail
to pay any principal or interest, regardless of amount, due in
respect of any Material Indebtedness when and as the same shall
become due and payable or (ii) the Borrower or any of the
Subsidiaries shall fail to observe or perform any other term,
covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Material Indebtedness, or
any other event or condition shall occur, if the effect of any
failure or other event or condition referred to in this clause (ii)
(immediately or upon the giving of notice or the passage of time or
any of the above) shall be to require the Borrower or any of the
Subsidiaries to purchase or offer to purchase such Material
Indebtedness, or to cause, or to permit the holder or holders of such
Material Indebtedness or a trustee on its or their behalf to cause
such Material Indebtedness to become due or to be required to be
repurchased, redeemed or defeased prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower, any of
the Material Subsidiaries or any person that Controls the Borrower or
any Material Subsidiary, or of a substantial part of the property or
assets of the Borrower, any of the Material Subsidiaries or any
person that Controls the Borrower or any Material Subsidiary,
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under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower, any of the Material Subsidiaries or any
person that Controls the Borrower or any Material Subsidiary or for a
substantial part of the property or assets of the Borrower, any of
the Material Subsidiaries or any person that Controls the Borrower or
any Material Subsidiary or (iii) the winding-up or liquidation of the
Borrower, any of the Material Subsidiaries or any person that
Controls the Borrower or any Material Subsidiary; and such proceeding
or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(h) the Borrower, any of the Material Subsidiaries or any
person that Controls the Borrower or any Material Subsidiary shall
(i) voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code, as now constituted
or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) consent to
the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in (g)
above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
the Borrower, any of the Material Subsidiaries or any person that
Controls the Borrower or any Material Subsidiary or for a substantial
part of the property or assets of the Borrower, any of the Material
Subsidiaries or any person that Controls the Borrower or any Material
Subsidiary, (iv) file an answer admitting the material allegations of
a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as
they become due or (vii) take any action for the purpose of effecting
any of the foregoing;
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $15,000,000 (other than that portion of
a final judgment as to which a reputable insurance company has
confirmed its acceptance of liability in writing) in the aggregate
shall be rendered against the Borrower, any of the Subsidiaries or
any combination thereof and the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower
or any of the Subsidiaries to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion
of the Required Lenders, when taken together with all other such
ERISA Events, could reasonably be expected to result in liability of
the Borrower and their ERISA Affiliates in an aggregate amount
exceeding $10,000,000 or to require payments exceeding $5,000,000 in
any year;
(k) any Guarantee purported to be created under the
Subsidiary Guarantee Agreement shall cease to be, or shall be
asserted by any Loan Party not to be, a valid and enforceable
Guarantee of the Obligations in any material respect; or
(l) there shall have occurred a Change in Control,
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the
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Borrower accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to the Borrower described in
paragraph (g) or (h) above, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrower
and the other Loan Parties accrued hereunder and under any other Loan Document,
shall automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
ARTICLE VIII
The Agent
In order to expedite the transactions contemplated by this Agreement,
CSFB is hereby appointed to act as Administrative Agent on behalf of the
Lenders. Each of the Lenders and each assignee of any such Lender hereby
irrevocably authorizes the Administrative Agent to take such actions on behalf
of such Lender or assignee and to exercise such powers as are specifically
delegated to the Administrative Agent by the terms and provisions hereof and of
the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders, without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders all payments of principal of and interest on
the Loans and all other amounts due to the Lenders hereunder, and promptly to
distribute to each Lender its proper share of each payment so received; (b) to
give notice on behalf of each of the Lenders to the Borrower of any Event of
Default specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by the Borrower or any other Loan Party pursuant to this
Agreement or the other Loan Documents as received by the Administrative Agent.
Without limiting the generality of the foregoing, the Administrative Agent is
hereby expressly authorized to execute any and all documents as contemplated by
and in accordance with the provisions of this Agreement.
Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or willful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Administrative Agent shall not be
responsible to the Lenders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement or any other Loan Documents,
instruments or agreements. The Administrative Agent shall in all cases be fully
protected in acting, or refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. The Administrative Agent
shall, in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by it in good faith to be genuine and correct
and to have been signed or sent by the proper person or persons. Neither the
Administrative Agent nor any of its directors, officers, employees or agents
shall have any responsibility to the Borrower or any other Loan Party on account
of the failure of or delay in performance or breach by any Lender of any of its
obligations hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or the Borrower or any other Loan
Party of any of their respective obligations hereunder or under any other Loan
Document or in
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connection herewith or therewith. The Administrative Agent may execute any and
all duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent shall be
under no duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Lenders and the Borrower. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an Affiliate of any such bank. Upon the acceptance
of any appointment as Administrative Agent hereunder by a successor bank, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
With respect to the Loans made by it hereunder, the Administrative
Agent in its individual capacity and not as Administrative Agent shall have the
same rights and powers as any other Lender and may exercise the same as though
it were not the Administrative Agent, and the Administrative Agent and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any of the Subsidiaries or other Affiliate
thereof as if it were not the Administrative Agent.
Each Lender agrees (a) to reimburse the Administrative Agent, on
demand, in the amount of its pro rata share (based on the amount of its Loans
and available commitments hereunder) of any expenses incurred for the benefit of
the Lenders by the Administrative Agent, including counsel fees and compensation
of Administrative Agent and employees paid for services rendered on behalf of
the Lenders, that shall not have been reimbursed by the Borrower and (b) to
indemnify and hold harmless the Administrative Agent and any of its directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against it in its capacity as Administrative Agent or any of them in any way
relating to or arising out of this Agreement or any other Loan Document or
action taken or omitted by it or any of them under this Agreement or any other
Loan Document, to the extent the same shall not have been reimbursed by the
Borrower or any other Loan Party; provided that no Lender shall be liable to the
Administrative Agent or any such other indemnified person for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements that are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or wilful misconduct of the Administrative Agent or any of
its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative
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Agent or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement or any other Loan
Document, any related agreement or any document furnished hereunder or
thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein and in the other Loan Documents shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at c/o Rayonier, Inc.,
1177Summer Street, Stamford, CT, 06905-5529 Attention: General
Counsel (Fax No. (203) 964-4335);
(b) if to the Administrative Agent, to Credit Suisse First
Boston, Eleven Madison Avenue, New York, NY 10010, Attention of
Daniel Sullivan (Fax No. (212) 325-8304), with a copy to the
Resources Group (Fax No. (212) 325-8176; and
(c) if to a Lender, to it at its address (or telecopy
number) set forth on Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender shall have become a party
hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01; provided, that each notice under Article II will be delivered by
hand or overnight courier service or sent by telecopy.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower and the Subsidiaries herein
in any certificate or other instrument delivered by the Borrower or on its
behalf in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans, regardless of any investigation
made by the Lenders or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
Fee or any other amount payable under this Agreement or any other Loan Document
is outstanding and unpaid and so long as the Commitments have not been
terminated. The provisions of Sections 2.13, 2.15, 2.19, 9.04(i), 9.05 and 9.16
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the
Administrative Agent or any Lender.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto.
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SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the Administrative
Agent or the Lenders that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of any or all of its Commitments and the Loans at the time owing to
it); provided, however, that (i) except in the case of an assignment to another
Lender or an Affiliate or Related Fund of the assigning Lender or another Lender
(x) the Borrower, unless an Event of Default shall have occurred and be
continuing, and the Administrative Agent must give their prior written consent
to such assignment (which consent shall not be unreasonably withheld) and (y)
the amount of the Revolving Credit Commitment and the Term Commitment or
outstanding Term Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 in the aggregate (or, if less, the entire remaining amount of such
Lender's Revolving Credit Commitment and Term Commitment or outstanding Term
Loans) and (ii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire and any tax form as
required by the Internal Revenue Service or Section 2.19(e) of this Agreement,
if applicable. Upon acceptance and recording and payment of the fee as specified
in paragraph (e) of this Section 9.04, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five Business Days after the execution thereof, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.13, 2.15,
2.19 and 9.05, as well as to any Fees accrued for its account and not yet paid,
and to be bound by the provisions of Section 9.16).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Commitments and Revolving Credit Commitment, and the outstanding
balances of its Term Loans and Revolving Loans, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any of the Subsidiaries or
the performance or observance by the Borrower or any of the Subsidiaries of any
of its obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents
and warrants that it is legally authorized to enter into such Assignment and
Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred
to in Section 3.05 or delivered pursuant to Section 5.03 and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent,
such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
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credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its offices in
The City of New York a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Lenders,
and the Commitments of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive and the Borrower, the Administrative Agent and
the Lenders may treat each person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register and any
Assignments and Acceptances delivered to the Administrative Agent pursuant to
this Section 9.04(d) shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), a processing and recordation fee of $3,500 (which shall be
paid by the assigning Lender and such assignee as they may agree) and, if
required, the written consent of the Borrower and the Administrative Agent to
such assignment, the Administrative Agent shall (i) accept such Assignment and
Acceptance and (ii) record the information contained therein in the Register. No
assignment shall be effective unless it has been recorded in the Register as
provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and/or obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.13, 2.15 and 2.19, and shall be bound by the
confidentiality provisions contained in Section 9.16, to the same extent as is
such Lender (subject to the last sentence of this Section 9.04(f)) and (iv) the
Borrower, the Administrative Agent and the Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of the Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount of principal of or the rate at which interest is payable on the
Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans, increasing or extending the Commitments or
releasing all or substantially all the Guarantors). All amounts payable by the
Borrower to any Lender hereunder in respect of any Loan and the applicability of
the cost protection provisions contained in Sections 2.13, 2.15 and 2.19 shall
be determined as if such Lender had not sold or agreed to sell any participation
in such Loan, and as if such Lender were funding the participated portion of
such Loan in the same way that it is funding the portion of such Loan in which
no participation has been sold.
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure of
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information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.
(h) Any Lender may at any time assign all or any portion of its
rights under this Agreement to a Federal Reserve Bank to secure extensions of
credit by such Federal Reserve Bank to such Lender; provided that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such Federal Reserve Bank for such Lender as a party hereto. In
order to facilitate such an assignment to a Federal Reserve Bank, the Borrower
shall, at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note or notes evidencing the Loans made to the
Borrower by the assigning Lender hereunder.
(i) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and the Borrower, the option to provide to the
Borrower all or any part of any Loan that such Granting Lender would otherwise
be obligated to make to the Borrower pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC to make any Loan and
(ii) if an SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary in this Section 9.04, any SPC may (i)
with notice to, but without the prior written consent of, the Borrower and the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by the Borrower and the Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC. This section may not be amended
without the written consent of the SPC. Notwithstanding any grant of rights to
an SPC pursuant to this paragraph, the Granting Lender shall retain the sole
right to approve any amendment, modification or waiver of any provision of this
Agreement or the other Loan Documents; provided that the Granting Lender may
enter into and perform any agreement with the SPC as to the manner in which it
will exercise such right.
(j) Except as provided in Section 6.07, the Borrower shall not assign
or delegate any of its rights or duties hereunder without the prior written
consent of the Administrative Agent and each Lender, and any such attempted
assignment without such consent shall be null and void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or
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thereby shall be consummated), and (ii) all reasonable out-of-pocket expenses
incurred by the Administrative Agent or any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement or in connection with the Loans made hereunder (including in
connection with the negotiation of any restructuring or "work out" (whether or
not consummated) of the Obligations).
(b) The Borrower shall indemnify the Administrative Agent and each
Lender and each Affiliate of any of the foregoing persons and each of their
respective directors, officers, employees, agents and controlling persons (each
such person being called an "Indemnitee") against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable counsel fees, charges and disbursements, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of any actual or prospective claim, litigation, investigation or
proceeding and regardless of whether any Indemnitee is a party thereto relating
to (i) the execution or delivery of this Agreement or any other Loan Document or
any agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use of
the proceeds of the Loans or (iii) any actual or alleged presence or Release of
Hazardous Materials on any property owned, leased or operated by the Borrower or
any of the Subsidiaries, or any Environmental Claim related in any way to the
Borrower or the Subsidiaries; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) All amounts due under this Section 9.05 shall be payable on
written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement and
other Loan Documents held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Borrower, the Administrative Agent or any Lender in exercising any power or
right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Borrower, the Administrative
Agent and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower or any other Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or
<PAGE> 68
64
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.
(b) None of this Agreement or any other Loan Document or any
provision hereof or thereof (except, in the case of any other Loan Document, as
expressly provided therein) may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Borrower and the
Required Lenders (and, in the case of any other Loan Document, any other person
whose consent is required thereunder); provided, however, that no such agreement
shall (i) decrease the principal amount of, or extend the maturity of or any
scheduled principal payment date or date for the payment of any interest on any
Loan or any fees, or waive or excuse any such payment or any part thereof, amend
or modify the provisions of Section 2.09(c) or 2.12 (a), amend or modify the
definition of the term "Revolving Credit Maturity Date", or decrease the rate of
interest on any Loan or any fees, without the prior written consent of each
Lender affected thereby, (ii) change or extend the Commitment or decrease or
extend the date for payment of the Commitment Fees of any Lender without the
prior written consent of such Lender, or (iii) amend or modify the provisions of
Section 2.16, 2.17 or 9.04(i), the provisions of this Section or the definition
of the term "Required Lenders" or release any Guarantors (other than pursuant to
a permitted sale or liquidation of a Subsidiary Guarantor) without the prior
written consent of each Lender affected thereby; provided further that (i) no
such agreement that by its terms adversely affects the rights of the Revolving
Credit Lenders or the Term Lenders in a manner different from its effect on the
other classes of Lenders shall become effective unless approved by a majority in
interest of each class of Lenders so adversely affected and (ii) no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent hereunder or under any other Loan Document without the
prior written consent of the Administrative Agent.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section 9.09 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any party other than the
parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT,
<PAGE> 69
65
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract, and shall become effective as provided in Section
9.03. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) The
Borrower irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against the Borrower or its
properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent and each of
the Lenders agrees to keep confidential (and to use its best efforts to cause
its respective agents and representatives to keep confidential) the Information
(as defined below) and all copies thereof, extracts therefrom and
<PAGE> 70
66
analyses or other materials based thereon, except that the Administrative Agent
or any Lender shall be permitted to disclose Information (a) to such of its
respective officers, directors, employees, agents, affiliates and
representatives as need to know such Information in connection with the
performance of their duties related to the Loan Documents and the transactions
contemplated thereby or the legal and regulatory compliance requirements of the
Administrative Agent or such Lender, as the case may be, (b) to the extent
requested by any regulatory authority, (c) to the extent otherwise required by
applicable laws and regulations or by any subpoena or similar legal process, (d)
in connection with any suit, action or proceeding (i) relating to the
enforcement of its rights hereunder or under the other Loan Documents or (ii)
for purposes of establishing a "due diligence" defense, (e) to any direct or
indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty agrees to be bound by the
provisions of this Section 9.16) or (f) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section
9.16 or (ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower; provided, however,
that the Administrative Agent and/or any Lender, as the case may be, shall (to
the extent it may lawfully do so) provide the Borrower, to the extent
practicable, with advance notice of any disclosure of information referred to in
clauses (c) and (d) above. For the purposes of this Section, "Information" shall
mean all financial statements, certificates, reports, agreements and all other
information (including all analyses, compilations and studies prepared by the
Administrative Agent or any Lender based on any of the foregoing and including
any budget, programming and program scheduling information) that are received
from the Borrower and related to the Borrower or any Subsidiary or their
respective businesses, other than any of the foregoing that were available to
the Administrative Agent or any Lender on a nonconfidential basis prior to its
disclosure thereto by the Borrower or any Subsidiary, and that are in the case
of Information provided after the date hereof, clearly identified at the time of
delivery as confidential or of such a nature that a prudent person would expect
such Information to be confidential.
<PAGE> 71
67
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
RAYONIER TIMBERLANDS OPERATING COMPANY, L.P.,
by RAYONIER TIMBERLANDS MANAGEMENT, INC., its Managing
General Partner
by /s/ James M. Rutledge
---------------------
Name: James M. Rutledge
Title: Treasurer
by /s/ John B. Canning
-------------------
Name: John B. Canning
Title: Secretary
CREDIT SUISSE FIRST BOSTON, individually and as
Administrative Agent,
by /s/ Douglas E. Maher
--------------------
Name: Douglas E. Maher
Title: Vice President
by /s/ Julia P. Kingsbury
----------------------
Name: Julia P. Kingsbury
Title: Vice President
MORGAN STANLEY SENIOR FUNDING,
INC., individually and as Co-Syndication Agent,
by /s/ Michael T. McLaughlin
-------------------------
Name: Michael T. McLaughlin
Title: Principal
Citibank, N.A., individually and as Co-Syndication
Agent,
by /s/ Prakash M. Chonkar
----------------------
Name: Prakash M. Chonkar
Title: Attorney-in-Fact
<PAGE> 72
68
Bank of America, N.A.,
by /s/ Joseph L. Corah
-------------------
Name: Joseph L. Corah
Title: Vice President
The Bank of New York,
by /s/ Kenneth P. Sneider, Jr.
---------------------------
Name: Kenneth P. Sneider, Jr.
Title: Vice President
CoBank, ACB,
by /s/ Brian J. Klatt
------------------
Name: Brian J. Klatt
Title: Vice President
Morgan Guaranty Trust Company of New York,
by /s/ R. David Stone
------------------
Name: R. David Stone
Title: Associate
SunTrust Bank, Atlanta,
by /s/ W. David Wisdom
-------------------
Name: W. David Wisdom
Title: Vice President
Wells Fargo Bank, N.A.,
by /s/ David Goode
---------------
Name: David Goode
Title: Vice President
<PAGE> 1
Exhibit 4.2
================================================================================
RAYONIER TIMBERLANDS
OPERATING COMPANY, L.P.
--------------
NOTE PURCHASE AGREEMENT
--------------
DATED AS OF OCTOBER 25, 1999
Re: $112,500,000 Series A Senior Notes due December 31, 2007
$147,500,000 Series B Senior Notes due December 31, 2009
$112,500,000 Series C Senior Notes due December 31, 2011
$112,500,000 Series D Senior Notes due December 31, 2014
1
<PAGE> 2
RAYONIER TIMBERLANDS OPERATING COMPANY, L.P.
$112,500,000 Series A Senior Notes due December 31, 2007
$147,500,000 Series B Senior Notes due December 31, 2009
$112,500,000 Series C Senior Notes due December 31, 2011
$112,500,000 Series D Senior Notes due December 31, 2014
Dated as of
October 25, 1999
Timber Capital Holdings LLC
c/o CT Corporation Systems
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
Ladies and Gentlemen:
RAYONIER TIMBERLANDS OPERATING COMPANY, L.P., a Delaware limited
partnership (the "Company"), agrees with you as follows:
ARTICLE I
AUTHORIZATION OF NOTES; INTEREST
SECTION 1.1 Authorization of Notes.
The Company, acting pursuant to that certain Purchase and Sale Agreement
(the "Purchase Agreement") dated as of July 28, 1999, between Rayonier Inc., a
North Carolina corporation and an Affiliate of the Company, and Jefferson
Smurfit Corporation (U.S.), a Delaware corporation, will authorize the issue and
sale of (i) $112,500,000 aggregate principal amount of its Series A Senior Notes
due December 31, 2007 (the "Series A Notes"), (ii) $147,500,000 aggregate
principal amount of its Series B Senior Notes due December 31, 2009 (the "Series
B Notes"), (iii) $112,500,000 aggregate principal amount of its Series C Senior
Notes due December 31, 2011 (the "Series C Notes") and (iv) $112,500,000
aggregate principal amount of its Series D Senior Notes due December 31, 2014
(the "Series D Notes," and together with the Series A Notes, the Series B Notes,
and the Series C Notes, the "Notes," such term to include any such notes
delivered in substitution or exchange therefor, or in subsequent substitutions
or exchanges, pursuant to Article XIII of this Agreement). The Notes shall be
substantially in the respective forms set out in Exhibits 1(a), 1(b), 1(c) and
1(d), with such changes therefrom, if any, as may be approved by you and the
Company. Interest on the Notes will be as set forth in Section 1.2 below.
Certain capitalized terms used in this Agreement are defined in Schedule A;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.
2
<PAGE> 3
SECTION 1.2 Interest.
(a) Interest Rate. Except to the extent otherwise expressly
provided in Section 1.2(b) below and, with respect to overdue payments of
principal and interest, in the Notes of each series, the rate of interest borne
by the Notes of each series will be: with respect to the Series A Notes, 8.288%
per annum; with respect to the Series B Notes, 8.388% per annum; with respect to
the Series C Notes, 8.488% per annum; and with respect to the Series D Notes,
8.638% per annum. Interest will be payable semi-annually in arrears on each June
30 and December 31.
(b) Loan. You will use your best efforts to arrange, as soon as
reasonably possible thereafter, the making of a loan to you, or a placement of
debt securities by you, in either case having the attributes specified in the
next sentence (the "Loan"). The Loan will (w) bear interest on each of its
tranches (as specified in clause (z) below) at a then applicable market fixed
interest rate in respect of an investment of the term and credit quality of such
Loan tranche, (x) be secured only by the Notes and, at your option, by other
assets which do not have associated with them any liabilities, contingent or
otherwise, (y) generate loan proceeds equal to 80 percent of the aggregate
outstanding principal amount of the Notes of all series or (as shall be
determined by you in your sole discretion) more, and (z) be divided into
tranches maturing on the same dates as do the respective series of the Notes,
the aggregate principal amount of each such tranche to bear the same relation to
the aggregate principal amount of the entire Loan as the aggregate outstanding
principal amount of the series of the Notes maturing on the same date as such
Loan tranche bears to the aggregate principal amount of all outstanding Notes.
The Loan may be issued with original issue discount.
If and to the extent that the Yield to Maturity on a Loan tranche
is less than the Yield to Maturity on the series of Notes of like maturity
(calculated in each case as of the date of funding of the Loan), the interest
rate in respect of the Notes of such series shall be decreased (such decrease to
take effect on and as of the date of funding of the Loan) such that the Yield to
Maturity in respect of such series of Notes is equal to the Yield to Maturity on
such Loan tranche. For the purposes of this Section 1.2(b), "Yield to Maturity"
means, as of the determination date, that rate of interest which, if compounded
semi-annually and employed in discounting to present value from its respective
scheduled payment date each of the remaining payments of principal and interest
in respect of a series of Notes or Loan tranche, as the case may be, would
produce the original principal amount of such series of Notes or Loan tranche,
as the case may be.
(c) Interest Rate Notices. Promptly following your obtaining a
preliminary commitment with respect to the Loan, you will advise the Company in
writing thereof, setting forth the fixed rate of interest to be applicable to
each Loan tranche and the material terms thereof. Promptly thereafter, the
Company will provide to you, subject to your reasonable verification, written
advice of any adjustment in the interest rates applicable to the several series
of the Notes, including (i) such rates, prior to and giving effect to such
adjustment, and (ii) computations demonstrating the appropriateness thereof.
ARTICLE II
3
<PAGE> 4
SALE AND PURCHASE OF NOTES
SECTION 2.1 Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement and the Purchase
Agreement, the Company will issue and sell to you and you will purchase from the
Company, at the Closing, all Notes of each series.
ARTICLE III
CLOSING
SECTION 3.1 Closing.
The sale and purchase of the Notes shall occur at the offices of
Sutherland Asbill & Brennan LLP, 999 Peachtree Street, NE, Atlanta, Georgia
30309 (or at such other location in Atlanta acceptable to you and the Company)
at the Closing. At the Closing the Company will deliver to you the Notes in the
form of a single Note of each of Series A, Series B, Series C and Series D in a
principal amount equal to the entire principal amount of such series, in each
case dated the date of the Closing and registered in your name, against delivery
by you to the Company of evidence, in form and substance satisfactory to the
Company, of transfer to the Company of all your right, title and interest in and
to certain limited liability company member interests, as more particularly
provided in the Purchase Agreement.
ARTICLE IV
[RESERVED]
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to you that:
SECTION 5.1 Formation; Power and Authority; Ownership.
The Company is a limited partnership duly formed and validly existing
under the laws of the State of Delaware, and is duly licensed or qualified as a
foreign limited partnership in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company has all requisite partnership power
and authority to enter into this Agreement, to issue the Notes and to perform
its obligations under this Agreement and the Notes.
SECTION 5.2 Authorization, Etc.
4
<PAGE> 5
This Agreement and the Notes have been duly authorized by all necessary
action on behalf of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer, fraudulent
conveyance or other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
SECTION 5.3 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this Agreement
and the Notes will not (i) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any property
of the Company or any Restricted Subsidiary under, any indenture, mortgage, deed
of trust, loan, purchase or credit agreement, corporate charter or by-laws, or
any other material agreement or instrument to which the Company or any
Restricted Subsidiary is a party or by which the Company or any Restricted
Subsidiary or any of their respective properties may be bound or affected, (ii)
result in a breach of any of the terms, conditions or provisions of any material
order, judgment, decree, or ruling of any court, arbitrator or State or Federal
Governmental Authority applicable to the Company or any Restricted Subsidiary or
(iii) violate any provision of any statute or other rule or regulation of any
State or Federal Governmental Authority applicable to the Company or any
Restricted Subsidiary.
SECTION 5.4 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any State or Federal Governmental Authority is required in
connection with the execution, delivery of performance by the Company of this
Agreement or the Notes.
SECTION 5.5 No Event of Default.
No event has occurred and is continuing or would result from the
transactions contemplated hereby that constitutes an Event of Default or
Default.
SECTION 5.6 Compliance with ERISA.
The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder will not involve any transaction that is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company in the first sentence of this Section is made in reliance upon and
subject to the accuracy of your representation in Section 6.2 as to the sources
of the consideration used to pay the purchase price of the Notes to be purchased
by you.
ARTICLE VI
5
<PAGE> 6
REPRESENTATIONS OF THE PURCHASER
SECTION 6.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own account and
not with a view to the distribution thereof, provided that the disposition of
your property shall at all times be within your control. You understand that the
Notes have not been registered under the Securities Act by reason of specific
exemptions under the provisions thereof and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to so register the Notes or to qualify an indenture in respect
thereof under the Trust Indenture Act of 1939.
SECTION 6.2 Source of Consideration.
You represent that the limited liability company member interests
referred to in Section 3.1 do not constitute assets of any employee benefit plan
(as defined in Section 3 of ERISA).
ARTICLE VII
INFORMATION AS TO COMPANY; STATUS OF SUBSIDIARIES
SECTION 7.1 Financial and Business Information.
The Company shall deliver to you, and to each other holder of Notes that
is an Institutional Investor:
(a) Quarterly Statements. Within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,
(i) an unaudited consolidated balance sheet of the Company and
its Restricted Subsidiaries as at the end of such quarter, and
(ii) unaudited consolidated statements of income, changes in
partners' equity and cash flows of the Company and its Restricted
Subsidiaries, for such quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending with such quarter,
setting forth, in each case in comparative form, the figures for the
corresponding periods in the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly financial statements
generally, and certified by a Senior Financial Officer as fairly presenting, in
all material respects, the financial position of the entities being reported on
and their results of operations and cash flows, subject to changes resulting
from normal, recurring year-end adjustments;
6
<PAGE> 7
(b) Annual Statements. Within 120 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in partners'
equity and cash flows of the Company and its Restricted Subsidiaries,
for such year,
setting forth, in each case in comparative form, the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by
(A) a report thereon of independent certified public
accountants of recognized national standing, which report shall
state that such financial statements present fairly, in all
material respects, the financial position of the entities being
reported upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable
basis for such report in the circumstances, and
(B) a certificate of such accountants stating that they
have reviewed this Agreement and stating further whether, in
making their audit, they have become aware of any financial
condition or event that then constitutes a Default or an Event of
Default, and, if they are aware that any such condition or event
then exists, specifying the nature and period of the existence
thereof (it being understood that such accountants shall not be
liable, directly or indirectly, for any failure to obtain
knowledge of any Default or Event of Default unless such
accountants should have obtained knowledge thereof in making an
audit in accordance with generally accepted auditing standards or
did not make such an audit);
(c) Interest Rate Adjustments. The Company will provide the
notices required by Section 1.2(d); and
(d) Requested Information. With reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries
relating to the ability of the Company to perform its obligations hereunder and
under the Notes, or the ability of any Subsidiary Guarantor to perform its
obligations under a Subsidiary Guarantee, as from time to time may be reasonably
requested by any such holder of Notes.
SECTION 7.2 Officer's Certificate.
Each set of financial statements delivered pursuant to Section 7.1(a) or
Section 7.1(b) hereof shall be accompanied by a certificate of a Senior
Financial Officer setting forth:
7
<PAGE> 8
(a) Covenant Compliance. Any information (including detailed
calculations where applicable) required in order to establish whether the
Company was in compliance with the requirements of Sections 10.1 - 10.3, 10.6,
10.10 and 10.11 hereof, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such Section,
where applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such Sections,
and the calculation of the amount, ratio or percentage then in existence and
specifying those adjustments in any items abstracted from such financial
statements necessary to reflect the adjustments to GAAP provided for in this
Agreement); and
(b) Event of Default. A statement that such Senior Financial
Officer has reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions and conditions
of the Company and its Restricted Subsidiaries from the beginning of the
quarterly or annual period covered by the statements then being furnished to the
date of the certificate and that such review has not disclosed the existence
during such period of any condition or event that constitutes a Default or an
Event of Default or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action, if any,
shall have been taken or is proposed to be taken with respect thereto.
SECTION 7.3 Inspection.
The Company shall permit your representatives and designees, and the
representatives and designees of each other holder of Notes that is an
Institutional Investor, at your expense, or at the expense of such holder, and
upon reasonable prior notice to the Company, to visit the principal executive
office of the Company, to discuss the affairs, finances and accounts of the
Company and its Restricted Subsidiaries with the officers of the General
Partner, and (with the consent of the Company, which consent will not be
unreasonably withheld and with an opportunity for one or more Responsible
Officers to be present, it being understood that the failure of such Responsible
Officers to be present shall not preclude the representatives of such holder
from proceeding with such meeting) its independent public accountants, and (with
the consent of the Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and each Restricted
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing.
ARTICLE VIII
PREPAYMENT OF THE NOTES
SECTION 8.1 Required Prepayments.
The Company is not required to make any prepayments in respect of the
Notes except to the extent specified in sections 8.3, 8.8, 10.10(b) and 10.11.
SECTION 8.2 Optional Prepayments with Make-Whole Amount.
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The Company may, at its option, on any Business Day upon notice as
provided below, prepay the Notes in whole, or from time to time in part (in
multiples of $5,000,000); provided that, if the Company shall so prepay the
Notes in part, such prepayment may be of any one or more series as the Company
shall elect, at 100% of the principal amount so prepaid, together with interest
accrued thereon to the date of such prepayment, plus any applicable Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
With respect to any optional prepayment under this Section 8.2, the Company will
give each holder of Notes written notice of its intention to make such
prepayment not less than 20 Business Days prior to the date fixed for such
prepayment. Each such notice shall specify the proposed prepayment date, the
aggregate principal amount of the Notes of each series to be prepaid on such
date, the principal amount of each Note of each such series held by such holder
so to be prepaid, and the interest to be paid on the prepayment date with
respect to such principal amount(s) being prepaid, and shall be accompanied by a
certificate of a Senior Financial Officer as to the estimated Make-Whole Amount
due in connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such computation.
If such notice is not withdrawn by the Company before the tenth (10th) Business
Day prior to the proposed payment date, the notice and the Company's obligation
to prepay provided for in the notice shall be irrevocable. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.
SECTION 8.3 Prepayment Out of Asset Sale Proceeds or Excess Harvest
Proceeds.
In the event that the Company shall offer to apply the Excess Proceeds
of any Asset Sale pursuant to Section 10.10(b) or Excess Harvest pursuant to
Section 10.11 to the prepayment of Notes, the Company will give written notice
(a "Company Notice") of such offer to all holders of the Notes. The Company
Notice shall (i) describe in reasonable detail, the facts and circumstances
giving rise to such Company Notice, (ii) set forth the aggregate amount of such
Excess Proceeds which it intends to offer to apply to the prepayment of Notes,
(iii) contain an offer by the Company to prepay on a stated date (the
"Prepayment Date"), which shall be a Business Day not more than 60 days and not
less than 45 days after such Company Notice, a principal amount of the Notes,
ratably in proportion to the unpaid principal amounts thereof (subject to the
requirements of Section 10.10(b) or 10.11, as the case may be, to offer to
prepay the maximum aggregate principal amount of Notes that may be prepaid from
Excess Proceeds or Excess Harvest Proceeds, as the case may be, giving effect to
any then existing requirement to make a pro rata offer to prepay other Senior
Debt) held by each such holder which bears the same relationship to the
aggregate amount of such Excess Proceeds available to prepay the Notes as the
aggregate principal amount of all Notes held by such holder bears to the
aggregate principal amount of all then outstanding Notes, together with interest
on the principal amount of Notes to be prepaid to the Prepayment Date, but
without any Make-Whole Amount (showing in such offer the amount of interest
which would be paid on such Prepayment Date), and (iv) request each holder of
Notes offered to be prepaid to notify the Company in writing by a stated date,
which date shall be not less than 30 days after such holder's receipt of the
Company Notice, of its acceptance or rejection of such prepayment offer, it
being understood that
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such prepayment offer may be accepted in part and rejected in part. If a holder
does not notify the Company as provided in subclause (iv) above, then such
holder shall be deemed to have rejected such offer.
SECTION 8.4 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes of any one or more
series pursuant to Section 8.2, the principal amount of the Notes to be prepaid
shall be allocated among all of the Notes of the respective series at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts of the Notes of such series not theretofore called for
prepayment. Partial prepayments of the Notes pursuant to Section 8.3 shall be
allocated as therein provided.
SECTION 8.5 Maturity Surrender, Etc.
In the case of each prepayment of Notes pursuant to this Article VIII,
the principal amount of each Note to be prepaid in full shall mature and become
due and payable on the date fixed for such prepayment, together with interest on
such principal amount accrued to such date and the applicable Make-Whole Amount,
if any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
SECTION 8.6 Purchase of Notes.
The Company will not and will not permit any Subsidiary or Affiliate
controlled by the Company or any Subsidiary to purchase, redeem, prepay or
otherwise acquire, directly or indirectly, any of the outstanding Notes except
upon the payment or prepayment of the Notes in accordance with the terms of this
Agreement. The Company will promptly cancel all Notes acquired by it, any
Subsidiary or any Affiliate controlled by the Company or any Subsidiary, and no
Notes may be delivered in substitution or exchange for any such Notes.
SECTION 8.7 Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an amount
equal to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no event be
less than zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2, or has become or is
declared to be immediately due and payable pursuant to Section 12.1 (and the
last paragraph of Section 12.1(c) applies), as the context requires.
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"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such Called Principal from their respective scheduled due dates to
the Settlement Date with respect to such Called Principal, in accordance with
generally accepted financial practice and at a discount factor (applied on a
semi-annual basis) equal to 50 basis points above the Reinvestment Yield with
respect to such Called Principal, provided, however, that from the date of
issuance of the Notes until the fifth anniversary thereof, such discount factor
shall be zero basis points above the Reinvestment Yield.
"Reinvestment Yield" means, with respect to the Called Principal of any
Note, the yield to maturity implied by (i) the yields reported, as of 10:00 A.M.
(New York City time) on the Business Day next preceding the Settlement Date with
respect to such Called Principal, on the display designated as "Page PX1" in the
Bloomberg Financial Markets Service (or such other display as may replace Page
PX1 in the Bloomberg Financial Markets Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of such time are not
ascertainable, including by way of interpolation, the Treasury Constant Maturity
Series Yields reported, for the latest day for which such yields have been so
reported as of the Business Day next preceding the Settlement Date with respect
to such Called Principal, in Federal Reserve Statistical Release H. 15 (519) (or
any comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury bill quotations to
bond-equivalent yields in accordance with generally accepted financial practice
and (b) interpolating linearly between (1) the actively traded U.S. Treasury
security with the maturity closest to and greater than the Remaining Average
Life and (2) the actively traded U.S. Treasury security with the maturity
closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Note Purchase Agreement Called Principal into (ii) the sum of
the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b) the
number of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment (the Stated Maturity of
such Note).
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.2 or 12.1.
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"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid (including
partial prepayments) pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.
SECTION 8.8 Change of Control.
(a) If a Change of Control occurs, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to or
greater than $10,000,000) of that Holder's Notes pursuant to the offer described
below (the "Change of Control Offer") at an offer price in cash equal to 100% of
the aggregate principal amount of Notes to be repurchased plus accrued and
unpaid interest thereon, if any, to the date of purchase (the "Change of Control
Purchase Payment"). Within 30 days following any Change of Control, the Company
will mail a notice to each Holder stating: (a) that the Change of Control Offer
is being made pursuant to this Section 8.8 and that all Notes tendered will be
accepted for purchase; (b) the purchase date, which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed (the "Change of
Control Purchase Date") and the Change of Control Purchase Payment for each Note
of such Holder; (c) that any Note not tendered will continue to accrue interest;
(d) that, except for any Note accepted for purchase pursuant to the Change of
Control Offer with respect to which the Company defaults in the payment of the
Change of Control Purchase Payment, all Notes so accepted for purchase will
cease to accrue interest after the Change of Control Purchase Date; (e) that
Holders electing to have any Notes purchased, in whole or in part, pursuant to a
Change of Control Offer will be required to surrender such Notes to the Company
at the address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Purchase Date; (f) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in aggregate principal amount to the unpurchased portion of the Notes
surrendered and (g) the material circumstances and material facts regarding such
Change of Control.
(b) On the Change of Control Purchase Date, the Company will, to
the extent lawful, accept for purchase all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer. The Company will announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
(c) Notwithstanding paragraphs (a) and (b) above, the Company
will not be required to make a Change of Control Offer upon a Change of Control
and a Holder will not have the right to require the Company to repurchase any
Notes pursuant to a Change of Control Offer if a third party (not an Affiliate
of the Company) makes an offer to purchase the Notes at the price, in the
manner, at the times and otherwise in substantial compliance with the
requirements set forth in this Agreement applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such purchase offer.
(d) To the extent that the provisions of any applicable
securities laws or regulations conflict with provisions of this Section 8.8, the
Company shall comply with such
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securities laws and regulations and shall not be deemed to have breached its
obligations hereunder by virtue thereof.
(e) Notes repurchased pursuant to the foregoing provisions of
this Section 8.8 shall be cancelled and not reissued, and shall not be deemed
outstanding for any purpose of this Agreement.
ARTICLE IX
AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
SECTION 9.1 Compliance with Law.
The Company will, and will cause each of its Subsidiaries to, comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 9.2 Insurance.
The Company will, and will cause each of its Restricted Subsidiaries to,
maintain, with financially sound and reputable insurers, insurance with respect
to their respective Material properties and businesses against such casualties
and contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary (with respect to such types,
terms, amounts and reserves) in the case of entities of established reputations
engaged in the same or a similar business and similarly situated and consistent
with the existing practices of the Company and its Restricted Subsidiaries as of
the date hereof.
SECTION 9.3 Maintenance of Properties.
The Company will, and will cause each of its Restricted Subsidiaries to,
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
the Company or any Restricted Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is desirable in
the conduct of its business and the Company has
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concluded that such discontinuance would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
SECTION 9.4 Payment of Taxes.
The Company will, and will cause each of its Subsidiaries to, file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, provided
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
SECTION 9.5 Existence, Etc.
Subject to and except as permitted by Sections 10.7 and 10.10, the
Company will at all times preserve and keep in full force and effect (a) its
existence as a limited partnership and (b) the corporate, limited liability
company or partnership existence, as the case may be, of each of its Restricted
Subsidiaries (unless merged into the Company or a Subsidiary in the manner
permitted by Section 10.7) and all rights and franchises of the Company and its
Restricted Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
existence, right or franchise would not, individually or in the aggregate, have
a Material Adverse Effect.
SECTION 9.6 Ranking; Covenant to Secure Notes Equally.
The Company will ensure that, at all times, all liabilities of the
Company under the Notes will rank in right of payment either pari passu or
senior to all other Debt of the Company except for Debt which is preferred as a
result of being secured as permitted by Section 10.3 (but then only to the
extent of such security). The Company will, if it or any Restricted Subsidiary
shall create or assume any Lien upon any of its property or assets, whether now
owned or hereafter acquired, other than Liens permitted by the provisions of
Section 10.3 (unless prior written consent to the creation or assumption thereof
shall have been obtained pursuant to Article XVII), make or cause to be made
effective provision whereby the Notes will be secured by such Lien equally and
ratably with any and all other Debt thereby secured so long as any such other
Debt shall be so secured.
ARTICLE X
NEGATIVE COVENANTS
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The Company covenants that so long as any of the Notes are outstanding:
SECTION 10.1 Limitation on Additional Debt.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or in any manner become directly or indirectly liable, contingently or
otherwise, for the payment of (in each case, to "incur"), any Debt (including,
without limitation, Acquired Debt), unless at the time of such incurrence, and
after giving pro forma effect to the receipt and application of the proceeds of
such Debt, the Consolidated Fixed Charge Coverage Ratio of the Company is
greater than 2.5 to 1.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may incur Permitted Debt.
SECTION 10.2 Limitation on Restricted Payments.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any other distribution or
payment on or in respect of Capital Stock of the Company or any of its
Restricted Subsidiaries or any payment made to the direct or indirect holders
(in their capacities as such) of Capital Stock of the Company or any of its
Restricted Subsidiaries (other than (i) dividends or distributions payable
solely in Capital Stock of the Company (other than Redeemable Capital Stock of a
Restricted Subsidiary) or in options, warrants or other rights to purchase
Capital Stock of the Company (other than Redeemable Capital Stock of a
Restricted Subsidiary), (ii) the declaration or payment of dividends or other
distributions to the extent declared or paid to the Company or any Restricted
Subsidiary and (iii) the declaration or payment of dividends or other
distributions by any Restricted Subsidiary to all holders of Capital Stock of
such Restricted Subsidiary on a pro rata basis (including, in the case of the
Company, to the General Partner)),
(b) purchase, redeem, defease or otherwise acquire or retire for
value any Capital Stock of the Company or any of its Restricted Subsidiaries
(other than any such Capital Stock owned by a Wholly-Owned Restricted Subsidiary
of the Company),
(c) make any principal payment on, or purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment, scheduled sinking fund payment or other
Stated Maturity, any Subordinated Debt (other than any such Debt owned by the
Company or a Wholly-Owned Restricted Subsidiary of the Company),
(d) make any Investment (other than any Permitted Investment) in
any Person, or
(e) make any interest payment on the Rayonier Subordinated Notes
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(such payments or Investments described in the preceding clauses (a), (b), (c),
(d) and (e) being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to the proposed Restricted Payment (A) no
Default or Event of Default shall have occurred and be continuing, and (B) such
Restricted Payment, together with the aggregate of all other Restricted Payments
made by the Company and its Restricted Subsidiaries during the fiscal quarter
during which such Restricted Payment is made, shall not exceed (1) if the
Consolidated Fixed Charge Coverage Ratio of the Company shall be greater than
2.0 to 1, an amount equal to Available Cash for the immediately preceding fiscal
quarter, or (2) if the Consolidated Fixed Charge Coverage Ratio of the Company
shall be equal to or less than 2.0 to 1, an amount equal to the sum of (x)
$75,000,000 over the life of the Notes, plus (y) to the extent not theretofore
used as the basis for a Restricted Payment pursuant to clause (b) or (c) of the
next succeeding paragraph, the aggregate net cash proceeds of any (i) capital
contribution to the Company from any Person (other than a Restricted Subsidiary)
or (ii) issuance and sale of shares of Capital Stock (other than Redeemable
Capital Stock) of the Company to any Person (other than to a Restricted
Subsidiary), in either such case made after the Issue Date and not later than
substantially concurrently with the making of such Restricted Payment, minus (z)
the aggregate amount of all Restricted Payments (including such Restricted
Payment) made pursuant to this Clause (2) after the Issue Date. The amount of
any such Restricted Payment, if other than cash, shall be the Fair Market Value
(as determined in good faith by the Board of Directors of the General Partner)
on the date of such Restricted Payment of the asset(s) proposed to be
transferred by the Company or such Restricted Subsidiary, as the case may be,
pursuant to such Restricted Payment.
None of the foregoing provisions of this Section 10.2 shall
prohibit: (a) the payment of any dividend or distribution within 60 days after
the date of its declaration, if at the date of declaration such payment would be
permitted by the immediately preceding paragraph; (b) the redemption, repurchase
or other acquisition or retirement of any shares of any class of Capital Stock
of the Company or any Restricted Subsidiary in exchange for, or out of the net
cash proceeds of, a substantially concurrent (i) capital contribution to the
Company from any Person (other than a Restricted Subsidiary) or (ii) issue and
sale of other shares of Capital Stock (other than Redeemable Capital Stock of a
Restricted Subsidiary) of the Company to any Person (other than to a Restricted
Subsidiary); provided, however, that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase or other acquisition or
retirement shall be excluded from the calculation of Available Cash; (c) any
redemption, repurchase or other acquisition or retirement of Subordinated Debt
by exchange for, or out of the net cash proceeds of, a substantially concurrent
(i) capital contribution to the Company from any Person (other than a Restricted
Subsidiary) or (ii) issue and sale of (A) Capital Stock (other than Redeemable
Capital Stock of a Restricted Subsidiary) of the Company to any Person (other
than to a Restricted Subsidiary) or (B) Debt of the Company issued to any Person
(other than a Restricted Subsidiary), so long as such Debt is Permitted
Refinancing Debt; or (d) any distributions or redemptions declared or effected
by the Company on or before the Issue Date, whether or not payable on a later
date; provided, however, in each case, that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase or other
acquisition or retirement shall be excluded from the calculation of Available
Cash. In computing the amount of Restricted Payments previously made for
purposes of the preceding
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paragraph, Restricted Payments made under clause (a) shall be included and
Restricted Payments made under clauses (b), (c), and (d) shall not be so
included.
SECTION 10.3 Liens.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or suffer to exist any Liens, other than
Permitted Liens, upon any of its respective properties or assets, whether owned
on the Issue Date or thereafter acquired, unless the Notes and the Subsidiary
Guarantees, as applicable, are secured equally and ratably with (or prior to, in
the case of Subordinated Debt) the obligations secured by such Lien.
SECTION 10.4 Limitation on Transactions with Affiliates.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, transfer, disposition, purchase, exchange or lease of assets, property
or services), with, or for the benefit of, any Affiliate of the Company, unless
(a) such transaction or series of related transactions is between the Company
and one or more of its Restricted Subsidiaries or between two or more Restricted
Subsidiaries or (b) such transaction or series of related transactions is on
terms that are no less favorable to the Company or such Restricted Subsidiary,
as the case may be, than those which would have been obtained in a comparable
transaction at such time from Persons who are not Affiliates of the Company or a
Restricted Subsidiary; provided, however, that this covenant will not apply to
(i) any employment agreement, stock option agreement, restricted stock
agreement, consulting agreement or similar agreement entered into in the
ordinary course of business, (ii) transactions permitted by Section 10.2, (iii)
any agreement in effect on the Issue Date or any amendment thereto (so long as
the agreement, as amended by such amendment, is no less favorable (taken as a
whole) to the holders of the Notes than the original agreement as in effect on
the Issue Date) and any transactions contemplated thereby, and (iv) the payment
of reasonable fees to, and indemnities provided on behalf of, officers,
directors, employees or consultants of the Company, any general partner or any
Restricted Subsidiary in the ordinary course of business.
SECTION 10.5 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make
any other distributions on or in respect of its Capital Stock, (b) pay any Debt
owed to the Company or any other Restricted Subsidiary, (c) make loans or
advances to, or any investment in, the Company or any other Restricted
Subsidiary, or (d) transfer any of its properties or assets to the Company or
any other Restricted Subsidiary (collectively, "Payment Restrictions"), except
for such encumbrances or restrictions existing under or by reason of (i)
applicable law, rules or regulations, or any order or ruling by any governmental
authority; (ii) any agreement in effect at or entered into
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on the Issue Date (including, without limitation, this Agreement and the Credit
Agreement); (iii) customary non-assignment provisions of any contract, license
or any lease governing a leasehold interest of the Company or any Restricted
Subsidiary; (iv) customary restrictions on cash or other deposits imposed by
customers under contracts entered into in the ordinary course of business; (v)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (d) above on
the property so acquired; (vi) contracts for the sale of assets, including,
without limitation, customary restrictions with respect to a Restricted
Subsidiary pursuant to an agreement that has been entered into for the sale of
all or substantially all of the Capital Stock or assets of such Restricted
Subsidiary; (vii) any agreement or other instrument governing Debt, Preferred
Stock or Redeemable Capital Stock of a Person acquired by the Company or any
Restricted Subsidiary (or of a Restricted Subsidiary of such Person) in
existence at the time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to any Person, or
the properties or assets of any Person, other than the Person, or the
properties, assets or Subsidiaries of the Person, so acquired; (viii) provisions
contained in agreements or instruments relating to Debt or Preferred Stock which
prohibit the transfer of all or substantially all of the assets of the obligor
or issuer thereunder unless the transferee shall assume the obligations of the
obligor or issuer under such agreement or instrument; or (ix) Permitted
Refinancing Debt, provided that the encumbrances or restrictions of the type
referred to in clause (a), (b), (c), or (d) above, contained in agreements
governing such Permitted Refinancing Debt, are no more restrictive (taken as a
whole) than those contained in the agreement governing the Debt being
refinanced.
SECTION 10.6 Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale and Leaseback Transaction with respect to
any property of the Company or any of its Restricted Subsidiaries.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries may
enter into Sale and Leaseback Transactions with respect to property acquired or
constructed after the Issue Date; provided that (a) the Company or such
Restricted Subsidiary would be permitted to incur Debt secured by a Lien on such
property in an amount equal to the Attributable Debt with respect to such Sale
and Leaseback Transaction, or (b) the lease in such Sale and Leaseback
Transaction is for a term not in excess of the lesser of (i) three years and
(ii) 60% of the remaining useful life of such property.
SECTION 10.7 Merger, Consolidation or Sale of Assets.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving Person), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another Person unless (a) the Company is
the surviving Person, or the Person formed by or surviving such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation,
partnership or limited liability company organized or existing under the laws of
the United States, any state thereof or the District of Columbia; (b) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have
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been made assumes all the obligations of the Company under the Notes; (c)
immediately after such transaction no Default or Event of Default exists; and
(d) the Company or such other Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable Four-Quarter Period, be permitted to
incur at least $1.00 of additional Debt pursuant to Section 10.1 hereof.
Notwithstanding the foregoing clause (d), any Restricted Subsidiary may
consolidate or merge with or into, or dispose of all or any part of its
properties or assets to, the Company.
SECTION 10.8 Nature of Business.
Neither the Company nor any Restricted Subsidiary will engage to any
Material extent in any business other than the Business.
SECTION 10.9 Limitation on Non-Guarantor Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary that is not a
Subsidiary Guarantor to guarantee the payment of any Debt of the Company unless
such Restricted Subsidiary simultaneously executes and delivers a Subsidiary
Guarantee and an Officer's Certificate setting forth the manner of authorization
thereof, and with respect to any guarantee of Subordinated Debt by a Subsidiary,
any such guarantee shall be subordinated to such Restricted Subsidiary's
Subsidiary Guarantee at least to the same extent as such Subordinated Debt is
subordinated to the Notes; provided that this Section 10.9 shall not be
applicable to any guarantee of any Subsidiary that (A) existed at the time such
Person became a Subsidiary of the Company and (B) was not incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary of the Company.
Further, a pledge of assets permitted pursuant to Section 10.3 as security for
any Debt for which the pledgor is not otherwise liable shall not be considered a
guarantee giving rise to any requirement of a Subsidiary Guarantee under this
Section 10.9.
SECTION 10.10 Asset Sales.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to (i) sell, lease, convey or otherwise dispose of any
assets other than sales in the ordinary course of business and consistent with
past practice (provided, that the sale, lease, conveyance or other disposition
of all or substantially all of the assets of the Company shall be governed by
the provisions of Section 10.7 hereof and not by the provisions of this Section
10.10 and provided further, that Sale and Leaseback Transactions shall be
governed by the provisions of Section 10.6 and not by the provisions of this
Section 10.10) or (ii) issue or sell Capital Stock of any of its Restricted
Subsidiaries, in the case of either clause (i) or (ii) above whether in a single
transaction or a series of related transactions, that has a Fair Market Value
(as determined in good faith by the Board of Directors of the General Partner)
in excess of $10,000,000 or for net cash proceeds in excess of $10,000,000 (each
of the foregoing, an "Asset Sale"), unless at least 75% of the consideration
therefor received by the Company or such Restricted Subsidiary is in the form of
cash or cash equivalents; provided, however, that the amount of (A) any
liabilities (as shown on the Company's
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or such Restricted Subsidiary's most recent audited balance sheet or in the
notes thereto) of the Company or any Restricted Subsidiary that are assumed by
the transferee of any such assets and (B) any notes or other obligations
received by the Company or any such Restricted Subsidiary from such transferee
that are converted (by means of a sale, non-recourse loan or otherwise) by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received) within 120 days of such Asset Sale, shall be deemed to be cash for
purposes of this provision; and provided further, that the 75% limitation set
forth above shall not apply to any Asset Sale in which the cash portion of the
consideration received therefrom, determined in accordance with the foregoing
proviso, is equal to or greater than what the after-tax proceeds would have been
had such Asset Sale complied with the aforementioned 75% limitation.
Notwithstanding the foregoing, Asset Sales shall not be deemed to include (a)
any transfer of assets or Capital Stock by the Company or any of its Restricted
Subsidiaries to a Wholly-Owned Restricted Subsidiary of the Company, (b) any
transfer of assets pursuant to or constituting a Permitted Investment, (c) the
sale of Timberlands in a like-kind exchange for a like interest in other
Timberlands having a Fair Market Value (as determined in good faith by the Board
of Directors of the General Partner) at least equal to the Fair Market Value (as
determined in good faith by the Board of Directors of the General Partner) of
the Timberlands sold, (d) the sale of not more than 100,000 acres in the
aggregate of Timberlands designated in good faith by the Board of Directors of
the General Partner for a higher and better use, (e) a disposition of obsolete
equipment in the ordinary course of business, (f) any sale of Capital Stock of,
or Debt or other securities of, an Unrestricted Subsidiary, (g) timber deed,
bulk, pay-as-cut and stumpage sales in the ordinary course of business and (h)
any transaction permitted by Section 10.2.
(b) In the event that the aggregate Net Proceeds received by the
Company or any of its Restricted Subsidiaries from one or more Asset Sales since
the Issue Date exceed the Adjusted Asset Sales Amount, within 270 days after the
date such aggregate Net Proceeds exceed such amount (or such longer period as
may be required to comply with any agreement in effect on the Issue Date), the
Company, at its option, may apply the amount of such aggregate Net Proceeds in
excess of the Adjusted Asset Sales Amount (less the amount of any such Net
Proceeds previously applied during such fiscal year for the purposes set forth
in clause (i) and/or (ii) below) to (i) reduce Senior Debt of the Company
secured by a Permitted Lien or Senior Debt of a Restricted Subsidiary (with a
permanent reduction of availability in the case of the Working Capital Facility
or any other facility that permits amounts repaid or prepaid to be reborrowed)
or (ii) make, or commit, pursuant to a binding written contract (provided that
the contract is consummated substantially in accordance with the terms thereof
within 30 days after the end of the 270-day period), to make, an investment in
assets used or useful in the Business. Pending the final application of any such
Net Proceeds, the Company or any Restricted Subsidiary may temporarily reduce
borrowings under the Working Capital Facility or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Agreement. Any such Net
Proceeds in excess of the Adjusted Asset Sales Amount that are not applied or
invested as provided in the first sentence of this Section 10.10(b) will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $50,000,000, the Company shall make an offer to Holders of
Notes pursuant to Section 8.3 and an offer to all holders of other Senior Debt
that contains provisions similar to those set forth in Section 8.3 and this
Section 10.10(b) (an "Asset Sale Offer"), to prepay the maximum principal amount
of Notes and such other Debt that may be prepaid out of the Excess Proceeds (in
the case of the Notes, at the price
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and all as otherwise more fully provided in Section 8.3). To the extent that the
aggregate principal amount of Notes and such other Debt tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company may use such
deficiency for general business purposes. If the aggregate principal amount of
Notes, and such other Debt, offered to be prepaid exceeds the amount of Excess
Proceeds offered to be applied to prepay the same, the offer to prepay the Notes
and such other Debt shall be made on a pro rata basis. Upon completion of such
Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
SECTION 10.11 Limitation on Harvesting.
In the event that the Company or any of its Restricted Subsidiaries
receive any Net Proceeds from one or more Excess Harvests, within 270 days after
the date of such receipt (or such longer period as may be required to comply
with any agreement in effect on the Issue Date), the Company, at its option, may
apply the amount of such aggregate Net Proceeds (less the amount of any such Net
Proceeds previously applied during such fiscal year for the purposes set forth
in clause (a) and/or (b) below) to (a) reduce Senior Debt of the Company secured
by a Permitted Lien or Senior Debt of a Restricted Subsidiary (with a permanent
reduction of availability in the case of the Working Capital Facility or any
other facility that permits amounts repaid or prepaid to be reborrowed) or (b)
make, or commit, pursuant to a binding written contract (provided that the
contract is consummated substantially in accordance with the terms thereof
within 30 days after the end of the 270-day period), to make an investment in
assets used or useful in the Business. Pending the final application of any such
Net Proceeds, the Company or any Restricted Subsidiary may temporarily reduce
borrowings under the Working Capital Facility or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Agreement. Any such Net
Proceeds that are not applied or invested as provided in the first sentence of
this Section 10.11 will be deemed to constitute "Excess Harvest Proceeds." When
the aggregate amount of Excess Harvest Proceeds exceeds $100,000,000, the
Company shall make an offer to Holders of Notes pursuant to Section 8.3 and an
offer to all holders of other Senior Debt containing provisions similar to those
set forth in Section 8.3 and this Section 10.11 (an "Excess Harvest Offer") to
prepay the maximum principal amount of Notes and such other Debt that may be
prepaid out of the Excess Harvest Proceeds (in the case of the Notes, at the
price and all as otherwise more fully provided in Section 8.3). To the extent
that the aggregate principal amount of Notes and such other Debt tendered
pursuant to an Excess Harvest Offer is less than the Excess Harvest Proceeds,
the Company may use such deficiency for general business purposes. If the
aggregate principal amount of Notes and such other Debt, offered to be prepaid
exceeds the amount of Excess Harvest Proceeds offered to be applied to prepay
the same, the offer to prepay the Notes and such other Debt shall be made on a
pro rata basis. Upon completion of such Excess Harvest Offer, the amount of
Excess Harvest Proceeds shall be reset at zero.
ARTICLE XI
EVENTS OF DEFAULT
SECTION 11.1 Events of Default.
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An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) default by the Company or any Subsidiary Guarantor in the
payment of the principal of or Make-Whole Amount, if any, on any Note when the
same becomes due and payable (upon Stated Maturity, acceleration, optional
redemption or otherwise); or
(b) default by the Company or any Subsidiary Guarantor in the
payment of an installment of interest on any of the Notes, when the same becomes
due and payable, which default continues for a period of 10 days; or
(c) failure to perform or observe any other term, covenant or
agreement contained in this Agreement or the Subsidiary Guarantee of any
Subsidiary Guarantor (other than a default specified in clause (a) or (b) above)
and such default continues for a period of 30 days after the earlier of written
notice of such default requiring the Company to remedy the same shall have been
given to the Company or such Subsidiary Guarantor by the holder of a Note then
outstanding or an executive officer of the General Partner obtains actual
knowledge of such default; or
(d) any representation or warranty made in Sections 5.1 through
5.6 of this Agreement, or any statements in a certificate or instrument
delivered after the Closing is false or incorrect as of the date as of which
such representation, warranty or statement is made and the falsity or
incorrectness thereof could reasonably be expected to result in a Material
Adverse Effect.
(e) default or defaults under one or more agreements,
instruments, mortgages, bonds, debentures or other evidences of Debt under which
the Company or any Restricted Subsidiary of the Company then has outstanding
Debt, which default (i) is caused by a failure to pay at its Stated Maturity or
within the applicable grace period, if any, provided with respect to such Debt,
principal, premium or interest with respect to Debt of the Company or a
Restricted Subsidiary (collectively, a "Payment Default") or (ii) results in the
acceleration of such Debt prior to its Stated Maturity and, in each case, the
principal amount of any such Debt, together with the principal amount of any
other such Debt under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $25,000,000 or more; or
(f) a final judgment or judgments (which is or are non-appealable
or which has or have not been stayed pending appeal) shall be rendered against
the Company or any Restricted Subsidiary for the payment of money in excess of
$15,000,000 in the aggregate (other than that portion of a final judgment as to
which a reputable insurance company has accepted liability) and such judgment(s)
shall not be discharged or execution thereon stayed pending appeal or review
within 60 days after entry thereof, or, in the event of such a stay, shall not
be discharged within 30 days after such stay expires; or
(g) the Subsidiary Guarantee of any Subsidiary Guarantor shall
for any reason cease to be, or be asserted by the Company or such Subsidiary
Guarantor, as applicable, not to be, in full force and effect (except pursuant
to the release of the Subsidiary Guarantee of such Subsidiary Guarantor); or
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(h) the Company or any Significant Subsidiary that is a
Restricted Subsidiary (or each member of any group of Subsidiaries that are
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary) (i) is generally not paying, or admits in writing its inability to
pay, its debts as they become due, (ii) files, or consents by answer or
otherwise to the filing against it of, a petition for relief or reorganization
or arrangement or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (iii) makes an assignment for the benefit of
its creditors, (iv) consents to the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, (v) is adjudicated as insolvent or to
be liquidated, or (vi) takes action for the purpose of any of the foregoing; or
(i) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any Significant
Subsidiary that is a Restricted Subsidiary (or each member of any group of
Subsidiaries that are Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary), a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any Significant Subsidiary that is a Restricted
Subsidiary (or each member of such group), or any such petition shall be filed
against the Company or any Significant Subsidiary that is a Restricted
Subsidiary (or each member of such group) and such petition shall not be
dismissed or appointment discharged within 60 days.
ARTICLE XII
REMEDIES ON DEFAULT, ETC.
SECTION 12.1 Acceleration.
(a) If an Event of Default with respect to the Company or any
Significant Subsidiary that is a Restricted Subsidiary (or any group of
Subsidiaries that are Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary) described in paragraph (h) or (i) of
Article XI has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
any holder or holders of at least 50% in aggregate principal amount of the Notes
(without regard to series) at the time outstanding may at any time at its or
their option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Article XI has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such
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Event of Default may at any time, at its or their option, by notice or notices
to the Company, declare all the Notes held by it or them to be immediately due
and payable.
Upon any Note's becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus all accrued and unpaid
interest thereon and, to the full extent permitted by law, an amount equal to
the Make-Whole Amount, if any, that the Company would have had to pay if the
Company had elected to prepay the Notes pursuant to Section 8.2 hereof on the
date of such acceleration (but disregarding for this purpose in the computation
thereof the proviso to the definition of "Discounted Value" in Section 8.7),
shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby waived.
The Company acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Company (except as herein specifically provided for).
SECTION 12.2 Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
SECTION 12.3 Rescission.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the holders of not less than 66_% in
aggregate principal amount of the Notes (without regard to series) then
outstanding, by written notice to the Company, may, on behalf of the holders of
all the Notes, waive, rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the rate specified therein, (b) all Events of Default and Defaults,
other than non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Article XVII, and
(c) no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.
SECTION 12.4 No Waivers or Election of Remedies, Expenses, Etc.
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No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Article XV, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Article XII, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
ARTICLE XIII
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
SECTION 13.1 Registration of Notes.
The Company shall keep at its principal executive office a register for
the registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary.
SECTION 13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
its attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, of
like series and in an aggregate principal amount equal to the unpaid principal
amount of the surrendered Note. Each such new Note shall be registered in the
name of such Person as such holder may request and shall be substantially in the
form of Notes being surrendered as set forth in Exhibit 1(a), 1(b), 1(c) or
1(d), as the case may be. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such transfer of Notes.
Notes shall not be transferred in denominations of less than $1,000,000,
provided that if necessary to enable the registration of transfer by a holder of
its entire holding of Notes, one Note may be in a denomination of less than
$1,000,000. Notwithstanding any other provision of this Section 13.2, the
Company shall not be obligated to register the transfer of any Note unless it
shall have received from the proposed transferee representations and an opinion
of counsel, in each case satisfactory to it, that such transfer will not be
subject to the prohibitions of
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Section 406 of ERISA or be one in connection with which a tax could be imposed
pursuant to Section 4975(c)(1)(A) - (D) of the Code.
SECTION 13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of you or any other Holder that is an
Institutional Investor, notice from you or such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is, or
is a nominee for, you or another Holder of a Note with a minimum net worth of at
least $100,000,000, your or such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note of like series, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
ARTICLE XIV
PAYMENTS ON NOTES
SECTION 14.1 Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in The
City of New York, at the principal office of The Bank of New York in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in New York State or the principal
office of a bank or trust company in New York State.
SECTION 14.2 Home Office Payment.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified in Section 18.1, or by such other method or at such other address as
you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, you shall surrender such Note for cancellation, reasonably promptly
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after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to Section
14.1. Prior to any sale or other disposition of any Note held by you or your
nominee you will, at the Company's election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been paid
thereon or surrender such Note to the Company in exchange for a new Note or
Notes pursuant to Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by you under this Agreement and that has made
the same agreement relating to such Note as you have made in this Section 14.2.
ARTICLE XV
EXPENSES, ETC.
SECTION 15.1 Transaction Expenses.
The Company will pay all costs and expenses (including attorneys' fees
of a special counsel and, if reasonably required, local or other counsel)
incurred by you or a holder of a Note (a) in connection with any amendments,
waivers or consents under or in respect of this Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective), that are requested
by the Company, (b) the costs and expenses incurred in enforcing or defending
(or determining whether or how to enforce or defend) any rights under this
Agreement or the Notes or in responding to any subpoena or other legal process
or informal investigative demand issued in connection with this Agreement or the
Notes, or by reason of being a holder of any Note, and (c) the costs and
expenses, including financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in connection with
any work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company shall not, in connection with any of the matters described in
Section 15.1(a), be liable for the costs and expenses of more than one separate
legal firm, and separate local counsel as reasonably required.
SECTION 15.2 Survival.
The obligations of the Company under this Article XV will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
ARTICLE XVI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
ENTIRE AGREEMENT
SECTION 16.1 Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder
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of a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company in respect of the
subject matter hereof and thereof, and supersede all prior agreements and
understandings relating to the subject matter hereof.
ARTICLE XVII
AMENDMENT AND WAIVER
SECTION 17.1 Requirements.
(a) With Consent of Holders. This Agreement (including the
Subsidiary Guarantee) and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company, any
Subsidiary Guarantors at the time existing and the holders of at least a
majority in aggregate principal amount of the Notes (without regard to series)
then outstanding ("Required Holders"), except that (a) no amendment or waiver of
any of the provisions of Article I, II, III, IV, V or VI hereof, or any defined
term (as it is used therein), will be effective as to you unless consented to by
you in writing, and (b) no such amendment or waiver may, without the written
consent of the holder of each Note of each series at the time outstanding and
affected thereby (a) reduce the principal amount of Notes whose holders must
consent to an amendment, supplement or waiver, (b) reduce the principal of or
change the fixed maturity of any Note or alter the provisions with respect to
the prepayment of the Notes (other than provisions of Sections 8.3, 10.10(b) and
10.11 which may be amended by the holders of at least 75% in aggregate principal
amount of the Notes (without regard to series) then outstanding), (c) reduce the
rate of or change the time for payment of interest on any Note, (d) waive a
Default or Event of Default in the payment of principal of or Make-Whole Amount,
if any, or interest on the Notes (except a rescission of acceleration of the
Notes by the holders of at least a majority in aggregate principal amount of the
Notes and a waiver of the payment default that resulted from such acceleration),
(e) make any Note payable in money other than that stated in the Notes, (f) make
any change in the provisions of this Agreement relating to waivers of past
Defaults or the rights of holders of Notes to receive payments of principal of,
Make-Whole Amount, if any, or interest on the Notes, (g) waive a redemption
payment with respect to any Note (other than a payment pursuant to Section 8.3,
10.10(b) and/or 10.11 which may be waived by the holders of at least 75% in
aggregate principal amount of the Notes (without regard to series) then
outstanding), (h) release any Subsidiary Guarantor other than in accordance with
Section 21.4 or (i) make any change in this Section 17.1(a).
(b) Without Consent of Holders. The Company and the Subsidiary
Guarantors may amend or supplement this Agreement (including the Subsidiary
Guarantee) or the Notes without the consent of any Holder of Notes:
(i) to cure any ambiguity, defect or inconsistency;
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(ii) to provide for the assumption of the Company's or a
Subsidiary Guarantor's obligations to the Holders of the Notes in the case
of a merger or consolidation not prohibited by this Agreement; or
(iii) to add or release any Subsidiary Guarantor pursuant to the
terms of this Agreement.
SECTION 17.2 Solicitation of Holders of Notes.
The Company will provide each holder of the Notes (irrespective of the
amount of Notes then owned by it) with sufficient information, sufficiently far
in advance of the date a decision is required, to enable such holder to make an
informed and considered decision with respect to any proposed amendment, waiver
or consent in respect of any of the provisions hereof or of the Notes. The
Company will deliver executed or true and correct copies of each amendment,
waiver or consent effected pursuant to the provisions of this Article XVII to
each holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the requisite
holders of Notes.
SECTION 17.3 Binding Effect, Etc.
Any amendment or waiver consented to as provided in this Article XVII
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
SECTION 17.4 Notes Held by Company, Etc.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
have approved or consented to any amendment, waiver or consent to be given under
this Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates or Restricted Subsidiaries shall be deemed not to be outstanding.
ARTICLE XVIII
NOTICES
SECTION 18.1 Notices.
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All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or your nominee at
the address and in the manner below or at such other address and/or in
such other manner as you or your nominee shall have most recently
specified to the Company in writing,
Address for notices and communications generally:
c/o CT Corporation Systems
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
Address for payments (which shall be by wire transfer of
immediately available funds):
Acct. No. 323869343 in The Chase Manhattan Bank,
New York, New York
ABA No. 021000021.
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at
RAYONIER TIMBERLANDS OPERATING COMPANY, L.P.
c/o Rayonier Inc.
1177 Summer Street
Stamford, Connecticut 06905-5529
Attention: General Counsel
, or at such other address as the Company shall have specified to the holder of
each Note in writing.
Notices under this Article XVIII will be deemed given only when actually
received.
ARTICLE XIX
REPRODUCTION OF DOCUMENTS
SECTION 19.1 Reproduction of Documents.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by
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<PAGE> 31
you at the Closing (except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to you, may
be reproduced by you by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Article XIX shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
ARTICLE XX
CONFIDENTIAL INFORMATION
SECTION 20.1 Confidential Information.
For the purposes of this Article XX, "Confidential Information" means
information delivered to you by or on behalf of the Company, any Subsidiary or
any general partner in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature unless (i) if
each of the Company and the General Partner is not subject to the reporting
requirements of Section 13 of the Exchange Act, such information was clearly
marked or labeled or otherwise adequately identified in writing when received by
you as not being confidential information of the Company, such Subsidiary or
such Affiliate, and (ii) if either of the Company or the General Partner is
subject to the reporting requirements of Section 13 of the Exchange Act, the
same was clearly marked or labeled or otherwise adequately identified in writing
when received by you as being confidential information of the Company, provided
that such term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any Person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or (d) constitutes financial statements delivered
to you under Section 7.1 that are otherwise publicly available. You will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes), (ii)
your financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Article XX, (iii) any other holder of any Note, (iv) any Person or
Persons from whom you may seek to obtain the Loan (if such Person has agreed
with the Company in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Article XX), (v) any federal
or state regulatory authority having jurisdiction over you, (vi) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
the investment portfolio of any Person from whom you obtain the Loans, or (vii)
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any other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to you, (x) in response to any subpoena or other legal process, (y)
in connection with any litigation to which you are a party or (z) if an Event of
Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your Notes
and this Agreement. Each holder of a Note, by its acceptance of a Note, will be
deemed to have agreed to be bound by and to be entitled as such to the benefits
of this Article XX as though it were a party to this Agreement. On reasonable
request by the Company in connection with the delivery to any holder of a Note
of information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee), such holder will enter into an agreement with the Company
embodying the provisions of this Article XX.
ARTICLE XXI
SUBSIDIARY GUARANTEE OF NOTES
SECTION 21.1 Unconditional Guarantee.
Each Subsidiary Guarantor hereby unconditionally, irrevocably, jointly
and severally, guarantees to each Holder the full and prompt payment of the
principal of, Make-Whole Amount, if any, and interest on the Notes and all other
amounts due and payable under the Notes whether at maturity, by acceleration,
redemption, repurchase or otherwise, including, without limitation, interest on
the overdue principal of, Make-Whole Amount, if any, and interest on the Notes,
to the extent lawful, all in accordance with the terms hereof and thereof
(subject, however, to the limitations set forth in Section 21.3).
This Subsidiary Guarantee shall be an unsecured general obligation of
each Subsidiary Guarantor and rank senior in right of payment to all existing
and future subordinated Debt of such Subsidiary Guarantor and pari passu in
right of payment to all existing and future senior Debt of such Subsidiary
Guarantor except for Debt which is preferred as a result of being secured as
permitted by Section 10.3 (but then only to the extent of such security).
Failing payment when due of any amount so guaranteed for whatever
reason, the Subsidiary Guarantors will be jointly and severally obligated to pay
the same immediately. Each Subsidiary Guarantor hereby agrees that its
obligations pursuant to this Subsidiary Guarantee shall, to the extent permitted
by law, be unconditional irrespective of the validity, regularity or
enforceability of the Notes, the obligations of the Company under the Notes or
any other Subsidiary Guarantor's Subsidiary Guarantee, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Notes with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company or any other Subsidiary Guarantor, any action to enforce the
same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of any Subsidiary Guarantor. Each Subsidiary
Guarantor, to the extent permitted by law, hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company or any
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other Subsidiary Guarantor, protest, notice, notice of intent to accelerate,
notice of acceleration and all demands whatsoever and covenants that this
Subsidiary Guarantee will not be discharged except by complete performance of
the obligations contained in the Notes and in this Article XXI. If any Holder is
required by any court or otherwise to return to the Company, any Subsidiary
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Subsidiary Guarantor, any amount paid
by the Company or any Subsidiary Guarantor to such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Subsidiary Guarantor agrees it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor agrees that this is a guarantee of
payment not a guarantee of collection.
SECTION 21.2. Subsidiary Guarantors May Consolidate, etc., on Certain Terms.
(a) Except as set forth in Sections 10.7 and 10.10, nothing
contained in this Agreement or in any of the Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Company or
another Subsidiary Guarantor or shall prevent any disposition of assets to the
Company or another Subsidiary Guarantor.
(b) Except as set forth in Sections 10.7 and 10.10, nothing
contained in this Agreement or in any of the Notes shall prevent any
consolidation or merger or sale of a Subsidiary Guarantor with or into a Person
other than the Company or a Subsidiary Guarantor (regardless of whether an
Affiliate of such Subsidiary Guarantor), or successive consolidations or mergers
in which a Subsidiary Guarantor or its successor or successors shall be a party
or parties, or shall prevent any sale, assignment, transfer, lease, conveyance
or other disposition of all or substantially all of the assets of a Subsidiary
Guarantor to a Person other than the Company or another Subsidiary Guarantor
(regardless of whether an Affiliate of such Subsidiary Guarantor) authorized to
acquire and operate the same, provided, that, (a) that if such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition
results in a surviving Person (other than the Company) who is not a Subsidiary
Guarantor, the Person surviving such consolidation or merger, or to which such
sale, assignment, transfer, lease, conveyance or disposition has been made shall
agree to assume such Subsidiary Guarantor's obligations arising under this
Article XXI and the Notes, (except to the extent that Section 21.3 would result
in the release of such obligations), (b) immediately after such transaction, and
giving effect thereto, no Default or Event of Default has occurred and is
continuing; and (c) such Subsidiary Guarantor or such other Person formed by or
surviving any such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made will, at
the time of such transaction and after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable Four-Quarter
Period, be permitted to incur at least $1.00 of additional Debt pursuant to
Section 10.1. Notwithstanding the foregoing clause (c), any Restricted
Subsidiary may consolidate or merge with or into, or dispose of all or any part
of its properties and assets to, the Company. Upon any consolidation or merger,
or any sale, assignment, transfer, lease, conveyance or other disposition of all
or substantially all of the assets of a Subsidiary Guarantor in accordance with
this Section 21.2(b), the successor Person formed by such consolidation or into
which such Subsidiary Guarantor is
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merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for, and may exercise
every right and power of, a Subsidiary Guarantor under this Agreement with the
same effect as if such successor had been named as a Subsidiary Guarantor
herein.
SECTION 21.3 Release of a Subsidiary Guarantor.
Upon (a) (i) the sale or other disposition of all of the Capital Stock
of a Subsidiary Guarantor to a Person other than the Company or another
Subsidiary Guarantor or (ii) the merger or consolidation of a Subsidiary
Guarantor with or into another Person or the sale of all or substantially all of
the assets of a Subsidiary Guarantor to another Person, in either case pursuant
to a transaction that is in compliance with this Agreement (including without
limitation as described in Section 21.2 hereof) or (b) the release of all
guarantees and co-obligor agreements by a Subsidiary Guarantor with respect to
Debt of the Company, such Subsidiary Guarantor shall be automatically and
unconditionally released and discharged from its Subsidiary Guarantee and all of
its obligations in respect of the Notes.
Except as provided in this Section 21.3, a Subsidiary Guarantor may not
otherwise be released from its Subsidiary Guarantee and its related obligations
hereunder and this Subsidiary Guarantee is a continuing guarantee which shall
remain in full force and effect until payment in full of the Notes and all other
amounts payable under this Subsidiary Guarantee.
SECTION 21.4 Limitation of Subsidiary Guarantor's Liability.
By becoming a Subsidiary Guarantor each Subsidiary Guarantor shall be
deemed to confirm, and by its acceptance of any Note, each Holder shall be
deemed to confirm, that it is their intentions that the Subsidiary Guarantee of
such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for
purposes of any federal or state law. To effectuate the foregoing intention, the
obligations of each Subsidiary Guarantor under this Subsidiary Guarantee shall
be limited to the maximum amount, after giving effect to all other contingent
and fixed liabilities of such Subsidiary Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to Section 21.5, as will result in the
obligations of such Subsidiary Guarantor under this Subsidiary Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. This Section 21.4 is for the benefit of the creditors of each
Subsidiary Guarantor.
SECTION 21.5 Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, in the event any payment or distribution is made by any
Subsidiary Guarantor (a "Funding Subsidiary Guarantor") under this Subsidiary
Guarantee, such Funding Subsidiary Guarantor shall be entitled to a contribution
from each other Subsidiary Guarantor in a pro rata amount based on the Adjusted
Net Assets of each Subsidiary Guarantor (including the Funding Subsidiary
Guarantor) for all
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payments, distributions, damages and expenses incurred by the Funding Subsidiary
Guarantor in discharging the Company's obligations with respect to the Notes or
any other Subsidiary Guarantor's obligations with respect to this Subsidiary
Guarantee.
SECTION 21.6 Other Subsidiary Guarantees.
The Company hereby agrees to cause each guaranty of, and co-obligor
agreement with respect to, Debt of the Company made by a Subsidiary Guarantor to
include provisions substantially similar to Sections 21.4 and 21.5.
ARTICLE XXII
MISCELLANEOUS
SECTION 22.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not, except that the benefits of
Sections 7.1, 7.2, 7.3, 13.3 and 14.2 shall be limited as therein provided.
SECTION 22.2 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of, or Make-Whole Amount or interest on, any Note that
is due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
SECTION 22.3 Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 22.4 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
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SECTION 22.5 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
SECTION 22.6 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW
YORK.
SECTION 22.7 No Recourse Against Others.
(a) No director, officer, employee, partner, incorporator or
stockholder of the Company or any of its general partners, as such, or any
Subsidiary Guarantor shall have any liability for any obligations of the Company
or such Subsidiary Guarantor hereunder and under the Notes or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder of Notes, by accepting a Note, waives and releases all such liability.
The waiver and release shall be part of the consideration for the issuance of
the Notes.
(b) Except as provided for in the Subsidiary Guarantee, the
obligations of the Company under the Notes will be non-recourse to any general
partner (and its Affiliates (other than the Company)) and payable only out of
the cash flow and assets of the Company. Each Holder of a Note, by accepting
delivery of such Note, will be deemed to have agreed that neither any general
partner nor any of its respective assets (nor any of its Affiliates (other than
the Company) nor their assets) shall be liable for any of the obligations of the
Company under the Notes (except as provided for in the Subsidiary Guarantee).
(c) Notwithstanding the foregoing, nothing in this provision
shall be construed as a waiver or release of any claims under the federal
securities laws.
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The execution hereof by you shall constitute a contract among the
Company and the Purchaser for the uses and purposes hereinabove set forth.
Very truly yours,
COMPANY:
RAYONIER TIMBERLANDS
OPERATING COMPANY, L.P.
By: RAYONIER TIMBERLANDS MANAGEMENT,
INC., its Managing General Partner
By: /s/ James Rutledge
-----------------------------
Name: James Rutledge
-----------------------------
Title: Treasurer
-----------------------------
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SUBSIDIARY GUARANTORS:
RAYLAND, LLC
By: RAYONIER TIMBERLANDS
MANAGEMENT, INC.,
its Manager
By: /s/ John B. Canning
--------------------------
Name: John B. Canning
--------------------------
Title: Secretary
--------------------------
R (1999) TIMBERLANDS LLC
R (1999) TIMBERLANDS II LLC
By: RAYONIER TIMBERLANDS
OPERATING COMPANY, L.P.,
their sole member
By: RAYONIER TIMBERLANDS
MANAGEMENT, INC.,
its Managing General Partner
By: /s/John B. Canning
-----------------------
Name: John B. Canning
-----------------------
Title: Secretary
-----------------------
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Accepted as of October 25, 1999 TIMBER CAPITAL HOLDINGS LLC
By: JEFFERSON SMURFIT
CORPORATION (U.S),
its sole member
By: /s/ Leslie T. Lederer
-----------------------
Name: Leslie T. Lederer
-----------------------
Title: VP
-----------------------
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SCHEDULE A
(to Note Purchase Agreement)
DEFINED TERMS
GENERAL PROVISIONS
Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the express
requirements of this Agreement. All express or implied references herein to "the
Company and the Restricted Subsidiaries" for the purposes of computing the
consolidated financial position, results of operations, or other balance sheet
or financial statement item (including, without limitation, Available Cash,
Consolidated Cash Flow Available for Fixed Charges, Consolidated Fixed Charges,
Consolidated Income Tax Expense, Consolidated Interest Expense, Consolidated Net
Income, Consolidated Non-Cash Charges and Consolidated Total Assets) shall be
deemed to include only the Company and the Restricted Subsidiaries as separate
legal entities and, unless otherwise expressly provided herein, shall not
include the financial position, results of operations, or other such items, of
any other Person (including, without limitation, an Unrestricted Subsidiary),
whether or not, in any particular instance, such accounting treatment would be
in accordance with GAAP.
DEFINITIONS
As used herein (including the Schedules hereto), the following terms
have the respective meanings set forth below or set forth in the Section hereof
following such term:
"Acquired Debt" means, with respect to any specified Person (a) Debt of
any other Person existing at the time such other Person merged with or into or
became a Subsidiary of such specified Person, including Debt incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person, and (b) Debt encumbering any
asset acquired by such specified Person.
"Acquisition Facility" means any loan facility provided for the purpose
of financing acquisitions.
"Acquisition Principal Amount" means $50,000,000.
"Adjusted Asset Sales Amount" means $100,000,000 as increased by 10% of
the purchase price of Asset Acquisitions (other than like-kind exchanges)
subsequent to the Issue Date.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date means the
amount by which the fair value of the properties and assets of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed
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and contingent liabilities incurred or assumed on such date), but excluding its
liabilities under the Subsidiary Guarantee, of such Subsidiary Guarantor at such
date.
"Affiliate" means, at any time, and with respect to any specified
Person, any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common Control
with, such specified Person. As used in this definition, "Control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company; provided, however, for purposes of Section 10.4, the
Company shall not be an Affiliate of any Restricted Subsidiary and no Restricted
Subsidiary shall be an Affiliate of the Company or any other Restricted
Subsidiary.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged with or into the Company or
any Restricted Subsidiary, (b) the acquisition by the Company or any Restricted
Subsidiary of the assets of any Person (other than a Restricted Subsidiary)
which constitute all or substantially all of the assets of such Person, (c) the
acquisition by the Company or any Restricted Subsidiary of merchantable Timber
or Timberlands outside the ordinary course of business, or (d) the acquisition
by the Company or any Restricted Subsidiary of any division or line of business
of any Person (other than a Restricted Subsidiary).
"Asset Sale" is defined in Section 10.10.
"Asset Sale Offer" is defined in Section 10.10.
"Attributable Debt" means, with respect to any Sale and Leaseback
Transaction not involving a Capital Lease, as of any date of determination, the
total obligation (discounted to present value at the rate of interest implicit
in the lease included in such transaction) of the lessee for rental payments
(other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining portion of the term (including extensions which are at the
sole option of the lessor) of the lease included in such transaction (in the
case of any lease which is terminable by the lessee upon the payment of a
penalty, such rental obligation shall also include the amount of such penalty,
but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated).
"Available Cash" means, with respect to any fiscal quarter:
(a) the sum of (i) all cash and cash equivalents of the
Partnership Group on hand at the end of such fiscal quarter, and (ii) all
additional cash and cash equivalents of the Partnership Group on hand on the
date of determination of Available Cash with respect to such fiscal quarter
resulting from working capital borrowings made subsequent to the end of such
fiscal quarter, less
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<PAGE> 42
(b) the amount of any cash reserves that is necessary or
appropriate in the reasonable discretion of the General Partner to (i) provide
for the proper conduct of the business of the Partnership Group (including
reserves for future capital expenditures and for anticipated future credit needs
of the Partnership Group) subsequent to such fiscal quarter, or (ii) comply with
applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which any Group Member is a party
or by which it is bound or its assets are subject.
For purposes of the definition of "Available Cash," the following terms
shall have the following meanings:
"Group Member" means a member of the Partnership Group.
"Partnership Group" means the Company and all
Subsidiaries, treated as a single consolidated entity.
"Working Capital Borrowings" means borrowings under the Bank
Credit Facility or a similar facility (such as a commercial paper
facility) giving rise to Debt incurred for working capital purposes and
for the purpose of making distributions to the Partnership.
"Business" means the acquisition, ownership, management, harvesting,
marketing and selling of Timber and activities related or incidental thereto,
including but not limited to the ownership, management and sale of properties
with a higher and better use than the growing of timber and the ownership,
operation and sale of facilities used in the processing or conversion of timber
into products.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City are required or authorized to be closed.
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person (as lessee or
guarantor or other surety) which would, in accordance with GAAP, be required to
be classified and accounted for as a capital lease on a balance sheet of such
Person.
"Capital Stock" means, with respect to any Person, any and all shares,
units representing interests, participations, rights in or other equivalents
(however designated) of such Person's capital stock, including (x) with respect
to partnerships, partnership interests (whether general or limited) and any
other interest or participation that confers upon a Person the right to receive
a share of the profits and losses of, or distributions of assets of, such
partnership, (y) with respect to limited liability companies, member interests,
and (z) with respect to any Person, any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
"Change of Control" means the occurrence of any of the following:
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(1) the sale, transfer, lease, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than Rayonier Inc. or a
Subsidiary thereof, and within six months of the occurrence of such event
(which, in the case of an event consisting of a series of related transactions,
shall be deemed to have occurred on the date of consummation of the most recent
such transaction) there is a Rating Decline; or
(2) the adoption of a plan relating to the liquidation or dissolution of
the Company; or
(3) the occurrence of a Rating Decline within six months of the first
date on which neither Rayonier Inc. nor an Affiliate of Rayonier Inc. is the
managing general partner of the Company (or, if the Company is no longer a
limited partnership, the first date on which neither Rayonier Inc. nor an
Affiliate of Rayonier Inc. controls the management of the Company).
"Change of Control Offer" is defined in Section 8.8.
"Change of Control Purchase Date" is defined in Section 8.8.
"Change of Control Purchase Payment" is defined in Section 8.3.
"Closing" is defined in the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Company" means Rayonier Timberlands Operating Company, L.P., a
Delaware limited partnership.
"Company Notice" is defined in Section 8.3.
"Confidential Information" is defined in Article XX.
"Consolidated Cash Flow Available for Fixed Charges" means, with respect
to the Company and its Restricted Subsidiaries for any period, the sum of,
without duplication, the amounts for such period, taken as a single accounting
period, of (a) Consolidated Net Income, (b) Consolidated Non-Cash Charges, (c)
Consolidated Interest Expense, (d) interest on the Rayonier Subordinated Notes
(to the extent such interest is deducted in the determination of Consolidated
Net Income) and (e) Consolidated Income Tax Expense.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Company and its Restricted Subsidiaries, the ratio of the aggregate amount of
Consolidated Cash Flow Available for Fixed Charges for the most recent four full
fiscal quarters for which financial information in respect
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thereof is available immediately preceding the date of the transaction (the
"Transaction Date") giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (such most recent four full fiscal quarter period being
referred to herein as the "Four Quarter Period") to the aggregate amount of
Consolidated Fixed Charges for the Four Quarter Period. In addition to and
without limitation of the foregoing, for purposes of this definition,
"Consolidated Cash Flow Available for Fixed Charges" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to, without duplication (a) the incurrence or
repayment of any Debt of the Company or any of its Restricted Subsidiaries (and,
in the case of any incurrence, the application of the net proceeds thereof)
during the period commencing on the first day of the Four Quarter Period to and
including the Transaction Date (the "Reference Period"), including, without
limitation, the incurrence of the Debt giving rise to the need to make such
calculation (and the application of the net proceeds thereof), as if such
incurrence (and application) occurred on the first day of the Reference Period
(including any actual interest payments made with respect to Debt under the
Working Capital Facility), and (b) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of the Company or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise being liable
for Acquired Debt) occurring during the Reference Period, as if such Asset Sale
or Asset Acquisition occurred on the first day of the Reference Period;
provided, however, that (i) Consolidated Fixed Charges shall be reduced by
amounts attributable to businesses or assets that are so disposed of or
discontinued only to the extent that the obligations giving rise to such
Consolidated Fixed Charges would no longer be obligations contributing to the
Consolidated Fixed Charges subsequent to the date of determination of the
Consolidated Fixed Charge Coverage Ratio and (ii) Consolidated Cash Flow
Available for Fixed Charges generated by an acquired business or asset shall be
determined (x) in the case of an Asset Acquisition of Timber or Timberlands by
the Company or a Restricted Subsidiary (which for purposes of this definition
shall include the acquisition pursuant to the Purchase Agreement of the limited
liability company member interests described in Schedule 3.1) during such
period, by using the projected net cash flow of the Timber or Timberlands so
acquired, based on the harvest plan prepared in the ordinary course of business
and in good faith by the General Partner, for the first 12 full months of
operations of the acquired Timber or Timberlands following the date of the Asset
Acquisition; provided that such harvest plan shall not assume the harvesting or
sale of more than 10% (or, in the case of an acquisition under a cutting
contract with a term of less than 10 years, such higher percentage as shall be
equal to the quotient of 100% divided by the term of such cutting contract
(expressed in years)) of the total merchantable Timber so acquired in the first
12 full months following the date of the Asset Acquisition; and provided
further, in determining projected cash flow from acquired Timber or Timberlands,
prices shall be assumed to equal the average prices realized by the Company for
comparable Timber sold during such prior period; and (y) in the case of all
other Asset Acquisitions during such period, by using the actual gross profit
(revenues minus cost of goods sold) of such acquired business or asset during
the Four Quarter Period minus the pro forma expenses that would have been
incurred by the Company and its Restricted Subsidiaries in the operation of such
acquired business or asset during such period computed on the basis of personnel
expenses for employees retained or to be retained by the Company and its
Restricted Subsidiaries in the operation of the acquired business or asset and
non-personnel costs and expenses incurred by the Company and its
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Restricted Subsidiaries in the operation of the Company's business at similarly
situated facilities. If the applicable Reference Period for any calculation of
the Consolidated Fixed Charge Coverage Ratio shall include a portion prior to
the Issue Date, then such Consolidated Fixed Charge Coverage Ratio shall be
calculated based upon the Consolidated Cash Flow Available for Fixed Charges and
the Consolidated Fixed Charges of the Company on a pro forma basis for such
portion of the Reference Period prior to the Issue Date, giving effect to the
transactions occurring on the Issue Date, and the Consolidated Cash Flow
Available for Fixed Charges and the Consolidated Fixed Charges for the remaining
portion of the Reference Period on and after the Issue Date, giving pro forma
effect, as described in the two foregoing sentences, to all applicable
transactions occurring on the Issue Date or otherwise. Furthermore, in
calculating "Consolidated Fixed Charges" for purposes of determining the
"Consolidated Fixed Charge Coverage Ratio" (i) interest on outstanding Debt
(other than Debt referred to in clause (ii) below) determined on a fluctuating
basis as of the last day of the Four Quarter Period and which will continue to
be so determined thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Debt in effect on such date; (ii)
only actual interest payments associated with Debt incurred in accordance with
clause (d) of the definition of Permitted Debt and all Permitted Refinancing
Debt in respect thereof, during the Four Quarter Period shall be included in
such calculation; and (iii) if interest on any Debt actually incurred on such
date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the last day of the Four Quarter Period will
be deemed to have been in effect during such period.
"Consolidated Fixed Charges" means, with respect to the Company and its
Restricted Subsidiaries for any period, the sum of, without duplication, (a) the
amounts for such period of Consolidated Interest Expense and (b) the product of
(i) the aggregate amount of dividends and other distributions paid or accrued
during such period in respect of Preferred Stock and Redeemable Capital Stock of
Restricted Subsidiaries on a consolidated basis and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the then
applicable current combined federal, state and local statutory tax rate,
expressed as a percentage.
"Consolidated Income Tax Expense" means, with respect to any period, all
provisions for Federal, state, local and foreign income taxes of the Company and
its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company and
its Restricted Subsidiaries for any period, without duplication, the sum of (a)
the interest expense (not including any amounts paid or accrued in respect of
Preferred Stock or Redeemable Capital Stock) of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (i) any amortization of debt discount,
(ii) the net cost under Interest Rate Agreements, (iii) the interest portion of
any deferred payment obligation, (iv) all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers' acceptance
financing that constitute Debt and (v) all accrued interest and (b) the interest
component of Capital Leases paid, accrued or scheduled to be paid or accrued by
the Company and its Restricted Subsidiaries during such period as determined on
a consolidated basis in accordance
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with GAAP. Consolidated Interest Expense shall not include the interest on the
Rayonier Subordinated Notes.
"Consolidated Net Income" means the net income of the Company and its
Restricted Subsidiaries, as determined on a consolidated basis in accordance
with GAAP and as adjusted to exclude (a) net after-tax extraordinary gains or
losses, (b) net after-tax gains or losses attributable to Asset Sales to the
extent the Net Proceeds therefrom result in the aggregate Net Proceeds received
by the Company or any Restricted Subsidiary from all Asset Sales since the Issue
Date exceeding the Adjusted Asset Sales Amount, (c) the net income or loss of
any Person which is not a Restricted Subsidiary and which is accounted for by
the equity method of accounting, provided that Consolidated Net Income shall
include the amount of dividends or distributions actually paid to the Company or
any Restricted Subsidiary, (d) the net income or loss prior to the date of
acquisition of any Person combined with the Company or any Restricted Subsidiary
in a pooling of interest, (e) the net income of any Restricted Subsidiary to the
extent that dividends or distributions of such Net income are not at the date of
determination permitted by the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or other regulation and (f)
the cumulative effect of any changes in accounting principles.
"Consolidated Non-Cash Charges" means, with respect to the Company and
its Restricted Subsidiaries for any period, the aggregate depreciation,
depletion, amortization and any other non-cash charges, in each case reducing
Consolidated Net Income of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Assets" means, at any time, the total assets and
properties of the Company and its Restricted Subsidiaries which would be shown
as assets on a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of such time prepared in accordance with GAAP.
"Credit Agreement" means the Credit Agreement, dated as of October 25,
1999, among the Company, the lenders named therein and Credit Suisse First
Boston, as Administrative Agent, Morgan Stanley Senior Funding, Inc. and
Citicorp Visa, Inc., as Co-Syndication Agents, and Credit Suisse First Boston,
Lead Arranger, as agent and as letter of credit issuing bank, and the several
financial institutions which are or become parties from time to time thereto,
evidencing the Bank Credit Facility, and as it may be amended, supplemented or
otherwise modified from time to time, including all exhibits and schedules
thereto, and any successor or replacement facility entered into in compliance
herewith.
"Debt" means as applied to any Person (without duplication):
(a) any indebtedness for borrowed money and all obligations
evidenced by any bond, note, debenture or other similar instrument or letter of
credit (or reimbursement agreements in respect thereof) which such Person has
directly or indirectly created, incurred or assumed (other than obligations with
respect to letters of credit securing obligations (other than obligations
described in paragraphs (a) through (c) of this definition) entered into in the
ordinary course of business of such
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Person to the extent such letters of credit are not drawn upon, or, if and to
the extent drawn upon, such drawing is reimbursed no later than the fifth
Business Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit);
(b) any indebtedness for borrowed money and all obligations
evidenced by any bond, note, debenture or other similar instrument secured by
any Lien in respect of property owned by such Person, whether or not such Person
has assumed or become liable for the payment of such indebtedness, provided that
the amount of such indebtedness, if such Person has not assumed the same or
become liable therefor, shall in no event be deemed to be greater than the Fair
Market Value from time to time (as determined in good faith by such Person) of
the property subject to such Lien;
(c) any indebtedness, whether or not for borrowed money
(excluding trade payables and accrued expenses arising in the ordinary course of
business), with respect to which such Person has become directly or indirectly
liable and which represents the deferred purchase price (or a portion thereof)
or has been incurred to finance the purchase price (or a portion thereof) of any
property or service or business acquired by such Person, whether by purchase,
consolidation, merger or otherwise;
(d) the principal component of any obligations under Capital
Leases to the extent such obligations would, in accordance with GAAP, appear on
a balance sheet of such Person;
(e) all Attributable Debt of such Person in respect of Sale and
Leaseback Transactions not involving a Capital Lease;
(f) any indebtedness of any other Person of the character
referred to in clause (a), (b), (c), (d) or (e) of this definition with respect
to which the Person whose Debt is being determined has become liable by way of a
Guaranty;
(g) all Redeemable Capital Stock of any Restricted Subsidiary of
such Person valued at the greater of its voluntary or involuntary maximum fixed
repurchase price;
(h) any Preferred Stock (other than Redeemable Capital Stock) of
any Restricted Subsidiary of such Person that is not a Subsidiary Guarantor
valued at the liquidation preference thereof or any mandatory redemption payment
obligations in respect thereof; and
(i) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses (a)
through (h) above.
For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable Capital Stock as if
such Redeemable Capital Stock were purchased on any date as of which Debt shall
be required to be determined, and if such price is based upon, or measured by,
the Fair Market Value of such Redeemable Capital Stock, such Fair Market Value
shall be determined in good faith by the board of directors of the issuer of
such Redeemable Capital Stock.
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"Default" means any event that is, or after notice or passage of time or
both, would be, an Event of Default.
"Environmental Laws" means any and all applicable Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"Event of Default" is defined in Article XI.
"Excess Harvest" means a harvest of Timber (including timber deed, bulk,
pay-as-cut and stumpage sales), to the extent in excess in the aggregate of the
following limitations: (a) 140% of the Planned Volume during any fiscal year of
the Company, (b) 135% of the Planned Volume during any period of two consecutive
fiscal years of the Company, (c) 130% of the Planned Volume during any period of
three consecutive fiscal years of the Company, (d) 125% of the Planned Volume
during any period of four consecutive fiscal years of the Company, and (e) 120%
of the Planned Volume during any period of five consecutive fiscal years of the
Company. In the event that the Company or any of its Restricted Subsidiaries
sells Timber pursuant to a timber deed, bulk, pay-as-cut or stumpage contract,
the Timber shall be deemed harvested in equal monthly amounts over the life of
the contract, regardless of when the purchaser actually severs the Timber.
"Excess Harvest Offer" is defined in Section 10.11.
"Excess Harvest Proceeds" is defined in Section 10.11.
"Excess Proceeds" is defined in Section 10.10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, at any time and with respect to any property,
the sale value of such property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States of America, which are applicable from time to
time.
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"General Partner" means the managing general partner of the Company.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State
or other political subdivision thereof; or
(ii) any other jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Guaranty" as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of such Person with respect to any Debt,
lease, cash dividend or other obligation of another, including, without
limitation (a) any such obligation directly or indirectly guaranteed or endorsed
(otherwise than for collection or deposit in the ordinary course of business) by
such Person, or in respect of which such Person is otherwise directly or
indirectly liable, (b) any other obligation under any contract which, in
economic effect, is substantially equivalent to a guaranty, including, without
limitation, any such obligation of a partnership in which such Person is a
general partner or of a joint venture in which such Person is a joint venturer,
or (c) any obligation in effect guaranteed by such Person through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation or services regardless of the non-delivery or nonfurnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof.
"Holder" or "holder" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by the Company
pursuant to Section 13.1.
"Institutional Investor" means (a) any holder of a Note holding more
than 10% of the aggregate principal amount of the Notes then outstanding, and
(b) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form.
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"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect the Company or any Restricted
Subsidiary from fluctuations in interest rates.
"Investment" means as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of stock or other securities of any
other Person, or any direct or indirect loan, advance or capital contribution by
such Person to any other Person, and any other item which would be classified as
an "investment" on a balance sheet of such Person prepared in accordance with
GAAP, including, without limitation, any direct or indirect contribution by such
Person of property or assets to a joint venture, partnership or other business
entity in which such Person retains an interest (it being understood that a
direct or indirect purchase or other acquisition by such Person of assets of any
other Person (other than stock or other securities) shall not constitute an
Investment). The amount involved in Investments made during any period shall be
the aggregate cost to the Company and its Restricted Subsidiaries of all such
Investments made during such period, determined in accordance with GAAP, but
without regard to unrealized increases or decreases in value, or write-ups,
write-downs or write-offs, of such Investments and without regard to the
existence of any undistributed earnings or accrued interest with respect thereto
accrued after the respective dates on which such Investments were made, less any
net return of capital realized during such period upon the sale, repayment or
other liquidation of such Investments (determined in accordance with GAAP, but
without regard to any amounts received during such period as earnings (in the
form of dividends not constituting a return of Capital, interest or otherwise)
on such Investments or as loans from any Person in whom such Investments have
been made). Notwithstanding the foregoing, if the Company shall at any time
designate any Restricted Subsidiary as an Unrestricted Subsidiary, the amount of
the Investment in such newly designated Unrestricted Subsidiary arising at such
time by reason of such designation shall be the portion of the Fair Market Value
of the net assets of such Subsidiary allocable to the Company's equity interest
in such Subsidiary at the time that such Subsidiary is designated an
Unrestricted Subsidiary.
"Investment Grade Rating" means, in respect of the Notes, a rating of
BBB- from S&P or a comparable rating granted by at least one of the other Rating
Agencies.
"Issue Date" means the date on which the Notes are originally
issued.
"Lien" means any mortgage, charge, pledge, lien (statutory or
other), security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance upon or with respect to any property
of any kind. A Person shall be deemed to own subject to a Lien any property
which such Person has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, Capital Lease or other title
retention agreement; provided, however, "Lien" shall not include any negative
pledge.
"Loan" is defined in Section 1.2(c).
"Make-Whole Amount" is defined in Section 8.6.
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"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, (b) the ability of the
Company or any Significant Subsidiary that is a Subsidiary Guarantor to perform
its payment obligations, its obligations under Articles IX or X or any other
material obligations under this Agreement and the Notes, or (c) the validity or
enforceability of this Agreement or the Notes.
"Maturity Date" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein provided, whether at
the Stated Maturity with respect to such principal or by declaration of
acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Proceeds" means, with respect to any Asset Sale or Excess Harvest,
the proceeds thereof in the form of cash or cash equivalents including payments
in respect of deferred payment obligations when received in the form of cash or
cash equivalents (except to the extent that such deferred payment obligations
are financed or sold with recourse to the Company or any Restricted Subsidiary
of the Company) net of (a) brokerage commissions and other fees and
expenses (including, without limitation, fees and expenses of legal counsel and
accountants and fees, expenses, discounts or commissions of underwriters,
placement agents and investment bankers) related to such Asset Sale or Excess
Harvest, (b) provisions for all taxes payable as a result of such Asset Sale or
Excess Harvest, (c) amounts required to be paid to any Person (other than the
Company or any Restricted Subsidiary of the Company) owning a beneficial
interest in the assets subject to such Asset Sale or Excess Harvest, (d)
appropriate amounts to be provided by the Company or any Restricted Subsidiary
of the Company, as the case may be, as a reserve required in accordance with
GAAP against any liabilities associated with such Asset Sale or Excess Harvest
and retained by the Company or any Restricted Subsidiary of the Company, as the
case may be, after such Asset Sale or Excess Harvest, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale or Excess Harvest and (e) amounts
required to be applied to the repayment of Debt secured by a Lien on the asset
or assets sold in such Asset Sale or Excess Harvest.
"Notes" is defined in Article I.
"Officer's Certificate" means a certificate of an officer of the General
Partner whose responsibilities extend to the subject matter of such certificate.
"Option of Holder to Elect Purchase" is defined in Section 8.3.
"Payment Default" is defined in Section 11.1.
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"Payment Restrictions" is defined in Section 10.5.
"Permitted Debt" means any of the following:
(a) Debt of the Company evidenced by the Notes;
(b) Debt outstanding on the Issue Date, including but not limited
to the Debt outstanding under the Credit Agreement and the Rayonier Subordinated
Notes;
(c) Debt of the Company or a Restricted Subsidiary incurred for
any purpose permitted under the Acquisition Facility, provided that the
aggregate principal amount of such Debt outstanding at any time may not exceed
the Acquisition Principal Amount;
(d) Debt of the Company or a Restricted Subsidiary incurred for
any purpose permitted under the Working Capital Facility, provided that the
aggregate principal amount of such Debt outstanding at any time may not exceed
the Working Capital Principal Amount;
(e) Debt owed by the Company or any Restricted Subsidiary to any
Restricted Subsidiary;
(f) Debt under Interest Rate Agreements;
(g) Permitted Refinancing Debt;
(h) Debt of the Company and its Restricted Subsidiaries
represented by letters of credit supporting (i) obligations under workers'
compensation laws and (ii) the repayment of Permitted Debt;
(i) surety bonds and appeal bonds required in the ordinary course
of business or in connection with the enforcement of rights or claims of the
Company or any of its Subsidiaries or in connection with judgments that do not
result in a Default or Event of Default;
(j) the Subsidiary Guarantee of the Notes (and any assumption of
the obligations guaranteed thereby);
(k) the incurrence by the Company or any Restricted Subsidiary of
Debt in respect of Capital Leases, mortgage financings or purchase money
obligations, in each case incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of property, plant
or equipment used in the business of the Company or such Restricted Subsidiary,
in an aggregate principal amount which, when aggregated with the principal
amount of all other Debt then outstanding and incurred pursuant to this clause
(k) (together with any Permitted Refinancing Debt with respect thereto) does not
exceed $50,000,000 at any time outstanding;
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(l) the incurrence by the Company or any Restricted Subsidiary of
additional Debt in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing Debt
incurred to refund, refinance or replace any other Debt incurred pursuant to
this clause (l), not to exceed $100,000,000.
"Permitted Investments" means, at any time, all of the
following:
(a) Investments made or owned by the Company or any Restricted
Subsidiary in (i) any evidence of Debt 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 (provided that the full faith and credit of the United States of America
is pledged in support 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
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 in obligations referred to in clauses (i) through (v) of this definition,
in each case having assets in excess of $100,000,000;
(b) the acquisition by the Company or any Restricted Subsidiary
of Capital Stock or other ownership interests, whether in a single transaction
or in a series of related transactions, of a Person engaged in substantially the
same business as the Company such that upon the completion of such transaction
or series of transactions, such Person becomes a Restricted Subsidiary;
(c) the making or ownership by the Company or any Restricted
Subsidiary of Investments (in addition to Investments permitted by subdivisions
(a), (b), (d), (e), (f) and (g)) in any Person which is engaged in substantially
the same business as the Company, provided that the aggregate amount of all such
Investments made by the Company and its Restricted Subsidiaries following the
Issue Date and outstanding pursuant to this subdivision (c) shall not at any
date of determination exceed 10% of Consolidated Total Assets (the "Investment
Limit"), provided that, in addition to Investments that would be permitted under
the Investment Limit, during any fiscal year the Company and its Restricted
Subsidiaries may invest up to $100,000,000 (the "Annual Limit") pursuant to the
provisions of this subdivision (c), but the unused amount of the Annual Limit
shall not be carried over to any future years;
A-14
<PAGE> 54
(d) the making or ownership by the Company or any Restricted
Subsidiary of Investments (i) arising out of loans and advances to employees
incurred in the ordinary course of business, (ii) arising out of extensions of
trade credit or advances to third parties in the ordinary course of business and
(iii) acquired by reason of the exercise of customary creditors' rights upon
default or pursuant to the bankruptcy, insolvency or reorganization of a debtor;
(e) the creation or incurrence of liability by the Company or any
Restricted Subsidiary with respect to any Guaranty constituting an obligation,
warranty or indemnity, not guaranteeing Debt of any Person, which is undertaken
or made in the ordinary course of business;
(f) the creation or incurrence of liability by the Company or any
Restricted Subsidiary with respect to any Interest Rate Agreements; and
(g) the Subsidiary Guarantee of the Notes (and any assumption of
the obligations guaranteed thereby), and the making by the Company or any
Restricted Subsidiary of Investments in the Company or another Restricted
Subsidiary.
"Permitted Liens" means any of the following:
(a) Liens for taxes, assessments or other governmental charges
the payment of which is not yet due or is being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and as to
which reserves or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor and be adequate in the good faith judgment of
the obligor;
(b) Liens of lessors, landlords and carriers, vendors, loggers,
warehousemen, mechanics, materialmen, repairmen and other like Liens incurred in
the ordinary course of business for sums not yet due or the payment of which is
being contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and as to which reserves or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor and be adequate
in the good faith judgment of the obligor, in each case (i) not incurred or made
in connection with the borrowing of money, the obtaining of advances or credit
or the payment of the deferred purchase price of property or (ii) incurred in
the ordinary course of business securing the unpaid purchase price of property
or services constituting current accounts payable, and banker's Liens in the
nature of rights of set off arising in the ordinary course of business of the
Company and its Subsidiaries in connection with Debt permitted by Section 10.1;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security, or (ii)
to secure (or to obtain letters of credit that secure) the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
performance bonds, purchase, construction or sales contracts and other similar
obligations, in each case not incurred or made in connection with the borrowing
of money;
A-15
<PAGE> 55
(d) other deposits made to secure liability to insurance carriers
under insurance or self-insurance arrangements;
(e) Liens securing reimbursement obligations under letters of
credit, provided in each case that such Liens cover only the title documents and
related goods (and any proceeds thereof) covered by the related letter of
credit;
(f) any attachment or judgment Lien relating to a judgment that
does not constitute an Event of Default;
(g) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances, which, in
each case either (i) are granted, entered into or created in the ordinary course
of the business of the Company or any Restricted Subsidiary or (ii) do not
materially impair the value or intended use of the property covered thereby;
(h) Liens on property or assets of any Restricted Subsidiary
securing Debt of such Restricted Subsidiary owing to the Company or a Restricted
Subsidiary;
(i) Liens on assets of the Company or any Restricted Subsidiary
existing on the Issue Date;
(j) Liens existing on any property of any Person at the time it
becomes a Subsidiary of the Company, or existing at the time of acquisition upon
any property acquired by the Company or any such Subsidiary through purchase,
merger or consolidation or otherwise, whether or not assumed by the Company or
such Subsidiary, or created to secure Debt incurred to pay all or any part of
the purchase price or cost of construction or improvement (a "Purchase Money
Lien") of property (including Capital Stock and other securities) acquired by
the Company or a Restricted Subsidiary; provided that (i) any such Lien shall be
confined solely to such item or items of property and other property which is an
improvement to or is acquired for use specifically in connection with such
acquired property, or, in the case of construction, related unimproved land,
(ii) in the case of a Purchase Money Lien, the principal amount of the Debt
secured by such Purchase Money Lien shall at no time exceed an amount equal to
100% of the purchase price or cost of construction or improvement to the Company
and the Restricted Subsidiaries of such property, (iii) any such Purchase Money
Lien shall be created not later than 180 days after the acquisition of such
property and (iv) any such Lien (other than a Purchase Money Lien) shall not
have been created or assumed in contemplation of such Person's becoming a
Subsidiary of the Company or such acquisition of property by the Company or any
Subsidiary;
(k) easements, exceptions or reservations in any property of the
Company or any Restricted Subsidiary granted or reserved for the purpose of
pipelines, roads, the removal of oil, gas, coal or other minerals, and other
like purposes, or for the joint or common use of real property, facilities and
equipment, which are incidental to, and do not materially interfere with, the
ordinary conduct of the business of the Company or any Restricted Subsidiary;
A-16
<PAGE> 56
(l) any Lien renewing or extending any Lien permitted by
subdivision (i) or (j), provided that (i) the principal amount of the Debt
secured by any such Lien shall not exceed the principal amount of such Debt
outstanding immediately prior to the renewal or extension of such Lien, and (ii)
no assets encumbered by any such Lien other than the assets encumbered
immediately prior to such renewal or extension shall be encumbered thereby;
(m) any negative pledge; or
(n) other Liens, provided that the aggregate of the obligations
secured by all such other Liens would not exceed $50,000,000.
"Permitted Refinancing Debt" means Debt incurred by the Company or any
Restricted Subsidiary to substantially concurrently (excluding any notice period
on redemptions) repay, refund, renew, replace, extend or refinance, in whole or
in part, any Permitted Debt of the Company or any Restricted Subsidiary or any
other Debt incurred by the Company or any Restricted Subsidiary pursuant to
Section 10.1, to the extent (a) the principal amount of such Permitted
Refinancing Debt does not exceed the principal or accreted amount plus the
amount of accrued and unpaid interest of the Debt so repaid, refunded or
refinanced (except that, in the case of the Notes, such Permitted Refinancing
Debt may include the redemption premiums set forth in Section 8.2), (b) the
Permitted Refinancing Debt ranks no more favorably in right of payment with
respect to the Notes than the Debt so repaid, refunded, renewed, replaced,
extended or refinanced, and (c) the Permitted Refinancing Debt has a Weighted
Average Life to Stated Maturity and Stated Maturity equal to, or greater than,
the Debt so repaid, refunded, renewed, replaced, extended or refinanced;
provided, however, that Permitted Refinancing Debt shall not include Debt
incurred by a Restricted Subsidiary to repay, refund, renew, replace, extend or
refinance Debt of the Company.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, charitable
foundation, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Planned Volume" means 6,700,000 tons for the calendar year 2000 and
shall increase 2% per year thereafter. In the event of the acquisition of
merchantable Timber or Timberlands (other than in a like-kind exchange of Timber
or Timberlands for other Timber or Timberlands and other than Timber or
Timberlands acquired with the Net Proceeds of an Excess Harvest) constituting an
Asset Acquisition, Planned Volume will be increased for 10 years by 10% of the
volume of merchantable Timber so acquired; provided that if such Asset
Acquisition is made under a cutting contract with a term of less than 10 years,
Planned Volume will be increased for each year during the term of the cutting
contract by a number of tons equal to the number of tons so acquired multiplied
by the quotient of 100% divided by the number of years in the cutting contract.
In the event of a disposition of merchantable Timber or Timberlands constituting
an Asset Sale, Planned Volume will be reduced by 10% of the volume of
merchantable Timber sold in such Asset Sale. In the event of an Excess Harvest,
Planned Volume will be reduced by 10% of the amount of the Excess Harvest. For
purposes of this definition, all volumes of Timber harvested that are
denominated in board feet shall be converted to tons on the basis of 7.2 tons
per thousand board feet.
A-17
<PAGE> 57
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated), which is preferred
as to the payment of distributions, dividends, or upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares or units of
Capital Stock of any other class of such Person.
"Prepayment Date" is defined in Section 8.3.
"Property" or "Properties" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"Purchase Agreement" is defined in Section 1.1.
"Purchaser" means Jefferson Smurfit Corporation (U.S.) or one
of its Affiliates.
"Rating Agencies" means any or all of S&P, Moody's, Duff & Phelps
Incorporated and Fitch IBCA, Inc.
"Rating Category" means:
(1) with respect to S&P, any of the following categories:
AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor
categories) and
(2) with respect to Moody's, any of the following categories:
Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor
categories).
"Rating Decline" means a decrease in the rating of the Notes by either
Moody's or S&P by one or more gradations (including gradation within Ratings
Categories as well as between Rating Categories), or the Notes not being rated
by either Moody's or S&P. In determining whether the rating of the notes has
decreased by one or more gradations, gradations within Rating Categories, namely
+ and - for S&P, and 1, 2 and 3 for Moody's, will be taken into account.
"Rayonier" means Rayonier Inc., a North Carolina corporation,
and its successors.
"Rayonier Subordinated Notes" means Subordinated Debt owed by the
Company on the Issue Date to Rayonier or its Affiliates with the terms specified
in Annex I to this Schedule A.
"Redeemable Capital Stock" means any shares of any class or series of
Capital Stock, that, either by the terms thereof, by the terms of any security
into which it is convertible or exchangeable or by contract or otherwise, is or
upon the happening of an event or passage of time would be, required to be
redeemed prior to the Stated Maturity with respect to the principal of any
outstanding Note or is redeemable at the option of the holder thereof at any
time prior to the Stated Maturity of any of the outstanding Notes, or is
convertible into or exchangeable for debt securities at any time prior to the
Stated Maturity of any of the outstanding Notes.
A-18
<PAGE> 58
"Required Holders" means, at any time, the holders of at least a
majority in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the General Partner with responsibility for the administration of the
relevant portion of this Agreement.
"Restricted Payments" is defined in Section 10.2.
"Restricted Subsidiary" means any Subsidiary which, as of the
date of determination, is not an Unrestricted Subsidiary.
"Sale and Leaseback Transaction" of any Person (a "Transferor") means
any arrangement (other than between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries) whereby (a) property (the "Subject Property")
has been or is to be disposed of by such Transferor to any other Person with the
intention on the part of such Transferor of taking back a lease of such Subject
Property pursuant to which the rental payments are calculated to amortize the
purchase price of such Subject Property substantially over the useful life of
such Subject Property, and (b) such Subject Property is in fact so leased by
such Transferor or an Affiliate of such Transferor.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Security" has the meaning set forth in section 2(a)(1) of the
Securities Act.
"Senior Debt" means Debt of the Company or any Restricted Subsidiary
which is not Subordinated Debt.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the General Partner.
"Significant Subsidiary" shall have the same meaning as in Rule 1.02(w)
of Regulation S-X under the Securities Act.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, and its successors.
"Stated Maturity" means, (a) when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and (b) when used with respect to any other Debt, means the date or
dates specified in the instrument governing such Debt as the fixed date or dates
on which each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect
of such Debt, or any installment of interest thereon, is due and payable.
A-19
<PAGE> 59
"Subordinated Debt" means Debt of the Company or any Subsidiary
Guarantor which is expressly subordinated in right of payment to the Notes or
the Subsidiary Guarantee, respectively.
"Subsidiary" means, with respect to any Person, (a) a corporation a
majority of whose Voting Stock (or, in the case of a partnership, a majority of
the partners' Capital Stock, considering all partners' Capital Stock as a single
class) is at the time, directly or indirectly, owned by such Person, by one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof and (b) any other Person, including, without limitation, a joint
venture, in which such Person, one or more Subsidiaries thereof or such Person
and one or more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to vote
in the election of directors, managers, general partners or trustees thereof (or
other Person performing similar functions) or, if such Persons are not elected,
to vote on any matter that is submitted to the vote of all Persons holding
ownership interests in such entity, and (c) a corporation or any other Person
substantially all the equity interest in which (whether or not a voting
interest) is at the time, directly or indirectly, owned by such Person, by one
or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof. For purposes of this definition, any directors' qualifying
shares or investments by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary. Unless the context
clearly indicates otherwise, references to Subsidiaries are to Subsidiaries
(direct or indirect) of the Company.
"Subsidiary Guarantee" means, collectively, Article XXI of this Note
Agreement and an agreement, in form and substance satisfactory to the Required
Holders, whereby a Restricted Subsidiary agrees to be bound by the terms of
Article XXI of the Note Agreement.
"Subsidiary Guarantor" means each of the Company's Subsidiaries, if any,
executing a Subsidiary Guarantee.
"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.
"Timberlands" means, at any date of determination, all real property
owned by or leased to the Company that is suitable for Timber production.
"Unrestricted Subsidiary" means any Subsidiary of the Company or a
Restricted Subsidiary that is designated as such by the General Partner,
provided that no portion of the Debt or any other obligation (contingent or
otherwise) of such Subsidiary (a) is guaranteed by the Company or any Restricted
Subsidiary, (b) is recourse to or obligates the Company or any Restricted
Subsidiary in any way or (c) subjects any property or assets of the Company or
any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to
the satisfaction thereof. Notwithstanding the foregoing, the Company or a
Restricted Subsidiary may Guarantee or agree to provide funds for the payment or
maintenance of, or otherwise become liable with respect to Debt of an
Unrestricted Subsidiary, but only to the extent that the Company or a Restricted
Subsidiary would be permitted to (a) make
A-20
<PAGE> 60
an Investment in an amount equal to the Debt represented by such Guaranty or
agreement in such Unrestricted Subsidiary pursuant to subdivision (c) of the
definition of Permitted Investments and (b) incur the Debt represented by such
Guaranty or agreement pursuant to Section 10.1. The General Partner may
designate an Unrestricted Subsidiary to be a Restricted Subsidiary, provided
that immediately after giving effect to such designation (a) there exists no
Default or Event of Default, and (b) if such Unrestricted Subsidiary has, as of
the date of such designation, outstanding Debt (other than Permitted Debt), the
Company could incur at least $1.00 of Debt (other than Permitted Debt).
Notwithstanding the foregoing, no Subsidiary may be designated an Unrestricted
Subsidiary if such Subsidiary, directly or indirectly, holds Capital Stock of a
Restricted Subsidiary.
"Voting Stock" means, (i) Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the directors (or Persons performing similar functions) or
(ii) in the case of a partnership, limited liability company or joint venture,
interests in the profits or capital thereof entitling the holders of such
interests to approve major business actions.
"Weighted Average Life to Stated Maturity" means, when applied to any
Debt at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Debt; provided, however, that with respect to any revolving Debt,
the foregoing calculation of Weighted Average Life to Stated Maturity shall be
determined based upon the total available commitments and the required
reductions of commitments in lieu of the outstanding principal amount and the
required payments of principal, respectively.
"Wholly-Owned Restricted Subsidiary" means any Subsidiary of the Company
of which 99% of the outstanding Capital Stock is owned by the Company or by one
or more Wholly-Owned Restricted Subsidiaries of the Company or by the Company
and one or more Wholly-Owned Restricted Subsidiaries of the Company. For
purposes of this definition, any directors' qualifying shares or investments by
foreign nationals mandated by applicable law shall be disregarded in determining
the ownership of a Subsidiary.
"Working Capital Facility" means the working capital facility of the
Company provided for in the Credit Agreement and any similar facility or
facilities, including a commercial paper facility.
"Working Capital Principal Amount" means $100,000,000.
"Yield to Maturity" is defined in Section 1.2.
A-21
<PAGE> 1
EXHIBIT 12
RAYONIER INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-------------------
1999 1998
------- ------
<S> <C> <C>
Earnings:
Net Income $ 49,341 $ 49,477
Add:
Income Taxes 23,869 19,705
Amortization of Capitalized Interest 1,748 1,679
------- --------
Additions to Net Income 25,617 21,384
------- --------
Adjustments to Earnings for Fixed Charges:
Interest and Other Financial Charges 22,693 26,076
Interest Factor Attributable to Rentals 1,313 1,480
------- --------
Adjustments for Fixed Charges 24,006 27,556
------- --------
EARNINGS AS ADJUSTED $ 98,964 $ 98,417
======= ========
Fixed Charges:
Fixed Charges above $ 24,006 $ 27,556
Capitalized Interest 314 194
------- --------
TOTAL FIXED CHARGES $ 24,320 $ 27,750
======= ========
RATIO OF EARNINGS AS ADJUSTED TO
TOTAL FIXED CHARGES 4.07 3.55
==== ====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,666
<SECURITIES> 0
<RECEIVABLES> 111,374
<ALLOWANCES> 5,066
<INVENTORY> 115,313
<CURRENT-ASSETS> 275,076
<PP&E> 1,340,527
<DEPRECIATION> 664,915
<TOTAL-ASSETS> 1,570,951
<CURRENT-LIABILITIES> 182,130
<BONDS> 432,544
0
0
<COMMON> 67,118
<OTHER-SE> 582,887
<TOTAL-LIABILITY-AND-EQUITY> 1,570,951
<SALES> 739,872
<TOTAL-REVENUES> 739,872
<CGS> 621,829
<TOTAL-COSTS> 621,829
<OTHER-EXPENSES> 22,140
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,693
<INCOME-PRETAX> 73,210
<INCOME-TAX> 23,869
<INCOME-CONTINUING> 49,341
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,341
<EPS-BASIC> 1.78
<EPS-DILUTED> 1.75
</TABLE>
