Exhibit 10.1
$30,000,000
REVOLVING CREDIT AGREEMENT
dated as of April 19, 2005
among
THE PACIFIC LUMBER COMPANY
and
βββββ� LUMBER CO., INC.,
as Borrowers
THE LENDERS PARTY HERETO,
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Administrative Agent
and
CREDIT SUISSE FIRST BOSTON,
acting through its New York Branch,
as Sole Bookrunner and Sole Lead Arranger
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
SECTION 1.01 Defined Terms
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SECTION 1.02 Terms Generally
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SECTION 1.03 Classification of Loans and Borrowings
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SECTION 1.04 Pro Forma Calculations
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ARTICLE II. THE CREDITS
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SECTION 2.01 Commitments
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SECTION 2.02 Loans
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SECTION 2.03 Borrowing Procedure
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SECTION 2.04 Repayment of Loans; Evidence of Debt
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SECTION 2.05 Fees
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SECTION 2.06 Interest on Loans
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SECTION 2.07 Default Interest
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SECTION 2.08 Alternate Rate of Interest
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SECTION 2.09 Termination and Reduction of Commitments
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SECTION 2.10 Conversion and Continuation of Borrowings
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SECTION 2.11 [Reserved]
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SECTION 2.12 Prepayment
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SECTION 2.13 Mandatory Prepayments
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SECTION 2.14 Reserve Requirements; Change in Circumstances
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SECTION 2.15 Change in Legality
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SECTION 2.16 Indemnity
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SECTION 2.17 Pro Rata Treatment
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SECTION 2.18 Sharing of Setoffs
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SECTION 2.19 Payments
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SECTION 2.20 Taxes
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SECTION 2.21 Assignment of Commitments Under Certain
------------ Circumstances; Duty to Mitigate
SECTION 2.22 Swingline Loans
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SECTION 2.23 Letters of Credit
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SECTION 2.24 Relationship Between the Borrowers
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ARTICLE III. REPRESENTATIONS AND WARRANTIES
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SECTION 3.01 Organization; Powers
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SECTION 3.02 Authorization; No Conflicts
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SECTION 3.03 Enforceability
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SECTION 3.04 Governmental Approvals
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SECTION 3.05 Financial Statements
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SECTION 3.06 No Material Adverse Change
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SECTION 3.07 Title to Properties; Possession Under Leases
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SECTION 3.08 Subsidiaries
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SECTION 3.09 Litigation; Compliance with Laws
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SECTION 3.10 Agreements
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SECTION 3.11 Federal Reserve Regulations
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SECTION 3.12 Investment Company Act; Public Utility Holding Company Act 54
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SECTION 3.13 Use of Proceeds
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SECTION 3.14 Tax Returns
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SECTION 3.15 No Material Misstatements:
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SECTION 3.16 Employee Benefit Plans
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SECTION 3.17 Environmental Matters
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SECTION 3.18 Insurance
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SECTION 3.19 Security Documents
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SECTION 3.20 Location of Real Property
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SECTION 3.21 Labor Matters
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SECTION 3.22 Liens
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SECTION 3.23 Intellectual Property
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SECTION 3.24 Solvency
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SECTION 3.25 Permits
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SECTION 3.26 Deposit and Disbursement Accounts
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ARTICLE IV. CONDITIONS OF LENDING
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SECTION 4.01 All Credit Events
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SECTION 4.02 First Credit Event
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ARTICLE V. AFFIRMATIVE COVENANTS
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SECTION 5.01 Existence; Businesses and Properties
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SECTION 5.02 Insurance
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SECTION 5.03 Obligations and Taxes
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SECTION 5.04 Financial Statements, Reports, etc
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SECTION 5.05 Litigation and Other Notices
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SECTION 5.06 Information Regarding Collateral
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SECTION 5.07 Maintaining Records; Access to Properties and Inspections;
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Environmental Assessments
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SECTION 5.08 Use of Proceeds
SECTION 5.09 Additional Collateral, etc
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SECTION 5.10 Further Assurances
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SECTION 5.11 [Intentionally Omitted]
SECTION 5.12 Cash Management Systems; Bank Accounts
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SECTION 5.13 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real
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Estate Purchases
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ARTICLE VI. NEGATIVE COVENANTS
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SECTION 6.01 Indebtedness
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SECTION 6.02 Liens
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SECTION 6.03 Sale and Lease-Back Transactions
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SECTION 6.04 Investments, Loans and Advances
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SECTION 6.05 Mergers, Consolidations, Sales of Assets and Acquisitions
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SECTION 6.06 Restricted Payments; Restrictive Agreements
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SECTION 6.07 Transactions with Affiliates
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SECTION 6.08 Business of the Borrowers and Subsidiaries; Limitation on Hedging
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Agreements
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SECTION 6.09 Other Indebtedness and Agreements
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SECTION 6.10 Capital Expenditures
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SECTION 6.11 Minimum Combined EBITDA
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SECTION 6.12 Fiscal Year
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ARTICLE VII. EVENTS OF DEFAULT
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ARTICLE VIII. THE ADMINISTRATIVE AGENT AND THE ARRANGER
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ARTICLE IX. MISCELLANEOUS
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SECTION 9.01 Notices
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SECTION 9.02 Survival of Agreement
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SECTION 9.03 Binding Effect
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SECTION 9.04 Successors and Assigns
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SECTION 9.05 Expenses; Indemnity
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SECTION 9.06 Right of Setoff
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SECTION 9.07 Applicable Law
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SECTION 9.08 Waivers; Amendment
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SECTION 9.09 Interest Rate Limitation
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SECTION 9.10 Entire Agreement
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SECTION 9.11 WAIVER OF JURY TRIAL
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SECTION 9.12 Severability
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SECTION 9.13 Counterparts
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SECTION 9.14 Headings
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SECTION 9.15 Jurisdiction; Consent to Service of Process
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SECTION 9.16 Confidentiality
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SECTION 9.17 Delivery of Lender Addenda
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Exhibits and Schedules
Exhibit A Form of Administrative Questionnaire
Exhibit B [Intentionally Omitted]
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Borrowing Request
Exhibit E Form of Lender Addendum
Exhibit F Form of Perfection Certificate
Exhibit G Form of Exemption Certificate
Exhibit H Form of Borrowing Base Certificate
Exhibit I Closing Checklist
Schedule 1.01 Mortgaged Properties
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.10 Agreements
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 3.19(a) UCC Filing Offices
Schedule 3.19(c) Mortgage Filing Offices
Schedule 3.20 Owned and Leased Real Property
Schedule 3.26 Deposit and Disbursement Accounts
Schedule 6.01 Existing Indebtedness
Schedule 6.02 Existing Liens
Schedule 6.04 Existing Investments
Schedule 6.07 Transactions with Affiliates
REVOLVING CREDIT AGREEMENT dated as of April 19, 2005 (this "Agreement"), among
THE PACIFIC LUMBER COMPANY ("PALCO"), a Delaware corporation and βββββ� LUMBER
CO., INC. ("βββββ�"), a California corporation, the LENDERS from time to time
party hereto, and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative agent
(in such capacity and together with its successors, the "Administrative Agent").
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 Defined Terms. As used in this Agreement, the following terms shall
have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.
"Account Debtor" means each Person obligated in any way on or in connection with
an Account.
"Accounts" means all now owned or hereafter acquired or arising accounts of
either Borrower, as defined in the UCC, including any rights to payment for the
sale or lease of goods or rendition of services, whether or not they have been
earned by performance.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate in effect for
such Interest Period and (b) Statutory Reserves.
"Administrative Agent" shall have the meaning assigned to such term in the
preamble.
"Administrative Agent Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"Administrative Borrower" shall have the meaning assigned to such term in
Section 2.24(a).
"Administrative Questionnaire" shall mean an Administrative Questionnaire in the
form of Exhibit A, or such other form as may be supplied from time to time by
the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified person, another
person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the person specified;
provided, however, that, for purposes of Section 6.07, the term "Affiliate"
shall also include any person that directly or indirectly owns 5% or more of any
class of Equity Interests of the person specified or that is an officer or
director of the person specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount of the
Lenders' Revolving Credit Exposures.
"Agreement" shall have the meaning assigned to such term in the preamble.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective date of such change in
the Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin" shall mean (a) with respect to the Loans comprising each ABR
Borrowing, including each Swingline Loan, .50% per annum and (b) with respect to
the Loans comprising each Eurodollar Borrowing, 2.25% per annum.
"Arranger" shall have the meaning assigned to such term in the preamble.
"Asset Sale" shall mean the sale, lease, sale and leaseback, assignment,
conveyance, transfer, issuance or other disposition (by way of merger, casualty,
condemnation or otherwise) by PALCO or any of the Subsidiaries to any person
other than PALCO or any Subsidiary Guarantor of (a) any Equity Interests of any
of the Subsidiaries (other than directors' qualifying shares) or (b) any other
assets of PALCO or any of the Subsidiaries, including Equity Interests of any
person that is not a Subsidiary (other than inventory, obsolete or worn out
assets, scrap and Permitted Investments, in each case disposed of in the
ordinary course of business); provided that any asset sale or series of related
asset sales described in clause (b) above having a value not in excess of
$100,000 shall be deemed not to be an "Asset Sale" for purposes of this
Agreement.
"Assignment and Acceptance" shall mean an assignment and acceptance entered into
by a Lender and an assignee (with the consent of any person whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit C or such other form as shall be approved by the Administrative
Agent.
"Benefit Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Tax Code or Section 307 of ERISA, and in respect of which the
Borrowers or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"Board" shall mean the Board of Governors of the Federal Reserve System of the
United States of America.
"Borrowers" shall mean PALCO and βββββ�.
"Borrowing" shall mean (a) Loans of the same Type made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Availability" means as of any time of determination the lesser of (i)
the Total Revolving Credit Commitment at such time and (ii) the Borrowing Base
at such time, in each case, less the sum of (a) the Loans then outstanding
(including, without duplication, the outstanding balance of the Swingline Loan
then outstanding), (b) aggregate L/C Exposure at such time and (c) Reserves
established by the Administrative Agent in its reasonable credit judgment.
"Borrowing Base" means, at any time, an amount equal to (a) the sum of (A)
eighty-five percent (85%) of the Net Amount of Eligible Accounts plus (B)
seventy-five percent (75%) of the value (being the lower of cost (on a first-in
first-out basis) or market) of Eligible Inventory; minus (b) Reserves from time
to time established by the Administrative Agent in its reasonable credit
judgment.
"Borrowing Base Certificate" means a certificate by a Responsible Officer of
PALCO, substantially in the form of Exhibit H (or another form acceptable to the
Administrative Agent) setting forth the calculation of the Borrowing Base,
including a calculation of each component thereof, all in such detail as shall
be reasonably satisfactory to the Administrative Agent. All calculations of the
Borrowing Base in connection with the preparation of any Borrowing Base
Certificate shall originally be made by PALCO and certified to the
Administrative Agent; provided, that the Administrative Agent shall have the
right to review and adjust, in the exercise of its reasonable credit judgment,
any such calculation (1) to reflect its reasonable estimate of declines in value
of any of the Collateral described therein, and (2) to the extent that such
calculation is not in accordance with this Agreement.
"Borrowing Request" shall mean a request by the Administrative Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit D, or such other form as shall be approved by the Administrative Agent.
"Breakage Event" shall have the meaning assigned to such term in Section 2.16.
"Business Day" shall mean any day other than a Saturday, Sunday or day on which
commercial banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan
(including with respect to all notices and determinations in connection
therewith and any payments of principal, interest or other amounts thereon), the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Expenditures" shall mean, for any period, with respect to any person,
(a) the additions to property, plant and equipment and other capital
expenditures of such person and its subsidiaries that are (or should be) set
forth in a consolidated statement of cash flows of such person for such period
prepared in accordance with GAAP and (b) Capital Lease Obligations incurred by
such person and its subsidiaries during such period.
"Capital Lease Obligations" of any person shall mean the obligations of such
person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such person under GAAP, and the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
"Change in Control" shall be deemed to have occurred if (a) Maxxam shall fail to
own directly or indirectly, beneficially and of record, Equity Interests
representing at least 51% of the aggregate ordinary voting power and aggregate
equity value represented by the issued and outstanding Equity Interests in
PALCO; (b) Maxxam, through direct representation or through persons nominated by
it, ceases to control a majority of the Board of Directors of PALCO necessary to
effectuate any actions of the Board of Directors of PALCO; (c) PALCO shall at
any time fail to own directly or indirectly, beneficially and of record, 100% of
each class of issued and outstanding Equity Interests in βββββ�, (unless PALCO
owns no Equity Interests in βββββ�), free and clear of all Liens (other than
Liens created by the Guarantee and Collateral Agreement); (d) PALCO shall fail
to own directly or indirectly, beneficially and of record, Equity Interests
representing at least 51% of the aggregate ordinary voting power and aggregate
equity value represented by the issued and outstanding Equity Interests in
Scotia Pacific or (e) PALCO, through direct representation or through persons
nominated by it, ceases to control a majority of the Board of Managers of Scotia
Pacific necessary to effectuate any actions of the Board of Managers of Scotia
Pacific.
"Change in Law" shall mean (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.14, by any lending office of such Lender or by such Lender's holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Charges" shall have the meaning assigned to such term in Section 9.09.
"Closing Date" shall mean April 19, 2005.
"Collateral" shall mean all property and assets of the Loan Parties, now owned
or hereafter acquired, upon which a Lien is purported to be created by any
Security Document, and shall include the Mortgaged Properties.
"Combined EBITDA" shall mean, for any period, Combined Net Income for such
period plus (a) without duplication and to the extent deducted in determining
such Combined Net Income, the sum of (i) Combined Interest Expense for such
period, (ii) combined income tax expense for such period, (iii) all amounts
attributable to depreciation and amortization for such period and (iv) any
non-cash charges (other than the write-down of current assets) for such period
(provided that to the extent that all or any portion of the income of any person
is excluded from Combined Net Income pursuant to the definition thereof for all
or any portion of such period any amounts set forth in the preceding clauses (i)
through (iv) that are attributable to such person shall not be included for
purposes of this definition for such period or portion thereof), and minus (b)
without duplication (i) all cash payments made during such period on account of
reserves, restructuring charges and other non-cash charges added to Combined Net
Income pursuant to clause (a)(iv) above in a previous period and (ii) to the
extent included in determining such Combined Net Income, any extraordinary gains
and all non-cash items of income for such period, all determined on a combined
basis in accordance with GAAP (except that Inventory is presented on a FIFO
basis).
"Combined Interest Expense" shall mean, for any period, the sum of (a) the
interest expense (including imputed interest expense in respect of Capital Lease
Obligations) of the Borrowers on a combined basis for such period (including all
commissions, discounts and other fees and charges owed by the Borrowers on a
combined basis with respect to letters of credit and bankers' acceptance
financing), net of interest income, in each case determined on a combined basis
in accordance with GAAP, plus (b) any interest accrued during such period in
respect of Indebtedness of the Borrowers on a combined basis that is required to
be capitalized rather than included in interest expense for such period in
accordance with GAAP. For purposes of the foregoing, interest expense shall be
determined after giving effect to any net payments made or received by the
Borrowers on a combined basis with respect to interest rate Hedging Agreements.
"Combined Net Income" shall mean, for any period, the net income or loss of the
Borrowers on a combined basis for such period determined on a combined basis in
accordance with GAAP; provided that there shall be excluded (a) the income of
any Subsidiary (other than βββββ�), (b) the income or loss of any person accrued
prior to the date it is merged into or consolidated with a Borrower or the date
that such person's assets are acquired by a Borrower, (c) the income of any
person other than a Borrower, except to the extent of the amount of dividends or
other distributions actually paid to a Borrower by such person during such
period, and (d) any gains attributable to sales of assets out of the ordinary
course of business.
"Commitment" shall mean, with respect to any Lender, such Lender's Revolving
Credit Commitment and Swingline Commitment.
"Commitment Fee" shall have the meaning assigned to such term in Section
2.05(a).
"Commitment Fee Rate" shall mean a rate per annum equal to 1/2 of 1%.
"Control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "Controlling" and "Controlled" shall have meanings correlative thereto.
"Control Agreement" means tri-party deposit account, securities account or
commodities account control agreements by and among the applicable Loan Party,
the Administrative Agent, certain other parties and the depository, securities
intermediary or commodities intermediary, and each in form and substance
satisfactory in all respects to the Administrative Agent and in any event
proving to the Administrative Agent "control" of such deposit account,
securities or commodities account within the meaning of Articles 8 and 9 of the
UCC.
"Credit Event" shall have the meaning assigned to such term in Section 4.01.
"Default" shall mean any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would constitute an Event of
Default.
"dollars" or "$" shall mean lawful money of the United States of America.
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"Eligible Accounts" shall mean the Accounts which the Administrative Agent in
the exercise of its reasonable commercial discretion determines to be Eligible
Accounts. Without limiting the discretion of the Administrative Agent to
establish other criteria of ineligibility, Eligible Accounts shall not, unless
the Administrative Agent in its sole discretion elects, include any Account:
(a) with respect to which more than 60 days have elapsed since the date of the
original invoice therefor or which is more than 30 days past due, provided, that
during the period from November 1 through March 31 in any year any Account that
is subject to an Extended Terms Invoice and with respect to which no more than
120 days have elapsed since the date of the original invoice therefor or which
is no more than 30 days past due shall be eligible, provided, that when such
Account is aggregated with the gross amount of all other such Accounts then
outstanding, such aggregated amount shall not exceed $2,500,000;
(b) with respect to which any of the representations, warranties, covenants, and
agreements contained in the Security Documents are incorrect or have been
breached;
(c) with respect to which Account (or any other Account due from such Account
Debtor), in whole or in part, a check, promissory note, draft, trade acceptance
or other instrument for the payment of money has been received, presented for
payment and returned uncollected for any reason;
(d) which represents a progress billing (as hereinafter defined) or as to which
the applicable Borrower has extended the time for payment without the consent of
the Administrative Agent; for the purposes hereof, "progress billing" means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon the applicable Borrower's completion of any further
performance under the contract or agreement;
(e) with respect to which any one or more of the following events has occurred
to the Account Debtor on such Account: death or judicial declaration of
incompetency of an Account Debtor who is an individual; the filing by or against
the Account Debtor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or
other relief under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction, now or
hereafter in effect; the making of any general assignment by the Account Debtor
for the benefit of creditors; the appointment of a receiver or trustee for the
Account Debtor or for any of the assets of the Account Debtor, including,
without limitation, the appointment of or taking possession by a "custodian," as
defined in the Federal Bankruptcy Code; the institution by or against the
Account Debtor of any other type of insolvency proceeding (under the bankruptcy
laws of the United States or otherwise) or of any formal or informal proceeding
for the dissolution or liquidation of, settlement of claims against, or winding
up of affairs of, the Account Debtor; the sale, assignment, or transfer of all
or any material part of the assets of the Account Debtor; the nonpayment
generally by the Account Debtor of its debts as they become due; or the
cessation of the business of the Account Debtor as a going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar amount of outstanding
Accounts owed at such time by the Account Debtor thereon is classified as
ineligible under clause (a) above;
(g) owed by an Account Debtor which: (i) does not maintain its chief executive
office in the United States of America or Canada (other than the Province of
Newfoundland); or (ii) is not organized under the laws of the United States of
America or Canada or any state or province thereof; or (iii) is the government
of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department,
agency, public corporation, or other instrumentality thereof; except to the
extent that such Account is secured or payable by a letter of credit
satisfactory to the Administrative Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or employee of the
applicable Borrower;
(i) except as provided in clause (k) below, with respect to which either the
perfection, enforceability, or validity of the Administrative Agent's Liens in
such Account, or the Administrative Agent's right or ability to obtain direct
payment to the Administrative Agent of the proceeds of such Account, is governed
by any federal, state, or local statutory requirements other than those of the
UCC;
(j) owed by an Account Debtor to which the applicable Borrower or any of its
Subsidiaries, is indebted in any way, or which is subject to any right of setoff
or recoupment by the Account Debtor, unless the Account Debtor has entered into
an agreement acceptable to the Administrative Agent to waive setoff rights; or
if the Account Debtor thereon has disputed liability or made any claim with
respect to any other Account due from such Account Debtor; but in each such case
only to the extent of such indebtedness, setoff, recoupment, dispute, or claim;
(k) owed by the government of the United States of America, or any department,
agency, public corporation, or other instrumentality thereof, unless the Federal
Assignment of Claims Act of 1940, as amended (31 U.S.C. ss. 3727 et seq.), and
any other steps necessary to perfect the Administrative Agent's Liens therein,
have been complied with to the Administrative Agent's satisfaction with respect
to such Account;
(l) owed by any state, municipality, or other political subdivision of the
United States of America, or any department, agency, public corporation, or
other instrumentality thereof and as to which the Administrative Agent
determines that its Lien therein is not or cannot be perfected;
(m) which represents a sale on a ββββ-and-hold, guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or return basis;
(n) which is evidenced by a promissory note or other instrument or by chattel
paper;
(o) if the Administrative Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in any state requiring
the filing of a Notice of Business Activities Report or similar report in order
to permit the applicable Borrower to seek judicial enforcement in such State of
payment of such Account, unless such Borrower has qualified to do business in
such state or has filed a Notice of Business Activities Report or equivalent
report for the then current year;
(q) which arises out of a sale not made in the ordinary course of the applicable
Borrower's business;
(r) with respect to which the goods giving rise to such Account have not been
shipped and delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by the applicable Borrower,
and, if applicable, accepted by the Account Debtor, or the Account Debtor
revokes its acceptance of such goods or services;
(s) owed by an Account Debtor or a group of affiliated Account Debtors which is
obligated to the applicable Borrower respecting Accounts the aggregate unpaid
balance of which exceeds fifteen percent (15%) of the aggregate unpaid balance
of all Accounts owed to such Borrower at such time by all of the Borrower's
Account Debtors, but only to the extent of such excess;
(t) which is not subject to a first priority and perfected security interest in
favor of the Administrative Agent for the benefit of the Secured Parties;
(u) as to which any Borrower is not able to bring suit or otherwise enforce its
remedies against the Account Debtor through judicial process;
(v) that is not a true and correct statement of bona fide indebtedness incurred
in the amount of the Account for merchandise sold to or services rendered and
accepted by the applicable Account Debtor;
(w) with respect to which an invoice, reasonably acceptable to the
Administrative Agent in form and substance, has not been sent to the applicable
Account Debtor;
(x) that (i) is not owned by any Borrower or (ii) is subject to any Lien of any
other person, other than Liens in favor of the Administrative Agent, on behalf
of itself and the Lenders;
(y) to the extent such Account exceeds any credit limit established by the
Administrative Agent, in its reasonable credit judgment, following prior notice
of such limit by the Administrative Agent to the Administrative Borrower; and
(z) that is payable in any currency other than dollars.
In addition, (i) to the extent that the amounts in respect of any Account in the
general ledger are lower than the amounts in respect of such Account in the
monthly aging reports submitted to the Administrative Agent, the difference
between such amounts shall be excluded from the calculation of Eligible Accounts
and (ii) if PALCO does not own any Equity Interest in βββββ�, no Account of βββββ�
shall constitute an Eligible Account.
If any Account at any time ceases to be an Eligible Account, then such Account
shall promptly be excluded from the calculation of Eligible Accounts.
"Eligible Inventory" means Inventory which the Administrative Agent, in its
reasonable discretion, determines to be Eligible Inventory. Without limiting the
discretion of the Administrative Agent to establish other criteria of
ineligibility, Eligible Inventory shall not, unless the Administrative Agent in
its sole discretion elects, include any Inventory:
(a) that is not owned by the applicable Borrower;
(b) that is not subject to the Administrative Agent's Liens, which are perfected
as to such Inventory, or that are subject to any other Lien whatsoever (other
than the Liens described in clause (d) of Section 6.02 provided that such
Permitted Liens (i) are junior in priority to the Administrative Agent's Liens
or subject to Reserves and (ii) do not impair directly or indirectly the ability
of the Administrative Agent to realize on or obtain the full benefit of the
Collateral);
(c) that does not consist of finished goods or raw materials;
(d) that consists of chemicals, samples, prototypes, supplies, or packing and
shipping materials;
(e) that is not in good condition, is unmerchantable, or does not meet all
standards imposed by any Governmental Authority, having regulatory authority
over such goods, their use or sale;
(f) that is not currently either usable or salable, at prices approximating at
least cost, in the normal course of the applicable Borrower's business, or that
is slow moving or stale;
(g) that is obsolete or returned or repossessed or used goods taken in trade;
(h) that is located outside the United States of America (or that is in-transit
from vendors or suppliers);
(i) that is located in a public warehouse or in possession of a bailee or in a
facility leased by the applicable Borrower, if the warehouseman, or the bailee,
or the lessor has not delivered to the Administrative Agent, if requested by the
Administrative Agent, a subordination agreement in form and substance
satisfactory to the Administrative Agent or if a Reserve for rents or storage
charges has not been established for Inventory at that location;
(j) that contains or bears any proprietary rights licensed to the applicable
Borrower by any Person, if the Administrative Agent is not satisfied that it may
sell or otherwise dispose of such Inventory in accordance with the terms of the
Security Documents and Section 6.05 without infringing the rights of the
licensor of such proprietary rights or violating any contract with such licensor
(and without payment of any royalties other than any royalties due with respect
to the sale or disposition of such Inventory pursuant to the existing license
agreement), and, as to which the applicable Borrower has not delivered to the
Administrative Agent a consent or sublicense agreement from such licensor in
form and substance acceptable to the Administrative Agent if requested;
(k) that is Inventory placed on consignment;
(l) that consists of the difference between any Borrower's first-in, first-out
log costs and estimated market value log costs;
(m) that consists of the difference between any Borrower's first-in, first-out
lumber costs and reported market value lumber costs;
(n) (i) is not located on premises owned, leased or rented by Borrowers and set
forth in Disclosure Schedule 3.20 or (ii) is located at an owned location
subject to a mortgage in favor of a lender other than the Administrative Agent,
unless a reasonably satisfactory mortgagee waiver has been delivered to the
Administrative Agent;
(o) that is covered by a negotiable document of title, unless such document has
been delivered to the Administrative Agent with all necessary endorsements, free
and clear of all Liens except those in favor of the Administrative Agent and
Lenders; (p) that is not of a type held for sale in the ordinary course of the
applicable Borrower's business;
(q) that breaches any of the representations or warranties pertaining to
Inventory set forth in the Loan Documents;
(r) that consists of any costs associated with "freight-in" charges;
(s) that consists of Hazardous Materials or goods that can be transported or
sold only with licenses that are not readily available; or
(t) that is not covered by casualty insurance reasonably acceptable to the
Administrative Agent.
In addition, (i) to the extent that the amounts in respect of any Inventory in
the general ledger are lower than the amounts in respect of such Inventory in
the monthly aging reports submitted to the Administrative Agent, the difference
between such amounts shall be excluded from the calculation of Eligible
Inventory and (ii) to the extent that PALCO does not own an Equity Interest in
βββββ�, no Inventory of βββββ� shall constitute Eligible Inventory.
If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of Eligible Inventory.
"Environmental Laws" shall mean all former, current and future Federal, state,
local and foreign laws (including common law), treaties, regulations, rules,
ordinances, codes, decrees, judgments, directives, orders (including consent
orders), and agreements in each case, relating to protection of the environment,
natural resources, human health and safety or the presence, Release of,
threatened Release, or exposure to, Hazardous Materials, or the generation,
manufacture, processing, distribution, use, treatment, storage, transport,
recycling or handling of, or the arrangement for such activities with respect
to, Hazardous Materials.
"Environmental Liability" shall mean all liabilities, obligations, damages,
losses, claims, actions, suits, judgments, orders, fines, penalties, fees,
expenses and costs (including administrative oversight costs, natural resource
damages and remediation costs), whether contingent or otherwise, arising out of
or relating to (a) compliance or non-compliance with any Environmental Law, (b)
the generation, use, handling, transportation, storage, treatment or disposal of
any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
Release or threatened Release of any Hazardous Materials or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed
or imposed with respect to any of the foregoing.
"Environmental Permit" shall mean any Permit under Environmental Law.
--------------------
"Equipment" means all now owned and hereafter acquired machinery, equipment,
furniture, furnishings, fixtures, of either Borrower and other tangible personal
property (except Inventory), including embedded software, motor vehicles with
respect to which a certificate of title has been issued, aircraft, dies, tools,
jigs, molds and office equipment, as well as all of such types of property
leased by either Borrower and all of such Borrower's rights and interests with
respect thereto under such leases (including, without limitation, options to
purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"Equity Interests" shall mean shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity interests in any person, or any obligations convertible
into or exchangeable for, or giving any person a right, option or warrant to
acquire, such equity interests or such convertible or exchangeable obligations.
"Equity Issuance" shall mean any issuance or sale by PALCO of any Equity
Interests of PALCO, or the receipt by PALCO of any capital contribution, as
applicable, except in each case for (a) any issuance of directors' qualifying
shares and (b) sales or issuances of common stock of PALCO to management or
employees of PALCO or any Subsidiary under any employee stock option or stock
purchase plan or employee benefit plan in existence from time to time in the
ordinary course of business.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not incorporated)
that, together with the Borrowers, is treated as a single employer under Section
414(b) or (c) of the Tax Code, or solely for purposes of Section 302 of ERISA
and Section 412 of the Tax Code, is treated as a single employer under Section
414 of the Tax Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder, with respect to a Benefit Plan
(other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Benefit Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Tax Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Tax Code
or Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Benefit Plan; (d) the incurrence by the Borrowers
or any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Benefit Plan or the withdrawal or partial
withdrawal of the Borrowers or any of its ERISA Affiliates from any Benefit Plan
or Multiemployer Plan; (e) the receipt by the Borrowers or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Benefit Plan or Plans or to appoint a trustee to
administer any Benefit Plan; (f) the adoption of any amendment to a Benefit Plan
that would require the provision of security pursuant to Section 401(a)(29) of
the Tax Code or Section 307 of ERISA; (g) the receipt by the Borrowers or any of
their ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan
from the Borrowers or any of their ERISA Affiliates of any notice, concerning
the imposition of Withdrawal Liability or a determination that a Multiemployer
Plan is, or is expected to be, insolvent or in reorganization, within the
meaning of Title IV of ERISA; (h) the occurrence of a "prohibited transaction"
with respect to which the Borrowers or any of the Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Tax Code) or
with respect to which the Borrowers or any such Subsidiary could otherwise be
liable; or (i) any other event or condition with respect to a Benefit Plan or
Multiemployer Plan that could result in liability of any Loan Party in an amount
in excess of $2,500,000.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" shall have the meaning assigned to such term in Article VII.
"Excluded Taxes" shall mean, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of the Borrowers hereunder, (a) taxes imposed on (or measured by) its
net income as a result of a connection between such recipient and the
jurisdiction imposing such tax (or any political subdivision thereof), other
than any such connection arising solely from such recipient having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document and (b) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Administrative
Borrower under Section 2.21(a)), any United States withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender's failure to comply with Section 2.20(d),
except to the extent that such Foreign Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to
receive additional amounts from PALCO with respect to such withholding tax
pursuant to Section 2.20(a).
"Existing Credit Facility" shall mean the $30,000,000 credit facility of the
Borrowers under the Credit Agreement dated as of January 23, 2004, among the
Borrowers, Bank of America, N.A., as a lender and as agent for all lenders, and
the other lenders party thereto, as amended.
"Extended Terms Invoice" means any invoice issued by a Borrower that states that
payment in respect of such invoice is due more than 30 days past the date of
such invoice.
"Facility" shall mean the Commitments and the extensions of credit made
thereunder.
"Federal Funds Effective Rate" shall mean, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for the day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter" shall mean the Fee Letter dated as of the Closing Date, among the
Borrowers and the Administrative Agent.
"Fees" shall mean the Commitment Fees, the Administrative Agent Fees, the L/C
Guaranty Fees and the Issuing Bank Fees.
"Financial Officer" of any person shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such person and in
addition to such persons, for purposes of certifying compliance with financial
covenants and the preparation of a Borrowing Base Certificate, the "Financial
Officer" shall include the financial reporting manager and general accounting
manager or any other person having substantially the same authority and
responsibility.
"Foreign Lender" shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" shall mean generally accepted accounting principles in the United States.
"Governmental Authority" shall mean the government of the United States of
America or any other nation, any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Granting Lender" shall have the meaning assigned to such term in Section
9.04(i).
"Guarantee" of or by any person (the "guarantor") shall mean any obligation,
contingent or otherwise, of (a) the guarantor or (b) another person (including
any bank under a letter of credit) to induce the creation of which the guarantor
has issued a reimbursement, counterindemnity or similar obligation, in either
case guaranteeing or having the economic effect of guaranteeing any Indebtedness
or other obligation of any other person (the "primary obligor") in any manner,
whether directly or indirectly, and including any obligation, contingent or
otherwise, of the guarantor, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation, (ii)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation, (iv) as an account party in respect of any letter of credit or
letter of guaranty issued to support such Indebtedness or obligation or (v) to
otherwise assure or hold harmless the owner of such Indebtedness or other
obligation against loss in respect thereof; provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"Guarantee and Collateral Agreement" shall mean each Guarantee and Collateral
Agreement executed and delivered by one or more Loan Parties, each in form and
substance reasonably satisfactory to the Administrative Agent.
"Guarantors" shall mean the Subsidiary Guarantors.
"Hazardous Materials" shall mean any petroleum (including crude oil or fraction
thereof) or petroleum products or byproducts, or any pollutant, contaminant,
chemical, compound, constituent, or hazardous, toxic or other substances,
materials or wastes defined, or regulated as such by, or pursuant to, any
Environmental Law, or requires removal, remediation or reporting under any
Environmental Law, including asbestos, or asbestos containing material, radon or
other radioactive material, polychlorinated biphenyls and urea formaldehyde
insulation.
"Hedging Agreement" shall mean any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, fuel or other
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions.
"Holdings" shall mean MAXXAM Group Inc.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
under conditional sale or other title retention agreements relating to property
or assets acquired by such person, (d) all obligations of such person in respect
of the deferred purchase price of property or services (other than current trade
accounts payable incurred in the ordinary course of business), (e) all
obligations of such person, contingent or otherwise, to purchase, redeem, retire
or otherwise acquire for value any Equity Interests in such person, (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such person of
Indebtedness of others, (h) all Capital Lease Obligations of such person, (i)
all obligations, contingent or otherwise, of such person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such person in respect of bankers' acceptances. The
Indebtedness of any person shall include the Indebtedness of any other person
(including any partnership in which such person is a general partner) to the
extent such person is liable therefor as a result of such person's ownership
interest in, or other relationship with, such other person, except to the extent
the terms of such Indebtedness provide that such person is not liable therefor.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes and Other Taxes.
"Indemnitee" shall have the meaning assigned to such term in Section 9.05(b).
"Information" shall have the meaning assigned to such term in Section 9.16.
"Intellectual Property Collateral" shall have the meaning assigned to such term
in the Guarantee and Collateral Agreement.
"Intellectual Property Security Agreement" shall mean all Intellectual Property
Security Agreements to be executed and delivered by the Loan Parties, each
substantially in the applicable form required by the Guarantee and Collateral
Agreement.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement dated
as of the Closing Date by and among the Borrowers, the Guarantors, Holdings, the
Administrative Agent and the Administrative Agent (as defined in the Term Loan
Agreement).
"Interest Payment Date" shall mean (a) with respect to any ABR Loan (including a
Swingline Loan), the last Business Day of each calendar month, and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
that would have been an Interest Payment Date had successive Interest Periods of
three months' duration been applicable to such Borrowing.
"Interest Period" shall mean, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is 1, 2, 3 or 6 months thereafter
(or 9 or 12 months thereafter if, at the time of the relevant Borrowing, an
interest period of such duration is available to all Lenders participating
therein), as the Borrowers may elect; provided, however, that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (b) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.
"Inventory" means all now owned and hereafter acquired inventory, goods and
merchandise of either Borrower, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in either Borrower's business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods, merchandise, and all
documents of title or other Documents representing them.
"Investments" shall have the meaning assigned to such term in Section 6.04.
"Issuing Bank" shall mean, as the context may require, or a bank selected by or
acceptable to Administrative Agent in its sole discretion, in such Person's
capacity as an issuer of Letters of Credit.
"Issuing Bank Fees" shall have the meaning assigned to such term in Section
2.05(c).
"L/C Disbursement" shall mean a payment or disbursement made by the
Administrative Agent under a Letter of Credit Guaranty.
"L/C Exposure" shall mean, at any time, the sum of (a) the aggregate undrawn
amount of all Letters of Credit at such time and (b) the aggregate amount of all
L/C Disbursements that have not been reimbursed at such time. The L/C Exposure
of any Lender at any time shall equal its Pro Rata Percentage of the aggregate
L/C Exposure at such time.
"L/C Fee Payment Date" shall have the meaning assigned to such term in Section
2.05(c).
"L/C Guaranty Fee" shall have the meaning assigned to such term in Section
2.05(c).
"Lender Addendum" shall mean, with respect to any initial Lender, a Lender
Addendum in the form of Exhibit E, or such other form as may be supplied by the
Administrative Agent, to be executed and delivered by such Lender on the Closing
Date.
"Lenders" shall mean (a) the persons that deliver a Lender Addendum (other than
any such person that has ceased to be a party hereto pursuant to an Assignment
and Acceptance) and (b) any person that has become a party hereto pursuant to an
Assignment and Acceptance. Unless the context otherwise requires, the term
"Lenders" shall include the Swingline Lender.
"Letter of Credit" shall mean any letter of credit issued pursuant to Section
2.23.
"Letter of Credit Guaranty" shall mean any guaranty or similar agreement
delivered by the Administrative Agent to an Issuing Bank of one or more
Borrowers' reimbursement obligation under such Issuing Bank's reimbursement
agreement, application for letter of credit or other like document.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, the rate per annum determined by the Administrative Agent at
approximately 11:00 a.m., London time, on the date that is two Business Days
prior to the commencement of such Interest Period by reference to the British
Bankers' Association Interest Settlement Rates for deposits in dollars (as set
forth by the Bloomberg Information Service or any successor thereto or any other
service selected by the Administrative Agent which has been nominated by the
British Bankers' Association as an authorized information vendor for the purpose
of displaying such rates) for a period equal to such Interest Period; provided
that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the "LIBO Rate" shall be the interest
rate per annum determined by the Administrative Agent to be the average of the
rates per annum at which deposits in dollars are offered for such relevant
Interest Period to major banks in the London interbank market in London, England
by the Administrative Agent at approximately 11:00 a.m. (London time) on the
date that is two Business Days prior to the beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of trust,
lien (statutory or otherwise), pledge, hypothecation, encumbrance, collateral
assignment, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset and (c)
in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.
"Loan Documents" shall mean this Agreement and the Security Documents.
"Loan Parties" shall mean the Borrowers and each Subsidiary that is or becomes a
party to a Loan Document.
"Loans" means Loans made by the Lenders to the Borrowers pursuant to Sections
2.01 and 2.22.
"Margin Stock" shall have the meaning assigned to such term in Regulation U.
"Material Adverse Effect" shall mean a material adverse condition or material
adverse change in or materially affecting (a) the business, assets, liabilities,
operations or condition (financial or otherwise) or prospects of PALCO and the
Subsidiaries, taken as a whole, or (b) the validity or enforceability of any of
the Loan Documents or the rights and remedies of the Arranger, the
Administrative Agent, or the Secured Parties thereunder.
"Material Indebtedness" shall mean Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of PALCO and the Subsidiaries in an aggregate outstanding
principal amount exceeding $1,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of PALCO or any
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that PALCO or such
Subsidiary would be required to pay if such Hedging Agreement were terminated at
such time.
"Maturity Date" shall mean April 19, 2010.
"Maximum Rate" shall have the meaning assigned to such term in Section 9.09.
"Maxxam" means MAXXAM Inc.
"Moody's" shall mean βββββ�'β� Investors Service, Inc.
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"Mortgaged Properties" shall mean, initially, each parcel of real property and
the improvements thereto owned or leased by a Loan Party and specified on
Schedule 1.01, and shall include each other parcel of real property and
improvements thereto with respect to which a Mortgage is granted pursuant to
Section 5.09 or 5.10.
"Mortgages" shall mean the fee or leasehold mortgages or deeds of trust,
assignments of leases and rents and other security documents granting a Lien on
any Mortgaged Property to secure the Obligations, each in form and substance
reasonably satisfactory to the Administrative Agent, with such changes as shall
be advisable under the law of the jurisdiction in which such Mortgage is to be
recorded and as are reasonably satisfactory to the Administrative Agent, as the
same may be amended, supplemented, replaced or otherwise modified from time to
time in accordance with this Agreement.
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Amount of Eligible Accounts" means, at any time, the gross amount of
Eligible Accounts less sales, excise or similar taxes, and less returns,
discounts, claims, credits and allowances, accrued rebates, and deductions of
any nature at any time issued, owing, granted, outstanding, available or
claimed.
"Obligations" shall mean all obligations defined as "Obligations" in the
Guarantee and Collateral Agreement and the other Security Documents.
"Other Taxes" shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
(including interest, fines, penalties and additions to tax) arising from any
payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" shall mean the Pre-Closing UCC Diligence Certificate
substantially in the form of Exhibit F or any other form approved by the
Administrative Agent.
"Permits" shall mean any and all franchises, licenses, leases, permits,
approvals, notifications, certifications, registrations, authorizations,
exemptions, qualifications, easements, rights of way, Liens and other rights,
privileges and approvals required under any Requirement of Law.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, the Administrative Agent or any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not
less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more than 30
days for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria of clause (c) above;
(e) investments in "money market funds" within the meaning of Rule 2a-7 of the
Investment Company Act of 1940, as amended, substantially all of whose assets
are invested in investments of the type described in clauses (a) through (d)
above;
(f) taxable auction rate securities commonly known as "money market notes" that
at the time of purchase have been rated and the ratings for which (A) for direct
issues, must not be less than "P1" if rated by βββββ�'β� Investors Services, Inc.
and not less than "A1" if rated by Standard and Poor's Corporation, or (B) for
collateralized issues which follow the asset coverage tests set forth in the
Investment Company Act of 1940, as amended, must have long-term ratings of at
least "AAA" if rated by Standard & Poor's Corporation and "Aaa" if rated by
βββββ�'β� Investors Services, Inc.; and
(g) other short-term investments utilized by Subsidiaries in accordance with
normal investment practices for cash management in investments of a type
analogous to the foregoing.
"Permitted Refinancing Indebtedness" shall mean Indebtedness issued or incurred
(including by means of the extension or renewal of existing Indebtedness) to
refinance, refund, extend, renew or replace existing Indebtedness ("Refinanced
Indebtedness"); provided that (a) the principal amount of such refinancing,
refunding, extending, renewing or replacing Indebtedness is not greater than the
principal amount of such Refinanced Indebtedness plus the amount of any premiums
or penalties and accrued and unpaid interest paid thereon and reasonable fees
and expenses, in each case associated with such refinancing, refunding,
extension, renewal or replacement, (b) such refinancing, refunding, extending,
renewing or replacing Indebtedness has a final maturity that is no sooner than,
and a weighted average life to maturity that is no shorter than, such Refinanced
Indebtedness, (c) if such Refinanced Indebtedness or any Guarantees thereof are
subordinated to the Obligations, such refinancing, refunding, extending,
renewing or replacing Indebtedness and any Guarantees thereof remain so
subordinated on terms no less favorable to the Lenders, (d) the obligors in
respect of such Refinanced Indebtedness immediately prior to such refinancing,
refunding, extending, renewing or replacing are the only obligors on such
refinancing, refunding extending, renewing or replacing Indebtedness and (e)
such refinancing, refunding, extending, renewing or replacing Indebtedness
contains covenants and events of default and is benefited by Guarantees, if any,
which, taken as a whole, are determined in good faith by a Financial Officer of
PALCO to be no less favorable to the Borrowers or the applicable Subsidiary and
the Lenders in any material respect than the covenants and events of default or
Guarantees, if any, in respect of such Refinanced Indebtedness.
"person" shall mean any natural person, corporation, trust, business trust,
joint venture, joint stock company, association, company, limited liability
company, partnership, Governmental Authority or other entity.
"Pledged Collateral" shall have the meaning assigned to such term in the
Guarantee and Collateral Agreement.
"Prime Rate" shall mean the rate of interest per annum announced from time to
time by Credit Suisse First Boston as its prime rate in effect at its principal
office in New York City; each change in the Prime Rate shall be effective as of
the opening of business on the date such change is announced as being effective.
The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate actually available.
"Pro Rata Percentage" of any Lender, at any time, shall mean the percentage of
the total Commitments represented by such Lender's Commitment. In the event the
Commitments shall have expired or been terminated, the Pro Rata Percentage of
any Lender shall be determined on the basis of the Commitments most recently in
effect prior thereto.
"Real Property" shall mean all Mortgaged Property and all other real property
owned or leased from time to time by any Loan Party.
"Register" shall have the meaning assigned to such term in Section 9.04(d).
"Regulation T" shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" shall mean, with respect to any specified person, such
person's Affiliates and the respective directors, officers, employees, agents
and advisors of such person and such person's Affiliates.
"Release" shall mean any release, spill, seepage, emission, leaking, pumping,
injection, pouring, emptying, deposit, disposal, discharge, dispersal, dumping,
escaping, leaching, or migration into, onto or through the environment or within
or upon any building, structure, facility or fixture.
"Required Lenders" shall mean, at any time, Lenders having Loans (excluding
Swingline Loans), L/C Exposure, Swingline Exposure and unused Commitments
representing at least a majority of the sum of all Loans (excluding Swingline
Loans), outstanding L/C Exposure, Swingline Exposure and unused Commitments at
such time.
"Requirement of Law" shall mean as to any person, the governing documents of
such person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such person or any of its Real Property or personal property
or to which such person or any of its property of any nature is subject.
"Reserves" shall mean reserves that limit the availability of credit hereunder,
consisting of reserves against the Commitments, Eligible Accounts or Eligible
Inventory, established by the Administrative Agent from time to time in the
Administrative Agent's reasonable credit judgment. Without limiting the
generality of the foregoing, the following reserves shall be deemed to be a
reasonable exercise of the Administrative Agent's credit judgment: (a) a reserve
for accrued, unpaid interest on the Obligations, (b) reserves for rent at leased
locations subject to statutory or contractual landlord liens, (c) reserves for
any lumberman's liens, logger's liens or other priming liens, (d) Inventory
shrinkage, (e) environmental compliance reserves, (f) dilution, and (g)
warehousemen's or bailees' charges.
"Responsible Officer" of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement.
"Restricted Payment" shall mean any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interests in
PALCO or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, defeasance, retirement, acquisition, cancellation or
termination of any Equity Interests in PALCO or any Subsidiary or any option,
warrant or other right to acquire any such Equity Interests in PALCO or any
Subsidiary.
"Revolving Credit Commitment" shall mean, with respect to each Lender, the
commitment, if any, of such Lender to make Loans (and to acquire participations
in Letters of Credit and Swingline Loans) hereunder as set forth on the Lender
Addendum delivered by such Lender, or in the Assignment and Acceptance pursuant
to which such Lender assumed its Commitment, as applicable, as the same may be
(i) reduced from time to time pursuant to Section 2.09 and (ii) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender, at any time,
the aggregate principal amount at such time of all outstanding Loans of such
Lender, plus the aggregate amount at such time of such Lender's L/C Exposure,
plus the aggregate amount at such time of such Lender's Swingline Exposure.
"S&P" shall mean Standard & Poor's Ratings Group, Inc. ---
"Salmon Creek" shall mean Salmon Creek LLC, a Delaware limited liability
company.
"Scotia Inn" shall mean Scotia Inn Inc., a Delaware corporation. ----------
"Scotia Pacific" shall mean Scotia Pacific Company LLC, a Delaware limited
liability company.
"Secured Parties" shall have the meaning assigned to such term in the Guarantee
and Collateral Agreement.
"Security Documents" shall mean the Guarantee and Collateral Agreement, the
Mortgages, the Intellectual Property Security Agreements, the Intercreditor
Agreement and each of the other security agreements, pledges, mortgages,
consents and other instruments and documents executed and delivered pursuant to
any of the foregoing or pursuant to Section 5.09 or 5.10.
"Settlement Property" shall mean the approximately 200 acres of real property to
be deeded from Scotia Pacific to PALCO, and then substantially concurrently
deeded from PALCO to ββ. ββββββ βββββββ�, pursuant to that certain Stipulation
for Settlement CCP Section 664.6 in ββββββ βββββββ�, et al. v βββββββ� βββββββ�, et
al., State of California, Humboldt County Superior Court, Case No. DR 9700399.
"Special Agent Advance" shall have the meaning assigned to such term in Section
9.05(e).
"SPC" shall have the meaning assigned to such term in Section 9.04(i).
"Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch, Affiliate
or other fronting office making or holding a Loan) is subject for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board). Eurodollar Loans shall be deemed to constitute eurocurrency funding
and to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" shall mean, with respect to any person (herein referred to as the
"parent"), any corporation, partnership, limited liability company, association
or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or more than 50% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held, or (b) that is, at the
time any determination is made, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.
"Subsidiary" shall mean any subsidiary of PALCO, other than Scotia Pacific or a
subsidiary of Scotia Pacific.
"Subsidiary Guarantor" shall mean each Subsidiary other than βββββ�.
"Survey" shall have the meaning assigned to such term in Section 4.02(p).
"Swingline Commitment" shall mean the commitment of the Swingline Lender to make
loans pursuant to Section 2.22, as the same may be reduced from time to time
pursuant to Section 2.09 .
"Swingline Exposure" shall mean, at any time, the aggregate principal amount at
such time of all outstanding Swingline Loans. The Swingline Exposure of any
Lender at any time shall equal its Pro Rata Percentage of the aggregate
Swingline Exposure at such time.
"Swingline Lender" shall mean The CIT Group/Business Credit, Inc., in its
capacity as lender of Swingline Loans hereunder.
"Swingline Loan" shall mean any loan made by the Swingline Lender pursuant to
Section 2.22.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Taxes" shall mean any and all present or future taxes, levies, imposts, duties,
deductions, charges, liabilities or withholdings imposed by any Governmental
Authority.
"Term Loan Agreement" shall mean that certain Term Loan Agreement dated the date
hereof among PALCO, Britt, Credit Suisse First Boston, acting through its New
York Branch, as the administrative agent and a lender, and the financial
institutions from time to time party thereto as lenders, as amended, modified,
supplemented or otherwise modified from time to time.
"Title Insurance Company" shall have the meaning assigned to such term in
Section 4.02(n).
"Total Revolving Credit Commitment" shall mean, at any time, the aggregate
amount of the Revolving Credit Commitments, as in effect at such time. The
initial Total Revolving Credit Commitment is $30,000,000.
"Transactions" shall mean, collectively, (a) the execution, delivery and
performance by the Loan Parties of the Loan Documents to which they are a party,
(b) the borrowings hereunder, the issuance of Letters of Credit and the use of
proceeds of each of the foregoing, (c) the granting of Liens pursuant to the
Security Documents, (d) the repayment of all obligations under the Existing
Credit Facility and (e) any other transactions related to or entered into in
connection with any of the foregoing.
"Type", when used in respect of any Loan or Borrowing, shall refer to the Rate
by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term "Rate" shall include the
Adjusted LIBO Rate and the Alternate Base Rate.
"UCC" shall mean the Uniform Commercial Code.
"Uniform Customs" shall have the meaning assigned to such term in Section 9.07.
"United States" or "U.S." shall mean the United States of America. -------------
----
"wholly owned subsidiary" of any person shall mean a subsidiary of such person
of which securities (except for directors' qualifying shares) or other ownership
interests representing 100% of the Equity Interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person; a "wholly owned Subsidiary" shall mean
any wholly owned Subsidiary of one or more of the Borrowers.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including", and
words of similar import, shall not be limiting and shall be deemed to be
followed by the phrase "without limitation". The word "will" shall be construed
to have the same meaning and effect as the word "shall". The words "asset" and
"property" shall be construed as having the same meaning and effect and to refer
to any and all rights and interests in tangible and intangible assets and
properties of any kind whatsoever, whether real, personal or mixed, including
cash, securities, Equity Interests, accounts and contract rights. The words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision of this Agreement unless the context shall otherwise require. All
references herein to Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any definition of, or reference to, any Loan
Document or any other agreement, instrument or document in this Agreement shall
mean such Loan Document or other agreement, instrument or document as amended,
restated, supplemented or otherwise modified from time to time (subject to any
restrictions on such amendments, restatements, supplements or modifications set
forth herein) and (b) all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided,
however, that if the Administrative Borrower notifies the Administrative Agent
that the Borrowers wish to amend any covenant in Article VI or any related
definition to eliminate the effect of any change in GAAP occurring after the
date of this Agreement on the operation of such covenant (or if the
Administrative Agent notifies the Administrative Borrower that the Required
Lenders wish to amend Article VI or any related definition for such purpose),
then the Borrowers' and their Subsidiaries' compliance with such covenant shall
be determined on the basis of GAAP in effect immediately before the relevant
change in GAAP became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrowers and the Required
Lenders.
SECTION 1.03 Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a "Eurodollar
Loan"). Borrowings also may be classified and referred to by Type (e.g., a
"Eurodollar Borrowing").
SECTION 1.04 Pro Forma Calculations. All pro forma calculations permitted or
required to be made by PALCO or any Subsidiary pursuant to this Agreement shall
include only those adjustments that would be permitted or required by Regulation
S-X under the Securities Act of 1933, as amended, together with those
adjustments that (a) have been certified by a Financial Officer of PALCO as
having been prepared in good faith based upon reasonable assumptions and (b) are
based on reasonably detailed written assumptions reasonably acceptable to the
Administrative Agent.
ARTICLE II.
THE CREDITS
SECTION 2.01 Commitments. Subject to the terms and conditions hereof and relying
upon the representations and warranties set forth herein, each Lender agrees,
severally and not jointly, to make Loans to the Borrowers, at any time and from
time to time on or after the Closing Date and until the earlier of the Maturity
Date and the termination of the Commitment of such Lender in accordance with the
terms hereof, in an aggregate principal amount at any time outstanding that (i)
will not result in such Lender's Revolving Credit Exposure exceeding such
Lender's Revolving Credit Commitment and (ii) will not result in the Aggregate
Revolving Credit Exposure exceeding the Borrowing Base. Within the limits set
forth in clause (ii) of the preceding sentence and subject to the terms,
conditions and limitations set forth herein, the Borrowers may borrow, pay or
prepay and reborrow Loans.
SECTION 2.02 Loans. (a) Each Loan (other than Swingline Loans) shall be made as
part of a Borrowing consisting of Loans of the same Type made by the Lenders
ratably in accordance with their respective Commitments; provided, however, that
the failure of any Lender to make any Loan required to be made by it shall not
in itself relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of any
other Lender to make any Loan required to be made by such other Lender). Except
for Loans deemed made pursuant to Section 2.02(f), and subject to Section 2.22
relating to Swingline Loans, the Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $250,000 and not
less than $750,000 or (ii) equal to the remaining available balance of the
applicable Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Administrative Borrower may
request pursuant to Section 2.03; provided that all Borrowings made on the
Closing Date and during the period ending seven days thereafter must be made as
ABR Borrowings (and may not be converted into Eurodollar Borrowings until the
end of such seven-day period), and no Borrowings may be converted into or
continued as a Eurodollar Borrowing having an Interest Period in excess of one
month prior to the date which is 60 days after the Closing Date. Each Lender may
at its option make any Eurodollar Loan by causing any domestic or foreign branch
or Affiliate of such Lender to make such Loan; provided that any exercise of
such option shall not affect the obligation of the Borrowers to repay such Loan
in accordance with the terms of this Agreement. Borrowings of more than one Type
may be outstanding at the same time; provided, however, that the Administrative
Borrower shall not be entitled to request any Borrowing that, if made, would
result in more than five (5) Eurodollar Borrowings outstanding hereunder at any
time. For purposes of the foregoing, Borrowings having different Interest
Periods, regardless of whether they commence on the same date, shall be
considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f) and subject to
Section 2.22 relating to Swingline Loans, each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds to such account in New York City as the
Administrative Agent may designate not later than 2:00 p.m., New York City time,
and the Administrative Agent shall promptly credit the amounts so received to an
account in the name of the applicable Borrower, designated by the Administrative
Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur
on such date because any condition precedent herein specified shall not have
been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Administrative Agent such Lender's portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
paragraph (c) of this Section and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrowers on such date a corresponding
amount. If the Administrative Agent shall have so made funds available then, to
the extent that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the Borrowers severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrowers to but excluding the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrowers, the interest rate
applicable at the time to the Loans comprising such Borrowing or (ii) in the
case of such Lender, a rate determined by the Administrative Agent to represent
its cost of overnight or short-term funds (which determination shall be
conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the Administrative
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
(f) If the Administrative Agent shall not have received from the Borrowers the
payment required to be made by Section 2.23(e) with respect to a Letter of
Credit within the time specified in such Section, the Administrative Agent will
promptly notify each Lender of such L/C Disbursement and its Pro Rata Percentage
thereof. Each Lender shall pay by wire transfer of immediately available funds
to the Administrative Agent not later than 2:00 p.m., New York City time, on
such date (or, if such Lenders shall have received such notice later than 12:00
(noon), New York City time, on any day, not later than 10:00 a.m., New York City
time, on the immediately following Business Day), an amount equal to such
Lender's Pro Rata Percentage of such L/C Disbursement (it being understood that
such amount shall be deemed to constitute an ABR Loan of such Lender and such
payment shall be deemed to have reduced the L/C Exposure). If any Lenders shall
not have made its Pro Rata Percentage of such L/C Disbursement available to the
Administrative Agent as provided above, such Lender and the Borrowers severally
agree to pay interest on such amount, for each day from and including the date
such amount is required to be paid in accordance with this paragraph to but
excluding the date such amount is paid, to the Administrative Agent at (i) in
the case of the Borrowers, a rate per annum equal to the interest rate
applicable to Loans pursuant to Section 2.06(a), and (ii) in the case of such
Lender, for the first such day, the Federal Funds Effective Rate, and for each
day thereafter, the Alternate Base Rate.
SECTION 2.03 Borrowing Procedure. In order to request a Borrowing (other than a
Swingline Loan or a deemed Borrowing pursuant to Section 2.02(f), as to which
this Section 2.03 shall not apply), the Administrative Borrower shall hand
deliver or fax to the Administrative Agent a duly completed Borrowing Request
(a) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York
City time, three Business Days before a proposed Borrowing and (b) in the case
of an ABR Borrowing, not later than 2:00 p.m., New York City time, one Business
Day before a proposed Borrowing. Each Borrowing Request shall be irrevocable,
shall be signed by or on behalf of the Administrative Borrower and shall specify
the following information: (i) whether the Borrowing then being requested is to
be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing
(which shall be a Business Day); (iii) the number and location of the account to
which funds are to be disbursed (which shall be an account that complies with
the requirements of Section 2.02(c)); (iv) the amount of such Borrowing; (v) if
such Borrowing is to be a Eurodollar Borrowing, the initial Interest Period with
respect thereto and (vi) a Borrowing Base Certificate as of such date; provided,
however, that, notwithstanding any contrary specification in any Borrowing
Request, each requested Borrowing shall comply with the requirements set forth
in Section 2.02. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Administrative Borrower shall be deemed to have selected
an Interest Period of one month's duration. The Administrative Agent shall
promptly advise the applicable Lenders of any notice given in accordance with
this Section 2.03 (and the contents thereof), and of each Lender's portion of
the requested Borrowing.
SECTION 2.04 Repayment of Loans; Evidence of Debt. (a) The Borrowers hereby
unconditionally promise to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Loan of such Lender made to
the Borrowers on the Maturity Date. The Borrowers hereby unconditionally promise
to pay to the Swingline Lender the then unpaid principal amount of each
Swingline Loan made to the Borrowers on the Maturity Date or the last day of
each calendar month.
(b) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness of the Borrowers to such Lender
resulting from each Loan made by such Lender to the Borrowers from time to time,
including the amounts of principal and interest payable and paid to such Lender
from time to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will record (i)
the amount of each Loan made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrowers to each Lender hereunder and
(iii) the amount of the sum received by the Administrative Agent hereunder from
the Borrowers or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b) and
(c) of this Section shall be prima facie evidence of the existence and amounts
of the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrowers to repay
the Loans made to the Borrowers in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it hereunder be evidenced by a
promissory note. In such event, the Borrowers shall execute and deliver to such
Lender a promissory note payable to such Lender and its registered assigns and
in a form and substance reasonably acceptable to the Administrative Agent.
Notwithstanding any other provision of this Agreement, in the event any Lender
shall request and receive such a promissory note, the interests represented by
such note shall at all times (including after any assignment of all or part of
such interests pursuant to Section 9.04) be represented by one or more
promissory notes payable to the payee named therein or its registered assigns.
SECTION 2.05 Fees. (a) The Borrowers agree to pay to each Lender, through the
Administrative Agent, on the last Business Day of each calendar month in each
year and on each date on which any Commitment of such Lender shall expire or be
terminated as provided herein, a commitment fee (a "Commitment Fee") equal to
the Commitment Fee Rate on the average daily unused amount of the Commitment of
such Lender (other than the Swingline Commitment) during the preceding month (or
other period commencing with the date hereof or ending with the Maturity Date or
the date on which the Commitments of such Lender shall expire or be terminated).
All Commitment Fees shall be computed on the basis of the actual number of days
elapsed in a year of 360 days. The Commitment Fee due to each Lender shall
commence to accrue on the date hereof and shall cease to accrue on the date on
which the Commitment of such Lender shall expire or be terminated as provided
herein. For purposes of calculating Commitment Fees, no portion of the
Commitments shall be deemed utilized under Section 2.22 as a result of
outstanding Swingline Loans.
(b) The Borrowers agree to pay to the Administrative Agent and the Arranger, for
its own account, the fees in the amounts and at the times from time to time
agreed to in writing by the Borrowers (or any Affiliate) and the Administrative
Agent, including pursuant to the Fee Letter (the "Administrative Agent Fees").
(c) The Borrowers agree to pay (i) to each Lender, through the Administrative
Agent, on the last Business Day of each calendar month and on the date on which
the Commitment of such Lender shall be terminated as provided herein (each, an
"L/C Fee Payment Date") a fee (an "L/C Guaranty Fee") calculated on such
Lender's Pro Rata Percentage of the daily aggregate L/C Exposure (excluding the
portion thereof attributable to unreimbursed L/C Disbursements which are earning
interim interest pursuant to Section 2.23(h)) during the preceding quarter (or
shorter period commencing with the date hereof or ending with the Maturity Date
or the date on which all Letters of Credit have been canceled or have expired
and the Commitments of all Lenders shall have been terminated) at a rate per
annum equal to the interest rate on Borrowings comprised of Eurodollar Loans
pursuant to Section 2.06, and (ii) to the Administrative Agent, any and all
charges, fees, commissions, costs and expenses charged to the Administrative
Agent by an Issuing Bank in connection with, or arising out of, Letters of
Credit or out of transactions relating thereto, when charged to or paid by the
Administrative Agent, or as may be due upon any termination of this Agreement
(the amounts in this clause (ii), collectively, the "Issuing Bank Fees") (in the
case of this clause (ii), as long as such amounts are consistent with amounts
charged to similarly situated borrowers). All L/C Guaranty Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days.
(d) If, on or prior to the second anniversary of the Closing Date, the Revolving
Credit Commitment of any Lender is reduced or terminated, the Borrowers agree to
pay to the Administrative Agent for the benefit of such Lender on the date of
such reduction or termination a fee equal to 1% of the amount of each reduction
(or the entire amount of such Revolving Credit Commitment in the event of a
termination thereof); provided, however, that no amount shall be payable
pursuant to this Section 2.05(d) in connection with a termination which occurs
simultaneously with repayment of the Obligations with the proceeds of a credit
facility which such Lender is a lender under.
(e) All Fees shall be paid on the dates due, in immediately available funds, to
the Administrative Agent for distribution, if and as appropriate, among the
Lenders, except that the Issuing Bank Fees shall be paid for the account of the
Administrative Agent. Once paid, none of the Fees shall be refundable under any
circumstances. SECTION 2.06 Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline
Loan, shall bear interest (computed on the basis of the actual number of days
elapsed over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Prime Rate and over a year of 360
days at all other times) at a rate per annum equal to the Alternate Base Rate
plus the Applicable Margin in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Margin in effect from time to time.
(c) Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or
day within an Interest Period, as the case may be, shall be determined by the
Administrative Agent, and such determination shall be conclusive absent manifest
error.
SECTION 2.07 Default Interest. If an Event of Default has occurred and is
continuing and the Required Lenders so elect, the Borrowers shall on written
demand from time to time pay interest, to the extent permitted by law, on such
defaulted amount to but excluding the date of actual payment (after as well as
before judgment) (a) in the case of overdue principal, at the rate otherwise
applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum and (b) in
all other cases, at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of 365 or 366 days, as the case may be, when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) equal to the rate that would be applicable to an ABR Loan plus
2.00%.
SECTION 2.08 Alternate Rate of Interest. In the event, and on each occasion,
that prior to the commencement of any Interest Period for a Eurodollar Borrowing
(a) the Administrative Agent shall have determined that adequate and reasonable
means do not exist for determining the Adjusted LIBO Rate for such Interest
Period or (b) the Administrative Agent is advised by the Required Lenders in
respect of the Facility that the Adjusted LIBO Rate for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period, the
Administrative Agent shall, as soon as practicable thereafter, give written or
fax notice of such determination to the Borrowers and the Lenders. In the event
of any such determination, until the Administrative Agent shall have advised the
Borrowers and the Lenders that the circumstances giving rise to such notice no
longer exist, (i) any request by the Administrative Borrower for a Eurodollar
Borrowing pursuant to Section 2.03 or 2.10 shall be deemed to be a request for
an ABR Borrowing and (ii) any Interest Period election that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a
Eurodollar Borrowing shall be ineffective. Each determination by the
Administrative Agent under this Section 2.08 shall be conclusive absent manifest
error.
SECTION 2.09 Termination and Reduction of Commitments. (a) Unless previously
terminated in accordance with the terms hereof, the Commitments shall
automatically terminate on the Maturity Date. Notwithstanding the foregoing, all
the Commitments shall automatically terminate at 5:00 p.m., New York City time,
on April 19, 2005, if the initial Credit Event shall not have occurred by such
time.
(b) Upon at least three Business Days' prior irrevocable written or fax notice
to the Administrative Agent, the Borrowers may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Commitments;
provided, however, that (i) each partial reduction of the Commitments shall be
in an integral multiple of $1,000,000 and in a minimum amount of $1,000,000 and
(ii) the Commitments shall not be reduced to an amount that is less than the
Aggregate Revolving Credit Exposure then in effect.
(c) Each reduction in the Commitments hereunder shall be made ratably among the
applicable Lenders in accordance with their Pro Rata Percentages. The Borrowers
shall pay to the Administrative Agent for the account of the applicable Lenders,
on the date of each termination or reduction, the Commitment Fees on the amount
of the Commitments so terminated or reduced accrued to but excluding the date of
such termination or reduction.
SECTION 2.10 Conversion and Continuation of Borrowings. The Administrative
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing of the
Borrowers into an ABR Borrowing, (b) not later than 2:00 p.m., New York City
time, three Business Days prior to conversion or continuation, to convert any
ABR Borrowing of the Borrowers into a Eurodollar Borrowing or to continue any
Eurodollar Borrowing of the Borrowers as a Eurodollar Borrowing for an
additional Interest Period and (c) not later than 2:00 p.m., New York City time,
three Business Days prior to conversion, to convert the Interest Period with
respect to any Eurodollar Borrowing of the Borrowers to another permissible
Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among the Lenders in
accordance with the respective principal amounts of the Loans comprising
the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any Borrowing shall be
converted or continued, then each resulting Borrowing shall satisfy the
limitations specified in Sections 2.02(a) and 2.02(b) regarding the
principal amount and maximum number of Borrowings of the relevant Type;
(iii)each conversion shall be effected by each Lender and the Administrative
Agent by recording for the account of such Lender the new Loan of such
Lender resulting from such conversion and reducing the Loan (or portion
thereof) of such Lender being converted by an equivalent principal amount;
accrued interest on any Eurodollar Loan (or portion thereof) being
converted shall be paid by the Borrowers at the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other than the end of
the Interest Period applicable thereto, the Borrowers shall pay, upon
demand, any amounts due to the Lenders pursuant to Section 2.16;
(v) any portion of a Borrowing maturing or required to be repaid in less than
one month may not be converted into or continued as a Eurodollar Borrowing;
(vi) any portion of a Eurodollar Borrowing that cannot be converted into or
continued as a Eurodollar Borrowing by reason of the immediately preceding
clause shall be automatically converted at the end of the Interest Period
in effect for such Borrowing into an ABR Borrowing;
(vii)after the occurrence and during the continuance of a Default or Event of
Default, no outstanding Loan may be converted into, or continued as, a
Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer
to this Agreement and specify (i) the identity and amount of the Borrowing that
the Administrative Borrower request be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR
Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Administrative Borrower shall be deemed to have selected an Interest Period of
one month's duration. The Administrative Agent shall advise the Lenders of any
notice given pursuant to this Section 2.10 and of each Lender's portion of any
converted or continued Borrowing. If the Administrative Borrower shall not have
given notice in accordance with this Section 2.10 to continue any Borrowing into
a subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Borrowing), such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be converted or continued into an
ABR Borrowing.
SECTION 2.11 [Reserved].
SECTION 2.12 Prepayment. (a) The Borrowers shall have the right at any time and
from time to time to prepay any Borrowing, in whole or in part, upon at least
three Business Days' prior written or fax notice (or telephone notice promptly
confirmed by written or fax notice) in the case of Eurodollar Loans, or written
or fax notice (or telephone notice promptly confirmed by written or fax notice)
at least one Business Day prior to the date of prepayment in the case of ABR
Loans, to the Administrative Agent before 2:00 p.m., New York City time;
provided, however, that each partial prepayment shall be in an amount that is an
integral multiple of $250,000 and not less than $750,000.
(b) Each notice of prepayment shall specify the prepayment date and the
principal amount of each Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrowers to prepay such Borrowing by the
amount stated therein on the date stated therein. All prepayments under this
Section 2.12 shall be subject to Section 2.16, but otherwise without premium or
penalty. All prepayments under this Section 2.12 shall be accompanied by accrued
and unpaid interest on the principal amount to be prepaid to but excluding the
date of payment.
SECTION 2.13 Mandatory Prepayments. (a) In the event of any termination of all
the Commitments, the Borrowers shall, on the date of such termination, repay or
prepay all its outstanding Borrowings and all its outstanding Swingline Loans
and replace all its outstanding Letters of Credit and/or deposit an amount equal
to the L/C Exposure in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Secured Parties. If as a result of
any partial reduction of the Commitments the Aggregate Revolving Credit Exposure
would exceed the Commitments after giving effect thereto, then the Borrowers
shall, on the date of such reduction, repay or prepay Borrowings or Swingline
Loans (or a combination thereof) and/or cash collateralize obligations in
respect of Letter of Credit Guaranties in an amount sufficient to eliminate such
excess.
(b) In the event and on each occasion that Aggregate Revolving Credit Exposure
exceeds the Borrowing Base, the Borrowers shall immediately repay Loans and/or
cash collateralize outstanding Letters of Credit to the extent necessary to
cause the Aggregate Revolving Credit Exposure not to exceed the Borrowing Base.
(c) In connection with any Asset Sale which consists of (i) the sale of all of
the Equity Interests in βββββ� or (ii) the sale of Eligible Accounts and/or
Eligible Inventory (or the sale of certain of such assets and other assets of a
Borrower), the Borrowers shall apply the Net Proceeds of such sale to repay
outstanding Revolving Loans and/or provide cash collateral with respect to L/C
Exposure in an amount equal to the lesser of (i) the amount necessary to cause
the Borrowers to comply with Section 2.13(b) or (ii) the sum of (a) 85% of the
Net Amount of the Eligible Accounts sold in such Asset Sale plus (b) 75% of the
value (being the lower of cost (on a first-in first out basis) or market) of the
Eligible Inventory sold in such Asset Sale.
SECTION 2.14 Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision of this Agreement, if any Change in Law
shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender or the Administrative Agent (except any such
reserve requirement which is reflected in the Adjusted LIBO Rate) or
(ii) impose on any Lender or the Administrative Agent or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein, and
the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to any Lender or
the Administrative Agent of issuing or maintaining any Letter of Credit or
Letter of Credit Guaranty or purchasing or maintaining a participation
therein or to reduce the amount of any sum received or receivable by such
Lender hereunder (whether of principal, interest or otherwise) by an amount
deemed by such Lender or the Administrative Agent to be material, then the
Borrowers will pay to such Lender or the Administrative Agent, as the case
may be, upon demand such additional amount or amounts as will compensate
such Lender or the Issuing Bank, as the case may be, for such additional
costs incurred or reduction suffered.
(b) If any Lender or the Administrative Agent shall have determined that any
Change in Law regarding capital adequacy has or would have the effect of
reducing the rate of return on such Lender's, the Administrative Agent's capital
or on the capital of such Lender's, the Administrative Agent's holding company,
if any, as a consequence of this Agreement or the Loans made by, or
participations in Letter of Credit Guaranties purchased by, such Lender or the
Letter of Credit Guaranties issued by the Administrative Agent to a level below
that which such Lender, the Administrative Agent or such Lender's or the
Administrative Agent's holding company could have achieved but for such Change
in Law (taking into consideration such Lender's or the Administrative Agent's
policies and the policies of such Lender's or the Administrative Agent's holding
company with respect to capital adequacy) by an amount deemed by such Lender or
the Administrative Agent to be material, then from time to time the Borrowers
shall pay to such Lender or the Administrative Agent, as the case may be, such
additional amount or amounts as will compensate such Lender or the
Administrative Agent or such Lender's or the Administrative Agent's holding
company for any such reduction suffered.
(c) A certificate of a Lender or the Administrative Agent setting forth the
amount or amounts necessary to compensate such Lender or the Administrative
Agent or its holding company, as applicable, as specified in paragraph (a) or
(b) of this Section 2.14 shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender or the
Administrative Agent, as the case may be, the amount or amounts shown as due on
any such certificate delivered by it within 10 days after its receipt of the
same.
(d) Failure or delay on the part of any Lender or the Administrative Agent to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Administrative Agent's right to demand such compensation;
provided that the Borrowers shall not be under any obligation to compensate any
Lender or the Administrative Agent under paragraph (a) or (b) above for
increased costs or reductions with respect to any period prior to the date that
is 180 days prior to such request if such Lender or the Administrative Agent
knew or could reasonably have been expected to know of the circumstances giving
rise to such increased costs or reductions and of the fact that such
circumstances would result in a claim for increased compensation by reason of
such increased costs or reductions; provided further that the foregoing
limitation shall not apply to any increased costs or reductions arising out of
the retroactive application of any Change in Law within such 180-day period. The
protection of this Section shall be available to each Lender and the
Administrative Agent regardless of any possible contention of the invalidity or
inapplicability of the Change in Law that shall have occurred or been imposed.
SECTION 2.15 Change in Legality. (a) Notwithstanding any other provision of this
Agreement, if any Change in Law shall make it unlawful for any Lender to make or
maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Administrative Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not thereafter (for the
duration of such unlawfulness) be made by such Lender hereunder (or be
continued for additional Interest Periods and ABR Loans will not thereafter
(for such duration) be converted into Eurodollar Loans), whereupon any
request for a Eurodollar Borrowing (or to convert an ABR Borrowing to a
Eurodollar Borrowing or to continue a Eurodollar Borrowing for an
additional Interest Period) shall, as to such Lender only, be deemed a
request for an ABR Loan (or a request to continue an ABR Loan as such for
an additional Interest Period or to convert a Eurodollar Loan into an ABR
Loan, as the case may be), unless such declaration shall be subsequently
withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans. Any such conversion of a Eurodollar Loan under (i) above
shall be subject to Section 2.16.
(b) For purposes of this Section 2.15, a notice to the Administrative Borrower
by any Lender shall be effective as to each Eurodollar Loan made by such Lender,
if lawful, on the last day of the Interest Period then applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrowers.
SECTION 2.16 Indemnity. The Borrowers shall indemnify each Lender against any
loss or expense that such Lender may sustain or incur as a consequence of (a)
any event, other than a default by such Lender in the performance of its
obligations hereunder, which results in (i) such Lender receiving or being
deemed to receive any amount on account of the principal of any Eurodollar Loan
prior to the end of the Interest Period in effect therefor, (ii) the conversion
of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period
with respect to any Eurodollar Loan, in each case other than on the last day of
the Interest Period in effect therefor or (iii) any Eurodollar Loan to be made
by such Lender (including any Eurodollar Loan to be made pursuant to a
conversion or continuation under Section 2.10) not being made after notice of
such Loan shall have been given by the Administrative Borrower hereunder (any of
the events referred to in this clause (a) being called a "Breakage Event") or
(b) any default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrowers and shall be conclusive absent manifest error.
SECTION 2.17 Pro Rata Treatment. Except as provided below in this Section 2.17
with respect to Swingline Loans and as required under Section 2.15, each
Borrowing, each payment or prepayment of principal of any Borrowing, each
payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Commitments and each conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type shall be allocated pro
rata among the Lenders in accordance with their respective applicable
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Loans).
For purposes of determining the available Revolving Credit Commitments of the
Lenders at any time, each outstanding Swingline Loan shall be deemed to have
utilized the Revolving Credit Commitments of the Lenders (including those
Lenders which shall not have made Swingline Loans) pro rata in accordance with
such respective Revolving Credit Commitments. Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing to the next higher or lower whole dollar amount.
SECTION 2.18 Sharing of Setoffs. Each Lender agrees that if it shall, through
the exercise of a right of banker's lien, setoff or counterclaim against the
Borrowers or any other Loan Party, or pursuant to a secured claim under Section
506 of Title 11 of the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means, obtain payment (voluntary or involuntary) in respect of any Loan or
Loans or L/C Disbursement as a result of which the unpaid principal portion of
its Loans and participations in the Letter of Credit Guaranty shall be
proportionately less than the unpaid principal portion of the Loans and
participations in the Letter of Credit Guaranty of any other Lender, it shall be
deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Loans and L/C Exposure of such other Lender, so that the
aggregate unpaid principal amount of the Loans and L/C Exposure and
participations in Loans and L/C Exposure held by each Lender shall be in the
same proportion to the aggregate unpaid principal amount of all Loans and L/C
Exposure then outstanding as the principal amount of its Loans and L/C Exposure
prior to such exercise of banker's lien, setoff or counterclaim or other event
was to the principal amount of all Loans and L/C Exposure outstanding prior to
such exercise of banker's lien, setoff or counterclaim or other event; provided,
however, that if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrowers expressly consent to the
foregoing arrangements and agrees that any Lender holding a participation in a
Loan or Letter of Credit Guaranty deemed to have been so purchased may exercise
any and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing by the Borrowers to such Lender by reason thereof as fully
as if such Lender had made a Loan directly to the Borrowers in the amount of
such participation.
SECTION 2.19 Payments. (a) The Borrowers shall make each payment (including
principal of or interest on any Borrowing or any L/C Disbursement or any Fees or
other amounts) hereunder and under any other Loan Document not later than 12:00
(noon), New York City time, on the date when due in immediately available
dollars, without setoff, defense or counterclaim. Each such payment (other than
principal of and interest on Swingline Loans, which shall be paid directly to
the Swingline Lender except as otherwise provided in Section 2.21(e)) shall be
made to the Administrative Agent at its offices at 1211 Avenue of the Americas,
ββββ βββββ�, βββ� ββββ, βββ� ββββ βββββ�. All payments hereunder and under each
other Loan Document shall be made in dollars.
(b) Except as otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Borrowing or any Fees or other
amounts) hereunder or under any other Loan Document shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.20 Taxes. (a) Any and all payments by or on account of any obligation
of the Borrowers or any other Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if any Indemnified Taxes or
Other Taxes are required to be withheld or deducted from such payments, then (i)
the sum payable by the Borrowers shall be increased as necessary so that after
all required deductions or withholding (including deductions or withholdings
applicable to additional sums payable under this Section 2.20) the
Administrative Agent or such Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrowers or such other Loan Party shall make (or cause to be made) such
deductions and (iii) the Borrowers or such other Loan Party shall pay (or cause
to be paid) the full amount deducted to the relevant Governmental Authority in
accordance with applicable law. In addition, the Borrowers or any other Loan
Party hereunder shall pay (or cause to be paid) any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(b) The Borrowers shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, or any of their respective Affiliates, on or with
respect to any payment by or on account of any obligation of any Loan Party
hereunder or under any other Loan Document (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrowers by a Lender, or by the Administrative Agent on its behalf or on behalf
of a Lender, shall be conclusive absent manifest error.
(c) As soon as practicable after any payment of Indemnified Taxes or Other Taxes
pursuant to Section 2.20(a), and in any event within 30 days of any such payment
being due, the Borrowers shall deliver (or cause to be delivered) to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(d) Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrowers is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Administrative Borrower (with
a copy to the Administrative Agent), at the reasonable written request of the
Administrative Borrower, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate; provided that such Lender is legally entitled
to complete, execute and deliver such documentation and in such Lender's
judgment such completion, execution or delivery would not materially prejudice
the legal position of such Lender. In addition, each Foreign Lender shall (i)
furnish on or before it becomes a party to the Agreement either (a) two accurate
and complete originally executed U.S. Internal Revenue Service Form W-8BEN (or
successor form) or (b) an accurate and complete U.S. Internal Revenue Service
Form W-8ECI (or successor form), certifying, in either case, to such Foreign
Lender's legal entitlement to an exemption or reduction from U.S. Federal
withholding tax with respect to all interest payments hereunder, and (ii)
provide a new Form W-8BEN (or successor form) or U.S. Internal Revenue Service
Form W-8ECI (or successor form) upon the expiration or obsolescence of any
previously delivered form to reconfirm any complete exemption from, or any
entitlement to a reduction in, U.S. Federal withholding tax with respect to any
interest payment hereunder; provided that any Foreign Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Tax Code and is relying
on the so-called "portfolio interest exemption" shall also furnish a "Non-Bank
Certificate" in the form of Exhibit G together with a U.S. Internal Revenue
Service Form W-8BEN. Notwithstanding any other provision of this paragraph, a
Foreign Lender shall not be required to deliver any form pursuant to this
paragraph that such Foreign Lender is not legally able to deliver.
(e) Any Lender that is a United States person, as defined in Section 7701(a)(30)
of the Tax Code, and is not an exempt recipient within the meaning of Treasury
Regulations Section 1.6049-4(c) shall deliver to the Borrowers (with a copy to
the Administrative Agent) two accurate and complete original signed copies of
Internal Revenue Service Form W-9, or any successor form that such person is
entitled to provide at such time in order to comply with United States back-up
withholding requirements.
(f) Without prejudice to the survival of any other agreement of the Borrowers
hereunder, the agreements and obligations of the Borrowers contained in this
Section 2.20 shall survive the payment in full of all amounts due hereunder.
SECTION 2.21 Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate.
(a) In the event (i) any Lender delivers a certificate requesting compensation
pursuant to Section 2.14, (ii) any Lender delivers a notice described in Section
2.15, (iii) the Borrowers are required to pay any additional amount to any
Lender or any Governmental Authority on account of any Lender pursuant to
Section 2.20 or (iv) any Lender does not consent to a proposed amendment,
modification or waiver of this Agreement requested by the Administrative
Borrower which requires the consent of all of the Lenders or all of the Lenders
under any Facility to become effective (and which is approved by at least the
Required Lenders), the Borrowers may, at their sole expense and effort
(including with respect to the processing and recordation fee referred to in
Section 9.04(b)), upon notice to such Lender and the Administrative Agent,
require such Lender to transfer and assign, without recourse (in accordance with
and subject to the restrictions contained in Section 9.04), all of its
interests, rights and obligations under this Agreement to an assignee that shall
assume such assigned obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (x) such assignment shall not
conflict with any law, rule or regulation or order of any court or other
Governmental Authority having jurisdiction, (y) solely with respect to
replacements of Lenders pursuant to clauses (i), (ii) or (iii) of this Section,
the Borrowers shall have received the prior written consent of the
Administrative Agent (and, if a Revolving Credit Commitment is being assigned,
of the Swingline Lender), which consent shall not unreasonably be withheld, and
(z) the Borrowers or such assignee shall have paid to the affected Lender in
immediately available funds an amount equal to the sum of the principal of and
interest accrued to the date of such payment on the outstanding Loans or L/C
Disbursements of such Lender, plus all Fees and other amounts accrued for the
account of such Lender hereunder (including any amounts under Section 2.14 and
Section 2.16); provided further that, if prior to any such transfer and
assignment the circumstances or event that resulted in such Lender's claim for
compensation under Section 2.14 or notice under Section 2.15 or the amounts paid
pursuant to Section 2.20, as the case may be, cease to cause such Lender to
suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital, or cease to have the consequences specified in
Section 2.15, or cease to result in amounts being payable under Section 2.20, as
the case may be (including as a result of any action taken by such Lender
pursuant to paragraph (b) below), or if such Lender shall waive its right to
claim further compensation under Section 2.14 in respect of such circumstances
or event or shall withdraw its notice under Section 2.15 or shall waive its
right to further payments under Section 2.20 in respect of such circumstances or
event, as the case may be, then such Lender shall not thereafter be required to
make any such transfer and assignment hereunder. In connection with any such
replacement, if the replaced Lender does not execute and deliver to the
Administrative Agent a duly completed Assignment and Acceptance reflecting such
replacement within five Business Days of the date on which the replacement
Lender executes and delivers such Assignment and Acceptance to the replaced
Lender, then such replaced Lender shall be deemed to have executed and delivered
such Assignment and Acceptance.
(b) If (i) any Lender shall request compensation under Section 2.14, (ii) any
Lender delivers a notice described in Section 2.15 or (iii) the Borrowers are
required to pay any additional amount to any Lender or any Governmental
Authority on account of any Lender, pursuant to Section 2.20, then such Lender
shall use reasonable efforts (which shall not require such Lender to incur an
unreimbursed loss or unreimbursed cost or expense or otherwise take any action
inconsistent with its internal policies or legal or regulatory restrictions or
suffer any disadvantage or burden deemed by it to be significant) (x) to file
any certificate or document reasonably requested in writing by the
Administrative Borrower or (y) to assign its rights and delegate and transfer
its obligations hereunder to another of its offices, branches or affiliates, if
such filing or assignment would reduce its claims for compensation under Section
2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would
reduce amounts payable pursuant to Section 2.20, as the case may be, in the
future. The Borrowers hereby agree to pay all reasonable costs and expenses
incurred by any Lender in connection with any such filing or assignment,
delegation and transfer.
SECTION 2.22 Swingline Loans.
(a) Swingline Commitment. Subject to the terms and conditions hereof and relying
upon the representations and warranties set forth herein, the Swingline Lender
agrees to make loans to the Borrowers, at any time and from time to time after
the Closing Date, and until the earlier of the Maturity Date and the termination
of the Commitments in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of all Swingline Loans exceeding $2,000,000 in the
aggregate or (ii) the Aggregate Revolving Credit Exposure, after giving effect
to any Swingline Loan, exceeding the Commitment. Each Swingline Loan shall be in
a principal amount that is an integral multiple of $100,000. The Swingline
Commitment may be terminated or reduced from time to time as provided herein.
Within the foregoing limits, the Borrowers may borrow, pay or prepay and
reborrow Swingline Loans hereunder, subject to the terms, conditions and
limitations set forth herein.
(b) Swingline Loans. The Administrative Borrower shall notify the Administrative
Agent by fax, or by telephone (confirmed by fax), not later than 11:00 a.m., New
York City time, on the day of a proposed Swingline Loan to be made to it. Such
notice shall be delivered on a Business Day, shall be irrevocable and shall
refer to this Agreement and shall specify the requested date (which shall be a
Business Day) and amount of such Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender of any notice received from the
Administrative Borrower pursuant to this paragraph (b). The Swingline Lender
shall make each Swingline Loan available to the Borrowers by means of a credit
to the general deposit account of the Borrowers with the Swingline Lender by
3:00 p.m. on the date such Swingline Loan is so requested.
(c) Prepayment. The Borrowers shall have the right at any time and from time to
time to prepay any Swingline Loan, in whole or in part, upon giving written or
fax notice (or telephone notice promptly confirmed by written or fax notice) to
the Swingline Lender and to the Administrative Agent before 12:00 (noon), New
York City time, on the date of prepayment at the Swingline Lender's address for
notices specified in the Lender Addendum delivered by the Swingline Lender. All
principal payments of Swingline Loans shall be accompanied by accrued interest
on the principal amount being repaid to the date of payment.
(d) Interest. Each Swingline Loan shall be an ABR Loan and, subject to the
provisions of Section 2.07, shall bear interest as provided in Section 2.06(a).
(e) Participations. The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to acquire participations on such Business Day
in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Lenders will
participate. The Administrative Agent will, promptly upon receipt of such
notice, give notice to each Lender, specifying in such notice such Lender's Pro
Rata Percentage of such Swingline Loan or Loans. In furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to the Administrative Agent, for the
account of the Swingline Lender, such Lender's Pro Rata Percentage of such
Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation
to acquire participations in Swingline Loans pursuant to this paragraph is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or an Event of
Default, and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Lender shall comply with its
obligation under this paragraph by wire transfer of immediately available funds,
in the same manner as provided in Section 2.02(c) with respect to Loans made by
such Lender (and Section 2.02(c) shall apply, mutatis mutandis, to the payment
obligations of the Lenders under this Section) and the Administrative Agent
shall promptly pay to the Swingline Lender the amounts so received by it from
the Lenders. The Administrative Agent shall notify the Borrowers of any
participations in any Swingline Loan acquired pursuant to this paragraph and
thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrowers (or other party on behalf of the
Borrowers) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Lenders that
shall have made their payments pursuant to this paragraph and to the Swingline
Lender, as their interests may appear. The purchase of participations in a
Swingline Loan pursuant to this paragraph shall not relieve the Borrowers (or
other party liable for obligations of the Borrowers) of any default in the
payment thereof.
SECTION 2.23 Letters of Credit.
(a) General. Subject to the terms and conditions hereof, the Administrative
Borrower may request the issuance of a Letter of Credit at any time and
from time to time while the Commitments remain in effect for its own
account, in a form reasonably acceptable to the Administrative Agent and
the Issuing Bank. In order to assist the Administrative Borrower in
establishing or opening Letters of Credit with an Issuing Bank, the
Administrative Borrower has requested that the Administrative Agent join in
the applications for such Letters of Credit, and/or guarantee payment or
performance of such Letters of Credit and any drafts or acceptances
thereunder through the issuance of one or more Letter of Credit Guaranties,
thereby lending the Administrative Agent's credit to the Borrowers, and the
Administrative Agent has agreed to do so. This Section shall not be
construed to impose an obligation to issue any Letter of Credit.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In
order to request the issuance of a Letter of Credit (or to amend, renew or
extend an existing Letter of Credit), the Administrative Borrower shall
hand deliver or fax to the Administrative Agent (no less than three
Business Days (or such shorter period of time acceptable to the Issuing
Bank) in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the
date of issuance, amendment, renewal or extension, the date on which such
Letter of Credit is to expire (which shall comply with paragraph (c)
below), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to
prepare such Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if, and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrowers shall be deemed to
represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension (i) the L/C Exposure shall not exceed
$15,000,000 and (ii) the Aggregate Revolving Credit Exposure shall not
exceed the lesser of (a) total Commitments; and (b) the Borrowing Base.
(c) Expiration Date. Each Letter of Credit shall expire at the close of
business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit and (ii) the date that is five Business
Days prior to the Maturity Date, unless such Letter of Credit expires by
its terms on an earlier date; provided, however, that a Letter of Credit
may, upon the request of the Administrative Borrower and subject to the
Issuing Bank's consent, include a provision whereby such Letter of Credit
shall be renewed automatically for additional consecutive periods of 12
months or less (but not beyond the date that is five Business Days prior to
the Maturity Date) unless the Issuing Bank notifies the beneficiary thereof
at least 30 days prior to the then-applicable expiration date that such
Letter of Credit will not be renewed.
(d) Participations. Upon the issuance of a Letter of Credit and without any
further action on the part of the Issuing Bank or the Lenders, the
Administrative Agent hereby grants to each Lender, and each such hereby
acquires from the Administrative Agent, a participation to the extent of
the applicable Letter of Credit Guaranty equal to such Lender's Pro Rata
Percentage of the aggregate amount available to be drawn under such Letter
of Credit, effective upon the issuance of such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent
such Lender's Pro Rata Percentage of each L/C Disbursement made by the
Administrative Agent and not reimbursed by the Borrowers (or, if
applicable, another party pursuant to its obligations under any other Loan
Document) forthwith on the date due as provided in Section 2.02(f). Each
Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the
occurrence and continuance of a Default or an Event of Default, and that
each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.
(e) Reimbursement. Upon any L/C Disbursement in respect of a Letter of Credit,
the Borrowers shall pay to the Administrative Agent an amount equal to such
L/C Disbursement not later than two hours after any Borrower shall have
received notice that payment of such draft will be made, or, if any
Borrower shall have received such notice later than 10:00 a.m., New York
City time, on any Business Day, not later than 10:00 a.m., New York City
time, on the immediately following Business Day.
(f) Obligations Absolute. The Borrowers' obligations provided in paragraph (e)
above shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under
any and all circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or any Loan
Document, or any term or provision therein;
(ii) any amendment or waiver of, or any consent to departure from, all or any of
the provisions of any Letter of Credit or any Loan Document;
(iii)the existence of any claim, setoff, defense or other right that the
Borrowers, any other party guaranteeing, or otherwise obligated with, the
Borrowers, any subsidiary or other Affiliate thereof or any other person
may at any time have against the beneficiary under any Letter of Credit,
the Issuing Bank, the Administrative Agent or any Lender or any other
person, whether in connection with this Agreement, any other Loan Document
or any other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(v) payment by the Issuing Bank under a Letter of Credit against presentation
of a draft or other document that does not comply with the terms of such
Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of the Issuing Bank,
any Lender, the Administrative Agent or any other person or any other event
or circumstance whatsoever, whether or not similar to any of the foregoing,
that might, but for the provisions of this Section, constitute a legal or
equitable discharge of the Borrowers' obligations hereunder.
Without limiting the generality of the foregoing, it is expressly understood and
agreed that the absolute and unconditional obligation of the Borrowers hereunder
to reimburse L/C Disbursements will not be excused by the gross negligence or
willful misconduct of the Issuing Bank or the Administrative Agent. However, the
foregoing shall not be construed to excuse the Issuing Bank or the
Administrative Agent from liability to the Borrowers to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by the Borrowers to the extent permitted by applicable law)
suffered by the Borrowers that are caused by the Issuing Bank's or the
Administrative Agent's gross negligence or willful misconduct in determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof; it is understood that the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (i) the Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount of
any draft presented under such Letter of Credit, whether or not the amount due
to the beneficiary thereunder equals the amount of such draft and whether or not
any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute willful misconduct or gross negligence of the Issuing
Bank.
(g) Intentionally Omitted.
(h) Interim Interest. If the Administrative Agent shall make any payment under a
Letter of Credit Guaranty in respect of a Letter of Credit, then, unless the
Borrowers shall reimburse such payment in full on such date, the unpaid amount
thereof shall bear interest for the account of the Administrative Agent, for
each day from and including the date of such payment to but excluding the
earlier of the date of payment by the Borrowers or the date on which interest
shall commence to accrue thereon as provided in Section 2.02(f), at the rate per
annum that would apply to such amount if such amount were an ABR Loan.
(i) Intentionally Omitted.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, the Borrowers shall, on the Business Day it receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders representing greater than 50% of the total L/C
Exposure) thereof and of the amount to be deposited, deposit in an account with
the Administrative Agent, for the ratable benefit of the Lenders, an amount in
cash equal to 105% of the L/C Exposure as of such date. Such deposit shall be
held by the Administrative Agent as collateral for the payment and performance
of the obligations of the Borrowers under this Agreement. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits in Permitted Investments, which investments shall be
made at the option and sole discretion of the Administrative Agent, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall (i)
automatically be applied by the Administrative Agent to reimburse payment made
in respect of a Letter of Credit Guaranty for L/C Disbursements which have not
been reimbursed, (ii) be held for the satisfaction of the reimbursement
obligations of the Borrowers for the L/C Exposure at such time and (iii) if the
maturity of the Loans has been accelerated (but subject to the consent of
Lenders representing greater than 50% of the total L/C Exposure), be applied to
satisfy the Obligations. If the Borrowers are required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrowers within three Business Days after all Events of Default have been cured
or waived.
SECTION 2.24 Relationship Between the Borrowers.
(a) Administrative Borrower. βββββ� hereby appoints PALCO, and PALCO (in such
capacity, the "Administrative Borrower") shall act under this Agreement, as the
agent, attorney-in-fact and legal representative of βββββ� for all purposes,
including requesting Loans and receiving account statements and other notices
and communications to the Borrowers (or any of them) from the Administrative
Agent or any Lender. The Administrative Agent and the Lenders may rely, and
shall be fully protected in relying, on any Borrowing request, request for a
Letter of Credit, disbursement instruction, report, information or any notice or
communication made or given by the Administrative Borrower, whether in its own
name, as Borrowers' agent, on behalf of βββββ� or on behalf of the Borrowers, and
neither the Administrative Agent nor any Lender shall have any obligation to
make any inquiry or request any confirmation from or on behalf of any other
Borrower as to the binding effect on it of any such notice, request,
instruction, report, information, other notice or communications, nor shall the
joint and several character of the Borrowers' obligations hereunder be affected,
provided that the provisions of this Section 2.24 shall not be construed so as
to preclude either Borrower from taking actions permitted to be taken by a
"Borrower" hereunder.
(b) ΐΦΜμΜΓappΟΒΤΨt and Several Obligations. The obligations of the Borrowers pursuant to
the Loan Documents shall be joint and several. Each Borrower hereby irrevocably
and unconditionally guaranties, as primary obligor and not merely as surety, the
due and punctual payment in full of all Obligations of the other Borrower when
the same shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. ss. 362(a)).
(c) Obligations Absolute. The obligations of each Borrower under this Section
2.24 are irrevocable, absolute, independent and unconditional and shall not be
affected by any circumstance which constitutes a legal or equitable discharge of
a guarantor or surety other than payment in full of the Obligations. In
furtherance of the foregoing and without limiting the generality thereof, each
Borrower agrees that: (i) its obligation under this Section 2.24 with respect to
the obligations of the other Borrower is a guaranty of payment when due and not
of collectibility; (ii) the Administrative Agent and any Lender may enforce this
obligation upon the occurrence of an Event of Default hereunder notwithstanding
the existence of any dispute between the other Borrower and the Administrative
Agent or any Lender with respect to the existence of such Event of Default;
(iii) the obligations of each Borrower hereunder are independent of each of the
obligations of the other Borrower under the Loan Documents and the obligations
of any other Person and a separate action or actions may be brought and
prosecuted against each Borrower whether or not any action is brought against
the other Borrower or any other Person and whether or not the other Borrower or
any other Person is joined in any such action or actions; and (iv) a payment of
a portion, but not all, of the Obligations by any Borrower shall in no way
limit, affect, modify or abridge the liability of such or any other Borrower for
any portion of the Obligations that has not been paid. Each Borrower agrees that
its obligation under this Section 2.24 with respect to the obligations of the
other Borrower is a continuing guaranty and shall be binding upon each Borrower
and its successors and assigns, and each Borrower irrevocably waives any right
to revoke its obligations under this Section 2.24 as to future transactions
giving rise to any Obligations.
(d) Actions by the Administrative Agent and the Lenders. The Administrative
Agent and any Lender may from time to time, without notice or demand and without
affecting the validity or enforceability of this Section 2.24 or giving rise to
any limitation, impairment or discharge of any Borrower's liability hereunder,
but subject to the provisions of Section 2.24 (i) renew, extend, accelerate or
otherwise change the time, place, manner or terms of payment of the Obligations
of the other Borrower with the consent of such other Borrower, (ii) settle,
compromise, release or discharge, or accept or refuse any offer of performance
with respect to, or substitutions for, the Obligations of the other Borrower or
any agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations, (iii) request and accept other guaranties of
the Obligations of the other Borrower and take and hold security for the payment
of such Obligations, (iv) release, exchange, compromise, subordinate or modify,
with or without consideration, any security for payment of the Obligations of
the other Borrower, any other guaranties of such Obligations, or any other
obligation of any Person with respect to such Obligations, (v) enforce and apply
any security now or hereafter held from the other Borrower by or for the benefit
of the Administrative Agent or any Lender in respect of the Obligations of the
other Borrower and direct the order or manner of sale thereof, or exercise any
other right or remedy that the Administrative Agent or the Lenders, or any of
them, may have against any such security, in each case as the Administrative
Agent or the Lenders in their discretion may determine consistent with this
Agreement and any applicable security agreement, including foreclosure on any
such security pursuant to one or more judicial or nonjudicial sales, whether or
not every aspect of any such sale is commercially reasonable, and (vi) exercise
any other rights available to the Administrative Agent or the Lenders, or any of
them, under the Loan Documents.
(e) No Discharge. The obligations of each Borrower under this Section 2.24 shall
be valid and enforceable and shall not be subject to any limitation, impairment
or discharge for any reason (other than payment in full of the Obligations),
including the occurrence of any of the following, whether or not any Borrower
shall have had notice or knowledge of any of them: (i) any failure to assert or
enforce or agreement not to assert or enforce, or the stay or enjoining, by
order of court, by operation of law or otherwise, of the exercise or enforcement
of, any claim or demand or any right, power or remedy with respect to the
Obligations of the other Borrower or any agreement relating thereto, or with
respect to any other guaranty of or security for the payment of such
Obligations, (ii) any waiver or modification of, or any consent to departure
from, any of the terms or provisions of this Agreement or any of the other Loan
Documents or any agreement or instrument executed pursuant thereto, or of any
other guaranty or security for the Obligations of the other Borrower, (iii) the
Obligations of the other Borrower, or any agreement relating thereto, at any
time being found to be illegal, invalid or unenforceable in any respect, (iv)
the application of payments received from any source to the payment of
indebtedness other than the Obligations of the other Borrower, even though the
Administrative Agent or the Lenders, or any of them, might have elected to apply
such payment to any part or all of the Obligations of the other Borrower, (v)
any failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Obligations of the other Borrower, (vi) any
defenses, set-offs or counterclaims which the other Borrower or any other Person
may assert against the Administrative Agent or any Lender in respect of the
Obligations, including but not limited to failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury and (vii) any other act or thing or omission, or delay to
do any other act or thing, which may or might in any manner or to any extent
vary the risk of any Borrower as an obligor in respect of the Obligations.
(f) Waivers. Each Borrower waives, for the benefit of the Administrative Agent
and each Lender: (i) any right to require the Administrative Agent or any
Lender, as a condition of payment or performance by such Borrower, to (A)
proceed against the other Borrower or any other Person, (B) proceed against or
exhaust any security held from the other Borrower or any other Person, (C)
proceed against or have resort to any balance of any deposit account or credit
on the books of the Administrative Agent or any Lender in favor of the other
Borrower or any other Person, or (D) pursue any other remedy in the power of the
Administrative Agent or any Lender; (ii) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of the other
Borrower including any defense based on or arising out of the lack of validity
or the unenforceability of the Obligations or any agreement or instrument
relating thereto or by reason of the cessation of the liability of the other
Borrower from any cause other than payment in full of the Obligations; (iii) any
defense based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal; (iv) any defense based upon the
Administrative Agent's or any Lender's errors or omissions in the administration
of the Obligations, except behavior that amounts to gross negligence or willful
misconduct; (v) (A) any principles or provisions of law, statutory or otherwise,
that are or might be in conflict with the terms of this Section 2.24 and any
legal or equitable discharge of such Borrower's obligations hereunder, (B) the
benefit of any statute of limitations affecting such Borrower's liability
hereunder or the enforcement hereof, (C) any rights to set-offs, recoupments and
counterclaims and (D) promptness, diligence and any requirement that the
Administrative Agent or any Lender protect, secure, perfect or insure any Lien
or any property subject thereto; (vi) notices, demands, presentments, protests,
notices of protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Section 2.24, notices of default under this
Agreement or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Obligations or any agreement related
thereto, notices of any extension of credit to the other Borrower and notices of
any of the matters referred to in Sections 2.24(d) and (e) and any right to
consent to any thereof; and (vii) to the fullest extent permitted by law, any
defenses or benefits that may be derived from or afforded by law which limit the
liability of or exonerate guarantors or sureties, or which may conflict with the
terms of this Section 2.24.
As used in this paragraph, any reference to "the principal" includes each
Borrower and any reference to "the creditor" includes the Administrative Agent
and each of the Lenders. In accordance with Section 2856 of the California Civil
Code each Borrower waives any and all rights and defenses available to it by
reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California
Civil Code, including any and all rights or defenses such Borrower may have
because the Obligations are secured by real property or by reason of protection
afforded to the principal with respect to any of the Obligations, or to any
other guarantor of any of the Obligations with respect to any of such
guarantor's obligations under its guaranty, in either case pursuant to the
antideficiency or other laws of the State of California limiting or discharging
the principal's indebtedness or such guarantor's obligations, including Section
580a, 580b, 580d or 726 of the California Code of Civil Procedure. Consequently,
among other things: (1) the creditor may collect from such Borrower without
first foreclosing on any real or personal property collateral pledged by the
principal; and (2) if the creditor forecloses on any real property collateral
pledged by the principal: (x) the amount of the Obligations may be reduced only
by the price for which the collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price and (y) the creditor may
collect from such Borrower even if the creditor, by foreclosing on the real
property collateral, has destroyed any right such Borrower may have to collect
from the principal. This is an unconditional and irrevocable waiver of any
rights and defenses such Borrower may have because the Obligations are secured
by real property. Each Borrower also waives all rights and defenses arising out
of an election of remedies by the creditor, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for an
Obligation, has destroyed such Borrower's rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise; and even though that election of remedies by
the creditor, such as nonjudicial foreclosure with respect to security for an
obligation of any other guarantor of any of the Obligations, has destroyed such
Borrower's rights of contribution against such other Borrower or any other
guarantor. No other provision of this Section 2.24 shall be construed as
limiting the generality of any of the covenants and waivers set forth in this
paragraph.
(g) Borrowers' Rights of Subrogation, Contribution, Etc.; Subordination of Other
Obligations. Each Borrower waives any claim, right or remedy, direct or
indirect, that such Borrower now has or may hereafter have against the other
Borrower or any of its assets in connection with this Section 2.24 or the
performance by such Borrower of its obligations hereunder, in each case whether
such claim, right or remedy arises in equity, under contract, by statute
(including under California Civil Code Section 2847, 2848 or 2849), under common
law or otherwise and including (i) any right of subrogation, reimbursement or
indemnification that such Borrower now has or may hereafter have against the
other Borrower, (ii) any right to enforce, or to participate in, any claim,
right or remedy that the Administrative Agent or any Lender now have or may
hereafter have against the other Borrower and (iii) any benefit of, and any
right to participate in, any collateral or security now or hereafter held by the
Administrative Agent or any Lender. In addition, until the Obligations shall
have been paid in full, the Commitments shall have terminated and all Letters of
Credit shall have expired or been cancelled, each Borrower shall withhold the
exercise of any right of contribution such Borrower may have against the other
Borrower. Each Borrower further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Borrower may have against the
other Borrower or against any collateral or security, and any rights of
contribution such Borrower may have against such other Borrower, shall be junior
and subordinate to any rights the Administrative Agent or any Lender may have
against such Borrower to all right, title and interest the Administrative Agent
or any Lender may have in any such collateral or security, and to any right the
Administrative Agent or any Lender may have against such other Borrower.
Any indebtedness of any Borrower now or hereafter held by any Borrower is
subordinated in right of payment to the Obligations, and any such indebtedness
of the other Borrower to such Borrower collected or received by such Borrower
after an Event of Default has occurred and is continuing, and any amount paid to
a Borrower on account of any subrogation, reimbursement, indemnification or
contribution rights referred to in the preceding paragraph when all Obligations
have not been paid in full, shall be held in trust for the Administrative Agent
and the Lenders and shall forthwith be paid over to the Administrative Agent for
the benefit of the Lenders to be credited and applied against the Obligations.
(h) Fraudulent Transfer Laws. Anything contained in this Section 2.24 to the
contrary notwithstanding, the obligations of each Borrower under this Section
2.24 shall be limited to a maximum aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any applicable provisions of comparable state law (collectively,
the "Fraudulent Transfer Laws"), in each case after giving effect to all other
liabilities of such Borrower, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws and after giving effect as assets to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws) of
any rights to subrogation, reimbursement, indemnification or contribution of
such Borrower pursuant to applicable law or pursuant to the terms of any
agreement.
(i) Related Guaranties. Each Borrower under this Section 2.24 and any other
guaranties, if any, relating to the Agreement (the "Related Guaranties") that
contain a contribution provision similar to that set forth in this Section 2.24,
together desire to allocate among themselves (collectively, the "Contributing
Guarantors"), in a fair and equitable manner, their obligations arising under
this Section 2.24 and the Related Guaranties. Accordingly, in the event any
payment or distribution is made on any date by any Borrower under this Section
2.24 or a guarantor under a Related Guaranty, each such Borrower or such
guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the maximum amount permitted by law so as to maximize
the aggregate amount of the Obligations paid to the Administrative Agent and the
Lenders.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Each of the Borrowers, jointly and severally, represents and warrants to the
Arranger, the Administrative Agent and each of the Lenders that:
SECTION 3.01 Organization; Powers. Each of the Loan Parties (a) is duly
organized or formed, validly existing and in good standing under the laws of the
jurisdiction of its organization or formation, (b) has all requisite power and
authority, and the legal right, to own and operate its property and assets, to
lease the property it operates as lessee and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required, except where the failure so to qualify, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect and (d) has the power and authority, and the legal right, to execute,
deliver and perform its obligations under this Agreement, each of the other Loan
Documents, and each other agreement or instrument contemplated thereby to which
it is or will be a party, including, in the case of the Borrowers, to borrow
hereunder, in the case of each Loan Party and Holdings, to grant the Liens
contemplated to be granted by it under the Security Documents and, in the case
of each Guarantor, to Guarantee the Obligations as contemplated by the Guarantee
and Collateral Agreement.
SECTION 3.02 Authorization; No Conflicts. The Transactions (a) have been duly
authorized by all requisite corporate, partnership or limited liability company
and, if required, stockholder, partner or member action and (b) will not (i)
violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of Loan Party, (B) any order of any Governmental Authority or arbitrator
or (C) any provision of any indenture, agreement or other instrument to which a
Loan Party is a party or by which any of them or any of their property is or may
be bound, (ii) be in conflict with, result in a breach of or constitute (alone
or with notice or lapse of time or both) a default under, or give rise to any
right to accelerate or to require the prepayment, repurchase or redemption of
any obligation under any such indenture, agreement or other instrument or (iii)
result in the creation or imposition of any Lien upon or with respect to any
property or assets now owned or hereafter acquired by any Loan Party (other than
Liens created under the Security Documents).
SECTION 3.03 Enforceability. This Agreement has been duly executed and delivered
by each Loan Party and constitutes, and each other Loan Document when executed
and delivered by each Loan Party thereto will constitute, a legal, valid and
binding obligation of such Loan Party enforceable against such Loan Party in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
SECTION 3.04 Governmental Approvals. No action, consent or approval of,
registration or filing with, Permit from, notice to, or any other action by, any
Governmental Authority is or will be required in connection with the
Transactions, except for (a) the filing of UCC financing statements and filings
with the United States Patent and Trademark Office and the United States
Copyright Office, (b) recordation of the Mortgages and (c) such as have been
made or obtained and are in full force and effect.
SECTION 3.05 Financial Statements. PALCO has heretofore furnished to the Lenders
(i) balance sheets and statements of income, stockholder's equity and cash flows
for the Borrowers on a combined basis as of and for the fiscal years ended
December 31, 2004 and December 31, 2003, in each case audited by and accompanied
by the opinion of Deloitte & Touche LLP, independent public accountants and
(ii) the unaudited balance sheet and related statement of income and cash flows
for βββββ� as of the period from and including January 1, 2001 through and
including December 31, 2004. All of such financial statements present fairly in
all material respects the financial condition and results of operations and cash
flows of the applicable entities as of such dates and for such periods. Such
balance sheets and the notes thereto disclose all material liabilities, direct
or contingent, of the applicable entities as of the dates thereof. Such
financial statements were prepared in accordance with GAAP (except for the
exclusion of PALCO's wholly owned subsidiaries, Scotia Pacific and Salmon Creek,
except as losses in excess of investments in subsidiaries as a component of
stockholder's equity unless otherwise indicated or the context indicates
otherwise and consolidating the financial statements thereof) applied on a
consistent basis.
SECTION 3.06 No Material Adverse Change. No event, change or condition has
occurred since December 31, 2004 that has caused, or would reasonably be
expected to cause, a Material Adverse Effect.
SECTION 3.07 Title to Properties; Possession Under Leases. (a) Each of the Loan
Parties has good and marketable title to, or valid leasehold interests in, all
its material properties and assets (including all Real Property), except for
liens permitted under Section 6.02 and minor defects in title that, in the
aggregate, are not substantial in amount and do not materially detract from the
value of the property subject thereto or interfere with its ability to conduct
its business as currently conducted or to utilize such properties and assets for
their intended purposes. Each parcel of Real Property is free from material
structural defects and all building systems contained therein are in good
working order and condition, as necessary to permit the Loan Party using the
Real Property to conduct its business as currently conducted or to utilize such
Real Property for its intended purpose, ordinary wear and tear dispositions,
abandonments and breakdowns arising in the ordinary course of business excepted,
suitable for the purposes for which they are currently being used. Each parcel
of Real Property and the current use thereof complies in all material respects
with all applicable laws (including building and zoning ordinances and codes)
and with all insurance requirements.
(b) Each of the Loan Parties is in compliance in all material respects with all
obligations under all material leases to which it is a party and all such leases
are legal, valid, binding and in full force and effect and are enforceable in
accordance with their terms. Each of the Loan Parties enjoys peaceful and
undisturbed possession under all such material leases. The Loan Parties are not
in default of their payment or other material obligations under any material
lease and no legal proceedings have been instituted against any Loan Party by
any landlord with respect to any claimed default under any such leases. Except
as set forth in Schedule 3.20, none of the Real Property is subject to any
lease, sublease, license or other agreement granting to any person any right to
the use, occupancy, possession or enjoyment of the Real Property or any portion
thereof, except for easements or similar rights which do not materially detract
from the value of the property subject thereto or interfere with the ability of
such Loan Party to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. PALCO has delivered to
the Administrative Agent true, complete and correct copies of all leases
(whether as landlord or tenant) of Real Property.
(c) None of the Loan Parties has received any notice of, nor has any knowledge
of, any pending or contemplated condemnation proceeding affecting the Real
Properties or any sale or disposition thereof in lieu of condemnation.
(d) Except as set forth on Schedule 3.07 none of the Loan Parties is obligated
under any right of first refusal, option or other contractual right to sell,
assign or otherwise dispose of any Real Property or any interest therein.
(e) There are no pending or, to the knowledge of PALCO, proposed special or
other assessments for public improvements or otherwise affecting any material
portion of the owned Real Property, nor are there any contemplated improvements
to such owned Real Property that may result in such special or other
assessments. No Loan Party has suffered, permitted or initiated the joint
assessment of any material portion of any owned Real Property with any other
real property constituting a separate tax lot. Each owned parcel of Real
Property is comprised of one or more parcels, each of which constitutes a
separate tax lot and none of which constitutes a portion of any other tax lot
not constituting Collateral.
(f) Such Loan Party has obtained all permits, licenses, variances and
certificates required by applicable law to be obtained and necessary to the use
and operation of each parcel of Real Property, except where the failure to have
such permit, license, certificate or variance would not prohibit the use of such
parcel of Real Property as it is currently being used. The use being made of
each parcel of Real Property conforms with the certificate of occupancy and/or
such other permits, licenses, variances and certificates for such Real Property
and any other restrictions, covenants or conditions affecting such Real
Property, except for any such nonconformity that would not reasonably be
expected to be enjoined or to result in material fines.
(g) Each developed parcel of Real Property has adequate rights of access to
public ways or reasonable rights to permit the Real Property to be used for its
intended purpose, and is served by installed, operating and adequate water,
electric, gas, telephone, sewer, sanitary sewer and storm drain facilities as
necessary to permit the Loan Party using such Real Property to conduct its
business as currently conducted or to utilize such Real Property for its
intended purpose; (ii) all public utilities necessary to the continued use and
enjoyment of each parcel of Real Property as used and enjoyed on the Closing
Date are located in the public right-of-way abutting the premises or easements
permitting the location of such utilities, and all such utilities are connected
so as to serve such Real Property without passing over other Property except for
land of the utility company providing such utility service or, in the case of
leased Real Property, contiguous land owned by the lessor of such leased Real
Property; (iii) each developed parcel of Real Property, including each leased
parcel, has adequate available parking to meet legal and operating requirements;
(iv) all roads necessary for access to each developed parcel of Real Property to
permit its use for its current purpose have been completed and dedicated to
public use and accepted by all governmental authorities or are the subject of
access easements for the benefit of such Real Property; and (v) no building or
structure constituting Real Property or any appurtenance thereto or equipment
thereon, or the use, operation or maintenance thereof, violates any restrictive
covenant or encroaches on any easement or on any property owned by others, which
violation or encroachment interferes with the use or could materially adversely
affect the value of such building, structure or appurtenance or which
encroachment is necessary for the operation of the business at any Real
Property.
SECTION 3.08 Subsidiaries. Schedule 3.08 sets forth as of the Closing Date a
list of all Subsidiaries, including each Subsidiary's exact legal name (as
reflected in such Subsidiary's certificate or articles of incorporation or other
constitutive documents) and jurisdiction of incorporation or formation and the
percentage ownership interest of PALCO (direct or indirect) therein, and
identifies each Subsidiary that is a Loan Party. The shares of capital stock or
other Equity Interests so indicated on Schedule 3.08 are fully paid and
non-assessable and are owned by PALCO, directly or indirectly, free and clear of
all Liens (other than Liens created under the Security Documents).
SECTION 3.09 Litigation; Compliance with Laws. (a) Except as set forth in
Schedule 3.09, there are no actions, suits or proceedings at law or in equity or
by or before any arbitrator or Governmental Authority now pending or, to the
knowledge of PALCO, threatened against or affecting any Loan Party or any
business, property or rights of any such person (i) that involve any Loan
Document or the Transactions or (ii) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined, would
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(b) Since the date of this Agreement, there has been no change in the status of
the matters disclosed on Schedule 3.09 that, individually or in the aggregate,
has resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
(c) None of the Loan Parties or any of their respective material properties or
assets is in violation of, nor will the continued operation of their material
properties and assets as currently conducted violate, any law, rule or
regulation (including any zoning, building, Environmental Law, ordinance, code
or approval or any building permits) or any restrictions of record or agreements
affecting the Mortgaged Property, or is in default with respect to any judgment,
writ, injunction, decree or order of any Governmental Authority, where such
violation or default, individually or in the aggregate, would reasonably be
expected to result in a Material Adverse Effect.
(d) Certificates of occupancy and permits are in effect for each Mortgaged
Property as currently constructed, and true and complete copies of such
certificates of occupancy have been delivered to the Administrative Agent as
mortgagee with respect to each Mortgaged Property.
SECTION 3.10 Agreements. (a) Except as set forth in Schedule 3.10, none of the
Loan Parties is a party to any agreement or instrument, or subject to any
corporate restriction, that, individually or in the aggregate, has resulted or
would reasonably be expected to result in a Material Adverse Effect.
(b) None of the Loan Parties is in default in any manner under any provision of
any indenture or other agreement or instrument evidencing Indebtedness, or any
other material agreement or instrument to which it is a party or by which it or
any of its properties or assets are or may be bound, where such default,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect. No Default has occurred and is continuing.
SECTION 3.11 Federal Reserve Regulations. (a) None of the Loan Parties is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, for purchasing or carrying Margin Stock or for the purpose of
purchasing, carrying or trading in any securities under such circumstances as to
involve any Loan Party in a violation of Regulation X or to involve any broker
or dealer in a violation of Regulation T. No Indebtedness being reduced or
retired out of the proceeds of any Loans or Letters of Credit was or will be
incurred for the purpose of purchasing or carrying any Margin Stock. Following
the application of the proceeds of the Loans and the Letters of Credit, Margin
Stock will not constitute more than 25% of the value of the assets of the
aggregate assets of the Loan Parties. None of the transactions contemplated by
this Agreement will violate or result in the violation of any of the provisions
of the Regulations of the Board, including Regulation T, U or X. If requested by
any Lender or the Administrative Agent, the Borrowers will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
Regulation U.
SECTION 3.12 Investment Company Act; Public Utility Holding Company Act. None of
the Loan Parties is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended, or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
SECTION 3.13 Use of Proceeds. The Borrowers will use the proceeds of the Loans
solely for general corporate purposes, including the repayment of all
obligations under the Existing Credit Facility. The Administrative Borrower will
request the issuance of Letters of Credit solely to support payment obligations
incurred in the ordinary course of business by the Borrowers and the Subsidiary
Guarantors.
SECTION 3.14 Tax Returns. Each of the Loan Parties has timely filed or timely
caused to be filed all material Federal, state, local and foreign tax returns or
materials required to have been filed by it and all such tax returns and related
materials are correct and complete in all material respects. Each of the Loan
Parties has timely paid or timely caused to be paid all material Taxes due and
payable by it and all assessments received by it, except Taxes that are being
contested in good faith by appropriate proceedings and for which the applicable
Loan Party, shall have set aside on its books adequate reserves in accordance
with GAAP. Each of the Loan Parties has made adequate provision in accordance
with GAAP for all Taxes not yet due and payable. No Lien relating to Taxes has
been filed, and to the knowledge of any of the Loan Parties, no Lien is being
asserted or threatened, with respect to any Tax. None of the Loan Parties (a)
intends to treat the Loans or any of the transactions contemplated by any Loan
Document as being a "reportable transaction" (within the meaning of Treasury
Regulation Section 1.6011-4) or (b) is aware of any facts or events that would
result in such treatment.
SECTION 3.15 No Material Misstatements:. Each of the Loan Parties has disclosed
to the Arranger, the Administrative Agent and the Lenders all agreements,
instruments and corporate or other restrictions to which any Loan Party is
subject, and all other matters known to any of them, that, individually or in
the aggregate, would reasonably be expected to result in a Material Adverse
Effect. No other information, report, financial statement, exhibit or schedule
furnished by or on behalf of any Loan Party to the Arranger, the Administrative
Agent or any Lender for use in connection with the transactions contemplated by
the Loan Documents or in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto contained, contains or will
contain any material misstatement of fact or omitted, omits or will omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were, are or will be made, not misleading;
provided that to the extent any such information, report, financial statement,
exhibit or schedule was based upon or constitutes a forecast or projection, the
Borrowers represent only that they acted in good faith and utilized reasonable
assumptions and due care in the preparation of such information, report,
financial statement, exhibit or schedule.
SECTION 3.16 Employee Benefit Plans. Each Loan Party and each of its ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Tax Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
would reasonably be expected to result in material liability of the Borrowers or
any of their ERISA Affiliates.
SECTION 3.17 Environmental Matters. (a) Except as set forth in Schedule 3.17 and
except with respect to any other matters that, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect, none of
the Loan Parties:
(i) has failed to comply with any Environmental Law or to take, in a timely
manner, all actions necessary to obtain, maintain, renew and comply with
any Environmental Permit, and all such Environmental Permits are in full
force and effect and not subject to any administrative or judicial appeal;
(ii) has become a party to any governmental, administrative or judicial
proceeding or possesses knowledge of any such proceeding that has been
threatened under Environmental Law;
(iii)has received notice of, become subject to, or is aware of any facts or
circumstances that could form the basis for, any Environmental Liability
other than those which have been fully and finally resolved and for which
no obligations remain outstanding;
(iv) possesses knowledge that any Mortgaged Property (A) is subject to any Lien,
restriction on ownership, occupancy, use or transferability imposed
pursuant to Environmental Law or (B) contains or previously contained
Hazardous Materials of a form or type or in a quantity or location that
would reasonably be expected to result in any Environmental Liability;
(v) possess knowledge that there has been a Release or threat of Release of
Hazardous Materials at or from the Mortgaged Properties (or from any
facilities or other properties formerly owned, leased or operated by any
Loan Party) in violation of, or in amounts or in a manner that could give
rise to liability under, any Environmental Law;
(vi) has generated, treated, stored, transported, or Released Hazardous
Materials from the Mortgaged Properties (or from any facilities or other
properties formerly owned, leased or operated by any Loan Party) in
violation of, or in a manner or to a location that could give rise to
liability under, any Environmental Law;
(vii)is aware of any facts, circumstances, conditions or occurrences in respect
of any of the facilities and properties owned, leased or operated that
could (A) form the basis of any action, suit, claim or other judicial or
administrative proceeding relating to liability under or noncompliance with
Environmental Law on the part of any Loan Party or (B) interfere with or
prevent continued compliance with Environmental Laws by any Loan Party; or
(viii) has pursuant to any order, decree, judgment or agreement by which it is
bound or has assumed the Environmental Liability for any Person.
(b) Since the date of this Agreement, there has been no change in the status of
the matters disclosed on Schedule 3.17 that, individually or in the
aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.
SECTION 3.18 Insurance. Schedule 3.18 sets forth a true, complete and correct
description of all insurance maintained by or on behalf of the Loan Parties as
of the Closing Date. As of the Closing Date, such insurance is in full force and
effect and all premiums have been duly paid. The Loan Parties are insured by
financially sound and reputable insurers and such insurance is in such amounts
and covering such risks and liabilities (and with such deductibles, retentions
and exclusions) as are in accordance with normal and prudent industry practice.
None of the Loan Parties (a) has received notice from any insurer (or any agent
thereof) that substantial capital improvements or other substantial expenditures
will have to be made in order to continue such insurance or (b) has any reason
to believe that it will not be able to renew its existing coverage as and when
such coverage expires or to obtain similar coverage from similar insurers at a
substantially similar cost.
SECTION 3.19 Security Documents. (a) The Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid, binding and enforceable security
interest in the Collateral described therein and proceeds thereof and (i) in the
case of the Pledged Collateral, upon the earlier of (A) when such Pledged
Collateral is delivered to the Administrative Agent and (B) when financing
statements in appropriate form are filed in the offices specified on Schedule
3.19(a) and (ii) in the case of all other Collateral described therein (other
than Intellectual Property Collateral), when financing statements in appropriate
form are filed in the offices specified on Schedule 3.19(a), the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Secured Parties in such
Collateral and proceeds thereof, as security for the Obligations, in each case
prior and superior to the rights of any other person (except, in the case of all
Collateral other than Pledged Collateral, with respect to Liens expressly
permitted by Section 6.02).
(b) Each Intellectual Property Security Agreement is effective to create in
favor of the Administrative Agent, for the ratable benefit of the Secured
Parties, a legal, valid, binding and enforceable security interest in the
Intellectual Property Collateral described therein and proceeds thereof. When
each Intellectual Property Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office,
respectively, together with financing statements in appropriate form filed in
the offices specified in Schedule 3.19(a), such Intellectual Property Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property Collateral and proceeds thereof, as security for the Obligations, in
each case prior and superior in right to any other person (except with respect
to Liens expressly permitted by Section 6.02) (it being understood that
subsequent recordings in the United States Patent and Trademark Office and the
United States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the grantors after
the date hereof).
(c) Each of the Mortgages is effective to create in favor of the Administrative
Agent, for the ratable benefit of the Secured Parties, a legal, valid, binding
and enforceable Lien on, and security interest in, all of the Loan Parties'
right, title and interest in and to the Mortgaged Property thereunder and
proceeds thereof, and when the Mortgages are filed in the offices specified on
Schedule 3.19(c), each such Mortgage shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the grantors thereof
in such Mortgaged Property and proceeds thereof, as security for the
Obligations, in each case prior and superior in right to any other person
(except with respect to Liens expressly permitted by Section 6.02).
SECTION 3.20 Location of Real Property. Schedule 3.20 lists completely and
correctly as of the Closing Date all Real Property and the addresses thereof,
indicating for each parcel whether it is owned or leased, including in the case
of leased Real Property, the landlord name, lease date and lease expiration
date. The Loan Parties own in fee or have valid leasehold interests in, as the
case may be, all the real property set forth on Schedule 3.20.
SECTION 3.21 Labor Matters. As of the Closing Date, there are no strikes,
lockouts or slowdowns against any Loan Party pending or, to the knowledge of the
Borrowers, threatened. The hours worked by and payments made to employees of the
Loan Parties have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such matters.
All payments due from any of the Loan Parties, or for which any claim may be
made against any of the Loan Parties, on account of wages and employee health
and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Loan Parties to the extent required by GAAP. The
consummation of the Transactions will not give rise to any right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which any of the Loan Parties is bound.
SECTION 3.22 Liens. There are no Liens of any nature whatsoever on any of the
properties or assets of any of the Loan Parties (other than Liens expressly
permitted by Section 6.02).
SECTION 3.23 Intellectual Property. Each of the Loan Parties owns, or is
licensed to use, all trademarks, tradenames, copyrights, patents and other
intellectual property material to its business, and the use thereof by the Loan
Parties does not infringe upon the rights of any other person, except for any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.
SECTION 3.24 Solvency. Immediately after the consummation of the Transactions to
occur on the Closing Date and immediately following the making of each Loan (or
other extension of credit hereunder) and after giving effect to the application
of the proceeds of each Loan (or other extension of credit hereunder), (a) the
fair value of the assets of each Loan Party, at a fair valuation, will exceed
its debts and liabilities, subordinated, contingent or otherwise; (b) the
present fair saleable value of the property of each Loan Party will be greater
than the amount that will be required to pay the probable liability of its debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) each Loan Party will be able
to pay its debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) no Loan Party will
have unreasonably small capital with which to conduct the business in which it
is engaged as such business is now conducted and is proposed to be conducted
following the Closing Date.
SECTION 3.25 Permits. Except where any such failure would not reasonably be
expected to have a Material Adverse Effect: (a) Each Loan Party has obtained and
holds all Permits required in respect of all Real Property and for any other
property otherwise operated by or on behalf of, or for the benefit of, such
person and for the operation of each of its businesses as presently conducted
and as proposed to be conducted, (b) all such Permits are in full force and
effect, and each Loan Party has performed and observed all requirements of such
Permits, (c) no event has occurred that allows or results in, or after notice or
lapse of time would allow or result in, revocation or termination by the issuer
thereof or in any other impairment of the rights of the holder of any such
Permit, (d) no such Permits contain any restrictions, either individually or in
the aggregate, that are materially burdensome to any Loan Party, or to the
operation of any of its businesses or any property owned, leased or otherwise
operated by such person, (e) each Loan Party reasonably believes that each of
its Permits will be timely renewed and complied with, without material expense,
and that any additional Permits that may be required of such Person will be
timely obtained and complied with, without material expense and (f) the
Borrowers have no knowledge or reason to believe that any Governmental Authority
is considering limiting, suspending, revoking or renewing on materially
burdensome terms any such Permit.
SECTION 3.26 Deposit and Disbursement Accounts. Schedule 3.26 lists all banks
and other financial institutions at which any Loan Party maintains deposit or
other accounts as of the Closing Date and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number therefor.
ARTICLE IV.
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans, and the agreement of the
Administrative Agent to assist Administrative Borrower in obtaining Letters of
Credit in accordance with Section 2.23, are subject to the satisfaction of the
following conditions:
SECTION 4.01 All Credit Events. On the date of each Borrowing, including each
Borrowing of a Swingline Loan, and on the date of each issuance, amendment,
extension or renewal of a Letter of Credit (each such event being called a
"Credit Event"):
(a) The Administrative Agent shall have received a notice of such Borrowing as
required by Section 2.03 (or such notice shall have been deemed given in
accordance with Section 2.03) or, in the case of the issuance, amendment,
extension or renewal of a Letter of Credit, the Administrative Agent shall
have received a notice requesting the issuance, amendment, extension or
renewal of such Letter of Credit as required by Section 2.23(b) or, in the
case of the Borrowing of a Swingline Loan, the Swingline Lender and the
Administrative Agent shall have received a notice requesting such Swingline
Loan as required by Section 2.22(b).
(b) The representations and warranties set forth in each Loan Document shall be
true and correct in all material respects on and as of the date of such
Credit Event with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate
to an earlier date, in which case such representations and warranties shall
be true and correct in all material respects on and as of such earlier
date.
(c) The Borrowers and each other Loan Party shall be in compliance with all the
terms and provisions set forth in each Loan Document on its part to be
observed or performed, and, at the time of and immediately after such
Credit Event, no Event of Default or Default shall have occurred and be
continuing.
Each Credit Event shall be deemed to constitute a joint and several
representation and warranty by each of the Borrowers on the date of such Credit
Event as to the matters specified in paragraphs (b) and (c) of this Section
4.01.
SECTION 4.02 First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of itself and the
Lenders, a favorable written opinion of (i) βββββββ� βββββ� LLP, counsel for
the Loan Parties, and (ii) each special and local counsel to the Loan
Parties as the Administrative Agent may reasonably request, in each case
(A) dated the Closing Date, (B) addressed to the Administrative Agent, the
Arranger and the Lenders and (C) covering such matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall reasonably
request and which are customary for transactions of the type contemplated
herein, and the Loan Parties hereby request such counsel to deliver such
opinions.
(b) The Administrative Agent shall have received (i) a copy of the certificate
or articles of incorporation or other formation documents, including all
amendments thereto, of each Loan Party, certified as of a recent date by
the Secretary of State of the state of its organization, and a certificate
as to the good standing of each Loan Party as of a recent date, from such
Secretary of State; (ii) a certificate of the Secretary or Assistant
Secretary of each Loan Party dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of the by-laws of such Loan
Party as in effect on the Closing Date and at all times since a date prior
to the date of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly adopted by
the Board of Directors of such Loan Party authorizing the execution,
delivery and performance of the Loan Documents to which such person is a
party, in the case of the Borrowers, the borrowings hereunder, in the case
of each Loan Party, the granting of the Liens contemplated to be granted by
it under the Security Documents and, in the case of each Guarantor, the
Guaranteeing of the Obligations as contemplated by the Guarantee and
Collateral Agreement, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that the
certificate or articles of incorporation or other formation documents of
such Loan Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (i) above and (D) as to the incumbency and specimen signature of
each officer executing any Loan Document or any other document delivered in
connection herewith on behalf of such Loan Party; (iii) a certificate of
another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to (ii)
above; and (iv) such other documents as the Administrative Agent, the
Arranger or the Lenders may reasonably request.
(c) The Administrative Agent shall have received a certificate, dated the
Closing Date and signed by a Financial Officer of the Borrowers, confirming
compliance with the conditions precedent set forth in paragraphs (b) and
(c) of Section 4.01.
(d) The Administrative Agent shall have received (i) this Agreement, executed
and delivered by a duly authorized officer of each of the Borrowers, (ii)
the Guarantee and Collateral Agreement, executed and delivered by a duly
authorized officer of each of each Loan Party and Holdings, (iii) a
Mortgage covering each of the Mortgaged Properties, executed and delivered
by a duly authorized officer of each Loan Party thereto, (iv) the
Intellectual Property Security Agreements, executed and delivered by a duly
authorized officer of each Loan Party thereto, (v) if requested by any
Lender pursuant to Section 2.04, a promissory note or notes conforming to
the requirements of Section 2.04 and executed and delivered by a duly
authorized officer of the Borrowers and (vi) a Lender Addendum executed and
delivered by each Lender and accepted by the Borrowers.
(e) The Administrative Agent, for the ratable benefit of the Secured Parties,
shall have been granted on the Closing Date perfected Liens on the
Collateral (subject, in the case of all Collateral other than Pledged
Collateral, only to Liens expressly permitted by Section 6.02) and shall
have received such other reports, documents and agreements as the
Administrative Agent shall reasonably request and which are customarily
delivered in connection with security interests in real property assets.
The Pledged Collateral shall have been duly and validly pledged under the
Guarantee and Collateral Agreement to the Administrative Agent, for the
ratable benefit of the Secured Parties, and certificates representing such
Pledged Collateral, accompanied by instruments of transfer and stock powers
endorsed in blank, shall be in the possession of the Administrative Agent.
(f) The Administrative Agent shall have received a duly executed Perfection
Certificate dated on or prior to the Closing Date. The Administrative Agent
shall have received the results of a recent Lien and judgment search in
each relevant jurisdiction with respect to each of the Loan Parties that
shall be Subsidiary Guarantors or shall otherwise have assets that are
included in the Collateral, and such search shall reveal no Liens on any of
the assets of each of the Loan Parties except, in the case of Collateral
other than Pledged Collateral, for Liens expressly permitted by Section
6.02 and except for Liens to be discharged on or prior to the Closing Date
pursuant to documentation reasonably satisfactory to the Administrative
Agent.
(g) The Borrowers shall have received not less than $35,000,000 in gross cash
proceeds from borrowings under the Term Loan Agreement.
(h) After giving effect to the Transactions and the other transactions
contemplated hereby, the Loan Parties shall have outstanding no
Indebtedness or preferred stock other than (i) the Loans and other
extensions of credit hereunder, (ii) borrowings under the Term Loan
Agreement and (iii) the Indebtedness set forth on Schedule 6.01. The
Borrowers shall have repaid all amounts outstanding under the Existing
Credit Facility. The Administrative Agent shall have received satisfactory
evidence that (i) the Existing Credit Facility shall have been terminated,
all amounts then due and payable or to become due and payable (other than
indemnification obligations not yet having been requested) thereunder shall
have been paid in full and all commitments and reimbursement obligations
thereunder shall have been terminated and (ii) satisfactory arrangements
shall have been made for the termination of all Liens granted in connection
therewith, in each case on terms and conditions satisfactory to the
Administrative Agent.
(i) The Administrative Agent shall have received (i) the financial statements
described in Section 3.05 and (ii) unaudited combined preliminary special
purpose balance sheets and related statements of income, stockholders'
equity and cash flows of PALCO and βββββ� prepared in accordance with GAAP
(except for the exclusion of PALCO's wholly owned subsidiaries Scotia
Pacific, Salmon Creek and Scotia Inn except as losses in excess of
investments in subsidiaries as a component of stockholder's equity and
consolidating the financial statements thereof, and inventory presented on
a FIFO basis), for March, 2005 and year-to-date through March, 2005.
(j) The Administrative Agent shall have received projections of the Loan
Parties for the years 2005 through 2006 and for the quarters beginning with
the second fiscal quarter of 2005 and through the fourth fiscal quarter of
2006, in form and substance satisfactory to the Administrative Agent.
(k) The Administrative Agent shall have received a certificate from the chief
financial officer of PALCO certifying that each of the Loan Parties, after
giving effect to the Transactions and the other transactions contemplated
hereby, are solvent.
(l) All material governmental and third party consents and approvals with
respect to the Transactions and the other transactions contemplated hereby
to the extent required shall have been obtained, all applicable appeal
periods shall have expired and there shall be no litigation, governmental,
administrative or judicial action, actual or, to the knowledge of any Loan
Party, threatened, that could reasonably be expected to restrain, prevent
or impose materially burdensome conditions on the Transactions or the other
transactions contemplated hereby.
(m) The Administrative Agent shall have received all documentation and other
information required by bank regulatory authorities under applicable "know
your customer" and anti-money laundering rules and regulations, including
the U.S.A. Patriot Act.
(n) The Administrative Agent shall have received in respect of each Mortgaged
Property a mortgagee's title insurance policy (or policies) or marked up
unconditional binder for such insurance. Each such policy shall be in a
form and in an amount satisfactory to the Administrative Agent and issued
by title companies satisfactory to the Administrative Agent (including any
such title companies acting as co-insurers or reinsurers, at the option of
the Administrative Agent) (in each such case, a "Title Insurance Company").
The Administrative Agent shall have received evidence satisfactory to it
that all premiums in respect of each such policy, all charges for mortgage
recording tax, and all related expenses, if any, have been paid. The
Administrative Agent shall have received a copy of all recorded documents
referred to, or listed as exceptions to title in, the title policy or
policies referred to above and a copy of all other material documents
affecting the Mortgaged Property.
(o) If requested by the Administrative Agent, the Administrative Agent shall
have received (i) a policy of flood insurance that (A) covers any parcel of
improved Mortgaged Property that is located in a flood zone and (B) is
written in an amount not less than the outstanding principal amount of the
indebtedness secured by such Mortgage that is reasonably allocable to such
Mortgaged Property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less.
(p) The Administrative Agent shall have received evidence satisfactory to the
Administrative Agent demonstrating that after giving effect to the
Transactions, Borrowing Availability shall be at least $14,000,000.
(q) Borrowers shall have delivered all documents listed on, and taken all
actions set forth on and satisfied all other conditions precedent listed in
the Closing Checklist attached hereto as Exhibit I, all in form and
substance, or in a manner, satisfactory to the Administrative Agent and
Lenders.
ARTICLE V.
AFFIRMATIVE COVENANTS
Each of the Borrowers covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired and all amounts drawn
thereunder have been reimbursed in full, each of the Borrowers will, and will
cause each of the Loan Parties:
SECTION 5.01 Existence; Businesses and Properties. (a) Do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
legal existence, except as otherwise expressly permitted under Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
in all material respects with all applicable laws, rules, regulations and
decrees and orders of any Governmental Authority, whether now in effect or
hereafter enacted; and at all times maintain and preserve all property material
to the conduct of such business and keep such property in good repair, working
order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 5.02 Insurance. Maintain the insurance required by the Guarantee and
Collateral Agreement.
SECTION 5.03 Obligations and Taxes. Pay and discharge promptly when due all
material taxes, assessments and governmental charges or levies imposed upon it
or upon its income or profits or in respect of its property, before the same
shall become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise that, if unpaid, might give rise to a Lien
upon such properties or any part thereof; provided, however, that such payment
and discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the Borrowers or the
applicable Subsidiary shall have set aside on its books adequate reserves with
respect thereto in accordance with GAAP and such contest operates to suspend
collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien and, in the case of a Mortgaged Property, there is no risk
of forfeiture of such property.
SECTION 5.04 Financial Statements, Reports, etc. Furnish to the Administrative
Agent and each Lender:
(a) within 90 days after the end of each fiscal year, the balance sheet and
related statements of income, stockholders' equity and cash flows showing
the financial condition of the Borrowers on a combined basis as of the
close of such fiscal year and the results of its operations and the
operations of the Borrowers on a combined basis during such year, together
with comparative figures for the immediately preceding fiscal year, all
audited by an independent public accountant of recognized national standing
and accompanied by an opinion of such accountants (which shall not be
qualified in any material respect except for a going concern qualification
and as indicated below) to the effect that such financial statements fairly
present the financial condition and results of operations of the Borrowers
in accordance with GAAP (except for the exclusion of Scotia Pacific, Salmon
Creek and Scotia Inn except as losses in excess of investments in
subsidiaries as a component of stockholder's equity unless otherwise
indicated or the context indicates otherwise) consistently applied;
(b) within 45 days after the end of each of the first three fiscal quarters of
each fiscal year, the balance sheet and related statements of income,
stockholders' equity and cash flows showing the financial condition of the
Borrowers on a combined basis as of the close of such fiscal quarter and
the results of its operations and the operations of the Borrowers during
such fiscal quarter and the then elapsed portion of the fiscal year, and
commencing April, 2006, comparative figures for the same periods in the
immediately preceding fiscal year, all certified by one of PALCO's
Financial Officers as fairly presenting the financial condition and results
of operations of the Borrowers on a combined basis in accordance with GAAP
(except for the exclusion of Scotia Pacific, Salmon Creek and Scotia Inn
except as losses in excess of investments in subsidiaries as a component of
stockholder's equity and consolidating the financial statements thereof,
and inventory presented on a FIFO basis) consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) within 30 days after the end of each fiscal month of each fiscal quarter,
(i) the combined balance sheet and related statements of income and cash
flows showing the financial condition of the Borrowers during such fiscal
month and the then elapsed portion of the fiscal year, all certified by one
of its Financial Officers as fairly presenting the financial condition and
results of operations of the Borrowers in accordance with GAAP (except for
the exclusion of Scotia Pacific, Salmon Creek and Scotia Inn except as
losses in excess of investments in subsidiaries as a component of
stockholder's equity and consolidating the financial statements thereof,
and inventory presented on a FIFO basis) consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes and (ii) the
separate, internally prepared entity-only balance sheet and related
statements of income and cash flows showing the financial condition of each
Borrower, and the eliminations reflected in the corresponding financial
statements delivered pursuant to the preceding clause (i), for such month
and the then-elapsed portion of the fiscal year (and, commencing with such
financial statements for the month of April, 2006, for the corresponding
month and elapsed portion of the preceding fiscal year) all certified by
one of its Financial Officers as fairly presenting the financial condition
and results of operations of the Borrowers in accordance with GAAP (except
for the exclusion of PALCO's wholly owned subsidiaries Scotia Pacific,
Salmon Creek and Scotia Inn except as losses in excess of investments in
subsidiaries as a component of stockholder's equity and consolidating the
financial statements thereof, and inventory presented on a FIFO basis)
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(d) concurrently with any delivery of financial statements under paragraph (a)
or (b) above, (i) a certificate of the accounting firm (in the case of
paragraph (a)) or Financial Officer (in the case of paragraph (b)) opining
on or certifying such statements and certifying that no Event of Default or
Default has occurred or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto (which
certificate, when furnished by an accounting firm, may be limited to
providing negative assurances regarding financial covenants related to
accounting matters and disclaim responsibility for legal interpretations)
and (ii) a certificate executed by any officer of PALCO setting forth
computations in reasonable detail satisfactory to the Administrative Agent
demonstrating compliance with the covenants contained in Sections 6.10 and
6.11;
(e) at least 30 days prior to the end of each fiscal year of PALCO, a detailed
consolidated budget for the following fiscal year (including a projected
consolidated and consolidating balance sheet and related statements of
projected operations and cash flows as of the end of and for such following
fiscal year and setting forth the assumptions used for purposes of
preparing such budget) and, promptly when available, any significant
revisions of such budget;
(f) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by PALCO or
any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange;
(g) promptly after the receipt thereof by either PALCO or any of the
Subsidiaries, a copy of any final "management letter" received by any such
person from its certified public accountants and the management's response
thereto (it being understood that the term "management letter" does not
include communications from such public accountants to an audit committee
that by their terms expressly state that they may not be provided to third
parties);
(h) promptly, upon the Administrative Agent's request, and in any event no less
frequently than noon New York time on the fifteenth (15th) Business Day
after the end of each month (or, if the Borrowing Availability at any time
is less than $5,000,000, on the third (3rd) Business Day after the end of
each week until the Borrowing Availability is at least $5,000,000 at all
times during any calendar month), each of the following reports, each of
which shall be prepared by Borrowers as of the last day of the immediately
preceding month (or week, if applicable): (A) a Borrowing Base Certificate
with respect to each Borrower, accompanied by such supporting detail and
documentation as shall be requested by the Administrative Agent in its
reasonable discretion; (B) with respect to each Borrower, a summary of
Inventory by location and type with a supporting perpetual Inventory
report, in each case accompanied by such supporting detail and
documentation as shall be requested by the Administrative Agent in its
reasonable discretion; and (C) with respect to each Borrower, a monthly
trial balance showing Accounts outstanding aged from invoice date as
follows: 1 to 30 days, 31 to 60 days, 61 to 90 days, 91 days to 120 days
and 120 days or more, accompanied by such supporting detail and
documentation as shall be requested by the Administrative Agent in its
reasonable discretion;
(i) on a weekly basis or at such more frequent intervals as the Administrative
Agent may request from time to time (together with a copy of all or any
part of such delivery requested by any Lender in writing after the Closing
Date), collateral reports with respect to each Borrower, including all
additions and reductions (cash and non-cash) with respect to Accounts of
each Borrower, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion
each of which shall be prepared by the applicable Borrower as of the last
day of the immediately preceding week or the date 2 days prior to the date
of any request;
(j) at the time of delivery of each of the monthly financial statements
delivered pursuant to Section 5.04(c): (A) a reconciliation of the most
recent monthly Borrowing Base, general ledger and month-end Inventory
reports of each Borrower to each Borrower's general ledger and monthly
financial statements delivered pursuant to Section 5.04(c), in each case
accompanied by such supporting detail and documentation as shall be
requested by the Administrative Agent in its reasonable discretion; (B) a
reconciliation of the perpetual inventory by location to each Borrower's
most recent monthly Borrowing Base Certificate, general ledger and monthly
financial statements delivered pursuant to Section 5.04(c), in each case
accompanied by such supporting detail and documentation as shall be
requested by the Administrative Agent in its reasonable discretion; (C) an
aging of accounts payable and a reconciliation of that accounts payable
aging to each Borrower's general ledger and monthly financial statements
delivered pursuant to Section 5.04(c), in each case accompanied by such
supporting detail and documentation as shall be requested by the
Administrative Agent in its reasonable discretion; and (D) a reconciliation
of the outstanding Loans to each Borrower's general ledger and monthly
financial statements delivered pursuant to Section 5.04(c), in each case
accompanied by such supporting detail and documentation as shall be
requested by the Administrative Agent in its reasonable discretion;
(k) from time to time, if the Administrative Agent or any Lender determines
that obtaining appraisals is necessary in order for the Administrative
Agent or such Lender to comply with applicable laws or regulations, the
Administrative Agent will, at Borrowers' expense, obtain appraisal reports
in form and substance and from appraisers satisfactory to the
Administrative Agent stating the then current fair market values of all or
any portion of the Real Property owned by Loan Parties. In addition to the
foregoing, at Borrowers' expense, at any time while and so long as an Event
of Default shall have occurred and be continuing, and in the absence of a
Default or Event of Default not more than twice during each calendar year,
the Administrative Agent may obtain appraisal reports in form and substance
and from appraisers satisfactory to the Administrative Agent stating the
then current market values of all or any portion of the Real Property and
personal property owned by any of the Loan Parties;
(l) Borrowers, at their own expense, shall deliver to the Administrative Agent
the results of each physical verification, if any, that any Loan Party may
in their discretion have made, or caused any other person to have made on
their behalf, of all or any portion of their Inventory (and, if a Default
or an Event of Default has occurred and is continuing, Borrowers shall,
upon the request of the Administrative Agent, conduct, and deliver the
results of, such physical verifications as the Administrative Agent may
require); and
(m) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of any Loan Party or
Scotia Pacific, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.05 Litigation and Other Notices. Furnish to the Administrative Agent
and each Lender prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and extent thereof
and the corrective action (if any) taken or proposed to be taken with
respect thereto;
(b) the filing or commencement of, or any threat or notice of intention of any
person to file or commence, any action, suit or proceeding, whether at law
or in equity or by or before any arbitrator or Governmental Authority,
against any Loan Party or Scotia Pacific that would reasonably be expected
to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event described in clause (b) of the definition
thereof or any other ERISA Event that, alone or together with any other
ERISA Events that have occurred, would reasonably be expected to result in
liability of any Loan Party or Scotia Pacific in an aggregate amount
exceeding $1,000,000; and
(d) any development that has resulted in, or would reasonably be expected to
result in, a Material Adverse Effect.
SECTION 5.06 Information Regarding Collateral. (a) Furnish to the Administrative
Agent prompt written notice of any change (i) in any Loan Party's corporate name
or in any trade name used to identify it in the conduct of its business or in
the ownership of its properties, (ii) in the location of any Loan Party's chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral owned by it or any office or
facility at which Collateral owned by it is located (including the establishment
of any such new office or facility), (iii) in any Loan Party's identity or
corporate structure or (iv) in any Loan Party's Federal Taxpayer Identification
Number. Each of the Borrowers agrees not to effect or permit any change of its
corporate or identity or state of organization unless all filings have been made
under the UCC or otherwise and all other actions have been taken that are
required in order for the Administrative Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral. The Administrative Borrower also agrees promptly to notify
the Administrative Agent if any material portion of the Collateral is damaged or
destroyed.
(b) Deliver to the Administrative Agent, each year, at the time of delivery of
the annual financial statements with respect to the preceding fiscal year
pursuant to Section 5.04(a), a certificate of a Financial Officer setting forth
the information required pursuant to Section I of the Perfection Certificate or
confirming that there has been no change in such information since the date of
the Perfection Certificate delivered on the Closing Date or the date of the most
recent certificate delivered pursuant to this Section.
SECTION 5.07 Maintaining Records; Access to Properties and Inspections;
Environmental Assessments. (a) Keep proper books of record and account in which
full, true and correct entries in conformity with GAAP and all requirements of
law are made of all dealings and transactions in relation to its business and
activities. Each of the Borrowers will, and will cause each of the Subsidiaries
to, permit any representatives designated by the Administrative Agent or any
Lender to visit and inspect the financial records and the properties of the Loan
Party at reasonable times and as often as reasonably requested and to make
extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of the Loan Parties with the officers
thereof and independent accountants therefor.
(b) In the event that the Administrative Agent or any Lender shall have reason
to believe that Hazardous Materials have been Released or are threatened to be
Released on or from any Mortgaged Property or other facility of any Loan Party
or that any such property or facility is not being operated in compliance with
applicable Environmental Law, the Administrative Agent may, at its election and
after reasonable notice to the Administrative Borrower, retain an independent
engineer or other qualified environmental consultant to evaluate whether
Hazardous Materials are present in the soil, groundwater, or surface water at
such Mortgaged Property or facility or whether the facilities or properties are
being operated and maintained in compliance with applicable Environmental Laws.
Such environmental assessments may include detailed visual inspections of the
Mortgaged Property or facility, including any and all storage areas, storage
tanks, drains, dry βββββ� and leaching areas, and the taking of soil samples,
surface water samples and groundwater samples as well as such other reasonable
investigations or analyses as are necessary. The scope of any such environmental
assessments under this paragraph shall be determined in the sole discretion of
the Administrative Agent. Each of the Borrowers shall, and shall cause each of
the Subsidiaries to, cooperate in the performance of any such environmental
assessment and permit any such engineer or consultant designated by the
Administrative Agent to have full access to each property or facility at
reasonable times and after reasonable notice to the Administrative Borrower of
the plans to conduct such an environmental assessment. All environmental
assessments conducted pursuant to this paragraph shall be at the Borrowers' sole
cost and expense.
SECTION 5.08 Use of Proceeds. Use the proceeds of the Loans and request the
issuance of Letters of Credit only for the purposes set forth in Section 3.13.
SECTION 5.09 Additional Collateral, etc. (a) With respect to any Collateral
acquired after the Closing Date (other than the Settlement Property) or, in the
case of inventory or equipment, any material Collateral moved after the Closing
Date by any other Loan Party (other than any Collateral described in paragraphs
(b) or (c) of this Section 5.09) as to which the Administrative Agent, for the
benefit of the Secured Parties, does not have a perfected security interest,
promptly (and, in any event, within 10 days following the date of such
acquisition) (i) execute and deliver to the Administrative Agent such amendments
to the Guarantee and Collateral Agreement or such other Security Documents as
the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Secured Parties, a security
interest in such Collateral and (ii) take all actions necessary or advisable to
grant to, or continue on behalf of, the Administrative Agent, for the benefit of
the Secured Parties, a perfected security interest in such Collateral, including
the filing of UCC financing statements in such jurisdictions as may be required
by the Guarantee and Collateral Agreement or by law or as may be requested by
the Administrative Agent.
(b) With respect to any fee interest in any Collateral consisting of Real
Property (other than the Settlement Property) or any material lease of
Collateral consisting of Real Property acquired or leased after the Closing Date
by the Borrowers or any other Loan Party, promptly (and, in any event, within 10
days following the date of such acquisition) (i) execute and deliver a first
priority Mortgage in favor of the Administrative Agent (subject only to Liens
permitted by Section 6.02), for the benefit of the Secured Parties, covering
such real property and complying with the provisions herein and in the Security
Documents, (ii) provide the Secured Parties with title and extended coverage
insurance in an amount at least equal to the purchase price of such Real
Property (or such other amount as the Administrative Agent shall reasonably
specify), Surveys, and if applicable, flood insurance, lease estoppel
certificates, memoranda or amendments, all in accordance with the standards for
deliveries contemplated on the Closing Date, (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative Agent
and (iv) deliver to the Administrative Agent a notice identifying, and upon the
Administrative Agent's request, provide a copy of, the consultant's reports,
environmental site assessments or other documents relied upon by any Loan Party
to determine that any such real property included in such Collateral does not
contain Hazardous Materials of a form or type or in a quantity or location that
could reasonably be expected to result in a material Environmental Liability.
(c) With respect to any Subsidiary created or acquired after the Closing Date by
any Loan Party, promptly (and, in any event, within 10 days following such
creation or the date of such acquisition) (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Secured Parties, a valid, perfected
first priority security interest in the Equity Interests in such new Subsidiary
that are owned by any Loan Party (subject only to Liens permitted by Section
6.02), (ii) deliver to the Administrative Agent the certificates, if any,
representing such Equity Interests, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of the Borrowers or
such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to
become a party to the Guarantee and Collateral Agreement (and provide Guarantees
of the Obligations) and the Intellectual Property Security Agreements and (B) to
take such actions necessary or advisable to grant to the Administrative Agent,
for the benefit of the Secured Parties, a perfected first priority security
interest in the Collateral described in the Guarantee and Collateral Agreement
and the Intellectual Property Security Agreement with respect to such new
Subsidiary, including the recording of instruments in the United States Patent
and Trademark Office and the United States Copyright Office and the filing of
UCC financing statements in such jurisdictions as may be required by the
Guarantee and Collateral Agreement, the Intellectual Property Security Agreement
or by law or as may be requested by the Administrative Agent and (iv) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
SECTION 5.10 Further Assurances. From time to time duly authorize, execute and
deliver, or cause to be duly authorized, executed and delivered, such additional
instruments, certificates, financing statements, agreements or documents, and
take all such actions (including filing UCC and other financing statements), as
the Administrative Agent may reasonably request, for the purposes of
implementing or effectuating the provisions of this Agreement and the other Loan
Documents, or of more fully perfecting or renewing the rights of the
Administrative Agent and the Secured Parties with respect to the Collateral (or
with respect to any additions thereto or replacements or proceeds or products
thereof or with respect to any other property or assets hereafter acquired by or
any of the Loan Parties which may be deemed to be part of the Collateral)
pursuant hereto or thereto. Upon the exercise by the Administrative Agent or any
Lender of any power, right, privilege or remedy pursuant to this Agreement or
the other Loan Documents which requires any consent, approval, recording,
qualification or authorization of any Governmental Authority, each of the
Borrowers will execute and deliver, or will cause the execution and delivery of,
all applications, certifications, instruments and other documents and papers
that the Administrative Agent or such Lender may be required to obtain from any
Loan Party for such governmental consent, approval, recording, qualification or
authorization.
SECTION 5.11 [Intentionally Omitted].
SECTION 5.12 Cash Management Systems; Bank Accounts. Borrowers shall, and shall
cause each other Loan Party to, enter into Control Agreements with respect to
each deposit account maintained by any Loan Party (other than any payroll
account so long as such payroll account is a zero balance account) as of or
after the Closing Date. Each such deposit account control agreement shall be in
form and substance satisfactory to the Administrative Agent. Borrowers shall,
and shall cause any Subsidiary to, provide prior written notice to the
Administrative Agent before directly or indirectly establishing any new bank
account and prior to the establishment thereof, the Administrative Agent,
Borrowers or such Subsidiary and the bank at which the account is to be opened
shall enter into a Control Agreement regarding such bank account pursuant to
which such bank (i) acknowledges the security interest of the Administrative
Agent in such bank account, (ii) agrees to comply with instructions originated
by the Administrative Agent directing disposition of the funds in the bank
account without further consent from Borrowers, and (iii) agrees to subordinate
and limit any security interest the bank may have in the bank account on terms
satisfactory to the Administrative Agent.
SECTION 5.13 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. Upon the request of the Administrative Agent, each Loan
Party shall use reasonable efforts to obtain a landlord's agreement, mortgagee
agreement or bailee letter, as applicable, from the lessor of each leased
property (other than the lessor of the leased property which the mill owned by
βββββ� on the Closing Date is on), mortgagee of owned property or bailee with
respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be reasonably satisfactory in form and substance to the Administrative Agent.
With respect to such locations or warehouse space leased, owned or where
Collateral is stored or located as of the Closing Date and thereafter, if the
Administrative Agent has not received a landlord or mortgagee agreement or
bailee letter as of the Closing Date (or, if later, as of the date such location
is acquired, leased or Collateral stored or located), the Eligible Inventory at
that location shall, in the Administrative Agent's discretion, be subject to
such Reserves as may be established by the Administrative Agent in its
reasonable credit judgment. After the Closing Date, no real property or
warehouse space shall be leased by any Loan Party and no Inventory shall be
shipped to a processor or converter under arrangements established after the
Closing Date (excluding renewals of existing leases and arrangements) without
the prior written consent of the Administrative Agent (which consent, in the
Administrative Agent's discretion, may be conditioned upon the establishment of
Reserves acceptable to the Administrative Agent) or, unless and until a
satisfactory landlord agreement or bailee letter, as appropriate, shall first
have been obtained with respect to such location. Each Loan Party shall and
shall cause its Subsidiaries to timely and fully pay and perform their
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located (other
than Collateral in an aggregate amount for all such locations not to exceed
$100,000 in the aggregate).
ARTICLE VI.
NEGATIVE COVENANTS
Each of the Borrowers covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in full
and all Letters of Credit have been cancelled or have expired and all amounts
drawn thereunder have been reimbursed in full, neither the Borrowers will, nor
will they cause or permit Loan Party to:
SECTION 6.01 Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness existing on the date hereof and set forth in Schedule 6.01 and
any Permitted Refinancing Indebtedness in respect of any such Indebtedness;
(b) Indebtedness created hereunder and under the other Loan Documents;
(c) unsecured intercompany Indebtedness of the Borrowers to the extent
permitted by Section 6.04(f) so long as such Indebtedness is evidenced by a
subordinated note in form and substance satisfactory to the Administrative
Agent;
(d) Indebtedness of any Loan Party incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, and any
Permitted Refinancing Indebtedness in respect of any such Indebtedness;
provided that (i) such original Indebtedness is incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement and (ii) the aggregate principal amount of Indebtedness
permitted by this Section 6.01(d), when combined with the aggregate
principal amount of all Capital Lease Obligations incurred pursuant to
Section 6.01(e), shall not exceed $2,500,000 at any time outstanding;
(e) Capital Lease Obligations in an aggregate principal amount, when combined
with the aggregate principal amount of all Indebtedness incurred pursuant
to Section 6.01(d), not exceeding $2,500,000 at any time outstanding;
(f) Indebtedness of the Borrowers under the Term Loan Agreement in an aggregate
principal amount not to exceed $40,000,000 and Indebtedness of the
Guarantors under any Guarantees in respect thereof and any Permitted
Refinancing Indebtedness in respect of any such Indebtedness;
(g) Indebtedness under performance bonds or with respect to workers'
compensation claims, in each case incurred in the ordinary course of
business;
(h) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn
against insufficient funds in the ordinary course of business; provided
that such Indebtedness is promptly covered by a Loan Party; and
(i) other unsecured Indebtedness of the Borrowers or the Subsidiaries in an
aggregate principal amount not exceeding $500,000 at any time outstanding.
SECTION 6.02 Liens. Create, incur, assume or permit to exist any Lien on any
property or assets (including Equity Interests or other securities of any
person, including any Subsidiary) now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrowers and the Subsidiaries existing
on the date hereof and set forth in Schedule 6.02; provided that such Liens
shall secure only those obligations which they secure on the date hereof
and refinancings, extensions, renewals and replacements thereof permitted
hereunder;
(b) any Lien created under the Loan Documents;
(c) Liens for Taxes not yet due or which are being contested in compliance with
Section 5.03;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
lumberman's or other like Liens arising in the ordinary course of business
and securing obligations that are not due and payable or which are being
contested in compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of business in compliance
with workmen's compensation, unemployment insurance and other social
security laws or regulations;
(f) deposits in an amount not to exceed $500,000 in aggregate to secure the
performance of bids, trade contracts (other than for Indebtedness), leases
(other than Capital Lease Obligations), statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on use of real
property and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of any Loan Party or
the ability of any Loan Party to utilize such property for its intended
purpose;
(h) purchase money security interests in real property, improvements thereto or
other fixed or capital assets hereafter acquired (or, in the case of
improvements, constructed) by the Borrowers or any Subsidiary; provided
that (i) such security interests secure Indebtedness permitted by Section
6.01, (ii) such security interests are incurred, and the Indebtedness
secured thereby is created, within 90 days after such acquisition (or
construction) and (iii) such security interests do not apply to any other
property or assets of any Loan Party;
(i) judgment Liens securing judgments not constituting an Event of Default
under Article VII;
(j) any interest or title of a lessor or sublessor under any lease entered into
by a Loan Party in the ordinary course of business and covering only the
assets so leased;
(k) Liens securing the Indebtedness of the Borrowers under the Term Loan
Agreement and Indebtedness of the Subsidiary Guarantors under any
Guarantees in respect of the Term Loan Agreement as long as such
Indebtedness are permitted under Section 6.01(f);
(l) Liens on cash deposits and other funds maintained with a depositary
institution, in each case arising in the ordinary course of business by
virtue of any statutory or common law provision relating to banker's liens;
provided that (i) the applicable deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by any
Loan Party in excess of those set forth in regulations promulgated by the
Board and (ii) the applicable deposit account is not intended by any Loan
Party to provide collateral or security to the applicable depositary
institution or any other person;
(m) Liens on cash or deposit accounts to secure letters of credit incurred in
connection with the Existing Credit Facility; and
(n) Liens reflected on any mortgagee policy of title insurance issued on or
prior to the Closing Date in favor of Administrative Agent or the Lenders
in connection with the Mortgages.
SECTION 6.03 Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal or mixed, used or useful in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or other
property which it intends to use for substantially the same purpose or purposes
as the property being sold or transferred unless (a) the sale of such property
is permitted by Section 6.05 and (b) any Capital Lease Obligations or Liens
arising in connection therewith are permitted by Sections 6.01 and 6.02,
respectively.
SECTION 6.04 Investments, Loans and Advances. Purchase, hold or acquire any
Equity Interests, evidences of indebtedness or other securities of, make or
permit to exist any loans or advances or capital contributions to, or make or
permit to exist any investment or any other interest in, any other person (all
of the foregoing, "Investments"), except:
(a) Permitted Investments;
(b) Investments received in connection with the bankruptcy or reorganization
of, or settlement of delinquent accounts and disputes with, customers and
suppliers, in each case in the ordinary course of business;
(c) the Loan Parties may make loans and advances in the ordinary course of
business to their respective employees so long as the aggregate principal
amount thereof at any time outstanding (determined without regard to any
write-downs or write-offs of such loans and advances) shall not exceed
$200,000;
(d) Investments existing on the date hereof and set forth on Schedule 6.04;
(e) extensions of trade credit in the ordinary course of business;
(f) Investments by a Borrower in another Borrower pursuant to cash management
procedures consistent with those in existence on the Closing Date;
(g) Investments after the Closing Date in Scotia Pacific in an aggregate amount
not to exceed $5,000,000; and
(h) in addition to Investments permitted by paragraphs (a) through (g) above,
additional Investments by the Loan Parties so long as the aggregate amount
invested, loaned or advanced pursuant to this paragraph (f) (determined
without regard to any write-downs or write-offs of such investments, loans
and advances) does not exceed $500,000 in the aggregate.
SECTION 6.05 Mergers, Consolidations, Sales of Assets and Acquisitions. (a)
Merge into or consolidate with any other person, or permit any other person to
merge into or consolidate with it, or liquidate or dissolve, or sell, transfer,
lease, issue or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all the assets (whether now owned or
hereafter acquired) of any Loan Party or any of the Equity Interests of any
Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a
series of transactions) all or any substantial part of the assets of any other
person, except for (i) the purchase and sale by the Borrowers or any Subsidiary
of inventory in the ordinary course of business, (ii) the sale or discount by
the Borrowers or any Subsidiary in each case without recourse and in the
ordinary course of business of overdue accounts receivable arising in the
ordinary course of business, but only in connection with the compromise or
collection thereof consistent with customary industry practice (and not as part
of any bulk sale or financing transaction), and (iii) if at the time thereof and
immediately after giving effect thereto no Event of Default or Default shall
have occurred and be continuing, (x) the merger or consolidation of any wholly
owned Subsidiary into or with a Borrower in a transaction in which a Borrower is
the surviving corporation, (y) the merger or consolidation of any wholly owned
Subsidiary into or with any other wholly owned Subsidiary in a transaction in
which the surviving entity is a wholly owned Subsidiary and no person other than
a Borrower or a wholly owned Subsidiary receives any consideration.
(b) Engage in any Asset Sale (other than the transaction described in that
certain Letter of Intent, dated November 24, 2004, between K.D. Investments LLC
and PALCO) unless (i) such Asset Sale is for cash consideration, (ii) such
consideration is at least equal to the fair market value of the assets being
sold, transferred, leased or disposed of and (iii) no Event of Default shall
exist at such time.
SECTION 6.06 Restricted Payments; Restrictive Agreements. (a) Declare or make,
or agree to declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so; provided, however, that
(i) any Subsidiary may declare and pay dividends or make other distributions
ratably to its equity holders, (ii) so long as no Event of Default or Default
shall have occurred and be continuing or would result therefrom, PALCO may, or
may make distributions to Holdings so that Holdings may, repurchase its Equity
Interests owned by employees of Holdings, PALCO or the Subsidiaries or make
payments to employees of Holdings, PALCO or the Subsidiaries upon termination of
employment in connection with the exercise of stock options, stock appreciation
rights or similar equity incentives or equity based incentives pursuant to
management incentive plans or in connection with the death or disability of such
employees in an aggregate amount not to exceed for all of this clause (ii)
$250,000 in any fiscal year, (iii) the Borrowers may make Restricted Payments to
Holdings (x) in amount not to exceed $25,000 in any fiscal year to the extent
necessary to pay general corporate and overhead expenses incurred by Holdings in
the ordinary course of business and (y) in an amount necessary to pay the Tax
liabilities of Holdings directly attributable to (or arising as a result of) the
operations of the Borrowers and the Subsidiaries; provided that (A) the amount
of such dividends pursuant to clause (iii)(y) shall not exceed the amount that
the Borrowers and the Subsidiaries would be required to pay in respect of
Federal, State and local Taxes were the Borrowers and the Subsidiaries to pay
such Taxes as stand-alone taxpayers and (B) all Restricted Payments made to
Holdings pursuant to clause (iii) shall be used by Holdings for the purpose
specified herein within 20 days of the receipt thereof and (iv) consummate
transactions pursuant to the agreements listed on Schedule 6.07 (other than the
declaration of payment of a dividend or similar payment) consistent with past
practices.
(b) Enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (i) the ability of Holdings
or any Loan Party to create, incur or permit to exist any Lien upon any of its
property or assets intended to serve as Collateral, or (ii) the ability of any
Subsidiary to pay dividends or other distributions with respect to any of its
Equity Interests or to make or repay loans or advances to any Loan Party or to
Guarantee Indebtedness of any Loan Party; provided that (A) the foregoing shall
not apply to restrictions and conditions imposed by law or by any Loan Document,
(B) the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale,
provided such restrictions and conditions apply only to the Subsidiary that is
to be sold and such sale is permitted hereunder, (C) the foregoing shall not
apply to restrictions and conditions imposed on any Subsidiary that is not a
Loan Party (D) clause (i) of the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness, (E) clause (i) of the foregoing shall not
apply to restrictions or conditions imposed by the Term Loan Agreement and (F)
clause (i) of the foregoing shall not apply to customary provisions in leases
and other contracts restricting the assignment thereof.
SECTION 6.07 Transactions with Affiliates. Sell or transfer any property or
assets to, or purchase or acquire any property or assets from, or otherwise
engage in any other transactions with, any of its Affiliates, except that (a)
any Loan Party may engage in any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to
the any Loan Party than could be obtained on an arm's-length basis from
unrelated third parties, (b) Restricted Payments may be made to the extent
provided in Section 6.06 and (c) the transactions pursuant to the agreements
described on Schedule 6.07 may be consummated consistent with past practices.
SECTION 6.08 Business of the Borrowers and Subsidiaries; Limitation on Hedging
Agreements. (a) With respect to the Loan Parties, engage at any time in any
business or business activity other than the business conducted by it as of the
date hereof and business activities reasonably incidental thereto.
(b) Enter into any Hedging Agreement other than (a) any such agreement or
arrangement entered into in the ordinary course of business and consistent with
prudent business practice to hedge or mitigate risks to which the Borrowers or
any Subsidiary is exposed in the conduct of its business or the management of
its liabilities or (b) any such agreement entered into to hedge against
fluctuations in interest rates or currency incurred in the ordinary course of
business and consistent with prudent business practice; provided that in each
case such agreements or arrangements shall not have been entered into for
speculation purposes.
SECTION 6.09 Other Indebtedness and Agreements. (a) Permit any waiver,
supplement, modification or amendment, termination or release of any indenture,
instrument or agreement pursuant to which any Material Indebtedness of any Loan
Party (other than Material Indebtedness pursuant to the Term Loan Agreement) is
outstanding if the effect of such waiver, supplement, modification or amendment,
termination or release would materially increase the obligations of the obligor
or confer additional material rights on the holder of such Indebtedness in a
manner adverse to such Loan Party or the Lenders.
(b) (i) Make any distribution, whether in cash, property, securities or a
combination thereof, other than regular scheduled payments of principal and
interest as and when due (to the extent not prohibited by applicable
subordination provisions), in respect of, or pay, or offer or commit to pay, or
directly or indirectly redeem, repurchase, retire or otherwise acquire for
consideration, or set apart any sum for the aforesaid purposes, any
Indebtedness, except (A) the payment of the Indebtedness created hereunder or
under the Term Loan Agreement, (B) refinancings of Indebtedness permitted by
Section 6.01, (C) the payment of secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing such
Indebtedness and (D) payments after the Closing Date in an aggregate amount not
to exceed $300,000, or (ii) pay in cash any amount in respect of any
Indebtedness or preferred Equity Interests that may at the obligor's option be
paid in kind or in other securities.
SECTION 6.10 Capital Expenditures. Permit the aggregate amount of Capital
Expenditures made by the Borrowers and the Subsidiaries in any period set forth
below to exceed the amount set forth below for such period:
Period Amount
------ ------
Fiscal Year 2005 $8,000,000
Fiscal Year 2006 $4,000,000
Fiscal Year 2007 $4,000,000
Fiscal Year 2008 $4,000,000
Fiscal Year 2009 $4,000,000
Fiscal Year 2010 $4,000,000
SECTION 6.11 Minimum Combined EBITDA. If Borrowing Availability is less than
$7,500,000 at any time during any fiscal month of the Borrower set forth below,
permit the Combined EBITDA for the 12-month period (unless otherwise indicated
below) then ended at the end of any such fiscal month (or at the end of the then
preceding fiscal month) set forth below to be less than the amount set forth
opposite such fiscal month set forth below:
Fiscal Month Ending Amount
------------------- ------
Four month period ending ($15,623,000)
April 30, 2005
Five month period ending ($19,557,000)
May 31, 2005
Six month period ending ($22,651,000)
June 30, 2005
Seven month period ending ($22,832,000)
July 31, 2005
Eighth month period ending August 31, 2005 ($23,735,000)
Nine month period ending September 30, 2005 ($24,250,000)
Ten month period ending October 31, 2005 ($25,346,000)
Eleven month period ending November 30, 2005 ($23,863,000)
December 31, 2005 ($21,550,000)
January 30, 2006 ($16,129,000)
February 28, 2006 ($12,059,000)
March 31, 2006 ($12,809,000)
April 30, 2006 ($9,450,000)
May 31, 2006 ($6,754,000)
June 30, 2006 ($4,417,000)
July 30, 2006 ($4,333,000)
August 31, 2006 ($3,711,000)
September 30, 2006 ($2,276,000)
October 31, 2006 ($1,292,000)
November 30, 2006 ($1,510,000)
December 31, 2006 ($1,896,000)
December 31, 2007 $9,700,000
December 31, 2008 $15,200,000
December 31, 2009 $16,000,000
December 31, 2010 $16,000,000
The parties agree that the minimum Combined EBITDA covenant set forth in
this Section 6.11 for the 12-month period ended at the end of each of the first
eleven fiscal months for each of fiscal years 2007, 2008, 2009 and 2010 shall be
as set forth in a written notice from the Administrative Agent to the
Administrative Borrower following consultation with the Borrowers with respect
thereto within 60 days of the Closing Date; provided, however, that failure to
give such written notice shall not otherwise change the covenant levels set
forth in this Section 6.11.
SECTION 6.12 Fiscal Year. With respect to any Loan Party, change its fiscal
year-end to a date other than December 31.
ARTICLE VII.
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of Default"):
(a) any representation or warranty made or deemed made in or in connection with
any Loan Document or the Borrowings or issuances of Letters of Credit hereunder,
or any representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished in
connection with or pursuant to any Loan Document, shall prove to have been false
or misleading in any material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan or the
reimbursement with respect to any L/C Disbursement when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof in accordance with the Loan
Documents;
(c) default shall be made in the payment of any interest on any Loan or L/C
Disbursement or any Fee or any other amount (other than an amount referred to in
(b) above) due under any Loan Document, when and as the same shall become due
and payable, and such default shall continue unremedied for a period of three
Business Days;
(d) default shall be made in the due observance or performance by any Loan Party
of any covenant, condition or agreement contained in Section 5.01(a), 5.02
(other than a default which arises as a result of the downgrade in the rating of
an insurance carrier), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by any Loan Party
of any covenant, condition or agreement contained in Section 5.04(c), 5.04(h),
5.04(i) or 5.04(j) and such default shall continue unremedied for a period of 5
days;
(f) default shall be made in the due observance or performance by any Loan Party
or Holdings of any covenant, condition or agreement contained in any Loan
Document (other than those specified in clauses (b), (c) or (d) above) and such
default shall continue unremedied for a period of 30 days;
(g) any Loan Party shall (i) fail to pay any principal or interest, regardless
of amount, due in respect of any Material Indebtedness, when and as the same
shall become due and payable, or (ii) any other event or condition occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material Indebtedness to
become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (ii) shall
not apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of any Loan Party (other than Salmon Creek), or of a substantial part of
the property or assets of any Loan Party (other than Salmon Creek), under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party (other than Salmon Creek)or
for a substantial part of the property or assets of any Loan Party (other than
Salmon Creek)or (iii) the winding-up or liquidation of any Loan Party (other
than Salmon Creek); and such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the foregoing
shall be entered;
(i) any Loan Party (other than Salmon Creek)shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Loan Party (other than
Salmon Creek)or for a substantial part of the property or assets of any Loan
Party (other than Salmon Creek), (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due;
(j) one or more judgments for the payment of money in an aggregate amount in
excess of $5,000,000 or other judgments that, individually or in the aggregate,
would reasonably be expected to result in a Material Adverse Effect shall be
rendered against any Loan Party or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of any Loan Party to enforce
any such judgment;
(k) an ERISA Event described in clause (b) of the definition thereof shall have
occurred or any other ERISA Event shall have occurred that, when taken together
with all other such ERISA Events, would reasonably be expected to result in
liability of any Loan Party and their ERISA Affiliates in an aggregate amount
exceeding $5,000,000;
(l) any Guarantee under the Guarantee and Collateral Agreement for any reason
shall cease to be in full force and effect (other than in accordance with its
terms), or any Guarantor shall deny that it has any further liability under its
Guarantee (other than as a result of the discharge of such Guarantor in
accordance with the terms of the Loan Documents);
(m) any Lien purported to be created under any Security Document shall cease to
be, or shall be asserted by any Loan Party or Holdings not to be, a valid,
perfected and, with respect to the Secured Parties, first priority (except as
otherwise expressly provided in this Agreement or such Security Document) Lien
on any material Collateral covered thereby, except to the extent that any such
loss of perfection or priority results from the failure of the Administrative
Agent to maintain possession of certificates representing Equity Interests
pledged under the Guarantee and Collateral Agreement; or
(n) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to any Loan
Party described in paragraph (h) or (i) above), and at any time thereafter
during the continuance of such event either or both of the following actions may
be taken: (i) the Administrative Agent may, and at the request of the Required
Lenders with respect to the Facility shall, by notice to the Administrative
Borrower, terminate forthwith the Revolving Credit Commitments and the Swingline
Commitment and (ii) the Administrative Agent may, and at the request of the
Required Lenders shall, by notice to the Administrative Borrower, declare the
Loans then outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrowers accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrowers, anything contained herein or in any other Loan Document
to the contrary notwithstanding, and the Administrative Agent shall have the
right to take all or any actions and exercise any remedies available to a
secured party under the Security Documents or applicable law or in equity; and
in any event with respect to any Loan Party described in paragraph (h) or (i)
above, the Revolving Credit Commitments and the Swingline Commitment shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrowers accrued hereunder and under any other Loan
Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrowers, anything contained herein or in any other
Loan Document to the contrary notwithstanding, and the Administrative Agent
shall have the right to take all or any actions and exercise any remedies
available to a secured party under the Security Documents or applicable law or
in equity.
ARTICLE VIII.
THE ADMINISTRATIVE AGENT AND THE ARRANGER
Each of the Lenders hereby irrevocably appoints the Administrative Agent its
agent and authorizes the Administrative Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Administrative Agent by the
terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto. Without limiting the generality of the foregoing,
the Administrative Agent is hereby expressly authorized by the Lenders to
execute any and all documents (including releases and the Security Documents)
with respect to the Collateral and the rights of the Secured Parties with
respect thereto, as contemplated by and in accordance with the provisions of
this Agreement and the Security Documents.
The Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
Holdings, the Borrowers or any Subsidiary or any of their respective Affiliates
as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.08), and (c) except as expressly set
forth in the Loan Documents, the Administrative Agent shall not have any duty to
disclose, nor shall it be liable for the failure to disclose, any information
relating to Holdings, the Borrowers or any of the Subsidiaries that is
communicated to or obtained by the bank serving as the Administrative Agent or
any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.08) or in the absence of its own gross negligence or willful misconduct. The
Administrative Agent shall not be deemed to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by
Holdings, the Borrowers or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document, (ii)
the contents of any certificate, report or other document delivered thereunder
or in connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper person. The Administrative Agent
may also rely upon any statement made to it orally or by telephone and believed
by it to have been made by the proper person, and shall not incur any liability
for relying thereon. The Administrative Agent may consult with legal counsel
(who may be counsel for Holdings or the Borrowers), independent accountants and
other experts selected by it, and shall not be liable for any action taken or
not taken by it in accordance with the advice of any such counsel, accountants
or experts.
The Administrative Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by it. The
Administrative Agent and any such sub-agent may perform any and all its duties
and exercise its rights and powers by or through their respective Related
Parties. The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as the Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent as
provided below, the Administrative Agent may resign at any time by notifying the
Lenders and the Borrowers. Upon any such resignation of the Administrative
Agent, the Required Lenders shall have the right, in consultation with the
Borrowers, to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New York,
New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrowers to a successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the
Borrowers and such successor. After an Administrative Agent's resignation
hereunder, the provisions of this Article and Section 9.05 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while acting as the Administrative Agent.
The Arranger, in its capacity as such, shall have no duties or responsibilities,
and shall incur no liability, under this Agreement or any other Loan Document.
Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent, the Arranger, or any Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, the Arranger, or any Lender and based on such documents
and information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement or any other Loan Document, any related agreement or any document
furnished hereunder or thereunder.
To the extent required by any applicable law, the Administrative Agent may
withhold from any interest payment to any Lender an amount equivalent to any
applicable withholding tax. If the Internal Revenue Service or any other
Governmental Authority asserts a claim that the 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 or was not properly executed or
because such Lender failed to notify the Administrative Agent of a change in
circumstance which rendered the exemption from, or reduction of, withholding tax
ineffective or for any other reason, such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including any penalties or interest
and together with all expenses (including legal expenses, allocated internal
costs and out-of-pocket expenses) incurred.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 Notices. Notices and other communications provided for herein shall
be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by fax, as follows:
(a) if to the Administrative Borrower, to
The Pacific Lumber Company
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(b) if to the Administrative Agent, to
The CIT Group/Business Credit, Inc.
1211 Avenue of the Americas
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Attention: The Pacific Lumber Client Credit Manager
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(c) if to a Lender, to it at its address (or fax number) set forth in the
Lender Addendum or the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by fax
or on the date five Business Days after dispatch by certified or registered mail
if mailed, in each case delivered, sent or mailed (properly addressed) to such
party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.
SECTION 9.02 Survival of Agreement. All covenants, agreements, representations
and warranties made herein and in the certificates or other instruments prepared
or delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans and the issuance of Letters of
Credit by the Issuing Bank, regardless of any investigation made by the Lenders
or on their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement or any other Loan Document is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05
shall remain operative and in full force and effect regardless of the expiration
of the term of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Loans, the expiration of the Commitments,
the expiration of any Letter of Credit, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document or any
investigation made by or on behalf of the Administrative Agent, the Arranger,
any Lender or the Issuing Bank.
SECTION 9.03 Binding Effect. This Agreement shall become effective when it shall
have been executed by each of the parties hereto and when the Administrative
Agent shall have received counterparts hereof which, when taken together, bear
the signatures of each of the other parties hereto.
SECTION 9.04 Successors and Assigns. (a) Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the Borrowers, the Administrative Agent or the
Lenders that are contained in this Agreement shall bind and inure to the benefit
of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) the Administrative Agent must give its prior written consent
to such assignment (which consent shall not be unreasonably withheld or
delayed), (ii) in the case of any assignment of a Revolving Credit Commitment,
each of the Swingline Lender and the Borrower must give its prior written
consent to such assignment (which consent shall not be unreasonably withheld or
delayed); provided that the consent of the Borrowers shall not be required to
any such assignment, (iii) the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $1,000,000 (or, if less, the entire remaining
amount of such Lender's Commitment) and shall be in an amount that is an
integral multiple of $1,000,000 (or the entire remaining amount of such Lender's
Commitment), (iv) the parties to each such assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance (such Assignment and
Acceptance to be (A) electronically executed and delivered to the Administrative
Agent via an electronic settlement system then acceptable to the Administrative
Agent, which shall initially be the settlement system of ClearPar, LLC, or (B)
manually executed and delivered together with a processing and recordation fee
of $3,500 payable to the Administrative Agent and (v) the assignee, if it shall
not be a Lender immediately prior to the assignment, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to paragraph (e) of this Section 9.04, from and after the
effective date specified in each Assignment and Acceptance, (A) the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16,
2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment, and the outstanding balances of its Loans, in each case without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance, (ii) except as set forth in (i) above,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of Holdings, the Borrowers or any Subsidiary
or the performance or observance by Holdings, the Borrowers or any Subsidiary of
any of its obligations under this Agreement, any other Loan Document or any
other instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in Section 3.05(a) or delivered pursuant to Section 5.04
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will independently and without reliance upon the
Administrative Agent, the Arranger, such assigning Lender or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of the
Borrowers, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive and the Borrowers,
the Administrative Agent, and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrowers, and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance executed by
an assigning Lender and an assignee, an Administrative Questionnaire completed
in respect of the assignee (unless the assignee shall already be a Lender
hereunder) and the written consent of the Swingline Lender and the
Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders and
the Swingline Lender. No assignment shall be effective unless it has been
recorded in the Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrowers, the Swingline Lender,
the Issuing Bank or the Administrative Agent sell participations to one or more
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans);
provided, however, that (i) such Lender's obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the participating
banks or other entities shall be entitled to the benefit of the cost protection
provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if
they were Lenders (but, with respect to any particular participant, to no
greater extent than the Lender that sold the participation to such participant)
and (iv) the Borrowers, the Administrative Agent and the Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of the Borrowers relating to the Loans or
L/C Disbursements and to approve any amendment, modification or waiver of any
provision of this Agreement (other than amendments, modifications or waivers
decreasing any fees payable hereunder or the amount of principal of or the rate
at which interest is payable on the Loans, extending any scheduled principal
payment date or date fixed for the payment of interest on the Loans, increasing
or extending the Commitments or releasing any Guarantor or all or any
substantial part of the Collateral).
(g) Any Lender or participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; provided that, prior to any such disclosure of
information designated by the Borrowers as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to
Section 9.16.
(h) Any Lender may at any time assign all or any portion of its rights under
this Agreement to secure extensions of credit to such Lender or in support of
obligations owed by such Lender; provided that no such assignment shall release
a Lender from any of its obligations hereunder or substitute any such assignee
for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained herein, any Lender (a
"Granting Lender") may grant to a special purpose funding vehicle (an "SPC"),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrowers, the option to provide to the Borrowers
all or any part of any Loan that such Granting Lender would otherwise be
obligated to make to the Borrowers pursuant to this Agreement; provided that (i)
nothing herein shall constitute a commitment by any SPC to make any Loan and
(ii) if an SPC elects not to exercise such option or otherwise fails to provide
all or any part of such Loan, the Granting Lender shall be obligated to make
such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder
shall utilize the Commitment of the Granting Lender to the same extent, and as
if, such Loan were made by such Granting Lender. Each party hereto hereby agrees
that no SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under the laws of the United States or any State thereof. In addition,
notwithstanding anything to the contrary contained in this Section 9.04, any SPC
may (i) with notice to, but without the prior written consent of, the Borrowers
and the Administrative Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by the Borrowers and Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC.
(j) The Borrowers shall not assign or delegate any of its rights or duties
hereunder without the prior written consent of the Administrative Agent and each
Lender, and any attempted assignment without such consent shall be null and
void.
SECTION 9.05 Expenses; Indemnity. (a) The Borrowers agree, to pay all
out-of-pocket costs and expenses incurred by the Administrative Agent, the
Arranger and the Swingline Lender in connection with the syndication of the
Facility and the preparation and administration of this Agreement and the other
Loan Documents or in connection with any amendments, modifications or waivers of
the provisions hereof or thereof (whether or not the transactions hereby or
thereby contemplated shall be consummated) or incurred by the Administrative
Agent, the Arranger or any Lender in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made or Letters of Credit issued
hereunder, including in each case the fees, disbursements and other charges of
counsel for the Arranger and the Administrative Agent, and, in connection with
any such enforcement or protection, the reasonable fees, disbursements and other
charges of any counsel for the Administrative Agent, the Arranger or any Lender.
(b) The Borrowers agree to indemnify the Administrative Agent, the Arranger,
each Lender and each Related Party of any of the foregoing persons (each such
person being called an "Indemnitee") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
costs and expenses, including reasonable counsel fees, disbursements and other
charges, incurred by or asserted against any Indemnitee arising out of, in any
way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans or issuances of
Letters of Credit, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto, or (iv) any actual or alleged presence or Release of Hazardous
Materials on any property owned or operated by any Loan Party, or any
Environmental Liability related in any way to any Loan Party; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related costs and expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from primarily the gross negligence or willful
misconduct of such Indemnitee (and, upon any such determination, any
indemnification payments with respect to such losses, claims, damages,
liabilities or related costs and expenses previously received by such Indemnitee
shall be subject to reimbursement by such Indemnitee).
(c) To the extent that the Borrowers fail to pay any amount required to be paid
by them to the Administrative Agent, the Arranger, or the Swingline Lender under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent, the Arranger, or the Swingline Lender, as the case may be,
such Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent, the Arranger, or the Swingline Lender in its
capacity as such.
(d) To the extent permitted by applicable law, neither of the Borrowers shall
assert, and each hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.
(e) The Administrative Agent may, at its option, from time to time, at any time
on or after an Event of Default and for so long as the same is continuing or
upon any other failure of a condition precedent to the Loans and Letter of
Credit Accommodations hereunder, make such disbursements and advances ("Special
Agent Advances") which Administrative Agent, in its sole discretion, (i) deems
necessary or desirable either to preserve or protect the Collateral or any
portion thereof or (ii) to enhance the likelihood or maximize the amount of
repayment by any Loan Party of the Loans and other Obligations or (iii) to pay
any other amount chargeable to any Loan Party pursuant to the terms of this
Agreement or any of the other Loan Documents consisting of costs, fees and
expenses and payments to any issuer of Letters of Credit. Special Agent Advances
shall be repayable on demand and be secured by the Collateral. Special Agent
Advances shall constitute Obligations hereunder. Each Lender agrees that it
shall make available to the Administrative Agent, upon the Administrative
Agent's demand, in immediately available funds, the amount equal to such
Lender's Pro Rata Percentage of each such Special Agent Advance. If such funds
are not made available to the Administrative Agent by such Lender, the
Administrative Agent shall be entitled to recover such funds, on demand from
such Lender together with interest thereon for each day from the date such
payment was due until the date such amount is paid to the Administrative Agent
at the Federal Funds Rate for each day during such period (as published by the
Federal Reserve Bank of New York or at the Administrative Agent's option based
on the arithmetic mean determined by 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 the three leading brokers of Federal funds transactions in
New York City selected by Agent) and if such amounts are not paid within three
(3) days of the Administrative Agent's demand, at the Alternative Base Rate plus
the Applicable Margin.
(f) The provisions of this Section 9.05 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the Transactions or the other transactions contemplated hereby,
the repayment of any of the Loans, the expiration of the Commitments, the
expiration of any Letter of Credit, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, the Arranger,
any Lender or the Issuing Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
SECTION 9.06 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time to time,
except to the extent prohibited by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrowers against any of and all the obligations of
the Borrowers now or hereafter existing under this Agreement and other Loan
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this
Section 9.06 are in addition to other rights and remedies (including other
rights of setoff) which such Lender may have.
SECTION 9.07 Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER
THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08 Waivers; Amendment. (a) No failure or delay of the Administrative
Agent or any Lender in exercising any power or right hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by the
Borrowers or any other Loan Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on the Borrowers in any case shall entitle
the Borrowers to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrowers and the Required Lenders; provided, however, that no such
agreement shall (i) decrease the principal amount of, or extend the maturity of
or any scheduled principal payment date or date for the payment of any interest
on any Loan or any date for reimbursement of an L/C Disbursement, or waive or
excuse any such payment or any part thereof, or decrease the rate of interest on
any Loan or L/C Disbursement, without the prior written consent of each Lender
affected thereby, (ii) increase or extend the Commitment or decrease or extend
the date for payment of any Fees of any Lender without the prior written consent
of such Lender, (iii) amend or modify the pro rata requirements of Section 2.17,
the provisions of Section 9.04(j), the provisions of this Section or the
definition of the term "Required Lenders," or release any Guarantor, without the
prior written consent of each Lender, (iv) amend or modify the definition of the
term "Required Lenders" without the prior written consent of each Lender
affected thereby, (v) release all or any substantial part of the Collateral
without the prior written consent of each Lender, or (vi) modify the protections
afforded to an SPC pursuant to the provisions of Section 9.04(i) without the
written consent of such SPC; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Swingline Lender, or the Arranger hereunder or under any other Loan
Document without the prior written consent of the Administrative Agent, the
Swingline Lender, or Arranger, as applicable.
SECTION 9.09 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan or
participation in any Letter of Credit Guaranty, together with all fees, charges
and other amounts which are treated as interest on such Loan or participation in
such Letter of Credit Guaranty under applicable law (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by the Lender holding
such Loan or participation in accordance with applicable law, the rate of
interest payable in respect of such Loan or participation hereunder, together
with all Charges payable in respect thereof, shall be limited to the Maximum
Rate and, to the extent lawful, the interest and Charges that would have been
payable in respect of such Loan or participation but were not payable as a
result of the operation of this Section 9.09 shall be cumulated and the interest
and Charges payable to such Lender in respect of other Loans or participations
or periods shall be increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.
SECTION 9.10 Entire Agreement. This Agreement, the Fee Letter and the other Loan
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents. Nothing in this Agreement or in the other Loan Documents,
expressed or implied, is intended to confer upon any person (other than the
parties hereto and thereto, their respective successors and assigns permitted
hereunder and, to the extent expressly contemplated hereby, the Related Parties
of each of the Administrative Agent, the Arranger and the Lenders ) any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12 Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.13 Counterparts. This Agreement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall
constitute an original but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 9.03.
Delivery of an executed signature page to this Agreement or of a Lender Addendum
by facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.
SECTION 9.14 Headings. Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15 Jurisdiction; Consent to Service of Process. (a) Each of the
Borrowers hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Arranger or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against the Borrowers or their properties in the courts of any jurisdiction.
(b) Each of the Borrowers hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
SECTION 9.16 Confidentiality. Each of the Administrative Agent and the Lenders
agrees to maintain the confidentiality of the Information, except that
Information may be disclosed (a) to its and its Affiliates' officers, directors,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority or quasi-regulatory authority (such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) in connection with
the exercise of any remedies hereunder or under the other Loan Documents or any
suit, action or proceeding relating to the enforcement of its rights hereunder
or thereunder, (e) subject to an agreement containing provisions substantially
the same as those of this Section 9.16, to (i) any actual or prospective
assignee of or participant in any of its rights or obligations under this
Agreement and the other Loan Documents or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
any Loan Party or any of their respective obligations, (f) with the consent of
the Borrowers or (g) to the extent such Information becomes publicly available
other than as a result of a breach of this Section 9.16. For the purposes of
this Section, "Information" shall mean all information received from the
Borrowers and related to the Borrowers or their business, other than any such
information that was available to the Administrative Agent or any Lender on a
nonconfidential basis prior to its disclosure by Holdings or the Borrowers;
provided that, in the case of Information received from the Borrowers after the
date hereof, such information is clearly identified at the time of delivery as
confidential. Any person required to maintain the confidentiality of Information
as provided in this Section 9.16 shall be considered to have complied with its
obligation to do so if such person has exercised the same degree of care to
maintain the confidentiality of such Information as such person would accord its
own confidential information. Notwithstanding any other express or implied
agreement, arrangement or understanding to the contrary, each of the parties
hereto agrees that each other party hereto (and each of its employees,
representatives or agents) are permitted to disclose to any persons, without
limitation, the tax treatment and tax structure of the Loans and the other
transactions contemplated by the Loan Documents and all materials of any kind
(including opinions and tax analyses) that are provided to the Loan Parties, the
Lenders, the Arranger or the Administrative Agent related to such tax treatment
and tax aspects. To the extent not inconsistent with the immediately preceding
sentence, this authorization does not extend to disclosure of any other
information or any other term or detail not related to the tax treatment or tax
aspects of the Loans or the transactions contemplated by the Loan Documents.
SECTION 9.17 Delivery of Lender Addenda. Each initial Lender shall become a
party to this Agreement by delivering to the Administrative Agent a Lender
Addendum duly executed by such Lender, the Borrower and the Administrative
Agent.
SECTION 9.18 Disclosures. The parties acknowledge and agree that the disclosure
of any matter in the Schedules to the Loan Documents shall not be deemed to
constitute an acknowledgment that the matter is material or is not material for
any purpose other than with respect to the Loan Documents.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
THE PACIFIC LUMBER COMPANY
By:
Name:
Title:
βββββ� LUMBER CO., INC.
By:
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC., as Administrative Agent
and Swingline Lender
By:
Name:
Title:
Exhibit A
ADMINISTRATIVE QUESTIONNAIRE
I. Borrower Name:
The Pacific Lumber Company
βββββ� Lumber Co., Inc.
------------------------------------------------
------------------------------------------------
II. Legal Name of Lender for Signature Page:
------------------------------------------------
III. Name of Lender for any eventual tombstone:
------------------------------------------------
IV. Legal Address:
-------------------------------------------------------------
-------------------------------------------------------------
V. Contact Information:
Credit Contact Operations Contact Legal Counsel
Name:
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
Title:
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
Address:
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
Telephone:
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
Facsimile:
----------------------------- -------------------------- ----------------------------
----------------------------- -------------------------- ----------------------------
Email: Address:
----------------------------- -------------------------- ----------------------------
VI. Lender's Wire Payment Instructions:
Pay to:
------------------------------------------- -----------------------------------------------
------------------------------------------- -----------------------------------------------
(Name of Lender)
------------------------------------------- -----------------------------------------------
------------------------------------------- -----------------------------------------------
(ABA#) (City/State)
------------------------------------------- -----------------------------------------------
------------------------------------------- -----------------------------------------------
(Account #) (Account Name)
Please return this form, by fax, to the attention of [ ], fax (212) [ ], no
later than 5:00 p.m. New York City time, on [ ], 2004. ADMINISTRATIVE
QUESTIONNAIRE
Borrower Name: The Pacific Lumber Company
βββββ� Lumber Co., Inc.
VII. Organizational Structure:
Foreign Branch, organized under which laws etc.
-------------------------------------------------
Lender's Tax ID:
-------------------------------------------------
Tax withholding Form Attached (For Foreign Buyers)
[___] Form W-9
[___] Form W-8
[___] Form 4224 effective: ____________________
[___] Form 1001
[___] W/Hold _________% Effective ________________
[___] Form 4224 on file with Administrative Agent from previous current year's
transaction ___________________
VIII. Payment Instructions:
Servicing Site:
Pay To:
IX. Name of Authorized Officer:
------------------------------------------------------------------
Name:
------------------------------------------------------------------
Signature:
------------------------------------------------------------------
Date:
------------------------------------------------------------------
ADMINISTRATIVE QUESTIONNAIRE
X. Institutional Investor Sub-Allocations
Institution Legal Name:
-----------------------------------------------------
-----------------------------------------------------
Fund Manager:
-----------------------------------------------------
Sub-Allocations:
-------------------------- - ---------------- -- --------------------- -- ------------------- -- ---------------------
Exact Legal Name Sub-Allocation Direct Signer to Purchase by Date of Post
Credit Agreement Assignment Closing Assignment
(for documentation (Indicate US$)
purposes) (Yes / No) (Yes / No)
-------------------------- ---------------- --------------------- ------------------- ---------------------
1.
-------------------------- ---------------- --------------------- ------------------- ---------------------
2.
-------------------------- ---------------- --------------------- ------------------- ---------------------
3.
-------------------------- ---------------- --------------------- ------------------- ---------------------
4.
-------------------------- ---------------- --------------------- ------------------- ---------------------
5.
-------------------------- ---------------- --------------------- ------------------- ---------------------
6.
-------------------------- ---------------- --------------------- ------------------- ---------------------
7.
-------------------------- ---------------- --------------------- ------------------- ---------------------
Total
-------------------------- - ---------------- -- --------------------- -- ------------------- -- ---------------------
Special Instructions
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Exhibit C
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Revolving Credit Agreement dated as of April 19, 2005
(the "Credit Agreement"), among The Pacific Lumber Company ("Palco"), βββββ�
Lumber Co., Inc. (together with Palco, the "Borrowers"), the Lenders from time
to time party thereto, and The CIT Group/Business Credit, Inc., as
administrative agent (in such capacity, the "Administrative Agent"). Terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
SECTION 1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below (but not prior
to the registration of the information contained herein in the Register pursuant
to Section 9.04(d) of the Credit Agreement), the interests set forth below (the
"Assigned Interest") in the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents, including, without limitation, the
amounts and percentages set forth below of (i) the Commitments of the Assignor
on the Effective Date, (ii) the Loans owing to the Assignor which are
outstanding on the Effective Date and (iii) participations of the Assignor in
Letters of Credit and Swingline Loans which are outstanding on the Effective
Date. Each of the Assignor and the Assignee hereby makes and agrees to be bound
by all the representations, warranties and agreements set forth in Section
9.04(c) of the Credit Agreement, a copy of which has been received by each such
party. From and after the Effective Date (i) the Assignee shall be a party to
and be bound by the provisions of the Credit Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and under the Loan Documents and (ii) the
Assignor shall, to the extent of the interests assigned by this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement.
SECTION 2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, any forms referred to in
Section 2.20(d) of the Credit Agreement, duly completed and executed by such
Assignee and (ii) if the Assignee is not already a Lender under the Credit
Agreement, a completed Administrative Questionnaire.
SECTION 3. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Date of Assignment:
---------------------------------------------------------
Legal Name of Assignor:
---------------------------------------------------------
Legal Name of Assignee:
---------------------------------------------------------
Assignee's Address for Notices:
---------------------------------------------------------
Effective Date of Assignment:
---------------------------------------------------------
------------------------ ---------------------------- --------------------------
Principal Amount Assigned
Percentage
Assigned of
Applicable
Facility/Commitment
(set forth, to
at least 8
decimals, as a
percentage of
the Facility and
the aggregate
Commitments of
all Lenders
thereunder)
---------------------------- ---------------------------
---------------------------- ---------------------------
Facility/Commitment
------------------------ ---------------------------- --------------------------
------------------------ ---------------------------- --------------------------
Revolving Credit $ %
------------------------ ---------------------------- --------------------------
[Remainder of page intentionally left blank]
The terms set forth on the foregoing
pages are hereby agreed to: Accepted
___________________________, THE CIT GROUP/BUSINESS CREDIT, INC., as
as Assignor Administrative Agent and as Swingline Lender
By:_________________________ By:___/s/ βββββββ� β�. Soutar_________________
Name: Name:βββββββ� β�. ββββββ
Title: Title:Vice President
--------------------------,
as Assignee
By:_________________________
Name:
Title:
Exhibit D
FORM OF BORROWING REQUEST
The CIT Group/Business Credit, Inc., as Administrative
Agent for the Lenders referred to below,
[Date]
Ladies and Gentlemen:
The undersigned, The Pacific Lumber Company (the "Administrative
Borrower"), refers to the Revolving Credit Agreement dated as of April __, 2005
(the "Credit Agreement"), among the Borrowers (as defined therein), the Lenders
from time to time party thereto, and The CIT Group/Business Credit, Inc., as
administrative agent (in such capacity, the "Administrative Agent"). Terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement. The Borrowers hereby gives you notice pursuant to
Section 2.03 of the Credit Agreement that it requests a Borrowing under the
Credit Agreement, and in that connection sets forth below the terms on which
such Borrowing is requested to be made:
(A) Borrower ______________________
(B) Date of Borrowing
(which is a Business Day) ______________________
(C) Principal Amount of Borrowing ______________________
(D) Type of Borrowing(1) ______________________
(E) Interest Period and the last day
thereof(2) ______________________
(F) Funds are requested to be disbursed to the Company's account with
_____________ (Account No.
----------------- ).
(signature page follows)
The Administrative Borrower hereby represent and warrant to the
Administrative Agent and the Lenders that, on the date of this Borrowing Request
and on the date of the related Borrowing, the conditions to lending specified in
the Credit Agreement have been satisfied.
THE PACIFIC LUMBER COMPANY, as Administrative Borrower
By:
Name:
Title:
Exhibit E
[INSERT LENDER NAME]
LENDER ADDENDUM
Reference is made to the Revolving Credit Agreement dated as of April 19, 2005
(the "Credit Agreement"), among The Pacific Lumber Company ("Palco"), βββββ�
Lumber Co., Inc. (together with Palco, the "Borrowers"), the Lenders from time
to time party thereto, and The CIT Group/Business Credit, Inc., as
administrative agent (in such capacity, the "Administrative Agent"). Terms used
herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement.
Upon execution and delivery of this Lender Addendum by the parties hereto as
provided in Section 9.17 of the Credit Agreement, the undersigned hereby becomes
a Lender thereunder having the Commitments set forth in Schedule 1 hereto,
effective as of the Closing Date.
THIS LENDER ADDENDUM SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
This Lender Addendum may be executed by one or more of the parties hereto on any
number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an
executed signature page hereof by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum to be
duly executed and delivered by their proper and duly authorized officers as of
this 19th day of April, 2005.
Name of Lender
By:
------------------------------------------------------
Name:
Title:
Accepted and agreed:
THE PACIFIC LUMBER COMPANY
By:
Name:
Title:
βββββ� LUMBER CO., INC.
By:
Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Administrative Agent
By:By:
Name:
Title:
Schedule 1 to
Lender Addendum
COMMITMENTS AND NOTICE ADDRESS
1. Name of Lender: Notice Address:
Attention:
Telephone:
Facsimile:
2. Revolving Credit Commitment:
Exhibit F
Form of Perfection Certificate
In connection with the proposed transaction by and among The Pacific Lumber
Company ("Palco"), βββββ� Lumber, Co., Inc. (the "Debtor"), and The CIT
Group/Business Credit, Inc., as administrative agent, the Borrowers hereby
certify on behalf of themselves and the other Loan Parties as follows:
I.Current Information
A. Legal Names, Organizations, Corporate Functions, Jurisdictions of
Organization and Organizational Identification Numbers. The full and exact legal
name (as it appears in each respective certificate or articles of incorporation,
limited liability membership agreement or similar organizational documents, in
each case as amended to date), the type of organization, the corporate function,
the jurisdiction of organization (or formation, as applicable) and the
organizational identification number (not tax i.d. number) of each Loan Party
are as follows:
Type of Organization (e.g.
Name of Loan corporation, limited liability Corporate Jurisdiction of Organizational
------------- ------------------------------- ---------- ---------------- --------------
Party company, limited partnership) Function Organization/ Formation Identification Number
----- ----------------------------- -------- ----------------------- ---------------------
B. Chief Executive Offices and Mailing Addresses. The chief executive
office address and the preferred mailing address (if different than chief
executive office) of each Loan Party are as follows:
Name of Loan Party Address of Chief Executive Office Mailing Address (if different than
------------------ --------------------------------- ----------------------------------
CEO)
C. Changes in Names, Jurisdiction of Organization or Corporate Structure.
Except as set forth below, no Loan Party has changed its name, jurisdiction
of organization or its corporate structure in any way (e.g. by merger,
consolidation, change in corporate form, change in jurisdiction of organization
or otherwise) within the past five (5) years:
Loan Party Date of Change Description of Change
D. Prior Addresses.
Except as set forth below, no Loan Party has changed its chief executive
office within the past five (5) years:
Loan Party Prior Address/City/State/Zip Code
E. Acquisitions of Equity Interests or Assets.
Except as set forth below, no Loan Party has acquired the equity interests
of another entity or substantially all the assets of another entity within the
past five (5) years:
Loan Party Date of Acquisition Description of Acquisition
F. Trade Names.
Set forth below is each trade name or assumed name currently used (or used
at any time during the past five years) by the Loan Party or by which the Debtor
or any Grantor is known or is transacting any business (or has been known or has
transacted any business during the past five years):
Loan Party Trade/Assumed Name
G. Corporate Ownership and Organizational Structure.
Attached as Exhibit A hereto is a true and correct chart showing the
ownership relationship of the Loan Parties.
II. Additional Information
A. Tangible Personal Property. Set forth below are all the locations where
the Loan Party currently maintains or has maintained any material amount (fair
market value of $100,000 or more) of its tangible personal property (including
goods, inventory and equipment) of such Loan Party (whether or not in the
possession of such Loan Party) within the past five (5) years:
Description of
Loan Party Address/City/State/Zip Code County Assets and Value
B. Warehousemen and bailees. Except as set forth below, no persons
(including warehousemen and bailees) other than the Loan Party have possession
of any material amount (fair market value of $100,000 or more) of assets
(including goods, inventory and equipment) of such Loan Party:
Description of
Loan Party Address/City/State/Zip Code County Assets and Value
III. Investment Related Property
A. Securities. Set forth below is a list of all equity interests owned by
the Loan Party together with the type of organization which issued such equity
interests (e.g. corporation, limited liability company, partnership or trust):
# of % of Certificate No.
----- ----- ----------------
Type of Shares Total Shares Interest (if uncertificated,
-------- ------- ------------- --------- --------------------
Loan Party Issuer Organization Owned Outstanding Pledged please indicate so) Par Value
---------- ------ ------------ ----- ----------- ------- ------------------- ---------
B. Securities Accounts. Set forth below is a list of all securities
accounts in which the Loan Party customarily maintains securities or other
assets having an aggregate value in excess of $100,000:
Name & Address of Financial
Loan Party Type of Account Institutions
C. Deposit Accounts. Set forth below is a list of all bank accounts
(checking, savings, money market or the like) in which the Loan Party
customarily maintains in excess of $100,000:
Loan Party Type of Account Name & Address of
Financial Institutions
D. Instruments. Set forth below is a list of all instruments owed to the
Loan Party in the principal amount of greater than $100,000:
Principal Amount of
Debtor/Grantor Issuer of Instrument Instrument Maturity Date
IV. Intellectual Property
A. Set forth below is a list of all copyrights, patents and trademarks and other
intellectual property owned or used, or hereafter adopted, held or used, by the
Loan Party:
Loan Party Copyrights Filing Date Status Registration No.
---------- ---------- ----------- ------ ---------------
Loan Party Patents Filing Date Status Registration No.
---------- ------- ----------- ------ ---------------
Loan Party Trademarks Filing Date Status Registration No.
---------- ---------- ----------- ------ ---------------
V. Real Estate Related UCC Collateral
A. Fixtures. Set forth below are all the locations where the Loan Party
owns or leases any real property:
Owned or
Loan Party Address/City/State/Zip Code County Leased
VI. Miscellaneous
A. Authority to File Financing Statements. The undersigned, on behalf of
the Loan Party, hereby authorizes the Administrative Agent to file financing or
continuation statements, and amendments thereto, in all jurisdictions and with
all filing offices as the Administrative Agent may determine, in its sole
discretion, are necessary or advisable to perfect the security interest granted
or to be granted to the lenders and other secured parties under the credit
agreement relating to proposed transaction. Such financing statements may
describe the collateral in the same manner as described in the credit agreement
and related security documents or may contain an indication or description of
collateral that describes such property in any other manner as the
Administrative Agent may determine, in its sole discretion, is necessary,
advisable or prudent to ensure the perfection of the security interest in the
collateral granted to the lenders and other secured parties, including, without
limitation, describing such property as "all assets" or "all personal property."
IN WITNESS WHEREOF, the undersigned hereto has caused this Perfection
Certificate to be executed as of this day of April, 2005 by its officer
thereunto duly authorized.
THE PACIFIC LUMBER COMPANY
By:
Name:
Title:
βββββ� LUMBER CO., INC.
By:
Name:
Title:
Exhibit G
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Revolving Credit Agreement dated as of April 19, 2005
(the "Credit Agreement"), among The Pacific Lumber Company ("Palco"), βββββ�
Lumber Co., Inc. (together with Palco, the "Borrowers"), the Lenders from time
to time party thereto, and The CIT Group/Business Credit, Inc., as
administrative agent (in such capacity, the "Administrative Agent"). Capitalized
terms used herein that are not defined herein shall have the meanings ascribed
to them in the Credit Agreement. [_______________________] (the "Non-U.S.
Lender") is providing this certificate pursuant to Section 2.20(d) of the Credit
Agreement. The Non-U.S. Lender hereby represents and warrants that: 1. The
Non-U.S. Lender is the sole record and beneficial owner of the Loans or the
obligations evidenced by Note(s) in respect of which it is providing this
certificate.
2. The Non-U.S. Lender is not a "bank" for purposes of Section 881(c)(3)(A) of
the Internal Revenue Code of 1986, as amended (the "Code"). In this regard, the
Non-U.S. Lender further represents and warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for purposes of any
tax, securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements;
3. The Non-U.S. Lender is not a 10-percent shareholder of the Borrower within
the meaning of Section 881(c)(3)(B) of the Code; and
4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(C) of the
Code.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate.
[NAME OF NON-U.S. LENDER]
By:
------------------------------------------------------
Name:
Title:
Date:
Schedule 1.01(a)
MORTGAGE PROPERTIES
Mfg Lessor/
Owner Parcel Number Property Description AcreageFacilitilessee Comments
----- ------------- -------------------- --------------------- -------- -
THE PACIFIC LUMBER COMPANY CR 101-291-008-000T 2N R 1W βββ� ββ ββ.β�
βββ� βββββββ� ββββββ COMPANY CR 101-291-014-000 βββ�
βββ� βββββββ� ββββββ COMPANY CR 106-151-003-000T 2N R 1W βββ� ββ βββ�
βββ� βββββββ� ββββββ COMPANY CR 106-151-006-000T 2N R 1W SEC 29 83.5
THE PACIFIC LUMBER CO 200-021-004-000T 3N R 1W βββ� ββ ββ
βββ� βββββββ� ββββββ CO 200-021-008-000T 3N R 1W βββ� ββ ββ
βββ� βββββββ� ββββββ COMPANY 200-021-009-000T 3N R 1W βββ� ββ ββ
βββ� βββββββ� ββββββ COMPANY CR 200-021-014-000T3N R1W SEC 27 71.79
THE PACIFIC LUMBER CO 2N R1W SEC 2 ortuna The following 17 Fortuna
200-363-006-000T 0F Mill
THE PACIFIC LUMBER CO 200-363-007-000T2N R1W SEC 2 0Fortuna parcels total 76.77 acres
THE PACIFIC LUMBER CO 201-082-007-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 201-091-006-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 201-092-026-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 201-092-027-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 201-092-029-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 201-331-002-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 201-331-004-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 201-331-005-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 202-011-023-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 202-011-031-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 202-021-005-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 202-021-010-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO CR 202-021-017-000T2N R1W SEC 2 0Fortuna
THE PACIFIC LUMBER CO 202-022-001-000T2N R1W SEC 11 0Fortuna
THE PACIFIC LUMBER CO 204-032-001-000T2N R1E SEC 9 158
THE PACIFIC LUMBER CO 204-032-002-000T 2N R 1E SEC 9 406
THE PACIFIC LUMBER CO 204-033-006-000T2N R1E SEC 10 40 βββββ�
THE PACIFIC LUMBER CO CR 204-121-004-000T2N R1E SEC 21 0Carlotta
THE PACIFIC LUMBER COMPANY 204-121-005-000T2N R1E SEC 21 0Carlotta
THE PACIFIC LUMBER COMPANY 204-121-006-000T2N R1E SEC 21 0Carlotta
THE PACIFIC LUMBER COMPANY 204-251-001-000T2N R1E SEC 21 0Carlotta
THE PACIFIC LUMBER CO CR 204-251-010-000T2N R1E SEC 21 0Carlotta
THE PACIFIC LUMBER COMPANY CR 204-381-001-000 0
THE PACIFIC LUMBER COMPANY 205-061-012-000T1N R1E βββ� ββ β�
βββ� βββββββ� ββββββ CO 205-221-001-000T 1N β� ββ βββ� ββ ββ
βββ� βββββββ� ββββββ COMPANY 205-261-012-000RS, BK 60, PGS 74-76 9.5
THE PACIFIC LUMBER COMPANY CR 205-321-003-000T1N R1E SEC 23 0
THE PACIFIC LUMBER CO 205-321-032-000T1N R1E SEC 25 80
THE PACIFIC LUMBER CO 205-321-034-000T1N R1E βββ� ββ βββ�
βββ� βββββββ� ββββββ COMPANY 205-341-019-000T1N R1E SEC 21 171
THE PACIFIC LUMBER CO 205-351-001-000T 1N R 1E SEC 5 280
THE PACIFIC LUMBER CO 205-351-002-000T 1N β� ββ βββ� β� ββ
βββ� βββββββ� ββββββ COMPANY 205-351-018-000T1N R1E βββ� ββ & ββ βββ�.β�
βββ� βββββββ� ββββββ CO 205-351-019-000T2N R1E SEC 28 507.5
THE PACIFIC LUMBER CO 206-031-007-000T2N R2E SEC 5 170
THE PACIFIC LUMBER CO 206-101-031-000T2N R1E βββ� ββ β�
βββ� βββββββ� ββββββ CO 206-101-032-000T2N R1E SEC 15 22 βββββ�
THE PACIFIC LUMBER CO 206-191-016-000T2N R1E βββ� ββ βββ�
βββ� βββββββ� ββββββ COMPANY 206-281-002-000T 2N R 1E SEC 10 21 βββββ�
THE PACIFIC LUMBER CO 206-281-003-000T2N R1E SEC 10 83 βββββ�
THE PACIFIC LUMBER CO CR 206-351-004-000T2N R1E SEC 28 0
THE PACIFIC LUMBER CO 209-201-011-000T1N R2E SEC 28 140
THE PACIFIC LUMBER CO 211-132-008-000T1S R2E βββ� ββ β�
βββ� βββββββ� ββββββ COMPANY CR 211-132-009-000T 1S R 2E βββ� ββ β�
βββ� βββββββ� ββββββ COMPANY CR 211-133-007-000 0
THE PACIFIC LUMBER COMPANY CR 211-133-009-000 0
THE PACIFIC LUMBER CO 211-133-012-000T1S R2E SEC 25 88
THE PACIFIC LUMBER CO 211-134-002-000T1S R2E βββ� ββ β�
βββ� βββββββ� ββββββ CO 211-141-003-000T 1S β� ββ βββ� ββ β�
βββ� βββββββ� ββββββ COMPANY CR 211-273-003-000T 1S R 3E βββ� ββ β�
βββ� βββββββ� ββββββ CO CR 211-275-010-000T1S R3E βββ� ββ β�
βββ� βββββββ� ββββββ COMPANY CR 211-275-016-000T1S R3E βββ� ββ β�
βββ� βββββββ� ββββββ COMPANY CR 211-276-011-000T1S R3E βββ� ββ β�
βββ� βββββββ� ββββββ COMPANY CR 211-276-015-000T1S R3E βββ� ββ β�
βββ� βββββββ� ββββββ COMPANY CR 211-283-008-000 0
THE PACIFIC LUMBER CO CR 211-492-009-000T1S R1E βββ� ββ β�
βββ� βββββββ� ββββββ COMPANY CR 211-492-012-000T1S R1E SEC 22 0
THE PACIFIC LUMBER CO 211-552-004-000T 1S β� ββ βββ� ββ ββ
βββ� βββββββ� ββββββ COMPANY CR 214-114-010-000 0
THE PACIFIC LUMBER CO 304-011-003-000T 4N R 1E SEC 19 272
THE PACIFIC LUMBER CO 311-041-007-000T4N R1W βββ� ββ β�
βββ� βββββββ� ββββββ CO 311-051-002-000T 4N R 1W βββ� ββ βββ�
βββ� βββββββ� ββββββ CO 311-114-001-000T 3N R 1W βββ� ββ βββ�
βββ� βββββββ� ββββββ CO 314-061-011-000 1
THE PACIFIC LUMBER COMPANY CR 314-131-050-000T 4N R 2E βββ� β� ββ
βββ� βββββββ� ββββββ COMPANY CR 314-131-051-000T 4N R 2E βββ� β� βββ�
βββ� βββββββ� ββββββ COMPANY CR 314-131-064-000T 4N β� ββ βββ� ββ βββ�
βββ� βββββββ� ββββββ COMPANY CR 314-131-065-000T 4N R 2E βββ� ββ ββ
βββ� βββββββ� ββββββ COMPANY CR 314-131-076-000 193.5
THE PACIFIC LUMBER COMPANY CR 314-143-004-000T 4N R 2E SEC 13 110.5
THE PACIFIC LUMBER COMPANY CR 314-154-001-000T 4N R 2E βββ� ββ ββ.β�
βββ� βββββββ� ββββββ COMPANY CR 314-154-002-000T 4N R 2E βββ� ββ ββ
βββ� βββββββ� ββββββ COMPANY CR 314-201-007-000 βββ�
βββ� βββββββ� ββββββ COMPANY CR 314-201-012-000 37
THE PACIFIC LUMBER COMPANY 314-333-004-000T4N R2E βββ� β� β�
βββ� βββββββ� ββββββ COMPANY ,CR 316-084-001-000T 6N β� ββ βββ� β� βββ�
βββ� βββββββ� ββββββ COMPANY 404-121-012-000T 5N β� ββ βββ� ββ ββ
βββ� βββββββ� ββββββ COMPANY 404-131-016-000T5N R2E βββ� ββ β�
βββ� βββββββ� ββββββ CO 405-321-013-000T4N R1E SEC 1 160
THE PACIFIC LUMBER CO 905-000-474-000T4N R2W βββ� ββ β�
βββ� βββββββ� ββββββ CO 905-000-475-000T4N R2W βββ� ββ β�
βββ� βββββββ� ββββββ CO βββ�-βββ�-ββ T3N R1W SEC 22 40
THE PACIFIC LUMBER CO βββ�-βββ�-ββ T3N R1W SEC 15 200
THE PACIFIC LUMBER CO βββ�-βββ�-ββ T3N R1W βββ� ββ ββ
βββββ� βββ�-βββ�-βββ�-βββ� 4.7 Arcata
βββββ� 507-121-014-000 3 Arcata
βββββ� 507-081-038-000 20.5 Arcata
See attached "Legal Description Exhibit `A'" relating to property owned by
Salmon Creek LLC.
LEGAL DESCRIPTION
EXHIBIT "A"
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF HUMBOLDT, STATE
OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
All fee interest in and to the following described lands
EXCEPTING THEREFROM
All right, title and interest in and to, including without limitation the right
in perpetuity to harvest, all trees and timber, regardless of species and
regardless of size or diameter, now located on or hereafter planted or growing
in the soil of those portions of the parcels of land located in the County of
Humboldt, State of California, described below (the "Property"), which are more
particularly shown as "Salmon Creek Ownership" on that certain map of the
Property identified as map no. 100, on the GIS system jointly used by Pacific
Lumber Company, Salmon Creek Corporation and others, dated July 15, 1998, and
each containing a notation executed by representatives of said parties, Fidelity
National Title Insurance Company, and Skadden, Arps, Slate, βββββββ� & ββββ
and held in trust by U.S. Bank of California ("Escrow Holder") pursuant to the
terms of that certain Escrow Agreement dated July 20, 1998 herewith by and the
above stated parties and the Escrow Holder, together with the right to enter
upon the Property for any and all purposes pertaining to the cultivation,
ownership and harvesting of such trees and timber. Being the same rights
described in the deed from Salmon Creek Corporation, a Delaware corporation to
The Pacific Lumber Company, a Delaware corporation recorded July 17, 1998 as
Instrument No. ββββ-βββββ�-β�, Humboldt County Official Records.
Said parcels of land being described as follows:
Township 3 North, Range 1 East, Humboldt Meridian:
PARCEL ONE
Section 19:
The North Half of the Southeast Quarter.
EXCEPTING THEREFROM one-half of all oil, gas and minerals with appurtenant
rights, as reserved in the deed recorded February 29, 1944 in Book 265 of
Deeds, page 256.
APN βββ�-βββ�-ββ
Section 20:
The North Half of the Southwest Quarter.
EXCEPTING THEREFROM one-half of all oil, gas and minerals, with appurtenant
rights, as reserved in the deed recorded February 29, 1944 in Book 265 of
Deeds, page 265.
APN βββ�-βββ�-ββ
The South Half of the Southeast Quarter.
APN βββ�-βββ�-ββ
Section 23:
The East Half of the Southeast Quarter.
EXCEPTING FROM the lands in Section 23 above described one-half of all oil,
gas and minerals, with appurtenant rights, as reserved in the deed recorded
February 29, 1944 in Book 265 of Deeds, page 256.
APN βββ�-βββ�-ββ
Section 23:
The Southeast Quarter of the Southwest Quarter, and the Southwest Quarter
of the Southeast Quarter.
EXCEPTING FROM the 23 above described all oil, gas and minerals, with
appurtenant rights as excepted in the deed from the Regents of the
University of California recorded March 22, 1950 in Book 125 of Official
Records, page 24.
APN βββ�-βββ�-ββ
Section 26:
The Northwest Quarter, the North Half of the Southwest Quarter, the
Southwest Quarter of the Southwest Quarter and the Southwest Quarter of the
Northeast Quarter.
EXCEPTING THEREFROM one-half of all oil, gas and minerals, with appurtenant
rights, as reserved in the deeds recorded February 29, 1944 in Book 265 of
Deeds, page 255 and 256.
APN βββ�-βββ�-ββ
Section 27:
The West Half, the Northeast Quarter, the North Half of the Southeast
Quarter and the Southeast Quarter of the Southeast Quarter.
APN βββ�-βββ�-ββ
Section 28:
The East Half of the Southeast Quarter, the Northeast Quarter of the
Northwest Quarter, and the Northeast Quarter.
EXCEPTING THEREFROM and from the land in Section 27 last above described
one-half of all oil, gas and minerals, with appurtenant rights, as reserved
in the deed recorded February 29, 1944 in Book 265 of Deeds, page 256.
APN βββ�-βββ�-ββ, βββ�-βββ�-ββ, βββ�-βββ�-ββ
Section 28:
The West Half of the Northwest Quarter, the Southeast Quarter of the
Northwest Quarter, the West Half of the Southeast Quarter, the North Half
of the Southwest Quarter and the Southeast Quarter of the Southwest
Quarter.
APN βββ�-βββ�-ββ and βββ�-βββ�-ββ
Section 29:
The North Half of the Northeast Quarter.
APN βββ�-βββ�-ββ
Section 33:
The Northeast Quarter.
APN βββ�-βββ�-ββ
Section 35:
The Northwest Quarter of the Northwest Quarter.
EXCEPTING THEREFROM, one-half of all oil, gas and minerals, with
appurtenant rights as reserved in the deeds recorded February 29, 1944 in
Book 265 of Deeds, page 255 and 256.
APN βββ�-βββ�-ββ
EXCEPTING FROM ALL OF THE ABOVE DESCRIBED LANDS that portion thereof
conveyed to the United States of America by deed recorded March 1, 1999 as
Instrument No. ββββ-ββββ-β�, Humboldt County Official Records.
PARCEL TWO
Easements and rights of way as further described in and subject to the
conditions contained in that certain Reciprocal Rights Agreement recorded
March 22, 1993 as Instrument No. ββββ-ββββ-βββ�, Humboldt County Official
Records.
PARCEL THREE
The right to use roads as further described in, and subject to the
conditions contained in those certain Right of Way Grants executed by
United States Department of the Interior Bureau of Land Management recorded
March 1, 1999 as Instrument Nos. ββββ-ββββ-β�, ββββ-ββββ-β�, ββββ-ββββ-β� and
ββββ-ββββ-β�, Humboldt County Official Records.
APN 200-011-019-000
HOU:2445420.1
Schedule 3.07
TITLE TO PROPERTIES; POSSESSION UNDER LEASES
Rights of first refusal, Options or other Contractual Rights to sell,
assign or otherwise dispose of any Real Property or any interest therein:
1. Amended and Restated Purchase and Sale Agreement dated as of January 7, 2005
between River View Terrace LLC and PALCO.
2. Real Estate Purchase Agreement dated on or about March 10, 2005 between PALCO
and The FHK Companies.
3. Stipulation for Settlement CCP ss. 664.6 in ββββββ βββββββ�, et al. v. βββββββ�
βββββββ�, et al., State of California, Humboldt County Superior Court, Case No.
DR 9700399
4. Letter of intent dated November 24, 2004 between K. D. Investments LLC and
The Pacific Lumber Company.
Schedule 3.08
PALCO AND ITS SUBSIDIARIES
Name Domicile Qualifications
The Pacific Lumber Company ("Palco") California --
Palco Subsidiaries:
βββββ� Lumber Co., Inc.* California --
Salmon Creek LLC * Delaware California
Scotia Inn Inc.* Delaware California
Scotia Pacific Company LLC* Delaware California
* None of these companies has any subsidiaries.
Schedule 3.09
LITIGATION
In March 1999, an action entitled Environmental Protection Information
Association, Sierra Club v. California Department of Forestry and Fire
Protection, California Department of Fish and Game, The Pacific Lumber Company,
Scotia Pacific Company LLC, Salmon Creek Corporation, et al. (the
"EPIC-SYP/Permits lawsuit") was filed in Superior Court in Humboldt County,
California (No. CV-990445). This action alleged, among other things, various
violations of the California Endangered Species Act ("CESA") and the California
Environmental Quality Act ("CEQA"), and challenged, among other things, the
validity and legality of Palco's sustained yield plan ("SYP") and the incidental
take permits issued by California in connection with the Headwaters Agreement
(the "California Permits"). The plaintiffs sought, among other things, to set
aside California's approval of the SYP and the California Permits and injunctive
relief to prevent implementation of timber harvesting plans ("THPs") approved in
reliance upon these documents. In March 1999, a similar action, entitled United
Steelworkers of America, AFL-CIO, CLC, and ββββββ ββββββ v. California
Department of Forestry and Fire Protection, The Pacific Lumber Company, Scotia
Pacific Company LLC and Salmon Creek Corporation (the "USWA lawsuit"), was filed
in Humboldt County Superior Court (No. CV-990452) challenging the validity and
legality of the SYP. The EPIC-SYP/Permits and USWA lawsuits were consolidated
for trial.
Following trial, the Court on October 31, 2003 entered a judgment
invalidating the SYP and the California Permits due to several deficiencies in
agency procedures and the failure of Palco to submit a complete and
comprehensible SYP. The Court's decision, however, allowed for harvesting on
THPs which rely on the SYP and were approved prior to July 23, 2003. The
short-term effect of the ruling was to preclude approval, under the SYP, of a
small number of THPs which were under review but had not been approved, and a
minor reduction in 2003 harvesting that had been expected from these specific
THPs. As a result of this case, Palco has since October 2002, when the Court
issued a stay order preventing future reliance upon the SYP, been obtaining
review and approval of new THPs under a procedure provided for in the forest
practice rules that does not depend upon the SYP and the California Permits.
Palco expects to follow this procedure until its Option A Plan is approved.
Palco and the State of California have appealed the October 31, 2003, decision.
In September 2004, the Court granted the plaintiffs' request for reimbursement
of an aggregate of $5.8 million in attorneys fees and other expenses incurred in
connection with these matters. Palco and the State of California have also
appealed this decision.
In July 2001, an action entitled Environmental Protection Information
Center v. The Pacific Lumber Company, Scotia Pacific Company LLC (the "Bear
Creek lawsuit") was filed in the U.S. District Court for the Northern District
of California (No. C01-2821), and later amended to add the Environmental
Protection Agency ("EPA") as a defendant. The lawsuit alleges that Palco's
harvesting and other forestry activities under certain approved THPs will result
in discharges of pollutants in violation of the federal Clean Water Act ("CWA").
The plaintiff asserts that the CWA requires the defendants to obtain a permit
from the California North Coast Regional Water Quality Control Board (the "North
Coast Water Board") before beginning timber harvesting and road construction
activities and is seeking to enjoin these activities until such permit has been
obtained. The plaintiff also seeks civil penalties of up to $27,500 per day for
the defendant's alleged continued violation of the CWA. On October 14, 2003, in
connection with certain motions that had been filed, the Court upheld the
validity of an EPA regulation which exempts harvesting and other forestry
activities from certain discharge requirements.
Both state and federal agencies, along with Palco and other timber
companies, have relied upon this regulation for more than 25 years. However, the
Court interpreted the regulation in such a way as to narrow the forestry
operations which are exempted, thereby limiting the regulation's applicability
and subjecting culverts and ditches to permit requirements. This ruling has
widespread implications for the timber industry in the United States. The case
is not yet final as the trial has not yet been held, and there are many
unresolved issues involving interpretation of the Court's decision and its
application to actual operations. Should the decision ultimately become final
and held to apply to all Palco's timber operations, it may have some or all of
the following effects: imposing additional permitting requirements, delaying
approvals of THPs, increasing harvesting costs, and adding water protection
measures beyond those contained in Palco's habitat conservation plan ("HCP").
On November 20, 2002, two similar actions entitled ββββ ββββ, et al. v.
ββββ βββββ�, et al. (the "ββββ action") and βββββ� ββββ, et al. v. ββββ βββββ�, et
al. (the "Cave action") were filed in Humboldt County Superior Court (No.'s
DR020718 and DR020719, respectively), which also name Palco and certain
affiliates as defendants. On April 4, 2003, the plaintiffs in these actions
filed amended complaints and served the defendants with notice of the actions.
The ββββ action alleges, among other things, that defendants' logging practices
have contributed to an increase in flooding along Freshwater Creek (which runs
through Palco's timberlands), resulting in personal injury and damage to the
plaintiffs' properties. Plaintiffs further allege that in order to have THPs
approved in the affected areas, the defendants engaged in certain unfair
business practices. The plaintiffs seek, among other things, compensatory and
exemplary damages, injunctive relief, and appointment of a receiver to ensure
that the watershed is restored. The Cave action contains similar allegations and
requests similar relief with respect to the Elk River watershed (a portion of
which is contained on the Palco Timberlands).
On February 25, 2003, the District Attorney of Humboldt County filed a
civil suit entitled The People of the State of California v. The Pacific Lumber
Company, Scotia Pacific Holding Company and Salmon Creek Corporation in the
Humboldt County Superior Court (No. DR030070) (the "Humboldt DA action"). The
suit was filed under California's unfair competition law and alleges that Palco
used certain unfair business practices in connection with completion of the
Headwaters Agreement, and that this resulted in Palco being able to harvest
significantly more trees under the HCP and SYP than would have otherwise been
the case. The suit sought a variety of remedies including a civil penalty of
$2,500 for each additional tree that has been or will be harvested due to this
alleged increase in harvest, as well as restitution and an injunction in respect
of the additional timber harvesting allegedly being conducted. In response to
motions filed by Palco for sanctions and dismissal of this suit, on April 30,
2004, the Court issued a ruling requiring the District Attorney to amend his
suit to prove that "extrinsic" fraud occurred. In addition, the Court eliminated
the remedies being sought, other than for civil penalties, and suggested that it
would be inappropriate to base civil penalties on the additional trees
harvested. The Court also ruled that it declined "at this juncture" to impose
sanctions on the District Attorney. The District Attorney subsequently amended
his suit, and Palco later filed new motions to dismiss and for sanctions. After
delays resulting from the District Attorney's efforts to disqualify the trial
judge, and that judge's later self-disqualification, a hearing on these motions
was held on February 18, 2005. The Court rejected the sanctions motion, but has
not yet ruled on the motion for dismissal.
On November 2, 2004, an action entitled Environmental Protection
Information Center v. U.S. Fish & Wildlife Service, NOAA Fisheries, et al.
(No. C04-4647) was filed in the U.S. District Court for the Northern District of
California (the "EPIC-USFWS/NOAA lawsuit"). This lawsuit alleges that two
federal agencies have violated certain federal laws and related regulations in
connection with their oversight of the HCP and related incidental take permits
issued by the federal governments pursuant to the HCP and related federal
incidental take permits (the "Federal Permits"). The plaintiff also alleges that
the Federal Permit for the northern spotted owl was unlawfully issued and that
Palco violated California's unfair competition law by using false advertising
and making misleading environmental claims. The plaintiff seeks a variety of
remedies, including requiring additional actions by the federal agencies and
precluding them from authorizing take of the northern spotted owl, an injunction
requiring Palco to cease certain alleged unlawful activities, as well as
restitution and remediation by Palco. Motions have been filed by the federal
government and Palco seeking dismissal of substantial portions of this case, but
a hearing date on this motion has not yet been set.
Schedule 3.10
AGREEMENTS
None.
Schedule 3.17
ENVIRONMENTAL MATTERS
See attached memorandum of April 13, 2005 to βββββ� β�. ββββββββ from βββββββ�
βββββ�, ββββββ ββββββ and βββββββββ� βββββ� of βββββ� βββββ� LLP.
PALCO is party to a "consent decree" settlement for its ββββββββ and βββββ�
operations. PALCO has completed some Phase II work at the Scotia facility (Mill
A, Mill B, and portions of Scotia Value Added). Limited Phase I work has been
conducted at both the ββββββββ and Fortuna facilities. No environmental issues
have been found warranting notification to regulatory agencies at either the
ββββββββ or βββββββ� facilities as part of these Phase I activities. A technical
memorandum summarizing the findings has been prepared for the completed Phase II
work in Scotia. PALCO is conducting a remediation project concerning groundwater
and soil contamination at the old company garage located on Main Street in
Scotia and its coordinating that work through both the Humboldt County
Environmental Health Department and the Regional Water Quality Control Board.
There was a number of underground storage tanks located on PALCO property. All
of these sites have been officially closed from a regulatory perspective except
the one site, as mentioned above, at the old company garage on Main Street in
Scotia. That site will be going through active remediation through a hydrogen
peroxide injection process and is scheduled for complete closure within
approximately four years. Another site located on PALCO property is in ββββββββ;
however, this site is from historic LP operations and is their responsibility
for closure.
PALCO is proactively managing its asbestos and lead paint program. PALCO has
been surveying the Scotia town site for asbestos and lead based paint. As
locations are identified that contain these building materials, they are noted
and quantified in reports. Also, at the time of the surveys any damaged material
is noted and further specified if conditions need to be abated. If conditions
are noted during the surveys that need to be abated, they are scheduled with a
contractor licensed to perform such work in the state of California. A large
amount of material has been removed predominately from older and seldom used
buildings.
PALCO is undertaking to clean up one wood waste site at Hely creek. Another wood
waste site at βββββ� is being managed by a contractor specializing in reclaiming
wood waste. At βββββ�, related estimated costs of $200,000 to $300,000 per year
over four years are included in PALCO's plan. These estimates are subject to
potential downward revision. At Hely Creek, total costs of $200,000 are included
in PALCO's plan, and these costs are subject to potential upward revision.
In 2003, Scotia Pacific sold property to the State of California located in
Redway, Humboldt County (portions of Sections 15 an 16, Township 4 South, Range
3 East, Humboldt Meridian). This property was owned by PALCO until 1993. A Phase
1 Environmental Site Assessment in connection with this sale found debris in the
vicinity that suggested past activity by trespassers on the property; possible
violations of Environmental Law may have occurred in connection with this
activity.
Regulatory and Environmental Factors Affecting Palco's Business (see Schedule
3.09 for various defined terms used herein)
General
Palco's business is subject to a variety of California and federal laws and
regulations, as well as the HCP, dealing with timber harvesting practices,
threatened and endangered species and habitat for such species, and air and
water quality. Compliance with such laws and regulations also plays a
significant role in Palco's business. The California Forest Practice Act (the
"Forest Practice Act") and related regulations adopted by the California Board
of Forestry and Fire Protection (the "BOF") set forth detailed requirements for
the conduct of timber harvesting operations in California. These requirements
include the obligation of timber companies to obtain regulatory approval of
detailed THPs containing information with respect to areas proposed to be
harvested. California law also requires large timberland owners, including
Palco, to demonstrate that their proposed timber operations constitute the
maximum sustainable production of their timberlands over time.
The federal Endangered Species Act (the "ESA") and CESA provide in general
for the protection and conservation of specifically listed wildlife and plants.
These laws generally prohibit the take of certain species, except for
specifically authorized incidental take pursuant to otherwise lawful activities
which do not jeopardize the continued existence of the affected species and
which are made in accordance with an approved habitat conservation plan and
related incidental take permits. A habitat conservation plan, among other
things, specifies measures to minimize and mitigate the potential impact of the
incidental take of species and to monitor the effects of the activities covered
by the plan. Palco is also subject to the CEQA, which provides for protection of
the state's air and water quality and wildlife, and the California
ββββββ-Cologne Water Quality Control Act and CWA, which require that Palco
conduct its operations so as to reasonably protect the water quality of nearby
rivers and streams. Compliance with such laws, regulations and judicial and
administrative interpretations, together with other regulatory and environmental
matters, have resulted in substantial restrictions on the scope and timing of
Palco's timber operations, increased operational costs significantly, and
engendered continual litigation and other challenges to its operations.
Moreover, the cash flows of Palco and Scotia Pacific have recently been
adversely affected by the failure of the North Coast Water Board to release for
harvest THPs which have already been approved by the other government agencies
that approve Scotia Pacific's THPs. See "Water Quality" below.
Environmental Plans
The HCP and the SYP (collectively, the "Environmental Plans"), which cover
the substantial portion of the timberlands of Palco and its subsidiaries (the
"Palco Timberlands"), were approved by the federal and state governments upon
the consummation of the Headwaters Agreement. In connection with approval of the
Environmental Plans, incidental take permits (the "Permits") were issued with
respect to certain threatened, endangered and other species found on the
timberlands covered by the Environmental Plans. The Permits were to cover the
50-year term of the HCP and allow incidental take of 17 different species
covered by the HCP, including nine species which are found on the Palco
Timberlands that have been listed under the ESA and/or the CESA. The agreements
which implement the Environmental Plans also provide for various remedies
(including the issuance of written stop orders and liquidated damages) in the
event of a breach by Palco, Salmon Creek or Scotia Pacific (collectively, the
"Palco Companies") of these agreements or the Environmental Plans.
Under the HCP, harvesting activities are prohibited or restricted on
certain areas of the Palco Timberlands. Some of these restrictions continue for
the entire 50-year term of the HCP. For example, several areas (consisting of
substantial quantities of timber, including old growth redwood and βββββββ�-fir
timber) are designated as habitat conservation areas for the marbled murrelet, a
coastal seabird, and certain other species. Harvesting in certain other areas of
the Palco Timberlands is currently prohibited while these areas are evaluated
for the potential risk of landslide. Further, additional areas alongside streams
have been designated as buffers, in which harvesting is prohibited or
restricted, to protect aquatic and riparian habitat. Restrictions on harvest in
streamside buffers and potential landslide prone acres may be adjusted up or
down, subject to certain minimum and maximum buffers, based upon the ongoing
watershed analysis process described below. The adaptive management process
described below may also be used to modify most of these restrictions.
The first analysis of a watershed, Freshwater, was released in June 2001.
This analysis was used by the Palco Companies and the government agencies to
develop proposed harvesting prescriptions. Prescriptions for the Van Duzen
watershed were approved in January 2004. Prescriptions for a third watershed
(Lower Eel - Eel Delta) were approved in March 2004. The Freshwater, Van Duzen
and Lower Eel prescriptions each resulted in a reduction in the size of the
streamside buffers set forth in the Environmental Plans and also provide for
geologic reviews in order to conduct any harvesting activities on potential
landslide-prone areas. This effectively reduced both the size and operational
restrictions in respect of landslide-prone areas. The analysis for a fourth
watershed, Elk River, was submitted in mid-2004 for agency and public review,
and prescriptions for Elk River have been developed and are undergoing review by
the relevant agencies.
The HCP required the Palco Companies, together with the government
agencies, to establish a schedule resulting in completion of the initial
watershed analysis process for all covered lands within five years. However, due
largely to the number of agencies involved and the depth and complexity of the
analyses, the process has proven to require more time than originally
anticipated. Accordingly, the Palco Companies have been working with the
government agencies to establish an appropriate timeline and to streamline the
process for implementation of watershed analysis on the remaining portions of
Palco Timberlands to ensure that such studies are time and cost efficient, and
that such studies continue to provide scientific results necessary to evaluate
potential changes to the harvesting restrictions on those lands. The Palco
Companies have received an extension to March 2007 of the time in which the
watershed analysis process must be completed. A proposed streamlined process is
undergoing review by the relevant agencies.
The HCP imposes certain restrictions on the use of roads on the timberlands
covered by the HCP during several months of the year and during periods of wet
weather. However, Palco has conducted, and expects to be able to continue to
conduct, some harvesting during these periods. An adaptive management change
approved in 2003 for the road restrictions has improved the ability to construct
and use roads on the Palco Timberlands in ways that are consistent with the
operational needs of the Palco Companies. The HCP also requires that 75 miles of
roads be stormproofed (i.e., reconstructed to reduce sediment generation) on an
annual basis and that certain other roads must be improved or repaired. The
nature of this work requires that it be performed in the dry periods of the
year. To date, over 450 miles of roads have been stormproofed.
The HCP contains an adaptive management provision, which both the state and
federal governments have clarified will be implemented on a timely and efficient
basis, and in a manner which will be both biologically and economically sound.
This provision allows the Palco Companies to propose changes to many of the HCP
prescriptions based on, among other things, economic considerations. The
regulatory agencies have also clarified that in applying this adaptive
management provision, to the extent the changes proposed do not result in the
jeopardy of a particular species, the regulatory agencies will consider the
practicality of the suggested changes, including the cost and economic
feasibility and viability. The Palco Companies and the agencies have implemented
various adaptive management changes related to wildlife and rare plants, and
other changes relating to roads and streamside buffers. These adaptive
management changes have increased Palco's ability to conduct harvesting
operations and/or reduce operating costs while still meeting the obligations of
the Environmental Plans.
Water Quality
Laws and regulations dealing with water quality are impacting the Palco
Companies primarily in four areas: efforts by the EPA and the North Coast Water
Board to establish total maximum daily load limits ("TMDLs") in watercourses
that have been declared to be water quality impaired; actions by the North Coast
Water Board to impose waste discharge reporting requirements in respect of
watersheds on the Palco Timberlands and in some cases, clean-up or prevention
measures; actions by the North Coast Water Board during the THP approval process
which impose certain operational requirements on individual THPs; and a
directive of the North Coast Water Board to its staff to develop watershed-wide
waste discharge requirements ("WWDRs") for the Freshwater and Elk River
watersheds.
Under the CWA, the EPA is required to establish TMDLs for relevant
contaminants in watercourses that have been declared to be "water quality
impaired." The EPA and the North Coast Water Board are in the process of
establishing TMDLs for many northern California rivers and certain of their
tributaries, including nine watercourses that flow within the Palco Timberlands.
On the Palco Timberlands, the relevant contaminant is simple sediment dust, dirt
and gravel that is abundant in watercourses largely as a function of the area's
normally heavy rainfall and soil that erodes easily. Palco expects this process
to continue into 2010. In December 1999, the EPA issued a report dealing with
TMDLs on two of the nine watercourses. The agency indicated that the
requirements under the HCP would significantly address the sediment issues that
resulted in TMDL requirements for these watercourses. The North Coast Water
Board has begun the process of establishing the TMDL requirements applicable to
two other watercourses on the Palco Timberlands, with a targeted completion of
2006 for these two watercourses. Scotia Pacific's scientists are actively
working with North Coast Water Board staff to ensure these TMDLs recognize and
incorporate the environmental protection measures of the HCP. The final TMDL
requirements applicable to the Palco Timberlands may require aquatic protection
measures that are different from or in addition to those in the HCP or that
result from the prescriptions to be developed pursuant to the watershed analysis
process provided for in the HCP.
For each of the three winter periods since 2002, the North Coast Water
Board has required Palco to submit "Reports of Waste Discharge" in order to
conduct winter harvesting operations in the Freshwater and Elk River watersheds.
After consideration of these reports, the North Coast Water Board imposed
requirements on the Palco Companies to implement additional mitigation and
erosion control practices in these watersheds for each of the three winter
operating periods. The North Coast Water Board has also extended the
requirements for certain mitigation and erosion control practices in three
additional watersheds (Bear, Jordan and βββββ� Creek). The Palco Companies and
the North Coast Water Board are currently in discussions to determine what these
measures will be. The requirements imposed to date by the North Coast Water
Board have significantly increased operating costs; additional requirements
imposed in the future could further increase costs and cause delays in THP
approvals.
The North Coast Water Board has also issued a clean up and abatement order
(the "Elk River Order") for the Elk River watershed, which is aimed at
addressing existing sediment production sites through clean up actions. The
North Coast Water Board has also initiated the process which could result in
similar orders for the Freshwater and Bear Creek watersheds, and is
contemplating similar actions for the Jordan and βββββ� Creek watersheds. The Elk
River Order has resulted in increased costs to Palco that could extend over a
number of years. Additional orders in other watersheds (should they be issued),
may also result in further cost increases. Palco's appeal of the Elk River Order
to the State Water Resources Control Board (the "State Water Board") was denied.
Palco has appealed the decision of the State Water Board in state court.
In addition to the foregoing actions, the North Coast Water Board in
December 2003 directed its staff to create WWDRs for the Freshwater and Elk
River watersheds. As harvesting activities on the Palco Timberlands cannot
readily be moved between watersheds due to, among other things, historic harvest
patterns, adjacency restrictions, and the age classes of trees, that action and
the other matters described above could, in addition to the potential effects
noted above, individually or collectively result in reduced harvest. In that
regard, the staff of the North Coast Water Board has not yet formulated the
required WWDRs for the Freshwater and Elk River watersheds, and has on several
occasions postponed its projected date for their completion. As a result, the
North Coast Water Board has failed to release for harvest a number of Scotia
Pacific's THPs that are located in the Freshwater and Elk River watersheds, even
though these THPs have already been approved by the other government agencies
which review Scotia Pacific's THPs and are in compliance with the HCP. The delay
in receiving the release of these THPs has adversely impacted the cash flows of
both Palco and Scotia Pacific. Furthermore, it is likely that additional delays
in the development of the Freshwater and Elk River WWDRs will occur, and such
delays could have adverse impacts beyond those currently being experienced.
On February 25, 2005, the Executive Officer of the staff of the North Coast
Water Board publicly announced approval of the release of additional THPs such
that Palco would be allowed to harvest up to 50% of the harvest limit
established by the CDF for the Freshwater and Elk River watersheds. On March 16,
the North Coast Water Board ordered (the "March 16 Order") that additional THPs
be enrolled that would allow the harvest of up to 75% of the harvest limit
established by the CDF for the Freshwater and Elk River watersheds. Following an
appeal of the March 16 Order to the State Water Resources Control Board (the
"State Water Board"), on April 6, 2005, a hearing officer acting on behalf of
the State Water Board issued an order staying the enrollment of the additional
THPs under the March 16 Order.
California Senate ββββ 810, which became effective January 1, 2004,
provides regional water quality control boards with additional authority related
to the approval of THPs on land within impaired watersheds. Under this law, a
THP "may not be approved if the appropriate regional water quality control board
finds, based on substantial evidence, that the timber operations proposed in the
plan will result in a discharge into a watercourse that has been classified as
impaired due to sediment...that causes or contributes, to a violation of the
regional water quality control plan. Palco is uncertain of the operational and
financial effects which will ultimately result from Senate ββββ 810. While this
provision has not yet been invoked in respect of the Palco Timberlands, because
substantially all rivers and waterbodies on the Palco Timberlands are classified
as sediment-impaired, implementation of this law could result in delays in
obtaining approval of THPs, lower harvest levels and increased costs and
additional protection measures beyond those contained in the HCP.
Memorandum
April 13, 2005
TO: βββββ� β�. ββββββββ
FROM: βββββββ� βββββ�
ββββββ ββββββ
βββββββββ� βββββ�
CLIENT: 92236 - PALCO
MATTER: 012 - Regional Water Board Matters
RE: List of Regional and State Water Board Orders and Actions
Following is a summarized list of the orders issued and actions taken by the
Regional or State Board affecting The Pacific Lumber Company.
REGIONAL BOARD ORDERS AND ACTIONS
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
# ORDER NO. DATE TITLE OF ORDER DESCRIPTION ISSUES DISPOSITION
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
1 87-113 09/24/87 Resolution No. 87-113, Waives the filing of ROWDs (unless PALCO had no issues with this PALCO did not appeal this order.
*** Waiving Waste Discharge requested by the Board) and Resolution.
Resolution Requirements for issuances of WDRs for specific *Rescinded by R1-2002-0109
(Categorical Specific Types of types of waste discharges under Under amendments to Cal. Water (Interim Categorical Waiver)*
Waiver) Discharges Cal. Water Code ss.13269, including Code ss.13269 (SB 390), the existing
stormwater runoff, erosion from waivers expired on 1/1/03.
minor construction projects, minor
stream channel alterations, and
timber harvesting. "The Regional
Board finds that waiver of [ROWDs
and WDRs] . would enable
Regional Board staff resources to
be used more effectively."
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
2 97-115 09/23/97 Cleanup and Abatement Orders cleanup and abatement of First attempt to link landslides PALCO filed a petition for review.
*** Order No. 97-115, North activities pertaining to and harvesting; no current issues
CAO Fork Elk River landslides observed in and around since the CAO was superceded. *Rescinded by 98-100 (CAO)*
(North Fork Elk) THP 94-360.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
3 98-100 09/22/98 Cleanup and Abatement Rescinds in part 97-115 (CAO). Contains findings that PALCO PALCO filed a petition for
*** Order No. 98-100, North Orders further cleanup and caused the water quality problems review, but is complying with βββ�
βββ� Fork Elk River abatement activities: (1) survey in the North Fork Elk River; no 98-100 requirements; has
(North Fork Elk) downstream landowners utilizing formal evidentiary hearing was surveyed, provided water, and
North Fork Elk for domestic or ever held, but the Regional and replaced water systems of various
agricultural water supply; and State Board have insisted landowners; PALCO could consider
(2) provide adversely affected (particularly in the THP 520 challenging the findings by
downstream surface water users proceedings) that the stipulated invoking the settlement
with alternative water supplies. settlement(02/22/99)serves as a agreement's provision with
concession by PALCO that it was respect to new evidence.
responsible for the conditions
in the North Fork Elk River;
PALCO has argued that the
settlement agreement expressly
states that PALCO is not admitting
liability.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
4 N/A 09/09/00 Staff Report for Evaluates several adverse impacts PALCO submitted comments opposing
*** Proposed Regional Water to beneficial uses of water caused the report at these workshops.
Staff Report Board Actions in the by discharge of sediment from The report underlies many of the
North Fork Elk River, lands owned by PALCO within the other identified matters, but does
Bear Creek, Freshwater 5 other watersheds. Alternatives not constitute its own order.
Creek,Jordan Creek and addressed in the report include
βββββ� Creek Watersheds adoption of individual WDRs for
timber harvest activities and
expediting the time schedule for
development of TMDLs for
Freshwater Creek, Elk River, and
the Middle Fork of the Eel River
to which βββββ�, Bear and Jordan
Creeks are tributary. Proposes
cease and desist orders limiting
timber harvest rates in Bear at
72.75 acres/yr and in NFER at
39.57 acres/yr (rates developed by
ββββββ ββββ).
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
5 R1-2001-0019 03/28/01 Monitoring and Orders PALCO to conduct water At issue was the Regional Board's PALCO filed petition for review
R *** Reporting Program quality monitoring in the South authority to require additional and stay of this order (SWRCB/OCC
MRP Order No. R1-2001-0019 Fork Elk River watershed in monitoring after a THP has been File A-1380). The State Board
(South Fork Elk) (South Fork Elk River) conjunction with THP 520. approved, particularly when no denied PALCO's stay request
information changed and the (WQO-2001-0009) and modified the
harvesting had not yet begun; monitoring requirements of
PALCO argued that the Order was R1-2001-0019 (WQO-2001-0014).
not supported by the weight of the
evidence and that the burden of
the monitoring outweighed any
benefit.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
6 R1-2002-0080 10/24/02 Policy for Waiving As a result of the amendments to "Storm water runoff" is one of the PALCO did not appeal this order.
*** Waste Discharge Water Code ss.13269 (SB 390), the waiver categories listed in
Resolution Requirements for waiver categories listed in Attachment B, "Storm water runoff
(Categorical Specific Types of Waste Attachment A would expire 1/1/03 is not governed by statewide
Waiver) Discharge and be replaced by individual regulations, no water quality
WDRs, waivers, or general orders. problems are anticipated and no
WDRs are waived for categories NPDES permit is required."
listed in Attachment B (these
categories will be reviewed and
amended within 5 years from date
of resolution).
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
7 R1-2002-0085 08/01/02 Cleanup and Abatement Ordered PALCO to prepare according PALCO has argued that the Regional PALCO filed a petition for review
*** Order and Request for to a set time table: (1) work plan Board does not have the authority (SWRCB/OCC File A-1501). At
CAO Technical Reports No. to conduct corrective actions on to issue CAOs as a collateral PALCO's request, the βββββ� βββββ�
(βββββ� & βββββ� ββ-ββββ-ββββ (βββββ� and roads identified in the PWA attack on approved THPs, that the is holding matter in abeyance
Forks Elk) South Fork Elk Rivers) report, (2) a report identifying CAO is not supported by the until 10/11/06.
options and preferred alternatives evidence, that the CAO cannot
for remediation of each road and regulate natural or legacy *Rescinded by R1-2002-0114 (CAO);
non-road related landslides conditions, and that the CAO is a PALCO's position is that
contained in PWA report; (3) an breach of the Headwaters Agreement. R1-2002-0114(CAO) is also being
assessment of in-stream soil held abeyance*
in deposits in Bridge Creek
and the Little North
Fork Elk River.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
8 Letter Order 08/05/02 Order Requiring Reports Order requires PALCO to provide PALCO raised a number of arguments PALCO filed a petition for review
*** of Waste Discharge for reports of waste discharge for Elk against the ROWD (and the (SWRCB/OCC File A-1502). At
ROWDs Elk River ("Elk River River; order addresses only wet subsequent WDRs), including that PALCO's request, the State Board
(Elk) ROWD") weather conditions between Oct. 15 WDRs are unauthorized, barred by is holding matter in abeyance
and May 1 of each years. collateral estoppel, are unduly until 10/11/06.
burdensome, are not supported by
the evidence, and breach the
Headwaters Agreement.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
9 R1-2002-0088 08/15/02 Order Requiring Technical report order for Elk PALCO raised a number of arguments PALCO filed a petition for review
*** Technical Information, River TMDL development monitoring. against the MRP Order, including (SWRCB/OCC File A-1507). At
MRP Monitoring and that it is unauthorized, barred by PALCO's request, the State Board
(Elk) Reporting Program collateral estoppel, is unduly is holding matter in abeyance
R1-2002-0088 (Elk River) burdensome, not supported by the until 10/11/06.
evidence, and breaches the
Headwaters Agreement.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
10 R1-2002-0105 11/07/02 Waste Discharge Orders PALCO to comply with MRP No current issues since the WDRs PALCO did not appeal this order.
*** Requirements No. R1-2002-0105 and submit on July 1 were rescinded.
WDRs R1-2002-0105 (Elk River) of each year, a revised ROWD *Rescinded by R1-2003-0007 (WDRs)*
(Elk) identifying all THPs and associated
activities proposed to
be conducted in the Elk
River watershed during the
winter months.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
11 R1-2002-0105 *** 11/07/02 Monitoring and Requires instream water sample No current issues since the MRP PALCO did not appeal this order.
MRP Reporting Program No. collection at selected stream Order was rescinded.
(Elk) R1-2002-0105 (Elk River) crossings; objective is to assess *Rescinded by R1-2003-0007 (MRP)*
and demonstrate compliance with
WDR Order R1-2002-0105.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
12 R1-2002-0109 12/10/02 Interim Categorical *Rescinds Resolution 87-113 This order was adopted in PALCO did not appeal this order.
*** Waiver for Discharges (Categorical waiver resolution).* anticipation of the expiration of
Resolution Related to Timber Waives issuance of WDRs and Resolution 87-113 on 1/1/03. The EPIC/HWC petitioned the State
(Interim Operations in the North submittal of ROWDs for timber Regional Board did not permit Board for review and stay of this
Categorical Waiver) Coast Region operations on private lands; PALCO to use this categorical order (SWRCB/ OCC File A-1539);
dischargers must comply with the waiver for its Elk and Freshwater the stay was denied (see SWRCB
requirements of the Basin Plan, THPs. 4/15/03 letter order below).
monitoring programs instituted by
the Executive Officer, and submit *Rescinded by R1-2003-0116
a Notice of Intent and approved (Interim Categorical Waiver)*
THP prior to commencement of
timber operations.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
13 R1-2002-0111 12/10/02 Waiver of Waste Renews the waivers of ROWDs and The categorical waiver granted PALCO did not appeal this order.
*** Discharge Requirements WDRs for a number of active North under Resolution 87-113 was to
Waiver of WDRs for Specific, Currently Coast THPs covered under the expire on 01/01/03; this order HWC filed a petition for review
Active Timber Harvest timber harvesting categorical extended the waiver for an (see SWRCB/OCC File A-1542). By
Plans as of January 1, waiver in Resolution 87-113 (see additional five years. letter of 03/21/03, the State
2003, on Private and #1 above); a list of the specific Board consolidated this petition
State Lands Within the THPs is attached to the order. with HWC's later petition for
North Coast Region review of Order ββ-ββββ-ββββ
(βββ�)
(see
#18
below).
Both
petitions
were
ultimately
dismissed
by
the
State
Board.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
14 R1-2002-0114 12/17/02 Cleanup and Abatement Rescinds R1-2002-0085 (CAO). PALCO has argued that the Regional PALCO filed a petition for
*** Order and Request for Orders PALCO to (1) conduct all Board does not have the authority review, which State Board
CAO Technical Reports No. cleanup and abatement activities to issue CAOs as a collateral rejected by letter dated
(North & South R1-2002-0114 (North and under direction of a CE; (2) attack on approved THPs, that the 1/28/03. PALCO then sent a
Forks Elk) South Forks Elk River) prepare and submit a workplan to CAO is not supported by the letter explaining that the
conduct corrective actions on evidence, that the CAO cannot material pertaining to this
roads identified in PWA report; regulate natural or legacy matter is encompassed within
(3) prepare and submit itemized conditions, and that the CAO is a SWRCB/OCC File A-1501 (PALCO
report identifying all options and breach of the Headwaters Agreement. Petition for Review of
preferred alternatives for the R1-2002-0085).
remediation of each road and
non-road related site in PWA *Since this order rescinded
report; (4) prepare and submit an R1-2002-0085 (CAO), which the
assessment of in-stream soil State Board was holding in
deposits in Bridge Creek and the abeyance until 10/11/06 at
North Branch of the NF Elk PALCO's request, PALCO's position
is that R1-2002-0114 (CAO) is
*Effectively did nothing more than also being held in abeyance*
make grammatical changes to and
alter deadlines for R1-2002-0085*
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
15 Letter Order 12/19/02 Letter order requiring Request for reports of waste PALCO filed suit on the primary PALCO filed a petition for review
*** reports of waste discharges for certain THPs in grounds that the findings in this (SWRCB/OCC File A-1543). The
ROWD discharge of Freshwater Freshwater. order (i.e., PALCO's harvesting is State Board dismissed without
(Freshwater) Creek ("Freshwater the cause of water quality review or hearing; on 8/22/03,
ROWD"). problems in the watershed) are not PALCO filed a Petition and
supported by the evidence, that Complaint in Humboldt County
the order is unauthorized under Superior Court (Case No.
the comprehensive regulatory CV03-0650).
regime established by the FPA and
FPR, and that the order is barred
by collateral estoppel and Gov't
Code ss.51115.5; PALCO has also
alleged breach of contract,
promissory estoppel, violations of
due process and equal protection,
and an uncompensated taking.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
16 Letter Order 01/06/03 Section 13267 Order for Letter order requiring information PALCO decided it could live with PALCO did not appeal this order.
*** Freshwater Creek relating to "early abatement" this order (effort was being made
CAO Cleanup and Abatement actions for the Freshwater Creek to find common ground with
(Freshwater) Activities Watershed, prior to completion of Regional Board).
the TMDL development process.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
17 R1-2003-0007 01/31/03 Revision of Waste Rescinds R1-2002-0105 (WDRs). PALCO decided it could live with PALCO did not appeal this order.
*** Discharge Requirements Enforces PALCO to submit reports this order (effort was being made
WDRs No. R1-2003-0007 (Elk of waste discharge on fifteen Elk to find common ground with *Rescinded by R1-2003-0118 (WDRs)*
(Elk) River) River THPs. Regional Board).
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
18 R1-2003-0007 01/30/03 Monitoring and Rescinds R1-2002-0105 (MRP). PALCO decided it could live with PALCO did not appeal this order.
*** Reporting Program No. Requires instream water sample this order (effort was being made
MRP R1-2003-0007 (Elk River) collection at selected stream to find common ground with HWC filed a petition for review.
(Elk) crossings; objective is to assess Regional Board). and the State Board consolidated
and demonstrate compliance with this petition with HWC's earlier
Revised WDR Order R1-2003-0007. petition for review of Order
R1-2002-0111
(SWRCB/
OCC
File
A-1542)
(see
#13
above);
both
petitions
were
ultimately
dismissed
by
the
State
Board.
*Rescinded by R1-2003-0118 (WDRs)*
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
19 R1-2003-0027 02/27/03 Waste Discharge Enforces WDRS on Freshwater on PALCO decided it could live with PALCO did not appeal this order.
*** Requirements No. THPs not already covered by WDRs this order (effort was being made
WDRs R1-2003-0027 submitted by PALCO on 1/16/03 or to find common ground with *Rescinded by R1-2003-0119*
(Freshwater) (Freshwater Creek) waiver thereof. Regional Board).
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
20 R1-2003-0027 02/27/03 Monitoring and Enforces monitoring on Freshwater PALCO decided it could live with PALCO did not appeal this order.
*** Reporting Program No. to "assess and demonstrate this order (effort was being made
MRP R1-2003-0027 compliance with WDR R1-2003-0027. to find common ground with *Rescinded by R1-2003-0119*
(Freshwater) (Freshwater Creek) Regional Board).
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
21 Letter Order 03/26/03 Letter order requiring Letter seeks GIS data layers from PALCO filed suit on the primary PALCO filed a petition for review
*** technical reports PALCO. grounds that the order violated (SWRCB/OCC File No. A-1564) and
Technical Reports related to GIS layers due process by having no hearing, State Board dismissed without
re GIS Layers pursuant to Water Code that such information cannot be review or hearing; PALCO filed
(Elk & Freshwater) section 13267(b) (Elk compelled through the TMDL Petition and Complaint in
River & Freshwater) process, that the evidence does Humboldt County Superior Court
not support such an order, that (Case No. CV03-0761).
the information constitutes
privileged trade secrets, and that On 01/25/05, the Regional Board
the order constitutes an wrote to PALCO (see #30 below)
uncompensated taking, a violation stating it reserved discretion to
of due process, and a violation of pursue enforcement actions for
equal protection. failure to meet the deadlines of
this order or to require
compliance in the future.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
22 Letter Order 03/26/03 Letter order requiring Letter identifies six specific PALCO filed suit on the primary PALCO filed a petition for review
*** technical reports categories of reports, including grounds that the order violated (SWRCB/OCC File No. A-1564) and
Technical Reports related to several stream crossings information, due process by having no hearing, the State Board dismissed without
re Information Gaps information gaps, inventories and maps to be that such information cannot be review or hearing; PALCO filed a
(Elk & Freshwater) pursuant to Water Code disclosed by PALCO to the Regional compelled through the TMDL Petition and Complaint in
section 13268(b) (Elk Board. process, that the evidence does Humboldt County Superior Court
River & Freshwater) not support such an order, that (Case No. CV03-0761 - this is the
the information constitutes same suit described in #21 above).
privileged trade secrets, and that
the order constitutes an
uncompensated taking, a violation
of due process, and a violation of
equal protection.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
23 R1-2003-0073 06/26/03 Resolution Delegating Appoints βββββββββ� βββββββ� as PALCO did not appeal this order.
*** Certain Powers and Executive Officer of the Regional
Resolution Duties to the Executive Board (effective 8/15/03) and
(Powers of the Officer delegates all powers and duties of
Executive Officer) the Regional Board to her.
---- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
24 R1-2003-0076 08/27/03 Resolution Forwarding Regional Board initiated the If the nomination is approved by PALCO did not appeal this
*** Elk River Sensitive nomination process under the the Board of Forestry, the Elk resolution, but did submit its
Resolution Watershed Nomination to Forest Practice Rules to designate River watershed would be subjected opposition; the Board of Forestry
(Elk River Board of Forestry the Elk River Watershed as a to substantial additional discussed this item at its
Sensitive "Sensitive Watershed" under 14 CCR operating restrictions under the 10/9/03 meeting and requested
Watershed ss.916.8; the BOF will now hold Forest Practice Rules. that two BOF members develop and
Nomination) hearings and make the final formalize a process to form a
determination.
committee
for
exploration
on
how
to
evaluate
a
sensitive
watershed
nomination.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
25 R1-2003-0116 11/05/03 Interim Categorical Subject to the conditions of the PALCO did not appeal this order.
*** Waiver for Discharges order, the Regional Board waived
Interim Related to Timber the submittal of ROWDs and *Rescinded by R1-2004-0016
Categorical Waiver Operations in the North issuance of WDRs for waste (Categorical Waiver)*
Coast Region discharges associated with timber
operations on non-federal lands,
unless the Executive Officer
determined otherwise. The
Executive Officer may deny
coverage where a request for WDRs
is received from a state agency or
subdivision; where unique
conditions warrant further
regulation; or where timber
operations involve discharges that
could result in reduced water
quality protection or pose a
significant threat to water
quality.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
26 R1-2003-0118 11/05/03 Waste Discharge Enforces WDRs on 22 THPs in Elk PALCO decided it could live with PALCO did not appeal this order.
*** Requirements for PALCO River during winter operations (9 this order (effort was being made
WDRs (Elk River) THPs were carried over from to find common ground with
(Elk) R1-2003-0007). Regional Board).
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
27 R1-2003-0118 11/05/03 Monitoring and Objective is to assess and Requires PALCO to collect instream PALCO did not appeal this order.
*** Reporting Program for demonstrate compliance with WDR water samples at selected stream
MRP PALCO (Elk River) Order R1-2003-0118. crossings on THPs covered by WDR
(Elk) Order R1-2003-0118 and prepare
monthly and quarterly reports.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
28 R1-2003-0119 11/05/03 Waste Discharge Enforces WDRs on 16 THPs in Elk PALCO decided it could live with PALCO did not appeal this order.
*** Requirements for PALCO River during winter operations (4 this order (effort was being made
WDRs (Freshwater} THPs were carried over from to find common ground with
(Freshwater) R1-2003-0027). Regional Board).
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
29 N/A 08/26/03 Phase II Report: Regional Board held a series of The primary issue that has evolved PALCO submitted comments opposing
*** 08/27/03 Independent Scientific workshops on the Phase II Report from the ISRP is the Regional the report at these workshops.
ISRP Report Phase 09/23/03 Review Panel of the ISRP. Board's unprecedented effort to The report underlies many of the
II 11/04/03 impose a rate of harvesting other identified matters, but
12/02/03 restriction on PALCO to address does not constitute its own order.
the Board's alleged concerns over
water quality.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
30 Letter Order 06/17/04 Request for Reports of The letter request carries out the There is some overlap between the On 01/25/05, the Regional Board
*** Waste Discharge for Board's December 2003 motion data requested in this letter wrote to PALCO "in the spirit of
ROWDs Timber Harvesting and directing staff to address water order and the letter order of cooperation, and to allow the
(Elk & Freshwater) Related Activities in quality impacts in the listed 03/26/03 requesting data under [WWDRs] to proceed to fruition"
North Fork Elk River, watersheds. To be deemed Water Code ss.13267 (see #21 stating that the ROWDs were
South Fork Elk River, complete, the 3 ROWDs must each above). PALCO will not agree to deemed complete and that the
and Freshwater Creek contain a general summary of past, provide the Board with GIS data in Board would proceed with drafting
Watersheds, Humboldt ongoing and foreseeable electronic format, but will the WWDRs. However, the Board
County, California activities; project-specific provide the data in hard copy. reserved its discretion to pursue
(pursuant to sediment delivery estimates; and enforcement actions for failure
ββββββ-Cologne ss.13260) spatial data and maps (including to meet the deadlines set in the
GIS layers). ss.13267 Order (see #21 above).
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
31 R1-2004-0016 06/23/04 Categorical Waiver of Rescinds R1-2003-0116 (Categorical Order expires 6/23/09. PALCO did not appeal this order.
*** Waste Discharge Waiver). Excludes projects
Categorical Waiver Requirements for accepted for filing, but not
Discharges Related to approved, by CDF prior to
Timber Harvest 6/23/04. Those dischargers have
Activities on until 10/15/04 to seek temporary
Non-Federal Lands in coverage under R1-2003-0116 and
the North Coast Region then be automatically covered
under R1-2004-0016 provided
they meet the eligibility criteria
of R1-2004-0016. Order sets
out 6 waiver categories for new
projects and the criteria
for each category. Projects
that do not meet the
eligibility criteria for one
of the 6 waiver categories
are subject to individual
waivers, general WDRs (under
R1-2004-0030), or individual
WDRs. Attaches a Guidance
Document and Certification
Notice forms.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
32 R1-2004-0028 04/02/04 Cleanup and Abatement Requires PALCO to prepare and PALCO has attempted to comply with PALCO did not appeal this order.
*** Order and Requirement submit sediment source inventory, this order in collaboration with
CAO for Technical Reports sediment reduction work plans, Regional Board staff.
(South & Mainstem for PALCO (South Fork treatment schedules, and annual
Elk) Elk River and Mainstem summary reports and monitoring
Elk River) plans.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
33 R1-2004-0030 06/23/04 General Waste Discharge Order adopts the Negative PALCO applied for GWDR permit PALCO did not appeal this order.
*** Requirements for Declaration under CEQA and sets coverage for 22 THPs in Elk and
GWDRs Discharges Related to out the requirements for obtaining Freshwater as a bridge between HWC filed petition for review and
Timber Harvest general WDRs for timber harvest expiration of the 2004 permits and emergency stay after the 12/24/04
Activities on activities conducted on a delay in adopting new enrollment (SWRCB/OCC File
Non-Federal Lands in non-federal lands. Projects that watershed-wide WDRs. On 12/24/04, A-1683). HWC's request for stay
the North Coast Region do not qualify for a waiver of the Executive Officer enrolled 4 was denied (see WQO-2005-0001
WDRs under Order R1-2004-0016 of the THPs (THP 00-428, THP below).
(Categorical Waiver) can apply for 01-193, THP 13-198 and THP 04-168)
GWDRs. If coverage is denied under the GWDRs. HWC filed a second petition for
individual ROWDs must be submitted review and stay after the 3/16/05
for individual WDRs On 3/16/05, the Regional Board enrollment (SWRCB/OCC File
enrolled additional PALCO Elk and A-1692). This time, the State
Freshwater THPs under GWDR Order Board granted HWC's stay (see
R1-2004-0030 until the total WQO-2005-0006 below).
acreage enrolled in the
drainages equaled 75% of the
acreage in the THPs previously
approved by CDF.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
34 R1-2004-0042 05/12/04 Declining Request for Denies the 10/2/03 request of HWC Notes that in response to various On 5/5/04, PALCO had made an oral
*** Order Requiring to have the Regional Board require investigations and concerns, "the commitment to staff that it (1)
Dredging Dredging in the Elk PALCO to dredge sediment deposits Regional Board has directed staff agreed a flooding assessment was
(Elk) River from NFER, SFER and Main Stem Elk to begin work on WWDRs in the needed; (2) would help with the
and to issue WDRs to prevent above-noted watersheds." flooding assessment; and (3)
further sediment discharges. The would release info it possesses
resolution denies HWC's request concerning flooding. On 5/6/04,
and directs the Executive Officer PALCO verified its commitment to
to work with PALCO to compile participate in a flooding
information necessary to conduct a assessment and provide logistical
flooding assessment. and technical assistance.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
35 R1-2004-0087 11/29/04 Resolution re Total Directs the Executive Officer to PALCO did not appeal this order.
*** Maximum Daily Load develop a workplan addressing
TMDL Development Implementation Policy watershed priorities for
Statement for addressing sediment waste
Sediment-Impaired discharges at the
Receiving Waters in the watershed-specific level; directs
North Coast Region staff to work with landowners to
control sediment discharges;
directs completion of report
"Salmonid Freshwater Habitat
Properly Functioning Conditions
for Sediment-Related Parameters";
directs staff to consider EPA
sediment TMDLs as "foundational
technical documents upon which
to base implementation actions";
and directs the EO to prepare
amendments to the Basin Plan for
established TMDLs.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
STATE BOARD ORDERS AND ACTIONS
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
# ORDER NO. DATE IN THE MATTER OF DESCRIPTION ISSUES DISPOSITION
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
A WQO-2001-0009 05/17/01 Petition of the Pacific Denies PALCO's request for stay of The Regional Board agreed not to
*** Lumber Company and the monitoring and reporting pursue administrative civil
SWRCB/OCC File Scotia Pacific Company requirements of R1-2001-0019 liability for violations of
A-1380 LLC for Review of during the pendency of its R1-2002-0019, provided PALCO did
Monitoring and petition for review.. not begin timber operations on THP
Reporting Order No. 520 pending the State Board's
R1-2001-0019 review on the merits.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
B WQO-2001-0014 10/18/01 Pacific Lumber and Orders PALCO to conduct water The primary issue on appeal is The State Board vacated the order
*** Scotia Pacific Company quality monitoring in the South whether the Regional and State per the outcome of Humboldt
SWRCB/OCC File LLC For Review of Fork Elk River watershed in Board's have the authority to County Superior Court litigation
A-1380 Monitoring and conjunction with THP 520 per impose additional restrictions on (DR01-0860). The case is now
Reporting Order No. Regional Board's Order No. a THP after it has been approved awaiting oral argument before the
R1-2001-0019 R1-2001-0019. by CDF and no Head-of-Agency California Supreme Court.
Appeal has been taken; the
Superior Court held that the
Boards do not have such
authority; SB 810 was passed
empowering the Regional Board
with greater authority to stop
a THP approval.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
C WQO-2002-0004 01/23/02 Humboldt Watershed State Board's order in response to This matter is effectively an State Board remands the matter to
*** Council, βββββ� ββββ and HWC Petition. The Regional Board amalgam of the other matters the Regional Board for
SWRCB/OCC File βββ� ββββββ For is directed to expedite TMDL above, only the HWC wants even consideration and action.
A-1361 Imposition of Waste development in the 5 watersheds further measures taken against
Discharges Requirements and take other appropriate PALCO. Clarified by WQO-2002-0019.
in the Freshwater Creek actions, such as progress reports
and Elk River Drainages addressed to the State Board
or for an Order
Directing the North
Coast Regional Water
Quality Control Board
to Conduct Hearings
Regarding Waste
Discharge Requirements
Or to Take Other
Appropriate Action
Against Pacific Lumber
Company
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
D WQO-2002-0019 10/17/02 Humboldt Watershed State Board's order in
response to This matter is effectively an On 11/20/02, HWC filed suit in
*** Council, βββββ� ββββ and HWC Renewed Petition alleging the amalgam of
the other matters San Francisco Superior Court SWRCB/OCC File βββ� ββββββ
To Require Regional Board had not complied above, only HWC wants even
further (Case No. CPF 02-502062), which A-1479 Reports of Waste with
WQO-2002-0004. The order measures taken against PALCO; the PALCO
successfully had
Discharge and to Issue directs the Regional Board to Regional Board often cites this transferred to Humboldt County
Waste Discharge continue taking action per order and WQ-2002-0004 as a where it filed a Motion to
Requirements For All WQO-2002-0004 and to require WDRs directive for all of their actions. Dismiss (Case No. CV03-0438).
Logging Conducted by as appropriate. It further Before the motion was heard, HWC
Pacific Lumber Company clarifies the topics of Regional voluntarily dismissed the suit.
in the Freshwater Board progress reports to be give
Creek, Elk River, βββββ� to the State Board and rejects On 12/17/03, HWC filed a second
Creek, Bear Creek, and Petitioners' request to require suit in Humboldt County (Case No.
Jordan Creek Drainages WDRs for all PALCO THPs in the 5 CV03-0961) and sought a temporary
or to Direct the North watersheds. restraining order. The court
Coast Regional Water denied the TRO on 1/12/04 and
Quality Control Board HWC's subsequent petition for
to Render a Decision on stay to the Court of Appeal was
Issues Raised by denied. On 1/4/05, HWC dismissed
Petitioner. the case with prejudice.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
E Letter Order 04/24/03 Petition of The State Board denied HWC's stay HWC appealed the Regional Board's The State Board denied HWC's
*** Environmental request in a letter to ββββ ββββββ adoption of interim categorical request for stay.
SWRCB/OCC File Protection Information dated 4/24/03, on the grounds that waivers and requested a stay.
A-1539 Center and Humboldt HWC did not prove there would be
Watershed Council substantial harm to petitioner or
(Interim Categorical the public if a stay was not
Waiver for Discharges granted and failed to demonstrate
Related to Timber that there will be a lack of harm
Operations, Resolution to the public interest if a stay
No. R1-2002-0109 is granted. The letter attached
βββββ� ββββββ'β� 4/15/05 memorandum
to State Board Executive Director
βββββββ� βββββ�.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
F Head of Agency 09/19/03 Head of Agency Appeal State Board initiated a
formal This is the first Head of Agency The State Board withdrew its
Appeal to Board of Forestry on Head of Agency Appeal of THP Appeal taken
by the State Board appeal on 09/26/03 before any *** THP 1-02-218 "Root
1-02-218 to the Board of Forestry (despite numerous requests by the
action was taken; the THP has
Canal." at the Regional Board's request Regional Board in the past). since been approved and harvested.
(14 CCR ss.1056 et seq.).
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
G WQO-2005-0001 01/20/05 Petition of Humboldt State Board denied HWC's
stay HWC appealed the Regional Board's The State Board denied HWC's ***
Watershed Council for request on the grounds that HWC enrollment of 4
Elk and Freshwater request for stay after a hearing SWRCB/OCC File
Review of Enrollment of did not prove substantial harm to THPs (THP
00-428, THP 01-193, THP on 1/19/05, but has deferred β�-ββββ ββββ βββββββ�
ββββββ the public and that while harm to 13-198 and THP 04-168) under
GWDR consideration of the merits for
Company Timber PALCO would be "relatively minor," Order R1-2004-0030; in its later proceedings.
Harvesting Plans under harm to its employees and petition for review, HWC requested
General Waste Discharge contractors would be great; the an emergency stay.
Requirements, Order No. Board deferred consideration of
R1-2004-0030 the merits of the petition for
later proceedings.
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
H WQO-2005-0006 04/06/05 Petition of Humboldt State Board determined that the This appeal followed the Regional The State Board granted HWC's
*** Watershed Council, evidence submitted made it clear Board's enrollment of additional request for stay after a hearing
SWRCB/OCC Environmental that harm would result from THPs under GWDR Order R1-2004-0030 on 4/5/05.
File A-1692 Protection Information continued timber operations and until the total acreage enrolled
Center, and Sierra Club that the "harm will happen without in the Elk and Freshwater
for Review of Directive question if no stay is issued, drainages equaled 75% of the
to Enroll Pacific that financial harm to PALCO and acreage in the THPs previously
Lumber Company Timber its contractors is largely PALCO's approved by CDF.
Harvesting Plans Under fault, that the financial harm is
General Waste Discharge not clearly significant, and that
Requirements, Order No. there are significant legal issues
R1-2004-0030 presented by the petition."
------- -------------------- ------------ ------------------------- ------------------------------------ ------------------------------------ -----------------------------------
Schedule 3.18
INSURANCE
MAXXAM Inc., including The Pacific Lumber Company and βββββ� Lumber Co., Inc.
Schedule of Insurance as of 4/12/2005
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Property Insurance
MAXXAM/PALMAS:
nderwriters at Lloyds (various) Total Limit $150 MM $100,000 except PDM which is
Master Property WB401758 06/01/04 - 06/01/05 U $250,000
---------------
Including: 8753133 06/01/04 - 06/01/05 Lexington Ins. Co. each and every loss except
rum & βββββββ� Specialty subject to various
sublimits and aggregate
limits for certain Earthquake 5% of the total value
Forest Products and PPX0004490 06/01/04 - 06/01/05 C coverages of the
teadfast Ins. Co affected loc. At time of loss
Puerto Rico SPP380557100 06/01/04 - 06/01/05 S except
nderwriters at Lloyds (various) Windstorm 5% of total value of
WB401759 06/01/04 - 06/01/05 U the affected
WB401759 06/01/04 - 06/01/05 Great Lakes Reinsurance location at time of loss
D35888962/002 06/01/04 - 06/01/05 Westchester Surplus Lines Ins Co
ESP2046 06/01/04 - 06/01/05 Essex Insurance PALCO/βββββ�/SCOPAC:
nderwriters at Lloyds $1MM combined any one occ except
WB0401760 06/01/04 - 06/01/05 U in
reat Lakes Reinsurance respect of Town of Scotia which
WB0401760 06/01/04 - 06/01/05 G is
$100,000 combined except
Earthquake 5% of the total value
of the affected loc. at time of
loss, subject to
$1MM combined minimum
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
BM1098510945 06/01/04 - 06/01/05 Continental Casualty Co. $100 MM per occ PD/BI,
Boiler & Machinery Extra Expense $1,000,000 Sawmills and Co-Gen
------------------
subject to various
Forest Products and sublimits $ 25,000 All Other
Puerto Rico coverage includes Terrorism 48 hours Service Interruption
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Property Terrorism Coverage nderwriters at Lloyds (various) $100 MM any one
---------------------------
Occurrence in respect of
832 EO4RQ23932 06/01/04 - 06/01/05 U property $500,000 an one occurrence
Forest Products and Puerto damage and business
Rico interruption combined PD and BI combined
----------------------------------
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
This chart is intended for information purposes only and is not a complete or
exhaustive summary - refer to your policy for applicable terms and conditions.
Workers' Compensation MWC11114600 10/14/2004-10/14/2005 Old Republic Insurance Co Statutory WC Benefits $500,000 each occ applies
-------------------- separately for Cov. A&B
Employers' Liability $1 Million Bodily Injury
ea. Accident
Except PALCO and Puerto
Rico
---------------------------- ----------------------------------------------------------
------------------------- -----------------------------------------------------------
Directors & Officers 00DA021073904 07/01/04 - 07/01/05 Twin City Fire Ins. Co. $10 Million Aggregate $0 Non-indenmifiable
---------------------
Liability
(Inclusive of Defense $1 MM Indemnifiable
Cost)
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Excess Directors & FD0403935 07/01/04 - 07/01/05 Und. At Lloyds (AFB)/Navigators $10 Million Aggregate X Excess Underlying
------------------
$10MM
Officers Liability 078460-014 iberty Mutual Ins. Co. $10 Million Aggregate X
-------------------
07/01/04 - 07/01/05 L $20MM
DOX0000505-00 rch Insurance Company $5 Million Aggregate X
07/01/04 - 07/01/05 A $30MM
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Directors & Officers NDA 1495172-00 07/01/02 - 07/01/08 Twin City Fire Ins. Co. $15 Million Aggregate $5 MM
---------------------
Liability
Run-Off Coverage
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Excess Directors & Officers 7520070364 97 07/01/02 - 07/01/08 Executive Risk Indemnity $15MM Aggregate X $15MM Excess Underlying
---------------------------
Liability Run-Off Coverage GA 6065875 07/01/02 - 07/01/08 Gulf Insurance Co. $25MM Aggregate X $30MM
--------------------------
DOC 838524102 07/01/02 - 07/01/08 Zurich American Ins. Co. $25MM Aggregate X $55MM
752070367-97 07/01/02 - 07/01/08 Executive Risk Indemnity $10MM Aggregate X $80MM
------------------------------------------------------------------------------------------------------------- ----------------------------------
--------------------------
General Liability MWZY 56551 10/14/04 - ββ/ββ/ββ βββ� ββββββββ Ins. Co. Nil General Aggregate $1 MM
-----------------
$2 Million
Products/Completed
Operations (Matching Deductible)
$1 Million Personal
Injury/Advertising Injuryper occurrence
$1 Million ea. Occurrence
$2 Million Excess
Employers Liab. BI by
Accident
$2 Million Excess
Employers Liab. BI by
Disease
$2 Million Excess
Employers Liab. Policy
Limit
$2 Million Liquor Liab.
ea. Occurrence/Agg
$1 Million Employee
Benefits Liab. ea.
Claim/Agg.
Defense Cost - in
addition to policy limits
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Auto Liability MWTB 19023 10/14/04 - 10/14/05 Old Republic Ins. Co. $1 Million ea. $1 MM (Matching Ded.)
--------------
Occurrence Combined
Single Limit
per occurrence
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
This chart is intended for information purposes only and is not a complete or
exhaustive summary - refer to your policy for applicable terms and conditions.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
estchester Fire Ins. Co. $25 Million per
Excess Liability CUW 781-551 10/14/04 - 10/14/05 W Occurrence/Aggregate
----------------
UXP002070-00 10/14/04 - 10/14/05 Arch Specialty Ins. Co. $25 MM occ/agg xs $25MM
AAU71014804 10/14/04 - 10/14/05 Axis Specialty Insurance $25 MM occ/agg xs $50MM
LQ1-B71-198163-023 10/14/04 - 10/14/05 Liberty Insurance Undwr $25 MM occ/agg xs $75MM
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Corporate Fiduciary 6801-8520 12/07/04 - 12/07/05 Federal Insurance Company $15 Million Term $150,000
--------------------
Liability Aggregate
---------
of Pittsburgh, PA
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Non-owned Aircraft PXLN 380 1747 12/31/2004-12/31/2005 XL Specialty Insurance Co. $5 Million ea. Occ. None
-------------------
combined limit BI/PD
Liability including War
---------
hrough ZL Aerospace, Inc $5 Million Aggregate
t Personal Injury
$5,000 ea. Person -
Medical Expense
$500 ea. Person -
Baggage Liability
$20,000 ea. Occurrence -
Baggage Liability
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Crime 7283148 1/31/2005 - 1/31/2006 American Home Assurance Co. $5 Million per Occurrence $100,000 per Occ.
----------------
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Excess Crime TBA 1/31/2005 - 1/31/2006 Navigators Insurance Company $5 Million excess of $5
------------
Million
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
The Directors & Officers Run-Off Insurance is placed on a consolidated basis
with ββββββ Aluminum & Chemical Corporation (KACC) and other KACC entities.
This chart is intended for information purposes only and is not a complete or
exhaustive summary - refer to your policy for applicable terms and conditions.
Schedule 3.19(a)
UCC FILING OFFICES
The Pacific Lumber Company The Secretary of State of the State of Delaware
βββββ� Lumber Co., Inc. The Secretary of State of the State of California
Scotia Inn, Inc. The Secretary of State of the State of Delaware
Salmon Creek LLC The Secretary of State of the State of Delaware
MAXXAM Group Inc. The Secretary of State of the State of Delaware
Schedule 3.19(c)
MORTGAGE FILING OFFICES
The Real property records of the County of Humbolt, California
Schedule 3.20
OWNED AND LEASED REAL PROPERTY
Mfg Lessor/
Owner Parcel Number Property Description Acreage Facilitielessee Comments
----- ------------- -------------------- ------- --------------- -------- -
1 THE PACIFIC LUMBER COMPANY CR 101-291-008-000 T 2N R 1W βββ� ββ ββ.β�
β� βββ� βββββββ� ββββββ COMPANY CR 101-291-014-000 160
3 THE PACIFIC LUMBER CO 103-012-004-000 T1S R1W SEC 1 168 Lessor
4 THE PACIFIC LUMBER COMPANY CR 106-151-001-000 T 2N R 1W SEC 29 82 Lessor
5 THE PACIFIC LUMBER COMPANY CR 106-151-003-000 T 2N R 1W SEC 29 160
6 THE PACIFIC LUMBER COMPANY CR 106-151-006-000 T 2N R 1W SEC 29 83.5
7 THE PACIFIC LUMBER CO 200-021-004-000 T 3N R 1W βββ� ββ ββ
β� βββ� βββββββ� ββββββ CO 200-021-008-000 T 3N R 1W βββ� ββ ββ
β� βββ� βββββββ� ββββββ COMPANY 200-021-009-000 T 3N R 1W βββ� ββ ββ
ββ βββ� βββββββ� ββββββ COMPANY CR 200-021-014-000 T3N R1W SEC 27 71.79
HE PACIFIC LUMBER CO 2N R1W βββ� β� βββ� βββββββββ� ββ βββββββ�
ββ β� 200-363-006-000 T 0 Fortuna Mill
12 THE PACIFIC LUMBER CO 200-363-007-000 T2N R1W βββ� β� β� βββββββ� βββββββ� total 76.77 acres
13 THE PACIFIC LUMBER COMPANY CR 200-411-006-000 2.53 Fortuna Lessor
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 201-091-006-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 201-092-026-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 201-092-027-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 201-092-029-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 201-331-002-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 201-331-004-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 201-331-005-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 202-011-023-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 202-011-031-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 202-021-005-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 202-021-010-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO CR 202-021-017-000 T2N R1W βββ� β� β� βββββββ�
ββ βββ� βββββββ� ββββββ CO 202-022-001-000 T2N R1W βββ� ββ β� βββββββ�
ββ βββ� βββββββ� ββββββ COMPANY CR 202-051-002-000 35.21 Lessor
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� β� βββ�
ββ βββ� βββββββ� ββββββ CO 204-032-002-000 T 2N R 1E SEC 9 406
31 THE PACIFIC LUMBER CO 204-033-002-000 T2N R1E SEC 10 97.5 βββββ� Lessor
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� SEC 10 40 βββββ�
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� SEC 15 161.5 βββββ� Lessor
ββ βββ� βββββββ� ββββββ ββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� SEC 21 0Carlotta
35 THE PACIFIC LUMBER COMPANY 204-121-005-000 T2N R1E SEC 21 0Carlotta
36 THE PACIFIC LUMBER COMPANY 204-121-006-000 T2N R1E SEC 21 0Carlotta
40 THE PACIFIC LUMBER COMPANY 204-251-001-000 T2N R1E SEC 21 0Carlotta
ββ βββ� βββββββ� ββββββ ββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� SEC 21 0Carlotta
42 THE PACIFIC LUMBER COMPANY CR 204-381-001-000 0
44 THE PACIFIC LUMBER CO CR 205-021-023-000 T1N R1W SEC 36 418.5 Lessor
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� SEC 31 120 Lessor
ββ βββ� βββββββ� ββββββ βββββββ� βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� ββ β�
ββ βββ� βββββββ� ββββββ CO 205-221-001-000 T 1N R 1E SEC 22 16
49 THE PACIFIC LUMBER COMPANY 205-261-012-000 RS, BK 60, PGS 74-76 9.5
51 THE PACIFIC LUMBER COMPANY CR 205-321-003-000 T1N R1E βββ� ββ β�
ββ βββ� βββββββ� ββββββ CO 205-321-032-000 T1N R1E βββ� ββ ββ
ββ βββ� βββββββ� ββββββ CO 205-321-034-000 T1N R1E βββ� ββ βββ�
ββ βββ� βββββββ� ββββββ COMPANY 205-341-019-000 T1N R1E βββ� ββ βββ�
ββ βββ� βββββββ� ββββββ CO 205-351-001-000 T 1N R 1E SEC 5 280
56 THE PACIFIC LUMBER CO 205-351-002-000 T 1N R 1E SEC 5 39
57 THE PACIFIC LUMBER CO 205-351-016-000 T1N R1E SEC 7 467.53 Scotia Lessor
58 THE PACIFIC LUMBER COMPANY 205-351-018-000 T1N R1E βββ� ββ & ββ βββ�.β�
ββ βββ� βββββββ� ββββββ CO 205-351-019-000 T2N R1E SEC 28 507.5
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� β� βββ�
ββ βββ� βββββββ� ββββββ CO 206-101-031-000 T2N R1E βββ� ββ β�
ββ βββ� βββββββ� ββββββ CO 206-101-032-000 T2N R1E SEC 15 22 βββββ�
64 THE PACIFIC LUMBER COMPANY CR 206-191-014-000 T 2N R 1E SEC 36 536 Lessor
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� ββ βββ�
ββ βββ� βββββββ� ββββββ COMPANY 206-281-002-000 T 2N R 1E SEC 10 21 βββββ�
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� SEC 10 83 βββββ�
ββ βββ� βββββββ� ββββββ ββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� ββ β�
ββ βββ� βββββββ� ββββββ CO 209-201-011-000 T1N R2E βββ� ββ βββ�
ββ βββ� βββββββ� ββββββ CO 211-011-004-000 T1S R1E SEC 6 40 Lessor
73 THE PACIFIC LUMBER CO 211-132-007-000 T 1S R 2E SEC 26 121.5 Lessor
ββ βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� ββ β�
ββ βββ� βββββββ� ββββββ COMPANY CR 211-132-009-000 T 1S β� ββ βββ� ββ β�
ββ βββ� βββββββ� ββββββ COMPANY CR 211-133-007-000 0
77 THE PACIFIC LUMBER COMPANY CR 211-133-009-000 0
78 THE PACIFIC LUMBER CO 211-133-012-000 T1S R2E βββ� ββ ββ
ββ βββ� βββββββ� ββββββ CO 211-134-002-000 T1S R2E βββ� ββ β�
ββ βββ� βββββββ� ββββββ CO 211-141-003-000 T 1S β� ββ βββ� ββ β�
ββ βββ� βββββββ� ββββββ COMPANY CR 211-273-003-000 T 1S R 3E SEC 30 0
82 THE PACIFIC LUMBER CO CR 211-275-010-000 T1S R3E βββ� ββ β�
ββ βββ� βββββββ� ββββββ COMPANY CR 211-275-016-000 T1S R3E βββ� ββ β�
ββ βββ� βββββββ� ββββββ COMPANY CR 211-276-011-000 T1S R3E βββ� ββ β�
ββ βββ� βββββββ� ββββββ COMPANY CR 211-276-015-000 T1S R3E βββ� ββ β�
ββ βββ� βββββββ� ββββββ COMPANY CR 211-283-007-000 T 1S R 3E SEC 34 0 Lessor
87 THE PACIFIC LUMBER COMPANY CR 211-283-008-000 0
88 THE PACIFIC LUMBER CO CR 211-492-009-000 T1S R1E βββ� ββ β�
ββ βββ� βββββββ� ββββββ COMPANY CR 211-492-012-000 T1S R1E βββ� ββ β�
ββ βββ� βββββββ� ββββββ CO 211-552-004-000 T 1S β� ββ βββ� ββ ββ
ββ βββ� βββββββ� ββββββ COMPANY CR 212-291-013-000 T 3S R 3E SEC 10 0 Lessor
92 THE PACIFIC LUMBER COMPANY CR 214-114-010-000 0
97 THE PACIFIC LUMBER CO 304-011-003-000 T 4N R 1E SEC 19 272
111 THE PACIFIC LUMBER CO 311-031-004-000 T 4N R 1W SEC 25 67 Lessor
βββ� βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� ββ β�
βββ� βββ� βββββββ� ββββββ CO 311-051-002-000 T 4N R 1W SEC 25 229
114 THE PACIFIC LUMBER CO 311-061-001-000 T 4N R 1E SEC 30 612 Lessor
βββ� βββ� βββββββ� ββββββ CO 311-114-001-000 T 3N R 1W SEC 22 248
116 THE PACIFIC LUMBER CO 314-061-011-000 1
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-131-050-000 T 4N β� ββ βββ� β� ββ
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-131-051-000 T 4N R 2E SEC 4 120
119 THE PACIFIC LUMBER COMPANY CR 314-131-064-000 T 4N R 2E SEC 10 157
120 THE PACIFIC LUMBER COMPANY CR 314-131-065-000 T 4N β� ββ βββ� ββ ββ
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-131-076-000 193.5
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-143-004-000 T 4N R 2E SEC 13 110.5
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-152-001-000 T 4N R 2E SEC 23 374.5 Lessor
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-152-005-000 0 Lessor
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-153-003-000 T 4N R 2E SEC 24 397 Lessor
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-154-001-000 T 4N R 2E SEC 25 77.5
127 THE PACIFIC LUMBER COMPANY CR 314-154-002-000 T 4N β� ββ βββ� ββ ββ
βββ� βββ� βββββββ� ββββββ COMPANY CR 314-201-007-000 156
129 THE PACIFIC LUMBER COMPANY CR 314-201-012-000 37
βββ� βββ� βββββββ� ββββββ βββββββ� βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� β� β�
βββ� βββ� βββββββ� ββββββ COMPANY ,CR 316-084-001-000 T 6N β� ββ βββ� β� βββ�
βββ� βββ� βββββββ� ββββββ COMPANY 404-121-012-000 T 5N β� ββ βββ� ββ ββ
βββ� βββ� βββββββ� ββββββ COMPANY 404-131-016-000 T5N R2E SEC 31 0
βββ� βββ� βββββββ� ββββββ ββ βββ�-βββ�-βββ�-βββ� βββ� βββ� βββ� β� βββ�
βββ� βββ� βββββββ� ββββββ CO 905-000-474-000 T4N R2W βββ� ββ β�
βββ� βββ� βββββββ� ββββββ CO 905-000-475-000 T4N R2W βββ� ββ β�
βββ� βββ� βββββββ� ββββββ CO βββ�-βββ�-ββ T3N R1W βββ� ββ ββ
βββ� βββ� PACIFIC LUMBER CO βββ�-βββ�-ββ T3N R1W SEC 15 200
152 THE PACIFIC LUMBER CO βββ�-βββ�-ββ T3N R1W βββ� ββ ββ
βββ� βββββ� βββ�-βββ�-βββ�-βββ� 4.7 Arcata
βββ� βββββ� 507-121-014-000 β� ββββββ
βββ� βββββ� 507-081-038-000 20.5 Arcata
156 VILLAGE CONCEPT 507-081-044-000 1.75 Arcata Lessee
157 βββββ� ββββββ 507-121-036-000 7 Arcata Lessee
See attached "Legal Description Exhibit `A'" relating to property owned by
Salmon Creek LLC.
LEGAL DESCRIPTION
EXHIBIT "A"
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF HUMBOLDT, STATE
OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
All fee interest in and to the following described lands
EXCEPTING THEREFROM
All right, title and interest in and to, including without limitation the right
in perpetuity to harvest, all trees and timber, regardless of species and
regardless of size or diameter, now located on or hereafter planted or growing
in the soil of those portions of the parcels of land located in the County of
Humboldt, State of California, described below (the "Property"), which are more
particularly shown as "Salmon Creek Ownership" on that certain map of the
Property identified as map no. 100, on the GIS system jointly used by Pacific
Lumber Company, Salmon Creek Corporation and others, dated July 15, 1998, and
each containing a notation executed by representatives of said parties, Fidelity
National Title Insurance Company, and Skadden, Arps, Slate, βββββββ� & ββββ
and held in trust by U.S. Bank of California ("Escrow Holder") pursuant to the
terms of that certain Escrow Agreement dated July 20, 1998 herewith by and the
above stated parties and the Escrow Holder, together with the right to enter
upon the Property for any and all purposes pertaining to the cultivation,
ownership and harvesting of such trees and timber. Being the same rights
described in the deed from Salmon Creek Corporation, a Delaware corporation to
The Pacific Lumber Company, a Delaware corporation recorded July 17, 1998 as
Instrument No. ββββ-βββββ�-β�, Humboldt County Official Records.
Said parcels of land being described as follows:
Township 3 North, Range 1 East, Humboldt Meridian:
PARCEL ONE
Section 19:
The North Half of the Southeast Quarter.
EXCEPTING THEREFROM one-half of all oil, gas and minerals with appurtenant
rights, as reserved in the deed recorded February 29, 1944 in Book 265 of
Deeds, page 256.
APN βββ�-βββ�-ββ
Section 20:
The North Half of the Southwest Quarter.
EXCEPTING THEREFROM one-half of all oil, gas and minerals, with appurtenant
rights, as reserved in the deed recorded February 29, 1944 in Book 265 of
Deeds, page 265.
APN βββ�-βββ�-ββ
The South Half of the Southeast Quarter.
APN βββ�-βββ�-ββ
Section 23:
The East Half of the Southeast Quarter.
EXCEPTING FROM the lands in Section 23 above described one-half of all oil,
gas and minerals, with appurtenant rights, as reserved in the deed recorded
February 29, 1944 in Book 265 of Deeds, page 256.
APN βββ�-βββ�-ββ
Section 23:
The Southeast Quarter of the Southwest Quarter, and the Southwest Quarter
of the Southeast Quarter.
EXCEPTING FROM the 23 above described all oil, gas and minerals, with
appurtenant rights as excepted in the deed from the Regents of the
University of California recorded March 22, 1950 in Book 125 of Official
Records, page 24.
APN βββ�-βββ�-ββ
Section 26:
The Northwest Quarter, the North Half of the Southwest Quarter, the
Southwest Quarter of the Southwest Quarter and the Southwest Quarter of the
Northeast Quarter.
EXCEPTING THEREFROM one-half of all oil, gas and minerals, with appurtenant
rights, as reserved in the deeds recorded February 29, 1944 in Book 265 of
Deeds, page 255 and 256.
APN βββ�-βββ�-ββ
Section 27:
The West Half, the Northeast Quarter, the North Half of the Southeast
Quarter and the Southeast Quarter of the Southeast Quarter.
APN βββ�-βββ�-ββ
Section 28:
The East Half of the Southeast Quarter, the Northeast Quarter of the
Northwest Quarter, and the Northeast Quarter.
EXCEPTING THEREFROM and from the land in Section 27 last above described
one-half of all oil, gas and minerals, with appurtenant rights, as reserved
in the deed recorded February 29, 1944 in Book 265 of Deeds, page 256.
APN βββ�-βββ�-ββ, βββ�-βββ�-ββ, βββ�-βββ�-ββ
Section 28:
The West Half of the Northwest Quarter, the Southeast Quarter of the
Northwest Quarter, the West Half of the Southeast Quarter, the North Half
of the Southwest Quarter and the Southeast Quarter of the Southwest
Quarter.
APN βββ�-βββ�-ββ and βββ�-βββ�-ββ
Section 29:
The North Half of the Northeast Quarter.
APN βββ�-βββ�-ββ
Section 33:
The Northeast Quarter.
APN βββ�-βββ�-ββ
Section 35:
The Northwest Quarter of the Northwest Quarter.
EXCEPTING THEREFROM, one-half of all oil, gas and minerals, with
appurtenant rights as reserved in the deeds recorded February 29, 1944 in
Book 265 of Deeds, page 255 and 256.
APN βββ�-βββ�-ββ
EXCEPTING FROM ALL OF THE ABOVE DESCRIBED LANDS that portion thereof
conveyed to the United States of America by deed recorded March 1, 1999 as
Instrument No. ββββ-ββββ-β�, Humboldt County Official Records.
PARCEL TWO
Easements and rights of way as further described in and subject to the
conditions contained in that certain Reciprocal Rights Agreement recorded
March 22, 1993 as Instrument No. ββββ-ββββ-βββ�, Humboldt County Official
Records.
PARCEL THREE
The right to use roads as further described in, and subject to the
conditions contained in those certain Right of Way Grants executed by
United States Department of the Interior Bureau of Land Management recorded
March 1, 1999 as Instrument Nos. ββββ-ββββ-β�, ββββ-ββββ-β�, ββββ-ββββ-β� and
ββββ-ββββ-β�, Humboldt County Official Records.
APN 200-011-019-000
HOU:2445420.1
51
Schedule 3.26
CURRENT BANK ACCOUNTS
as of 4/8/2005 & 4/11/05
The Pacific Lumber Company:
Book Balances Bank Balances
& Investment w/
as of accrued Interest
Bank accounts: Account Description 4/8/2005 4/8/2005
------------------- -------- --------
U. S. Bank of
California General Account ($1,903,725.64) $1,730,287.70
" Admin Payroll ZBA ZBA
" General Payroll ZBA ZBA
" Worker's Comp ZBA ZBA
" Health Care Benefits ZBA ZBA
" Collection Account 34,087.53 34,087.53
Bank of America General Account 13,636.15 13,636.15
Loan account (10,958,381.32) (10,958,381.32)
Lockbox account 1,805,621.79 1,805,621.79
Investment accounts:
Bank of America $0.00 $0.00
0.00 0.00
βββββ� ββββββ
βββββββ� βββββ� 0.00 0.00
βββββββ� βββββ� Money Mkt 0.00 0.00
βββββ� Lumber Company: 4/11/2005 4/11/2005
--------- ---------
Bank accounts: Collection Account $149,195.88 $149,195.88
Bank of America Operating Account 3,303.24 193,280.88
" Medical Account 4,983.19 -
βββββ� Fargo Payroll Account 4,393.17 5,105.26
Salmon Creek Company LLC: 4/8/2005 4/8/2005
-------- --------
Bank accounts:
General / Accounts $33,392.68 $33,268.39
βββββ� Fargo Payable
Investment accounts:
βββββββ� βββββ� $0.00 $0.00
Bank of America CD required per 2,390,715.00 2,396,094.11
Headwaters Agreement
HOU:2445420.1
Schedule 6.01
INDEBTEDNESS
(a) Obligations (Guaranty) as of March 31, 2005
The Pacific Lumber Company:
Creditor O/S Obligation Property Legal Description
Redwood Region Economic $54,372
Development Commission Secured by a first lien on Furniture,
fixtures and equipment in the dining
room and kitchen of the Scotia Inn,
located at βββ� ββββ ββββββ,
ββββββ, ββ
Salmon Creek LLC N/A The Pacific Lumber Company's
obligations under that certain
Indemnification Agreement dated
February 9, 2004 between The
Pacific Lumber Company and Salmon
Creek LLC
βββββ� Lumber Company:
NONE
(b) Debt
The Pacific Lumber Company:
Creditor Loan O/S Property Legal Description
-------- -------- --------------------------
SELCO Leasing** $229,554 Represents an interim loan on
equipment. December 31, 1998
the loan was converted
into a Capital Lease.
IBM Credit Corp. Lease ** 6,081 AS 400 and additional software
Optimum Solutions Inc.** -- Payroll system
βββββ� Lumber Company:
Creditor Loan O/S Property Legal Description
-------- -------- --------------------------
NONE --
**Capital leases
Letters Of Credit
as of March 31, 2005
LETTER OF CREDIT Date of Expiration
NO. ISSUING COMPANY ISSUING BANK BENEFICIARY PURPOSE Issue Date AMOUNT
LETTER OF CREDIT COLLATERIZED BY $20MM CARVE-OUT OF THE TPLC $30MM LINE OF
CREDIT WITH BANK OF AMERICA:
228874 The Pacific Bank of America County of Humboldt & CA To collateralize the project of 05/28/96 05/30/05 46,500.00
Lumber Company Dept. of Conservation reclamation of river bars,
access roads & stock pile area
assoc'd with gravel extraction
3007279 The Pacific Bank of America Pacific Gas & Electric To collateralize the Agreement 07/05/97 07/08/05 167,422.00
Lumber Company (AUTOMATIC between PLC & PG&E
RENEWAL UNLESS
NOTIFIED W/I 60
DAYS)
3021805 The Pacific Bank of America County of Humboldt & CA To collateralize the project at 12/24/99 12/24/05 23,667.82
Lumber Company (AUTOMATIC Dept. of Conservation Quarry #3
RENEWAL)
3004206 The Pacific Bank of America County of Humboldt & CA To collateralize the project at 04/03/97 04/03/06 21,825.00
Lumber Company (AUTOMATIC Dept. of Conservation Quarry #2
RENEWAL)
3004207 The Pacific Bank of America County of Humboldt & CA To collateralize the project at 04/03/97 04/03/06 10,929.00
Lumber Company (AUTOMATIC Dept. of Conservation Quarry #1
RENEWAL)
3029754 The Pacific Bank of America County of Humboldt & CA To collateralize the project at 09/27/00 09/25/05 67,991.00
Lumber Company (AUTOMATIC Dept. of Conservation PALCO ββββββββ Left Quarry
RENEWAL)
Total Pacific Lumber $338,334.82
HOU:2445420.1
===================================================================================================================
Capital Leases
As of March 31, 2005
Remaining
Company Lien Holder Payments Property Legal Description
--------------------------------- ------------------------------- ------------------ -------------------------------------
--------------------------------- ------------------------------- ------------------ -------------------------------------
PALCO IBM Credit Corporation $ 6,081.00 IBM Software, Remarketed Service
Suite, System Unit, IR Sales Tax,
Vendor Sourced Products/Services
8800017023/SELCO Selco Service Leasing 229,554.00 ββββββββ Mill Expansion
Optimum Solutions Inc Optimum Solutions Inc -- IBM AS400 Payroll Software
Total Outstanding Capital Leases $ 235,635.00
===================================================================================================================
Schedule 6.02
EXISTING LIENS
$2.5 million certificate of deposit owned by Salmon Creek LLC is pledged to
state or federal agencies.
The liens relating to the Indebtedness described on Schedule 6.01 in favor of
(i) Redwood Region Economic Development Commission, (ii) SELCO Leasing and (iii)
IBM Credit Corp.
Environmental restrictions imposed pursuant to the Implementation Agreement with
Regard to Habitat Conservation Plan dated March 1, 1999, and the Agreement
Relating to Enforcement of AB 1986 dated March 1, 1999, copies of which have
been furnished or made available to the Lenders.
Schedule 6.04
EXISTING INVESTMENTS
The Pacific Lumber Company has the following investments:
1. βββββ� Lumber Co., Inc. - 750 shares of common stock, $10.00 par value per share
2. Salmon Creek LLC - 100% membership interest
3. Scotia Inn, Inc. - 1,000 shares of common stock, $1.00 par value per share
4. Scotia Pacific Company LLC - 100% membership interest
Schedule 6.07
TRANSACTIONS WITH AFFILIATES
Agreements (including any currently existing amendments thereto that have been
provided to the Lenders on or prior to the Closing Date)
1. Agreement Relating to Enforcement of AB 1986, dated as of February 25,
1999, among The California Resources Agency, The California Department of
Fish and Game, The California Department of Forestry, The California
Wildlife Conservation Board, and The Pacific Lumber Company, Scotia Pacific
Company LLC, and Salmon Creek Corporation, and filed for record on March 1,
1999 in the Official Records of Humboldt County, CA as Document No.
ββββ-ββββ-βββ�.
2. Implementation Agreement with Regard to Habitat Conservation Plan for the
Properties of The Pacific Lumber Company, Scotia Pacific Company, LLC, and
Salmon Creek Corporation, dated as of February 1999, among The United
States Fish and Wildlife Service, The National Marine Fisheries Service,
The California Department of Fish and Game, The California Department of
Forestry and Fire Protection, and The Pacific Lumber Company, Scotia
Pacific Company LLC, and Salmon Creek Corporation
3. Streambed Alteration Agreement with regard to The Pacific Lumber Company
Habitat Conservation Plan, dated as of February 1999, among The California
Department of Fish and Game, and The Pacific Lumber Company, Scotia Pacific
Company LLC and Salmon Creek Corporation
4. Indenture between dated July 20, 1988 between Scotia Pacific Company LLC
and State Street Bank and Trust Company, as Trustee
5. Master Lease Agreement, dated as of July 20, 1998, between Scotia Pacific
Company LLC, as Lessor, and the Pacific Lumber Company, as Lessee
6. New Escrow Agreement, dated as of July 20, 1998, among The Pacific Lumber
Company, Scotia Pacific Company LLC, Salmon Creek Corporation, and U.S.
Bank of California
7. New Master Purchase Agreement, dated as of July 20, 1998, between Scotia
Pacific Company LLC, as Seller, and The Pacific Lumber Company, as
Purchaser
8. New Services Agreement, dated as of July 20, 1998, between The Pacific
Lumber Company and Scotia Pacific Company LLC
9. New Additional Services Agreement, dated as of July 20, 1998, between
Scotia Pacific Company LLC and The Pacific Lumber Company
10. New Reciprocal Rights Agreement, dated as of July 20, 1998, among The
Pacific Lumber Company, Scotia Pacific Company LLC and Salmon Creek
Corporation, and filed for record on July 17, 1998 in the Official Records
of Humboldt County, CA as Document No. ββββ-βββββ�-βββ�.
11. New Environmental Indemnification Agreement, dated as of July 20, 1998,
between The Pacific Lumber Company and Scotia Pacific Company LLC
12. Letter dated March 1, 1999 from the U.S. Department of the Interior Fish
and Wildlife Service and the U.S. Department of Commerce National Oceanic
and Atmospheric Administration to Palco, Salmon Creek and Scotia Pacific
LLC
13. Registration Rights Agreement of Scotia Pacific dated July 20, 1998.
14. Tax Allocation Agreement dated May 21, ββββ βββββ� βββββ�, ββββββ Pacific
Holding Company, Salmon Creek Corporation and MAXXAM Inc.
15. Tax Allocation Agreement between MAXXAM Inc. and βββββ� Lumber Co., Inc.,
dated July 3, 1990
16. Tax Allocation Agreement between MAXXAM Inc., MAXXAM Group Inc. The Pacific
Lumber Company and βββββ� Lumber Co., Inc., dated February 9, 2004
17. Tax Allocation Agreement with The Pacific Lumber Company, Scotia Pacific
Holding Company and Salmon Creek Corporation, dated March 23, 1993 (the
"Palco Tax Allocation Agreement")
18. Amendment of Tax Allocation Agreement between MAXXAM Inc. and The Pacific
Lumber Company, dated December 31, 2001 amending the Palco Tax Allocation
Agreement
19. Tax Allocation Agreement between MAXXAM Inc. and MAXXAM Group Inc., dated
August 4, 1993 (the "MGI Tax Allocation Agreement")
20. Amendment of Tax Allocation Agreement Between MAXXAM Inc. and MAXXAM Group
Inc., dated December 31, 2001 amending the MGI Tax Allocation Agreement
21. Tax Allocation Agreement between MAXXAM Inc. and MAXXAM Group Holdings
Inc., dated December 23, 1996 (the "MGHI Tax Allocation Agreement")
22. Amendment of Tax Allocation Agreement between MAXXAM Inc. and MAXXAM Group
Holdings Inc., dated December 31, 2001 amending the MGHI Tax Allocation
Agreement dated December 23, 1996
23. Indemnification Agreement dated February 9, 2004 between The Pacific Lumber
Company and Salmon Creek LLC
Payments
Repayment/reimbursement by The Pacific Lumber Company, βββββ� Lumber Co,
Inc., Scotia Inn, Inc. and Salmon Creek LLC to MAXXAM Inc. and its subsidiaries
of amounts limited to $1.6 million per year due in respect of allocated overhead
expenses and services provided by the employees of MAXXAM Inc. and its
subsidiaries (including past due amounts aggregating approximately $ 1.9 million
as of March 31, 2005 that are not limited by the $1.6 million per year cap).
(1) Specify Eurodollar Borrowing or ABR Borrowing.
(2) Which shall be subject to the definition of "Interest Period" and Section
2.02 of the Credit Agreement and end not later than the Maturity Date
(applicable for Eurodollar Borrowings only).