<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1994 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 NO. 0-016951
FIBREBOARD CORPORATION
(exact name of registrant as specified in charter)
Delaware 94-0751580
---------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
2121 North California Blvd., Suite 560, Walnut Creek, CA 94596
---------------------------------------------------------------
(Address of principal executive offices)
(510) 274-0700
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address or former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes XXX . No .
----- ----
As of the close of business on November 11, 1994, the registrant had
outstanding 4,220,225 shares of common stock.
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The following unaudited financial statements are filed as part of this
report:
<TABLE>
<CAPTION>
FINANCIAL STATEMENT TITLE PAGE
- ------------------------- ----
<S> <C>
Consolidated statements of income for the three and nine
month periods ended September 30, 1994 and 1993 3
Consolidated balance sheets as of September 30, 1994
and December 31, 1993 4
Consolidated statements of cash flows for the nine
months ended September 30, 1994 and 1993 6
Notes to consolidated financial statements 7
</TABLE>
2
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
-------------------- ----------------------
1994 1993 1994 1993
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales $80,393 $59,136 $226,301 $199,051
Cost of sales 68,738 52,743 188,185 165,300
------- ------- -------- --------
Gross margin 11,655 6,393 38,116 33,751
Selling and administrative expenses 8,661 4,559 19,309 16,177
------- ------- -------- --------
Income from operations 2,994 1,834 18,807 17,574
Interest expense (1,145) (979) (2,678) (2,495)
Interest and other income 20,165 1,157 21,957 3,527
------- ------- -------- --------
Income before income taxes 22,014 2,012 38,086 18,606
Income taxes (8,999) (824) (15,508) (7,628)
------- ------- -------- --------
Net income $13,015 $ 1,188 $ 22,578 $ 10,978
------- ------- -------- --------
------- ------- -------- --------
Earnings per share:
Primary $2.90 $.27 $5.03 $2.48
Fully diluted 2.90 .26 5.02 2.41
Common equivalent shares (thousands)
(Weighted average)
Primary 4,492 4,477 4,492 4,420
Fully diluted 4,492 4,538 4,494 4,556
</TABLE>
3
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1994 1993
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,598 $ 5,322
Receivables 45,162 16,268
Income tax refund receivable -- 3,500
Current portion of notes receivable 1,458 988
Inventories 82,178 80,158
Prepaid expenses 1,284 1,373
Deferred income taxes 11,465 6,898
---------- ------------
Total current assets 149,145 114,507
Timber and timberlands, net 30,103 35,564
Property, plant and equipment, at cost:
Land and improvements 21,505 21,079
Buildings 36,258 25,569
Machinery and equipment 123,987 110,771
Construction in progress 5,097 1,198
---------- ------------
186,847 158,617
Accumulated depreciation (72,580) (69,121)
---------- ------------
Net property, plant and equipment 114,267 89,496
Notes receivable 12,585 11,432
Goodwill 63,587 --
Other assets 12,451 10,360
---------- ------------
Total operating assets 382,138 261,359
Cash restricted for asbestos costs 3,226 827
Asbestos costs to be reimbursed 865,958 968,309
---------- ------------
Total assets $1,251,322 $1,230,495
---------- ------------
---------- ------------
</TABLE>
4
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1994 1993
------------ -----------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ -- $ 17,657
Current portion of long-term debt 2,051 4,764
Accounts payable and accrued liabilities 61,192 29,858
Reserve for asbestos-related costs 2,700 2,700
---------- ----------
Total current liabilities 65,943 54,979
Long-term debt 107,022 23,539
Reserve for asbestos-related costs 15,120 16,795
Other long-term liabilities 21,622 18,790
Deferred income taxes 24,352 21,935
---------- ----------
Total operating liabilities 234,059 136,038
Asbestos claims settlements:
Current 9,275 11,048
Long-term 843,058 941,880
---------- ----------
Total asbestos claims settlements 852,333 952,928
Asbestos-related long-term debt 22,033 21,361
---------- ----------
Total liabilities 1,108,425 1,110,327
Commitments & contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 3,000,000
shares authorized; none issued -- --
Common stock, $.01 par value, 15,000,000
shares authorized; 4,211,170 and
4,201,420 shares issued 42 42
Additional paid-in capital 75,987 75,836
Retained earnings 69,295 46,717
Minimum pension liability adjustment (2,427) (2,427)
---------- ----------
Total stockholders' equity 142,897 120,168
---------- -----------
Total liabilities and stockholders' equity $1,251,322 $1,230,495
---------- -----------
---------- -----------
</TABLE>
5
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1994 1993
-------- --------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 22,578 $ 10,978
Adjustments to reconcile income to net cash
provided (used) by operating activities:
Depreciation, amortization, and depletion 7,165 8,044
Deferred income taxes 154 6
Deferred long term benefits (456) 1,075
Compensation for stock grants 113 1,002
Gain on sale of assets (21,270) (2,136)
Change in working capital 28,717 (23,007)
-------- --------
Net cash provided (used) by operations 37,001 (4,038)
Net cash provided by discontinued operations -- 2,193
Cash Flows From Investing Activities:
Non-cash net assets of acquired operations (120,115) (13,054)
Proceeds from asset sales 26,023 3,231
Property, plant and equipment changes (5,726) (6,276)
Timber & timberland changes, net 2,229 (3,537)
Change in notes receivable 1,336 977
Change in other assets 24 (283)
-------- --------
Net cash used by investing activities (96,229) (18,942)
Cash Flows From Financing Activities:
New borrowing 93,000 5,000
Repayment of debt (29,887) (974)
Employee stock plan transactions 38 293
-------- --------
Net cash provided by financing activities 63,151 4,319
Net cash provided (used) by business activities 3,923 (16,468)
Cash Flows From Asbestos Related Activities:
Receipts from insurers 5,360 18,702
Structured settlement program activity 472 (1,667)
Other asbestos-related cash transactions (5,080) (11,507)
Change in cash restricted for asbestos costs (2,399) 5,145
-------- --------
Net cash provided (used) by asbestos-related activities (1,647) 10,673
-------- --------
Net increase (decrease) in cash 2,276 (5,795)
Cash at beginning of period 5,322 16,011
-------- --------
Cash at end of period $ 7,598 $ 10,216
-------- --------
-------- --------
Cash Paid During the Period For:
Interest $ 1,913 $ 2,000
Income taxes 6,054 3,252
Non-Cash Items:
Increase in asbestos claims settlements 123,363 122,645
Payments made to asbestos claimants on Fibreboard's behalf 224,430 55,672
Increase in receivables from sales of surplus real estate 2,949 --
</TABLE>
6
<PAGE>
FIBREBOARD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts in Thousands)
(Unaudited)
1. The interim financial statements included herein have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although Fibreboard management
believes that the disclosures are adequate to make the information
presented not misleading. These interim financial statements and notes
should be read in conjunction with the financial statements and the notes
thereto included in Fibreboard's 1993 Annual Report and Form 10-K.
Interim financial statements are by necessity somewhat tentative.
Judgments are used to estimate the amounts recorded each quarter for items
that are normally determinable only on an annual basis. For example,
numerous items relating to employee benefits are determined annually, with
hours worked determining pension plan contribution for the year,
eligibility for vacations, etc. Further, all inventory quantities are
verified by physically counting the units on hand at least once a year.
For those inventories not counted at the end of the quarter, quantities
are determined using measured sales and production data for the period.
The interim period financial information included herein reflects all
adjustments of a normal and recurring nature which are, in the opinion of
Fibreboard management, necessary for a fair presentation of the results of
the respective interim periods. Results of operations for interim periods
are not necessarily indicative of results to be expected for an entire
year.
2. Net earnings per common and common equivalent share are calculated using
the weighted average number of common shares outstanding during the period
plus the net additional number of shares which would be issuable upon the
exercise of stock options, assuming Fibreboard used the proceeds received
to purchase additional shares at market value.
3. Effective January 1, 1993, Fibreboard adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). The
adoption of SFAS 109 had no effect on reported net income.
SFAS 109 utilizes the liability method and deferred taxes are determined
based on the estimated future tax effects of differences between the
financial statement and tax bases of assets and liabilities under the
provisions of the enacted tax laws. The effective income tax rate, which
is based on such estimates, is updated quarterly.
7
<PAGE>
4. Inventories are valued at the lower of cost (first in, first out) or
market. Inventory costs include material, labor and operating overhead.
Operating supplies are priced at average cost. Inventories are as
follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1994 1993
------------ -----------
<S> <C> <C>
Finished Goods $45,357 $21,833
Raw Materials 35,807 56,649
Supplies 1,014 1,676
------- -------
Total Inventories $82,178 $80,158
------- -------
------- -------
</TABLE>
5. Fibreboard's ability to continue to operate in the normal course of
business is dependent upon its ongoing capability to fund asbestos-related
defense and indemnity costs. Prior to 1972, Fibreboard manufactured
insulation products containing asbestos. Fibreboard has since been named
as a defendant in many thousands of personal injury claims for injuries
allegedly caused by asbestos exposure and in asbestos-in-buildings actions
involving many thousands of buildings.
The following tables illustrate asbestos-related claims activity for the
periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
PERSONAL INJURY 1994 1993
--------------- -------- --------
<S> <C> <C>
New claims received 1,800 34,000
Claims disposed
Settled 14,631 21,100
Dismissed 946 1,574
"Green Card" settlements (1) 107 275
Judgments (2) 3 27
Adjustments (3) -- 2,300
Average settlement amount per claim settled-
pre-1959 claims $ 8 $ 8
post-1959 claims 7 4
Claims pending at end of period 43,900 64,910
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
ASBESTOS-IN-BUILDINGS 1994 1993
--------------------- ---- ----
<S> <C> <C>
New actions received 1 --
Actions disposed
Dismissed 6 4
Settled -- 1
Joined National Schools class action -- 2
Actions pending at end of period 16 22
<FN>
1. Under Green Card Settlements, there is no determination of liability
by Fibreboard to a claimant. Instead, Fibreboard waives the statute
of limitations should a claimant develop an asbestos-related
impairment in the future.
2. Judgments represent defense verdicts in favor of Fibreboard, plaintiff
verdicts where the net amount payable by Fibreboard is zero after
applying prior settlement amounts or plaintiff verdicts where the
judgment has been paid. Additional judgments favoring plaintiffs have
been entered. Fibreboard is appealing these judgments. The amount of
such judgments is included in Fibreboard's overall liability estimate.
3. Often, multiple claims are filed for the same injury. It is often not
possible to fully identify duplicate claims until the claims are
prepared for trial. Fibreboard has an ongoing program to identify
duplicate claims and remove them from the claims database, and
anticipates additional future adjustments.
</TABLE>
- -----------------------------------------------------------------------------
During 1993, Fibreboard entered into a settlement agreement with
Continental Casualty Company (Continental) and Pacific Indemnity Company
(Pacific) (the Insurance Settlement). In addition, Fibreboard,
Continental, Pacific and plaintiffs' representatives entered into a
settlement agreement (the Global Settlement). These agreements are
interrelated. Final court approval of the agreements is required. The
United States District Court for the Eastern District of Texas on July 29,
1994 issued an order preliminarily approving the Global Settlement. The
Court provisionally certified separate classes for the Global Settlement
and Insurance Settlement. The Court also approved the immediate
commencement of a 90-day nationwide direct mail, radio, television and
print media campaign to provide notice to members of each class, which has
now been concluded. The Court is scheduled to begin a Global Settlement
final fairness hearing on December 12, 1994 and a hearing immediately
following completion of that hearing to consider final trial court
approval of the Insurance Settlement. Fibreboard believes trial court
approval of the settlements could occur in the first half of 1995, but if
appealed, it may be 1996 or later before final court approval could be
obtained.
If both the Global Settlement and Insurance Settlement are approved,
Fibreboard believes its existing and future personal injury asbestos
liabilities will be resolved through insurance resources and existing
corporate reserves. Fibreboard will contribute $10,000 toward a
$1,535,000 settlement trust, which it will obtain from other remaining
insurance sources and existing
9
<PAGE>
reserves. The remainder of the trust will be funded by Continental and
Pacific (at December 31, 1993, the insurers had placed $1,525,000 in an
escrow account pending court approval of the settlements). The trust
will be used to compensate "future" plaintiffs, defined as those plaintiffs
who had not filed a claim against Fibreboard before August 27, 1993.
Such future plaintiffs only source of compensation will be the trust, as
an injunction will be entered prohibiting future claims against Fibreboard
or the insurers.
If the Global Settlement is not approved, but the Insurance Settlement is
approved, the insurers will instead provide Fibreboard with up to
$2,000,000 to resolve pending and future claims and will pay the deferred
payment portion of existing settled claims.
While Fibreboard is optimistic, there is no assurance final court approval
of either the Global Settlement or the Insurance Settlement can be
obtained. If neither the Global Settlement nor the Insurance Settlement
is approved, the parties will be bound by the outcome of the insurance
coverage litigation, unless other settlements are reached.
All insurance proceeds due from other insurers under previous settlements
have been received with the exception of approximately $10,000 from Home
Insurance (Home). Fibreboard intends to draw these funds for a
substantial portion of its contribution to the Global Settlement if
approved.
Plant Insulation Company, a former distributor of Fibreboard asbestos-
containing products, has filed a complaint against Fibreboard for
declaratory relief in California Superior Court seeking a determination
that the Global Settlement does not affect its right to indemnity from
Fibreboard and challenging the jurisdiction of the federal district court
in Texas considering approval of the Global Settlement, the adequacy of
representation of the defendant class in that litigation and the fairness
of the Global Settlement. Plant has previously lost on several claims
involving a right to indemnity from Fibreboard in California courts. One
of these decisions was appealed by Plant and the California Court of
Appeal recently confirmed the trial court decision in Fibreboard's favor.
Fibreboard believes that Plant's claims lack merit and intends to
vigorously oppose them. Fibreboard, Continental, Pacific and plaintiff's
representatives have entered into an agreement assuring that Plant's
claims will not affect the likelihood nor timing of obtaining final court
approval of the Global Settlement. During the third quarter of 1994,
Fibreboard, Continental and Pacific also entered into an agreement with
Plant which has the effect of eliminating any objections by Plant to final
court approval of the Insurance Settlement.
In the event the settlements discussed above are not approved, Fibreboard
believes it has substantial insurance coverage for asbestos-related
defense and indemnity costs. Fibreboard's disputes with Continental and
Pacific have been the subject of litigation which began in 1979. Trial
court judgments rendered in 1990 give Fibreboard virtually unlimited
insurance coverage for asbestos-related personal injury claims where the
initial exposure to asbestos occurred prior to March 1959. Under the
judgments, these insurers can be required to pay up to $500 for each
occurrence (defined as each individual claim) with no limitation on the
aggregate number of occurrences.
The insurers appealed to the California Court of Appeal. Among other
issues, Continental disputed the definition of an occurrence under its
policy as well as the trigger and scope of coverage as determined by the
trial court, while Pacific argued that its policy contained an aggregate
limit as well as disputing the trigger and scope of coverage issues. In
November 1993, the Court of Appeal issued its ruling on the trigger and
scope of coverage issues, confirming the favorable trial court judgments,
except the court held the period for coverage would begin at the time of
exposure to Fibreboard's asbestos products rather than at the time of
exposure to any
10
<PAGE>
company's asbestos product, with the presumption that these periods are
the same. The insurers have filed petitions for review with the California
Supreme Court, which has granted review but not yet scheduled any further
activity. At the request of Fibreboard, Continental and Pacific, the Court
of Appeal withheld its ruling on the remaining issues while the parties
seek approval of the Global and Insurance Settlements. If the Global
and/or Insurance Settlements are ultimately approved, Fibreboard and
its insurers will seek to dismiss the insurance coverage litigation.
Fibreboard has entered into an interim agreement with Continental under
which Continental agreed to provide a full defense to Fibreboard on pre-
1959 claims and make certain funds available as needed to pay currently
due Structured Settlement Obligations and other personal injury defense
costs for which Fibreboard does not otherwise have insurance available
during the period pending final approval of the Global and/or Insurance
Settlement, or if neither is approved, through the ultimate conclusion of
the insurance coverage appeal, however long that may take. In exchange
for the benefits provided under this agreement, Fibreboard agreed not to
settle additional pre-1959 personal injury claims without Continental's
consent.
If neither the Global Settlement nor the Insurance Settlement are approved
and Fibreboard prevails in the appeal of the insurance coverage
litigation, Continental has agreed to provide Fibreboard with $315,000 to
$425,000 to resolve personal injury claims alleging first exposure to
asbestos after March 1959, less any amounts Fibreboard recovers from the
Pacific settlement described below. Continental would also continue to
have responsibility for all pre-1959 personal injury claims against
Fibreboard up to $500 per claim.
In March 1992, Fibreboard and Pacific entered into a settlement agreement
(the Pacific Agreement). If the Global Settlement or Insurance Settlement
is approved, the Pacific Agreement will be of no effect. If neither of
the settlements is approved, the Pacific Agreement establishes amounts
payable to Fibreboard if the trial court judgments are upheld. Fibreboard
received $10,000 upon signing the agreements and received an additional
$10,000 during 1993. In addition, if the judgments are affirmed on
appeal, Fibreboard will receive from $80,000 to $105,000 to be used for
claims costs for which it does not otherwise have insurance.
In the event the trigger and scope of coverage judgments are reversed on
appeal, Pacific will owe Fibreboard nothing and will have a right to
repayment of interim funds previously advanced.
Fibreboard believes amounts available under the settlements discussed
above will be adequate to fund defense and indemnity costs until the
insurance coverage appeal is concluded, whether as a result of the final
approval of the Global and/or Insurance Settlements or the final
resolution of the insurance coverage litigation.
Fibreboard is also litigating with its insurance carriers and believes the
total limits of insurance policies in effect from 1932 to 1985 which may
provide coverage for asbestos-in-buildings claims aggregate $420,000
(including the settlements discussed below), which is in addition to the
personal injury insurance coverage and does not include additional
policies which contain no aggregate limit. The insurers dispute coverage,
although to date substantially all of Fibreboard's costs of defending
asbestos-in-buildings claims have been paid by its primary carriers.
Fibreboard has reached final settlements with three of its primary
insurers and one of its excess level insurers. In addition, a settlement
subject to court approval has been reached with a fourth primary insurer.
The final settlements confirm more than $175,000 of insurance as needed to
defend and dispose of asbestos-in-buildings claims.
11
<PAGE>
The asbestos-in-buildings insurance coverage trial has been continued. No
date has been set for the trial to recommence. Fibreboard is continuing
settlement discussions with the remaining insurers. Fibreboard cannot
predict whether such discussions will result in settlements.
Fibreboard has entered into tentative settlement agreements in two of the
class action asbestos-in-buildings claims in which it is involved. The
total amount of these settlements was $1,750, which will be fully funded
from existing confirmed insurance resources. The settlements are subject
to certain court actions. Once these settlements are finalized, the
settlement statistics in the table above will be adjusted to reflect these
two settlements.
At the end of 1991, Fibreboard attempted to quantify its liability for
asbestos-related personal injury claims then pending and anticipated
through the end of the decade. There are many opportunities for error in
such an exercise. Assumptions concerning the number of claims to be
received, the disease mix of pending and future claims and projections of
defense and indemnity costs may or may not prove correct. Fibreboard's
assumptions are based on its historical experience, modified as
appropriate for anticipated demographic changes or changes in the
litigation environment.
Notwithstanding the inherent risk of significant error in such a
calculation, Fibreboard estimated the amount necessary to defend and
dispose of asbestos-related personal injury claims pending at December 31,
1991 and anticipated through the end of the decade plus the costs of
prosecuting its insurance coverage litigation, would aggregate $1,610,000.
Because of the dynamic nature of this litigation, it is more difficult to
estimate how many personal injury claims will be received after 1999 as
well as the costs of defending and disposing of those future claims.
Consequently, Fibreboard's estimated liability contains no amounts for
personal injury claims received after the end of the decade, although it
is likely additional claims will be received thereafter. In addition, the
projected liability does not include any liability for asbestos-in-
buildings claims, if any, as Fibreboard believes that any liability for
such claims is not subject to reasonable estimation.
Fibreboard believes it is probable that it will ultimately receive
insurance proceeds of $1,584,000 for the defense and disposition of the
claims quantified above. Fibreboard's opinion is based on its
understanding of the disputed issues, the financial strength of the
insurers and the opinion of outside legal counsel regarding the outcome of
the litigation. As a result, Fibreboard recorded a liability, net of
anticipated insurance proceeds, of $26,000 at December 31, 1991,
representing its best estimate of the unreimbursed cost of resolving
personal injury claims then pending and anticipated through the remainder
of the decade as well as the costs of prosecuting the insurance coverage
litigation. The balance of the net liability was $17,820 at September 30,
1994.
Although Fibreboard, its insurers and plaintiffs' representatives entered
into the Insurance and Global Settlements discussed above, Fibreboard does
not believe these settlements impact its estimate of liability through the
end of the decade, and no additional events have transpired which indicate
the potential liability and insurance proceeds estimates should be
changed. Consequently, no adjustment has been made to the estimated
liability for personal injury claims through the end of the decade or
anticipated insurance proceeds. Fibreboard will continue to reevaluate
its estimates and will make adjustments to the effect dictated by changes
in the personal injury litigation.
12
<PAGE>
6. Information about Fibreboard's industry segments is set forth below:
The building products segment includes the results of wood products and
Norandex (See Note 8 below).
<TABLE>
<CAPTION>
QUARTER NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------ ------------------
1994 1993 1994 1993
------- -------- -------- --------
<S> <C> <C> <C> <C>
Outside sales
Building products $65,404 $45,268 $157,435 $141,921
Industrial insulation products 12,310 11,303 39,275 36,511
Resort operations 2,679 2,565 29,591 20,619
------- ------- -------- --------
$80,393 $59,136 $226,301 $199,051
------- ------- -------- --------
------- ------- -------- --------
Segment profit
Building products $ 3,494 $ 2,142 $ 11,129 $ 15,404
Industrial insulation products 1,577 1,582 5,185 4,258
Resort operations (780) (425) 7,147 4,408
------- ------- -------- --------
Total operations 4,291 3,299 23,461 24,070
Unallocated expense (1,297) (1,465) (4,654) (6,496)
Interest expense (1,145) (979) (2,678) (2,495)
Interest and other income 20,165 1,157 21,957 3,527
------- ------- -------- --------
Income before income taxes $22,014 $ 2,012 $ 38,086 $ 18,606
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
7. On June 30, 1994, Fibreboard finalized a $100,000 three-year revolving
credit facility with seven banks. On September 30, 1994 the facility was
increased to $175,000 with the addition of another participating bank.
Borrowings under the facility are secured by timberlands, machinery and
equipment, inventories and receivables and carry interest at either prime
or at 0.75% to 1.00% above the Eurodollar rate. In October 1994,
Fibreboard entered into an agreement to fix the interest rate on $50,000
of borrowings under this agreement for the next twelve months at 7.4%.
Borrowings may be used for general corporate purposes as well as for
approved acquisitions. At September 30, 1994, $75,904 was available
under this facility.
8. On August 31, 1994, Fibreboard acquired the stock of Norandex, Inc., a
manufacturer and distributor of residential exterior building products,
for approximately $120,000 in cash. The acquisition, which was accounted
for as a purchase, resulted in approximately $63,800 of goodwill which
will be amortized over 30 years. Third quarter 1994 results include one
month of Norandex operating earnings. For September 1994, Norandex had
revenues of $23,718 and operating earnings of $2,862. The following
unaudited table presents the pro forma combined results of Fibreboard and
Norandex assuming the transaction took place at January 1, 1994 or 1993.
13
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30
-------------------
1994 1993
------- --------
<S> <C> <C>
Net Sales $370,291 $339,676
Income before cumulative
effect of change in
accounting principles 25,810 16,005
Net Income 25,810 17,555
Earnings per share:
Income before cumulative
effect of change in accounting
principles
Primary 5.75 3.62
Fully diluted 5.74 3.51
Net income
Primary 5.75 3.97
Fully diluted 5.74 3.85
</TABLE>
The proforma results include only adjustments necessary to 1) reflect the
allocation of the purchase price resulting in changes in depreciation and
amortization; 2) recognize the interest cost associated with the
purchase; and 3) recognize the income tax effects of these adjustments.
Because the proforma results include only the adjustments indicated above,
they should not be considered indicative of the results that would have
occurred if the combination had been in effect on the dates indicated or
which may be obtained in the future. No attempt has been made to quantify
in the profoma results additional costs which may be incurred as a result
of the combination, even though certain cost are expected to increase.
Furthermore, the proforma results include the effects of gains on assets
sales and restructuring costs which occured during the periods and
which may note reoccur.
9. On July 18, 1994, Fibreboard sold approximately 8,900 acres of timberland
which were not strategically located to serve its primary converting
facilities for a gain of $18,858. This gain is reflected in interest and
other income.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Quarter ended September 30, 1994 vs. 1993
Building Products--
Building products sales increased 44% compared to 1993. The increase
was due to the acquisition of Norandex Inc. on August 31, 1994, which
contributed sales of $23.7 million during the third quarter. The wood
products business experienced an 8% sales decline. While lumber sales
were essentially flat (slightly higher volume offset by somewhat lower
average sales prices), reductions were experienced in millwork (lower
shipment volume) and plywood (lower shipment volume and average sales
prices). In addition, sales during the third quarter of 1993 included
approximately $3.2 million of sales from the agricultural container
business which was sold early in the first quarter of 1994.
Building products operating profit increased from $2.1 million to $3.5
million, including $2.9 million for Norandex for the month of September
1994. The wood products business suffered a decline in operating profit
from $2.1 million to $0.6 million due principally to the higher cost of
logs consumed in the primary converting operations during 1994 and
plywood production curtailments in response to weak product demand.
Fibreboard anticipates its raw material costs will continue to be higher
for the remainder of 1994 than in 1993, but should improve during 1995
as discussed below.
Fibreboard believes it has sufficient log inventories and timber under
contract or available from its own lands to meet raw material needs
through 1995. Fibreboard is significantly reducing the level of outside
log purchases in 1994 when compared with 1993, which will have the
effect of lowering year end log inventories from the historically high
level at December 31, 1993. In addition, overall average log cost
should be lower during 1995 as a higher percentage of logs harvested
will be from company owned lands.
Providing an uninterrupted timber supply remains a top priority.
Fibreboard anticipates significant competition for available timber
supplies which could result in shortages and/or increased costs.
Fibreboard is presently studying a number of initiatives to more closely
align production capacity with available timber supply. Fibreboard
cannot predict with certainty which, if any, or when such initiatives
might be implemented. However, if implemented, Fibreboard does not
expect these initiatives would adversely impact profitability.
The Norandex operating results for the month of September should not
be considered indicative of anticipated results for a full year.
Norandex sales activity is seasonal, following construction and
remodeling activity in its market areas. Norandex's primary market
areas are the mid-west and eastern portions of the United States. In
September, construction and remodeling activity was at its seasonal
peak, and will decrease significantly during the winter months.
Industrial Insulation Products--
Industrial insulation products sales increased 9%. Improved sales of
metal products resulting from higher unit sales prices were partially
offset by reductions in the sales of calcium silicate molded insulation
and fireproofing board due to lower shipment volume. Operating
15
<PAGE>
profit was steady between years at $1.6 million. Improved metal products
operating profit resulting primarily from improved margins on metals
sales as unit sales prices increased relative to inventory costs, was
offset by lower margins on molded insulation and fireproofing board.
Resort Operations--
Resort operations revenues increased 4% to $2.7 million due to
slightly increased summer business at Northstar. The seasonal operating
loss increased slightly from $0.43 million to $0.78 million due to
slightly increased summer maintenance costs at Sierra and higher golf
course operating costs due to drought conditions.
General Corporate Expenses--
Unallocated costs decreased from $1.5 million to $1.3 million. The
decrease was due to lower incentive compensation expense in 1994 versus
1993 as expense associated with the vesting of performance based stock
options was recorded in 1993.
Other Items--
Interest expense increased from $1.0 million to $1.1 million on higher
average borrowings but at lower rates when compared with 1993. Interest
and other income increased from $1.2 million to $20.2 million primarily
due to the 1994 sale of non-essential timberlands resulting in a gain of
$18.9 million. The sale of surplus property resulted in pre-tax gains
of $0.7 million in both years.
Nine months ended September 30, 1994 vs 1993
Building Products--
Building products sales increased 11% compared to 1993 due to the
addition of Norandex discussed above. The wood products business
experienced a 6% sales decline due to lower plywood sales (lower
shipment volume) offset by higher lumber sales (increased volume and
flat average sales prices). In addition, sales during 1993 included
approximately $8.3 million of sales from the agricultural container
business which was sold early in the first quarter of 1994.
Building products operating profit decreased from $15.4 million to
$11.1 million. Norandex operating profit of $2.9 million for the month
of September was offset by lower wood products operating profits,
reflecting higher costs of raw materials consumed during the first nine
months of 1994 when compared with 1993 and reduced plywood manufacturing
volumes which increased production costs.
Industrial Insulation Products--
Industrial insulation products sales increased 8%. Improved sales of
metal products resulting from higher unit sales prices were offset by
reductions in the sales of calcium silicate molded insulation and
fireproofing board due to shipment volume reductions. Operating profit
increased from $4.3 million during 1993 to $5.2 million. Improved
operating profit resulted primarily from improved margins on metals
sales as unit sales prices increased relative to inventory costs. In
addition, $0.4 million was realized in 1994 from mineral lease income.
Resort Operations--
Resort operations revenues increased 44% to $29.6 million due to
increased skier days at Northstar-at-Tahoe and the addition of Sierra-
at-Tahoe, which was not included in the 1993 results. Operating profit
increased from $4.4 million to $7.1 million as a result of increased
skier days at Northstar, the addition of Sierra-at-Tahoe, aggressive
marketing programs and
16
<PAGE>
cost controls and a 1994 gain on the sale of real estate of $0.3 million,
offset by higher snowmaking costs in 1994.
General Corporate Expenses--
Unallocated costs decreased from $6.5 million to $4.7 million. The
decrease was due to general cost containment, the 1993 recognition of
compensation expense associated with the vesting of certain performance
based stock options and the 1994 resolution of a contingent liability
related to post-retirement benefits which resulted in a gain of $1.0
million.
Other Items--
Interest expense increased from $2.5 million to $2.7 million.
Interest and other income increased from $3.5 million to $22.0 million
resulting from a third quarter 1994 gain on the sale of non-essential
timberlands of $18.9 million. Additionally, the sale of surplus
property resulted in pre-tax gains of $1.6 million in 1994 versus
$2.1 million in 1993.
At its annual meeting in June 1994, Fibreboard described its
acquisition program, the goal of which is to acquire businesses with a
combined value of $100 million to $200 million capable of generating an
incremental $1.00 to $2.00 of annual earnings per share. If such
businesses can be acquired and assimilated, Fibreboard believes it can
shortly thereafter generate consolidated earnings per share of between
$3.50 and $5.00. Fibreboard believes that the acquisition of Norandex
is a significant step toward achieving the goals of the acquisition
program.
FINANCIAL CONDITION
Cash generated from operations was $37.0 million in 1994 compared to a
use of $4.0 million in 1993. During 1993, log inventories were
increased dramatically whereas during 1994 the net investment in working
capital has been substantially reduced. Notes payable to banks
decreased from $17.7 million at December 31, 1993 to zero at September
30, 1994. The reduction in outstanding notes payable was achieved
through the use of cash flow generated in the first nine months. In
addition, cash flow from resort operations was used to reduce their
reducing revolving credit facility from $10.0 million at December 31,
1993 to $5.4 million at September 30, 1994. At September 30, 1994, $7.3
million was available for borrowing under credit facilities supporting
the resort operations.
In September 1994, Fibreboard increased its three-year revolving
credit facility from $100 million to $175 million. Borrowings under
the facility carry interest at either prime or at 0.75% to 1.00% above
the Eurodollar rate. Proceeds under this facility may be used for
general corporate purposes as well as for approved acquisitions. The
facility is secured by Fibreboard's timberlands, machinery and
equipment, receivables and inventories. At September 30, 1994, $75.9
million was available under this facility. In October 1994, Fiberboard
entered unto an agreement to fix the inteerest rate on $50 million of
outstanding borrowings at 7.4%.
In July 1994, Fibreboard sold approximately 8,900 acres of timberland
which were not strategically located to serve its primary converting
facilities for $21.5 million in cash, resulting in a pre-tax gain of
$18.9 million.
As discussed above, on August 31, 1994, Fibreboard completed its
purchase of the stock of Norandex Inc. from Noranda Aluminum, Inc. The
purchase price paid at closing was $115 million and is subject to
adjustment based upon the financial condition of Norandex at closing.
17
<PAGE>
Fibreboard estimates the purchase price will increase by approximately
$5.0 million, which has been recorded in accounts payable and accrued
liabilities at September 30, 1994. The purchase was funded with cash on
hand and borrowings under Fibreboard's revolving credit facility.
Fibreboard anticipates primarily discretionary capital expenditures of
approximately $9.0 million during 1994, primarily for replacements and
improvements of machinery and equipment and additional ski area
amenities. Through September 30, 1994, approximately $6 million has
been expended on these projects with the remaining expenditures
anticipated during the fourth quarter of 1994. In addition, Fibreboard
expects to spend $1.2 million in the first quarter of 1995 to expand the
production capacity of the Norandex vinyl siding manufacturing plant by
22%.
In addition to cash needs related to continuing operations, Fibreboard
must fund its on-going asbestos-related costs. To date, substantially
all such costs, other than the cost of litigating insurance coverage
issues, have been funded from insurance resources. At September 30,
1994, Fibreboard had $3.2 million in cash on hand restricted for
asbestos-related costs.
Fibreboard and Continental Casualty have entered into an interim
agreement under which Continental agreed to make certain funds available
for defense and indemnity costs associated with asbestos-related
personal injury claims during the period pending final approval of the
Global and/or Insurance Settlements (which are more fully discussed in
Fibreboard's Annual Report on Form 10-K for the year ended December 31,
1993), or if neither are approved, through the final conclusion of the
insurance coverage litigation, however long that may take. Fibreboard
believes the amounts to be paid by Continental under this interim
agreement, together with amounts available under prior settlements with
asbestos-in-buildings insurers and established reserves, will be
adequate to satisfy its asbestos-related cash requirements as they come
due.
Additional information regarding the asbestos-related litigation can
be found in note 5 to the consolidated financial statements beginning on
page 8.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
During the quarter ended September 30, 1994, there were no material
developments in those proceedings disclosed in Fibreboard's quarterly
report on Form 10-Q for the quarter ended March 31, 1994. Material
developments in the asbestos-related litigation are described in Note 5
to the consolidated financial statements beginning on page 8.
ITEM 5. OTHER EVENTS.
In October 1994, CRP 3800 Inc., the company formed by Carl Pohlad and
affiliates for purposes of acquiring Fibreboard, was liquidated and the
shares it held in Fibreboard were distributed to its shareholders. CRP
3800's amended Schedule 13-d filing with the Securities and Exchange
Commission states that such shareholders are holding Fibreboard shares
for investment purposes only.
18
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed as part of this Form 10-Q:
EXHIBIT NO. DESCRIPTION
----------- -----------
10.1 Amended and Restated Credit Agreement Dated September 29,
1994 among Fibreboard Corporation, as Borrower, Certain
Commercial Lending Institutions and Bank of America
National Trust and Savings Association, as Administrative
Co-Agent and Collateral Co-Agent
27 Financial Data Schedule
99.1 Fiberboard Press release dated September 30, 1994
(b) The following Current Report on Form 8-K was filed during the
period July 1, 1994 to September 30, 1994:
DATE EVENT REPORTED
--------------- --------------
August 31, 1994 Purchase of Norandex Inc. by Fibreboard Corporation
Amendment No. 1 to the above referenced Current Report was filed on
Form 8-K/A on November 14, 1994. Such amendment contained the
audited financial statements of Norandex Inc. for the three years
ended December 31, 1993, interim financial information as of August
31, 1994 and for the eight months then ended and pro forma combined
financial information for Fibreboard Corporation and Norandex Inc.
19
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
FIBREBOARD CORPORATION
----------------------
(Registrant)
Dated: November 14, 1994 By: /s/ James P. Donohue
----------------------------
James P. Donohue
Senior Vice President,
Finance and Administration and
Chief Financial Officer
Dated: November 14, 1994 By: /s/ Garold E. Swan
-----------------------------
Garold E. Swan
Vice President and Controller
20
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
U.S. $175,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT,
dated as of September 29, 1994,
among
FIBREBOARD CORPORATION,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as the Administrative Co-Agent and the
Collateral Co-Agent for the Lenders.
<PAGE>
|| TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . .26
1.3 Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . .26
1.4 Accounting and Financial Determinations. . . . . . . . . . . . . . .26
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1 Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
2.1.1 Loan Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . .28
2.1.2 Commitment to Issue Letters of Credit. . . . . . . . . . . . . . . .28
2.1.3 Lenders Not Permitted or Required To Make Loans or
Issue or Participate in Letters of Credit Under
Certain Circumstances. . . . . . . . . . . . . . . . . . . . . . .28
2.1.4 Extension of Commitment Termination Date and Stated
Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . .29
2.2 Mandatory and Optional Reductions of Commitment
Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
2.2.1 Mandatory Reductions . . . . . . . . . . . . . . . . . . . . . . . .29
2.2.2 Optional Reductions. . . . . . . . . . . . . . . . . . . . . . . . .30
2.3 Borrowing Procedure. . . . . . . . . . . . . . . . . . . . . . . . .30
2.4 Continuation and Conversion Elections. . . . . . . . . . . . . . . .30
2.5 Funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
2.6 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1 Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . .31
3.2 Interest Provisions. . . . . . . . . . . . . . . . . . . . . . . . .32
3.2.1 Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
3.2.2 Post-Default Rate. . . . . . . . . . . . . . . . . . . . . . . . . .35
3.2.3 Payment Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . .35
3.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
3.3.1 Commitment Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .36
3.3.2 Participation Fees . . . . . . . . . . . . . . . . . . . . . . . . .37
3.3.3 Co-Agents' Arrangement Fee . . . . . . . . . . . . . . . . . . . . .37
3.3.4 Co-Agents' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . .37
3.3.5 Letter of Credit Face Amount Fee . . . . . . . . . . . . . . . . . .37
3.3.6 Letter of Credit Issuing Fee . . . . . . . . . . . . . . . . . . . .38
<PAGE>
ARTICLE IV
LETTERS OF CREDIT
4.1 Issuance Requests. . . . . . . . . . . . . . . . . . . . . . . . . .38
4.2 Issuances and Extensions . . . . . . . . . . . . . . . . . . . . . .39
4.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
4.4 Other Lenders' Participation . . . . . . . . . . . . . . . . . . . .41
4.5 Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
4.6 Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
4.7 Deemed Disbursements . . . . . . . . . . . . . . . . . . . . . . . .43
4.8 Nature of Reimbursement Obligations. . . . . . . . . . . . . . . . .44
4.9 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
4.10 Conflicts With Letter of Credit Related Documents. . . . . . . . . .45
ARTICLE V
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
5.1 Eurodollar Rate Lending Unlawful . . . . . . . . . . . . . . . . . .45
5.2 Deposits Unavailable . . . . . . . . . . . . . . . . . . . . . . . .45
5.3 Increased Eurodollar Loan Costs, etc.. . . . . . . . . . . . . . . .46
5.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . .46
5.5 Increased Capital Costs. . . . . . . . . . . . . . . . . . . . . . .47
5.6 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
5.7 Payments, Computations, etc. . . . . . . . . . . . . . . . . . . . .48
5.8 Sharing of Payments. . . . . . . . . . . . . . . . . . . . . . . . .49
5.9 Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
5.10 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . .50
5.11 Other Increased Costs. . . . . . . . . . . . . . . . . . . . . . . .51
5.12 Obligation to Mitigate; Substitution of Lenders. . . . . . . . . . .52
5.13 Certain Restatement Effective Date Transitional
Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Restatement Effective Date . . . . . . . . . . . . . .54
6.1.1 Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
6.1.2 Resolutions, etc.. . . . . . . . . . . . . . . . . . . . . . . . . .54
6.1.3 Delivery of Notes. . . . . . . . . . . . . . . . . . . . . . . . . .54
6.1.4 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
6.1.5 Deed of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . .54
6.1.6 Security Agreements. . . . . . . . . . . . . . . . . . . . . . . . .55
6.1.7 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . . .56
6.1.8 Solvency, Valuation, Etc . . . . . . . . . . . . . . . . . . . . . .56
6.1.9 Insurance Certificates . . . . . . . . . . . . . . . . . . . . . . .57
6.1.10 Payment of Certain Indebtedness. . . . . . . . . . . . . . . . . . .57
6.1.11 Purchase of Loans, Closing Fees, Expenses, etc.. . . . . . . . . . .57
6.2 Conditions to All Credit Extensions. . . . . . . . . . . . . . . . .57
6.2.1 Compliance with Warranties, No Default, etc. . . . . . . . . . . . .57
6.2.2 Credit Request . . . . . . . . . . . . . . . . . . . . . . . . . . .58
6.2.3 Satisfactory Legal Form. . . . . . . . . . . . . . . . . . . . . . .59
-ii-
<PAGE>
6.3 Notice of Restatement Effective Date . . . . . . . . . . . . . . . .59
6.4 Failure to Reach Restatement Effective Date. . . . . . . . . . . . .59
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . .59
7.2 Due Authorization, Non-Contravention, etc. . . . . . . . . . . . . .59
7.3 Government Approval, Regulation, etc.. . . . . . . . . . . . . . . .60
7.4 Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . .60
7.5 Financial Information. . . . . . . . . . . . . . . . . . . . . . . .60
7.6 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . .61
7.7 Litigation, Labor Controversies, etc . . . . . . . . . . . . . . . .61
7.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
7.9 Ownership of Properties. . . . . . . . . . . . . . . . . . . . . . .61
7.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
7.11 Pension and Welfare Plans. . . . . . . . . . . . . . . . . . . . . .62
7.12 Environmental Warranties . . . . . . . . . . . . . . . . . . . . . .62
7.13 Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . .63
7.14 Accuracy of Information. . . . . . . . . . . . . . . . . . . . . . .64
7.15 Compliance of Laws . . . . . . . . . . . . . . . . . . . . . . . . .64
7.16 Absence of Default . . . . . . . . . . . . . . . . . . . . . . . . .64
7.17 Certain Representations and Warranties Concerning
Timberland . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
7.17.1 Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
7.17.2 Acres and Volume . . . . . . . . . . . . . . . . . . . . . . . . . .64
7.17.3 Description of the Land. . . . . . . . . . . . . . . . . . . . . . .64
7.18 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . .65
7.19 Settlement Agreements. . . . . . . . . . . . . . . . . . . . . . . .65
7.20 Subsidiaries and Obligors. . . . . . . . . . . . . . . . . . . . . .65
ARTICLE VIII
COVENANTS
8.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . .66
8.1.1 Financial Information, Reports, Notices, etc.. . . . . . . . . . . .66
8.1.2 Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . .68
8.1.3 Maintenance of Properties and Existing Lines of
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
8.1.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
8.1.5 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . .69
8.1.6 Environmental Covenant . . . . . . . . . . . . . . . . . . . . . . .69
8.1.7 New Significant Subsidiaries . . . . . . . . . . . . . . . . . . . .70
8.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . .71
8.2.1 Business Activities. . . . . . . . . . . . . . . . . . . . . . . . .71
8.2.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
8.2.3 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72
8.2.4 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . .75
8.2.5 Approved Acquisitions and other Investments. . . . . . . . . . . . .76
8.2.6 Restricted Payments, etc.. . . . . . . . . . . . . . . . . . . . . .77
8.2.7 Consolidation, Merger, etc.. . . . . . . . . . . . . . . . . . . . .78
-iii-
<PAGE>
8.2.8 Asset Dispositions, etc. . . . . . . . . . . . . . . . . . . . . . .79
8.2.9 Modification of Certain Agreements . . . . . . . . . . . . . . . . .80
8.2.10 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . .81
8.2.11 Negative Pledges, Restrictive Agreements, etc. . . . . . . . . . . .82
8.2.12 Fiscal Year of Borrower. . . . . . . . . . . . . . . . . . . . . . .82
ARTICLE IX
EVENTS OF DEFAULT
9.1 Listing of Events of Default . . . . . . . . . . . . . . . . . . . .82
9.1.1 Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . .82
9.1.2 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . .83
9.1.3 Non-Performance of Certain Covenants and
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . .83
9.1.4 Non-Performance of Other Covenants and Obligations . . . . . . . . .83
9.1.5 Default on Other Indebtedness or Settlement
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . .83
9.1.6 Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84
9.1.7 Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . .84
9.1.8 Control of the Borrower. . . . . . . . . . . . . . . . . . . . . . .85
9.1.9 Bankruptcy, Insolvency, etc. . . . . . . . . . . . . . . . . . . . .85
9.1.10 Impairment of Security, etc. . . . . . . . . . . . . . . . . . . . .86
9.1.11 Asbestos Litigation Payments . . . . . . . . . . . . . . . . . . . .86
9.1.12 Asbestos Qualification . . . . . . . . . . . . . . . . . . . . . . .86
9.2 Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . .86
9.3 Action if Other Event of Default . . . . . . . . . . . . . . . . . .87
ARTICLE X
THE ADMINISTRATIVE AGENT
AND THE COLLATERAL AGENT
10.1 Appointment and Authorization. . . . . . . . . . . . . . . . . . . .87
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . .87
10.3 Liability of Co-Agents and Issuers . . . . . . . . . . . . . . . . .88
10.4 Reliance by Co-Agents. . . . . . . . . . . . . . . . . . . . . . . .88
10.5 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . .89
10.6 Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . . .89
10.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .90
10.8 Co-Agent in Individual Capacity. . . . . . . . . . . . . . . . . . .91
10.9 Successor Co-Agents. . . . . . . . . . . . . . . . . . . . . . . . .91
10.10 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . .92
10.11 Funding Reliance, etc. . . . . . . . . . . . . . . . . . . . . . . .95
10.12 Copies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . .95
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Waivers, Amendments, etc.. . . . . . . . . . . . . . . . . . . . . .95
11.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
11.3 Payment of Costs and Expenses. . . . . . . . . . . . . . . . . . . .97
11.4 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .98
-iv-
<PAGE>
11.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
11.8 Execution in Counterparts, Effectiveness, etc. . . . . . . . . . . 100
11.9 Governing Law; Entire Agreement. . . . . . . . . . . . . . . . . . 100
11.10 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 100
11.11 Sale and Transfer of Loans and Notes; Participations
in Loans and Notes. . . . . . . . . . . . . . . . . . . . . . . . 101
11.11.1 Assignments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
11.11.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . 102
11.12 Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . 103
11.13 Forum Selection and Consent to Jurisdiction. . . . . . . . . . . . 103
11.14 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . 104
11.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . 104
-v-
<PAGE>
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Bank Percentages
EXHIBIT A - Form of Amended and Restated Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Lender Assignment Agreement
EXHIBIT E - Form of Opinion of Borrower's Counsel
EXHIBIT F - Form of Opinion of Administrative Agent's Counsel
EXHIBIT G - Form of Solvency Certificate
EXHIBIT H - Insurance Certificates
EXHIBIT I - Form of Deed of Trust
EXHIBIT I-2 - Form of Modification of Deed of Trust
EXHIBIT J - Form of Guaranty
EXHIBIT K - List of Settlement Agreements
EXHIBIT L - Borrower's Cash Management Policy
EXHIBIT M - Form of Security Agreement
EXHIBIT N - Form of Subsidiary Security Agreement
||
-vi-
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 29, 1994,
is among FIBREBOARD CORPORATION, a Delaware corporation (the "BORROWER"), the
various financial institutions which are or may become parties hereto
(collectively, the "LENDERS"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as administrative co-agent for such Lenders (the "ADMINISTRATIVE
AGENT"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
collateral co-agent for such Lenders (the "COLLATERAL AGENT"; each of the
Administrative Agent and the Collateral Agent sometimes hereinafter referred to
individually as a "CO-AGENT" and together as "CO-AGENTS").
R E C I T A L S:
A. The Borrower has entered into a Credit Agreement, dated as of June 30,
1994, with Bank of America Illinois (formerly known as Continental Bank), as
Administrative Agent, Bank of America National Trust and Savings Association, as
Collateral Agent and certain of the Lenders (the "ORIGINAL CREDIT AGREEMENT").
B. The Borrower is engaged directly and through its various Subsidiaries
in the Existing Lines of Business (as defined herein).
C. The Borrower and/or its Subsidiaries may from time to time make
Approved Acquisitions (as defined herein).
D. Under the Original Credit Agreement, the Borrower has obtained
commitments from the Lenders which are parties thereto pursuant to which
(a) Loans will be made to the Borrower from time to time prior to the
Commitment Termination Date; and
(b) Letters of Credit will be issued by an Issuer for the account of
the Borrower and under the several responsibilities of the Lenders from
time to time prior to the Commitment Termination Date.
E. The Borrower has requested the Co-Agents and the Lenders to amend and
restate the Original Credit Agreement so as to (1) add Sanwa Bank California and
The Bank of Nova Scotia as Lenders thereunder, (2) increase the aggregate
principal amount of the Commitments of all Lenders from $100,000,000 to
$175,000,000, and (3) accept the resignation of Bank of America Illinois as
Administrative Agent under the Original Credit Agreement and appoint BofA as
Administrative Agent hereunder.
<PAGE>
F. The Lenders (including those Lenders who are not parties to the
Original Credit Agreement) are willing, on the terms and subject to the
conditions hereinafter set forth (including ARTICLE VI), to so amend and restate
the Original Credit Agreement.
G. Pursuant to an Assignment and Assumption Agreement dated as of
September 29, 1994 between Bank of America Illinois and Bank of America National
Trust and Savings Association to be effective on or before the date hereof, Bank
of America Illinois (formerly known as Continental Bank) has assigned and
delegated and BofA has assumed, all the rights and obligations of Bank of
America Illinois (including, without limitation, its Commitment Loans, and
participations in any Letter of Credit) in its capacities as Lender,
Administrative Co-Agent and Issuer under the Original Credit Agreement.
H. The proceeds of Loans and Letters of Credit have been and will be used
to finance Approved Acquisitions (as defined herein) and for general corporate
purposes of the Borrower other than Restricted Payments.
NOW, THEREFORE, the parties hereto agree that, effective on the Restatement
Effective Date (as hereinafter defined), the Original Credit Agreement shall be
and hereby is amended and restated in its entirety to read as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 DEFINITIONS.
(a) GENERAL DEFINITIONS. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof):
"ACQUISITION" means one or more of a series of related transactions in
which the Borrower or any of its Subsidiaries (a) acquires any material
portion of the assets, liabilities, capital stock and/or other ownership
interest or any material portion of the assets of any division or any business
group thereof of any Person that is not an Affiliate of the Borrower or any of
its Subsidiaries or (b) purchases any in-place facilities (not including the
purchase of equipment in the ordinary course of business), excepting from
CLAUSES (a) and (b), (x) any acquisitions of timberland for an aggregate
purchase price not to exceed $10,000,000 in any Fiscal Year and (y) any
acquisitions of stock or assets, or purchases of any in-place facilities, for an
-2-
<PAGE>
aggregate purchase price not to exceed $5,000,000 in any Fiscal Year.
"ACQUIRED NET OPERATING CASH FLOW" means, with respect to any Approved
Acquisition for any period, (i) the net income, PLUS (ii) the interest expense,
PLUS (iii) all United States Federal, state, local and foreign income tax, PLUS
(iv) any extraordinary losses, MINUS (v) any extraordinary gains, PLUS, (vi) all
depletion, depreciation and amortization expense for such period, as each of the
items specified in CLAUSES (i) through (vi) are reasonably allocable to the
assets, capital stock, division or business group acquired in such Approved
Acquisition.
"ADMINISTRATIVE AGENT" is defined in the PREAMBLE and includes each other
Person which shall have subsequently been appointed as the successor
Administrative Agent pursuant to SECTION 10.9.
"AFFECTED LENDER" is defined in CLAUSE (b) of SECTION 5.12.
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"AGREEMENT" means, on any date, this Amended and Restated Credit Agreement
as originally in effect on the Restatement Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or otherwise modified
and in effect on such date.
"ALTERNATE BASE RATE" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently established by the
Administrative Agent at its Domestic Office as its reference rate; and
(b) the Federal Funds Rate most recently determined by the
Administrative Agent PLUS 0.50%.
-3-
<PAGE>
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Administrative Agent in connection with extensions of
credit. Changes in the rate of interest on that portion of any Loans maintained
as Base Rate Loans will take effect simultaneously with each change in the
Alternate Base Rate. The Administrative Agent will give notice promptly to the
Borrower and the Lenders of changes in the Alternate Base Rate.
"APPLICABLE LAW" means, with respect to any Person or matter, any law,
rule, regulation, order, decree or other requirement having the force of law
relating to such Person or matter and, where applicable, any interpretation
thereof by any Person having jurisdiction with respect thereto or charged with
the administration or interpretation thereof.
"APPLICABLE MARGIN" is defined in CLAUSE (c) of SECTION 3.2.1.
"APPROVED ACQUISITION" means any Acquisition
(i) which is not contested at any time by the majority of the
existing directors of the acquired entity or the Person from whom the
Acquisition is to be made;
(ii) with respect to which all or substantially all of the acquired
properties are used in the operations or expansion of an Existing Line of
Business or a substantially similar line of business;
(iii) after giving effect to which, including any Indebtedness
incurred or assumed by the Borrower and its Subsidiaries in connection
therewith, the Borrower and its Subsidiaries would be in compliance with
the provisions of SECTION 8.2.4 calculated as if such Acquisition had
occurred on the last day of the immediately preceding Fiscal Quarter; and
(iv) which, if such Acquisition is to be financed with Credit
Extensions in an aggregate amount in excess of $25,000,000, has been
approved in writing by the Majority Lenders.
"ASBESTOS LITIGATION" means any litigation, suit, action, arbitration or
proceeding instituted or made against the Borrower or any of its Subsidiaries,
or between the Borrower or any of its Subsidiaries and any insurer, or including
the Borrower or any of its Subsidiaries and involving any insurance policy of
the Borrower or any of its Subsidiaries, in each case, arising from or related
to any liability, claim, judgment, order or decree related to asbestos,
including, without limitation, any Personal Injury Asbestos Claim and any
Asbestos Building Material Claim.
-4-
<PAGE>
"ASBESTOS QUALIFICATION" means, relative to the opinion or certification of
any independent public accountant delivering such opinion or certification
pursuant to CLAUSE (b) of SECTION 8.1.1 as to any financial statement of the
Borrower, any qualification or exception to such opinion or certification for
any liability or potential liability of the Borrower relating to asbestos or
Asbestos Litigation.
"ASSIGNEE LENDER" is defined in SECTION 11.11.1.
"AUTHORIZED OFFICER" means, relative to any Obligor, those of its officers
or other designees whose signatures and incumbency shall have been certified to
the Administrative Agent and the Lenders pursuant to SECTION 6.1.2. Any
reference herein to a "senior Authorized Officer" shall be deemed to include a
chief financial officer or chief accounting officer.
"BOFA" means Bank of America National Trust and Savings Association, a
national banking association.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"BORROWER" is defined in the PREAMBLE.
"BORROWING" means the Loans of the same type and, in the case of Eurodollar
Loans, having the same Interest Period made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with SECTION 2.1.
"BORROWING REQUEST" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of EXHIBIT B
hereto.
"BUSINESS DAY" means
(a) any day which is neither a Saturday or Sunday nor a legal holiday
on which banks are authorized or required to be closed in San Francisco,
California; and
(b) relative to the making, continuing, prepaying or repaying of any
Eurodollar Loans, any day on which dealings in Dollars are carried on in
the eurodollar interbank market of the Administrative Agent's Eurodollar
Office.
"CAPITAL EXPENDITURES" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the Borrower and its
Subsidiaries for fixed or capital assets (other than Approved Acquisitions)
made during such period
-5-
<PAGE>
which, in accordance with GAAP, would be classified as capital
expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"CASH EQUIVALENT INVESTMENT" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after such time, issued or guaranteed by the United States Government;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of any Obligor)
organized under the laws of any state of the United States or of the
District of Columbia and rated at least A-l by Standard & Poor's
Ratings Group or P-l by Moody's Investors Service, Inc., or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by either
(i) a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than $500,000,000, or
(ii) any Lender; or
(d) any repurchase agreement entered into with any Lender (or other
commercial banking institution of the stature referred to in CLAUSE (c)(i))
which
(i) is secured by a fully perfected security interest in any
obligation of the type described in any of CLAUSES (a) through (c);
and
-6-
<PAGE>
(ii) has a market value at the time such repurchase agreement is
entered into of not less than 100% of the repurchase obligation of
such Lender (or other commercial banking institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"CHANGE OF CONTROL" means the occurrence of either (a) any Person or any
Persons acting together that would constitute a "group" (for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended, or any successor
provision thereto) (a "Group"), together with any Affiliates thereof, shall
beneficially own (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended, or any successor provision thereto) at least 15% of the
outstanding shares of voting stock of the Borrower; or (b) any Person, or Group,
together with any Affiliates thereof, shall succeed in having sufficient of its
nominees elected to the Board of Directors of the Borrower such that such
nominees, when added to any existing director remaining on the Board of
Directors of Borrower after such election who is an Affiliate of such Group,
will constitute a majority of the Board of Directors of the Borrower.
"CO-AGENT" and "CO-AGENTS" are defined in the PREAMBLE.
"CO-AGENT/RELATED PERSONS" means each Co-Agent in its capacity as such and
any successor agent arising under SECTION 10.9, together with their respective
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" means all property and interests in property and proceeds
thereof now owned or hereafter acquired by the Borrower and its Subsidiaries in
or upon which a Lien now or hereafter exists in favor of the Lenders, or the
Collateral Agent on behalf of the Lenders, whether under this Agreement or under
any other documents executed by any such Persons pursuant to or in connection
with the transactions contemplated hereby and delivered to the Collateral Agent
or the Lenders.
"COLLATERAL AGENT" is defined in the PREAMBLE and includes each other
Person which shall have subsequently been appointed as the successor Collateral
Agent pursuant to SECTION 10.9.
-7-
<PAGE>
"COLLATERAL DOCUMENTS" means, collectively, (i) the Deed of Trust, the
Modification to Deed of Trust, the Security Agreement, the Subsidiary Security
Agreements, and all other security agreements, mortgages, deeds of trust, patent
and trademark assignments, lease assignments, guarantees and other similar
agreements between the Borrower or any of its Subsidiaries and any of the
Lenders or the Collateral Agent for the benefit of the Lenders now or hereafter
delivered to any of the Lenders or the Collateral Agent pursuant to or in
connection with the transactions contemplated hereby, and all financing
statements (or comparable documents) now or hereafter filed in accordance with
the UCC (or comparable law) against the Borrower or any of its Subsidiaries as a
debtor in favor of the Lenders or the Collateral Agent for the benefit of the
Lenders as secured party and (ii) any amendments, supplements, modifications,
renewals, replacements, consolidations substitutions and extensions of any of
the foregoing.
"COLLATERAL RELEASE DATE" means the date upon which the Collateral Agent
releases the Collateral pursuant to CLAUSE (c) of SECTION 10.10.
"COMMITMENT" means, relative to any Lender, such Lender's obligation to
make Loans pursuant to SECTION 2.1.1 and to issue (in the case of an Issuer) or
participate in (in the case of all Lenders) Letters of Credit pursuant to
SECTION 2.1.2.
"COMMITMENT AMOUNT" means, on any date, $175,000,000, as such amount may be
reduced from time to time pursuant to SECTION 2.2.
"COMMITMENT AVAILABILITY" means, on any date, the excess of
(a) the Commitment Amount,
OVER
(b) the sum of
(i) the outstanding principal amount of all Loans on such date,
PLUS
(ii) the Letter of Credit Outstandings on such date.
"COMMITMENT TERMINATION DATE" means the earliest of
(a) September 30, 1997, as such date may be extended pursuant to
SECTION 2.1.4;
-8-
<PAGE>
(b) the date on which the Commitment Amount is terminated in full or
reduced to zero pursuant to SECTION 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in CLAUSE (a), (b) or (c), the
Commitments shall terminate automatically and without any further action.
"COMMITMENT TERMINATION EVENT" means
(a) the occurrence of any Default described in CLAUSES (a) through
(d) of SECTION 9.1.9 with respect to the Borrower or any of its
Subsidiaries; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans to be due and payable pursuant
to SECTION 9.3, or
(ii) in the absence of such declaration, the giving of notice by
the Administrative Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments to make Loans and issue
Letters of Credit have been terminated.
"COMPLIANCE CERTIFICATE" is defined in CLAUSE (c) of SECTION 8.1.1.
"CONSOLIDATED EBIT" means, for any period, the sum of
(a) Consolidated Net Income for such period; PLUS
(b) Consolidated Interest Expense for such period; PLUS
(c) all United States federal, state, local and foreign income taxes
of the Borrower and its Subsidiaries for such period deducted in arriving
at Consolidated Net Income for such period; PLUS
(d) extraordinary losses of the Borrower and its Subsidiaries for
such period; MINUS
(e) extraordinary gains of the Borrower and its Subsidiaries for such
period; MINUS
(f) without duplication with any of the foregoing, any Settlement
Gains for such period.
-9-
<PAGE>
"CONSOLIDATED EBITDA" means, for any period, the sum of
(a) Consolidated EBIT for such period; PLUS
(b) all depletion, depreciation and amortization expense for such
period, determined on a consolidated basis for the Borrower and its
Subsidiaries for such period.
"CONSOLIDATED FUNDED DEBT" means all Funded Debt of the Borrower and its
Subsidiaries (other than (a) the Gaylord Debt and (b) Funded Debt related to or
resulting from Asbestos Litigation, including, without limitation, Debt under
any Settlement Agreement).
"CONSOLIDATED FUNDED DEBT TO CAPITALIZATION RATIO" means, on any date, the
ratio of
(a) Consolidated Funded Debt on such date
TO
(b) Total Capitalization on such date.
"CONSOLIDATED FUNDED DEBT TO CASH FLOW RATIO" means, on the last day of any
Fiscal Quarter, the ratio of
(a) Consolidated Funded Debt on such date
TO
(b) (i) Consolidated Net Operating Cash Flow for the four
consecutive Fiscal Quarters ending on such date PLUS
(ii) with respect to each Approved Acquisition made during the
four consecutive Fiscal Quarters immediately preceding the last day of such
Fiscal Quarter, the aggregate amount of Acquired Net Operating Cash Flow
for the period beginning four Fiscal Quarters before the last day of such
Fiscal Quarter and ending on the date each such Approved Acquisition was
made.
"CONSOLIDATED INTEREST COVERAGE RATIO" means, for any period, the ratio of
(a) Consolidated EBIT for such period
TO
(b) Consolidated Interest Expense for such period.
-10-
<PAGE>
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the aggregate
interest expense of the Borrower and its Subsidiaries for such period determined
in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, all amounts which, in
conformity with GAAP, would be included under net income on a consolidated
income statement of the Borrower and its Subsidiaries for such period.
"CONSOLIDATED NET OPERATING CASH FLOW" means, for any period, the excess,
if any, of
(a) Consolidated EBITDA for such period
OVER
(b) Capital Expenditures for such period.
"CONSOLIDATED NET WORTH" means, on any date, the consolidated net worth of
the Borrower and its Subsidiaries on such date, as calculated in accordance with
GAAP.
"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability guaranteed thereby or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of EXHIBIT C hereto.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414 of the Code or Section 4001 of
ERISA.
"CREDIT EXTENSION" means and includes
-11-
<PAGE>
(a) the advancing of any Loans by the Lenders in connection with a
Borrowing, and
(b) any issuance or extension by an Issuer of a Letter of Credit.
"CURRENT QUARTER" is defined in CLAUSE (c) of SECTION 3.2.1.
"DEED OF TRUST" means the Deed of Trust executed and delivered by the
Borrower pursuant to the Original Credit Agreement, as amended, supplemented,
restated or otherwise modified from time to time, including, without limitation,
the Modification to Deed of Trust.
"DEFAULT" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"DISBURSEMENT DATE" is defined in SECTION 4.5.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
SCHEDULE I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Administrative Agent and
the Required Lenders.
"DOLLAR" and the sign "$" mean lawful money of the United States.
"DOMESTIC OFFICE" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to the Administrative
Agent.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release into, or
injury to, the environment, or otherwise alleging liability or responsibility
for damages (punitive or otherwise), cleanup, removal, remedial or response
costs, restitution, civil or criminal penalties, injunctive relief, or other
type of relief, resulting from or based upon (a) the presence, placement,
discharge, emission or release (including intentional and unintentional,
negligent and non-negligent, sudden or non-sudden, accidental or non-accidental
placement, spills, leaks, discharges, emissions or releases) of any Hazardous
Material at, in, or from property, whether or not owned by the Borrower or any
Subsidiary of the Borrower, or (b)
-12-
<PAGE>
any other circumstances forming the basis of any violation, or alleged
violation, of any Environmental law.
"ENVIRONMENTAL LAWS" means all applicable federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental matters, including CERCLA,
the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid
Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Emergency Planning and Community Right-to-Know
Act, the California Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the California Water Code and
the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"EURODOLLAR RATE" is defined in SECTION 3.2.1.
"EURODOLLAR LOAN" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the Eurodollar Rate (Reserve Adjusted).
"EURODOLLAR RATE (RESERVE ADJUSTED)" is defined in SECTION 3.2.1.
"EURODOLLAR OFFICE" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) as designated from time to time by notice from such
Lender to the Borrower and the Administrative Agent, whether or not outside the
United States, which shall be making or maintaining Eurodollar Loans of such
Lender hereunder.
"EURODOLLAR RESERVE PERCENTAGE" is defined in SECTION 3.2.1.
"EVENT OF DEFAULT" is defined in SECTION 9.1.
"EXISTING LINES OF BUSINESS" means the following lines of business operated
by the Borrower or any of its Subsidiaries primarily in the United States:
(i) the building materials business, including the manufacture,
distribution, and wholesale marketing and sale
-13-
<PAGE>
of lumber, plywood, other value-added wood products, and other products
used in industrial or residential construction or repair and the ownership
of timberland;
(ii) the industrial products business, consisting of the production,
distribution, and wholesale marketing and sale of molded industrial
insulation, fireproofing board and metal jacketing and other materials for
use in industrial construction applications;
(iii) the ski resort operations business, including the ownership,
development, marketing and operation of ski facilities (and any associated
off-season, golf, tennis, swimming, riding, biking, hiking and other
recreational facilities) and related hotel, housing (including related
residential developments for sale or lease), restaurant, shopping,
entertainment and group conference facilities; and
(iv) the Borrower's Standard Town and Country residential and
commercial property located in Standard, California adjacent to its
manufacturing complex, including the ownership, development, marketing and
operation thereof.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Administrative Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Administrative Agent.
"FISCAL QUARTER" means each fiscal quarter of the Borrower's Fiscal Year.
"FISCAL YEAR" means each fiscal year of the Borrower, ending on the last
Saturday in December of each year.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"FUNDED DEBT" means, with respect to any Person and as of any date of
determination, the sum of (i) all Indebtedness of such Person under this
Agreement PLUS (ii) all other Indebtedness of such Person that matures more than
one year from the date of the creation of such Indebtedness, or matures within
one year from the date of the creation of such Indebtedness but is
-14-
<PAGE>
renewable or extendable, at the option of the debtor, to a date more than one
year from such date, or arises under a revolving credit or similar agreement
that obligates the lender or lenders thereunder to extend credit during a period
of more than one year from such date of determination (in each case including
amounts of Funded Debt required to be paid or prepaid within one year from the
date of determination).
"GAAP" is defined in SECTION 1.4.
"GAAP CHANGES" is defined in SECTION 1.4.
"GAYLORD DEBT" means any amounts outstanding under the 1974 Pollution
Control Revenue Bonds (Fibreboard Corporation) Series A issued by the California
Pollution Control Financing Authority in the original principal amount of
$13,300,000.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"GUARANTY" means the Guaranty executed and delivered by each Significant
Subsidiary pursuant to SECTION 6.1.4, as amended, supplemented, restated or
otherwise modified from time to time.
"HAZARDOUS MATERIAL" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any other applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended or hereafter
amended.
"HEDGING OBLIGATIONS" means, with respect to any Person, all liabilities of
such Person under currency or interest rate swap agreements, currency or
interest rate cap agreements and currency or interest rate collar agreements,
and all other agreements or arrangements designed and used by such Person to
protect such
-15-
<PAGE>
Person against fluctuations in interest rates or currency exchange rates.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of Arthur Andersen & Co. or other independent public accountants
acceptable to the Administrative Agent and the Required Lenders as to any
financial statement of the Borrower, any qualification or exception to such
opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement;
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
the Borrower to be in default of any of its obligations under SECTION
8.2.4; or
(d) which is an Asbestos Qualification.
"INCLUDING" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of EJUSDEM GENERIS
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"INDEBTEDNESS" of any Person means, at any time, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
-16-
<PAGE>
(d) net liabilities of such Person under all Hedging Obligations;
(e) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services (other than accounts payable arising in the ordinary
course of such Person's business payable on terms customary in the trade),
and indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by such Person or
is limited in recourse; and
(f) all Contingent Liabilities of such Person in respect of any of
the foregoing;
PROVIDED, THAT, funding obligations under a Pension Plan, whether or not
attributable to past services, shall not constitute Indebtedness.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.
"INDEMNIFIED LIABILITIES" is defined in SECTION 11.4.
"INDEMNIFIED PARTIES" is defined in SECTION 11.4.
"INTEREST PERIOD" means, relative to any Eurodollar Loans, the period
beginning on (and including) the date on which such Eurodollar Loan is made or
continued as, or converted into, a Eurodollar Loan pursuant to SECTION 2.3 or
2.4 and ending on (but excluding) the day which numerically corresponds to such
date one, two, three or six months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), in each
case as the Borrower may select in its relevant notice pursuant to SECTION 2.3
or 2.4; PROVIDED, HOWEVER, that
(a) the Borrower shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more
than five different dates;
(b) Interest Periods commencing on the same date for Loans comprising
part of the same Borrowing shall be of the same duration;
-17-
<PAGE>
(c) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business
Day of a calendar month, in which case such Interest Period shall end on
the Business Day next preceding such numerically corresponding day); and
(d) no Interest Period may end later than the date set forth in
CLAUSE (a) of the definition of "COMMITMENT TERMINATION DATE", as such date
may be extended in accordance with this Agreement.
"INVESTMENT" of any Person means,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees, and accounts receivable, made in the ordinary course of
business);
(b) any Contingent Liability of such Person in respect of obligations
of any other Person; and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"ISSUANCE REQUEST" means a properly completed application for a Letter of
Credit on the applicable Issuer's standard form, executed by the chief
executive, accounting or financial Authorized Officer of the Borrower.
"ISSUER" means any affiliate, unit or agency of BofA, or any other Lender
which has agreed to issue one or more Letters of Credit at the request of the
Borrower and with the consent of the Administrative Agent, and which has
notified the Administrative Agent in writing prior to such issuance that it is
an Issuer hereunder with respect to such Letter of Credit.
"LENDER ASSIGNMENT AGREEMENT" means a Lender Assignment Agreement
substantially in the form of EXHIBIT D hereto.
"LENDERS" is defined in the PREAMBLE.
"LETTER OF CREDIT" is defined in SECTION 4.1.
-18-
<PAGE>
"LETTER OF CREDIT AVAILABILITY" means, at any time, the lesser of
(a) the excess of
(i) $15,000,000
OVER
(ii) the then Letter of Credit Outstandings,
OR
(b) the Commitment Availability at such time.
"LETTER OF CREDIT OUTSTANDINGS" means, at any time, an amount equal to the
sum of
(a) the aggregate Stated Amount at such time of all Letters of Credit
then outstanding and undrawn (as such aggregate Stated Amount shall be
adjusted, from time to time, as a result of drawings, the issuance of
Letters of Credit, or otherwise),
PLUS
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever or the filing of any UCC-1 financing statement or
any similar financing statement (other than a financing statement filed by a
lessor in respect of an operating lease not intended as security).
"LOAN" is defined in SECTION 2.1.1.
"LOAN DOCUMENT" means this Agreement, any Note, any Collateral Document,
the Guaranty, any Letter of Credit, any application for a Letter of Credit and
any other instrument or agreement executed and/or delivered by an Obligor
pursuant hereto or thereto or otherwise in connection herewith or therewith, as
each may be amended, supplemented, restated or otherwise modified from time to
time.
"MAJORITY LENDERS" means, at any time, Lenders holding at least 51% of the
then aggregate outstanding principal amount of the Notes then held by the
Lenders, or, if no such principal
-19-
<PAGE>
amount is then outstanding, Lenders having at least 51% of the Commitments.
"MATERIAL ADVERSE EFFECT" means, relative to any condition or occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding and the enactment,
issuance or amendment of any Applicable Law), a material adverse effect on:
(a) the consolidated business, assets, revenues, financial condition,
or operations or (but only with respect to Asbestos Litigation related
matters) prospects of the Borrower and its Subsidiaries, taken as a whole;
or
(b) the ability of the Borrower and its Subsidiaries, taken as a
whole, to perform any of the payment or other material obligations under
any Loan Document to which any Obligor is a party.
"MATERIAL POST-COLLATERAL RELEASE ASBESTOS LITIGATION" means any Asbestos
Litigation the payment or satisfaction of which is not adequately provided for
by
(i) if the Global Approval Judgment shall have occurred, the Global
Settlement Agreement or the Insurance Settlement Agreement to the extent
applicable (or any other agreement referred to in such agreements),
(ii) if the Settlement Agreement Approval Judgment shall have occurred
(and the Global Approval Judgment shall not have occurred), the Insurance
Settlement Agreement (or any agreement referred to therein), or
(iii) available insurance coverage which has been confirmed in writing
to the Borrower (whether by binding settlement agreement of by other
writing) and/or existing reserves as shown on the Borrower's March 31, 1994
financial statements
which (in any such case), if determined adversely to the Borrower or any of its
Subsidiaries, as the case may be, could reasonably be expected to have a
Material Adverse Effect.
"MODIFICATION TO DEED OF TRUST" means the Modification to Deed of Trust
executed and delivered by the Borrower pursuant to SECTION 6.1.5, as amended,
supplemented, restated or otherwise modified from time to time.
"NORANDEX" means Norandex Inc., a Delaware corporation.
"NOTE" means an amended and restated promissory note of the Borrower
payable to the order of any Lender, in the form of
-20-
<PAGE>
EXHIBIT A hereto (as such promissory note may be amended, endorsed or otherwise
modified from time to time), evidencing the aggregate Indebtedness of the
Borrower to such Lender resulting from outstanding Loans, and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the Borrower
and each other Obligor to the Co-Agents and the Lenders and their respective
successors and assigns arising under or in connection with this Agreement, the
Notes and each other Loan Document, howsoever created, arising or evidenced,
whether direct or indirect, joint or several, absolute or contingent, or now or
hereafter existing, or due or to become due, including, without limitation, all
indebtedness of any kind arising under, and all amounts of any kind which at any
time become due or owing to either Co-Agent or any of the Lenders under or with
respect to, the Loan Documents, all of the covenants, obligations,
indemnifications and agreements of each Obligor (and the truth of all
representations and warranties of each Obligor to the Co-Agents and the Lenders)
in, under or pursuant to the Loan Documents, any and all advances, costs or
expenses paid or incurred by the Collateral Agent, the Administrative Agent or
any of the Lenders or any agent or trustee therefor to protect any or all of the
Collateral, to perform any obligation of the Borrower or any other Obligor under
any of the Loan Documents, or to collect any amount owing to the Collateral
Agent, the Administrative Agent or any of the Lenders which is secured
thereunder; interest on all of the foregoing (including, without limitation,
interest accruing after the maturity of the Loans and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Obligor whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding);
and all costs of enforcement and collection of the Obligations, the Loan
Documents and any other document relating to the Obligations.
"OBLIGOR" means the Borrower or any other Person (other than either Co-
Agent, any Issuer or any Lender) obligated under, or otherwise a party to, any
Loan Document.
"ORGANIC DOCUMENT" means, relative to any Obligor, its certificate or
articles of incorporation, its by-laws and all shareholder voting agreements,
voting trusts and similar arrangements applicable to any of its authorized
shares of capital stock.
"ORIGINAL CREDIT AGREEMENT" is defined in RECITAL A.
"ORIGINAL EFFECTIVE DATE" means June 30, 1994.
-21-
<PAGE>
"ORIGINAL PERCENTAGE" means, relative to any Lender, the percentage set
forth with respect to such Lender on SCHEDULE II.
"PARTICIPANT" is defined in SECTION 11.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PENSION PLAN" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or
any corporation, trade or business that is, along with the Borrower, a member of
a Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"PERCENTAGE" means, relative to any Lender (i) on any date before the
Restatement Effective Date, such Lender's Original Percentage and (ii) on and
after the Restatement Effective Date, such Lender's Restated Percentage, or on
any date, the percentage set forth in the Lender Assignment Agreement, as any of
such percentages may be adjusted from time to time pursuant to Lender Assignment
Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered
pursuant to SECTION 11.11.
"PERSON" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"PRECEDING QUARTER" is defined in CLAUSE (c) of SECTION 3.2.1.
"QUARTERLY PAYMENT DATE" means the last day of each March, June, September,
and December or, if any such day is not a Business Day, the next succeeding
Business Day.
"RECONCILIATION STATEMENT" means a written statement of the Borrower,
signed by an Authorized Officer, in form and substance satisfactory to the
Administrative Agent reconciling the effect of changes in GAAP as contemplated
or permitted by SECTION 1.4.
"REIMBURSEMENT OBLIGATION" is defined in SECTION 4.6.
"RELEASE" means a "release", as such term is defined in CERCLA.
-22-
<PAGE>
"REQUIRED LENDERS" means, at any time, Lenders holding at least 66 2/3% of
the then aggregate outstanding principal amount of the Notes then held by the
Lenders, or, if no such principal amount is then outstanding, Lenders having at
least 66 2/3% of the Commitments.
"RESORT SUBSIDIARIES" means, collectively, Trimont Land Company, a
California corporation, Sierra-at-Tahoe, Inc., a Delaware corporation, and each
other Subsidiary now owned or hereafter acquired by the Borrower or any of its
Subsidiaries that is engaged in the ski resort operations business as described
in CLAUSE (iii) of the definition of Existing Lines of Business, the acquisition
or capitalization of which Subsidiary is not financed in whole or in part with
the proceeds of any Credit Extension.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, ET SEQ., as in effect from time to
time.
"RESTATED PERCENTAGE" means, relative to any Lender, the percentage set
forth with respect to such Lender on SCHEDULE II.
"RESTATEMENT EFFECTIVE DATE" means the date this Agreement becomes
effective pursuant to SECTION 6.1.
"RESTRICTED PAYMENT" means any payment or distribution which if made by
the Borrower or any of its Subsidiaries would be in violation of SECTION 8.2.6.
"SECURITY AGREEMENT" means the Security Agreement executed and delivered by
the Borrower pursuant to SECTION 6.1.6, as amended, supplemented, restated or
otherwise modified from time to time.
"SETTLEMENT AGREEMENT MODIFICATION" is defined in SECTION 8.2.9.
"SETTLEMENT AGREEMENTS" means the agreements listed on EXHIBIT K.
"SETTLEMENT GAINS" means, on any date, the cumulative amount since the
Original Effective Date of all amounts which would be recorded as gains from
asbestos litigation reserves or the positive adjustment of other Asbestos
Litigation related balance sheet items that have an effect on the consolidated
income statement of the Borrower and its Subsidiaries in accordance with GAAP.
"SIGNIFICANT SUBSIDIARY" means each Subsidiary of the Borrower (except the
Resort Subsidiaries) that
-23-
<PAGE>
(a) is designated with an asterisk in ITEM 7.8 ("Subsidiaries") of
the Disclosure Schedule;
(b) accounted for at least 5% of consolidated revenues of the
Borrower and its Subsidiaries or 5% of Consolidated EBIT, in each case for
the four Fiscal Quarters ending on the last day of the last Fiscal Quarter
immediately preceding the date as of which any such determination is made;
or
(c) has assets which represent at least 5% of the consolidated assets
of the Borrower and its Subsidiaries as of the last day of the last Fiscal
Quarter immediately preceding the date as of which any such determination
is made,
all of which, with respect to CLAUSES (b) and (c), shall be as reflected on the
audited consolidating financial statements of the Borrower for the period, or as
of the date, in question.
"STATED AMOUNT" of each Letter of Credit means the maximum amount that
could be drawn under such Letter of Credit assuming that all conditions
precedent to drawings thereunder have been complied with.
"STATED EXPIRY DATE" is defined in SECTION 4.1.
"STATED MATURITY DATE" means September 30, 1997, as such date may be
extended pursuant to SECTION 2.1.4.
"SUBSIDIARY" means, with respect to any Person, any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.
"SUBSIDIARY SECURITY AGREEMENT" means each of the Subsidiary Security
Agreements executed and delivered by a Significant Subsidiary pursuant to
SECTION 6.1.6, as each is amended, supplemented, restated or otherwise modified
from time to time.
"TAXES" is defined in SECTION 5.6.
"TIMBER" shall have the meaning set forth in the Deed of Trust.
-24-
<PAGE>
"TIMBERLANDS" shall have the meaning set forth in the Deed of Trust.
"TOTAL CAPITALIZATION" means, on any date, the sum of (i) an amount equal
to Consolidated Net Worth on such date, PLUS (ii) an amount equal to
Consolidated Funded Debt on such date.
"TYPE" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a Eurodollar Loan.
"UCC" means the Uniform Commercial Code as in effect in any jurisdiction.
"UNITED STATES" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"WELFARE PLAN" means a "welfare plan", as such term is defined in section
3(1) of ERISA.
(b) CERTAIN ASBESTOS-RELATED DEFINITIONS. The following terms (whether or
not underscored) when used in this Agreement, including its preamble and
recitals, shall, except where the context otherwise requires, have the following
meanings, and other capitalized terms used and not defined in this SECTION 1.2
shall have the meanings set forth in the Global Settlement Agreement or the
Insurance Settlement Agreement, as applicable each as modified by the Plant
Agreement (such meanings to be equally applicable to the singular and plural
forms thereof):
"CNA CASUALTY" means CNA Casualty Company of California, a California
corporation.
"COLUMBIA" means Columbia Casualty Company, an Illinois corporation.
"CONTINENTAL" means Continental Casualty Company, an Illinois corporation.
"FIBREBOARD" means Fibreboard Corporation; Fibreboard Paper Corporation;
Fibreboard Products, Incorporated; Paraffine Companies, Incorporated; Plant
Rubber & Asbestos Works; Pabco Products, Incorporated; and Pabco Insulation
Corporation; and each of their respective predecessors, Subsidiaries and
divisions, and with respect to Fibreboard Corporation's liability only, each of
their respective successors in interest.
"GLOBAL APPROVAL JUDGMENT" has the meaning set forth in the Global
Settlement Agreement as modified by the Plant Agreement.
"GLOBAL SETTLEMENT AGREEMENT" means the settlement agreement, dated as of
August 27, 1993, among Continental, CNA
-25-
<PAGE>
Casualty, Columbia, Pacific, the Borrower and the Representative Plaintiffs as
representatives of the Settlement Class.
"INSURANCE SETTLEMENT AGREEMENT" means the Settlement Agreement, dated
October 12, 1993, among the Borrower, Continental, CNA Casualty, Columbia and
Pacific.
"INSURERS" means (i) Continental, CNA Casualty, Columbia and all insurance
or indemnity companies controlling, controlled by or under common control with
any of them and (ii) Pacific and all insurance or indemnity companies
controlling, controlled by or under common control with it.
"PACIFIC" means Pacific Indemnity Company, a California corporation.
"PLANT AGREEMENT" shall mean that certain agreement, dated as of March,
1994, by and among the representatives of the Settlement Class, the Borrower,
Continental, CNA Casualty, Columbia, and Pacific.
"SETTLEMENT AGREEMENT APPROVAL JUDGMENT" has the meaning set forth in the
Insurance Settlement Agreement as modified by the Plant Agreement.
SECTION 1.2 USE OF DEFINED TERMS. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and in each Note,
Borrowing Request, Continuation/Conversion Notice, Loan Document, notice and
other communication delivered from time to time in connection with this
Agreement or any other Loan Document.
SECTION 1.3 CROSS-REFERENCES. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4 ACCOUNTING AND FINANCIAL DETERMINATIONS.
(a) Unless otherwise specified, all accounting terms used herein or in any
other Loan Document shall be interpreted, all accounting determinations and
computations hereunder or thereunder (including under SECTION 8.2.4) shall be
made, and all financial statements required to be delivered hereunder or
thereunder shall be prepared in accordance with, those generally accepted
accounting principles ("GAAP") applied in the preparation of the financial
statements referred to in SECTION 7.5. Notwithstanding the immediately
preceding sentence, if any
-26-
<PAGE>
changes in GAAP from those used in the preparation of the financial statements
referred to in SECTION 7.5 ("GAAP CHANGES") hereafter occasioned by the
promulgation of rules, regulations, pronouncements or opinions by or required by
the Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions)
result in a change in the method of calculation of, or in different components
in, any of the financial covenants, definitional provisions, standards or other
terms or conditions found in this Agreement, (i) the parties hereto agree to
enter into good faith negotiations with respect to amendments to this Agreement
to conform those covenants, definitional provisions, standards or other terms
and conditions as criteria for evaluating the Borrower's financial condition and
performance to substantially the same criteria as were effective prior to such
GAAP Change, and (ii) the Borrower shall be deemed to be in compliance with the
affected covenant or other provision during the 90-day period following any such
GAAP Change if and to the extent that the Borrower would have been in compliance
therewith under GAAP as in effect immediately prior to such GAAP Change;
PROVIDED, HOWEVER, that this SECTION 1.4 shall not be deemed to require the
Borrower, the Co-Agents or the Lenders to agree to modify any provision of this
Agreement or any other Loan Document to reflect any such GAAP Change and, if the
parties, in their sole discretion, fail to reach agreement on such modifications
prior to the end of the 90-day period referred to in clause (ii), the terms of
this Agreement shall remain unchanged and the compliance of the Borrower with
the covenants and other provisions contained herein shall, upon the expiration
of such 90-day period, be calculated in accordance with GAAP without giving
effect to such GAAP Change.
(b) If any GAAP Change occurs with respect to which the parties fail to
reach agreement after negotiation as provided in CLAUSE (a) of this SECTION 1.4,
then all financial covenants, definitional provisions, standards or other terms
or conditions for evaluating the Borrower's financial condition and performance
shall be calculated without giving effect to such GAAP Change. At the time of
any such change, the Borrower shall furnish to the Administrative Agent, with
sufficient copies for each Lender, a statement of the Borrower's
independent public accountants that such accountants concur with such change and
a Reconciliation Statement, and following such change, the Borrower shall
furnish the Administrative Agent, with sufficient copies for each Lender,
Reconciliation Statements (i) with each financial statement furnished thereafter
under this Agreement, and (ii) with each certificate or other data or
information furnished by the Borrower under this Agreement to show the
Borrower's compliance with all applicable financial covenants, definitional
provisions, standards or other terms or conditions for evaluating the Borrower's
financial condition and performance hereunder.
-27-
<PAGE>
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1 COMMITMENTS. On the terms and subject to the conditions of
this Agreement (including ARTICLE V), each Lender severally agrees as follows:
SECTION 2.1.1 LOAN COMMITMENT. From time to time on any Business Day
occurring prior to the Commitment Termination Date, each Lender will make Loans
(relative to such Lender, its "LOANS") to the Borrower equal to such Lender's
Percentage of the aggregate amount of the Borrowing of Loans requested by the
Borrower to be made on such day. On the terms and subject to the conditions
hereof, the Borrower may from time to time borrow, prepay and reborrow Loans.
SECTION 2.1.2 COMMITMENT TO ISSUE LETTERS OF CREDIT. From time to time on
any Business Day, each Issuer will issue, and each Lender will participate in,
the Letters of Credit, in accordance with ARTICLE IV.
SECTION 2.1.3 LENDERS NOT PERMITTED OR REQUIRED TO MAKE LOANS OR ISSUE OR
PARTICIPATE IN LETTERS OF CREDIT UNDER CERTAIN CIRCUMSTANCES. No Lender shall
be permitted or required to
(a) make any Loan if, after giving effect thereto, the aggregate
outstanding principal amount of all Loans
(i) of all Lenders, together with all Letter of Credit
Outstandings, would exceed the Commitment Amount, or
(ii) of such Lender, together with its Percentage of all Letter
of Credit Outstandings, would exceed such Lender's Percentage of the
Commitment Amount; or
(b) issue (in the case of any Issuer) or participate in (in the case
of each Lender) any Letter of Credit if, after giving effect thereto
(i) the aggregate amount of all Letter of Credit Outstandings
would exceed $15,000,000.
(ii) all Letter of Credit Outstandings together with the
aggregate outstanding principal amount of all Loans of all Lenders
would exceed the Commitment Amount, or
(iii) such Lender's Percentage of all Letter of Credit
Outstandings together with the aggregate outstanding principal amount
of all loans of such
-28-
<PAGE>
Lender's Percentage of the Commitment Amount.
SECTION 2.1.4 EXTENSION OF COMMITMENT TERMINATION DATE AND STATED MATURITY
DATE. (a) Not less than 60 days nor more than 120 days before (i) the first
anniversary of the date of the Restatement Effective Date and/or (ii) the then
current Commitment Termination Date, the Borrower may, by written request
delivered to the Administrative Agent, request that the Commitment Termination
Date be extended by all the Lenders for a period of one year from the then-
current Commitment Termination Date. The Administrative Agent shall notify the
Collateral Agent and the Lenders of any such request. Such extension shall only
be effective upon approval thereof in writing by each Co-Agent and all the
Lenders, and the execution and delivery of such amendments to the Loan Documents
and other documents (including without limitation amendments to Collateral
Documents and title insurance bring-down policies) as the Co-Agents may require
in connection with such extension. Each Co-Agent and Lender may accept or
reject any request for an extension in its sole and absolute discretion. Each
Co-Agent and Lender shall use reasonable efforts to accept or reject any such
request within 30 days after receiving notice thereof, PROVIDED that any failure
by a Co-Agent or Lender to respond to such a request shall be deemed to be a
rejection thereof.
(b) If any Lender rejects the Borrower's request for an extension
hereunder, the Borrower may: (i) request one or more of the other Lenders to
acquire and assume (in such Lender's sole discretion) all or part of such
rejecting Lender's Loans and Commitments; or (ii) designate a replacement bank
or financial institution to acquire and assume all or part of such rejecting
Lender's Loans and Commitments. Any such designation of a replacement bank or
financial institution under CLAUSE (ii) shall be subject to the prior written
consent of the Administrative Agent and the other Lenders (which consent shall
not be unreasonably withheld).
SECTION 2.2 MANDATORY AND OPTIONAL REDUCTIONS OF COMMITMENT AMOUNTS.
SECTION 2.2.1 MANDATORY REDUCTIONS. On each of the dates set forth below,
the Commitment Amount, to the extent greater than the amount set forth by such
date, shall automatically and without further action by any Person be reduced to
the amount set forth by such date:
Date Reduced Commitment Amount
---- -------------------------
September 30, 1995 $150,000,000
September 30, 1996 $125,000,000
-29-
<PAGE>
SECTION 2.2.2 OPTIONAL REDUCTIONS. The Borrower may, from time to time
on any Business Day occurring after the time of the initial Borrowing hereunder,
voluntarily reduce the amount of the Commitment Amount; PROVIDED, HOWEVER, that
all such reductions shall require at least three Business Days' irrevocable
prior notice to the Administrative Agent and be permanent, and any partial
reduction of the Commitment Amount shall be in a minimum amount of $5,000,000
and in an integral multiple of $1,000,000.
SECTION 2.3 BORROWING PROCEDURE. By delivering a Borrowing Request to the
Administrative Agent on or before 8:00 a.m., San Francisco time, on a Business
Day, the Borrower may from time to time irrevocably request, on not less than
three nor more than five Business Days' notice, that a Borrowing be made in a
minimum amount of $5,000,000 and an integral multiple of $1,000,000, or in the
unused amount of the Commitment Amount. On the terms and subject to the
conditions of this Agreement, each Borrowing shall be comprised of the type of
Loans, and shall be made on the Business Day, specified in such Borrowing
Request. On or before 9:00 a.m. (San Francisco time) on such Business Day each
Lender shall deposit with the Administrative Agent same day funds in an amount
equal to such Lender's Percentage of the requested Borrowing. Such deposit will
be made to an account which the Administrative Agent shall specify from time to
time by notice to the Lenders. To the extent funds are timely received from the
Lenders, the Administrative Agent shall make such funds available to the
Borrower by wire transfer on such Business Day to the accounts the Borrower
shall have specified in its Borrowing Request. No Lender's obligation to make
any Loan shall be affected by any other Lender's failure to make any Loan.
SECTION 2.4 CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 8:00
a.m., San Francisco time, on a Business Day, the Borrower may from time to time
irrevocably elect, on not less than three nor more than five Business Days'
notice that all, or any portion in an aggregate minimum amount of $5,000,000 and
an integral multiple of $1,000,000, of any Loans be, in the case of Base Rate
Loans, converted into Eurodollar Loans or, in the case of Eurodollar Loans,
converted into a Base Rate Loan or continued as a Eurodollar Loan (in the
absence of delivery of a Continuation/Conversion Notice with respect to any
Eurodollar Loan at least three Business Days before the last day of the then
current Interest Period with respect thereto, such Eurodollar Loan shall, on
such last day, automatically convert to a Base Rate Loan); PROVIDED, HOWEVER,
that (i) each such conversion or continuation shall be pro rated among the
applicable outstanding Loans of all Lenders, and (ii) no portion of the
outstanding principal amount of any Loans may be continued as, or be converted
into, Eurodollar Loans when any Default has occurred and is continuing.
-30-
<PAGE>
SECTION 2.5 FUNDING. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurodollar Loans hereunder by causing
one of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such Eurodollar Loan; PROVIDED,
HOWEVER, that such Eurodollar Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
Eurodollar Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of SECTION 5.1, 5.2, 5.3, 5.4 or 5.11, it shall be
conclusively assumed that each Lender elected to fund all Eurodollar Loans by
purchasing Dollar deposits in its Eurodollar Office's interbank eurodollar
market.
SECTION 2.6 NOTES. Each Lender's Loans under a Commitment shall be
evidenced by a Note payable to the order of such Lender in a maximum principal
amount equal to such Lender's Percentage of the Commitment Amount without regard
to any reduction thereof pursuant to SECTION 2.2. The Borrower hereby
irrevocably authorizes each Lender to make (or cause to be made) appropriate
notations on the grid attached to such Lender's Note (or on any continuation of
such grid), which notations, if made, shall evidence, INTER ALIA, the date of,
the outstanding principal of, and the interest rate and Interest Period
applicable to the Loans evidenced thereby. Such notations shall be conclusive
and binding on the Borrower absent manifest error; PROVIDED, HOWEVER, that the
failure of any Lender to make any such notations shall not limit or otherwise
affect any Obligations of the Borrower or any other Obligor.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in full
the unpaid principal amount of each Loan upon the Stated Maturity Date therefor.
Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; PROVIDED, HOWEVER, that
(i) any such prepayment shall be made PRO RATA among Loans of
the same type and, if applicable, having the same Interest Period of
all Lenders;
(ii) any such prepayment of any Eurodollar loan made on any day
other than the last day of the Interest
-31-
<PAGE>
Period for such Loan shall be subject to the Borrower's obligation to
make payment, if requested by any Lender, of an additional amount
equal to the amount due under Section 5.4 incurred as a result of
such prepayment being so made at such time;
(iii) all such prepayments shall require at least three but no
more than five Business Days' prior written notice to the
Administrative Agent; and
(iv) all such prepayments shall be in an aggregate minimum
amount of $5,000,000 (or if less, the aggregate outstanding amount of
all Loans) and an integral multiple of $1,000,000;
(b) shall, on each date when any reduction in the Commitment Amount
shall become effective, including pursuant to SECTION 2.2, make a mandatory
prepayment (which shall be applied (or held for application and bear
interest at the rate applicable under SECTION 4.7) as the case may be, by
the Lenders first to the payment of the aggregate unpaid principal amount
of those Loans then outstanding, and then to the payment of the then
outstanding Letter of Credit Outstandings) equal to the excess, if any, of
the aggregate, outstanding principal amount of
all Loans and Letter of Credit Outstandings over the Commitment Amount as
so reduced; and
(c) shall, immediately upon any acceleration of the Stated Maturity
Date of any Loans pursuant to SECTION 9.2 or SECTION 9.3, repay all Loans,
unless, pursuant to SECTION 9.3, only a portion of all Loans is so
accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by SECTION 5.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitment
Amount.
SECTION 3.2 INTEREST PROVISIONS. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this SECTION 3.2.
SECTION 3.2.1 RATES. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate Loan,
equal to the Alternate Base Rate from time to time in effect; and
-32-
<PAGE>
(b) on that portion maintained as a Eurodollar Loan, during each
Interest Period applicable thereto, equal to the sum of the Eurodollar Rate
(Reserve Adjusted) for such Interest Period plus a margin equal to the
Applicable Margin in effect on the date such Eurodollar Loan is made.
The applicable margin to be added to each such Loan (the "APPLICABLE MARGIN")
will be determined by the Administrative Agent from time to time for each
quarter of each calendar year (the "CURRENT QUARTER") in accordance with the
table set forth below based on the Compliance Certificate delivered by the
Borrower for the immediately preceding calendar quarter (the "PRECEDING
QUARTER") under CLAUSE (c) of SECTION 8.1.1. Such determination shall be based
on the calculation of the Consolidated Funded Debt to Cash Flow Ratio set forth
in the Compliance Certificate for the Preceding Quarter and shall apply from and
including the first day of the Current Quarter until and including the last day
of the Current Quarter. Prior to the date in the Current Quarter on which the
Administrative Agent receives the Compliance Certificate for the Preceding
Quarter which is required to be delivered during the Current Quarter, the
Applicable Margin shall be the same as was applicable in the Preceding Quarter,
subject to any necessary adjustment pursuant to this CLAUSE (b) upon receipt of
such subsequent Compliance Certificate, effective as of the beginning of the
Current Quarter; PROVIDED that the Applicable Margin for any day after the
forty-fifth day of any calendar quarter during which the Borrower shall not
deliver a Compliance Certificate shall be 1.0% PER ANNUM effective until the day
such certificate is delivered. If the subsequent Compliance Certificate shall
indicate that the Applicable Margin should have been increased for the Current
Quarter pursuant to this CLAUSE (b), the Borrower shall, on the date of delivery
of such Compliance Certificate, pay to the Administrative Agent for the account
of the Lenders an amount equal to the difference between (A) the aggregate
amount of interest which would theretofore have been payable during such Current
Quarter had such increase been made on the first day of such Current Quarter and
(B) the amount of interest which was actually paid during such Current Quarter.
If such Compliance Certificate shall indicate that the Borrower paid more
interest than would have been required if any reduction therein required by this
CLAUSE (b) had commenced on the first day of such Current Quarter, any such
excess payment shall be credited to future payments of interest and other
amounts payable to the Borrower hereunder. Any such credit to future payments
of interest shall in each case be made first to the next occurring payment of
interest due hereunder. The ratios set forth in the table below are for the
purpose of interest calculation only and shall not affect the Borrower's
obligation to comply with SECTION 8.2.4.
-33-
<PAGE>
Ratio Applicable Margin
----- -----------------
Less than 1.50:1 0.75%
1.50 or greater and less than 2.00:1 0.875%
2.00:1 or greater 1.00%
The "EURODOLLAR RATE (RESERVE ADJUSTED)" means, relative to any Loan to be
made, continued or maintained as, or converted into, a Eurodollar Loan for any
Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest
1/16 of 1%) determined pursuant to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) ------------------------------------
1.00 - Eurodollar Reserve Percentage
The Eurodollar Rate (Reserve Adjusted) for any Interest Period for Eurodollar
Loans will be determined by the Administrative Agent on the basis of the
Eurodollar Reserve Percentage in effect on, and the applicable rates furnished
to and received by the Administrative Agent from its Eurodollar office, two
Business Days before the first day of such Interest Period.
"EURODOLLAR RATE" means the rate of interest PER ANNUM determined by the
Administrative Agent as the rate at which dollar deposits in the approximate
amount of BofA's Eurodollar Loan for such Interest Period would be offered by
BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be
designated for such purpose by BofA), to major banks in the offshore dollar
interbank market at their request at approximately 11:00 a.m. (New York City
time) two Business Days prior to the commencement of such Interest period.
"EURODOLLAR RESERVE PERCENTAGE" means, relative to any Interest Period for
Eurodollar Loans, the reserve percentage (expressed as a decimal and rounded
upward to the nearest 1/100th of 1%) equal to the maximum aggregate reserve
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other scheduled
changes in reserve requirements) specified under regulations issued from time to
time by the F.R.S. Board and then applicable to assets or liabilities consisting
of and including "Eurocurrency Liabilities", as currently defined in Regulation
D of the F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.
All Eurodollar Loans shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such Eurodollar
Loan.
-34-
<PAGE>
The foregoing adjustment of the Eurodollar Rate on the basis of the
Eurodollar Reserve Percentage in order to determine the Eurodollar Rate (Reserve
Adjusted) shall be made by the Administrative Agent upon notice from time to
time by a Lender that it has become subject to reserves under applicable F.R.S.
Board regulations in respect of "Eurocurrency Liabilities" and that it shall
require compensation for costs it has incurred during an Interest Period as a
consequence of maintaining such reserves during such Interest Period. Such
compensation shall be limited to the actual costs of such reserves determined by
such Lender to be allocable to its Eurodollar Loan or Loans. Any determination
by a Lender of the amount of such reserves shall, in the absence of manifest
error, be final, conclusive and binding on all of the parties hereto.
SECTION 3.2.2 POST-DEFAULT RATE. At any time when any Event of Default
shall occur and be continuing, upon the request of the Administrative Agent, at
the direction of the Required Lenders, the Borrower shall pay, but only to the
extent permitted by law, interest (after as well as before judgment) on the
Loans and all other amounts due hereunder at the following rates: (i) with
respect to any amount payable on or in connection with a Base Rate Loan, from
the date of such Event of Default until such amount is paid in full, at a rate
PER ANNUM equal to the sum of the Alternate Base Rate in effect from time to
time (but not less than the Alternate Base Rate in effect at such date), PLUS
2.0% PER ANNUM (the "POST-DEFAULT RATE"), (ii) with respect to any amount
payable on or in connection with a Eurodollar Loan, from the date of such Event
of Default until the end of the Interest Period for such Eurodollar Loan, at a
rate PER ANNUM equal to the sum of the applicable Eurodollar Rate (Reserve
Adjusted), PLUS 3.0% PER ANNUM, and, thereafter, at the Post-Default Rate until
such amount is paid in full, and (iii) with respect to any other amount payable
hereunder, from the date of such Event of Default until such amount is paid in
full, at the Post-Default Rate.
SECTION 3.2.3 PAYMENT DATES. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any optional or required payment or prepayment, in
whole or in part, of principal outstanding on such Loan;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the date of the initial Borrowing hereunder;
(d) with respect to Eurodollar Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed three
months, on the date which would
-35-
<PAGE>
have been the last day in an Interest Period of three months);
(e) with respect to any Base Rate Loans converted into Eurodollar
Loans on a day when interest would not otherwise have been payable pursuant
to CLAUSE (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of which is
accelerated pursuant to SECTION 9.2 or SECTION 9.3, immediately upon such
acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3 FEES. The Borrower agrees to pay the fees set forth in this
SECTION 3.3. All such fees shall be non-refundable.
SECTION 3.3.1 COMMITMENT FEES.
(a) The Borrower agrees to pay to the Administrative Agent for the account
of each Lender, for the period (including any portion thereof when any of its
Commitments are suspended by reason of the Borrower's inability to satisfy any
condition of ARTICLE VI) commencing on the Original Effective Date and
continuing through the final Commitment Termination Date, a commitment fee on
such Lender's Percentage of the sum of the average daily unused portion of the
Commitment Amount (as in effect from time to time since the Original Effective
Date) calculated at the rates PER ANNUM determined from time to time for the
Current Fiscal Quarter in accordance with the table set forth below in
CLAUSE (c) and the Compliance Certificate delivered by the Borrower pursuant to
CLAUSE (c) of SECTION 8.1.1.
(b) The determination of the commitment fee shall be based on the
calculation of the Consolidated Funded Debt to Cash Flow Ratio set forth in the
Compliance Certificate which is delivered during the Current Quarter or which
was delivered on the Original Effective Date, as the case may be, and shall
apply from and including the first day until and including the last day of the
Current Quarter. Such commitment fees shall be payable by the Borrower in
arrears on each Quarterly Payment Date, commencing with the first such day
following the Original Effective Date, and on the Commitment Termination Date.
-36-
<PAGE>
(c) The ratios set forth in the table below are for the purpose of the
commitment fee calculation only and shall not affect the Borrower's obligation
to comply with SECTION 8.2.4.
Ratio Per Annum Commitment Fee
----- -------------------------
Less than 1.50:1 0.25%
1.50 or greater and less than 2.00:1 0.3125%
2.00:1 or greater 0.375%
The Commitment Fee rate applicable for any day after the forty-fifth day of
any quarter of any calendar year during which the Borrower does not deliver a
Compliance Certificate, effective until the day such certificate is delivered,
shall be the highest rate set forth above.
SECTION 3.3.2 PARTICIPATION FEES. On the Restatement Effective Date, the
Borrower agrees to pay to the Administrative Agent for the account of each
Lender, an up-front participation fee calculated as set forth in a letter dated
August 17, 1994 from the Administrative Agent to each Lender.
SECTION 3.3.3 CO-AGENTS' ARRANGEMENT FEE. The Borrower agrees to pay to
the Administrative Agent for the account of each Co-Agent, a non-refundable
initial arrangement fee in the amounts and at the times set forth in a separate
agreement dated as of June 30, 1994 between the Borrower and the Administrative
Agent, as supplemented by an agreement dated as of the date hereof between the
Borrower and the Administrative Agent.
SECTION 3.3.4 CO-AGENTS' FEES. The Borrower agrees to pay to each of the
Co-Agents a non-refundable agency fee in an amount and at the times set forth in
a separate agreement dated June 30, 1994 between the Borrower and the Co-Agents,
as supplemented by an agreement dated as of the date hereof between the Borrower
and the Co-Agents.
SECTION 3.3.5 LETTER OF CREDIT FACE AMOUNT FEE. The Borrower shall pay to
the Administrative Agent for the benefit of the Lenders letter of credit fees
per annum based on the average daily maximum amount available to be drawn on the
outstanding Letters of Credit, payable quarterly in arrears on each Quarterly
Payment Date. The applicable fees will be determined by the Administrative
Agent from time to time for the Current Quarter in accordance with the table set
forth below based on the Compliance Certificate delivered by the Borrower for
the Preceding Quarter under CLAUSE (c) of SECTION 8.1.1. Such determination
shall be based on the calculations of the Consolidated Funded Debt to Cash Flow
Ratio set forth in the Compliance Certificate delivered during the Current
Quarter and shall apply from and including the first day until and including the
last day of the Current
-37-
<PAGE>
Quarter. The ratios set forth in the table below are for the purpose of letter
of credit fee calculation only and shall not affect the Borrower's obligations
to comply with SECTION 8.2.4.
Per Annum Letter
Ratio of Credit Fee
----- ----------------
Less than 1.50:1 0.75%
1.50 or greater and less than 2.00:1 0.875%
2.00:1 or greater 1.00%
The Letter of Credit Fee rate applicable under this SECTION 3.3.5 (i) upon
the request of the Administrative Agent, at the direction of the Required
Lenders, for any day during which an Event of Default shall occur and be
continuing shall be 2.0% PER ANNUM, and (ii) for every day after the forty-fifth
day of any calendar quarter of any calendar year during which the Borrower does
not deliver a Compliance Certificate, effective until the day such certificate
is delivered, shall be the highest rate set forth above.
SECTION 3.3.6 LETTER OF CREDIT ISSUING FEE. The Borrower agrees to pay to
the Administrative Agent, for the account of the applicable Issuer, an issuing
fee for each Letter of Credit for the period from and including the date of
issuance of such Letter of Credit to (but not including) the date upon which
such Letter of Credit expires, of 0.125% PER ANNUM of the face amount of such
Letter of Credit and the Borrower further agrees to pay to the Administrative
Agent, for the account of the applicable Issuer, such Issuer's customary
administrative and processing fees and out-of-pocket expenses relating to such
Letter of Credit. Such fee and other amounts shall be payable by the Borrower
in arrears on each Quarterly Payment Date and on the Commitment Termination Date
for any period then ending for which such fee shall not theretofore have been
paid, commencing on the first such date after the issuance of such Letter of
Credit.
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1 ISSUANCE REQUESTS. By delivering to the Administrative Agent
and the applicable Issuer an Issuance Request on or before 10:00 a.m. San
Francisco time, the Borrower may request, from time to time prior to the
Commitment Termination Date and on not less than three nor more than fifteen
Business Days' notice, that such Issuer issue an irrevocable standby letter of
credit (including, without limitation, back-to-back letters of credit issued for
the purpose of supporting other letters of credit obtained by the Borrower
prior to the Original
-38-
<PAGE>
Effective Date in the ordinary course of its business in such form as may be
requested by the Borrower and approved by such Issuer in its sole discretion
(each a "LETTER OF CREDIT"), in support of financial obligations of the Borrower
incurred in the Borrower's ordinary course of business or in connection with an
Approved Acquisition and which are described in such Issuance Request. Upon
receipt of an Issuance Request, the Administrative Agent shall promptly notify
the Lenders thereof. Each Letter of Credit shall by its terms:
(a) be issued in a Stated Amount which
(i) is at least $100,000; and
(ii) does not exceed (or would not exceed) the then Letter of
Credit Availability; and
(b) be stated to expire on a date (its "STATED EXPIRY DATE") no later
than fifteen days prior to the then Commitment Termination Date.
So long as no Default has occurred and is continuing, by delivery to the
applicable Issuer and the Administrative Agent of an Issuance Request at least
five but not more than fifteen Business Days prior to the earlier of (i) the
Stated Expiry Date of any Letter of Credit and (ii) (if such Letter of Credit
contains provisions for automatic extension or renewal unless the Issuer advises
the beneficiary thereof that such Letter of Credit will not be extended or
renewed) the date upon which in accordance with the terms of such Letter of
Credit, the Issuer must provide notice to the Borrower that such Letter of
Credit will expire without renewal on the Stated Expiry Date, the Borrower may
request such Issuer to extend the Stated Expiry Date of such Letter of Credit to
a date no later than fifteen days prior to the then Commitment Termination Date.
Notwithstanding any provision contained in the foregoing to the contrary, the
Borrower may not request the issuance of, and no Issuer shall have an obligation
to issue, any Letter of Credit at any time when, or if after giving effect to
such issuance, and so long as, the Letter of Credit Outstandings shall equal or
exceed $15,000,000.
SECTION 4.2 ISSUANCES AND EXTENSIONS.
(a) On the terms and subject to the conditions of this Agreement
(including ARTICLE VI), the Issuer shall issue Letters of Credit, and extend the
Stated Expiry Dates of outstanding Letters of Credit, in accordance with the
Issuance Requests made therefor. Each Issuer will make available the original
of each Letter of Credit which it issues in accordance with the Issuance Request
therefor to the beneficiary thereof (and will promptly provide the Borrower and
each of the Lenders with a copy of such
-39-
<PAGE>
Letter of Credit) and will notify the beneficiary under any Letter of Credit of
any extension of the Stated Expiry Date or other renewal thereof.
(b) No Issuer is under any obligation to issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Issuer from
issuing such Letter of Credit, or any Applicable Law with respect to the
Issuer or any request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over the Issuer shall by
its terms purport to direct the Issuer to refrain from the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon the Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Issuer is not
otherwise compensated hereunder) not in effect on the Original Effective
Date, or shall impose upon the Issuer any unreimbursed loss, cost or
expense which was not applicable on the Original Effective Date and which
the Issuer in good faith deems material to it (unless the Borrower elects
to pay such losses, costs and expenses);
(ii) the Issuer has received written notice from any Lender, either
Co-Agent or the Borrower, on or prior to the Business Day prior to the
requested date of issuance of such Letter of Credit, that one or more of
the applicable conditions contained in ARTICLE VI is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is prior to
the maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(iv) any requested Letter of Credit is not in form and substance
acceptable to the Issuer, or the issuance of a Letter of Credit shall
violate any applicable policies of the Issuer; or
(v) any standby Letter of Credit is for the purpose of supporting the
issuance of any letter of credit by any other Person.
SECTION 4.3 EXPENSES. The Borrower agrees to pay to the Administrative
Agent for the account of the applicable Issuer(s) all administrative expenses
of such Issuer(s) in connection with the issuance, maintenance, modification (if
any) and administration of each Letter of Credit issued by such Issuer(s) upon
demand from time to time.
-40-
<PAGE>
SECTION 4.4 OTHER LENDERS' PARTICIPATION.
(a) Each Letter of Credit issued pursuant to SECTION 4.2 shall, effective
upon its issuance and without further action, be issued on behalf of all Lenders
(including the Issuer thereof) PRO RATA according to their respective
Percentages. Each Lender shall, to the extent of its Percentage, be deemed
irrevocably to have participated in the issuance of such Letter of Credit
(including, without limitation, Letters of Credit issued prior to the
Restatement Effective Date) and shall be responsible to reimburse promptly the
Issuer thereof for Reimbursement Obligations which have not been reimbursed by
the Borrower in accordance with SECTION 4.5, or which have been reimbursed by
the Borrower but must be returned, restored or disgorged by such Issuer for any
reason, and each Lender shall, to the extent of its Percentage, be entitled to
receive from the Administrative Agent a ratable portion of the letter of credit
fees received by the Administrative Agent pursuant to SECTION 3.3.4, with
respect to each Letter of Credit and which accrue on or after the Restatement
Effective Date.
(b) In the event that the Borrower shall fail to reimburse any Issuer, or
if for any reason Loans shall not be made to fund any Reimbursement Obligation,
all as provided in SECTION 4.5 and in an amount equal to the amount of any
drawing honored by such Issuer under a Letter of Credit issued by it, or in the
event such Issuer must for any reason return or disgorge such reimbursement,
such Issuer shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein. Each Lender
shall make available to such Issuer, whether or not any Default shall have
occurred and be continuing, an amount equal to its respective participation in
same day or immediately available funds at the office of such Issuer specified
in such notice not later than 9:00 a.m., San Francisco time, on the Business Day
(under the laws of the jurisdiction of such Issuer) after the date notified by
such Issuer.
(c) In the event that any Lender fails to make available to any Issuer the
amount of such Lender's participation in any Letter of Credit as provided
herein, such Issuer shall be entitled to recover such amount on demand from such
Lender together with interest at the daily average Federal Funds Rate for three
Business Days (together with such other compensatory amounts as may be required
to be paid by such Lender to the Administrative Agent pursuant to the Rules for
Interbank Compensation of the council on International Banking or the
Clearing house Compensation Committee, as the case may be, as in effect from
time to time) and thereafter at the Alternate Base Rate.
-41-
<PAGE>
(d) Nothing in this SECTION 4.4 shall be deemed to prejudice the right of
any Lender to recover from any Issuer any amounts made available by such Lender
to such Issuer pursuant to this Section in the event that it is finally
determined by a court of competent jurisdiction that the payment with respect to
a Letter of Credit by such Issuer in respect of which payment was made by such
Lender constituted gross negligence or wilful misconduct on the part of such
Issuer. Each Issuer shall distribute to each other Lender which has paid all
amounts payable by it under this SECTION 4.4 with respect to any Letter of
Credit issued by such Issuer such other Lender's Percentage of all payments
received by such Issuer from the Borrower in reimbursement of drawings honored
by such Issuer under such Letter of Credit when such payments are received.
SECTION 4.5 DISBURSEMENTS. Each Issuer will notify the Borrower and the
Administrative Agent promptly of the presentment for payment of any Letter of
Credit, together with notice of the date (a "DISBURSEMENT DATE") such payment
shall be made. Subject to the terms and provisions of such Letter of Credit,
the applicable Issuer shall make such payment to the beneficiary (or its
designee) of such Letter of Credit. Prior to 10:00 a.m., San Francisco time, on
the Disbursement Date, the Borrower will reimburse the applicable Issuer for all
amounts which it has disbursed or is required to disburse under the Letter of
Credit on such date. To the extent the applicable Issuer is not reimbursed in
full in accordance with the THIRD SENTENCE of this Section, the Borrower's
Reimbursement Obligation shall accrue interest at a fluctuating rate equal to
the Alternate Base Rate through and including the first Business Day after the
Disbursement Date, and thereafter at a fluctuating rate equal to the Alternate
Base Rate plus a margin of 2.0% PER ANNUM, in each case, payable on demand. The
Borrower may borrow Loans hereunder in order to pay any Reimbursement
Obligation, subject to the terms and conditions hereof (except for the minimum
amounts for Borrowings set forth in SECTION 2.3) including satisfaction of the
conditions set forth in SECTION 6.2, PROVIDED, HOWEVER, for the purpose of
determining the availability of the Commitments to make Loans immediately prior
to giving effect to the application of the proceeds of such Loans, such
Reimbursement Obligation shall be deemed not to be outstanding at such time.
SECTION 4.6 REIMBURSEMENT. The Borrower's obligation (a "REIMBURSEMENT
OBLIGATION") under SECTION 4.5 to reimburse an Issuer with respect to each
Disbursement (including interest thereon), and each Lender's obligation to make
participation payments in each drawing which has not been reimbursed by the
Borrower, shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, recoupment counterclaim, or defense to payment
which the Borrower may have or have had against any Lender or any beneficiary
of a Letter of Credit, including any defense based upon the occurrence of any
-42-
<PAGE>
Default, any draft, demand or certificate or other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient, the
failure of any Disbursement to conform to the terms of the applicable Letter of
Credit (if, in the applicable Issuer's good faith opinion, such Disbursement is
determined to be appropriate) or any non-application or misapplication by the
beneficiary of the proceeds of such Disbursement, or the legality, validity,
form, regularity, or enforceability of such Letter of Credit; PROVIDED, HOWEVER,
that nothing herein shall adversely affect the right of the Borrower to
commence any proceeding against the applicable Issuer for any wrongful
Disbursement made by such Issuer under a Letter of Credit as a result of acts or
omissions constituting gross negligence or wilful misconduct on the part of such
Issuer.
SECTION 4.7 DEEMED DISBURSEMENTS. Upon the occurrence and during the
continuation of any Event of Default after the Collateral Release Date or the
occurrence of the Commitment Termination Date, an amount equal to that portion
of Letter of Credit Outstandings attributable to outstanding and undrawn Letters
of Credit shall, at the election of the applicable Issuer acting on instructions
from the Required Lenders, and without demand upon or notice to the Borrower, be
deemed to have been paid or disbursed by such Issuer under such Letters of
Credit (notwithstanding that such amount may not in fact have been so paid or
disbursed), and, upon notification by such Issuer to the Administrative Agent
and the Borrower of its obligations under this Section, the Borrower shall be
immediately obligated to pay to the Administrative Agent, the amount deemed to
have been so paid or disbursed by such Issuer. Any amounts so received by the
Administrative Agent from the Borrower pursuant to this SECTION 4.7 shall be
held by the Administrative Agent in a segregated account as collateral security
for the repayment of the Borrower's Obligations in connection with the Letters
of Credit issued by such Issuer and, subject to the prior payment of such
Obligations, the other Obligations of the Borrower. The Borrower hereby assigns
and pledges to the Administrative Agent, for the benefit of the applicable
Issuer, and hereby grants to the Administrative Agent, for the benefit of the
applicable Issuer, a security interest in and lien upon such account and all
deposits in such account, all investments arising out of such funds, all claims
thereunder or in connection therewith and all cash, securities, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of such account, such funds or such investments. At such
time when all Events of Default shall have been cured or waived, the
Administrative Agent shall return to the Borrower all amounts then on deposit
with the Administrative Agent pursuant to this Section. All amounts on deposit
pursuant to this Section shall, until their application to any Reimbursement
Obligation or other Obligation or their return to the Borrower, as the case may
be, bear interest at the daily average Federal Funds Rate from time
-43-
<PAGE>
to time in effect (net of the costs of any reserve requirements, in respect of
amounts on deposit pursuant to this Section, pursuant to F.R.S. Board
Regulation D), which interest shall be held by the Administrative Agent as
additional collateral security for the repayment of the Obligations.
SECTION 4.8 NATURE OF REIMBURSEMENT OBLIGATIONS. The Borrower shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Neither any Issuer nor any Lender (except to the
extent of its own gross negligence or wilful misconduct) shall be responsible
for:
(a) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the application for and issuance of a Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or proceeds thereof in whole or in part, which may prove to be invalid or
ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, or otherwise;
or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a Letter
of Credit or of the proceeds thereof.
None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted any Issuer or any Lender hereunder. In furtherance and
extension, and not in limitation or derogation, of any of the foregoing, any
action taken or omitted to be taken by any Issuer in good faith shall be binding
upon the Borrower and shall not put such Issuer under any resulting liability to
the Borrower.
SECTION 4.9 INDEMNITY. The Borrower hereby agrees to protect, indemnify,
pay and save each Issuer, Co-Agent and Lender harmless from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and allocated costs of
-44-
<PAGE>
internal counsel) which such Issuer, Co-Agent or Lender may incur or be subject
to as a consequence, direct or indirect, of
(a) the issuance of the Letters of Credit, other than as a result of
the gross negligence or wilful misconduct of such Issuer, Co-Agent or
Lender as determined by a court of competent jurisdiction, or
(b) the failure of such Issuer, Co-Agent or Lender to honor a drawing
under any Letter of Credit as a result of any applicable act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority.
SECTION 4.10 CONFLICTS WITH LETTER OF CREDIT RELATED DOCUMENTS. In the
event of any conflict between this Agreement and any of the agreements and
instruments entered into by the Borrower with (or in favor of) any Issuer and
relating to any Letter of Credit (other than the Letter of Credit itself),
including any Issuance Request, this Agreement shall control.
ARTICLE V
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 5.1 EURODOLLAR RATE LENDING UNLAWFUL. If any Lender shall
determine (which determination shall, upon notice thereof to the Borrower and
the Lenders, be conclusive and binding on the Borrower) that the introduction of
or any change in or in the interpretation of any law makes it unlawful, or any
central bank or other governmental authority asserts that it is unlawful, for
such Lender to make, continue or maintain any Loan as, or to convert any Loan
into, a Eurodollar Loan of a certain type, the obligations of such Lender to
make, continue, maintain or convert into any such Loans shall, upon such
determination, forthwith be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such suspension no longer
exist, and all outstanding Eurodollar Loans of such type made by such Lender
shall automatically convert into Base Rate Loans at the end of the then
current Interest Periods with respect thereto or sooner, if required by such law
or assertion.
SECTION 5.2 DEPOSITS UNAVAILABLE. If the Majority Lenders shall have
determined that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to the Administrative Agent in its
relevant market; or
-45-
<PAGE>
(b) by reason of circumstances affecting their relevant eurodollar
markets, adequate means do not exist for ascertaining the interest rate
applicable hereunder to Eurodollar Loans of such type,
then, upon notice from the Administrative Agent to the Borrower and the Lenders,
the obligations of all Lenders under SECTION 2.3 and SECTION 2.4 to make or
continue any Loans as, or to convert any Loans into, Eurodollar Loans of such
type shall forthwith be suspended until the Administrative Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension no
longer exist.
SECTION 5.3 INCREASED EURODOLLAR LOAN COSTS, ETC. The Borrower agrees to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum receivable by such Lender in respect of,
making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, Eurodollar Loans. Such Lender shall promptly notify the
Administrative Agent and the Borrower in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount (which shall include calculations in reasonable detail).
Such additional amounts shall be payable by the Borrower directly to such Lender
within five Business Days of its receipt of such notice, and such notice shall,
in the absence of manifest error, be conclusive and binding on the Borrower.
SECTION 5.4 FUNDING LOSSES. In the event any Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a Eurodollar Loan)
as a result of
(a) any conversion or repayment or prepayment of the principal amount
of any Eurodollar Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to SECTION 3.1 or
otherwise;
(b) any Loans not being made as Eurodollar Loans in accordance with
the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, Eurodollar
Loans in accordance with the Continuation/Conversion Notice therefore,
-46-
<PAGE>
then, upon the written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), which notice shall set forth the basis for requesting
such reimbursement, the Borrower shall, within five Business Days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrower.
SECTION 5.5 INCREASED CAPITAL COSTS. If any change in, or
the introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in since the Original Effective Date of, any law or regulation, directive,
guideline, decision or request (whether or not having the force of law) of any
court, central bank, regulator or other governmental authority affects or would
affect the amount of capital required or expected to be maintained by any Lender
or any Person controlling such Lender, and such Lender determines (in its sole
and absolute discretion) that the rate of return on its or such controlling
Person's capital as a consequence of its Commitments, issuance of or
participation in Letters of Credit or the Loans made by such Lender is reduced
to a level below that which such Lender or such controlling Person could have
achieved but for the occurrence of any such circumstance, then, in any such case
upon notice from time to time by such Lender to the Borrower, the Borrower
shall, within five Business Days of its receipt thereof pay directly to such
Lender additional amounts sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrower. In determining such amount, such Lender
may use any method of averaging and attribution that it (in its sole and
absolute discretion) shall deem applicable.
SECTION 5.6 TAXES. (a) All payments by the Borrower of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts (such non-excluded items being called "TAXES"). In the event
that any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Borrower will
(i) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
-47-
<PAGE>
(ii) promptly forward to the Administrative Agent an official receipt
or other documentation satisfactory to the Administrative Agent evidencing
such payment to such authority; and
(iii) pay to the Administrative Agent for the account of the Lenders
such additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against either Co-Agent or any
Lender with respect to any payment received by the such Co-Agent or such Lender
hereunder, such Co-Agent or such Lender may pay such Taxes and the Borrower will
promptly pay such additional amounts (including any penalties, interest or
expenses) as is necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional amount)
shall equal the amount such person would have received had not such Taxes been
asserted.
(b) If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the respective Co-Agents or Lenders, the required receipts or other required
documentary evidence, the Borrower shall indemnify the Co-Agents and Lenders for
any incremental Taxes, interest or penalties that may become payable by any Co-
Agent or Lender as a result of any such failure. For purposes of this
SECTION 5.6, a distribution hereunder by either Co-Agent or any Lender to or for
the account of any Lender shall be deemed a payment by the Borrower.
Each Lender that is organized under the laws of a jurisdiction other than
the United States shall, prior to the date such Lender becomes a party to this
Agreement and in a timely fashion thereafter, execute and deliver to the
Borrower and the Administrative Agent, one or more (as the Borrower or the
Administrative Agent may reasonably request) United States Internal Revenue
Service Forms 4224 or Forms 1001 or such other forms or documents (or successor
forms or documents), appropriately completed, as may be applicable to establish
the extent, if any, to which a payment to such Lender is exempt from withholding
or deduction of Taxes.
SECTION 5.7 PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Administrative
Agent for the PRO RATA account of the Lenders entitled to receive such payment.
All such payments required to be made to the Administrative Agent shall be made,
without setoff, deduction or counterclaim, not later than
-48-
<PAGE>
9:00 a.m., San Francisco time, on the date due, in same day or immediately
available funds, to such account as the Administrative Agent shall specify from
time to time by notice to the Borrower. Funds received after that time shall be
deemed to have been received by the Administrative Agent on the next succeeding
Business Day. The Administrative Agent shall promptly remit in same day funds
to each Lender its share, if any, of such payments received by the
Administrative Agent for the account of such Lender. All interest and fees
shall be computed on the basis of the actual number of days (including the first
day but excluding the last day) occurring during the period for which such
interest or fee is payable over a year comprised of 360 days (or, in the case of
interest on a Base Rate Loan (other than when calculated with respect to the
Federal Funds Rate), 365 days or, if appropriate, 366 days). Whenever any
payment to be made shall otherwise be due on a day which is not a Business Day,
such payment shall (except as otherwise required by CLAUSE (c) of the definition
of the term "INTEREST PERIOD" with respect to Eurodollar Loans) be made on the
next succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 5.8 SHARING OF PAYMENTS. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of
SECTIONS 5.3, 5.4 and 5.5) or Letter of Credit in excess of its PRO RATA share
of payments then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Loans made by them and/or
Letters of Credit as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them; PROVIDED,
HOWEVER, that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such recovery together with an amount equal to such selling Lender's
ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
TO
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section may,
to the fullest extent
-49-
<PAGE>
permitted by law, exercise all its rights of payment (including set-off, but
subject to SECTION 5.9) with respect to such participation as fully as if such
Lender were the direct creditor of the Borrower in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section to share in the benefits of any
recovery on such secured claim.
SECTION 5.9 SET-OFF. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists, each Lender is
authorized at any time and from time to time, without prior notice to the
Borrower, any such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing to, such Lender to or for the credit or the
account of the Borrower against any and all Obligations owing to such Lender,
now or hereafter existing, irrespective of whether or not the Administrative
Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such set-off and application made by such Lender; PROVIDED, HOWEVER, that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of each Lender under this Section 5.9 are in
addition to the other rights and remedies (including other rights of set-
off) which the Lender may have. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE
LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF THE BORROWER OR ANY SUBSIDIARY
OF THE BORROWER HELD OR MAINTAINED BY THE LENDER WITHOUT THE PRIOR WRITTEN
CONSENT OF THE REQUIRED LENDERS AND EACH CO-AGENT.
SECTION 5.10 USE OF PROCEEDS. The Borrower shall apply the proceeds of
each Borrowing in accordance with RECITAL H, PROVIDED, that, without limiting
the foregoing, no proceeds of any Loan will be used to acquire or carry any
equity security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, or any "margin stock", as defined
in F.R.S. Board Regulation U except for Approved Acquisitions in compliance with
F.R.S. Board Regulation U.
-50-
<PAGE>
SECTION 5.11 OTHER INCREASED COSTS. If by reason of
(a) any change in applicable law, regulation, rule, decree or
regulatory requirement or any change in the interpretation or application
by any judicial or regulatory authority of any law, regulation, rule,
decree or regulatory requirement, or
(b) compliance by any Lender or any Issuer with any direction,
request or requirement (whether or not having the force of law) of any
governmental or monetary authority, including Regulation D of the F.R.S.
Board:
(i) any Lender or any Issuer shall be subject to any tax (other
than taxes on net income and franchises), levy, charge or withholding
of any nature or to any variation thereof or to any penalty with
respect to the maintenance or fulfillment of its obligations under
this Agreement, whether directly or by such being imposed on or
suffered by such Lender or Issuer;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letters of Credit
issued by any Issuer or participations therein purchased by any Lender
or any Commitment or Loans made by any Lender, but excluding with
respect to any Eurodollar Loan any such requirement included in the
calculation of the Eurodollar Rate (Reserve Adjusted); or
(iii) there shall be imposed on any Issuer any other condition
regarding any Letter of Credit or any other condition on any Lender
regarding this Agreement, any Commitment and Loans and any
participation in any Letter of Credit;
and the result of the foregoing is directly or indirectly to increase the cost
to such Issuer or such Lender of issuing, making or maintaining its Commitment,
any Loans or any Letter of Credit or of purchasing or maintaining any
participation therein or making any Loan or to reduce any amount receivable in
respect of any such Letter of Credit or any such Commitment or Loan by such
Issuer or such Lender, as applicable, then and in any such case such Issuer or
such Lender, as applicable, may, at any time after the additional cost is
incurred or the amount received is reduced, notify the Borrower thereof, and the
Borrower shall pay on demand such amounts as such Issuer or Lender, as
applicable, may specify to be necessary to compensate such Issuer or Lender, as
applicable, for such additional cost or reduced receipt, together with interest
on such amount from the date demanded until payment in full thereof at a rate
equal at all times to the
-51-
<PAGE>
Alternate Base Rate. The determination by such Issuer or Lender, as applicable,
of any amount due pursuant to this Section, as set forth in a statement setting
forth the calculation thereof in reasonable detail, shall, in the absence of
manifest error, be final and conclusive and binding on all of the parties
hereto.
SECTION 5.12 OBLIGATION TO MITIGATE; SUBSTITUTION OF LENDERS. (a) Each
Lender agrees that as promptly as practicable after it becomes aware of the
occurrence of an event that would entitle it to give notice pursuant to this
ARTICLE V, and in any event if so requested by the Borrower, each Lender shall
use reasonable efforts to make, fund or maintain its affected Eurodollar Rate
Loans through another Domestic Office, or a lending office outside of the United
States, if as a result thereof the increased costs would be avoided or
materially reduced or the illegality would thereby cease to exist and if, in the
opinion of such Lender, the making, funding or maintaining of such Eurodollar
Rate Loans through such other office would not be disadvantageous to such Lender
or contrary to such Lender's normal banking practices.
(b) Upon the receipt by the Borrower from any Lender (an "AFFECTED
LENDER") of a request for compensation or payment under this ARTICLE V, the
Borrower may: (i) request one or more of the other Lenders to acquire and
assume (in such Lender's sole discretion) all or part of such Affected Lender's
Loans and Commitments; or (ii) designate a replacement bank or financial
institution to acquire and assume all or part of such Affected Lender's Loans
and Commitments. Any such designation of a replacement bank or financial
institution under CLAUSE (ii) shall be subject to the prior written consent of
the Administrative Agent and the other Lenders (which consent shall not be
unreasonably withheld). Nothing in this CLAUSE (b) shall relieve the Borrower
of any obligation to pay any amounts accrued under this ARTICLE V prior to the
date any Lender is replaced.
SECTION 5.13 CERTAIN RESTATEMENT EFFECTIVE DATE TRANSITIONAL MATTERS.
(a) On the Restatement Effective Date, each Lender hereby sells and
assigns, without recourse, an amount of Loans equal to the product of (i)
the excess (if any) of its Original Percentage over its Restated Percentage
times (ii) the aggregate principal amount of Loans outstanding on such date
and each Lender hereby purchases an amount of Loans equal to the product of
(i) the excess (if any) of its Restated Percentage over its Original
Percentage times (ii) the aggregate principal amount of Loans outstanding
on such date. Each Lender selling Loans under this SECTION 5.13 shall be
deemed to have sold (and each Lender purchasing Loans shall be deemed to
have purchased) a PRO RATA portion (based on the aggregate principal amount
of Loans then
-52-
<PAGE>
outstanding) of each of such selling Lender's Loans. Payments by each
Lender purchasing Loans under this SECTION 5.13 shall be made to the
Administrative Agent not later than 9:00 a.m., San Francisco time in
immediately available funds, without setoff, deduction or counterclaim,
for the PRO RATA account (based upon the outstanding principal amount of
Loans being sold) of each selling Lender in an amount equal to the
aggregate principal amount of outstanding Loans purchased by such Lender.
(b) On and after the Restatement Effective Date, each Lender shall be
entitled to receive commitment fees under SECTION 3.3.1, letter of credit
fees under SECTION 3.3.5 and interest on Loans and on any other amount due
under any Loan Document, in each case, (i) accrued and unpaid before the
Restatement Effective Date in accordance with its Original Percentage and
(ii) accrued on and after the Restatement Effective Date in accordance with
its Restated Percentage.
(c) Each Lender acknowledges and agrees that in accordance with
SECTION 4.4 it shall be deemed to have participated in the issuance of each
Letter of Credit issued pursuant to SECTION 4.2 (including, without
limitation, Letters of Credit issued prior to the Restatement Effective
Date) in accordance with its Restated Percentage.
(d) On and after the Restatement Effective Date, to the extent that
any commitment and the other rights and obligations of any Lender existing
at the time immediately preceding the Restatement Effective Date have been
assigned or delegated, as applicable, to any Lender under this Agreement,
such Lender hereby assumes such commitment and other obligations and shall
have the rights and obligations of a Lender hereunder and under the other
Loan Documents and, to the extent that any commitment and other obligations
of any Lender existing at the time immediately preceding the Restatement
Effective Date have been delegated by any Lender pursuant to this
Agreement, such Lender shall be released from such commitment and its
obligations thereunder and under the other Loan Documents.
(e) Each Lender agrees to waive its right to receive any amounts to
which it may be entitled pursuant to SECTION 5.4 of this Agreement or
Section 5.4 of the Original Agreement solely to the extent such amounts
relate to or arise from the sales and purchases of Loans by Lenders under
this SECTION 5.13.
-53-
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO RESTATEMENT EFFECTIVE DATE. Unless otherwise
terminated pursuant to Section 6.4, this Agreement shall become effective on the
date (the "RESTATEMENT EFFECTIVE DATE") the conditions precedent set forth in
this SECTION 6.1 have been satisfied:
SECTION 6.1.1 AGREEMENT. The Administrative Agent shall have received
counterparts hereof executed on behalf of the Borrower, each Co-Agent and each
Lender (or notice thereof satisfactory to the Administrative Agent) shall have
been received by the Administrative Agent.
SECTION 6.1.2 RESOLUTIONS, ETC. The Administrative Agent shall have
received from each Obligor a certificate, dated the Restatement Effective Date,
of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it; and
(b) the incumbency and signatures of those of its officers or other
designees authorized to act with respect to this Agreement, the Notes and
each other Loan Document executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Obligor canceling or
amending such prior certificate.
SECTION 6.1.3 DELIVERY OF NOTES. The Administrative Agent shall have
received in exchange for Notes delivered on the Original Effective Date, for the
account of each Lender, its Note payable to the order of such Lender in a
maximum principal amount equal to such Lender's Restated Percentage of the
Commitment in effect as the Restatement Effective Date and duly executed and
delivered by the Borrower.
SECTION 6.1.4 GUARANTY. The Administrative Agent shall have received the
Guaranty in substantially the form of EXHIBIT J, dated the date hereof, duly
executed by each Significant Subsidiary of the Borrower.
SECTION 6.1.5 DEED OF TRUST. The Collateral Agent shall have received a
Modification to Deed of Trust in substantially the form of EXHIBIT I-2, dated as
of the date hereof, duly executed by the Borrower, modifying the Deed of Trust
in the form
-54-
<PAGE>
of Exhibit I to the Original Credit Agreement which has been executed and
delivered by the Borrower to the Collateral Agent and a copy of which is
attached hereto as EXHIBIT I, together with
(a) evidence of the completion (or satisfactory arrangements for the
completion) of all recordings and filings of the Modification of Deed of
Trust as may be necessary or, in the reasonable opinion of the Collateral
Agent, desirable effectively to create a valid, perfected first priority
Lien against the properties purported to be covered thereby, subject to the
exceptions contained in the preliminary title report therefor that
constitute Liens permitted by SECTION 8.2.3 or approved in writing by the
Collateral Agent;
(b) mortgagee's title insurance policies (or binding commitments
therefor) in favor of the Collateral Agent and the Lenders in an aggregate
amount equal to $100,000,000 and in form and substance and issued by
insurers, and reinsured by reinsurers in amounts, in each case, reasonably
satisfactory to the Collateral Agent, with respect to the property
purported to be covered by the Deed of Trust and Modification to Deed of
Trust, insuring that the Borrower owns in fee simple the real property
covered by the Deed of Trust and that the interests created by the Deed of
Trust and Modification to Deed of Trust constitute valid first Liens
thereon free and clear of all defects and encumbrances other than liens
permitted pursuant to SECTION 8.2.3 or as approved by the Collateral Agent,
and such policies shall also include a revolving credit endorsement and
such other endorsements as the Collateral Agent shall reasonably request;
and
(c) such other approvals, opinions, or documents as the Collateral
Agent may reasonably request.
SECTION 6.1.6 SECURITY AGREEMENTS. The Collateral Agent shall have
received executed counterparts of the (1) Security Agreement, dated as of the
date hereof, in the form of EXHIBIT M hereto, duly executed by the Borrower and
(2) the Subsidiary Security Agreements, each in the form of EXHIBIT N hereto,
dated as of the date hereof, duly executed by the applicable Significant
Subsidiary, in each case together with
(a) fully executed Uniform Commercial Code financing statements (Form
UCC-1), dated a date reasonably near to the Restatement Effective Date
naming the Borrower and each Significant Subsidiary as the debtors and the
Collateral Agent as the secured party, or other similar instruments or
documents, to be filed under the UCC of all jurisdictions as may be
necessary or, in the opinion of the Collateral Agent,
-55-
<PAGE>
desirable to perfect the security interests of the Collateral Agent granted
pursuant to the Security Agreement and the Subsidiary Security Agreements;
(b) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens other than
the Liens permitted by SECTION 8.2.3 and other rights of any Person
(i) in any collateral described in the Security Agreement or the
Subsidiary Security Agreements previously granted by any Person, or
(ii) securing any of the Indebtedness identified in ITEM 6.10
("INDEBTEDNESS TO BE PAID") of the Disclosure Schedule,
together with such other Uniform Commercial Code Form UCC-3 termination
statements as the Collateral Agent may reasonably request from such
Obligors;
(c) copies of search reports by a party acceptable to the Collateral
Agent, dated a date reasonably near to the Restatement Effective Date,
listing all effective financing statements which name the Borrower or any
Significant Subsidiary (in each case under its present name and any
previous names) as the debtor and which are filed in the jurisdictions in
which filings are to be made pursuant to CLAUSE (a) above, together with
copies of such financing statements; and
(d) evidence that all other actions necessary or, in the opinion of
the Collateral Agent or the Lenders, desirable to perfect and protect the
first priority Lien created by the Collateral Documents, and to enhance the
Collateral Agent's ability to preserve and protect its interests in and
access to the Collateral, have been taken.
SECTION 6.1.7 OPINIONS OF COUNSEL. The Administrative Agent shall have
received opinions, dated the date of the Restatement Effective Date and
addressed to the Co-Agents and all Lenders, from
(a) Brobeck, Phleger and Harrison, counsel to the Obligors, in
substantially the form of EXHIBIT E hereto; and
(b) Mayer, Brown & Platt, special counsel to the Administrative
Agent, in substantially the form of EXHIBIT F hereto.
SECTION 6.1.8 SOLVENCY, VALUATION, ETC. The Administrative Agent shall
have received a certificate of an Authorized Officer
-56-
<PAGE>
of the Borrower, which officer shall be the chief accounting or financial
Authorized Officer, dated the Restatement Effective Date, substantially in the
form of EXHIBIT G.
SECTION 6.1.9 INSURANCE CERTIFICATES. The Administrative Agent shall have
received certificates of Marsh & McLennan, the insurance broker of the Borrower,
in substantially the form set forth in EXHIBIT H, together with copies of the
insurance policies and any other documents referred to in each such certificate.
SECTION 6.1.10 PAYMENT OF CERTAIN INDEBTEDNESS. The Administrative Agent
shall have received written confirmation from the Borrower that, as of the
Restatement Effective Date, all Indebtedness described in ITEM 6.1.10
("INDEBTEDNESS TO BE PAID") of the Disclosure Schedule shall have been paid in
full or shall be paid contemporaneously at the time of the initial Credit
Extension on or after the Restatement Effective Date.
SECTION 6.1.11 PURCHASE OF LOANS, CLOSING FEES, EXPENSES, ETC. The
Administrative Agent shall have received for its own account, or for the account
of the applicable Lender or the Collateral Agent, as the case may be, all
payments due on the Restatement Effective Date from any Lender in respect of
Loans assigned pursuant to SECTION 5.13 and all fees, costs and expenses due and
payable pursuant to SECTIONS 3.3 and 11.3, if then invoiced.
SECTION 6.2 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each
Lender to make any Credit Extension (including the initial Credit Extension on
or after the Restatement Effective Date) shall be subject to the satisfaction of
each of the conditions precedent set forth in this SECTION 6.2.
SECTION 6.2.1 COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before
and after giving effect to any Credit Extension (but, if any Default of the
nature referred to in Section 9.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of any Borrowing) the following statements shall be
true and correct
(a) the representations and warranties set forth in ARTICLE VII
(excluding, however, those contained in SECTION 7.7) shall be true and
correct (both before and after giving PRO FORMA effect to any Acquisition
to be financed with the proceeds of such Credit Extension) with the same
effect as if then made (unless stated to relate solely to an earlier date,
in which case such representations and warranties shall be true and correct
as of such earlier date); PROVIDED that SECTION 7.5 shall be deemed to
refer to the most recent
-57-
<PAGE>
date of the delivery of the financial statements referred to therein;
(b) except as disclosed by the Borrower to the Administrative Agent
and the Lenders pursuant to SECTION 7.7
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or, to the
knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries which (A) if determined adversely to the Borrower or
such Subsidiary, as the case may be, could reasonably be expected to
have a Material Adverse Effect (except, but only to the extent, the
statement in this SUBCLAUSE (A) is made or deemed made with respect to
any time prior to the Collateral Release Date, for Asbestos
Litigation) or (B) which purports to affect the legality, validity or
enforceability of this Agreement, the Notes or any other Loan
Document; and
(ii) no development shall have occurred in any labor controversy,
litigation, arbitration or governmental investigation or proceeding
disclosed pursuant to SECTION 7.7 which if determined adversely to the
Borrower or any of its Subsidiaries, as the case may be, could
reasonably be expected to have a Material Adverse Effect (except, but
only to the extent that the statement in this CLAUSE (ii) is made or
deemed made with respect to any time prior to the Collateral Release
Date, for Asbestos Litigation);
(c) no Default shall have then occurred and be continuing, and
neither the Borrower nor any of its Subsidiaries are in material violation
of any applicable law or governmental regulation or court order or decree;
and
(d) at any time after the Collateral Release Date, there exists no
Material Post-Collateral Release Asbestos Litigation.
SECTION 6.2.2 CREDIT REQUEST. The Administrative Agent shall have
received a Borrowing Request or Issuance Request, as the case may be, for such
Credit Extension. Each of the delivery of a Borrowing Request or an Issuance
Request and the acceptance by the Borrower of the proceeds of the Borrowing or
the issuance of the Letter of Credit, as applicable, shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
(both immediately before and after giving effect to such Borrowing and the
application of the proceeds thereof) or the issuance of the Letter of Credit, as
applicable, the statements made in SECTION 6.2.1 are true and correct.
-58-
<PAGE>
SECTION 6.2.3 SATISFACTORY LEGAL FORM. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries shall be satisfactory in form and substance to the Administrative
Agent, the Collateral Agent and their respective counsel.
SECTION 6.3 NOTICE OF RESTATEMENT EFFECTIVE DATE. Upon satisfaction of
all the conditions set forth in SECTION 6.1, the Administrative Agent shall
deliver to the Borrower, the Collateral Agent and each Lender a notice stating
that such conditions have been satisfied and setting forth the Restatement
Effective Date.
SECTION 6.4 FAILURE TO REACH RESTATEMENT EFFECTIVE DATE. If all the
conditions set forth in SECTION 6.1 shall not have been satisfied on or prior to
October 15, 1994, this Agreement shall be of no further force or effect unless
each Lender and each Co-Agent shall have consented, in writing, to an extension
of such date. Prior to the Restatement Effective Date (or if the Restatement
Effective Date does not occur) the Original Credit Agreement shall continue in
effect according to its terms.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Co-Agents to enter into this
Agreement and to make Loans and issue Letters of Credit hereunder, the Borrower
represents and warrants unto the Co-Agents and each Lender as set forth in this
ARTICLE VII.
SECTION 7.1 ORGANIZATION, ETC. The Borrower and each of its Subsidiaries
is a corporation validly organized and existing and in good standing under the
laws of the State of its incorporation, is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction in which a
failure to have such authority could reasonably be expected to have a Material
Adverse Effect, and has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and perform its
Obligations under this Agreement, the Notes and each other Loan Document to
which it is a party and to own and hold under lease its property and to conduct
its business substantially as currently conducted by it.
SECTION 7.2 DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution,
delivery and performance by the Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Obligor of each Loan Document executed or
to be executed by it are within the Borrower's and each such Obligor's
-59-
<PAGE>
corporate powers, have been duly authorized by all necessary corporate action,
and do not
(a) contravene the Borrower's or any such Obligor's Organic
Documents;
(b) contravene (i) any material contractual restriction, or (ii) any
law or governmental regulation or court decree or order binding on or
affecting the Borrower or any such Obligor; or
(c) result in, or require the creation or imposition of, any Lien
(other than the Liens of the Collateral Documents) on any of the Borrower's
or any Obligor's properties.
SECTION 7.3 GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Borrower or any other Obligor of this Agreement,
the Notes or any other Loan Document to which it is a party. Neither the
Borrower nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 7.4 VALIDITY, ETC. Each Loan Document executed by an Obligor
will, on the due execution and delivery thereof, constitute, the legal, valid
and binding obligations of such Obligor enforceable in accordance with its
respective terms, except as such enforceability thereof may be limited by (a)
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and (b) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
SECTION 7.5 FINANCIAL INFORMATION. The consolidated balance sheets of
the Borrower and its Subsidiaries as at December 31, 1993, and June 30, 1994 and
the related statements of income, stockholders' equity, if applicable, and cash
flows of the Borrower and its Subsidiaries, copies of which have been furnished
to the Administrative Agent and each Lender, have been prepared in accordance
with GAAP consistently applied (except, in the case of the June 30, 1994
quarterly financial statements, for the absence of notes thereto and for year-
end adjustments), and present fairly the consolidated financial condition of the
corporations covered thereby as at the dates thereof or, as the
-60-
<PAGE>
case may be, the results of their operations for the periods then ended.
SECTION 7.6 NO MATERIAL ADVERSE CHANGE. Since March 31, 1994, there has
been no material adverse change in the financial condition, operations, assets,
business, properties or (but only with respect to Asbestos Litigation related
matters) prospects of the Borrower and its Subsidiaries, taken as a whole.
SECTION 7.7 LITIGATION, LABOR CONTROVERSIES, ETC. Except as disclosed in
ITEM 7.7 ("Litigation") of the Disclosure Schedule, there is no pending or, to
the knowledge of the Borrower, threatened litigation, action, proceeding, or
labor controversy affecting the Borrower or any of its Subsidiaries, or any of
their respective properties, businesses, assets or revenues, which, if
determined adversely to the Borrower or such Subsidiaries could reasonably be
expected to have a Material Adverse Effect (other than, but only prior to the
Collateral Release Date, Asbestos Litigation) or which purports to affect the
legality, validity or enforceability of this Agreement, the Notes or any other
Loan Document. At any time following the Collateral Release Date, there is no
Material Post-Collateral Release Asbestos Litigation.
SECTION 7.8 SUBSIDIARIES. The Borrower has no Subsidiaries, except those
Subsidiaries
(a) which are identified in ITEM 7.8 ("Existing Subsidiaries") of the
Disclosure Schedule or successors thereto; or
(b) the establishment or acquisition of which would not contravene
the terms of this Agreement.
SECTION 7.9 OWNERSHIP OF PROPERTIES. Except as set forth in Item 7.9
("Ownership of Properties"), the Borrower and each of its Subsidiaries owns good
and marketable title to all of their properties and assets, real and personal,
tangible and intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights), free and clear of all
Liens, charges or claims (including infringement claims with respect to patents,
trademarks, copyrights and the like) except as permitted pursuant to SECTION
8.2.3 or, in the case of claims, charges or defaults to title to any such
property or assets not constituting Liens as permitted pursuant to
SECTION 8.2.3, where the existence thereof could not give rise to a Material
Adverse Effect.
SECTION 7.10 TAXES. The Borrower and each of its Subsidiaries has filed
all income and other material tax returns and reports required by law to have
been filed by it and has paid all taxes and governmental charges thereby shown
to be owing,
-61-
<PAGE>
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
SECTION 7.11 PENSION AND WELFARE PLANS. During the twelve-consecutive-
month period prior to the date of the execution and delivery of this Agreement
and prior to the date of any Borrowing hereunder after the Restatement Effective
Date, no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a Lien under section 302(f) of ERISA. No condition exists or event
or transaction has occurred with respect to any Pension Plan which might result
in the incurrence by the Borrower or any member of the Controlled Group of any
material liability, fine or penalty. Except as disclosed in ITEM 7.11
("Employee Benefit Plans") of the Disclosure Schedule, neither the Borrower nor
any member of the Controlled Group has any contingent liability with respect to
any post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 7.12 ENVIRONMENTAL WARRANTIES. Except as set forth in ITEM 7.12
("Environmental Matters") of the Disclosure Schedule, to the best of the
Borrower's knowledge:
(a) all facilities and property (including underlying groundwater)
owned or leased by the Borrower or any of its Subsidiaries have been, and
continue to be, owned or leased by the Borrower and its Subsidiaries in
compliance with all Environmental Laws unless the failure to so comply
would not, or could not reasonably be expected to, have a Material Adverse
Effect;
(b) there have been no past, and there are no pending or threatened
(i) claims, complaints, notices or requests for information
received by the Borrower or any of its Subsidiaries with respect to
any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to the Borrower or any of
its Subsidiaries regarding potential liability under any Environmental
Law
which, in any such case, could, if determined adversely to the Borrower or
its Subsidiary, as the case may be, reasonably be expected to have a
Material Adverse Effect;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now or previously owned or
-62-
<PAGE>
leased by the Borrower or any of its Subsidiaries that, singly or in the
aggregate, have, or could reasonably be expected to have, a Material
Adverse Effect;
(d) the Borrower and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses and
other authorizations required by any Environmental Law, except for any such
permits, certificates, approvals, licenses or other authorizations the
possible consequences of the failure to obtain or comply with which could
not reasonably be expected to have a Material Adverse Effect;
(e) no property now or previously owned or leased by the Borrower or
any of its Subsidiaries is listed or (with respect to owned property only)
proposed for listing on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar state list of sites requiring investigation
or clean-up;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or
previously owned or leased by the Borrower or any of its Subsidiaries that,
singly or in the aggregate, have, or could reasonably be expected to have,
a Material Adverse Effect;
(g) neither Borrower nor any Subsidiary of the Borrower has directly
transported or directly arranged for the transportation of any Hazardous
Material, other than asbestos, to any location which is listed or proposed
for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of federal,
state or local enforcement actions or other investigations which may lead
to material claims against the Borrower or such Subsidiary thereof for any
remedial work, damage to natural resources or personal injury, including
claims under CERCLA other than with respect to Asbestos Litigation; and
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the Borrower
or any Subsidiary of the Borrower that, singly or in the aggregate, have,
or could reasonably be expected to have, a Material Adverse Effect.
SECTION 7.13 REGULATIONS G, U AND X. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X
-63-
<PAGE>
or any regulations substituted therefor, as from time to time in effect, are
used in this Section with such meanings.
SECTION 7.14 ACCURACY OF INFORMATION. All factual information heretofore
or contemporaneously furnished by or on behalf of the Borrower in writing to
either Co-Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of the Borrower in writing to
either Co-Agent or any Lender will be, taken as a whole, true and accurate in
every material respect on the date as of which such information is dated or
certified and as of the date of execution and delivery of this Agreement by each
Co-Agent and such Lender, and such information is not, or shall not be, as the
case may be, in light of the circumstances in which furnished, incomplete by
omitting to state any material fact necessary to make such information not
misleading.
SECTION 7.15 COMPLIANCE OF LAWS. Except as disclosed in ITEM 7.15
("Compliance with Laws") of the Disclosure Schedule, each of the Borrower and
its Subsidiaries is, and will on the Restatement Effective Date (both before and
after giving effect to the transactions contemplated hereby) be, in compliance
with the requirements of all Applicable Laws (including maintenance of all
necessary permits, approvals, certificates, licenses and other authorization
relating thereto), except for any noncompliance which does not have, and could
not reasonably be expected to have, a Material Adverse Effect.
SECTION 7.16 ABSENCE OF DEFAULT. Neither the Borrower nor any of its
Subsidiaries is in default in the payment of, or in default in any material
respect in the performance of, any obligation applicable to any outstanding
Indebtedness.
SECTION 7.17 CERTAIN REPRESENTATIONS AND WARRANTIES CONCERNING TIMBERLAND.
SECTION 7.17.1 CONDITION. To the Borrower's best knowledge after due
investigation, the Timberland and Timber are in good condition and are free from
all pests, blight, fungus or disease that would materially impair the value
thereof as a whole, except as disclosed in ITEM 7.17.1 ("Condition of the
Timberland and Timber") of the Disclosure Schedule.
SECTION 7.17.2 ACRES AND VOLUME. As of the Original Effective Date, the
Timberland contains approximately 70,800 acres on which is located, to the best
knowledge of the Borrower, the number of board feet of merchantable Timber set
forth in ITEM 7.17.2 ("Board Feet of Timber") of the Disclosure Schedule.
SECTION 7.17.3 DESCRIPTION OF THE LAND. The Deed of Trust and
Modification to Deed of Trust covers all of the properties
-64-
<PAGE>
described in the report from Mason, Bruce & Girard described in clause (b) of
Section 6.1.8 of the Original Credit Agreement.
SECTION 7.18 FINANCIAL CONDITION. After giving effect to the incurrence
by the Borrower and each Obligor of the Obligations and other transactions
contemplated to occur on the date hereof and on the date of each Credit
Extension:
(a) the net worth of each of the Borrower and each Obligor determined
in accordance with GAAP, consistently applied, will not be less than zero,
(b) the respective assets of each of the Borrower and each Obligor,
at fair valuation, will exceed its respective liabilities, including
contingent liabilities,
(c) the respective capital of each of the Borrower and each Obligor
will not be unreasonably small to conduct its respective business, and
(d) none of the Borrower nor any other Obligor will have incurred
debts, or intends to incur debts, beyond its respective ability to pay such
debts as they mature.
For purposes of this Section, "debt" means any liability with respect to (a) a
right to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (b) a right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
SECTION 7.19 SETTLEMENT AGREEMENTS. Except for the Settlement Agreements,
as of the Restatement Effective Date, neither the Borrower nor any of its
Subsidiaries is a party to any material agreement relating to Asbestos
Litigation to which one or more Insurers is a party (except for any agreement
related to the Borrower's "Structured Settlement Program" or its "Insurance
Assignment Program").
SECTION 7.20 SUBSIDIARIES AND OBLIGORS. References in the representations
and warranties to Subsidiaries and Obligors shall be deemed to include any
Person which becomes a Subsidiary or Obligor on or after the Restatement
Effective Date, commencing with the making or deemed making of any such
representation or warranty in connection with the first Credit Extension which
relates to the Acquisition pursuant to which such Person becomes a Subsidiary,
or at the time such Person becomes an Obligor, as the case may be.
-65-
<PAGE>
ARTICLE VIII
COVENANTS
SECTION 8.1 AFFIRMATIVE COVENANTS. The Borrower agrees with each Co-Agent
and each Lender that, until all Commitments have terminated, all Obligations
have been paid and performed in full, and all Letters of Credit have expired or
are terminated, the Borrower will perform or, as the case may be, comply with
the obligations set forth in this SECTION 8.1.
SECTION 8.1.1 FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The Borrower
will furnish, or will cause to be furnished, to the Administrative Agent copies
of the following financial statements, reports, notices and information:
(a) subject to SECTION 8.1.1(f), as soon as available and in any
event within 45 days after the end of each of the first three Fiscal
Quarters of each Fiscal Year of the Borrower, a consolidated balance sheet
of the Borrower and its Subsidiaries as of the end of such Fiscal Quarter,
a consolidated statement of income of the Borrower and its Subsidiaries for
such Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter, and a
consolidated statement of cash flows of the Borrower and its Subsidiaries
for the period commencing at the end of the previous Fiscal Year and ending
with the end of such Fiscal Quarter certified by a senior financial
Authorized Officer of the Borrower;
(b) subject to SECTION 8.1.1(f), as soon as available and in any
event within 90 days after the end of each Fiscal Year of the Borrower, a
copy of the annual audit report for such Fiscal Year for the Borrower and
its Subsidiaries, including therein a consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such Fiscal Year and
consolidated statement of stockholders' equity, income and cash flows of
the Borrower and its Subsidiaries for such Fiscal Year, in each case
certified (without any Impermissible Qualification other than, prior to the
Collateral Release Date, an Asbestos Qualification) in a manner acceptable
to the Administrative Agent and the Required Lenders by Arthur Andersen &
Co. or other independent public accountants acceptable to the
Administrative Agent and the Required Lenders, together with (A) a reliance
agreement between the Administrative Agent and such accounting firm in form
and substance satisfactory to the Administrative Agent, and (B) a report
from such accountants to the effect that, in making the examination
necessary for the signing of such annual report by such accountants, they
have reviewed computations prepared by the
-66-
<PAGE>
Borrower showing compliance with each of the financial ratios and
restrictions contained in SECTION 8.2.4 and that such accountants have not
become aware of any Default that has occurred and is continuing, or, if
they have become aware of such Default, describing such Default and the
steps, if any, being taken to cure it; PROVIDED that such accountants shall
not be liable by reason of any failure to obtain knowledge of any Default
that would not be disclosed in the course of their audit examination;
(c) as soon as available and in any event within 45 days after the
end of each Fiscal Quarter, a certificate (the "COMPLIANCE CERTIFICATE"),
executed by a senior Authorized Officer of the Borrower, showing (in
reasonable detail and with appropriate calculations and computations in all
respects satisfactory to the Administrative Agent) compliance with the
financial covenants set forth in SECTION 8.2.4;
(d) as soon as possible and in any event within three Business Days
after the occurrence of each Default, a statement of a senior financial
Authorized Officer of the Borrower setting forth details of such Default
and the action which the Borrower has taken and proposes to take with
respect thereto;
(e) as soon as possible and in any event within three days after (x)
the occurrence of any materially adverse development with respect to any
litigation, action, proceeding, or labor controversy described in
SECTION 7.7 or (y) the commencement of any labor controversy, litigation,
action, proceeding of the type described in SECTION 7.7, notice thereof and
if requested by the Required Lenders, copies of such pleadings or motions
filed or served in connection therewith as the Required Lenders may
reasonably request;
(f) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its public securityholders
generally, and all reports and final registration statements (without
exhibits, unless requested by the Administrative Agent, at the request of
any Lender) which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or any national securities exchange
(copies of all such reports provided to the Administrative Agent that
include the information to be provided pursuant to SECTION 8.1.1(a) or
8.1.1(b) shall be deemed to satisfy the requirements of SECTION 8.1.1(a) or
8.1.1(b), as the case may be);
(g) immediately upon becoming aware of the institution of any steps
by the Borrower or any other Person to
-67-
<PAGE>
terminate any Pension Plan (other than any voluntary termination which does
not result in any liability of the Borrower or such Person), or the failure
to make a required contribution to any Pension Plan if such failure is
sufficient to give rise to a Lien under section 302(f) of ERISA, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that the Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by the Borrower of
any material liability (other than ongoing funding obligations and PBGC
premiums), fine or penalty, or any material increase in the contingent
liability of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating thereto;
(h) on or before the Original Effective Date and on or before
March 31 after the end of each Fiscal Year thereafter, a timber harvest
summary that sets forth, classified by species, the volume by board feet of
(a) fee Timber harvested by the Borrower and the average price at which
such Timber of each such species was sold to Persons that are not
Affiliates of the Borrower during the prior Fiscal Year and (b) Timber
purchased by the Borrower from Persons that are not Affiliates of the
Borrower during the prior Fiscal Year and the overall average price at
which such Timber of each such species was purchased by species in the
aggregate; and
(i) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as any
Lender through the Administrative Agent may from time to time reasonably
request.
SECTION 8.1.2 COMPLIANCE WITH LAWS, ETC. The Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its property
except to the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books;
-68-
<PAGE>
where the failure to so comply with any such laws, rules, regulations, or
orders, singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
SECTION 8.1.3 MAINTENANCE OF PROPERTIES AND EXISTING LINES OF BUSINESS.
The Borrower will, and will cause each of its Subsidiaries to, maintain,
preserve, protect and keep its properties in good repair, working order and
condition, and make necessary and proper repairs, renewals and replacements so
that its business carried on in connection therewith may be properly conducted
at all times and will not discontinue any Existing Lines of Business.
SECTION ABC INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible insurance
companies insurance with respect to its properties and business (including
business interruption insurance) against such casualties and contingencies and
of such types and in such amounts as is customary in the case of similar
businesses and will, upon request of the Administrative Agent, furnish to each
Lender at reasonable intervals a certificate of an Authorized Officer of the
Borrower setting forth the nature and extent of all insurance maintained by the
Borrower and its Subsidiaries in accordance with this Section.
SECTION 8.1.5 BOOKS AND RECORDS. The Borrower will, and will cause each
of its Subsidiaries to, keep books and records which accurately reflect all of
its business affairs and transactions and permit the Administrative Agent and
each Lender or any of their respective representatives, at reasonable times and
intervals, to visit all of its offices, to discuss its financial matters with
its officers and independent public accountant (and the Borrower hereby
authorizes such independent public accountant to discuss the Borrower's
financial matters with each Lender or its representatives whether or not any
representative of the Borrower is present) and to examine (and, at the expense
of the Borrower, photocopy extracts from) any of its books or other corporate
records. The Borrower shall pay any fees of such independent public accountant
incurred in connection with the Administrative Agent's or any Lender's exercise
of its rights pursuant to this Section.
SECTION 8.1.6 ENVIRONMENTAL COVENANT. The Borrower will, and will cause
each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in material
compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance with
all applicable Environmental Laws;
-69-
<PAGE>
(b) immediately notify the Administrative Agent and provide copies
upon receipt of all written claims, complaints, notices or inquiries
relating to the condition of its facilities and properties or compliance
with Environmental Laws (other than with respect to Asbestos Litigation);
and
(c) provide such information and certifications which the
Administrative Agent may reasonably request from time to time to evidence
compliance with this SECTION 8.1.6;
except, in the case of the foregoing clause (a) or (b), with respect to
circumstances which could not reasonably be expected to have a Material Adverse
Effect.
SECTION 8.1.7 NEW SIGNIFICANT SUBSIDIARIES.
(a) Promptly after the date any Subsidiary of the Borrower becomes a
Significant Subsidiary and, in any event, within three Business Days following
receipt by the Borrower from the Collateral Agent of a security agreement
substantially in the form of the Subsidiary Security Agreements and a guaranty
of the Obligations in substantially the form of the Guaranty, the Borrower will
cause such Subsidiary to execute and deliver such guaranty and security
agreement to the Collateral Agent; PROVIDED, that at the request of the
Borrower, assets or the assets of any Person that would constitute Collateral if
such assets were subject to a Subsidiary Security Agreement, acquired by the
Borrower in any one Approved Acquisition and securing an aggregate amount of
Indebtedness not in excess of (i) $5,000,000 with respect to such Approved
Acquisition and (ii) $10,000,000 in the aggregate at any time for all Approved
Acquisitions, shall not be subject to the Lien of such Subsidiary Security
Agreement if, after reasonable efforts, the Borrower was unable to obtain the
required consent to a junior lien in favor of the Collateral Agent for the
benefit of the Lenders from any Person holding a Lien on such assets.
(b) Within ten days after the date such Subsidiary becomes a Significant
Subsidiary, the Borrower will cause such Subsidiary to have executed and filed
any UCC-1 financing statements furnished by the Collateral Agent in each
jurisdiction in which such filing is necessary to perfect the security interest
of the Collateral Agent in the Collateral of such Significant Subsidiary and in
which the Collateral Agent requests that such filing be made.
(c) Within sixty days after the date such Subsidiary becomes a Significant
Subsidiary, the Borrower and such Subsidiary shall have executed and delivered
to the Collateral Agent and the Administrative Agent, such other items as
reasonably requested by the Collateral Agent or the
-70-
<PAGE>
Administrative Agent in connection with the foregoing, including, without
limitation, resolutions, incumbency and officers certificates, opinions of
counsel, search reports and other certificates and documents.
SECTION 8.2 NEGATIVE COVENANTS. The Borrower agrees with the
Administrative Agent and each Lender that, until all Commitments have terminated
and all Obligations have been paid and performed in full, and all Letters of
Credit have expired or are terminated, the Borrower will comply with the
obligations set forth in this SECTION 8.2.
SECTION 8.2.1 BUSINESS ACTIVITIES. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business activity, except the
Existing Lines of Business and business activities arising from Approved
Acquisitions.
SECTION 8.2.2 INDEBTEDNESS. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Loans and other Obligations;
(b) Indebtedness (i) existing as of the Original Effective Date which
is identified in ITEM 8.2.2(b) ("Ongoing Indebtedness") of the Disclosure
Schedule or that has (ii) otherwise been specified in writing to the
Administrative Agent and the Lenders prior to the Original Effective Date
as being Indebtedness to be permitted under this CLAUSE (b);
(c) Indebtedness (including Capitalized Lease Liabilities) in an
aggregate principal amount not to exceed $5,000,000 at any time outstanding
which is purchase money Indebtedness incurred for the acquisition of
personal property, real property or improvements thereto, provided that
such Indebtedness is incurred at the time of such acquisition or
improvement or within thirty days thereafter;
(d) unsecured Indebtedness incurred in the ordinary course of
business with respect to open accounts extended by suppliers on normal
trade terms in connection with purchases of goods and services, but
excluding Indebtedness incurred through the borrowing of money or
Contingent Liabilities;
(e) unsecured Indebtedness of the Borrower and its Subsidiaries
(other than the Resort Subsidiaries) in an aggregate principal amount not
to exceed $5,000,000 at any time outstanding;
-71-
<PAGE>
(f) Funded Debt of Persons acquired by the Borrower in Approved
Acquisitions which is in existence at the time of such Approved
Acquisitions and which is not incurred or created by such Persons in
connection with or in contemplation of such Approved Acquisitions;
(g) Indebtedness of the Borrower's Subsidiaries owing to the
Borrower, and unsecured Indebtedness of the Borrower owing to any of its
Subsidiaries (which, in the case of the Resort Subsidiaries shall not
exceed $5,000,000 at any time outstanding);
(h) Indebtedness of the Resort Subsidiaries in an aggregate principal
amount not to exceed $30,000,000 at any time outstanding, PROVIDED that the
creditors to which such Indebtedness is owed have no recourse to the
Borrower or any Subsidiary of the Borrower (other than the Resort
Subsidiaries), or to any of their properties or assets, for payment of such
Indebtedness;
(i) Contingent Liabilities attributable to performance bonds
(including timber bonds issued for the benefit of the Borrower or any of
its Subsidiaries) not issued hereunder in an aggregate face amount
outstanding at any time not to exceed $10,000,000;
(j) Contingent Liabilities of the Borrower in respect of the
obligations of any of its Subsidiaries (other than the Resort Subsidiaries)
permitted hereunder;
(k) extensions, renewals and refinancings of Indebtedness of the
Borrower or any Subsidiary of the type referred to in CLAUSES (b), (c) and
(f) above, PROVIDED that the principal amount of such Indebtedness being
extended, renewed or refinanced does not increase above the amounts
specified in the Disclosure Schedule or other writings referred to in
CLAUSE (b), the amount referred to in CLAUSE (c) or above the amounts in
existence at the time of the applicable Approved Acquisition, as the case
may be; and
(l) Hedging Obligations of the Borrower or any of its Subsidiaries
incurred (i) to hedge Obligations or (ii) in the ordinary course of the
Borrower's or such Subsidiary's business.
PROVIDED, HOWEVER, that no Indebtedness otherwise permitted by CLAUSES (c), (e),
or (f) shall be permitted to be incurred if, after giving effect to the
incurrence thereof, any Default shall have occurred and be continuing.
SECTION 8.2.3 LIENS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or
-72-
<PAGE>
suffer to exist any Lien upon any of its property, revenues or assets, whether
now owned or hereafter acquired, except:
(a) Liens securing payment of the Obligations, granted pursuant to
any Loan Document;
(b) Liens on the assets of the Resort Subsidiaries to secure payment
of Indebtedness permitted in CLAUSE (h) of SECTION 8.2.2;
(c) Liens granted to secure payment of Indebtedness of the type
permitted and described in CLAUSE (c) of SECTION 8.2.2 and covering only
those assets leased or acquired with the proceeds of such Indebtedness;
(d) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside
on its books;
(e) Liens imposed by law, such as carriers, warehousemen, mechanics,
lumberjacks, materialmen and landlords liens and other similar liens
incurred in the ordinary course of business for sums not more than 60 days
overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall
have been set aside on its books;
(f) Liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits;
(g) judgment Liens (other than judgment Liens on the Collateral) (i)
in existence less than 30 days after the entry thereof or with respect to
which execution has been stayed, or the payment of which is covered in full
by insurance maintained with responsible insurance companies which have
confirmed in writing (whether by settlement agreement or other writing)
their liability for the full amounts of such judgments, or (ii) for payment
of any order or judgment not in excess of $5,000,000 which is not stayed by
reason of pending appeal, contract or otherwise so long as no enforcement
proceedings have been commenced;
(h) Liens covering assets or the assets of Persons acquired by the
Borrower in Approved Acquisitions and which were not incurred or created in
connection with or in contemplation of such Approved Acquisitions;
PROVIDED, that if such Liens cover assets or the assets of any Person that
-73-
<PAGE>
would constitute Collateral if such assets were subject to a Subsidiary
Security Agreement or the Security Agreement such assets shall have been
(A) acquired by the Borrower in any one Approved Acquisition and shall
secure an aggregate amount of Indebtedness not in excess of (i) $5,000,000
with respect to such Approved Acquisition and (ii) $10,000,000 in the
aggregate at any time for all Approved Acquisitions, or (B) acquired by the
Borrower in any Approved Acquisition approved in writing by the Majority
Lenders so long as such Liens were disclosed to the Lenders in accordance
with SECTION 8.2.5 in connection with any request by the Borrower for
approval of any proposed acquisition to be financed with a Credit Extension
in excess of $25,000,000;
(i) Utility easements, rights of way, building restrictions and such
other encumbrances or charges against real property, and minor title
defects and irregularities, as are of a nature generally existing with
respect to properties of a similar character and which do not materially
detract from the value of the property subject thereto;
(j) Liens existing on the date hereof in respect of property, assets
or revenues of the Borrower or any of its Subsidiaries which are described
in ITEM 8.2.3(j) ("Ongoing Liens") of the Disclosure Schedule;
(k) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by the Liens described in CLAUSES
(c), (h) and (j) above, PROVIDED that any extension, renewal or replacement
Lien shall be limited to (i) the property encumbered by the existing Lien
and (ii) to the existing amount of such Indebtedness (or, in the case of a
revolving credit, the existing commitment amount), except in the case of
CLAUSE (c) to the extent permitted by CLAUSE (c) of SECTION 8.2.2;
(l) Bankers' liens, rights of setoff and similar rights of banks and
other financial institutions;
(m) Any other consensual or nonconsensual Liens if the aggregate
amount of obligations of the Borrower or any of its Subsidiaries that is
secured by such Liens does not exceed $2,500,000 in the aggregate at any
time;
(n) Liens covering assets or the assets of Persons acquired by the
Borrower in Approved Acquisitions that are not otherwise permitted by this
SECTION 8.2.3 and that are (i) described in a schedule delivered to the
Collateral Agent no later than three Business Days following the date such
Approved Acquisition was consummated which shall set forth the names of the
debtor and secured party, the assets
-74-
<PAGE>
subject to such lien and the principal amount of indebtedness secured by
such lien; and (ii) released and discharged and any UCC-3 or similar
termination statement filed within 60 days after the date such Approved
Acquisition was consummated; PROVIDED that, if for reasons beyond the
control of the Borrower and notwithstanding its good faith efforts, the
schedules, deliveries, releases, filings or other actions required by
CLAUSES (i) or (ii) have not been made or taken within the applicable time
period, the period during which such schedules, deliveries, releases,
filings or other actions shall be made or taken shall be extended to the
date 120 days after the date such Approved Acquisition was consummated;
PROVIDED, FURTHER, that in connection with any such extension, the Borrower
shall have provided evidence of such good faith efforts reasonably
satisfactory to the Collateral Agent, if so requested by the Collateral
Agent.
(o) Deeds of trust, security agreements and other collateral
documents covering the Collateral, but junior to the Collateral Documents,
securing Hedging Obligations of the Borrower to one or more Lenders,
provided that each such Lender which is so secured shall have agreed in
writing (1) with the Collateral Agent, that such Lender will not cause its
junior collateral documents to be enforced unless the Collateral Agent is
then enforcing the Collateral Documents covering the same Collateral, and
(2) that it will permit its junior collateral documents to be supplemented
so as to secure Hedging Obligations of the Borrower owed to other Lenders
on a PARI PASSU basis with the Hedging Obligations owed to it.
SECTION 8.2.4 FINANCIAL CONDITION. The Borrower will not permit:
(a) Consolidated Net Worth at any time to be less than the sum of (i)
$120,000,000 PLUS (ii) 50% of the cumulative amount of Consolidated Net
Income for each Fiscal Quarter ending at September 30, 1994 and thereafter;
(b) the Consolidated Interest Coverage Ratio for any period of four
consecutive Fiscal Quarters to be less than 2.50:1 calculated as of the
last day of such period;
(c) the Consolidated Funded Debt to Cash Flow Ratio at the end of any
Fiscal Quarter to be greater than 3.25:1;
(d) the Consolidated Funded Debt to Capitalization Ratio at the end
of any Fiscal Quarter to be greater then 0.60:1.
-75-
<PAGE>
SECTION 8.2.5 APPROVED ACQUISITIONS AND OTHER INVESTMENTS. The Borrower
will not, and will not permit any of its Subsidiaries to make any Acquisition,
or to make, incur, assume or suffer to exist any Investment in any other Person,
except:
(a) Approved Acquisitions; PROVIDED, that the Borrower has complied
with the provisions of this SECTION 8.2.5 with respect to such Approved
Acquisitions;
(b) Investments existing on the Original Effective Date and
identified in ITEM 8.2.5(b) ("Ongoing Investments") of the Disclosure
Schedule;
(c) Cash Equivalent Investments and other Investments made in
accordance with the Borrower's Cash Management Policy as in effect on the
date hereof, a copy of which is attached hereto as EXHIBIT L, as such
policy may be amended from time to time; PROVIDED that any such amendments
have been furnished to the Lenders (through the Administrative Agent) and
the Majority Lenders have not objected thereto within fifteen days of
receipt thereof;
(d) without duplication, Investments permitted as Indebtedness
pursuant to SECTION 8.2.2;
(e) without duplication, Capital Expenditures (other than Capital
Expenditures constituting an Acquisition) of the Borrower or any of its
Subsidiaries;
(f) in the ordinary course of business, Investments by the Borrower
in any of its wholly-owned Subsidiaries, or by any such Subsidiary in any
of its wholly-owned Subsidiaries, by way of contributions to capital or
loans or advances; and
(g) other Investments in an aggregate amount at any one time not to
exceed $5,000,000;
PROVIDED, HOWEVER, that
(h) any Investment which when made complies with the requirements of
the definition of the term "CASH EQUIVALENT INVESTMENT" may continue to be
held notwithstanding that such Investment if made thereafter would not
comply with such requirements; and
(i) no Investment otherwise permitted by CLAUSE (a), (f) or (g) shall
be permitted to be made if, immediately before or after giving effect
thereto, any Default shall have occurred and be continuing.
In the event that the Borrower wishes to make any Acquisitions, the
Borrower will deliver to the Administrative
-76-
<PAGE>
Agent a written notice thereof, containing a description in detail reasonably
satisfactory to the Administrative Agent of the businesses, Persons and assets
proposed to be acquired and the terms and conditions of such proposed
Acquisition. Such notice must also include a summary calculation of Acquired
Net Operating Cash Flow prepared with respect to such Acquisition for each of
the four consecutive Fiscal Quarters ending on the last day of the
immediately preceding Fiscal Quarter, and must be delivered not less than 45
days prior to the desired closing date of such Acquisition in the case of an
Acquisition which will be financed with Credit Extensions in excess of
$25,000,000, or within 10 days before the closing date in the case of any other
Acquisition. In the case of any Approved Acquisition to be financed with Credit
Extensions in excess of $25,000,000, such notice shall also provide in detail
satisfactory to the Collateral Agent information relating to any Lien (other
than a Lien permitted by SECTION 8.2.3) that will not be released in connection
with such Approved Acquisition and that is in favor of any Person other than the
Collateral Agent on acquired assets that would be subject to a Subsidiary
Security Agreement executed and delivered in connection with such Approved
Acquisition pursuant to SECTION 8.1.7. The Borrower shall also deliver to the
Administrative Agent such financial statements and appraisals for the Persons,
businesses or other assets which the Borrower proposes to acquire as may be
reasonably requested by the Administrative Agent. Such notice shall be
accompanied by (A) PRO FORMA financial statements of the Borrower prepared by
the Borrower demonstrating to the reasonable satisfaction of the Required
Lenders that such Acquisition will comply with the requirements of CLAUSE (iii)
of the definition of Approved Acquisition, and (B) a certificate of a senior
financial Authorized Officer of the Borrower certifying that (subject to any
necessary approvals of the Lenders) such Acquisition will be an Approved
Acquisition.
The Administrative Agent will promptly deliver copies of all materials
which it receives from the Borrower pursuant to this SECTION 8.2.5 to the
Lenders.
SECTION 8.2.6 RESTRICTED PAYMENTS, ETC. On and at all times after the
Original Effective Date:
(a) the Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class
of capital stock (now or hereafter outstanding) of the Borrower or on any
warrants, options or other rights with respect to any shares of any class
of capital stock (now or hereafter outstanding) of the Borrower (other than
dividends or distributions payable in its common stock or warrants to
purchase its common stock or splitups or reclassifications of its stock
into additional or other shares of its common stock) or apply, or permit
any
-77-
<PAGE>
of its Subsidiaries to apply, any of its funds, property or assets to
the purchase, redemption, sinking fund or other retirement of, or
agree or permit any of its Subsidiaries to purchase or redeem, any shares
of any class of capital stock (now or hereafter outstanding) of the
Borrower, or warrants, options or other rights with respect to any shares
of any class of capital stock (now or hereafter outstanding) of the
Borrower (collectively, "DISTRIBUTIONS"); and
(b) the Borrower will not, and will not permit any Subsidiary to,
make any deposit for any of the foregoing purposes;
PROVIDED, that following the Original Effective Date, the Borrower may make
Distributions in cash if all the following conditions are met:
(A) no Default shall have occurred and be continuing both prior to and
after giving effect to the declaration and payment of any such Distribution;
(B) the aggregate cumulative amount of such Distributions made after
December 31, 1993 shall not exceed 50% of the cumulative amount of Consolidated
Net Income for the period after December 31, 1993;
(C) no Distribution may be made with any of the proceeds of any Credit
Extension; and
(D) prior to payment of such Distribution, the Borrower shall deliver to
the Administrative Agent a certificate signed by a senior financial Authorized
Officer of the Borrower, certifying compliance with the foregoing CLAUSES (A)
and (B).
SECTION 8.2.7 CONSOLIDATION, MERGER, ETC. The Borrower will not, and will
not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with,
or merge into or with, any other corporation, or purchase or otherwise acquire
all or substantially all of the assets of any Person (or of any division
thereof) except (provided no Event of Default shall arise therefrom)
(a) any Approved Acquisition which does not result in the
liquidation, dissolution, merger or consolidation of the Borrower, and
(b) (i) any such Subsidiary (other than any Resort Subsidiary) may
liquidate or dissolve voluntarily into, and may merge with and into, the
Borrower or any other Subsidiary (other than any Resort Subsidiary);
PROVIDED that, in the case of any such merger including the Borrower, the
Borrower is the surviving corporation, and (ii) the
-78-
<PAGE>
assets or stock of any Subsidiary (other than any Resort Subsidiary) may
be purchased or otherwise acquired by the Borrower or any other Subsidiary
(other than any Resort Subsidiary).
SECTION 8.2.8 ASSET DISPOSITIONS, ETC. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or any substantial part of its assets (including accounts receivable and
capital stock of Subsidiaries) to any Person, other than
(a) sales of timber (other than standing Timber on the Timberlands),
logs (including logs cut on the Timberlands), lumber and other inventory in
the ordinary course of the Borrower's or its Subsidiaries' business;
(b) sales for fair market value of equipment, which is surplus, worn-
out or obsolete and no longer useful in the Borrower's operations;
(c) sales of assets (other than Timber or Timberland), including
timberlands not constituting Collateral hereunder, the net book value of
which, together with the net book value of all other assets sold,
transferred, leased, contributed or conveyed otherwise than in the ordinary
course of business by the Borrower or any of its Subsidiaries pursuant to
this clause since the Original Effective Date, does not exceed $10,000,000;
(d) sales of the properties described in ITEM 8.2.8(d) ("Properties
Held for Sale") of the Disclosure Schedule;
(e) exchanges of Timberland for other Timberland, and exchanges of
timberland not constituting Collateral hereunder for other such timberland,
in each case in the ordinary course of business, with Persons who are not
Affiliates of the Borrower, if:
(i) the aggregate fair market value of all Timberland so
exchanged by the Borrower and its Subsidiaries does not exceed on a
cumulative basis $100,000,000 during the term of this Agreement;
(ii) the Timberland to be received in exchange is of at
least an equivalent fair market value to the Timberland to be
exchanged or, if such Timberland or other timberland is not of at
least an equivalent fair market value, the amount of any shortfall
shall constitute a permitted disposition under this SECTION 8.2.8;
-79-
<PAGE>
(iii) at the time of such exchange, no Default exists or
shall result from such exchange;
(iv) in the case of Timberland, the Collateral Agent has
received, in form and substance satisfactory to the Collateral Agent
and the Required Lenders, copies of appraisals or valuations for the
Timberlands to be exchanged and to be received in the exchange, which
appraisals or valuation shall, in the case of any exchange where the
Borrower is transferring properties (in one or a series of related
transactions) having a fair market value in excess of $10,000,000, be
prepared by Mason, Bruce & Girard or other timber appraisers of
recognized standing satisfactory to the Collateral Agent and the
Required Lenders; and in all other cases the appraisal or other
valuation may be prepared by the Borrower or any of its Subsidiaries
in such form and content as is usual and customary in accordance with
past practices of the Borrower and its Subsidiaries; and
(v) in the case of Timberland, the requirements of CLAUSE
(d) of SECTION 10.10 shall have been complied with; and
(f) dispositions of Timberland not otherwise permitted hereunder to
Persons who are not Affiliates of the Borrower if:
(i) the aggregate fair market value of all Timberland
disposed of by the Borrower and its Subsidiaries under this CLAUSE (f)
does not exceed on a cumulative basis $10,000,000 during the term of
this Agreement;
(ii) at the time of such disposition no Default exists or
shall result from such disposition;
(iii) the Collateral Agent has received, in form and
substance satisfactory to the Collateral Agent and the Required
Lenders, a copy of an appraisal or valuation for the Timberland being
sold, which appraisals or valuation may be prepared by the Borrower or
any of its Subsidiaries in such form and content as is usual and
customary in accordance with past practices of the Borrower and its
Subsidiaries; and
(iv) the requirements of CLAUSE (d) of SECTION 10.10 shall
have been complied with.
SECTION 8.2.9 MODIFICATION OF CERTAIN AGREEMENTS. The Borrower will not
consent to any amendment, supplement, waiver or
-80-
<PAGE>
other modification of any of the terms or provisions contained in, or applicable
to, any of the Settlement Agreements (each a "SETTLEMENT AGREEMENT
MODIFICATION") if such Settlement Agreement Modification would, or could
reasonably be expected to:
(a) increase or accelerate the payment date of any amounts payable by
the Borrower or any of its Subsidiaries under the Settlement Agreements, or
require the Borrower or any of its Subsidiaries to pay any material amounts
which would not otherwise have been payable by them under the Settlement
Agreements;
(b) reduce or delay in any material respect the payment or funding of
any amounts which the parties to the Settlement Agreements (other than the
Borrower and its Subsidiaries) are obligated to pay to or on behalf of the
Borrower or any of its Subsidiaries (including without limitation (i) the
payment of any claims, judgments, settlements or other amounts payable in
respect of asbestos or Asbestos Litigation, and (ii) the funding of any
trusts, escrows or other funding mechanisms provided for in the Settlement
Agreements);
(c) change in any material respect the "spendthrift" limitations
applicable to any payments which are to be made from any trusts, escrows or
other funds which are established or to be established pursuant to the
Settlement Agreements;
(d) modify in any way which is materially adverse to the Borrower or
any of its Subsidiaries any of the components contained in the definition
of Global Approval Judgment or Insurance Settlement Agreement Approval
Judgment as in effect on the Original Effective Date; or
(e) otherwise have a Material Adverse Effect.
To the extent reasonably practicable prior to entering into any Settlement
Agreement Modification or other modification of any of the terms, or provisions
contained in or applicable to any of the Settlement Agreements, the Borrower
will deliver to the Administrative Agent a copy thereof and, if the Borrower
believes that such Settlement Agreement Modification does not violate this
SECTION 8.2.9, a written explanation of the reason for such belief.
SECTION 8.2.10 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its other Affiliates
unless such arrangement or contract is fair and equitable to the Borrower or
such Subsidiary and is an arrangement or contract of the kind which
-81-
<PAGE>
would be entered into by a prudent Person in the position of the Borrower or
such Subsidiary with a Person which is not one of its Affiliates.
SECTION 8.2.11 NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any agreement (excluding this Agreement and any other Loan Document):
(a) except in the case of the Resort Subsidiaries, prohibiting or
restricting the creation or assumption of any Lien on any Collateral and,
at any time on and after the Collateral Release Date, any asset that would
have been subject to any Lien under the Collateral Documents if the
Collateral Release Date had not occurred and, in either case, the proceeds
thereof whether now owned or hereafter acquired, unless the Liens under the
Collateral Documents, whether or not then existing, are expressly permitted
by such agreement;
(b) restricting the ability of the Borrower or any other Obligor to
amend or otherwise modify this Agreement or any other Loan Document; or
(c) except in the case of the Resort Subsidiaries, prohibiting or
restricting the ability of any Subsidiary to make any payments, directly or
indirectly, to the Borrower by way of dividends, advances, repayments of
loans or advances, reimbursements of management and other intercompany
charges, expenses and accruals or other returns on investments, or any
other agreement or arrangement which restricts the ability of any such
Subsidiary to make any payment, directly or indirectly, to the Borrower.
SECTION 8.2.12 FISCAL YEAR OF BORROWER. The Borrower will not, and will
not permit any of its Significant Subsidiaries to, change its Fiscal Year from
that in effect on the Original Effective Date.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 LISTING OF EVENTS OF DEFAULT. Each of the following events or
occurrences described in this SECTION 9.1 shall constitute an "EVENT OF
DEFAULT".
SECTION 9.1.1 NON-PAYMENT OF OBLIGATIONS. The Borrower shall default in
the payment or prepayment when due of any principal of any Loan or of any
Reimbursement Obligation (and such default shall continue for one Business Day),
or the Borrower shall default in the payment when due of interest on any
-82-
<PAGE>
Loan or any Commitment Fee or Letter of Credit fee (and such default shall
continue for three Business Days) or the Borrower shall default in the payment
when due of any other Obligation (and such default shall continue for five
Business Days).
SECTION 9.1.2 BREACH OF WARRANTY. Any representation or warranty of the
Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document or any other writing or certificate furnished by or on
behalf of the Borrower or any other Obligor to either Co-Agent or any Lender for
the purposes of or in connection with this Agreement or any such other Loan
Document (including any certificates delivered pursuant to Article VI) is or
shall be incorrect when made in any material respect.
SECTION 9.1.3 NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS. The
Borrower shall default in the due performance and observance of any of its
obligations under SECTION 8.2.3 (and such default shall continue for 30 days
after the occurrence thereof) or SECTION 8.2.4, 8.2.5, 8.2.6, 8.2.7, 8.2.9,
8.2.10 or 8.2.12.
SECTION 9.1.4 NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document, and such default shall
continue unremedied for a period of 30 days after notice thereof shall have been
given to the Borrower by either Co-Agent or any Lender.
SECTION 9.1.5 DEFAULT ON OTHER INDEBTEDNESS OR SETTLEMENT OBLIGATIONS.
(a) A default shall occur in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any
Indebtedness (other than Indebtedness described in SECTION 9.1.1) of the
Borrower or any of its Subsidiaries having a principal amount, individually
or in the aggregate, in excess of $1,000,000 (or, in the case of Hedging
Obligations, a notional principal amount of $10,000,000), or a default
shall occur in the performance or observance of any obligation or condition
with respect to such Indebtedness (i) if the effect of such default is to
accelerate the maturity of any such Indebtedness or (ii) such default shall
continue unremedied for any applicable period of time sufficient to permit
the holder or holders of such Indebtedness, or any trustee or agent for
such holders, to cause such Indebtedness to become due and payable prior to
its expressed maturity and, in the case of CLAUSE (ii), such default shall
continue unremedied for a period of 30 days after the earlier of notice
having been given to the
-83-
<PAGE>
Borrower by either Co-Agent or any Lender or after an Authorized Officer
becomes aware thereof.
(b) Any amounts which individually or in the aggregate exceed
$5,000,000, and which are or may be payable by the Borrower or any of its
Subsidiaries to any asbestos personal injury or death claimant pursuant to
settlement agreements entered into between the Borrower or such Subsidiary
and such claimants (or their representatives), whether under the Borrower's
"Structured Settlement Program", its "Insurance Assignment Program" or
otherwise, the payment of which has been deferred under the terms of such
settlement agreements, shall be accelerated so as to be payable by the
Borrower or any of its Subsidiaries from its own funds (other than funds
from available insurance) prior to the date to which such payments were
deferred pursuant to such settlement agreements.
SECTION 9.1.6 JUDGMENTS. Any judgment or order for the payment of money
in excess of $5,000,000 in the aggregate shall be rendered against the Borrower
or any of its Subsidiaries and either
(a) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order;
(b) (except for judgments and orders in respect of Asbestos
Litigation) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal, contract or otherwise, shall not be in effect; and
(c) in the case of any Asbestos Litigation during the period
following the Collateral Release Date, there shall be any period of 90
consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal, contract or otherwise, shall not be
in effect.
SECTION 9.1.7 PENSION PLANS. Any of the following events shall occur with
respect to any Pension Plan
(a) the institution of any steps by the Borrower, any member of its
Controlled Group or any other Person to terminate a Pension Plan (other
than a voluntary termination of a Pension Plan in existence, and in respect
of which the Borrower was a member of a Controlled Group, on the Original
Effective Date) if, as a result of such termination, the Borrower or any
such member could be required to make a contribution to such Pension Plan,
or could reasonably expect to incur a liability or obligation to such
Pension Plan, in excess of $1,000,000; or
-84-
<PAGE>
(b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 9.1.8 CONTROL OF THE BORROWER. Any Change of Control of the
Borrower shall occur.
SECTION 9.1.9 BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any of its
Subsidiaries shall
(a) become insolvent or generally fail to pay, or admit in writing
its inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or any
of its Subsidiaries or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for the Borrower or any of its Subsidiaries
or for a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged within 60
days, PROVIDED that the Borrower, hereby expressly authorizes each Co-Agent
and each Lender to appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend their rights
under the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Borrower or any of its Subsidiaries, and, if
any such case or proceeding is not commenced by the Borrower or such
Subsidiary, such case or proceeding shall be consented to or acquiesced in
by the Borrower or such Subsidiary or shall result in the entry of an order
for relief or shall remain for 60 days undismissed, PROVIDED that the
Borrower hereby expressly authorizes the Administrative Agent and each
Lender to appear in any court conducting any such case or proceeding during
such 60-day period to preserve, protect and defend their rights under the
Loan Documents; or
(e) take any corporate action authorizing, or in furtherance of, any
of the foregoing.
-85-
<PAGE>
SECTION 9.1.10 IMPAIRMENT OF SECURITY, ETC. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any Obligor party thereto; the Borrower,
any other Obligor or any other party shall, directly or indirectly, contest in
any manner such effectiveness, validity, binding nature or enforceability; or
any Lien securing any Obligation shall, in whole or in part, cease to be a
perfected first priority Lien, subject only to SECTION 10.10 and to those
exceptions expressly permitted by such Loan Document.
SECTION 9.1.11 ASBESTOS LITIGATION PAYMENTS. The Borrower or any of its
Subsidiaries shall be required to pay from its own funds (other than (i) from
existing reserves or (ii) funds from available insurance) any judgment or
settlement with respect to asbestos or Asbestos Litigation in an aggregate
amount after the Original Effective Date in excess of $5,000,000.
SECTION 9.1.12 ASBESTOS QUALIFICATION. At any time after the Collateral
Release Date, the Borrower shall receive any notice or other information from
Arthur Andersen & Co. or any other independent public accounting firm retained
by the Borrower to audit its financial statements that a substantial likelihood
exists that the next annual audit report issued by such firm will contain an
Asbestos Qualification; PROVIDED that no Event of Default shall occur under this
SECTION 9.1.12 if within 60 days after receipt of such notice or other
information the Borrower executes and delivers to the Administrative Agent (a) a
deed of trust substantially in the form of the Deed of Trust and Modification to
Deed of Trust and otherwise satisfactory to the Administrative Agent with
respect to timberlands having an aggregate appraised value of not less than 200%
of the aggregate amount of the Commitments then in effect, together with an
appraisal demonstrating such aggregate appraised value of the timberlands
covered by such deed of trust (but dated substantially concurrently with such
deed of trust) and (b) unless the aggregate amount of the Commitments then in
effect has been reduced to an amount equal to or less than $100,000,000 on the
date such deed of trust is delivered, the other Collateral Documents
substantially in the form in effect at the time immediately preceding the
Collateral Release Date, in each case,together with the items set forth in
SECTIONS 6.1.5 and 6.1.6, as applicable.
SECTION 9.2 ACTION IF BANKRUPTCY. If any Event of Default described in
CLAUSES (a) through (d) of SECTION 9.1.9 shall occur, the Commitments to make
Loans and issue Letters of Credit (but not the Lender's Commitments to
participate in outstanding Letters of Credit), if not theretofore terminated,
shall automatically terminate and the outstanding principal amount of all
outstanding Loans and all other Obligations shall
-86-
<PAGE>
automatically be and become immediately due and payable, without notice or
demand.
SECTION 9.3 ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than any Event of Default described in CLAUSES (a) through (d) of
SECTION 9.1.9 shall occur for any reason, whether voluntary or involuntary, and
be continuing, the Administrative Agent, upon the direction of the Required
Lenders, shall by notice to the Borrower declare all or any portion of the
outstanding principal amount of the Loans and other Obligations to be due and
payable and/or the Commitments to make Loans and issue Letters of Credit (but
not the Commitments to participate in outstanding Letters of Credit), if not
theretofore terminated, to be terminated, whereupon the full unpaid amount of
such Loans and other Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice, demand
or presentment, and/or, as the case may be, the Commitments shall terminate.
ARTICLE X
THE ADMINISTRATIVE AGENT
AND THE COLLATERAL AGENT
SECTION 10.1 APPOINTMENT AND AUTHORIZATION. Each of the Lenders hereby
irrevocably authorizes the Collateral Agent to execute the Collateral Documents
and appoints, designates and authorizes each of the Administrative Agent and the
Collateral Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, neither Co-Agent shall have any
duties or responsibilities, except those expressly set forth herein, nor shall
either Co-Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against either Co-Agent. Following the release of
the Collateral, the Collateral Agent shall have no duties hereunder except in
its capacity as a Lender.
SECTION 10.2 DELEGATION OF DUTIES. Each Co-Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither Co-Agent shall be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
-87-
<PAGE>
SECTION 10.3 LIABILITY OF CO-AGENTS AND ISSUERS. None of the Co-
Agent/Related Persons shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document (except for its own gross negligence or willful misconduct), or
(ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary of
the Borrower, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by either Co-Agent under or in
connection with, this Agreement or any other Loan Document, or for the value of
any Collateral or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
the Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Co-Agent/Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrower or any of its Subsidiaries or Affiliates.
SECTION 10.4 RELIANCE BY CO-AGENTS.
(a) Each Co-Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by such Co-Agent.
Each Co-Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Required Lenders or Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Each Co-Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Majority Lenders, Required Lenders or Lenders, as
applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in ARTICLE VI, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter
-88-
<PAGE>
either sent or made available by either Co-Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to such Lender, unless an officer
of the Administrative Agent responsible for the transactions contemplated by the
Loan Documents shall have received notice from such Lender prior to the
applicable Credit Extension specifying its objection thereto and either such
objection shall not have been withdrawn by notice to the Administrative Agent to
that effect or (with respect to any Loan) such Lender shall not have made
available to the Administrative Agent such Lender's ratable portion of any
Borrowing.
SECTION 10.5 NOTICE OF DEFAULT. Neither Co-Agent shall be deemed to have
knowledge or notice of the occurrence of any Default, except, in the case of the
Administrative Agent, with respect to defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Lenders, unless such Co-Agent shall have received written notice
from a Lender or the Borrower referring to this Agreement, describing such
Default and stating that such notice is a "notice of default". In the event
that the Collateral Agent receives such notice, the Collateral Agent will give
notice to the Administrative Agent and in the event that the Administrative
Agent receives such a notice, the Administrative Agent will give notice thereof
to the Lenders. The Administrative Agent (and, with respect to the Collateral,
the Collateral Agent) shall take such action with respect to such Default or
Event of Default as shall be requested by the Required Lenders in accordance
with ARTICLE IX; PROVIDED, HOWEVER, that unless and until the Administrative
Agent shall have received any such request, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
subject to the provisions of SECTION 9.3, with respect to such Default or Event
of Default as it shall deem advisable or in the best interest of the Lenders.
SECTION 10.6 CREDIT DECISION. Each Lender expressly acknowledges that
none of the Co-Agent/Related Persons has made any representation or warranty to
it and that no act by either Co-Agent hereinafter taken, including any review of
the affairs of the Borrower and its Subsidiaries (including without limitation
Norandex), shall be deemed to constitute any representation or warranty by such
Co-Agent to any Lender. Each Lender represents to each Co-Agent that it has,
independently and without reliance upon such Co-Agent and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower and its
Subsidiaries (including without limitation Norandex), and all applicable bank
regulatory laws relating to the transactions contemplated thereby, and made
-89-
<PAGE>
its own decision to enter into this Agreement and extend credit to the Borrower
hereunder. Each Lender also represents that it will, independently and without
reliance upon either Co-Agent and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
evaluations and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly herein required to be furnished
to the Lenders by either Co-Agent, the Co-Agents shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower which may come into the possession
of any of the Co-Agent/Related Persons.
SECTION 10.7 INDEMNIFICATION. The Lenders shall indemnify upon demand the
Co-Agent/Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), ratably
according to its respective Percentage from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind whatsoever which may at any time
(including at any time following the termination of the Letters of Credit, the
repayment of the Loans and the termination or resignation of either Co-Agent) be
imposed on, incurred by or asserted against any such Person in any way relating
to or arising out of this Agreement or any document contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by any such Person under or in connection with any of
the foregoing; PROVIDED, HOWEVER, that no Lender shall be liable for the payment
to the Co-Agent/Related Persons of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse
each Co-Agent upon demand for its ratable share according to its respective
Percentage of any reasonable costs or out-of-pocket expenses including the fees
and disbursements of legal counsel incurred by such Co-Agent in connection with
the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein
to the extent that such Co-Agent is not reimbursed for such expenses by or on
behalf of the Borrower. Without limiting the generality of the foregoing, if
the Internal Revenue Service or any authority of the United States or other
jurisdiction asserts
-90-
<PAGE>
a claim that Administrative Agent did not properly withhold tax from amounts
paid to or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Administrative Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason), such Lender shall indemnify Administrative Agent fully for all amounts
paid, directly or indirectly, by the Administrative Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to Administrative Agent under this SECTION
10.7, together with all costs and out-of-pocket expenses, including the fees and
disbursements of legal counsel. The obligation of the Lenders in this Section
shall survive the payment of all Obligations hereunder.
SECTION 10.8 CO-AGENT IN INDIVIDUAL CAPACITY. Each Co-Agent and its
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, and generally engage in any kind of banking, trust,
financial advisory or other business with the Borrower and its Subsidiaries and
Affiliates as though it were not a Co-Agent hereunder and without notice to the
Lenders. With respect to its Loans and participation in Letters of Credit, each
Co-Agent shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not a Co-Agent, and the terms
"Lender" and "Lenders" shall include each Co-Agent in its individual capacity.
SECTION 10.9 SUCCESSOR CO-AGENTS. Either Co-Agent may resign from its
capacity as a Co-Agent upon 30 days' notice to the Lenders. If either Co-Agent
shall resign as Co-Agent under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders. If no
successor Co-Agent is appointed prior to the effective date of the resignation
of a retiring Co-Agent, such Co-Agent shall appoint, after consulting with the
other Co-Agent, the Lenders and the Borrower, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Co-Agent and the term "Administrative Agent" or "Collateral Agent", as
applicable, shall mean such successor agent and the retiring Co-Agent's rights,
powers and duties as Co-Agent shall be terminated. After any retiring Co-
Agent's resignation hereunder as Co-Agent, the provisions of this ARTICLE X and
SECTIONS 11.3 and 11.4 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Co-Agent under this Agreement. If no
successor Co-Agent has accepted appointment as Co-Agent by the date which is 30
days following a retiring Co-Agent's notice of resignation, the retiring Co-
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties
-91-
<PAGE>
of the Co-Agent hereunder until such time, if any, as the Required Lenders
appoint a successor Co-Agent as provided for above, PROVIDED, however, that the
resignation or retirement of the Collateral Agent shall not become effective
until a successor Collateral Agent shall have accepted its appointment as such
and all necessary action shall have been completed to transfer all rights and
benefits of the resigning or retiring Collateral Agent with respect to the Deed
of Trust and Modification to Deed of Trust, all Collateral, all title insurance
policies which have been delivered with respect to the Collateral, and the Loan
Documents to the successor Collateral Agent. Notwithstanding anything to the
contrary in this SECTION 10.9 or in Section 10.9 of the Original Credit
Agreement, the Lenders that are parties to the Original Credit Agreement hereby
accept the resignation of Bank of America Illinois (formerly known as
Continental Bank) as administrative agent under that Original Credit Agreement,
and the Lenders hereby appoint BofA to act as Administrative Agent hereunder.
SECTION 10.10 COLLATERAL MATTERS.
(a) The Collateral Agent is authorized on behalf of all the Lenders,
without the necessity of any notice to or further consent from the Lenders, from
time to time to take any action with respect to any Collateral or the Collateral
Documents which may be necessary to perfect and maintain perfected the Liens
upon the Collateral granted pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Collateral Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Collateral Agent upon any Collateral (i) upon termination of the Commitments and
payment and performance in full of all Loans then outstanding and all other
Obligations then due and payable under this Agreement and under any other Loan
Document and the expiration or termination of all Letters of Credit; or (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder, including pursuant to
CLAUSES (e) or (f) of SECTION 8.2.8 and CLAUSE (c) of this SECTION 10.10. Upon
request by the Collateral Agent at any time, the Required Lenders will confirm
in writing the Collateral Agent's authority to release particular types or items
of Collateral pursuant to this CLAUSE (b) of this SECTION 10.10.
(c) The Borrower may request the Collateral Agent to release the
Collateral upon the satisfaction of all of the following conditions:
(i) no Default shall have occurred and be continuing on the date
of such notice, or shall have occurred and be continuing on the date of the
release of the
-92-
<PAGE>
Collateral, both before and after giving effect to such release;
(ii) the representations and warranties of the Borrower set forth
in ARTICLE VII shall be true and correct on the date of such notice and
shall be true and correct on the date of the release of the Collateral,
both before and after giving effect to such release;
(iii) either a Global Approval Judgment or a Settlement Agreement
Approval Judgment shall have been issued and entered as to which any appeal
(and subsequent remand, if any) has been finally decided and no further
appeal or petition for certiorari can be taken or granted; and
(iv) Arthur Andersen & Co. shall have delivered the opinion with
respect to the December 31 audited annual consolidated financial statements
of the Borrower and its Subsidiaries and such opinion shall contain no
Impermissible Qualification (including, without limitation, the Asbestos
Qualification).
Following such a request by the Borrower, the Collateral Agent will be
authorized to release the Collateral if the Co-Agents and all the Lenders, in
their sole discretion based upon such certificates, documents, opinions and
other information as they may require, shall have determined to, and instructed
the Collateral Agent to release the Collateral.
(d) In connection with a proposed release of Collateral under
CLAUSES (e) or (f) of SECTION 8.2.8, the requirements set forth below shall
apply in respect of such contemplated release:
(i) The Borrower shall deliver the following items to the
Collateral Agent, in form and substance satisfactory to the Collateral
Agent:
(A) a Collateral release notice or request, as applicable,
including (1) a brief narrative description of the transaction, and
(2) as applicable, for the specific transaction and on a cumulative
basis since the Original Effective Date, the values of all Collateral
released and summary of the terms thereof;
(B) in respect of releases under CLAUSE (e) of
SECTION 8.2.8, (1) evidence of recordation (or recordation
instructions) of Deeds of Trust (or amendments to any existing Deeds
of Trust, as applicable) with respect to the Timberland being received
in exchange for the Timberland being released,
-93-
<PAGE>
such Deeds of Trust or amendments to be recorded substantially
concurrently with any full or partial reconveyances of the Timberland
being released, together with ALTA policies of title insurance, and
including such endorsements and reinsurance as may be required by the
Collateral Agent, insuring the Liens created by such Deeds of Trust or
amendments as being a perfected Lien against the Collateral described
therein and subject only to such exceptions as are acceptable to the
Collateral Agent and other Liens permitted by SECTION 8.2.3; (2) such
consents, estoppels, tenant subordination agreements and other
documents and instruments in connection with such Deeds of Trust or
amendments as shall reasonably be deemed necessary by the Collateral
Agent or the Required Lenders; and (3) evidence that all other actions
reasonably necessary or, in the opinion of the Collateral Agent,
desirable to perfect and protect the priority of the Lien created by
such Deeds of Trust or amendments, and to enhance the Collateral
Agent's ability to preserve and protect its interests in and access to
such Timberland, have been taken;
(C) a title insurance endorsement no. 111.1 for partial
reconveyances (providing generally that the rights of the insured
against the insurer have not been waived or surrendered by the
insured, or reduced by the insurer, except to the extent of the
applicable consideration received by the insured, as a result of the
partial reconveyance), and any other endorsements that the Collateral
Agent may require, in respect of each release of Collateral; and
(D) such other items as the Collateral Agent may reasonably
determine to be necessary, including certificates or other evidence of
compliance with the provisions of this Agreement.
(ii) At the time of submitting each Collateral release request or
notice under CLAUSE (e) or (f) of SECTION 8.2.8 or this SECTION 10.10, the
Borrower will be deemed to represent that no Default or Event of Default
then exists, or would occur as a result of the proposed transaction.
(iii) In connection with any Collateral release or notice
submitted under CLAUSE (e) or (f) of SECTION 8.2.8 or this SECTION 10.10,
the Collateral Agent is not required to otherwise verify or investigate the
accuracy, validity, completeness, or any other aspect of the request or
notice received from the Borrower.
-94-
<PAGE>
(e) The Collateral Agent is hereby instructed by the Lenders to sign
all applicable deeds of reconveyance, agreements, and other documents respecting
a Collateral release permitted hereunder. The Collateral Agent will report each
release of Collateral effected under this SECTION 10.10 to the Lenders promptly
thereafter.
SECTION 10.11 FUNDING RELIANCE, ETC. Unless the Administrative Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
3:00 p.m., San Francisco time, on the day prior to a Borrowing that such Lender
will not make available the amount which would constitute its Percentage of such
Borrowing on the date specified therefor, the Administrative Agent may assume
that such Lender has made such amount available to the Administrative Agent and,
in reliance upon such assumption, make available to the Borrower a corresponding
amount. If and to the extent that such Lender shall not have made such amount
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date the
Administrative Agent made such amount available to the Borrower to the date such
amount is repaid to the Administrative Agent, at the interest rate applicable at
the time to Loans comprising such Borrowing.
SECTION 10.12 COPIES, ETC. The Administrative Agent or Collateral Agent,
as applicable, will give prompt notice to each Lender of each notice or request
required or permitted to be given to such Co-Agent by the Borrower pursuant to
the terms of this Agreement or the other Loan Documents (unless concurrently
delivered to the Lenders by the Borrower). Each Co-Agent will distribute to
each Lender each document or instrument received for its account and copies of
all other communications received by such Co-Agent from the Borrower for
distribution to the Lenders by such Co-Agent in accordance with the terms of
this Agreement or the other Loan Documents.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; PROVIDED, HOWEVER, that no such
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the
-95-
<PAGE>
Required Lenders shall be effective unless consented to by each Lender;
(b) modify this SECTION 11.1 or SECTION 10.10(c), change the
definition of "REQUIRED LENDERS" or "MAJORITY LENDERS", increase any
Commitment Amount or the Percentage of any Lender, reduce any fees
described in ARTICLE III, release all or substantially all collateral
security except as otherwise specifically provided in any Loan Document or
extend any Commitment Termination Date shall be made without the consent of
each Lender and each holder of a Note;
(c) extend the due date for, or reduce the amount of, any scheduled
repayment or prepayment of principal of or interest on any Loan (or reduce
the principal amount of or rate of interest on any Loan) shall be made
without the consent of the holder of that Note evidencing such Loan;
(d) affect adversely the interests, rights or obligations of any
Issuer QUA the Issuer shall be made without the consent of such Issuer;
(e) affect adversely the interests, rights or obligations of the
Administrative Agent QUA the Administrative Agent shall be made without
consent of the Administrative Agent; and
(f) affect adversely the interests, rights or obligations of the
Collateral Agent QUA the Collateral Agent shall be made without the consent
of the Collateral Agent.
No failure or delay on the part of either Co-Agent, any Lender or the holder of
any Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by either Co-Agent, any Lender or
the holder of any Note under this Agreement or any other Loan Document shall,
except as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
EACH LENDER AGREES WITH AND IN FAVOR OF EACH OTHER LENDER (WHICH AGREEMENT SHALL
NOT BE FOR THE BENEFIT OF THE BORROWER OR ANY OF ITS SUBSIDIARIES) THAT NO
OBLIGOR'S OBLIGATIONS TO SUCH LENDER UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS ARE OR WILL BE SECURED BY ANY REAL PROPERTY COLLATERAL NOW OR
HEREAFTER ACQUIRED BY SUCH LENDER OTHER THAN THE REAL PROPERTY DESCRIBED IN THE
DEED OF TRUST OR MODIFICATION TO DEED OF TRUST.
-96-
<PAGE>
SECTION 11.2 NOTICES. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted and receipt thereof has been electronically confirmed.
SECTION 11.3 PAYMENT OF COSTS AND EXPENSES. The Borrower agrees to pay on
demand all reasonable expenses of the Administrative Agent and the Collateral
Agent (including the fees, charges and out-of-pocket expenses of counsel
(including allocated costs of internal counsel) to the Administrative Agent, the
Collateral Agent and of local counsel, if any, who may be retained by counsel to
the Administrative Agent or the Collateral Agent) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from time
to time hereafter be required, whether or not the transactions contemplated
hereby are consummated, and
(b) the filing, recording, refiling or rerecording of the Deed of
Trust or Modification to Deed of Trust and/or any Uniform Commercial Code
financing statements relating thereto and all amendments, supplements and
modifications to any thereof and any and all other documents or instruments
of further assurance required to be filed or recorded or refiled or
rerecorded by the terms hereof or of the Collateral Documents,
(c) all title, appraisal (including the allocated costs of internal
appraisal services), search, recording, filing and similar costs, fees and
expenses incurred or sustained by either Co-Agent or any of their
Affiliates in connection with this Agreement or the Collateral; and
(d) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrower further agrees to pay, and to save the Administrative Agent, the
Collateral Agent and the Lenders
-97-
<PAGE>
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the Borrowings
hereunder, the issuance of the Notes, the issuance of the Letters of Credit, or
any other Loan Documents. The Borrower also agrees to reimburse the
Administrative Agent, the Collateral Agent and each Lender upon demand for all
reasonable out-of-pocket expenses (including attorneys' fees and charges and
legal expenses, including allocated costs of internal counsel)) incurred by the
Administrative Agent, the Collateral Agent or such Lender in connection with (x)
the negotiation of any restructuring or "work-out", whether or not consummated,
of any Loan Documents or Obligations and (y) the enforcement of any Loan
Documents or Obligations.
SECTION 11.4 INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Co-Agents and each Lender and the extension of
the Commitments, the Borrower hereby agrees to indemnify, exonerate and hold the
Administrative Agent, the Collateral Agent and the Issuer and each Lender and
each of their respective officers, directors, employees and agents
(collectively, the "INDEMNIFIED PARTIES") free and harmless from and against any
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees, charges and
disbursements (including allocated costs of internal counsel) (collectively, the
"INDEMNIFIED LIABILITIES"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or the use of any
Letter of Credit;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties (including any action
brought by or on behalf of the Borrower as the result of any determination
by the Required Lenders pursuant to ARTICLE VI not to make any Credit
Extension);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Administrative Agent, the Collateral Agent or such
Lender is party thereto;
(d) any pending or threatened investigation, litigation or
proceeding, or any action taken by any Person,
-98-
<PAGE>
with respect to any Environmental Claim arising out of or related to the
Release by the Borrower or any of its Subsidiaries of any Hazardous
Material on the Collateral or any other property owned, leased, occupied or
used by the Borrower or its Subsidiaries subject to any Collateral
Document;
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary thereof of any
Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the Borrower or
such Subsidiary; or
(f) any Asbestos Litigation,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct, and, only with respect to releases of Hazardous
Materials and/or violations of Environmental Laws occurring after transfer of
the Collateral to the Collateral Agent, the Administrative Agent or the Lenders
by foreclosure or deed in lieu of foreclosure of the Deed of Trust or
Modification to Deed of Trust, except to the extent that such Indemnified Party
caused the release of any Hazardous Material. No action taken by legal counsel
chosen by either Co-Agent or any Lender in defending against any such
investigation, litigation or proceeding or requested remedial, removal or
response action shall vitiate or in any way impair the Borrower's obligation and
duty hereunder to indemnify and hold harmless the Co-Agents and each Lender. In
no event shall any site visit, observation, or testing by either Co-Agent or any
Lender be deemed a representation or warranty that Hazardous Materials are or
are not present in, on, or under the site, or that there has been or shall be
compliance with any Environmental Law. Neither the Borrower nor any other
Person is entitled to rely on any site visit, observation, or testing by either
Co-Agent or any Lender. Neither the Co-Agents nor any Lender owes any duty of
care to protect the Borrower or any other Person against, or to inform the
Borrower or any other party of, any Hazardous Materials or any other adverse
condition affecting any site or Property. Neither the Co-Agents nor any Lender
shall be obligated to disclose to the Borrower or any other Person any report or
findings made as a result of, or in connection with, any site visit,
observation, or testing by either Co-Agent or any Lender. If and to the extent
that the foregoing undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law.
-99-
<PAGE>
SECTION 11.5 SURVIVAL. The obligations of the Borrower under SECTIONS
5.3, 5.4, 5.5, 5.6, 5.11, 11.3 and 11.4, and the obligations of the Lenders
under SECTION 10.1, shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by each Obligor in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 11.6 SEVERABILITY. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 11.7 HEADINGS. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 11.8 EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by the Borrower, the Administrative Agent and the
Collateral Agent and be deemed to be an original and all of which shall
constitute together but one and the same agreement.
SECTION 11.9 GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, PROVIDED THAT THE
CO-AGENTS AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
This Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
SECTION 11.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that:
(a) the Borrower may not assign or transfer its rights or obligations
hereunder without the prior written consent of the Administrative Agent and
all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to SECTION 11.11.
-100-
<PAGE>
SECTION 11.11 SALE AND TRANSFER OF LOANS AND NOTES; PARTICIPATIONS IN
LOANS AND NOTES. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more other Persons in accordance with this SECTION
11.11.
SECTION 11.11.1 ASSIGNMENTS. Any Lender,
(a) with the written consents of the Borrower (except that no consent
of the Borrower shall be required after the occurrence and during the
continuance of a Default), the Administrative Agent, and any Issuer (which
consents shall not be unreasonably delayed or withheld and which consent,
in the case of the Borrower, shall be deemed to have been given in the
absence of a written notice delivered by the Borrower to the Administrative
Agent, on or before the fifth Business Day after receipt by the Borrower of
such Lender's request for consent, stating, in reasonable detail, the
reasons why the Borrower proposes to withhold such consent) may at any time
assign and delegate to one or more commercial banks or other financial
institutions, and
(b) with notice to the Borrower and the Administrative Agent, but
without the consent of the Borrower or the Administrative Agent, may assign
and delegate to any of its Affiliates or to any other Lender
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "ASSIGNEE LENDER"), all or any fraction of such Lender's total Loans and
Commitments (which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Lender's Loans and Commitments) in a
minimum aggregate amount of $10,000,000; PROVIDED, HOWEVER, that any such
Assignee Lender will comply, if applicable, with the provisions contained in
SECTION 5.12 and in the last sentence of SECTION 5.6 and FURTHER, PROVIDED,
HOWEVER, that, the Borrower, each other Obligor and the Administrative Agent
shall be entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee Lender
until
(c) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrower, the
Administrative Agent and any Issuer by such Lender and such Assignee
Lender,
(d) such Assignee Lender shall have executed and delivered to the
Borrower, the Administrative Agent and any Issuer a Lender Assignment
Agreement, accepted by the Administrative Agent, and
-101-
<PAGE>
(e) the processing fees described below shall have been paid.
From and after the date that the Administrative Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five Business Days after its receipt of notice that the
Administrative Agent has received an executed Lender Assignment Agreement, the
Borrower shall execute and deliver to the Administrative Agent (for delivery to
the relevant Assignee Lender) a new Note evidencing such Assignee Lender's
assigned Loans and Commitment and, if the assignor Lender has retained Loans and
a portion of its Commitment hereunder, a replacement Note in the principal
amount of the Loans and Commitment retained by the assignor Lender hereunder
(such Note to be in exchange for, but not in payment of, the Note then held by
such assignor Lender). Each such Note shall be dated the date of the
predecessor Note. Following receipt of the replacement Note and the new Note by
the Assigning Lender and the Assignee Lenders, the assignor Lender shall mark
the predecessor Note "exchanged" and deliver it to the Borrower. Accrued
interest on that part of the predecessor Note evidenced by the new Note, and
accrued fees, shall be paid as provided in the Lender Assignment Agreement.
Accrued interest on that part of the predecessor Note evidenced by the
replacement Note shall be paid to the assignor Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in the predecessor
Note and in this Agreement. Such assignor Lender or such Assignee Lender must
also pay a processing fee to the Administrative Agent upon delivery of any
Lender Assignment Agreement in the amount of $2,000.
SECTION 11.11.2 PARTICIPATIONS. Any Lender may at any time sell to one or
more commercial banks or other Persons (each of such commercial banks and other
Persons being herein called a "PARTICIPANT") participating interests (or a sub-
participating interest, in the case of a Lender's participating interest in a
Letter of Credit) in any of the Loans, Commitment, or other interests of such
Lender hereunder; PROVIDED, HOWEVER, that
(a) no participation or sub-participation contemplated in this
SECTION 11.11 shall relieve such Lender from its Commitment or its other
obligations hereunder or under any other Loan Document,
-102-
<PAGE>
(b) such Lender shall remain solely responsible for the performance
of its Commitment and such other obligations,
(c) the Borrower and each other Obligor and the Co-Agents shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and each of the
other Loan Documents,
(d) no Participant, unless such Participant is an Affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in CLAUSE (b) or (c) of SECTION 11.1, and
(e) the Borrower shall not be required to pay any amount under
SECTION 5.6 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
SECTIONS 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 11.3 and 11.4, shall be considered a
Lender.
SECTION 11.12 OTHER TRANSACTIONS. Nothing contained herein shall preclude
the Administrative Agent or any other Lender from engaging in any transaction,
in addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 11.13 FORUM SELECTION AND CONSENT TO JURISDICTION.
(a) ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF CALIFORNIA OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF CALIFORNIA AND OF THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF CALIFORNIA FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH
-103-
<PAGE>
ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF CALIFORNIA.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11.14 WAIVER OF JURY TRIAL.
THE ADMINISTRATIVE AGENT, THE LENDERS AND THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE ADMINISTRATIVE AGENT, THE LENDERS OR THE BORROWER. THE BORROWER
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO
WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
ADMINISTRATIVE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH
OTHER LOAN DOCUMENT.
SECTION 11.15 CONFIDENTIALITY.
Each Co-Agent and each Lender agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Borrower and
provided to it by the Borrower or any of its Subsidiaries, or by the
Administrative Agent on such Borrower's or Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents; except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by any Co-Agent or any Lender, or (ii) was or becomes
available on a non-confidential basis from a source other than the Borrower,
PROVIDED that such source is not bound by a confidentiality agreement with the
Borrower known to such Co-Agent or such Lender, as the case may be; PROVIDED,
HOWEVER, that either Co-Agent or any Lender may disclose such information (A) at
the request or pursuant to any requirement of any Governmental
-104-
<PAGE>
Authority to which such Co-Agent or Lender is subject or in connection with an
examination of such Co-Agent or Lender by any such authority; (B) pursuant to
subpoena or other court process; (C) when required to do so in accordance with
the provisions of any Applicable Law; (D) to the extent reasonably required in
connection with any litigation or proceeding to which either Co-Agent, any
Lender or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Co-Agent's or such Lender's independent
auditors and other professional advisors; (G) to any Participant or Assignee
Lender, actual or potential, and to any Affiliate of such Co-Agent or Lender
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Lenders hereunder, and (H) as to
any Co-Agent or any Lender, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Borrower is party
or is deemed party with such Co-Agent or such Lender.
-105-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
FIBREBOARD CORPORATION
By /s/ Garold E. Swan
--------------------------------------
Title: Vice President and Controller
Address: 2121 North California Boulevard
Suite 560
Walnut Creek, California 94596
Facsimile No.: (510) 274-0714
Attention: Garold E. Swan
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Administrative Co-Agent and
Collateral Co-Agent
By /s/ Shannon Collins
--------------------------------------
Title: Vice President
Address: 1455 Market Street
12th Floor
San Francisco, California 94103
Facsimile No.: (415) 622-4894
Attention: Shannon Collins
-106-
<PAGE>
LENDERS
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Michael J. Balok
--------------------------------------
Title: Vice President
Domestic
Office: 555 California Street
41st Floor
San Francisco, California 94104
Facsimile No.: (415) 622-2018
Attention: Michael Balok
Eurodollar
Office: 1850 Gateway Boulevard
Concord, California 94520
Facsimile No.: (510) 675-7531
Attention: Terry Peach
Account Administrator
-107-
<PAGE>
ABN AMRO BANK N.V.
By /s/ Peter Melloni Diane Waggoner
----------------------------------------
Title: Vice President Vice President
Domestic
Office: 101 California Street
45th Floor
San Francisco, California 94111
Facsimile No.: (415) 362-3726
Attention: Peter Melloni
Eurodollar
Office: 101 California Street
45th Floor
San Francisco, California 94111
Facsimile No.: (415) 362-3726
Attention: Peter Melloni
-108-
<PAGE>
NATIONSBANK OF NORTH CAROLINA, N.A.
By /s/ Michael Tousignant
--------------------------------------
Title: Assistant Vice President
Domestic
Office: One NationsBank Plaza
NC1-002-06-19
Charlotte, North Carolina 28255
Facsimile No.: (704) 386-8694
Attention: Michael Tousignant
Eurodollar
Office: One NationsBank Plaza
NC1-002-06-19
Charlotte, North Carolina 28255
Facsimile No.: (704) 386-8694
Attention: Michael Tousignant
-109-
<PAGE>
CORESTATES BANK N.A.
By /s/ Susan M. Atkinson
--------------------------------------
Title: Vice President
Domestic
Office: 1345 Chestnut Street
Philadelphia, Pennsylvania 19147
Facsimile No.: (215) 973-6745
Attention: Susan Atkinson
Eurodollar
Office: 1345 Chestnut Street
Philadelphia, Pennsylvania 19147
Facsimile No.: (215) 973-6745
Attention: Susan Atkinson
-110-
<PAGE>
FIRST INTERSTATE BANK OF CALIFORNIA
By /s/ Joellen Ademski Kenneth Lloyd
----------------------------------------
Title: Vice President Vice President
Domestic
Office: 1221 Broadway
Suite 240
Oakland, California 94612
Facsimile No.: (510) 891-2031
Attention: Joellen Ademski
Eurodollar
Office: 1221 Broadway
Suite 240
Oakland, California 94612
Facsimile No.: (510) 891-2031
Attention: Joellen Ademski
-111-
<PAGE>
WELLS FARGO BANK, NATIONAL ASSOCIATION
By /s/ Joe Alexis
--------------------------------------
Title: Vice President
Domestic
Office: Mid-Valley RCBO
P.O. Box 949
Modesto, California 95353-0949
Facsimile No.: (209) 523-3686
Attention: Joe Alexis
Eurodollar
Office: Mid-Valley RCBO
P.O. Box 949
Modesto, California 95353-0949
Facsimile No.: (209) 523-3686
Attention: Joe Alexis
-112-
<PAGE>
THE BANK OF NOVA SCOTIA
By /s/ Maarten Van Otterloo
-------------------------------
Title: Officer
Domestic
Office: 101 California Street
48th Floor
San Francisco, California 94111
Facsimile No. (415) 397-0791
Attention: Maarten Van Otterloo
Eurodollar
Office: 101 California Street
48th Floor
San Francisco, California 94111
Facsimile No. (415) 397-0791
Attention: Maarten Van Otterloo
-113-
<PAGE>
SANWA BANK CALIFORNIA
By /s/ Dan Stevens
-------------------------------
Title: Vice President
Domestic
Office: 1800 Sutter Street
Suite 360
Concord, California 94520
Facsimile No.: (510) 827-2557
Attention: Dan Stevens
Eurodollar
Office: 1800 Sutter Street
Suite 360
Concord, California 94520
Facsimile No.: (510) 827-2557
Attention: Dan Stevens
-114-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements included in the Registrants Form 10-Q for the
quarter ended 9/30/94 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 10824
<SECURITIES> 0
<RECEIVABLES> 46972
<ALLOWANCES> 1810
<INVENTORY> 82178
<CURRENT-ASSETS> 149145
<PP&E> 186847
<DEPRECIATION> 72580
<TOTAL-ASSETS> 1251322
<CURRENT-LIABILITIES> 65943
<BONDS> 131,106
<COMMON> 42
0
0
<OTHER-SE> 142855
<TOTAL-LIABILITY-AND-EQUITY> 1251322
<SALES> 226301
<TOTAL-REVENUES> 226301
<CGS> 188185
<TOTAL-COSTS> 188185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 342
<INTEREST-EXPENSE> 2678
<INCOME-PRETAX> 38086
<INCOME-TAX> 15508
<INCOME-CONTINUING> 22578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22578
<EPS-PRIMARY> 5.03
<EPS-DILUTED> 5.02
</TABLE>
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: STEPHEN L. DEMARIA
(510) 274-0700
FIBREBOARD INCREASES REVOLVING
CREDIT FACILITY TO $175 MILLION
(WALNUT CREEK, CALIFORNIA, September 30, 1994)--Fibreboard Corporation
(AMEX:FBD) today announced it has increased its revolving credit facility to
$175 million from the original $100 million three-year credit agreement
announced in July.
Bank of America National Trust and Savings Association, the agent bank, is
joined by NationsBank of North Carolina, ABN AMRO Bank N.V., First Interstate
Bank of California, Wells Fargo Bank National Association, Corestates Bank N.
A., Sanwa Bank California, and The Bank of Nova Scotia in the expanded credit
facility.
John D. Roach, chairman and chief executive officer, said, "This increased
credit facility will enable Fibreboard to continue our acquisition program.
Funds available from the credit facility are expected to increase during the
next several quarters as cash is generated by our recent acquisition of Norandex
and the approaching ski season in our resort business. The recent addition of
Norandex has expanded Fibreboard's building products focus with annualized
revenues 75% greater than they were before the acquisition. More importantly,
this moves us closer to our goal of acquiring operations that could add $1.00 to
$2.00 to our per share annual earnings.
"Once this acquisition program is completed, we believe that Fibreboard can
shortly thereafter achieve consolidated earnings between $3.50 and $5.00 per
share," added Roach.
Page 1 of 2
<PAGE>
Headquartered in Walnut Creek, California, Fibreboard's building products
group manufactures vinyl siding products, lumber, hardwood plywood, moulding and
millwork, precision molded industrial insulation and fireproofing materials and
distributes residential exterior building products for new construction and
remodeling markets through its own national distribution network. Fibreboard
also owns approximately 80,000 acres of timberland in the Sierra Nevada
mountains in California. In addition to the building products businesses, the
Resort Operations Group owns and operates Northstar-at-Tahoe, an all-season
resort featuring skiing, golf and a conference center, and Sierra-at-Tahoe, a
day ski facility, both located in the Lake Tahoe region of California.
Page 2 of 2
