EXHIBIT 10.2
EXECUTION COPY
$120,000,000
CREDIT AGREEMENT
AMONG
BEAR ISLAND PAPER COMPANY, LLC
AS BORROWER,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
TD SECURITIES (USA) INC.,
AS ARRANGER
AND
TORONTO-DOMINION (TEXAS), INC.,
AS ADMINISTRATIVE AGENT
DATED AS OF DECEMBER 1, 1997
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS................................................ 2
1.1 Defined Terms............................................ 2
1.2 Other Definitional Provisions............................ 25
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS............................ 25
2.1 Term Loan Commitments.................................... 25
2.2 Procedure for Term Loan Borrowing........................ 25
2.3 Repayment of Term Loans.................................. 26
2.4 Revolving Credit Commitments............................. 26
2.5 Procedure for Revolving Credit Borrowing................. 26
2.6 Repayment of Loans; Evidence of Debt..................... 27
2.7 Commitment Fees, etc. ................................... 28
2.8 Optional Termination or Reduction of Revolving Credit
Commitments; Mandatory Scheduled Reductions of
Revolving Credit Commitments........................... 28
2.9 Optional Prepayments..................................... 28
2.10 Mandatory Prepayments and Commitment Reductions.......... 29
2.11 Conversion and Continuation Options...................... 32
2.12 Minimum Amounts and Maximum Number of Eurodollar
Tranches............................................... 32
2.13 Interest Rates and Payment Dates......................... 33
2.14 Computation of Interest and Fees......................... 33
2.15 Inability to Determine Interest Rate..................... 33
2.16 Pro Rata Treatment and Payments.......................... 34
2.17 Requirements of Law...................................... 36
2.18 Taxes.................................................... 37
2.19 Indemnity................................................ 39
2.20 Illegality............................................... 40
2.21 Change of Lending Office................................. 40
SECTION 3. REPRESENTATIONS AND WARRANTIES............................. 40
3.1 Financial Condition...................................... 40
3.2 No Change................................................ 41
3.3 Corporate Existence; Compliance with Law................. 41
3.4 Corporate Power; Authorization; Enforceable
Obligations............................................ 42
3.5 No Legal Bar............................................. 42
3.6 No Material Litigation................................... 42
3.7 No Default............................................... 42
3.8 Ownership of Property; Liens............................. 43
3.9 Intellectual Property.................................... 43
3.10 Taxes.................................................... 43
3.11 Federal Regulations...................................... 43
3.12 Labor Matters............................................ 43
3.13 ERISA.................................................... 44
3.14 Investment Company Act; Other Regulations................ 44
3.15 Subsidiaries............................................. 44
3.16 Use of Proceeds.......................................... 44
3.17 Environmental Matters.................................... 44
3.18 Accuracy of Information, etc............................. 46
3.19 Security Documents....................................... 46
3.20 Solvency................................................. 47
3.21 Regulation H............................................. 47
SECTION 4. CONDITIONS PRECEDENT....................................... 47
4.1 Conditions to Initial Extension of Credit................ 47
4.2 Conditions to Each Loan.................................. 52
SECTION 5. AFFIRMATIVE COVENANTS...................................... 53
5.1 Financial Statements..................................... 53
5.2 Certificates; Other Information.......................... 54
5.3 Payment of Obligations................................... 55
5.4 Conduct of Business and Maintenance of Existence, etc. .. 55
5.5 Maintenance of Property; Insurance....................... 55
5.6 Inspection of Property; Books and Records; Discussions... 55
5.7 Notices.................................................. 56
5.8 Environmental Laws....................................... 57
5.9 Additional Collateral, etc............................... 57
5.10 Sales of Products by Agents.............................. 59
SECTION 6. NEGATIVE COVENANTS......................................... 59
6.1 Financial Condition Covenants............................ 59
6.2 Limitation on Indebtedness............................... 60
6.3 Limitation on Liens...................................... 61
6.4 Limitation on Fundamental Changes........................ 63
6.5 Limitation on Sale of Assets............................. 63
6.6 Limitation on Dividends.................................. 64
6.7 Limitation on Capital Expenditures....................... 65
6.8 Limitation on Investments, Loans and Advances............ 65
6.9 Limitation on Optional Payments and Modifications
of Debt Instruments, etc. ............................. 66
6.10 Limitation on Transactions with Affiliates............... 66
6.11 Limitation on Sales and Leasebacks....................... 67
6.12 Limitation on Changes in Fiscal Periods.................. 67
6.13 Limitation on Negative Pledge Clauses.................... 67
6.14 Limitation on Restrictions on Subsidiary Distributions... 67
6.15 Limitation on Lines of Business.......................... 68
6.16 Limitation on Amendments to Acquisition Documents........ 68
6.17 Limitation on Amendments to Management Contracts......... 68
6.18 Limitation on Finance Subsidiary......................... 68
SECTION 7. EVENTS OF DEFAULT.......................................... 69
SECTION 8. THE AGENTS................................................. 72
8.1 Appointment.............................................. 72
8.2 Delegation of Duties..................................... 72
8.3 Exculpatory Provisions................................... 72
8.4 Reliance by Administrative Agent......................... 73
8.5 Notice of Default........................................ 73
8.6 Non-Reliance on Agents and Other Lenders................. 73
8.7 Indemnification.......................................... 74
8.8 Agent in Its Individual Capacity......................... 74
8.9 Successor Administrative Agent........................... 75
8.10 Authorization to Execute Intercreditor Agreement
and Security Documents and Release Liens............... 75
8.11 The Arranger............................................. 75
SECTION 9. MISCELLANEOUS.............................................. 75
9.1 Amendments and Waivers................................... 75
9.2 Notices.................................................. 76
9.3 No Waiver; Cumulative Remedies........................... 77
9.4 Survival of Representations and Warranties............... 77
9.5 Payment of Expenses...................................... 78
9.6 Successors and Assigns; Participations and Assignments... 78
9.7 Adjustments; Set-off..................................... 81
9.8 Counterparts............................................. 82
9.9 Severability............................................. 82
9.10 Integration.............................................. 82
9.11 GOVERNING LAW............................................ 82
9.12 Submission To Jurisdiction; Waivers...................... 82
9.13 Acknowledgements......................................... 83
9.14 WAIVERS OF JURY TRIAL.................................... 83
9.15 Confidentiality.......................................... 83
ANNEXES:
A Pricing Grid
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
3.1(b) Dividend and Distribution
3.4 Consents, Authorizations, Filings and Notices
3.8 Location of Property
3.15 Subsidiaries
3.19(a) UCC Filing Jurisdictions
3.19(b) Mortgage Filing Jurisdictions
6.2 Existing Indebtedness
6.3 Existing Liens
6.8(f) Existing Investments
EXHIBITS:
A Form of Subsidiary Guarantee
B Form of Xxxxx-Xxxxx Guarantee
C Form of Security and Pledge Agreement
D-1 Form of Xxxxx Pledge Agreement
D-2 Form of Paper Company Pledge Agreement
D-3 Form of Timberlands Pledge Agreement
E Form of Mortgage
F Form of Intercreditor Agreement
G Form of Compliance Certificate
H Form of Closing Certificate
I Form of Assignment and Acceptance
J Form of Legal Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx
K-1 Form of Term Note
K-2 Form of Revolving Credit Note
L Form of Prepayment Option Notice
M Form of Exemption Certificate
N Executive Summary of Environmental Audit
CREDIT AGREEMENT, dated as of December 1, 1997, among BEAR
ISLAND PAPER COMPANY, LLC, a Virginia limited liability company (the
"Borrower"), the several banks and other financial institutions or
entities from time to time parties to this Agreement (the "Lenders"), TD
SECURITIES (USA) INC., as advisor and arranger (in such capacity, the
"Arranger"), and TORONTO-DOMINION (TEXAS), INC., as administrative agent
(in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower is a Wholly Owned Subsidiary (as
hereinafter defined) of Xxxxx-Xxxxx Industries, Inc., a Delaware
corporation ("Xxxxx-Xxxxx");
WHEREAS, Xxxxx-Xxxxx owns a partnership interest as general
partner in Bear Island Paper Company, L.P., a Virginia limited
partnership ("LP Paper Company"), and the remaining partnership interests
in LP Paper Company are held by Dow Xxxxx Virginia Company, Inc. and
Newsprint, Inc. (collectively, the "Retiring Partners") as limited
partners;
WHEREAS, Xxxxx-Xxxxx is a party to the Partnership Interest
Sale Agreement, dated as of October 15, 1997 (the "Acquisition
Agreement"), with the Retiring Partners pursuant to which LP Paper
Company will be converted into Mergerco, L.L.C., a Virginia limited
liability company ("LLC Paper Company") and the Borrower, as assignee of
Xxxxx-Xxxxx'x rights under the Acquisition Agreement, will then purchase
from the Retiring Partners all their interests in LLC Paper Company;
immediately thereafter LLC Paper Company will merge into the Borrower
(such transactions, the "Acquisition"); and after the completion of the
Acquisition the Borrower will be a Wholly Owned Subsidiary of Xxxxx-
Xxxxx;
WHEREAS, in connection with the Acquisition, (i) cash in the
aggregate amount of approximately $150,000,000 will be received by the
Retiring Partners on the Closing Date and (ii) approximately $42,000,000
plus prepayment penalties and accrued interest in connection with
existing debt of the LP Paper Company will be repaid (such transactions,
collectively with the Acquisition, the "Transaction");
WHEREAS, in connection with the Transaction, the Borrower
will issue and sell and cause a Subsidiary to issue and sell, as
co-obligors, $100,000,000 original principal amount of senior second
priority secured notes (the "Second Priority Notes");
WHEREAS, in connection with the Transaction, the Borrower has
requested the Lenders to establish (i) the Revolving Credit Facility in
the aggregate amount of $50,000,000 and (ii) the Term Loan Facility in
the aggregate amount of $70,000,000;
WHEREAS, the proceeds of such credit facilities and the
Second Priority Notes will be used to finance the Transaction, to pay
fees and expenses in connection therewith and to provide for working
capital and general corporate purposes of the Borrower and its
Subsidiaries; and
WHEREAS, the Lenders are willing to make such credit
facilities available upon and subject to the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms
listed in this Section 1.1 shall have the respective meanings set forth
in this Section 1.1.
"Acquired Indebtedness": Indebtedness of a Person (a)
existing at the time such Person becomes a Subsidiary or
(b) assumed in connection with the acquisition of assets
from such Person.
"Acquisition": as defined in the recitals hereto.
"Acquisition Agreement": as defined in the recitals hereto.
"Adjustment Date": as defined in the Pricing Grid.
"Affiliate": as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power
for the election of directors (or persons performing
similar functions) of such Person or (b) direct or cause
the direction of the management and policies of such
Person, whether by contract or otherwise.
"Agents": the collective reference to the Arranger and
the Administrative Agent.
"Aggregate Exposure": with respect to any Lender, an
amount equal to (a) until the Closing Date, the aggregate
amount of such Lender's Commitments and (b) thereafter,
the sum of (i) the aggregate unpaid principal amount of
such Lender's Term Loans and (ii) the amount of such
Lender's Revolving Credit Commitment or, if the Revolving
Credit Commitments have been terminated, the amount of
such Lender's Revolving Credit Loans.
"Aggregate Exposure Percentage" with respect to any
Lender, the ratio (expressed as a percentage) of such
Lender's Aggregate Exposure to the Aggregate Exposure of
all Lenders.
"Agreement": this Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Applicable Margin": for each Type of Loan and each
Facility, the Applicable Margin determined pursuant to
the Pricing Grid.
"Approved Fund": any fund under common management and
control with a fund that is a Lender.
"Asset Sale": (a) in respect of the Borrower and its
Subsidiaries, any Disposition of Property or series of
related Dispositions of Property (excluding any such
Disposition permitted by clause (a), (b), (c), (d) or (f)
of Section 6.5) which yields gross proceeds to the
Borrower or any of its Subsidiaries (valued at the
initial principal amount thereof in the case of non-cash
proceeds consisting of notes or other debt securities and
valued at fair market value in the case of other non-cash
proceeds) in excess of $1,000,000 in the aggregate in any
fiscal year and (b) in respect of Xxxxx and its
Subsidiaries or Timberlands and its Subsidiaries, any
Disposition of Property or series of related Dispositions
of Property (excluding any such Disposition which
consists of (i) sales of property in the ordinary course
of business, the sale or issuance of Capital Stock of
Xxxxx or its Subsidiaries to Xxxxx or Xxxxx-Xxxxx, or any
Wholly Owned Subsidiary of Xxxxx, or any Disposition of
any or all of the assets of any Subsidiary of Xxxxx to a
Wholly Owned Subsidiary of Xxxxx or to Xxxxx) which
yields gross proceeds to Xxxxx or any of its Subsidiaries
(valued at the initial principal amount thereof in the
case of non-cash proceeds consisting of notes or other
debt securities and valued at fair market value in the
case of other non-cash proceeds) in excess of (i) in the
case of Xxxxx and its Subsidiaries, $1,000,000 in the
aggregate in any fiscal year and (ii) in the case of
Timberlands and its Subsidiaries, $300,000 in the
aggregate in any fiscal year.
"Assignee": as defined in Section 9.6(c).
"Assignor": as defined in Section 9.6(c).
"Available Revolving Credit Commitment": as to any
Revolving Credit Lender at any time, an amount equal to
the excess, if any, of (a) the amount of such Lender's
Revolving Credit Commitment over (b) the aggregate
outstanding principal amount of such Lender's Revolving
Credit Loans.
"Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to
the greatest 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%. For purposes hereof: "Prime
Rate" shall mean the rate of interest per annum publicly
announced from time to time by The Toronto-Dominion Bank
as its prime or base rate in effect at its principal
office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by The
Toronto-Dominion Bank in connection with extensions of
credit to debtors). Any change in the 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 day of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest
applicable to which is based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Borrower Management Contract": the Management Services
Agreement, dated as of November 26, 1997, between
Xxxxx-Xxxxx and the Borrower, as amended, supplemented or
otherwise modified in accordance with the terms of this
Agreement.
"Borrowing Date": any Business Day specified by the
Borrower as a date on which the Borrower requests the
relevant Lenders to make Loans hereunder.
"Xxxxx-Xxxxx": as defined in the recitals hereto.
"Xxxxx-Xxxxx Guarantee": the Xxxxx-Xxxxx Guarantee to
be executed and delivered by Xxxxx-Xxxxx, substantially
in the form of Exhibit B, as the same may be amended,
supplemented or otherwise modified from time to time.
"Business": as defined in Section 3.17.
"Business Day": (i) for all purposes other than as
covered by clause (ii) below, a day other than a
Saturday, Sunday or other day on which commercial banks
in New York City are authorized or required by law to
close and (ii) with respect to all notices and
determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) and which
is also a day for trading by and between banks in Dollar
deposits in the interbank eurodollar market.
"Capital Expenditures": for any period, with respect to
any Person, the aggregate of all expenditures by such
Person and its Subsidiaries for the acquisition or
leasing (pursuant to a capital lease) of fixed or capital
operating assets or additions to equipment (including
replacements of, capitalized repairs of and improvements
to, operating assets during such period) which should be
capitalized under GAAP on a consolidated balance sheet of
such Person and its Subsidiaries.
"Capital Lease Obligations": as to any Person, 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, for the purposes of this
Agreement, the amount of such obligations at any time
shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated)
of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options
to purchase any of the foregoing.
"Cash Equivalents": (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United
States Government or issued by any agency thereof and
backed by the full faith and credit of the United States,
in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits
having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial
bank organized under the laws of the United States of
America or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial
paper of an issuer rated at least A-2 by Standard &
Poor's Ratings Services ("S&P") or P-2 by Xxxxx'x
Investors Service, Inc. ("Moody's"), or carrying an
equivalent rating by a nationally recognized rating
agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally,
and maturing within six months from the date of
acquisition; (d) repurchase obligations of any Lender or
of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more
than 30 days with respect to securities issued or fully
guaranteed or insured by the United States government;
(e) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by
any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at
least A by S&P or A by Moody's; (f) securities with
maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by
any Lender or any commercial bank satisfying the
requirements of clause (b) of this definition; or (g)
shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements
of clauses (a) through (f) of this definition.
"Change of Control": as defined in the Second Priority
Note Indenture.
"Closing Date": the date on which the conditions
precedent set forth in Section 4.1 shall have been
satisfied.
"Code": the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral": all Property of the Loan Parties, now
owned or hereafter acquired, upon which a Lien is
purported to be created by any Security Document.
"Commitment": as to any Lender, the sum of the Term
Loan Commitment and the Revolving Credit Commitment of
such Lender.
"Commitment Fee Rate": the Commitment Fee Rate
determined pursuant to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the
Borrower within the meaning of Section 4001 of ERISA or
is part of a group which includes the Borrower and which
is treated as a single employer under Section 414 of the
Code.
"Compliance Certificate": a certificate duly executed
by a Responsible Officer substantially in the form of
Exhibit G.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated October 1997 and furnished
to the Lenders in respect of the Facilities.
"Consolidated Current Assets": at any date, all amounts
(other than cash and Cash Equivalents) which would, in
conformity with GAAP, be set forth opposite the caption
"total current assets" (or any like caption) on a
consolidated balance sheet of the Borrower and its
Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all
amounts which would, in conformity with GAAP, be set
forth opposite the caption "total current liabilities"
(or any like caption) on a consolidated balance sheet of
the Borrower and its Subsidiaries at such date, but
excluding (a) the current portion of any Funded Debt of
the Borrower and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness
consisting of Revolving Credit Loans to the extent
otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net
Income of the Borrower and its Subsidiaries for such
period plus, without duplication and to the extent
reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a)
income tax expense (but only to the extent, if any,
deducted in determining such Consolidated Net Income),
(b) interest expense, amortization or writeoff of debt
discount and debt issuance costs and commissions,
discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and
organization costs, (e) any extraordinary, unusual or
non-recurring expenses or losses (including, whether or
not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such
period, losses on sales of assets outside of the ordinary
course of business) and (f) any other non-cash charges
(including non-cash management fees), and minus, to the
extent included in the statement of such Consolidated Net
Income for such period, the sum of (a) interest income,
(b) any extraordinary, unusual or non-recurring income or
gains (including, whether or not otherwise includable as
a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets
outside of the ordinary course of business) and (c) any
other non-cash income, all as determined on a
consolidated basis; provided that for purposes of
calculating Consolidated EBITDA of the Borrower and its
Subsidiaries for any period, (i) the Consolidated EBITDA
of any Person acquired by the Borrower or its
Subsidiaries during such period shall be included on a
pro forma basis for such period (assuming the
consummation of each such acquisition and the incurrence
or assumption of any Indebtedness in connection therewith
occurred on the first day of such period) if the
consolidated balance sheet of such acquired Person and
its consolidated Subsidiaries as at the end of the period
preceding the acquisition of such acquired Person and the
related consolidated statements of income and
stockholders' equity and of cash flows for the period in
respect of which Consolidated EBITDA is to be calculated
(A) have been previously provided to the Administrative
Agent and the Lenders and (B) either (x) have been
reported on without a qualification arising out of the
scope of the audit by independent certified public
accountants of nationally recognized standing or (y) have
been found acceptable by the Administrative Agent and
(ii) the Consolidated EBITDA of any Person Disposed of by
the Borrower or its Subsidiaries during such period shall
be deducted on a pro forma basis for such period
(assuming the consummation of each such Disposition and
the repayment of any Indebtedness in connection therewith
occurred on the first day of such period).
"Consolidated Fixed Charge Coverage Ratio": for any Test
Period, the ratio of (a) the sum of (i) Consolidated EBITDA
for such Test Period, (ii) the net amount of cash
contributions to the Borrower's equity during the last two
fiscal quarters of such Test Period, (iii) the amount of cash
and Cash Equivalents held by the Borrower on the first day of
such Test Period and (iv) the daily average amount during such
Test Period of the aggregate Available Revolving Credit
Commitments, not exceeding $10,000,000, less (x) cash Capital
Expenditures of the Borrower and its Subsidiaries during such
Test Period and (y) the amount of Restricted Payments (other
than Restricted Payments under Section 6.6(b), (d) and (e))
made by the Borrower during such Test Period to (b)
Consolidated Fixed Charges for such Test Period.
"Consolidated Fixed Charges": for any Test Period, the sum
(without duplication) of (a) Consolidated Interest Expense for
such Test Period, (b) Consolidated Lease Expense for such Test
Period, (c) the amount of dividends and other distributions
paid in respect of such Test Period pursuant to Section 6.6(b)
and (d) scheduled payments made during such Test Period on
account of principal of Indebtedness of the Borrower or any of
its Subsidiaries (including scheduled principal payments in
respect of the Term Loans and scheduled reductions of the
Revolving Credit Commitments).
"Consolidated Free Cash Flow": for any Test Period,
Consolidated EBITDA for such Test Period, plus (i) the net
amount of cash contributions to the Borrower's equity during
the last two fiscal quarters of such Test Period and (ii) the
daily average amount during such Test Period of the aggregate
Available Revolving Credit Commitments, but in any event not
in excess of $10,000,000.
"Consolidated Interest Coverage Ratio": for any Test
Period, the ratio of (a) Consolidated Free Cash Flow for
such Test Period to (b) Consolidated Interest Expense for
such Test Period.
"Consolidated Interest Expense": for any period, total
cash interest expense (including that attributable to
Capital Lease Obligations) of the Borrower and its
Subsidiaries for such period with respect to all
outstanding Indebtedness of the Borrower and its
Subsidiaries (including, without limitation, all
commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance
financing and net costs under Interest Rate Protection
Agreements to the extent such net costs are allocable to
such period in accordance with GAAP).
"Consolidated Lease Expense": for any period, the aggregate
amount of fixed and contingent rentals payable by the Borrower
and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP, for such period with respect to leases
of real and personal property; provided, that Capital Lease
Obligations shall not constitute Consolidated Lease Expense.
"Consolidated Leverage Ratio": as at the last day of
any period of four consecutive fiscal quarters, the ratio
of (a) Consolidated Total Debt on such day to (b)
Consolidated EBITDA for such period.
"Consolidated Net Income": for any period, the consolidated
net income (or loss) of the Borrower (or, prior to the
Acquisition, the LP Paper Company) and its Subsidiaries, or
Xxxxx and its Subsidiaries, as the case may be, determined on
a consolidated basis in accordance with GAAP; provided that
there shall be excluded (a) the income (or deficit) of any
Person accrued prior to the date it becomes a Subsidiary of
the Borrower or is merged into or consolidated with the
Borrower or any of its Subsidiaries, (b) the income (or
deficit) of any Person (other than a Subsidiary of the
Borrower) in which the Borrower or any of its Subsidiaries has
an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary
in the form of dividends or similar distributions and (c) the
undistributed earnings of any Subsidiary of the Borrower to
the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other
than under any Loan Document) or Requirement of Law applicable
to such Subsidiary.
"Consolidated Net Worth": at any date, all amounts
which would, in conformity with GAAP, be included on a
consolidated balance sheet of the Borrower and its
Subsidiaries under stockholders' equity at such date.
"Consolidated Total Capitalization": at any date, the
sum of Consolidated Net Worth plus Consolidated Total
Debt at such date.
"Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness of the Borrower and
its Subsidiaries at such date, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Working Capital": at any date, the excess
of Consolidated Current Assets on such date over
Consolidated Current Liabilities at such date.
"Contractual Obligation": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such
Person is a party or by which it or any of its Property
is bound.
"Currency Swap Agreements": with respect to any Person, any
spot or forward foreign exchange agreements and currency swap,
currency option or other similar financial agreements or
arrangements entered into by such Person or any of its
Subsidiaries in the ordinary course of business and designed
to protect against or manage exposure to fluctuations in
foreign currency exchange rates.
"Default": any of the events specified in Section 7,
whether or not any requirement for the giving of notice,
the lapse of time, or both, has been satisfied.
"Disposition": with respect to any Property, any sale,
lease, sale and leaseback, assignment (other than the granting
of a Lien or other encumbrance permitted in accordance with
the terms of this Agreement), conveyance, transfer or other
disposition thereof; and the terms "Dispose" and "Disposed of"
shall have correlative meanings.
"Dollars" and "$": dollars in lawful currency of the
United States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within and
including the United States of America.
"ECF Percentage": 75%; provided, that, with respect to
each fiscal year of the Borrower ending on or after
December 31, 1998, the ECF Percentage shall be reduced to
50% if Total Committed Debt at the end of such fiscal
year is less than $145,000,000.
"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, or other Requirements of Law
(including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of
human health or the environment, as now or may at any time
hereafter be in effect.
"Environmental Permits": any and all permits, licenses,
registrations, notifications, exemptions and any other
authorizations required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of
the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, the
rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest
Period appearing on Page 3750 of the Telerate screen as
of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that
such rate does not appear on Page 3750 of the Telerate
Service (or otherwise on such service), the "Eurodollar
Base Rate" for purposes of this definition shall be
determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may
be selected by the Administrative Agent or, in the
absence of such availability, by reference to the rate at
which the Administrative Agent is offered Dollar deposits
at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in
the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest
Period for the number of days comprised therein.
"Eurodollar Loans": Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate
per annum determined for such day in accordance with the
following formula (rounded upward to the nearest 1/100th
of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to
Eurodollar Loans the then current Interest Periods with
respect to all of which begin on the same date and end on
the same later date (whether or not such Loans shall
originally have been made on the same day).
"Event of Default": any of the events specified in
Section 7, provided that any requirement for the giving
of notice, the lapse of time, or both, has been
satisfied.
"Excess Cash Flow": for any fiscal year of the
Borrower, the excess, if any, of (a) the sum, without
duplication, of (i) Consolidated Net Income for such
fiscal year, (ii) an amount equal to the amount of all
non-cash charges (including depreciation and
amortization) deducted in arriving at such Consolidated
Net Income, (iii) decreases in Consolidated Working
Capital for such fiscal year, (iv) an amount equal to the
aggregate net non-cash loss on the Disposition of
Property by the Borrower and its Subsidiaries during such
fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in
arriving at such Consolidated Net Income and (v) the net
increase during such fiscal year (if any) in deferred tax
accounts of the Borrower over (b) the sum, without
duplication, of (i) an amount equal to the amount of all
non-cash credits included in arriving at such
Consolidated Net Income, (ii) the aggregate amount
actually paid by the Borrower and its Subsidiaries in
cash during such fiscal year on account of Capital
Expenditures (excluding the principal amount of
Indebtedness incurred in connection with such
expenditures and any such expenditures financed with the
proceeds of any Reinvestment Deferred Amount), (iii) the
aggregate amount of all optional prepayments of Revolving
Credit Loans during such fiscal year to the extent
accompanying permanent optional reductions of the
Revolving Credit Commitments and all optional prepayments
of the Term Loans during such fiscal year, (iv) the
aggregate amount of all regularly scheduled principal
payments of Funded Debt (including, without limitation,
the Term Loans and principal payments as a result of
permanent reductions of the Revolving Credit Commitments)
of the Borrower and its Subsidiaries made during such
fiscal year (other than in respect of any revolving
credit facility to the extent there is not an equivalent
permanent reduction in commitments thereunder), (v)
increases in Consolidated Working Capital for such fiscal
year, (vi) an amount equal to the aggregate net non-cash
gain on the Disposition of Property by the Borrower and
its Subsidiaries during such fiscal year (other than
sales of inventory in the ordinary course of business),
to the extent included in arriving at such Consolidated
Net Income, (vii) the net decrease during such fiscal
year (if any) in deferred tax accounts of the Borrower,
(viii) the amount of any dividends and other
distributions paid in respect of such fiscal year
pursuant to Section 6.6(b) and (ix) the amount of any
prepayment made during such period with Net Cash Proceeds
of Asset Sales to the extent such Net Cash Proceeds are
included in the calculation of Consolidated Net Income
for such period.
"Excess Cash Flow Application Date": as defined in
Section 2.10(c).
"Facility": each of (a) the Term Loan Commitments and
the Term Loans made thereunder (the "Term Loan Facility")
and (b) the Revolving Credit Commitments and the
Revolving Credit Loans made thereunder (the "Revolving
Credit Facility").
"Federal Funds Effective Rate": for any day, the weighted
average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate
is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions
received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Finance Subsidiary": a Wholly Owned Subsidiary of the
Borrower functioning solely as co-obligor in respect of
the Second Priority Notes.
"Foreign Subsidiary": any Subsidiary of the Borrower
that is not a Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of
such Person that matures more than one year from the date
of its creation or matures within one year from such date
but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that
obligates the lender or lenders to extend credit during a
period of more than one year from such date, including,
without limitation, all current maturities and current
sinking fund payments in respect of such Indebtedness
whether or not required to be paid within one year from
the date of its creation and, in the case of the
Borrower, Indebtedness in respect of the Loans.
"Funding Office": the office of the Administrative
Agent set forth in Section 9.2.
"GAAP": generally accepted accounting principles in the
United States of America as in effect from time to time,
except that for purposes of Section 6.1, GAAP shall be
determined on the basis of such principles in effect on the
date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered
pursuant to Section 3.1(b). In the event that any "Accounting
Change" (as defined below) shall occur and such change results
in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the
Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been
made. Until such time as such an amendment shall have been
executed and delivered by the Borrower, the Administrative
Agent and the Required Lenders, all financial covenants,
standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not
occurred. "Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the Securities
and Exchange Commission (or successors thereto or agencies
with similar functions).
"Governmental Authority": any nation or government, any
state or other political subdivision thereof and any
entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining
to government (including, without limitation, the
National Association of Insurance Commissioners).
"Guarantee Obligation": as to any Person (the
"guaranteeing person"), any obligation of (a) the
guaranteeing person or (b) another Person (including,
without limitation, any bank under any letter of credit)
to induce the creation of which the guaranteeing person
has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other
obligations (the "primary obligations") of any other
third Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such
primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain
the net worth or solvency of the primary obligor, (iii)
to purchase Property, securities or services primarily
for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to
assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount
of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to
the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation
is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms
of the instrument embodying such Guarantee Obligation,
unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.
"Guarantees": the collective reference to the
Xxxxx-Xxxxx Guarantee and the Subsidiary Guarantee.
"Guarantors": the collective reference to Xxxxx-Xxxxx
and the Subsidiary Guarantors.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person for
the deferred purchase price of Property or services
(other than current trade payables incurred in the
ordinary course of such Person's business), (c) all
obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all
indebtedness created or arising under any conditional
sale or other title retention agreement with respect to
Property acquired by such Person (even though the rights
and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or
sale of such Property), (e) all Capital Lease Obligations
of such Person, (f) all obligations of such Person,
contingent or otherwise, as an account party under
acceptance, letter of credit or similar facilities, (g)
all obligations of such Person, contingent or otherwise,
to purchase, redeem, retire or otherwise acquire for
value any Capital Stock (other than common stock) of such
Person, (h) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses
(a) through (g) above; (i) all obligations of the kind
referred to in clauses (a) through (h) above secured by
(or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured
by) any Lien on Property (including, without limitation,
accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable
for the payment of such obligation, (j) for the purposes
of Section 7(e) only, all obligations of such Person in
respect of Interest Rate Protection Agreements and (k)
the liquidation value of any preferred Capital Stock of
such Person or its Subsidiaries held by any Person other
than such Person and its Wholly Owned Subsidiaries.
"Insolvency": with respect to any Multiemployer Plan,
the condition that such Plan is insolvent within the
meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all
rights, priorities and privileges of the Borrower and its
Subsidiaries relating to intellectual property, whether
arising under United States, multinational or foreign laws or
otherwise, including, without limitation, copyrights,
copyright licenses, patents, patent licenses, trademarks (and
the goodwill of the business symbolized thereby), trademark
licenses, technology, know-how and processes, and all rights
to xxx at law or in equity for any infringement, dilution or
misappropriation thereof, including the right to receive all
proceeds and damages therefrom.
"Intercreditor Agreement": the Intercreditor Agreement,
substantially in the form of Exhibit F, to be entered
into by the Administrative Agent, the Trustee and
Toronto-Dominion (Texas), Inc., as administrative agent
under the Timberlands Loan Agreement.
"Interest Payment Date": (a) as to any Base Rate Loan,
the last day of each March, June, September and December
to occur while such Loan is outstanding and the final
maturity date of such Loan, (b) as to any Eurodollar
Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar
Loan having an Interest Period longer than three months, each
day which is three months, or a whole multiple thereof, after
the first day of such Interest Period and the last day of such
Interest Period and (d) as to any Loan (other than any
Revolving Credit Loan that is a Base Rate Loan), the date of
any repayment or prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as
the case may be, with respect to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto;
and (b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six, as selected
by the Borrower by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the last day
of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless
the result of such extension would be to carry such
Interest Period into another calendar month in which
event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond
the Scheduled Revolving Credit Termination Date or
beyond the date final payment is due on the Term Loans,
as the case may be, shall end on the Revolving Credit
Termination Date or such due date, as applicable;
(iii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the
last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as
not to require a payment or prepayment of any Eurodollar
Loan during an Interest Period for such Loan.
"Interest Rate Protection Agreement": any interest rate
protection agreement, interest rate futures contract,
interest rate option, interest rate cap or other interest
rate hedge arrangement, to or under which the Borrower or
any of its Subsidiaries is a party or a beneficiary on
the date hereof or becomes a party or a beneficiary after
the date hereof.
"Xxxx Xxxxxxx Credit Agreement": the Amended and Restated
Timberlands Loan and Maintenance Agreement, dated as of
November 24, 1997 between Timberlands and Xxxx Xxxxxxx Mutual
Life Insurance Company, as in effect on the Closing Date, and
as further amended or otherwise modified in accordance with
the terms of this Agreement and the Timberlands Loan
Agreement.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other),
charge or other security interest or any preference, priority
or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as
any of the foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, the Guarantees, the
Security Documents, the Intercreditor Agreement and the
Notes.
"Loan Parties": Xxxxx-Xxxxx, the Borrower and each
Subsidiary of the Borrower and Xxxxx-Xxxxx which is a party to
a Loan Document (other than any such Person which is only a
party to an Acknowledgement and Consent executed pursuant to a
Security Document).
"LP Paper Company": as defined in the recitals hereto.
"Management Contracts": the collective reference to (i)
the Borrower Management Contract and (ii) the Xxxxx
Management Contract.
"Material Adverse Effect": a material adverse effect on (a)
the Transaction, (b) the business, assets, property, condition
(financial or otherwise) or prospects of Xxxxx-Xxxxx and its
Subsidiaries taken as a whole, or the Borrower and its
Subsidiaries taken as a whole or (c) the validity or
enforceability of any material provision of this Agreement or
any of the other Loan Documents or the rights or remedies of
the Agents or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount or amounts
payable by the Borrower and/or its Subsidiaries in excess of
$1,000,000 in the aggregate during any fiscal quarter,
$3,500,000 in the aggregate during any four consecutive fiscal
quarters or $10,000,000 in the aggregate after the Closing
Date for remedial costs, compliance costs, compensatory
damages, punitive damages, fines, penalties or any combination
thereof.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or
petroleum products or any hazardous or toxic substances,
materials or wastes, defined or regulated as such in or under
any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation, or that could result in liability under any
Environmental Law.
"Mortgaged Properties": the real properties listed on
Schedule 1.1B, as to which the Administrative Agent for
the benefit of the Lenders shall be granted a Lien
pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust
made by any Loan Party in favor of, or for the benefit
of, the Administrative Agent for the benefit of the
Lenders, substantially in the form of Exhibit E (with
such changes thereto as shall be advisable under the law
of the jurisdiction in which such mortgage or deed of
trust is to be recorded), as the same may be amended,
supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset
Sale or any Recovery Event, the proceeds thereof in the
form of cash and Cash Equivalents (including any such
proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but only as and
when received) of such Asset Sale or Recovery Event, net
of attorneys' fees, accountants' fees, investment banking
fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset
Sale or Recovery Event (other than any Lien pursuant to a
Security Document) and other customary fees and expenses
actually incurred in connection therewith and net of any
taxes of the entity in respect of the Asset Sale or
Recovery Event and any Partner Taxes paid or reasonably
estimated to be payable as a result thereof and (b) in
connection with any issuance or sale of equity securities
in a primary offering or debt securities or instruments
or the incurrence of loans, the cash proceeds received
from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and
expenses actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.18(a).
"Non-U.S. Lender": as defined in Section 2.18(d).
"Notes": the collective reference to any promissory
note evidencing Loans.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the
maturity of the Loans and interest accruing after the filing
of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the
Loans and all other obligations and liabilities of the
Borrower to the Administrative Agent or to any Lender (or, in
the case of Interest Rate Protection Agreements and Currency
Swap Agreements, any affiliate of any Lender), whether direct
or indirect, absolute or contingent, due or to become due, or
now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, any other Loan
Document, any Interest Rate Protection Agreement or Currency
Swap Agreement entered into with any Lender or any affiliate
of any Lender or any other document made, delivered or given
in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation,
all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise.
"Other Taxes": any and all present or future stamp or
documentary taxes or any other excise or property taxes,
charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Paper Company Percentage": on any date, the ratio
(expressed as a percentage) of (i) the Aggregate Exposure
of all Lenders on such date to (ii) the sum of (A) the
Aggregate Exposure of all Lenders on such date plus (B)
the aggregate outstanding principal amount of the
Timberlands Loan on such date.
"Paper Company Pledge Agreement": the Paper Company
Pledge Agreement to be executed and delivered by
Xxxxx-Xxxxx, substantially in the form of Exhibit D-2, as
the same may be amended, supplemented or otherwise
modified from time to time.
"Participant": as defined in Section 9.6(b).
"Partner Taxes": with respect to Xxxxx-Xxxxx, the
Borrower or Timberlands or any of their Subsidiaries, the
amount (without duplication) sufficient to permit the
direct and indirect owners of equity interests of such
entity to pay the federal, state and local income taxes
and any foreign taxes imposed on them as a result of
their ownership of interests in such entity.
"Payment Office": the office of the Administrative
Agent set forth in Section 9.2.
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA
(or any successor).
"Person": an individual, partnership, corporation,
limited liability company, business trust, joint stock
company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Borrower
or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Pro Forma Balance Sheet": as defined in Section 3.1(a).
"Projections": as defined in Section 5.2(c).
"Properties": as defined in Section 3.17.
"Property": any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible, including, without
limitation, Capital Stock.
"Recovery Event": any settlement of or payment in
excess of $250,000 in respect of any property or casualty
insurance claim or any condemnation proceeding relating
to any asset of the Borrower, Xxxxx or Timberlands, or
any of their Subsidiaries, as the case may be.
"Register": as defined in Section 9.6(d).
"Regulation G": Regulation G of the Board as in effect
from time to time.
"Regulation U": Regulation U of the Board as in effect
from time to time.
"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received
in connection therewith which are not applied to prepay the
Term Loans or reduce the Revolving Credit Commitments pursuant
to Section 2.10(b), (e) or (f) as a result of the delivery of
a Reinvestment Notice.
"Reinvestment Event": any Recovery Event or Disposition
of land, equipment or obsolete or worn out property in
the ordinary course of business in respect of which the
Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Event of Default has
occurred and is continuing and that the Borrower, Timberlands
or Xxxxx or their Subsidiaries, as the case may be (directly
or indirectly through a Subsidiary), intends and expects to
use all or a specified portion of the Net Cash Proceeds of a
Recovery Event or Disposition of land, equipment or obsolete
or worn out property in the ordinary course of business to
acquire assets useful in its business, excluding the purchase
of farm land.
"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating
thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date to acquire assets useful in the
business of the Borrower, Timberlands or Xxxxx, or their
Subsidiaries, as the case may be, excluding the purchase of
farm land.
"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring
90 days after such Reinvestment Event and (b) the date on
which the Borrower shall have determined not to, or shall
have otherwise ceased to, acquire assets useful in the
business of the Borrower, Timberlands or Xxxxx or their
Subsidiaries, as the case may be, with all or any portion
of the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer
Plan, the condition that such plan is in reorganization
within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in
Section 4043(c) of ERISA, other than those events as to
which the thirty day notice period is waived under
applicable regulations.
"Required Facility Lenders": with respect to any Facility,
the holders of more than 66-2/3% of the aggregate unpaid
principal amount of the Term Loans or the Total Revolving
Extensions of Credit, as the case may be, outstanding under
such Facility (or, in the case of the Revolving Credit
Facility, prior to any termination of the Revolving Credit
Commitments, the holders of more than 66-2/3% of the Total
Revolving Credit Commitments).
"Required Lenders": the holders of more than 66-2/3% of (a)
until the Closing Date, the Commitments and (b) thereafter,
the sum of (i) the aggregate unpaid principal amount of the
Term Loans and (ii) the Total Revolving Credit Commitments or,
if the Revolving Credit Commitments have been terminated, the
Total Revolving Extensions of Credit.
"Required Prepayment Lenders": the Required Revolving
Credit Lenders and the Required Term Loan Lenders.
"Required Revolving Credit Lenders": the Required
Facility Lenders in respect of the Revolving Credit
Facility.
"Required Term Loan Lenders": the Required Facility
Lenders in respect of the Term Loan Facility.
"Requirement of Law": as to any Person, the Certificate
of Incorporation and By-Laws or other organizational or
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
Property or to which such Person or any of its Property
is subject.
"Responsible Officer": with respect to any party, its
chief executive officer, president, any vice president or
chief financial officer of the Borrower or of any
Subsidiary, as appropriate, but with respect to financial
matters, the chief financial officer of the Borrower or
of any Subsidiary, as appropriate.
"Retiring Partners": as defined in the recitals hereto.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender, if any, to make Revolving Credit
Loans in an aggregate principal amount not to exceed the
amount set forth under the heading "Revolving Credit
Commitment" opposite such Lender's name on Schedule 1.1A, as
the same may be changed from time to time pursuant to the
terms hereof. The original amount of the Total Revolving
Credit Commitments is $50,000,000.
"Revolving Credit Commitment Period": the period from
and including the Closing Date to the Revolving Credit
Termination Date.
"Revolving Credit Lender": each Lender which has a
Revolving Credit Commitment or which has made Revolving
Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Percentage": as to any Revolving Credit
Lender at any time, the percentage which such Lender's
Revolving Credit Commitment then constitutes of the Total
Revolving Credit Commitments (or, at any time after the
Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such
Lender's Revolving Credit Loans then outstanding constitutes
of the aggregate principal amount of the Revolving Credit
Loans then outstanding).
"Revolving Credit Termination Date": December 31, 2003.
"Second Priority Note Indenture": the Indenture entered
into by the Borrower, the Finance Subsidiary and the
Trustee in connection with the issuance of the Second
Priority Notes, as the same may be amended, supplemented
or otherwise modified from time to time in accordance
with Section 6.9.
"Second Priority Notes": as defined in the recitals
hereto , which term shall include the notes issued in
exchange therefor as contemplated by the Indenture.
"Second Priority Note Security Documents": the
collective reference to any and all documents providing
for collateral security, guarantees or negative pledges
in connection with the Second Priority Security Notes, as
the same may be amended, supplemented or otherwise
modified from time to time in accordance with Section
6.9.
"Security and Pledge Agreement": the Security and
Pledge Agreement to be executed by the Borrower and each
of its Subsidiaries, substantially in the form of Exhibit
C, as the same may be amended, supplemented or otherwise
modified from time to time.
"Security Documents": the collective reference to the
Security and Pledge Agreement, the Xxxxx Pledge
Agreement, the Paper Company Pledge Agreement, the
Timberlands Pledge Agreement, the Mortgages and all other
security documents hereafter delivered to the
Administrative Agent granting a Lien on any Property of
any Person to secure the obligations and liabilities of
any Loan Party under any Loan Document.
"Single Employer Plan": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the
"present fair saleable value" of the assets of such Person
will, as of such date, exceed the amount of all "liabilities
of such Person, contingent or otherwise", as of such date, as
such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the
insolvency of debtors, (b) the present fair saleable value of
the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of
such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as
they mature. For purposes of this definition, (i) "debt" means
liability on a "claim", and (ii) "claim" means any (x) right
to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.
"Xxxxx": F.F. Xxxxx, Inc., a Quebec corporation.
"Xxxxx Management Contract": the collective reference
to the Management and Administrative Services Agreement
dated January 1, 1990, and the Manufacturer's
Representative Agreement, dated January 1, 1990, in each
case between Xxxxx-Xxxxx and Xxxxx, as in effect on the
Closing Date, as amended, supplemented or otherwise
modified in accordance with the terms of this Agreement
and the Timberlands Loan Agreement.
"Xxxxx Pledge Agreement": collectively, the Xxxxx Pledge
Agreement to be executed and delivered by Xxxxx-Xxxxx under
New York law and the Xxxxx Hypothec Agreement to be executed
and delivered by Xxxxx-Xxxxx under Quebec law, substantially
in the form of Exhibit D-1, as the same may be amended,
supplemented or otherwise modified from time to time.
"Xxxxx Consolidated Net Worth": at any date, all
amounts which would, in conformity with GAAP, be included
on a consolidated balance sheet of Xxxxx and its
Subsidiaries under stockholders' equity at such date.
"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of
stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests
having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other
entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or
more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower; provided, in any event the
Finance Subsidiary shall not be a Subsidiary of the Borrower.
"Subsidiary Guarantee": the Subsidiary Guarantee to be
executed and delivered by each Subsidiary Guarantor,
substantially in the form of Exhibit A, as the same may
be amended, supplemented or otherwise modified from time
to time.
"Subsidiary Guarantor": each Subsidiary of the Borrower
other than a Foreign Subsidiary.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, the
obligation of such Lender, if any, to make a Term Loan to
the Borrower hereunder in a principal amount not to
exceed the amount set forth under the heading "Term Loan
Commitment" opposite such Lender's name on Schedule 1.1A.
The original aggregate amount of the Term Loan
Commitments is $70,000,000.
"Term Loan Lender": each Lender which has a Term Loan
Commitment or which has made a Term Loan.
"Term Loan Percentage": as to any Term Loan Lender at any
time, the percentage which such Lender's Term Loan Commitment
then constitutes of the aggregate Term Loan Commitments (or,
at any time after the Closing Date, the percentage which the
aggregate principal amount of such Lender's Term Loans then
outstanding constitutes of the aggregate principal amount of
the Term Loans then outstanding).
"Test Period": the fiscal quarter ended March 31, 1998, the
two consecutive fiscal quarters ended June 30, 1998, the three
consecutive fiscal quarters ended September 30, 1998, and the
four consecutive fiscal quarters ended December 31, 1998 and
any four consecutive fiscal quarters ending thereafter.
"Timberlands": Bear Island Timberlands Company, L.L.C,
a Virginia limited liability company.
"Timberlands Loan": the $35,000,000 loan made to
Xxxxx-Xxxxx pursuant to the Timberlands Loan Agreement.
"Timberlands Loan Agreement": the Credit Agreement,
dated as of the date hereof, among Xxxxx-Xxxxx, the
lenders from time to time parties thereto, and
Toronto-Dominion (Texas), Inc., as Administrative Agent,
as amended, supplemented or otherwise modified from time
to time.
"Timberlands Pledge Agreement": the Timberlands Pledge
Agreement to be executed and delivered by Xxxxx-Xxxxx,
substantially in the form of Exhibit D-3, as amended,
supplemented or otherwise modified from time to time in
accordance with this Agreement and the Timberlands Loan
Agreement.
"Timberlands Wood Supply Contract": the Wood Supply
Agreement between the Borrower and Timberlands dated as of
December 1, 1997 as amended prior to the Closing Date and
provided to the Administrative Agent, as amended or otherwise
modified in the ordinary course of business and on arms'
length terms (notice of which amendments will be given by the
Borrower to the Administrative Agent within 30 days after the
execution thereof).
"Total Committed Debt": at any date, the total Funded
Debt of the Borrower (and its Subsidiaries), including,
without limitation, the Second Priority Notes and unused
Revolving Credit Commitments.
"Total Revolving Credit Commitments": at any time, the
aggregate amount of the Revolving Credit Commitments at
such time.
"Total Revolving Extensions of Credit": at any time,
the aggregate outstanding principal amount of the
Revolving Credit Loans of the Revolving Credit Lenders at
such time.
"Transaction": as defined in the recitals hereto.
"Transferee": as defined in Section 9.15.
"Trustee": Crestar Bank, a Virginia banking
corporation, as trustee under the Second Priority Note
Indenture.
"Type": as to any Loan, its nature as a Base Rate Loan
or a Eurodollar Loan.
"Wholly Owned Subsidiary": as to any Person, any other
Person all of the Capital Stock of which (other than
directors' qualifying shares required by law) is owned by
such Person directly and/or through other Wholly Owned
Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary
Guarantor that is a Wholly Owned Subsidiary of the
Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate
or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or
thereto, accounting terms relating to Xxxxx-Xxxxx, the Borrower and its
Subsidiaries not defined in Section 1.1 and accounting terms partly
defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and
conditions hereof, (a) each Term Loan Lender severally agrees to make a
term loan (a "Term Loan") to the Borrower on the Closing Date in an
amount not to exceed the amount of the Term Loan Commitment of such
Lender. The Term Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 2.11.
2.2 Procedure for Term Loan Borrowing. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 10:00 A.M., New York City
time, one Business Day prior to the anticipated Closing Date) requesting
that the Term Loan Lenders make the Term Loans on the Closing Date and
specifying the amount to be borrowed. The Term Loans made on the Closing
Date shall initially be Base Rate Loans, but thereafter may be converted
in accordance with Section 2.11. Upon receipt of such notice the
Administrative Agent shall promptly notify each Term Loan Lender thereof.
Not later than 12:00 Noon, New York City time, on the Closing Date each
Term Loan Lender shall make available to the Administrative Agent at the
Funding Office an amount in immediately available funds equal to the Term
Loan or Term Loans to be made by such Lender. The Administrative Agent
shall make available to the Borrower the aggregate of the amounts made
available to the Administrative Agent by the Term Loan Lenders in
immediately available funds.
2.3 Repayment of Term Loans. (a) The Term Loan of each Term
Loan Lender shall mature in 32 consecutive quarterly installments,
payable on the last day of each March, June, September and December,
commencing on March 31, 1998, each of which shall be in an amount equal
to such Term Loan Lender's Term Loan Percentage multiplied by the amount
set forth below opposite such installment:
Installment Payment Date Principal Amount
------------------------ ----------------
3/31/98 thru 9/30/05 $175,000
12/31/05 $64,575,000
2.4 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Revolving Credit Lender severally agrees to
make revolving credit loans ("Revolving Credit Loans") to the Borrower
from time to time during the Revolving Credit Commitment Period in an
aggregate principal amount at any one time outstanding which does not
exceed the amount of such Lender's Revolving Credit Commitment. During
the Revolving Credit Commitment Period the Borrower may use the Revolving
Credit Commitments by borrowing, prepaying the Revolving Credit Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Credit Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and
notified to the Administrative Agent in accordance with Sections 2.5 and
2.11, provided that no Revolving Credit Loan shall be made as a
Eurodollar Loan after the day that is one month prior to the Revolving
Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving
Credit Loans on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Borrower
may borrow under the Revolving Credit Commitments during the Revolving
Credit Commitment Period on any Business Day, provided that the Borrower
shall give the Administrative Agent irrevocable notice (which notice must
be received by the Administrative Agent prior to 12:00 Noon, New York
City time, (a) three Business Days prior to the requested Borrowing Date,
in the case of Eurodollar Loans, or (b) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans), specifying (i)
the amount and Type of Revolving Credit Loans to be borrowed, (ii) the
requested Borrowing Date and (iii) in the case of Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths
of the initial Interest Period therefor. Any Revolving Credit Loans made
on the Closing Date shall initially be Base Rate Loans but thereafter may
be converted in accordance with Section 2.11. Each borrowing under the
Revolving Credit Commitments shall be in an amount equal to (x) in the
case of Base Rate Loans, $1,000,000 or a whole multiple of $250,000 in
excess thereof (or, if the then aggregate Available Revolving Credit
Commitments are less than $1,000,000, such lesser amount) and (y) in the
case of Eurodollar Loans, $1,000,000 or a whole multiple of $250,000 in
excess thereof. Upon receipt of any such notice from the Borrower, the
Administrative Agent shall promptly notify each Revolving Credit Lender
thereof. Each Revolving Credit Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for
the account of the Borrower at the Funding Office prior to 12:00 Noon,
New York City time, on the Borrowing Date requested by the Borrower in
funds immediately available to the Administrative Agent. Such borrowing
will then be made available to the Borrower by the Administrative Agent
in like funds as received by the Administrative Agent.
2.6 Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for
the account of the appropriate Revolving Credit Lender or Term Loan
Lender, as the case may be, (i) the then unpaid principal amount of each
Revolving Credit Loan of such Revolving Credit Lender on the Revolving
Credit Termination Date (or such earlier date on which the Loans become
due and payable pursuant to Section 7) and (ii) the principal amount of
each Term Loan of such Term Loan Lender in installments according to the
amortization schedule set forth in Section 2.3 (or on such earlier date
on which the Loans become due and payable pursuant to Section 7). The
Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates,
set forth in Section 2.13.
(b) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing indebtedness of the
Borrower to such Lender resulting from each Loan of such Lender 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, on behalf of the Borrower,
shall maintain the Register pursuant to Section 9.6(e), and a subaccount
therein for each Lender, in which shall be recorded (i) the amount of
each Loan made hereunder and any Note evidencing such Loan, the Type
thereof and each Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iii) both the amount of
any sum received by the Administrative Agent hereunder from the Borrower
and each Lender's share thereof.
(d) The entries made in the Register and the accounts of
each Lender maintained pursuant to Section 2.6(b) shall, to the extent
permitted by applicable law and absent manifest error, be prima facie
evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any Lender or
the Administrative Agent to maintain the Register or any such account, or
any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans made to such
Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver
to such Lender a promissory note of the Borrower evidencing any Term
Loans or Revolving Credit Loans, as the case may be, of such Lender,
substantially in the forms of Exhibit K-1 or K-2, respectively, with
appropriate insertions as to date and principal amount.
2.7 Commitment Fees, etc. (a) The Borrower agrees to pay
to the Administrative Agent for the account of each Revolving Credit
Lender a commitment fee for the period from and including the Closing
Date to the last day of the Revolving Credit Commitment Period, computed
at the Commitment Fee Rate on the average daily amount of the Available
Revolving Credit Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears on the last day of each
March, June, September and December and on the Revolving Credit
Termination Date, commencing on the first of such dates to occur after
the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent
the fees in the amounts and on the dates from time to time agreed to in
writing by the Borrower and the Administrative Agent.
2.8 Optional Termination or Reduction of Revolving Credit
Commitments; Mandatory Scheduled Reductions of Revolving Credit
Commitments. (a) The Borrower shall have the right, upon not less than
three Business Days' notice to the Administrative Agent, to terminate the
Revolving Credit Commitments or, from time to time, to reduce the amount
of the Revolving Credit Commitments; provided that no such termination or
reduction of Revolving Credit Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Credit
Loans made on the effective date thereof, the Total Revolving Extensions
of Credit would exceed the Total Revolving Credit Commitments. Any such
reduction shall be in an amount equal to $5,000,000, or in increments of
$1,000,000 thereof, and shall reduce permanently the Revolving Credit
Commitments then in effect.
(b) The Total Revolving Credit Commitments shall reduce in
20 equal consecutive quarterly installments, on the last day of each
March, June, September and December, commencing on March 31, 1998, each
of which shall be in an amount equal to $1,250,000, until the Total
Revolving Credit Commitments have been reduced to $25,000,000.
2.9 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium
or penalty upon irrevocable written or telephonic notice (promptly
confirmed in writing) delivered to the Administrative Agent at least
three Business Days (or five Business Days if required by Section
2.16(a)) prior thereto in the case of Eurodollar Loans and at least one
Business Day prior thereto in the case of Base Rate Loans, which notice
shall specify the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans or Base Rate Loans; provided, that if a
Eurodollar Loan is prepaid on any day other than the last day of the
Interest Period applicable thereto, the Borrower shall also pay any
amounts owing pursuant to Section 2.19. Upon receipt of any such notice
the Administrative Agent shall promptly notify each relevant Lender
thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with
(except in the case of Revolving Credit Loans which are Base Rate Loans)
accrued interest to such date on the amount prepaid. Partial prepayments
of Term Loans and Revolving Credit Loans shall be in an aggregate
principal amount of $5,000,000 or a whole multiple thereof.
2.10 Mandatory Prepayments and Commitment Reductions. (a)
If on any date (i) any Capital Stock shall be issued by the Borrower or
any of its Subsidiaries, except Capital Stock issued by a Subsidiary to
the Borrower or to a Wholly Owned Subsidiary Guarantor or by the Borrower
to Xxxxx-Xxxxx, or (ii) any Indebtedness shall be incurred by the
Borrower or any of its Subsidiaries, excluding any Indebtedness incurred
in accordance with Section 6.2 (a)-(e), (g)-(k), as in effect on the date
of this Agreement), an amount equal to 100% of the Net Cash Proceeds
thereof shall be applied on the date of such issuance or incurrence
toward the prepayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.10(g).
(b) If on any date the Borrower or any of its Subsidiaries
shall receive Net Cash Proceeds from any Asset Sale or Recovery Event
then, unless a Reinvestment Notice shall have been delivered in respect
thereof, such Net Cash Proceeds shall be applied within 30 days after
such date toward the prepayment of the Term Loans and the reduction of
the Revolving Credit Commitments to the extent set forth in Section
2.10(g) net of any federal, state, local and foreign taxes required to be
paid by the Borrower, a Subsidiary of the Borrower, or any direct or
indirect owner of the Borrower as a result of any actual or deemed
distribution made by such entity in order to enable such application. In
addition, on each Reinvestment Prepayment Date with respect to the
Borrower, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.10(g) net of any federal, state,
local and foreign taxes required to be paid by the Borrower, a Subsidiary
of the Borrower, or any direct or indirect owner of the Borrower as a
result of any actual or deemed distribution made by such entity in order
to enable such application.
(c) If for any fiscal year of the Borrower commencing with
the fiscal year ending December 31, 1998 there shall be Excess Cash Flow,
the Borrower shall, on the relevant Excess Cash Flow Application Date,
apply the ECF Percentage of such Excess Cash Flow toward the prepayment
of the Term Loans and the reduction of the Revolving Credit Commitments
as set forth in Section 2.10(g). Each such prepayment and commitment
reduction shall be made on a date (an "Excess Cash Flow Application
Date") no later than five days after the earlier of (i) the date on which
the financial statements of the Borrower referred to in Section 5.1(a),
for the fiscal year with respect to which such prepayment is made, are
required to be delivered to the Lenders and (ii) the date such financial
statements are actually delivered.
(d) If on any date after the repayment in full of the
Timberlands Loan any dividends or distributions shall be made by
Timberlands to Xxxxx-Xxxxx (excluding dividends or distributions in an
amount equal to Partner Taxes in respect of the income of Timberlands),
an amount equal to 100% of such dividends or distributions net of any
federal, state, local or foreign taxes required to be paid by Xxxxx-Xxxxx
or any direct or indirect owner of Xxxxx-Xxxxx as a result of such
dividend or distribution shall be applied by Xxxxx-Xxxxx on the date of
such dividend or distribution toward the prepayment of the Term Loans and
the reduction of the Revolving Credit Commitments as set forth in Section
2.10(g).
(e) If on any date after the repayment in full of the
Timberlands Loan, any Capital Stock of Timberlands shall be issued (other
than to Xxxxx-Xxxxx), an amount shall be applied on the date of such
issuance toward the repayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.10(g) equal to
100% of the Net Cash Proceeds thereof net of any federal, state, local
and foreign taxes required to be paid by Xxxxx-Xxxxx or any direct or
indirect owner of Xxxxx-Xxxxx as a result of any actual or deemed
distribution made to such application. If on any date after the date of
repayment in full of the Timberlands Loan, Timberlands or any of its
Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or
Recovery Event then, unless a Reinvestment Notice shall have been
delivered in respect thereof, an amount shall be applied within 30 days
after such date toward the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 2.10(g) equal
to such Net Cash Proceeds net of any federal, state, local and foreign
taxes required to be paid by Xxxxx-Xxxxx or any direct or indirect owner
of Xxxxx-Xxxxx as a result of any actual or deemed distribution made to
enable such application. In addition, on each Reinvestment Prepayment
Date with respect to Timberlands, an amount shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.10(g) equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event net of
any federal, state, local and foreign taxes required to be paid by
Xxxxx-Xxxxx or any direct or indirect owner of Xxxxx-Xxxxx as a result of
any actual or deemed distribution made to enable such application.
Notwithstanding the foregoing, any required prepayment pursuant to this
paragraph shall be reduced by an amount equal to the Paper Company
Percentage of any amounts required to be deposited in escrow, or
otherwise required to be paid, under the Xxxx Xxxxxxx Credit Agreement.
(f) If on any date prior to the date on which the Xxxxx
Pledge Agreement shall have terminated in accordance with the terms
thereof any Capital Stock of Xxxxx shall be issued (other than to
Xxxxx-Xxxxx), an amount shall be applied on the date of such issuance
toward the prepayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.10(g) equal to the
Paper Company Percentage of the Net Cash Proceeds thereof net of any
federal, state, local and foreign taxes required to be paid by
Xxxxx-Xxxxx or any direct or indirect owner of Xxxxx-Xxxxx as a result of
any actual or deemed distribution made by Xxxxx in order to enable such
application. If on any date prior to the date on which the Xxxxx Pledge
Agreement shall have terminated in accordance with the terms thereof
Xxxxx or any of its Subsidiaries shall receive Net Cash Proceeds from any
Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be
delivered in respect thereof, an amount shall be applied within 30 days
after such date toward the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 2.10(g) equal
to the Paper Company Percentage of such Net Cash Proceeds net of any
federal, state, local and foreign taxes required to be paid by
Xxxxx-Xxxxx or any direct or indirect owner of Xxxxx-Xxxxx as a result of
any actual or deemed distribution made by Xxxxx in order to enable such
application; provided, that with respect to any Asset Sale by Xxxxx
Partners, the Net Cash Proceeds required to be applied toward prepayment
pursuant to this paragraph (d) shall also be net of any portion thereof
attributable to equity interests in Xxxxx Partners held by Persons other
than Xxxxx. In addition, on each Reinvestment Prepayment Date with
respect to Xxxxx, an amount shall be applied toward the prepayment of the
Term Loans and the reduction of the Revolving Credit Commitments as set
forth in Section 2.10(g) equal to the Paper Company Percentage of the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment
Event net of any federal, state, local and foreign taxes required to be
paid by Xxxxx-Xxxxx or any direct or indirect owner of Xxxxx-xxxxx as a
result of any actual or deemed distribution made by Xxxxx in order to
enable such application; provided, that with respect to any Asset Sale by
Xxxxx Partners, the Net Cash Proceeds required to be applied toward
prepayment pursuant to this paragraph (d) shall also be net of any
portion thereof attributable to equity interests in Xxxxx Partners held
by Persons other than Xxxxx.
(g) Amounts to be applied in connection with prepayments
and Revolving Credit Commitment reductions made pursuant to Section 2.10
shall be applied as follows:
(i until the date on which the Total Revolving Credit
Commitments have been reduced to $25,000,000, such prepayments
and Revolving Credit Commitment reductions shall be applied pro
rata, to the prepayment of the Term Loans and the permanent
reduction of the Revolving Credit Commitments;
(ii from and after the date on which the Total
Revolving Credit Commitments have been reduced to $25,000,000,
such prepayments shall be applied to prepay the Term Loans until
the Term Loans have been repaid in full;
(iii from and after the date on which there are no Term
Loans outstanding, such prepayments shall be applied to reduce
permanently the Revolving Credit Commitments until such time as
the Total Revolving Credit Commitments have been reduced to
$25,000,000; and
(iv from and after the date on which the Revolving
Credit Commitments have been reduced to $25,000,000 (and the Term
Loans have been repaid in full), no further mandatory prepayments
and Revolving Credit Commitment reductions will be required
pursuant to this Section.
Any such reductions of the Revolving Credit Commitments
above shall be accompanied by prepayment of the Revolving Credit Loans to
the extent, if any, that the Total Revolving Extensions of Credit exceed
the amount of the Total Revolving Credit Commitments as so reduced, and
shall be applied to scheduled reductions in the Total Revolving Credit
Commitments in the direct order of the remaining scheduled reductions
pursuant to Section 2.8(b). The application of any prepayment pursuant to
Section 2.10 shall be made first to Base Rate Loans and second to
Eurodollar Loans. Each prepayment of the Loans under Section 2.10 (i)
shall be accompanied by accrued interest to the date of such prepayment
on the amount prepaid (except in the case of Revolving Credit Loans that
are Base Rate Loans) and (ii) in the case of prepayments of Term Loans,
shall be applied in the direct order of the remaining maturities of Term
Loans, pursuant to Section 2.3.
2.11 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to Base Rate
Loans by giving the Administrative Agent at least one Business Day's
prior irrevocable telephonic notice (promptly confirmed in writing) of
such election, provided that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with respect thereto.
The Borrower may elect from time to time to convert Base Rate Loans to
Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election (which notice
shall specify the length of the initial Interest Period therefor),
provided that no Base Rate Loan under a particular Facility may be
converted into a Eurodollar Loan (i) when any Event of Default has
occurred and is continuing or (ii) after the date that is one month prior
to the final scheduled termination or maturity date of such Facility.
Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by
the Borrower giving irrevocable notice to the Administrative Agent, in
accordance with the applicable provisions of the term "Interest Period"
set forth in Section 1.1, of the length of the next Interest Period to be
applicable to such Loans, provided that no Eurodollar Loan under a
particular Facility may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent has
or the Required Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such
continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and provided,
further, that if the Borrower shall fail to give any required notice as
described above in this paragraph or if such continuation is not
permitted pursuant to the preceding proviso such Loans shall be
automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.12 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of
Eurodollar Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections
so that, (a) after giving effect thereto, the aggregate principal amount
of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal
to $1,000,000 or a whole multiple of $250,000 in excess thereof and (b)
no more than ten Eurodollar Tranches shall be outstanding at any one
time.
2.13 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate
determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any
Loan shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), all outstanding Loans (whether or not
overdue) shall bear interest at a rate per annum which is equal to the
rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section 2.13 plus 2%, and (ii) if all or a portion of
any interest payable on any Loan or any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate applicable to Base Rate
Loans under the relevant Facility plus 2% (or, in the case of any such
other amounts that do not relate to a particular Facility, the Base Rate
plus 2%), in each case, with respect to clauses (i) and (ii) above, from
the date of such non-payment until such amount is paid in full (as well
after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c)
of this Section 2.13 shall be payable from time to time on demand.
2.14 Computation of Interest and Fees. (a) Interest, fees
and commissions payable pursuant hereto shall be calculated on the basis
of a 360-day year for the actual days elapsed, except that, with respect
to Base Rate Loans the rate of interest on which is calculated on the
basis of the Prime Rate, the interest thereon shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual
days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the relevant Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from
a change in the Base Rate or the Eurocurrency Reserve Requirements shall
become effective as of the opening of business on the day on which such
change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective
date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations used
by the Administrative Agent in determining any interest rate pursuant to
Section 2.13(a).
2.15 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower)
that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice
from the Required Facility Lenders in respect of the relevant
Facility that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect
the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during
such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof
to the Borrower and the relevant Lenders as soon as practicable
thereafter. If such notice is given (x) any Eurodollar Loans under the
relevant Facility requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, (y) any Loans under the relevant
Facility that were to have been converted on the first day of such
Interest Period to Eurodollar Loans shall be continued as Base Rate Loans
and (z) any outstanding Eurodollar Loans under the relevant Facility
shall be converted, on the first day of such Interest Period, to Base
Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans under the relevant Facility shall be
made or continued as such, nor shall the Borrower have the right to
convert Loans under the relevant Facility to Eurodollar Loans.
2.16 Pro Rata Treatment and Payments. (a) Each borrowing
by the Borrower from the Lenders hereunder, each payment by the Borrower
on account of any commitment fee and any reduction of the Commitments of
the Lenders shall be made pro rata according to the respective Term Loan
Percentages, or Revolving Credit Percentages, as the case may be, of the
relevant Lenders. Unless otherwise expressly provided herein, all
payments by the Borrower pursuant to this Agreement or any other Loan
Document that are not on account of any particular Facility shall be made
by the Borrower to the Administrative Agent for the pro rata account of
the Lenders entitled to receive such payment.
(b) Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Term Loans shall
be made pro rata according to the respective outstanding principal
amounts of the Term Loans then held by the Term Loan Lenders. Amounts
prepaid on account of the Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Revolving Credit
Loans shall be made pro rata according to the respective outstanding
principal amounts of the Revolving Credit Loans then held by the
Revolving Credit Lenders.
(d) Notwithstanding anything to the contrary in Sections
2.9, 2.10 or 2.16, so long as the Total Revolving Credit Commitments
exceed $25,000,000, each Term Loan Lender may, at its option, decline up
to 100% of the portion of any optional prepayment or mandatory payment
applicable to the Term Loans of such Term Loan Lender; accordingly, with
respect to the amount of any optional prepayment described in Section 2.9
or mandatory prepayment described in Section 2.10 that is allocated to
Term Loans (such amount, the "Term Loan Prepayment Amount"), at any time
when the Total Revolving Credit Commitments exceeds $25,000,000, the
Borrower will, (i) in the case of any optional prepayment which the
Borrower wishes to make, not later than five Business Days prior to the
date on which the Borrower wishes to make such optional prepayment, and
(ii) in the case of any mandatory prepayment required to be made pursuant
to Section 2.10, in lieu of applying such amount to the prepayment of
Term Loans, as provided in Section 2.10(g), on the date specified in
Section 2.10 for such prepayment, give the Administrative Agent
telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Term Loan Lender a
notice (each, a "Prepayment Option Notice") as described below. As
promptly as practicable, and in any case, within two Business Days after
receiving such notice from the Borrower, the Administrative Agent will
send to each Term Loan Lender a Prepayment Option Notice, which shall be
in the form of Exhibit L, and shall include an offer by the Borrower to
prepay on the date (each a "Prepayment Date") that is three Business Days
after the date of the Prepayment Option Notice, the Term Loans of such
Lender by an amount equal to the portion of the Prepayment Amount
indicated in such Lender's Prepayment Option Notice as being applicable
to such Lender's Term Loans. On the Prepayment Date, (i) the Borrower
shall pay to the Administrative Agent the aggregate amount necessary to
prepay that portion of the outstanding Term Loans in respect of which
Term Loan Lenders have accepted prepayment as described above (such
Lenders, the "Accepting Lenders"), and such amount shall be applied to
reduce the Term Loan Prepayment Amount, with respect to each Accepting
Lender and (ii) the Borrower shall pay to the Administrative Agent an
amount equal to the portion of the Term Loan Prepayment Amount not
accepted by the Accepting Lenders, and such amount shall be applied to
the prepayment of the Revolving Credit Loans and permanent reduction of
the Revolving Credit Commitments. Notwithstanding the foregoing, the
Total Revolving Credit Commitments shall not be reduced to less than
$25,000,000 by operation of this paragraph (d); accordingly, if
application in accordance with the preceding sentence of the aggregate
amount of the Term Loan Prepayment Amount not accepted by the Accepting
Lenders would reduce the Total Revolving Credit Commitments to less than
$25,000,000, such excess amount will be applied to prepay the Term Loans
of such non-Accepting Lenders, pro rata according to amounts of the Term
Loan Prepayment Amount initially refused by such non-Accepting Lenders.
(e) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made
prior to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Payment
Office, in Dollars and in immediately available funds. The Administrative
Agent shall distribute such payments to the Lenders promptly upon receipt
in like funds as received. If any payment hereunder (other than payments
on the Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding
Business Day. If any payment on a Eurodollar Loan becomes due and payable
on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in
which event such payment shall be made on the immediately preceding
Business Day. In the case of any extension of any payment of principal
pursuant to the preceding two sentences, interest thereon shall be
payable at the then applicable rate during such extension.
(f) Unless the Administrative Agent shall have been
notified in writing by any Lender prior to a borrowing that such Lender
will not make the amount that would constitute its share of such
borrowing available to the Administrative Agent, the Administrative Agent
may assume that such Lender is making such amount available to the
Administrative Agent, and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding amount.
If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to
the Administrative Agent, on demand, such amount with interest thereon at
a rate equal to the daily average Federal Funds Effective Rate for the
period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this Section
2.16(f) shall be conclusive in the absence of manifest error. If the
Administrative Agent makes the amount of such Lender's share of such
borrowing available to the Borrower and such Lender fails to make such
amount available to the Administrative Agent within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled
to recover such amount with interest thereon at the rate per annum
applicable to Base Rate Loans under the relevant Facility, on demand,
from the Borrower.
(g) Unless the Administrative Agent shall have been
notified in writing by the Borrower prior to the date of any payment
being made hereunder that the Borrower will not make such payment to the
Administrative Agent, the Administrative Agent may assume that the
Borrower is making such payment, and the Administrative Agent may, but
shall not be required to, in reliance upon such assumption, make
available to the Lenders their respective pro rata shares of a
corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date,
the Administrative Agent shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per
annum equal to the daily average Federal Funds Effective Rate. Nothing
herein shall be deemed to limit the rights of the Administrative Agent or
any Lender against the Borrower.
2.17 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Eurodollar Loan
made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes and
Other Taxes covered by Section 2.18 and changes in the rate of
tax on the overall net income of such Lender);
(ii shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit by,
or any other acquisition of funds by, any office of such Lender
which is not otherwise included in the determination of the
Eurodollar Rate hereunder; or
(iii shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or to reduce
any amount receivable hereunder in respect thereof, then, in any such
case, upon receipt of a request certifying in reasonable detail the basis
therefor, the Borrower shall promptly pay such Lender, any additional
amounts necessary to compensate such Lender for such increased cost or
reduced amount receivable. The Lender shall deliver a copy of any such
certificate to the Administrative Agent.
(b) If any Lender shall have determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or
in the interpretation or application thereof or compliance by such Lender
or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from
any Governmental Authority made subsequent to the date hereof shall have
the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or
under to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect
to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, after submission by such Lender to the Borrower
(with a copy to the Administrative Agent) of a written request certifying
in reasonable detail the basis therefor, the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender
for such reduction.
(c) A certificate as to any additional amounts payable
pursuant to this Section 2.17 submitted by any Lender to the Borrower
(with a copy to the Administrative Agent) shall be conclusive in the
absence of manifest error. The obligations of the Borrower pursuant to
this Section 2.17 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
2.18 Taxes. (a) All payments made by the Borrower under
this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes,
branch profit taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on any Agent or any Lender as a result of a present or
former connection between such Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") or Other Taxes are required to be
withheld from any amounts payable to any Agent or any Lender hereunder,
the amounts so payable to such Agent or such Lender shall be increased to
the extent necessary to yield to such Agent or such Lender (after payment
of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender with respect
to any Non- Excluded Taxes (i) that are attributable to such Lender's
failure to comply with the requirements of paragraph (d) or (e) of this
Section or (ii) that are United States withholding taxes imposed with
respect to amounts payable to such Lender at the time the Lender becomes
a party to this Agreement (except to the extent that such Lender's
assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded
Taxes pursuant to Section 2.18(a)) or are imposed as a result of action
taken by the Lender.
(b) In addition, the Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower
shall send to the Administrative Agent for the account of the relevant
Agent or Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to
the appropriate taxing authority or fails to remit to the Agents the
required receipts or other required documentary evidence, the Borrower
shall indemnify the Administrative Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by any
Agent or any Lender as a result of any such failure. The agreements in
this Section 2.18 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
(d) Each Lender (or Participant) that is not a "United
States person" as defined in Section 7701(a)(30) of the Code or any
successor provision thereto (a "Non-U.S. Lender") shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been
purchased or to the Borrower as required by law or regulation in order to
be eligible for an exemption from, or a reduced rate of, withholding) two
copies of either U.S. Internal Revenue Service Form 1001 or Form 4224,
or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest" a statement substantially in the form
of Exhibit M and a Form W-8, or any subsequent versions thereof or
successors thereto properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence
or invalidity of any form previously delivered by such Non-U.S. Lender.
Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding
any other provision of this Section 2.18, a Non-U.S. Lender shall not be
required to deliver any form pursuant to this Section 2.18(d) that such
Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement
shall deliver to the Borrower (with a copy to the Administrative Agent),
at the time or times prescribed by applicable law or reasonably requested
by the 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 reasonable judgment such completion, execution or
submission would not materially prejudice the legal position of such
Lender.
2.19 Indemnity. The Borrower agrees to indemnify each
Lender and to hold each Lender harmless from any loss or expense which
such Lender may sustain or incur as a consequence of (a) default by the
Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (b) default by
the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c)
the making of a prepayment of Eurodollar Loans on a day which is not the
last day of an Interest Period with respect thereto. Such indemnification
may include an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last
day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the
date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank eurodollar market. A certificate as
to any amounts payable pursuant to this Section 2.19 submitted to the
Borrower by any Lender shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
2.20 Illegality. Notwithstanding any other provision
herein, if the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof shall make it unlawful for any
Lender to make or maintain Eurodollar Loans as contemplated by this
Agreement, (a) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert Base Rate Loans to
Eurodollar Loans shall forthwith be cancelled and (b) such Lender's Loans
then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such
earlier period as required by law. If any such conversion of a Eurodollar
Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 2.19.
2.21 Change of Lending Office. Each Lender agrees that,
upon the occurrence of any event giving rise to the operation of Section
2.17, 2.18(a) or 2.20 with respect to such Lender, such Lender will, if
requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another lending office
for any Loans affected by such event with the object of avoiding the
consequences of such event; provided, that such designation is made on
terms that, in the sole judgment of such Lender, cause such Lender and
its lending office(s) to suffer no economic, legal or regulatory
disadvantage. Each Lender further agrees that (i) after the occurrence of
any such event or if such Lender defaults in its obligation to make a
Loan hereunder and (ii) upon the request of the Borrower such Lender
will, at the expense of the Borrower, assign its Commitments and Loans
hereunder to a new financial institution designated by the Borrower and
if not already a Lender, consented to by the Administrative Agent (which
consent shall not be unreasonably withheld) upon receipt by such Lender
of all amounts owing to it hereunder, including all amounts payable
pursuant to Section 2.19 if such assignment were deemed to be a
prepayment. Nothing in this Section 2.21 shall in any event affect or
postpone any of the obligations of any Borrower or the rights of any
Lender pursuant to Section 2.17, 2.18(a) or 2.20.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this
Agreement and to make the Loans, the Borrower hereby represents and
warrants to each Agent and each Lender that:
3.1 Financial Condition. (a) The unaudited pro forma
condensed consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at September 30, 1997 (including the notes thereto) (the
"Pro Forma Balance Sheet"), copies of which have heretofore been
furnished to each Lender, has been prepared giving effect (as if such
events had occurred on such date) to (i) the consummation of the
Transaction, (ii) the Loans to be made and the Second Priority Notes to
be issued on the Closing Date and the use of proceeds thereof and (iii)
the payment of fees and expenses in connection with the foregoing. The
Pro Forma Balance Sheet has been prepared based on the best information
available to the Borrower as of the date of delivery thereof, and
presents fairly in all material respects on a pro forma basis the
estimated financial position of Borrower and its consolidated
Subsidiaries as at September 30, 1997, assuming that the events specified
in the preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of the LP
Paper Company and Xxxxx-Xxxxx and its Subsidiaries as at December 31,
1995 and December 31, 1996 and the related consolidated statements of
income and of cash flows for the fiscal years ended on such dates,
reported on by and accompanied by an unqualified report from Coopers &
Xxxxxxx L.L.P., present fairly in all material respects the consolidated
financial condition of the LP Paper Company and Xxxxx-Xxxxx and their
respective Subsidiaries as at such date, and the consolidated results of
its operations and its consolidated cash flows for the respective fiscal
years then ended. The unaudited consolidated balance sheet of each of the
LP Paper Company and Xxxxx-Xxxxx and their respective Subsidiaries as at
October 31, 1997, and the related unaudited consolidated statements of
income and cash flows for the ten-month period ended on such date,
certified by a Responsible Officer, present fairly in all material
respects the consolidated financial condition of the LP Paper Company and
Xxxxx-Xxxxx and their respective Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows
for the ten-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved
by the aforementioned firm of accountants and disclosed therein). Except
for the Loan Documents, the Timberlands Loan Documents and the Second
Priority Note Security Documents, neither Xxxxx-Xxxxx nor the LP Paper
Company nor any of their respective Subsidiaries individually or in the
aggregate, has any material Guarantee Obligations, contingent liabilities
and liabilities for taxes, or any long-term leases or unusual forward or
long-term commitments, including, without limitation, any interest rate
or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, which are not reflected in the most recent
financial statements referred to in this paragraph (b). Except as set
forth on Schedule 3.1(b), during the period from December 31, 1996 to and
including the date hereof there has been no Disposition by either the LP
Paper Company or Xxxxx-Xxxxx and its Subsidiaries of any material part of
its business or Property.
3.2 No Change. Except as set forth on Schedule 3.1(b),
since December 31, 1996 there has been no development, circumstance or
event which has had or could reasonably be expected to have a Material
Adverse Effect.
3.3 Corporate Existence; Compliance with Law. Each of the
Borrower and its Subsidiaries (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization,
(b) has the corporate or other power and authority, and the legal right,
to own and operate its Property, to lease the Property it operates as
lessee and to conduct the business in which it is currently engaged, (c)
is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where the failure so to qualify, individually
or in the aggregate, could reasonably be expected to have a Material
Adverse Effect and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable
Obligations. Each Loan Party has the corporate or other power and
authority, and the legal right, to make, deliver and perform the Loan
Documents to which it is a party and, in the case of the Borrower, to
borrow hereunder. Each Loan Party has taken all necessary corporate (or
other) action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower,
to authorize the borrowings on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other
Person is required in connection with the Transaction and the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices which have been obtained or
made and are in full force and effect unless otherwise noted on Schedule
3.4 and (ii) the filings referred to in Section 3.19. Each Loan Document
has been duly executed and delivered on behalf of each Loan Party party
thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each
Loan Party party thereto, enforceable against each such Loan Party in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
3.5 No Legal Bar. The execution, delivery and performance
of this Agreement and the other Loan Documents, the borrowings hereunder
and the use of the proceeds thereof will not violate any Requirement of
Law or any material Contractual Obligation of the Borrower or any of its
Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the Security Documents). No Requirement
of Law or Contractual Obligation applicable to the Borrower or any of its
Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
3.6 No Material Litigation. No litigation, investigation
or proceeding of or before any arbitrator or Governmental Authority is
pending or, to the knowledge of the Borrower, threatened by or against
the Borrower or any of its Subsidiaries or against any of their
respective properties or revenues (a) with respect to any of the Loan
Documents or any of the transactions contemplated hereby or thereby, or
(b) which could reasonably be expected to have a Material Adverse Effect.
3.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected
to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
3.8 Ownership of Property; Liens. Each of the Borrower and
its Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other Property, and none of such Property
is subject to any Lien except as permitted by Section 6.3. Schedule 3.8
sets forth each county where any Property of the Borrower is located.
3.9 Intellectual Property. The Borrower and each of its
Subsidiaries owns, or is licensed to use, all Intellectual Property used
in the conduct of its business as currently conducted. No material claim
has been asserted and is pending by any Person against the Borrower or
any of its Subsidiaries challenging or questioning the use of any such
Intellectual Property of the Borrower or any of its Subsidiaries or the
validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim. To the best of the
Borrower's knowledge, the use of Intellectual Property by the Borrower
and its Subsidiaries does not infringe on the rights of any Person in any
material respect.
3.10 Taxes. Each of the Borrower and each of its
Subsidiaries has filed or caused to be filed all Federal, state and other
material tax returns which are required to be filed and has paid all
taxes shown to be due and payable on said returns or on any assessments
made against it or any of its Property and all other taxes, fees or other
charges imposed on it or any of its Property by any Governmental
Authority (other than, in each case, any the amount or validity of which
are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or its Subsidiaries, as the case
may be). Except to the extent permitted by Section 6.3(a), no tax Lien
has been filed. To the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge (other than
in each case, any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of
the Borrower or its Subsidiaries, as the case may be).
3.11 Federal Regulations. No part of the proceeds of any
Loans will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under
Regulation G or Regulation U as now and from time to time hereafter in
effect or for any purpose which violates the provisions of the
Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrower 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 G or Regulation U, as the case may be. Neither the Borrower
nor any of its Subsidiaries owns any "margin stock" as of the date
hereof.
3.12 Labor Matters. There are no strikes or other labor
disputes against the Borrower or any of its Subsidiaries pending or, to
the knowledge of the Borrower, threatened that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse
Effect.
3.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or
Section 302 of ERISA) has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect
to any Plan, and each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. No termination of a Single
Employer Plan has occurred except pursuant to the provisions for standard
terminations under Section 404(b) of ERISA, and no Lien in favor of the
PBGC or a Plan has arisen, during such five-year period. The present
value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from
any Multiemployer Plan which has resulted or could reasonably be expected
to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if the Borrower or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made. To the Borrower's knowledge as of
the Closing Date, no such Multiemployer Plan is in Reorganization or
Insolvent.
3.14 Investment Company Act; Other Regulations. No Loan
Party is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended. No Loan Party is subject to regulation under any
Requirement of Law (other than Regulation X of the Board) which limits
its ability to incur Indebtedness.
3.15 Subsidiaries. The Subsidiaries listed on Schedule
3.15 constitute all the Subsidiaries of Xxxxx-Xxxxx and the Borrower at
the date hereof.
3.16 Use of Proceeds. The proceeds of the Loans shall be
used to finance a portion of the Transaction, to pay related fees and
expenses and to provide for working capital and general corporate
purposes of the Borrower.
3.17 Environmental Matters. Other than exceptions to any
of the following that could not, individually or in the aggregate,
reasonably be expected to give rise to a Material Adverse Effect:
(a) the Borrower and its Subsidiaries: (i) are, and
within the period of all applicable statutes of limitation have
been, in compliance with all applicable Environmental Laws; (ii)
hold all Environmental Permits (each of which is in full force
and effect) required for any of their current operations or for
any property owned, leased, or otherwise operated by any of them
(the "Properties"); (iii) are, and within the period of all
applicable statutes of limitation have been, in compliance with
all of their Environmental Permits; and (iv) reasonably believe
that: each of their Environmental Permits will be timely renewed
and complied with, without material expense; any additional
Environmental Permits that may be required of any of them will be
timely obtained and complied with, without material expense; and
compliance with any Environmental Law that is or is expected to
become applicable to any of them will be timely attained and
maintained, without material expense.
(b) Materials of Environmental Concern are not
present at, on, under, in, or about any real property now or
formerly owned, leased or operated by the Borrower or any of its
Subsidiaries or at any other location (including, without
limitation, any location to which Materials of Environmental
Concern have been sent for re-use or recycling or for treatment,
storage, or disposal) in concentrations or conditions which could
reasonably be expected to (i) give rise to liability of the
Borrower or any of its Subsidiaries under any applicable
Environmental Law or otherwise result in any of them having to
incur costs, or (ii) interfere with the Borrower's or any of its
Subsidiaries' continued operations, or (iii) impair the fair
saleable value of any real property owned or leased by the
Borrower or any of its Subsidiaries in light of its current use
and condition to the extent the same is reflected in the
assessment referred to in Section 4.1(l).
(c) There is no judicial, administrative, or
arbitral proceeding (including any notice of violation or alleged
violation) under or relating to any Environmental Law to which
the Borrower or any of its Subsidiaries is, or to the knowledge
of the Borrower will be, named as a party that is pending or, to
the knowledge of the Borrower, threatened.
(d) Neither the Borrower nor any of its
Subsidiaries has received any written request for information, or
been notified that it is a potentially responsible party under or
relating to the federal Comprehensive Environmental Response,
Compensation, and Liability Act or any similar Environmental Law,
or with respect to any Materials of Environmental Concern.
(e) Neither the Borrower or any of its Subsidiaries
has entered into or agreed to any consent decree, order, nor
settlement or other agreement, nor is subject to any judgment,
decree, or order or other agreement, in any judicial,
administrative, arbitral, or other forum, relating to compliance
with or liability under any Environmental Law.
(f) Neither the Borrower nor any of its
Subsidiaries has assumed or retained, by contract, any
liabilities of any kind, fixed or contingent, known or unknown,
of any other person under any Environmental Law or with respect
to any Material of Environmental Concern.
3.18 Accuracy of Information, etc. No statement or
information contained in this Agreement, any other Loan Document, the
Confidential Information Memorandum or any other document, certificate or
statement furnished in writing to the Administrative Agent or the Lenders
or any of them, by or on behalf of any Loan Party for use in connection
with the transactions contemplated by this Agreement or the other Loan
Documents, taken as a whole, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of
the Confidential Information Memorandum, as of the date of this
Agreement), any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained herein
or therein not misleading. The projections and pro forma financial
information contained in the materials referenced above are based upon
good faith estimates and assumptions believed by management of the
Borrower to be reasonable at the time made, it being recognized by the
Lenders that such financial information as it relates to future events is
not to be viewed as fact and that actual results during the period or
periods covered by such financial information may differ from the
projected results set forth therein by a material amount and such results
are not warranted to be obtained and no representation is made as to
disclosure of matters of a general economic nature or matters of public
knowledge that generally affect the industry in which Xxxxx-Xxxxx or any
of its Subsidiaries is involved. As of the date hereof, the
representations and warranties of the Borrower, and, to the Borrower's
knowledge, of each other party to the Acquisition Agreement contained in
the Acquisition Agreement are true and correct in all material respects.
There is no fact known to any Loan Party that could reasonably be
expected to have a Material Adverse Effect that has not been expressly
disclosed herein, in the other Loan Documents, in the Confidential
Information Memorandum or in any other documents, certificates and
statements furnished to the Administrative Agent and the Lenders for use
in connection with the transactions contemplated hereby and by the other
Loan Documents.
3.19 Security Documents. (a) The Security and Pledge
Agreement is effective to create in favor of the Administrative Agent,
for the benefit of the Lenders, a legal, valid and enforceable security
interest in the Collateral described therein and the proceeds thereof.
In the case of the Pledged Stock described in the Security and Pledge
Agreement, when stock certificates representing such Pledged Stock are
delivered to the Administrative Agent, and in the case of the other
Collateral described in the Security and Pledge Agreement (other than
unregistered copyrights and the proceeds thereof), when financing
statements in appropriate form, and forms required by the U.S. Patent and
Trademark Office and the U.S. Copyright Office, are filed in the offices
specified on Schedule 3.19(a), the Liens granted pursuant to the Security
and Pledge Agreement shall constitute a fully perfected Lien (except with
respect to such other Collateral, such Lien shall be perfected only to
the extent perfection is required by the Security and Pledge Agreement)
on, and security interest in, all right, title and interest of the Loan
Parties in such Collateral and the proceeds thereof under U.S. law, as
security for the Obligations (as defined in the Security and Pledge
Agreement), in each case prior and superior in right to any other Person
except to the extent contemplated by Section 6.3(a)-(g), (i), (j) and
(k)-(n).
(b) Each of the Mortgages is effective to create in favor
of the Administrative Agent, for the benefit of the Lenders, a legal,
valid and enforceable Lien on the Mortgaged Properties described therein
and proceeds thereof, and with respect to the Mortgages dated the date
hereof, when the Mortgages are filed in the offices specified on Schedule
3.19(b), each such Mortgage shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the Loan
Parties in the Mortgaged Properties and the proceeds thereof, as security
for the Obligations (as defined in the relevant Mortgage), in each case
prior and superior in right to any other Person except to the extent
contemplated by Section 6.3(e) and (k).
(c) Each of the Xxxxx Pledge Agreement, the Paper Company
Pledge Agreement and the Timberlands Pledge Agreement is effective to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the
Collateral described therein and proceeds thereof. In the case of the
Pledged Stock described in such Pledge Agreements which constitutes
certificated securities, when stock certificates representing such
Pledged Stock are delivered to the Administrative Agent, and in the case
of the other Collateral described in such Pledge Agreements, when
financing statements in appropriate form are filed in the offices
specified on Schedule 3.19(a), such Pledge Agreements shall constitute a
fully perfected Lien on, and security interest in, all right, title and
interest of Xxxxx-Xxxxx in such Collateral and the proceeds thereof, as
security for the Obligations (as defined in such Pledge Agreements), in
the case of the Xxxxx Pledge Agreement and the Paper Company Pledge
Agreement, prior and superior in right to any other Person, and in the
case of the Timberlands Pledge Agreement, prior and superior in right to
any Person other than the Administrative Agent and the Lenders under the
Timberlands Loan Agreement.
3.20 Solvency. Each Loan Party is, and after giving effect
to the Transaction and the incurrence of all Indebtedness and obligations
being incurred in connection herewith and therewith will be and will
continue to be, Solvent; provided, that such representation and warranty
shall not be required to be made in respect of Xxxxx-Xxxxx after the
release of the Xxxxx-Xxxxx Guarantee.
3.21 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the
Secretary of Housing and Urban Development on or prior to the Closing
Date as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Initial Extension of Credit. The
agreement of each Lender to make the initial Loan requested to be made by
it is subject to the satisfaction, prior to or concurrently with the
making of such Loan on the Closing Date, of the following conditions
precedent:
(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, (ii) the Subsidiary
Guarantee, executed and delivered by a duly authorized officer of
each Subsidiary of the Borrower except the Finance Subsidiary,
(iii) the Xxxxx-Xxxxx Guarantee, executed and delivered by a duly
authorized officer of Xxxxx-Xxxxx, (iv) the Security and Pledge
Agreement, executed and delivered by a duly authorized officer of
the Borrower and each of its Subsidiaries, (v) the Xxxxx Pledge
Agreement, the Paper Company Pledge Agreement and the Timberlands
Pledge Agreement, in each case executed and delivered by a duly
authorized officer of Xxxxx-Xxxxx, (vi) a Mortgage covering each
of the Mortgaged Properties, executed and delivered by a duly
authorized officer of each party thereto, and (vii) for the
account of any Lender requesting Notes in accordance with Section
2.6(e), Notes conforming to the requirements hereof and executed
and delivered by a duly authorized officer of the Borrower.
(b) Intercreditor Agreement. The Administrative Agent
shall have received the Intercreditor Agreement, executed and
delivered by the Trustee, the Administrative Agent and
Toronto-Dominion (Texas), Inc., as administrative agent under the
Timberlands Loan Agreement.
(c) Acquisition, etc. The following transactions shall
have been consummated, in each case on terms and conditions
reasonably satisfactory to the Lenders:
(i) the Transaction shall have been
consummated, with the amount of cash paid to the Retiring
Partners on the Closing Date not exceeding an aggregate
total of $150,000,000; and
(ii) the Borrower shall have received at least
$100,000,000 in gross cash proceeds from the issuance of
the Second Priority Notes.
(d) Pro Forma Balance Sheet; Financial Statements. The
Lenders shall have received (i) the Pro Forma Balance Sheet, (ii)
audited consolidated financial statements of the LP Paper Company
and its Subsidiaries for the 1995 and 1996 fiscal years, (iii)
unaudited interim consolidated financial statements of the LP
Paper Company and its Subsidiaries, certified by a Responsible
Officer for the month of October 1997 and for the ten-month
period ended October 31, 1997, and such financial statements
shall not, in the reasonable judgment of the Lenders, reflect any
material adverse change in the consolidated financial condition
of the Borrower and its Subsidiaries, as reflected in the
financial statements or projections contained in the Confidential
Information Memorandum, (iv) audited consolidated financial
statements of Xxxxx and its Subsidiaries for the 1995 and 1996
fiscal years and (v) unaudited interim financial statements of
Xxxxx and of F.F. Xxxxx, Inc. & Partners, Limited Partnership
("Xxxxx Partners"), certified by a Responsible Officer, for the
month of October 1997 and for the ten-month period ended October
31, 1997, and such financial statements shall not, in the
reasonable judgment of the Lenders, reflect any material adverse
change in the financial condition of Xxxxx or Xxxxx Partners, as
reflected in the financial statements or projections contained in
the Confidential Information Memorandum.
(e) Approvals. Except as disclosed on Schedule 3.4, all
governmental and third party approvals (including landlords' and
other consents) necessary in connection with the Transaction, the
continuing operations of Xxxxx-Xxxxx, the Borrower and its
Subsidiaries and the transactions contemplated hereby shall have
been obtained and be in full force and effect, and all applicable
waiting periods shall have expired without any action being taken
or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Transaction
or the financing contemplated hereby.
(f) Related Agreements. The Administrative Agent shall
have received (in a form reasonably satisfactory to the
Administrative Agent), with a copy for each Lender, true and
correct copies, certified as to authenticity by the Borrower, of
the Acquisition Agreement, the Second Priority Note Indenture,
the Xxxx Xxxxxxx Credit Agreement, the Timberlands Loan
Agreement, the Timberlands Wood Supply Contract and such other
documents or instruments as may be reasonably requested by the
Administrative Agent, including, without limitation, a copy of
any material debt instrument, security agreement or other
material contract to which the Loan Parties may be a party.
(g) Timberlands Loan. All conditions precedent to the
making of the Timberlands Loan under the Timberlands Loan
Agreement shall have been satisfied, and the Timberlands Loan
shall be made concurrently with the Term Loans on the Closing Date.
(h) Fees. The Lenders, the Administrative Agent shall have
received all fees required to be paid, and all expenses for which
invoices have been presented, on or before the Closing Date.
(i) Business Plan. The Lenders shall have received a
satisfactory business plan for fiscal year 1997 and satisfactory
projections for the Borrower and its Subsidiaries for the period
from the Closing Date through December 31, 2005.
(j) Solvency Opinion. The Lenders shall have received a
satisfactory solvency opinion from Valuation Research Corporation
which shall document the solvency of the Borrower and its
Subsidiaries after giving effect to the Transaction and the
transactions contemplated hereby.
(k) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the
jurisdictions where assets of the Loan Parties are located, and
such search shall reveal no liens on any of the assets of the
Borrower or its Subsidiaries except for liens permitted by
Section 6.3 or liens to be discharged on or prior to the Closing
Date.
(l) Environmental Audit. The Administrative Agent shall
have received a satisfactory assessment, from Aware
Environmental, Inc., of compliance and liability issues that may
affect the Borrower or their Subsidiaries with respect to
environmental laws, the executive summary of which is attached
hereto as Exhibit N.
(m) Closing Certificate. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate
of each Loan Party, dated the Closing Date, substantially in the
form of Exhibit H, with appropriate insertions and attachments.
(n) Corporate and Other Proceedings and Corporate and
Other Documents. The Administrative Agent shall have received,
with a counterpart for each Lender, (i) true and complete copies
of the certificate of incorporation and by-laws (or equivalents
thereof) of each Loan Party, together with a good standing
certificate from the Secretary of State (or similar official) of
its jurisdiction of incorporation, (ii) a certificate of each
Loan Party, dated the Closing Date, as to the incumbency and
signature of the officers of each Loan Party executing any Loan
Document, satisfactory in form and substance to the
Administrative Agent, (iii) a copy of the resolutions, in form
and substance reasonably satisfactory to the Administrative
Agent, of the Board of Directors (or an equivalent thereof) of
each Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which it is a party
(including, but not limited to, the granting of any liens
provided for therein) and in the case of the Borrower, the
borrowings contemplated hereunder, certified by a
Secretary of such Loan Party as of the Closing Date, which
certificate shall be in form and substance reasonably
satisfactory to the Administrative Agent, and shall state that
the resolutions thereby certified have not been amended,
modified, revoked or rescinded.
(o) Legal Opinions. The Lenders shall have received the
following executed legal opinions, each reasonably satisfactory
in form and substance to the Lenders:
(i) the legal opinion of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, counsel to the Loan Parties,
substantially in the form of Exhibit J; and
(ii) the legal opinion of local counsel in each
of the State of Virginia, Connecticut and Canada and of
such other special and local counsel as may be required by
the Administrative Agent.
Each such legal opinion shall cover such other matters incident
to the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require.
(p) Pledged Stock; Stock Power. The Administrative Agent
shall have received the certificates representing the shares of
Capital Stock pledged pursuant to the Security Documents,
together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor
thereof.
(q) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code
financing statement) required by the Security Documents or under
law or reasonably requested by the Administrative Agent to be
filed, registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected
Lien on the Collateral described therein, prior and superior in
right to any other Person (other than with respect to Liens
expressly permitted by Section 6.3 and pursuant to the
Intercreditor Agreement), shall be in proper form for filing,
registration or recordation.
(r) Title Insurance; Flood Insurance. (i) If requested by
the Administrative Agent, the Administrative Agent shall have
received, and the title insurance company issuing the policy
referred to in clause (ii) below (the "Title Insurance Company")
shall have received, maps or plats of an as-built survey of the
sites of the Mortgaged Properties certified to the Administrative
Agent and the Title Insurance Company in a manner satisfactory to
them, dated a date satisfactory to the Administrative Agent and
the Title Insurance Company by an independent professional
licensed land surveyor satisfactory to the Administrative Agent
and the Title Insurance Company, which maps or plats and the
surveys on which they are based shall be made in accordance with
the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in
1992, and, without limiting the generality of the foregoing, there
shall be surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the buildings,
structures and other improvements and the established building
setback lines; (B) the lines of streets abutting the sites and width
thereof; (C) all access and other easements appurtenant to the sites;
(D) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the
site, whether recorded, apparent from a physical inspection of
the sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building
structures and improvements on the sites; (F) if the site is
described as being on a filed map, a legend relating the survey
to said map; and (G) the flood zone designations, if any, in
which the Mortgaged Properties are located.
(ii) 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 (A) be in an amount
satisfactory to the Administrative Agent; (B) be issued at
ordinary rates; (C) insure that the Mortgage insured thereby
creates a valid first Lien on such Mortgaged Property free and
clear of all defects and encumbrances, except as disclosed
therein; (D) name the Administrative Agent for the benefit of the
Lenders as the insured thereunder; (E) be in the form of ALTA
Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent
policies); (F) contain such endorsements and affirmative coverage
as the Administrative Agent may reasonably request and (G) be
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). 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.
(iii) If requested by the Administrative Agent, and
if located within a "special flood hazard" area as designated by
the director of Federal Emergency Management Agency, the
Administrative Agent shall have received (A) a policy of flood
insurance which (1) covers any parcel of improved real property
which is encumbered by any Mortgage (2) is written in an amount
not less than the outstanding principal amount of the
indebtedness secured by such Mortgage which is reasonably
allocable to such real 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, and (3) has a term ending not later than the maturity of
the Indebtedness secured by such Mortgage and (B) confirmation
that the Borrower has received the notice required pursuant to
Section 208(e)(3) of Regulation H of the Board.
(iv) 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
in clause (ii) above and a copy of all other material documents
affecting the Mortgaged Properties.
(s) Insurance. The Administrative Agent shall have
received insurance certificates satisfying the requirements of
Section 4.3 of the Security and Pledge Agreement and Section 5 of
the Mortgage.
(t) Appraisal. The Administrative Agent shall have
received a satisfactory appraisal from F & W Forestry Services,
Inc. of the assets of Timberlands.
(u) Management Contracts. The Lenders shall have received
copies of the Borrower Management Contract, which shall be in
form and substance satisfactory to the Lenders, and the Xxxxx
Management Contract (which shall be in the form reviewed by the
Administrative Agent prior to October 1, 1997).
4.2 Conditions to Each Loan. The agreement of each Lender
to make any Loan requested to be made by it on any date (including,
without limitation, its initial Loan) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or
pursuant to the Loan Documents shall be true and correct in all
material respects on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to
the Loans requested to be made on such date.
Each borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower as of the date of such Loan
that the conditions contained in this Section 4.2 have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Commitments remain in effect or any Loan or other amount is owing to any
Lender or any Agent hereunder, the Borrower shall and shall cause each of
its Subsidiaries to:
5.1 Financial Statements. Furnish to the Administrative
Agent, with sufficient copies for each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, Xxxxx and
Xxxxx-Xxxxx, a copy of the audited consolidated balance sheet of
such party and its consolidated Subsidiaries as at the end of
such year and the related audited consolidated statements of
income and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year,
reported on without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the
audit, by Coopers & Xxxxxxx L.L.P. or other independent certified
public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than
45 days after the end of each of the first three quarterly
periods of each fiscal year of the Borrower, the unaudited
consolidated balance sheet of such party and its consolidated
Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for
such quarter and the portion of the fiscal year through the end
of such quarter, reported on with or without footnotes, setting
forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
(c) as soon as available, but in any event not later than
45 days after the end of each month occurring during each fiscal
year of the Borrower, Xxxxx and Xxxxx-Xxxxx (other than the
third, sixth, ninth and twelfth such month with respect to the
Borrower), the unaudited balance sheets of such party and its
Subsidiaries as at the end of such month and the related
unaudited statements of income and of cash flows for such month
and the portion of the fiscal year through the end of such month,
reported on with or without footnotes setting forth in each case
in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments).
All such financial statements shall present fairly in all material
respects the financial condition of such parties and shall be prepared in
reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods (except
as approved by such accountants or officer, as the case may be, and
disclosed therein).
5.2 Certificates; Other Information. Furnish to the
Administrative Agent, with sufficient copies for each Lender, or, in the
case of clause (g), to the relevant Lender:
(a) concurrently with the delivery of the financial
statements referred to in Section 5.1(a), a certificate of the
independent certified public accountants reporting on such
financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial
statements pursuant to Section 5.1, (i) a certificate of a
Responsible Officer stating that, to the best of each such
Responsible Officer's knowledge that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except
as specified in such certificate and (ii) in the case of
quarterly or annual financial statements, (x) a Compliance
Certificate containing all information necessary for determining
compliance by the Borrower and its Subsidiaries with the
provisions of this Agreement referred to therein as of the last
day of the fiscal quarter or fiscal year of the Borrower, as the
case may be, and (y) to the extent not previously disclosed to
the Administrative Agent, a listing of any county or state within
the United States where any Loan Party keeps material inventory
or material equipment (other than motor vehicles) and of any
Intellectual Property acquired by any Loan Party since the date
of the most recent list delivered pursuant to this clause (y)
(or, in the case of the first such list so delivered, since the
Closing Date);
(c) as soon as available, and in any event no later than
45 days after the end of each fiscal year of the Borrower, a
detailed consolidated budget of the Borrower and its Subsidiaries
for the following fiscal year (including consolidated statements
of projected cash flow, projected changes in financial position,
projected income and a capital spending plan setting forth in
detail projected maintenance expenditures and projected
project-related expenditures), and, as soon as available,
significant revisions, if any, of such budget and projections
with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating
that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has
no reason to believe that such Projections are incorrect or
misleading in any material respect;
(d) within 30 days after the end of each fiscal month of
the Borrower, mill manager's report substantially in the form
customary prior to date of this Agreement;
(e) no later than 10 Business Days prior to the
effectiveness thereof, copies of substantially final drafts of
any proposed amendment, supplement, waiver or other modification
with respect to the Second Priority Note Indenture or the
Acquisition Agreement;
(f) within five days after the same are sent, copies of
all financial statements and reports which the Borrower sends to
the holders of any class of its debt securities or public equity
securities and within five days after the same are filed, copies
of all financial statements and reports which the Borrower may
make to, or file with, the Securities and Exchange Commission or
any successor or analogous Governmental Authority; and
(g) promptly, such additional financial and other
information as any Lender may from time to time reasonably
request.
5.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the
case may be, all its material obligations of whatever nature, except
where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Borrower or
its Subsidiaries, as the case may be.
5.4 Conduct of Business and Maintenance of Existence, etc.
(a) (i) Preserve, renew and keep in full force and effect its corporate
existence and (ii) take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of
its business, except, in each case, as otherwise permitted by Section 6.4
and except, in the case of clause (ii) above, to the extent that failure
to do so could not reasonably be expected to have a Material Adverse
Effect; and (b) comply with all Contractual Obligations and Requirements
of Law except to the extent that failure to comply therewith could not,
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
5.5 Maintenance of Property; Insurance. (a) Keep all
Property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with
financially sound and reputable insurance companies insurance on all its
Property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business.
5.6 Inspection of Property; Books and Records;
Discussions. (a) Keep proper books of records and account in which full,
true and correct entries in conformity with GAAP and all Requirements of
Law shall be made of all dealings and transactions in relation to its
business and activities and (b) permit representatives of any Lender to
visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time upon reasonable
notice and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the Borrower
and its Subsidiaries and with its independent certified public
accountants.
5.7 Notices. Promptly give notice to the Administrative
Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any material
Contractual Obligation of the Borrower or any of its Subsidiaries
or (ii) litigation, investigation or proceeding which may exist
at any time between the Borrower or any of its Subsidiaries and
any Governmental Authority, which in either case, if not cured or
if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or
any of its Subsidiaries in which the amount involved is
$5,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to
know thereof: (i) the occurrence of any Reportable Event with
respect to any Single Employer Plan, a failure to make any
required contribution to a Single Employer Plan, the creation of
any Lien in favor of the PBGC or a Single Employer Plan or any
withdrawal from, or the termination, Reorganization or Insolvency
of, any Multiemployer Plan or (ii) the institution of proceedings
or the taking of any other action by the PBGC or the Borrower or
any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan;
(e) any development, event, or condition relating to any
Environmental Law that, individually or in the aggregate with
other developments, events or conditions relating to any
Environmental Law, could reasonably be expected to result in the
payment by Borrower and its Subsidiaries, in the aggregate, of a
Material Environmental Amount, provided that, with respect to
costs required to maintain the operations of the Borrower and its
Subsidiaries in compliance with Environmental Laws, this
paragraph refers only to the increases in such costs over the
levels the Borrower and its Subsidiaries incurred, in the
aggregate, during fiscal year 1997; and
(f) any development or event which has had or could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 5.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the Borrower or
the relevant Subsidiary proposes to take with respect thereto.
5.8 Environmental Laws. (a) (i) Comply with all
Environmental Laws applicable to it, and obtain, comply with and maintain
any and all Environmental Permits necessary for its operations as
conducted and as planned; and (ii) take all reasonable efforts to ensure
that all of its tenants, subtenants, contractors, subcontractors, and
invitees comply with all Environmental Laws, and obtain, comply with and
maintain any and all Environmental Permits, applicable to any of them
insofar as any failure to so comply, obtain or maintain reasonably could
be expected to adversely affect the Borrower. For purposes of this
5.8(a), noncompliance by the Borrower or any of its Subsidiaries with any
applicable Environmental Law or Environmental Permit shall be deemed not
to constitute a breach of this covenant provided that, upon learning of
any actual or suspected noncompliance, the Borrower or Subsidiary, as the
case may be, shall promptly undertake all reasonable efforts to achieve
compliance, and provided further that, in any case, such non-compliance,
and any other noncompliance with Environmental Law, individually or in
the aggregate, could not reasonably be expected to give rise to a
Material Adverse Effect or materially and adversely affect the value of
any Mortgaged Property.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all material
respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws.
(c) With respect to any development, event, or condition
that is (or should have been) the subject of a notice pursuant to Section
5.7(e) of this Agreement, provide such information as may be necessary to
give the Administrative Agent reasonable assurance that such development,
event, or condition could not reasonably be expected to result in a
Material Adverse Effect.
5.9 Additional Collateral, etc. (a) With respect to any
Property acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than (x) any Property described in paragraph (b), (c)
or (d) below and (y) any Property subject to a Lien expressly permitted
by Section 6.3(g)) as to which the Administrative Agent, for the benefit
of the Lenders, does not have a perfected Lien, promptly (i) execute and
deliver to the Administrative Agent such amendments to the Security and
Pledge Agreement or such other documents as the Administrative Agent
deems necessary or advisable in order to grant to the Administrative
Agent, for the benefit of the Lenders, a security interest in such
Property except as prohibited by documents permitted by Section 6.13 and
(ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in such Property subject to Liens permitted by
Section 6.3 and perfected to the extent required by the Security and
Pledge Agreement, including without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be
required by the Security and Pledge Agreement or by law or as may be
requested by the Administrative Agent.
(b) With respect to any fee interest in any real estate
having a value (together with improvements thereof) of at least $500,000
acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than any such real estate subject to a Lien expressly
permitted by Section 6.3(g)), promptly (i) execute and deliver a first
priority Mortgage in favor of the Administrative Agent, for the benefit
of the Lenders, covering such real estate, (ii) if requested by the
Administrative Agent, provide the Lenders with (x) title and extended
coverage insurance covering such real estate in an amount at least equal
to the purchase price of such real estate (or such other amount as shall
be reasonably specified by the Administrative Agent) as well as a current
ALTA survey thereof, together with a surveyor's certificate and (y) any
consents or estoppels reasonably deemed necessary or advisable by the
Administrative Agent in connection with such mortgage or deed of trust,
each of the foregoing in form and substance reasonably satisfactory to
the Administrative Agent and (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.
(c) With respect to any new Subsidiary (other than a
Foreign Subsidiary) created or acquired after the Closing Date by the
Borrower or any of its Subsidiaries, promptly (i) execute and deliver to
the Administrative Agent such amendments to the Security and Pledge
Agreement as the Administrative Agent deems necessary or advisable in
order to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital
Stock of such new Subsidiary which is owned by the Borrower or any of its
Subsidiaries, (ii) deliver to the Administrative Agent the certificates
representing such Capital Stock if any, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of
the Borrower or such Subsidiary, as the case may be, (iii) cause such new
Subsidiary (A) to become a party to the Subsidiary Guarantee and the
Security and Pledge Agreement and (B) to take such actions necessary or
advisable to grant to the Administrative Agent for the benefit of the
Lenders a perfected first priority security interest in the Collateral
described in the Security and Pledge Agreement with respect to such new
Subsidiary, including, without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be
required by the Security and Pledge 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.
(d) With respect to any new Foreign Subsidiary created or
acquired after the Closing Date by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Security and Pledge Agreement as the
Administrative Agent deems necessary or advisable in order to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new
Subsidiary which is owned by the Borrower or any of its Subsidiaries
(provided that in no event shall more than 65% of the total outstanding
Capital Stock of any such new Subsidiary be required to be so pledged),
(ii) deliver to the Administrative Agent the certificates representing
such Capital Stock, if any, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the Borrower or
such Subsidiary, as the case may be, and take such other action as may be
necessary or, in the opinion of the Administrative Agent, desirable to
perfect the Lien thereon, and (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.
5.10 Sales of Products by Agents. Cause all sales of
products produced by the Borrower, whether made directly by the Borrower,
or by Xxxxx-Xxxxx or any division or Subsidiary thereof as agent on
behalf of the Borrower, to be invoiced in a manner to indicate clearly
(i) that such sales are being made for the account of the Borrower and
(ii) that payments in respect of such sales are to be made for the
account of the Borrower, whether made directly to the Borrower or to
Xxxxx-Xxxxx on its behalf; and within 30 days after a request from the
Administrative Agent, take all action necessary to cause the lockbox into
which payments are made in respect of sales of the Borrower's products to
be moved to The Toronto-Dominion Bank (within the United States),
provided that the Borrower is able to obtain the necessary consent from
the National Bank of Canada, its successors or assigns, which consent the
Borrower shall use its commercially reasonable efforts to obtain.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the
Commitments remain in effect or any Loan or other amount is owing to any
Lender or any Agent hereunder, the Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly:
6.1 Financial Condition Covenants.
(a) Consolidated Total Debt to Consolidated Total
Capitalization Ratio. Permit the ratio of Consolidated Total Debt to
Consolidated Total Capitalization on the last day of any fiscal quarter
of the Borrower ending during any period set forth below to exceed the
ratio set forth below opposite such period:
Consolidated Total Debt
to Consolidated Total
Period Capitalization Ratio
December 31, 1997 through December 31, 1999 95%
March 31, 2000 through December 31, 2000 90%
March 31, 2001 through December 31, 2001 85%
March 31, 2002 through December 31, 2002 80%
March 31, 2003 through December 31, 2003 75%
March 31, 2004 and thereafter 70%
(b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any Test Period ending during
any period set forth below to be less than the ratio set forth below
opposite such period:
Consolidated Interest
Period Coverage Ratio
March 31, 1998 through December 31, 2000 1.5 to 1
March 31, 2001 and thereafter 2.0 to 1
; provided, that if the Borrower would have been in violation of the
foregoing covenant for three Test Periods but for the inclusion of cash
contributions to the Borrower's equity in the calculation of such
covenant, then, in calculating such covenant for any succeeding Test
Period, cash contributions to the Borrower's equity during the last
fiscal quarter of such Test Period shall not be included.
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any Test Period to be less
than 1.35 to 1; provided, that if the Borrower would have been in
violation of the foregoing covenant for three Test Periods but for the
inclusion of cash contributions to the Borrower's equity in the
calculation of such covenant, then, in calculating such covenant for any
succeeding Test Period, cash contributions to the Borrower's equity
during the last fiscal quarter of such Test Period shall not be included.
(d) Maintenance of Current Ratio. Permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities at the
end of any fiscal quarter commencing with the fiscal quarter ending
December 31, 1997 to be less than 1.5 to 1.
6.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness of the Borrower to any Subsidiary (other
than the Finance Subsidiary) and of any Wholly Owned Subsidiary
Guarantor to the Borrower or any other Subsidiary (other than the
Finance Subsidiary);
(c) Indebtedness outstanding on the date hereof and listed
on Schedule 6.2 and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount
thereof);
(d) guarantees made in the ordinary course of business by
the Borrower or any of its Subsidiaries of obligations of any
Wholly Owned Subsidiary Guarantor;
(e) Indebtedness of the Borrower and the Finance
Subsidiary in respect of the Second Priority Notes, and
guarantees thereof by any Subsidiary which is a party to the
Subsidiary Guarantee, and any refinancings thereof on
substantially similar terms and without any increase in the
principal amount thereof;
(f) unsecured Indebtedness of the Borrower or any of its
Subsidiaries on terms and conditions acceptable to the Required
Lenders; provided that (i) the proceeds of such Indebtedness are
used to repay the Loans hereunder pursuant to Section 2.10(a) and
(ii) the weighted average life to maturity of such Indebtedness
is greater than the remaining life of the Loans being prepaid;
(g) Indebtedness of the Borrower in respect of deferred
commissions and management fees owing under the Borrower
Management Contract;
(h) additional Indebtedness of the Borrower and any of its
Subsidiaries in an aggregate principal amount at any time
outstanding not to exceed $12,500,000 (of which not more than
$6,000,000 may be secured, including pursuant to Capital Lease
Obligations);
(i) Indebtedness of the Borrower owed to Xxxxx-Xxxxx for
cash borrowed from Xxxxx-Xxxxx; provided that such Indebtedness
shall (i) be subordinated in right of payment to the Loans under
terms reasonably satisfactory to the Administrative Agent, (ii)
bear no interest, (iii) not require principal payments of any
kind on such Indebtedness to be repaid prior to the final
maturity date of the Term Loans, and (iv) contain no provisions
for remedies (including, without limitation, any defaults or any
other provisions that would result in the acceleration of the
maturity of such Indebtedness); provided, however, that such
Indebtedness may contain provisions for an acceleration of the
maturity of such Indebtedness upon the acceleration of the Loans;
(j) Indebtedness of the Borrower owed to Xxxxx-Xxxxx in
connection with management services provided by Xxxxx-Xxxxx to
the Borrower under the Borrower Management Contract to the extent
such Indebtedness represents fees in excess of 1% of the revenues
(net of transportation costs) of the Borrower; provided that such
Indebtedness shall (a) be subordinated in right of payment to the
Loans under terms reasonably satisfactory to the Administrative
Agent, (b) bear no interest, (c) not require principal payments
of any kind on such Indebtedness to be repaid prior to the final
maturity date of the Term Loans, and (d) shall contain no
provisions for remedies (including, without limitation, any
defaults or any other provisions that would result in the
acceleration of the maturity of such Indebtedness); and
(k) Indebtedness, in an aggregate principal amount not
exceeding $2,000,000, in the form of purchase price adjustments
owing to the Retiring Partners in respect of the Acquisition
Agreement.
6.3 Limitation on Liens. Create, incur, assume or suffer
to exist any Lien upon any of its Property or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the
books of the Borrower or its Subsidiaries, as the case may be, in
conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days
or which are being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and which
do not in any case materially detract from the value of the
Property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any of its
Subsidiaries;
(f) Liens in existence on the date hereof listed on
Schedule 6.3, securing Indebtedness permitted by Section 6.2(c),
provided that no such Lien is spread to cover any additional
Property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any
other Subsidiary incurred pursuant to Section 6.2(h) to finance
the acquisition of fixed or capital assets, provided that (i)
such Liens shall be created substantially simultaneously with the
acquisition of such fixed or capital assets, (ii) such Liens do
not at any time encumber any Property other than the Property
financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents and
the Second Priority Note Security Documents;
(i) any interest or title of a lessor under any lease
entered into by the Borrower or any other Subsidiary in the
ordinary course of its business and covering only the assets so
leased;
(j) Liens not otherwise permitted by this Section 6.3
securing Indebtedness incurred pursuant to Section 6.2(h);
(k) Liens arising under or in connection with
Environmental Laws which are being contested in good faith by
appropriate proceedings provided that adequate reserves with
respect thereto are maintained on the books of the Borrower and
its Subsidiaries, as the case may be, in conformity with GAAP and
that such Liens relate to potential liabilities that are not
reasonably expected to exceed $3,000,000 for the Borrower and its
Subsidiaries in the aggregate;
(l) Liens securing Acquired Indebtedness created prior to
(and not in connection with or in contemplation of) the
incurrence of such Indebtedness by the Borrower or any
Subsidiary; provided that such Lien does not extend to any
property or assets of the Borrower or any Subsidiary other than
assets acquired in connection with the incurrence of such
Acquired Indebtedness;
(m) Liens arising by reason of any judgment, decree or
order of any court so long as such Lien is adequately bonded and
any appropriate legal proceedings that may have been duly
initiated for the review of such judgment, decree or order shall
not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired; and
(n) Liens securing reimbursement obligations with respect
to letters of credit that encumber documents and other property
relating to such letters of credit and the products and proceeds
thereof.
6.4 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or Dispose of all or
substantially all of its Property or business except:
(a) any Subsidiary (other than the Finance Subsidiary) of
the Borrower may be merged or consolidated with or into the
Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any Wholly Owned
Subsidiary Guarantor (provided that the Wholly Owned Subsidiary
Guarantor shall be the continuing or surviving corporation);
(b) any Subsidiary of the Borrower may Dispose of any or
all of its assets (upon voluntary liquidation or otherwise) to
the Borrower or any Wholly Owned Subsidiary Guarantor; and
(c) the Transactions may be consummated.
6.5 Limitation on Sale of Assets. Dispose of any of its
Property or business (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the
case of any Subsidiary, issue or sell any shares of such Subsidiary's
Capital Stock to any Person, except:
(a) the Disposition of obsolete or worn out Property in
the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 6.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock
to the Borrower or any Wholly Owned Subsidiary Guarantor;
(e) the Disposition of Property as long as the Net Cash
Proceeds are applied in accordance with Section 2.10; provided
that the Borrower may not Dispose of the principal asset of the
Borrower (consisting of the Borrower's paper mill and the Bel Bai
II paper machine located therein) while this Agreement is in
effect; and
(f) the Disposition of Property for an amount not in
excess of either $300,000 in a single transaction or series of
related transactions or $500,000 in any fiscal year.
6.6 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Person making
such dividend) on, or make any payment on account of, or set apart assets
for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class
of Capital Stock of the Borrower or any Subsidiary or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of
the Borrower or any Subsidiary (collectively, "Restricted Payments"),
except that:
(a) any Subsidiary may make Restricted Payments to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(b) the Borrower may make Restricted Payments in respect
of Partner Taxes in respect of the Borrower and its Subsidiaries;
(c) so long as no Default or Event of Default shall have
occurred and be continuing, and, if for any fiscal year of the
Borrower commencing with the fiscal year ending December 31,
1998, there shall be Excess Cash Flow, the Borrower may make
Restricted Payments in cash to Xxxxx-Xxxxx on the relevant Excess
Cash Flow Application Date in an amount not to exceed 50% of such
Excess Cash Flow, provided that on the date of such payment Total
Committed Debt is less than $145,000,000;
(d) the payment of a distribution by the Borrower on or
after the Closing Date for Xxxxx-Xxxxx to recover expenses
incurred in connection with the Transactions (as defined in this
Agreement and the Timberlands Credit Agreement) and related
financings; provided that such distribution shall not exceed
$2,000,000; and
(e) the payment of a distribution by the Borrower on or
after the Closing Date to Xxxxx-Xxxxx in an amount equal to the
total federal, state, local and foreign tax liabilities of
Xxxxx-Xxxxx, Xxxxx Xxxxx and Xxxxxx Xxxxx arising as a result of
their direct and indirect ownership of equity interests in Bear
Island Paper Company, L.P. during the first eleven months of
1997, as calculated by the Borrower's Vice President of Finance
and recalculated by the Borrower's independent accountants;
provided, however, that the amount of the payment pursuant to
this paragraph shall not exceed the product of the taxable income
of Bear Island Paper Company, L.P. multiplied by the highest
combined marginal federal, state and local tax rates applicable
to the type of entity or individuals with respect to the taxes of
which the payment is to be made pursuant to this clause 6.6(e) in
the United States during 1997.
6.7 Limitation on Capital Expenditures. Make or commit to
make (by way of the acquisition of securities of a Person or otherwise)
any Capital Expenditure, except (a) Capital Expenditures of the Borrower
and its Subsidiaries in the ordinary course of business not exceeding
$12,000,000; provided, that (i) up to $5,000,000 of any such amount
referred to above, if not so expended in the fiscal year for which it is
permitted, may be carried over for expenditure in the next succeeding
fiscal year but not in any subsequent fiscal year, and (ii) Capital
Expenditures made pursuant to this clause (a) during any fiscal year
shall be deemed made, first, in respect of amounts carried over from the
prior fiscal year pursuant to subclause (i) above and, second, in respect
of amounts permitted for such fiscal year as provided above and (b)
Capital Expenditures made with the proceeds of any Reinvestment Deferred
Amount in respect of the Borrower.
6.8 Limitation on Investments, Loans and Advances. Make
any advance, loan, extension of credit (by way of guaranty or otherwise)
or capital contribution to, or purchase any stock, bonds, notes,
debentures or other securities of or any assets constituting all or a
material part of a business unit of, or make any other investment in, any
Person ("Investments"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) Investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 6.2;
(d) the Borrower may make Investments in any Wholly Owned
Subsidiary Guarantor;
(e) Investments existing on the Closing Date and set forth
on Schedule 6.8(f);
(f) Investments permitted by Section 6.2(b);
(g) Advances to employees in the ordinary course of
business in respect of travel, business and relocation expenses
up to an aggregate of $50,000 at any time outstanding; provided,
however, that the Borrower shall not be deemed to have defaulted
in respect of this provision as of the last day of any fiscal
quarter as long as (i) the addition of the amount in excess of
the $50,000 permitted above to the amount outstanding under
Section 6.2(h) would not result in a violation of such Section
and (ii) the Borrower was in compliance with this Section 6.8(g)
as of the end of the immediately preceding fiscal quarter;
(h) Investments in Xxxxx-Xxxxx consisting of amounts owing
by Xxxxx-Xxxxx to the Borrower or its Subsidiaries as proceeds of
collections on receivables of the Borrower or its Subsidiaries;
provided, that the amount of collected funds received by
Xxxxx-Xxxxx and owing to the Borrower and its Subsidiaries at the
end of any Business Day shall not exceed the sum of (i) the
collected funds received by Xxxxx-Xxxxx for the account of the
Borrower or such Subsidiary during such Business Day and the
immediately preceding Business Day plus (ii) an additional amount
not exceeding $100,000; and
(i) Investments in the form of promissory notes (having a
tenor not exceeding 5 years), in an aggregate principal amount
not exceeding $2,000,000 at any time outstanding, constituting up
to 70% of the sale price of land Disposed of by the Borrower or
its Subsidiaries.
(j) the Borrower may make investments in the Finance
Subsidiary to the extent required to permit it to make the
payments described in Section 6.18(vi).
6.9 Limitation on Optional Payments and Modifications of
Debt Instruments, etc. (a) Make or offer to make any payment, prepayment,
repurchase or redemption of or otherwise defease or segregate funds with
respect to the Second Priority Notes (other than scheduled interest
payments required to be made in cash and other than refinancings
permitted by Section 6.2(e) and other than as may be required upon an
asset sale by the Second Priority Notes after the Term Loans have been
paid in full and the Revolving Credit Commitments have been reduced to
$25,000,000), (b) amend, modify, waive or otherwise change, or consent or
agree to any amendment, modification, waiver or other change to, any of
the terms of the Second Priority Notes (other than any such amendment,
modification, waiver or other change which (i) would extend the maturity
or reduce the amount of any payment of principal thereof, which would
reduce the rate or extend the date for payment of interest thereon or
provide for the payment in kind in lieu of in cash of any interest
thereon or waive any defaults and (ii) does not involve the payment of a
consent fee), or (c) amend its organizational documents in any manner
determined by the Administrative Agent to be materially adverse to the
Lenders without the prior written consent of the Required Lenders.
6.10 Limitation on Transactions with Affiliates. Enter
into any transaction, including, without limitation, any purchase, sale,
lease or exchange of Property, the rendering of any service or the
payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any Wholly Owned Subsidiary Guarantor) unless
such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of business of the Borrower or such Subsidiary, as
the case may be, and (c) upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person which is
not an Affiliate. Notwithstanding the foregoing, (i) the Borrower may
perform its obligations under and consummate the transactions
contemplated by the Borrower Management Contract and the Timberlands Wood
Supply Contract, (ii) each of the Borrower and its Subsidiaries may pay
reasonable and customary regular compensation to its respective directors
who are not employees and (iii) the Borrower and its Subsidiaries may pay
dividends and distributions permitted by Section 6.6.
6.11 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or
any Subsidiary of real or personal property which has been or is to be
sold or transferred by the Borrower or such Subsidiary to such Person or
to any other Person to whom funds have been or are to be advanced by such
Person on the security of such property or rental obligations of the
Borrower or such Subsidiary.
6.12 Limitation on Changes in Fiscal Periods. Permit the
fiscal year of the Borrower to end on a day other than December 31 or
change the Borrower's method of determining fiscal quarters.
6.13 Limitation on Negative Pledge Clauses. Enter into or
suffer to exist or become effective any agreement which prohibits or
limits the ability of the Borrower or any of its Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of its Property or
revenues, whether now owned or hereafter acquired, to secure the
Obligations or, in the case of any guarantor, its obligations under the
Subsidiary Guarantee, other than (a) this Agreement, the other Loan
Documents, the Second Priority Note Indenture, and the Second Priority
Note Security Documents, (b) any agreements governing any purchase money
Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the
assets financed thereby) and (c) any prohibition on assignment of any
general intangible contained in the instrument under which such general
intangible arises as contemplated by the Security and Pledge Agreement.
6.14 Limitation on Restrictions on Subsidiary
Distributions. Enter into or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Subsidiary of
the Borrower to (a) pay dividends or make any other distributions in
respect of any Capital Stock of such Subsidiary held by, or pay any
Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to the Borrower or any other
Subsidiary of the Borrower or (c) transfer any of its assets to the
Borrower or any other Subsidiary of the Borrower, except for such
encumbrances or restrictions existing under or by reason of (i) any
restrictions existing under the Loan Documents; (ii) any restrictions
with respect to a Subsidiary imposed pursuant to an agreement which has
been entered into in connection with the Disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary;
(iii) customary non-assignment or net worth provisions in any lease
governing a leasehold interest, license or other contract, (iv) any
agreement or other instrument of a Person existing at the time it becomes
a Subsidiary of the Borrower, provided that such encumbrance or
restriction is not applicable to any other Person, or any property of any
other Person, other than such person becoming a Subsidiary of the
Borrower and was not entered into in contemplation of such Person
becoming a Subsidiary of the Borrower, (v) any agreement of a Loan Party
or any of its Subsidiaries in effect as of the Closing Date governing
Indebtedness of a Loan Party or any of its Subsidiaries outstanding as of
the Closing Date and, if such Indebtedness is renewed, extended or
refinanced in accordance with the terms of this Agreement, such other
restrictions in the agreements governing the renewed, extended or
refinanced Indebtedness (and successive renewals, extensions and
refinancing thereof in accordance with the terms of this Agreement)
provided such restrictions are no more restrictive in any material
respect than those contained in the agreements governing such outstanding
Indebtedness being renewed, extended or refinanced, (vi) any agreement
governing Indebtedness permitted by Section 6.2(d), (e), (f), (g), (h),
(i) and (k) provided such restrictions are no more restrictive in any
material respect than those contained in the Loan Documents or (vii)
restrictions required by applicable law.
6.15 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which the Borrower and its Subsidiaries are engaged on the
date of this Agreement or which are reasonably related thereto.
6.16 Limitation on Amendments to Acquisition Documents.
(a) Amend, supplement or otherwise modify (pursuant to a waiver or
otherwise) the terms and conditions of the indemnities and licenses
furnished to the Borrower or any of its Subsidiaries pursuant to the
Acquisition Agreement or any other document delivered by the Retiring
Partners or any of their affiliates in connection therewith such that
after giving effect thereto such indemnities or licenses shall be
materially less favorable to the interests of the Loan Parties or the
Lenders with respect thereto or (b) otherwise amend, supplement or
otherwise modify the terms and conditions of the Acquisition Agreement or
any such other documents except to the extent that any such amendment,
supplement or modification could not reasonably be expected to have a
Material Adverse Effect.
6.17 Limitation on Amendments to Management Contracts.
Amend, supplement or otherwise modify (pursuant to a waiver or otherwise)
the terms and conditions of the Management Contracts if the effect would
be to change any provision of such Management Contract relating to the
payment or method of calculation of fees thereunder or to materially
reduce the functions required to be performed by Xxxxx-Xxxxx thereunder;
provided, that this Section 6.17 shall cease to apply to the Xxxxx
Management Contract upon termination of the Xxxxx Pledge Agreement in
accordance with the terms thereof.
6.18 Limitation on Finance Subsidiary. Make any Investment
in the Finance Subsidiary, or permit the Finance Subsidiary to make any
Investment in any Person, or to conduct, transact or otherwise engage, or
commit to transact, conduct or otherwise engage, in any business or
operations other than (i) acting as co-issuer in respect of the Second
Priority Notes and performance of obligations in connection therewith,
(ii) the entry into, and exercise of rights and performance of
obligations in respect of indentures, engagement letters, underwriting
agreements and other agreements in respect of the Second Priority Notes
or any offering, issuance or sale thereof, (iii) the filing of
registration statements, and compliance with applicable reporting and
other obligations, under federal, state or other securities laws, (iv)
the retention of transfer agents, private placement agents, underwriters,
counsel, accountants and other advisors and consultants, (v) the
performance of obligations under in and compliance with its certificate
of incorporation and by-laws, or any applicable law, ordinance,
regulation, rule, order, judgment, decree or permit, (vi) the incurrence
and payment of any taxes for which it may be liable and (vii) other
activities directly related to the foregoing; provided, that the Borrower
may make Investments in the Finance Subsidiary to the extent required to
permit it to make the payments described in clause (vi) above.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be
continuing:
(a) The Borrower shall fail to pay any principal of any
Loan when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Loan or any other
amount payable hereunder or under any other Loan Document, within
five days after any such interest or other amount becomes due in
accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by
any Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to
have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of
Section 5.4(a) (with respect to the Borrower only), Section 5.7(a),
Section 6, or Section 4.5(c) of the Security and Pledge Agreement or
(ii) an "Event of Default" under and as defined in any Mortgage
shall have occurred and be continuing; or
(d) Any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a)
through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(e) Xxxxx-Xxxxx (so long as the Xxxxx-Xxxxx Guarantee is
in effect), the Borrower or any of its Subsidiaries shall (i)
default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee
Obligation, but excluding the Loans) beyond the applicable grace
period, if any, with respect thereto; or (ii) default in making
any payment of any interest on any such Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created; or (iii) default in
the observance or performance of any other agreement or condition
relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or beneficiary of such Indebtedness (or a trustee or agent
on behalf of such holder or beneficiary) to cause, with the
giving of notice if required, such Indebtedness to become due
prior to its stated maturity or (in the case of any such
Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described
in clause (i), (ii) or (iii) of this paragraph (e) shall not at
any time constitute an Event of Default unless, at such time, one
or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the
outstanding principal amount of which exceeds in the aggregate
$5,000,000; or
(f) (i) Xxxxx-Xxxxx, or the Borrower, Timberlands, Xxxxx
or any of their Subsidiaries, shall commence any case, proceeding
or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or Xxxxx-Xxxxx, or the Borrower,
Timberlands, Xxxxx or any of their Subsidiaries, shall make a
general assignment for the benefit of its creditors; or (ii)
there shall be commenced against Xxxxx-Xxxxx, or the Borrower,
Timberlands, Xxxxx or any of their Subsidiaries, any case,
proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against Xxxxx-Xxxxx, or the Borrower,
Timberlands, Xxxxx or any of their Subsidiaries, any case,
proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry
of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60
days from the entry thereof; or (iv) Xxxxx-Xxxxx, or the
Borrower, Timberlands, Xxxxx or any of their Subsidiaries, shall
take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) Xxxxx-Xxxxx, or the
Borrower, Timberlands, Xxxxx or any of their Subsidiaries, shall
generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975
of the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of the Borrower
or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, which Reportable Event
or commencement of proceedings or appointment of a trustee is
likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate
for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency
or Reorganization of, a Multiemployer Plan or (vi) any other
event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if
any, could, in the reasonable judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered
against Xxxxx-Xxxxx (so long as the Xxxxx-Xxxxx Guarantee is
still in effect), the Borrower or any of its Subsidiaries
involving in the aggregate a liability (not paid or fully covered
by insurance as to which the relevant insurance company has
acknowledged coverage) of $5,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 30 days from the entry
thereof; or
(i) Any of the Security Documents shall cease, for any
reason, to be in full force and effect, or any Loan Party or any
Affiliate of any Loan Party shall so assert, or any Lien created
by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby
except as provided in any such Security Document; or
(j) The guarantees contained in the Subsidiary Guarantee
shall cease, for any reason, to be in full force and effect or
any Loan Party or any Affiliate of any Loan Party shall so
assert, or the guarantees contained in the Xxxxx-Xxxxx Guarantee
shall cease, for any reason, to be in full force and effect or
any Loan Party or any Affiliate of any Loan Party shall so assert
except after the date set forth in Section 11 thereof; or
(k) A Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to
the Borrower, automatically the Commitments shall immediately terminate
and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents shall
immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken:
(i) with the consent of the Required Revolving Credit Facility Lenders,
the Administrative Agent may, or upon the request of the Required
Revolving Credit Facility Lenders, the Administrative Agent shall, by
notice to the Borrower declare the Revolving Credit Commitments to be
terminated forthwith, whereupon the Revolving Credit Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders,
the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents to be due
and payable forthwith, whereupon the same shall immediately become due
and payable.
SECTION 8. THE AGENTS
8.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Agents as the agents of such Lender under this Agreement
and the other Loan Documents, including acting as agent and fonde de
pouvoir for the Lenders under the Xxxxx Pledge Agreement, and each such
Lender irrevocably authorizes each Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the such Agent by the terms of this Agreement and
the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any other Loan Document or otherwise exist
against any Agent.
8.2 Delegation of Duties. Each Agent may execute any of
its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. No Agent shall
be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
8.3 Exculpatory Provisions. Neither any Agent nor any of
their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any other Loan Document (except to the
extent that any of the foregoing are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from its
or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any
officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or
provided for in, or received by the Agents under or in connection with,
this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Loan Party
a party thereto to perform its obligations hereunder or thereunder. The
Agents shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan
Party.
8.4 Reliance by Administrative Agent. Each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation,
counsel to the Loan Parties), independent accountants and other experts
selected by the Administrative Agent. The Agents may deem and treat the
payee of any Note as the owner thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. Each Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders (or, if so specified by this
Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of
the Required Lenders (or, if so specified by this Agreement, all
Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future
holders of the Loans.
8.5 Notice of Default. No Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the
Administrative Agent shall promptly give notice thereof to the Lenders.
The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the
Required Lenders (or, if so specified by this Agreement, all Lenders);
provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
8.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agents nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no
act by any Agent hereinafter taken, including any review of the affairs
of a Loan Party or any affiliate of a Loan Party, shall be deemed to
constitute any representation or warranty by any Agent to any Lender.
Each Lender represents to the Agents that it has, independently and
without reliance upon any Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties
and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that
it will, independently and without reliance upon any Agent 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 analysis,
appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of the Loan
Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any
affiliate of a Loan Party which may come into the possession of such
Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
8.7 Indemnification. The Lenders agree to indemnify each
Agent solely in its capacity as such (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so),
ratably according to their respective Aggregate Exposure Percentages in
effect on the date on which indemnification is sought under this Section
8.7 (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in
full, ratably in accordance with such Percentages immediately prior to
such date), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment of the Loans) be
imposed on, incurred by or asserted against such Agent solely in its
capacity as Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or
omitted by such Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements which are found by a
final and nonappealable decision of a court of competent jurisdiction to
have resulted from such Agent's gross negligence or willful misconduct.
The agreements in this Section 8.7 shall survive the payment of the Loans
and all other amounts payable hereunder.
8.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage
in any kind of business with any Loan Party as though such Agent was not
an Agent. With respect to its Loans made or renewed by it, each Agent
shall have the same rights, powers and duties under this Agreement and
the other Loan Documents as any Lender and may exercise the same as
though it were not an Agent, and the terms "Lender" and "Lenders" shall
include each Agent in its individual capacity.
8.9 Successor Administrative Agent. The Administrative
Agent may resign as Administrative Agent upon 10 days' notice to the
Lenders and the Borrower. If the Administrative Agent shall resign as
Administrative Agent under this Agreement and the other Loan Documents,
then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall (unless an
Event of Default under Section 7(a) or Section 7(f) with respect to the
Borrower shall have occurred and be continuing) be subject to approval by
the Borrower (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights,
powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon
such appointment and approval, and the former Administrative Agent's
rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. If no successor agent has accepted appointment as
Administrative Agent by the date that is 10 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective, and
the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above. After any
retiring Agent's resignation as Agent, the provisions of this Section 8
shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement and the other Loan
Documents.
8.10 Authorization to Execute Intercreditor Agreement and
Security Documents and Release Liens. The Administrative Agent is hereby
irrevocably authorized by each of the Lenders to execute and deliver the
Intercreditor Agreement and each of the Security Documents, to release
any Lien covering any Property of Xxxxx-Xxxxx, the Borrower or any of
their respective Subsidiaries (a) which is the subject of a Disposition
which is permitted by this Agreement, (b) which has been consented to in
accordance with Section 9.1 or (c) which is required to be released
pursuant to the terms of any Security Document. Each Lender confirms the
appointments and agreements contained in Section 7 of the Intercreditor
Agreement.
8.11 The Arranger. The Arranger, in its capacity as such,
shall have no duties or responsibilities, and shall incur no liability,
under this Agreement and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 9.1. The Required Lenders and each Loan Party party to the
relevant Loan Document may, or (with the written consent of the Required
Lenders) the Administrative Agent and each Loan Party party to the
relevant Loan Document may, from time to time, (a) enter into written
amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or
the other Loan Documents or changing in any manner the rights of the
Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on
such terms and conditions as the Required Lenders, or the Administrative
Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default
or Event of Default and its consequences; provided, however, that no such
waiver and no such amendment, supplement or modification shall (i)
forgive the principal amount or extend the final scheduled date of
maturity of any Loan, extend the scheduled date of any amortization
payment in respect of any Term Loan, reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any
payment thereof, increase the amount or extend the expiration date of any
Lender's Revolving Credit Commitment, or modify any pro rata provisions
of this Agreement pursuant to Section 2.18 in each case without the
consent of each Lender directly affected thereby; (ii) amend, modify or
waive any provision of this Section 9.1 or reduce any percentage
specified in the definition of Required Lenders or Required Prepayment
Lenders, consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement and the other Loan
Documents, release all or substantially all of the Collateral, release
all or substantially all of the Subsidiary Guarantors from their
obligations under the Subsidiaries Guarantee or release Xxxxx-Xxxxx from
its obligations under the Xxxxx-Xxxxx Guarantee, in each case without the
written consent of all Lenders; (iii) amend, modify or waive any
condition precedent to any extension of credit under the Revolving Credit
Facility set forth in Section 4.2 (including, without limitation, in
connection with any waiver of an existing Default or Event of Default)
without the written consent of the Required Revolving Credit Facility
Lenders; (iv) reduce the percentage specified in the definition of
Required Facility Lenders without the written consent of all Lenders
under each affected Facility; (v) amend, modify or waive any provision of
Section 9 without the written consent of the Agents; or (vi) modify
Section 2.10 without the written consent of the Required Prepayment
Lenders, or modify the provisions of Section 2.16(a), (b), (c) or (d)
without the consent of each Lender affected thereby. Any such waiver and
any such amendment, supplement or modification shall apply equally to
each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Administrative Agent and all future holders of the Loans. In
the case of any waiver, the Loan Parties, the Lenders and the
Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or other Default or
Event of Default, or impair any right consequent thereon.
9.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered, or three
Business Days after being deposited in the mail, postage prepaid, or, in
the case of telecopy notice, when received, addressed as follows in the
case of the Borrower and the Administrative Agent, and as set forth in an
administrative questionnaire delivered to the Administrative Agent in the
case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:
The Borrower: BEAR ISLAND PAPER COMPANY, LLC
x/x Xxxxx-Xxxxx Xxxxxxxxxx
Xxxx Xxxxxx Xxx 0000
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
The Arranger: TD SECURITIES (USA) INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Agent: TORONTO DOMINION (TEXAS), INC.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to: THE TORONTO-DOMINION BANK
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
provided that any notice, request or demand to or upon the either Agent
or the Lenders shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the either Agent or any
Lender, any right, remedy, power or privilege hereunder or under the
other Loan Documents shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan
Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
9.5 Payment of Expenses. The Borrower agrees (a) to pay or
reimburse the Agents for all their reasonable out-of-pocket costs and
expenses incurred in connection with the initial syndication,
development, preparation and execution of, and any amendment, supplement
or modification to, this Agreement and the other Loan Documents and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or
reimburse each Lender and the Agents for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights
under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel)
to each Lender and of counsel to the Agents, (c) to pay, indemnify, and
hold each Lender and the Agents harmless from, any and all recording and
filing fees or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and
hold each Lender and the Agents and their respective officers, directors,
trustees, employees, affiliates, agents and controlling persons (each, an
"indemnitee") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with
respect to any pending or threatened litigation or proceeding arising in
respect of the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and any such
other documents, including, without limitation, any of the foregoing
relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable
to the operations of Xxxxx-Xxxxx, the Borrower, any of its Subsidiaries
or any of the Properties (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided, that the Borrower
shall have no obligation hereunder to any indemnitee with respect to
indemnified liabilities to the extent such indemnified liabilities result
from the gross negligence or willful misconduct of such indemnitee.
Without limiting the foregoing, and to the extent permitted by applicable
law, the Borrowers agree not to assert and to cause its Subsidiaries not
to assert, and hereby waive and agree to cause their Subsidiaries to so
waive, all rights for contribution or any other rights of recovery with
respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature,
under or related to Environmental Laws applicable to Xxxxx-Xxxxx, the
Borrower, any of its Subsidiaries or any of the Properties that any of
them might have by statute or otherwise against any indemnitee, except to
the extent resulting from the gross negligence or willful misconduct of
any indemnitee. The agreements in this Section shall survive repayment of
the Loans and all other amounts payable hereunder.
9.6 Successors and Assigns; Participations and
Assignments. (a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Agents, all future holders of
the Loans and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the Agents and
each Lender.
(b) Any Lender may, without the consent of the Borrower,
in accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a "Participant")
participating interests in any Loan owing to such Lender, any Commitment
of such Lender or any other interest of such Lender hereunder and under
the other Loan Documents. In the event of any such sale by a Lender of a
participating interest to a Participant, such Lender's obligations under
this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan
for all purposes under this Agreement and the other Loan Documents, and
the Borrower and the Agents shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations
under this Agreement and the other Loan Documents. In no event shall any
Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent
to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would affect the Participant as
described in (i) of the proviso in Section 9.1, in each case to the
extent subject to such participation. The Borrower agrees that at anytime
that an Event of Default has occurred and is continuing, each Participant
shall, to the maximum extent permitted by applicable law, be deemed to
have the right of setoff in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under
this Agreement, provided that, in purchasing such participating interest,
such Participant shall be deemed to have agreed to share with the Lenders
the proceeds thereof as provided in Section 9.7(a) as fully as if it were
a Lender hereunder. The Borrower also agrees that each Participant shall
be entitled to the benefits of Sections 2.17, 2.18 and 2.19 with respect
to its participation in the Commitments and the Loans outstanding from
time to time as if it was a Lender; provided that, in the case of Section
2.18, such Participant shall have complied with the requirements of said
Section and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with
applicable law, at any time and from time to time upon three Business
Days notice to the Administrative Agent assign to any Lender or any
affiliate thereof or any Approved Fund or, with the consent of the
Borrower, and the Administrative Agent (which, in each case, shall not be
unreasonably withheld or delayed) (provided the consent of the Borrower
need not be obtained with respect to any assignment to a Lender or any
Affiliate thereof), to an additional bank, financial institution or other
entity (an "Assignee") all or any part of its rights and obligations
under this Agreement pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit I, executed by such Assignee, such
Assignor and the Administrative Agent (and, where the consent of the
Borrower is required pursuant to the foregoing provisions, by the
Borrower) and delivered to the Administrative Agent for its acceptance
and recording in the Register; provided that, other than in the case of
an assignment of all of a Lender's interests under this Agreement, after
giving effect to such assignment, and to all other assignments by such
Assignor and assignments to such Assignee, the sum of the Commitments of
and Loans owing to such Assignee, and if such Assignor is assigning only
a portion of its Commitments and Loans, of such Assignor, is at least
$5,000,000 unless otherwise agreed by the Borrower and the Administrative
Agent and that no such assignment shall be effective until executed by
the Administrative Agent. Any such assignment need not be ratable as
among the Facilities. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment
and/or Loans as set forth therein, and (y) the Assignor thereunder shall,
to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such assigning Lender shall cease to be
a party hereto except for the obligations of the Borrower under Section
9.5, which shall survive such assignment). Subject to Sections 2.18(d)
and (e), but notwithstanding any provision of this Section 9.6, the
consent of the Borrower shall not be required for any assignment which
occurs at any time when any Event of Default shall have occurred and be
continuing.
(d) The Administrative Agent shall maintain at its address
referred to in Section 9.2 a copy of each Assignment and Acceptance
delivered to it and a register (the "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 from time to time and
any Notes evidencing such Loans. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of the Loan and any Note
evidencing such Loan recorded therein for all purposes of this Agreement.
Any assignment of any Loan whether or not evidenced by a Note shall be
effective only upon appropriate entries with respect thereto being made
in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Loan evidenced by a Note shall
be registered on the Register only upon surrender for registration of
assignment or transfer of the Note evidencing such Loan, accompanied by a
duly executed Assignment and Acceptance, and thereupon one or more new
Notes in the same aggregate principal amount shall be issued to the
designated Assignee and the old Notes shall be returned by the
Administrative Agent to the Borrower marked "cancelled". The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and, in the case of an
Assignee that is not then a Lender or an affiliate thereof or a Person
under common management with such Lender, by the Borrower or the
Administrative Agent) together with payment by the Assignor or the
Assignee to the Administrative Agent of a registration and processing fee
of $3,500 (except that no such registration and processing fee shall be
payable (y) in connection with an assignment by The Toronto-Dominion Bank
or (z) in the case of an Assignee which is already a Lender or is an
affiliate of a Lender or a Person under common management with a Lender),
the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto
record the information contained therein in the Register and give notice
of such acceptance and recordation to the Lenders and the Borrower. On or
prior to such effective date, the Borrower, at its own expense, upon
request, shall execute and deliver to the Administrative Agent (in
exchange for the Revolving Credit Note and/or Term Notes, as the case may
be, of the assigning Lender) a new Revolving Credit Note and/or Term
Notes, as the case may be, to the order of such Assignee in an amount
equal to the Revolving Credit Commitment and/or applicable Term Loans, as
the case may be, assumed or acquired by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a Revolving
Credit Commitment and/or Term Loans, as the case may be, upon request, a
new Revolving Credit Note and/or Term Note, as the case may be, to the
order of the assigning Lender in an amount equal to the Revolving Credit
Commitment and/or applicable Term Loans, as the case may be, retained by
it hereunder. Such new Notes shall be dated the Closing Date and shall
otherwise be in the form of the Note replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of
Loans and Notes relate only to absolute assignments and that such
provisions do not prohibit assignments creating security interests,
including, without limitation, any pledge or assignment by a Lender of
any Loan or Note to any Federal Reserve Bank in accordance with
applicable law.
9.7 Adjustments; Set-off. (a) Except to the extent that
this Agreement provides for payments to be allocated to the Lenders under
a particular Facility, if any Lender (a "Benefitted Lender") shall at any
time receive any payment of all or part of its Loans owing to it, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 7(f), or otherwise), in
a greater proportion than any such payment to or collateral received by
any other Lender, if any, in respect of such other Lender's Loans owing
to such other Lender, or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan owing to each such other Lender,
or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice
to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, at any time when an Event of
Default has occurred and is continuing, to set off and appropriate and
apply against such amount any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held
or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to
notify the Borrower and the Administrative Agent after any such setoff
and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
9.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged
with the Borrower and the Administrative Agent.
9.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
9.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Borrower, the Administrative
Agent and the Lenders with respect to the subject matter hereof, and
there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof not
expressly set forth or referred to herein or in the other Loan Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
9.12 Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal
action or proceeding relating to this Agreement and the other
Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, the Borrower, its address set forth in
Section 9.2 or at such other address of which the Administrative
Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section 9.12 any special,
exemplary, punitive or consequential damages.
9.13 Acknowledgements. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan
Documents;
(b) neither the Administrative Agent nor any Lender has
any fiduciary relationship with or duty to the Borrower arising
out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between Administrative Agent
and Lenders, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and
the Lenders.
9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
9.15 Confidentiality. Each of the Agents and each Lender
agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan
Party as confidential; provided that nothing herein shall prevent any
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender,
(b) to any Participant or Assignee (each, a "Transferee") or prospective
Transferee which agrees to comply with the provisions of this Section,
(c) to the employees, directors, trustees, agents, attorneys, accountants
and other professional advisors of such Lender or its affiliates who
agree to comply with the provisions of this Section, (d) upon the request
or demand of any Governmental Authority having jurisdiction over the such
Agent or such Lender, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (f) if requested or required to do so in connection
with any litigation or similar proceeding, (g) which has been publicly
disclosed other than in breach of this Section 9.15, (h) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued
with respect to such Lender, or (i) in connection with the exercise of
any remedy hereunder or under any other Loan Document.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.
BEAR ISLAND PAPER COMPANY, LLC, as
Borrower
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Title: Vice President of Finance
TD SECURITIES (USA) INC.,
as Arranger
By: /s/ Xxxx Xxxxxx
--------------------------------------
Title: Vice President and Director
TORONTO-DOMINION (TEXAS), INC., as
Administrative Agent
By: /s/ Xxxx Xxxx
-------------------------------------
Title: Vice President
TORONTO-DOMINION (TEXAS), INC.
By: /s/ Xxxx Xxxx
Title: Vice President
CHRISTIANIA BANK OG KREDITKASS ASA
By: /s/ Xxxx Xxxxxx Xxxxxxxx
Title: First Vice President
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Title: First Vice President
KEYPORT LIFE INSURANCE COMPANY
By: /s/ Xxxxxx T. H. Yin
---------------------------------
Title: Assistant Vice President
PRIME INCOME TRUST
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Title: Sr. VP
DEEPROCK & COMPANY
BY: XXXXX XXXXX MANAGEMENT, AS
INVESTMENT ADVISOR
By: /s/ Xxxxx X. Page
---------------------------------
Title: Vice President
XXXXXXX XXXXX SENIOR FLOATING RATE
FUND, INC.
By: /s/ Xxxxxx Xxxxxxxx, CFA
---------------------------------
Title: Authorized Signatory
XXX XXXXXX AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Title: Sr. Vice Pres. & Director
Annex A
PRICING GRID FOR REVOLVING CREDIT LOANS,
TERM LOANS AND COMMITMENT FEES
----------------------------------------------------------------------------------------------------
Applicable Applicable
Margin- Margin- Applicable Applicable
Consolidated Eurodollar Base Rate Margin- Margin-Base
Leverage Revolving Revolving Eurodollar Rate Term Commitment
Ratio Credit Loans Credit Loans Term Loan Loans Fee
----------------------------------------------------------------------------------------------------
= 4.00 x 2.75% 1.75% 3.00% 2.00% .50%
= 3.00 x 2.50% 1.50% 3.00% 2.00% .50%
= 2.50 x 2.25% 1.25% 2.75% 1.75% .375%
= 2.00 x 2.00% 1.00% 2.75% 1.75% .375%
2.00 x 1.50% 0.50% 2.75% 1.75% .375%
==================== ================ ================= ============== ============= ==============
Changes in the Applicable Margin or in the Commitment Fee
Rate resulting from changes in the Consolidated Leverage Ratio shall
become effective on the date (the "Adjustment Date") on which financial
statements are delivered to the Administrative Agent and the Lenders
pursuant to Section 6.1 (but in any event not later than the 45th day
after the end of each of the first three quarterly periods of each fiscal
year or the 90th day after the end of each fiscal year, as the case may
be) and shall remain in effect until the next change to be effected
pursuant to this paragraph. If any financial statements referred to above
are not delivered within the time periods specified above, then, until
such financial statements are delivered, the Consolidated Leverage Ratio
as at the end of the fiscal period that would have been covered thereby
shall for the purposes of this definition be deemed to be greater than 4
to 1. Each determination of the Consolidated Leverage Ratio pursuant to
this definition shall be made with respect to the period of four
consecutive fiscal quarters of the Borrower ending at the end of the
period covered by the relevant financial statements; provided, however,
that with respect to the end of the first fiscal quarter ending after the
Closing Date, such determination shall be made by multiplying the results
for such quarter by four; with respect to the end of the second fiscal
quarter ending after the Closing Date, such determination shall be made
by adding the results for the two fiscal quarters ending after the
Closing Date and multiplying by two; and with respect to the end of the
third fiscal quarter ending after the Closing Date, such determination
shall be made by adding the results for the three fiscal quarters ending
after the Closing Date and multiplying by 4/3.
Notwithstanding the foregoing, until January 1, 1999, the
Applicable Margin in respect of Term Loans which are Eurodollar Loans
shall be 3.00%, and the Applicable Margin in respect of Term Loans which
are Base Rate Loans shall be 2.00%. From and after the Closing Date to
the first measurement date described above, the Applicable Margin in
respect of Revolving Credit Loans which are Eurodollar Loans shall be 2.75%,
and the Applicable Margin in respect of Revolving Credit Loans which are
Base Rate Loans, 1.75%, and the Commitment Fee Rate shall be .50%.
EXHIBIT A
SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of December 1, 1997, made by
each of the corporations that are signatories hereto (the
"Guarantors"), in favor of TORONTO DOMINION (TEXAS), INC., as
Administrative Agent (in such capacity, the "Administrative
Agent") for the lenders (the "Lenders") parties to the Credit
Agreement, dated as of December 1, 1997 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"),
among Bear Island Paper Company, LLC (the "Borrower"), the
Lenders, the Arranger named therein and the Administrative Agent.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower owns directly or indirectly all of the
issued and outstanding equity interests of each Guarantor;
WHEREAS, the Borrower and the Guarantors are engaged in
related businesses, and each Guarantor will derive substantial
direct and indirect benefit from the making of the Loans; and
WHEREAS, it is a condition precedent to the obligation of
the Lenders to make their respective Loans to the Borrower under
the Credit Agreement that the Guarantors shall have executed and
delivered this Guarantee to the Administrative Agent for the
ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of the premises and to
induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their
respective Loans to the Borrower under the Credit Agreement, the
Guarantors hereby agree with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement.
(b) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Guarantee shall refer to this
Guarantee as a whole and not to any particular provision of this
Guarantee, and section and paragraph references are to this
Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Guarantee (a) Subject to the provisions of paragraph
2(b), each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their
respective permitted successors, indorsees, transferees and
assigns, the prompt and complete payment and performance by the
Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor
hereunder and under the other Loan Documents shall in no event
exceed the amount which can be guaranteed by such Guarantor under
applicable federal and state laws relating to the insolvency of
debtors.
(c) Each Guarantor further agrees to pay any and all
reasonable out-of-pocket expenses (including, without limitation,
all reasonable fees and disbursements of counsel) which may be
paid or incurred by the Administrative Agent or any Lender in
enforcing, or obtaining advice of counsel in respect of, any
rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or
collecting against, such Guarantor under this Guarantee. This
Guarantee shall remain in full force and effect until the
Obligations are paid in full and the Commitments are terminated,
notwithstanding that from time to time prior thereto the Borrower
may be free from any Obligations.
(d) Each Guarantor agrees that the Obligations may at any
time and from time to time exceed the amount of the liability of
such Guarantor hereunder without impairing this Guarantee or
affecting the rights and remedies of the Administrative Agent or
any Lender hereunder.
(e) No payment or payments made by the Borrower, any of the
Guarantors, any other guarantor or any other Person or received
or collected by the Administrative Agent or any Lender from the
Borrower, any of the Guarantors, any other guarantor or any other
Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in
reduction of or in payment of the Obligations other than payments
made by such Guarantor in respect of the Obligations or payments
received or collected from such Guarantor in respect of the
Obligations shall be deemed to modify, reduce, release or
otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment or payments, remain
liable for the Obligations up to the maximum liability of such
Guarantor hereunder until the Obligations are paid in full and
the Commitments are terminated.
(f) Each Guarantor agrees that whenever, at any time, or
from time to time, it shall make any payment to the
Administrative Agent or any Lender on account of its liability
hereunder, it will notify the Administrative Agent in writing
that such payment is made under this Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees
that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor
shall be entitled to seek and receive contribution from and
against any other Guarantor hereunder who has not paid its
proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of
Section 5 hereof. The provisions of this Section shall in no
respect limit the obligations and liabilities of any Guarantor to
the Administrative Agent and the Lenders, and each Guarantor
shall remain liable to the Administrative Agent and the Lenders
for the full amount guaranteed by such Guarantor hereunder.
4. Right of Set-off. Each Guarantor hereby irrevocably
authorizes each Lender at any time and from time to time when an
Event of Default has occurred and is continuing, without notice
to such Guarantor or any other Guarantor, any such notice being
expressly waived by each Guarantor, to set-off and appropriate
and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender to or for the
credit or the account of such Guarantor, or any part thereof in
such amounts as such Lender may elect, against and on account of
the obligations and liabilities of such Guarantor to such Lender
hereunder and claims of every nature and description of such
Lender against such Guarantor, in any currency, whether arising
hereunder, under the Credit Agreement, any Note, any other Loan
Documents or otherwise, as such Lender may elect, whether or not
the Administrative Agent or any Lender has made any demand for
payment and although such obligations, liabilities and claims may
be contingent or unmatured. The Administrative Agent and each
Lender shall notify such Guarantor promptly of any such set-off
and the application made by the Administrative Agent or such
Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights
of the Administrative Agent and each Lender under this Section
are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Administrative
Agent or such Lender may have.
5. No Subrogation. Notwithstanding any payment or
payments made by any of the Guarantors hereunder or any set-off
or application of funds of any of the Guarantors by any Lender,
no Guarantor shall be entitled to be subrogated to any of the
rights of the Administrative Agent or any Lender against the
Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by any Lender for the payment
of the Obligations, nor shall any Guarantor seek or be entitled
to seek any contribution or reimbursement from the Borrower or
any other Guarantor in respect of payments made by such Guarantor
hereunder, until all amounts owing to the Administrative Agent
and the Lenders by the Borrower on account of the Obligations are
paid in full and the Commitments are terminated. If any amount
shall be paid to any Guarantor on account of such subrogation
rights at any time when all of the Obligations shall not have
been paid in full, such amount shall be held by such Guarantor in
trust for the Administrative Agent and the Lenders, segregated
from other funds of such Guarantor, and shall, forthwith upon
receipt by such Guarantor, be turned over to the Administrative
Agent in the exact form received by such Guarantor (duly indorsed
by such Guarantor to the Administrative Agent, if required), to
be applied against the Obligations, whether matured or unmatured,
in such order as the Credit Agreement shall provide.
6. Amendments, etc. with respect to the Obligations;
Waiver of Rights. Each Guarantor shall remain obligated
hereunder notwithstanding that, without any reservation of rights
against any Guarantor and without notice to or further assent by
any Guarantor, any demand for payment of any of the Obligations
made by the Administrative Agent or any Lender may be rescinded
by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any
part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the
Administrative Agent or any Lender, and the Credit Agreement, the
Notes and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the
Administrative Agent (or the Required Lenders, as the case may
be) may deem advisable from time to time, and any collateral
security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agent nor any Lender shall
have any obligation to protect, secure, perfect or insure any
Lien at any time held by it as security for the Obligations or
for this Guarantee or any property subject thereto. When making
any demand hereunder against any of the Guarantors, the
Administrative Agent or any Lender may, but shall be under no
obligation to, make a similar demand on the Borrower or any other
Guarantor or guarantor, and any failure by the Administrative
Agent or any Lender to make any such demand or to collect any
payments from the Borrower or any such other Guarantor or
guarantor or any release of the Borrower or such other Guarantor
or guarantor shall not relieve any of the Guarantors in respect
of which a demand or collection is not made or any of the
Guarantors not so released of their several obligations or
liabilities hereunder, and shall not impair or affect the rights
and remedies, express or implied, or as a matter of law, of the
Administrative Agent or any Lender against any of the Guarantors.
For the purposes hereof "demand" shall include the commencement
and continuance of any legal proceedings.
7. Guarantee Absolute and Unconditional. Each Guarantor
waives any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of
reliance by the Administrative Agent or any Lender upon this
Guarantee or acceptance of this Guarantee, the Obligations, and
any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived,
in reliance upon this Guarantee; and all dealings between the
Borrower and any of the Guarantors, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, likewise
shall be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or any of the Guarantors with
respect to the Obligations. Each Guarantor understands and
agrees that this Guarantee shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to
(a) the validity, regularity or enforceability of the Credit
Agreement, any Note or any other Loan Document, any of the
Obligations or any other collateral security therefor or
guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender
(b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or
be asserted by the Borrower against the Administrative Agent or
any Lender, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the Borrower or such Guarantor)
which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Obligations,
or of such Guarantor under this Guarantee, in bankruptcy or in
any other instance. When pursuing its rights and remedies
hereunder against any Guarantor, the Administrative Agent and any
Lender may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Borrower or any
other Person or against any collateral security or guarantee for
the Obligations or any fight of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to pursue
such other rights or remedies or to collect any payments from the
Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of
offset, or any release of the Borrower or any such other Person
or any such collateral security, guarantee or right of offset,
shall not relieve such Guarantor of any liability hereunder, and
shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of the
Administrative Agent and the Lenders against such Guarantor.
This Guarantee shall remain in full force and effect and be
binding in accordance with and to the extent of its terms upon
each Guarantor and the successors and assigns thereof, and shall
inure to the benefit of the Administrative Agent and the Lenders,
and their respective successors, indorsees, transferees and
assigns, until all the Obligations and the obligations of each
Guarantor under this Guarantee shall have been satisfied by
payment in full and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the
Credit Agreement the Borrower may be free from any Obligations.
8. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is
rescinded or must otherwise be restored or returned by the
Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any Guarantor or
any substantial part of its property, or otherwise, all as though
such payments had not been made.
9. Payments. Each Guarantor hereby guarantees that
payments hereunder will be paid to the Administrative Agent
without set-off or counterclaim in U.S. Dollars at the office of
the Administrative Agent located at 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000.
10. Representations and Warranties. Each Guarantor hereby
represents and warrants that:
(a) it is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has the corporate or
other power and authority and the legal right to own and operate
its property, to lease the property it operates and to conduct
the business in which it is currently engaged;
(b) it has the power and authority and the legal right to
execute and deliver, and to perform its obligations under, this
Guarantee, and has taken all necessary action to authorize its
execution, delivery and performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of such Guarantor enforceable in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors' rights
generally, general equitable principles and an implied covenant
of good faith and fair dealing;
(d) the execution, delivery and performance of this
Guarantee will not violate any provision of any material
Requirement of Law or material Contractual Obligation of such
Guarantor and will not result in or require the creation or
imposition of any Lien on any of the properties or revenues of
such Guarantor pursuant to any such Requirement of Law or
Contractual Obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority
and no consent of any other Person (including, without
limitation, any stockholder or creditor of such Guarantor) is
required in connection with the execution, delivery, performance,
validity or enforceability of this Guarantee, except as described
in Section 3.4 of the Credit Agreement; and
(f) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of such Guarantor, threatened by or against such
Guarantor or against any of its properties or revenues (1) with
respect to this Guarantee or any of the transactions contemplated
hereby or, (2) which could reasonably be expected to have a
material adverse effect on the business, operations, property or
financial or other condition of such Guarantor.
Each Guarantor agrees that the foregoing
representations and warranties shall be deemed to have been made
by such Guarantor on the date of each borrowing by the Borrower
under the Credit Agreement on and as of such date of borrowing as
though made hereunder on and as of such date.
11. Authority of Administrative Agent. Each Guarantor
acknowledges that the rights and responsibilities of the
Administrative Agent under this Guarantee with respect to any
action taken by the Administrative Agent or the exercise or non-
exercise by the Administrative Agent of any option, right,
request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the
Administrative Agent and the Lenders, be governed by the Credit
Agreement, but, as between the Administrative Agent and such
Guarantor, the Administrative Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and
valid authority so to act or refrain from acting, and no
Guarantor shall be under any obligation, or entitlement, to make
any inquiry respecting such authority.
12. Notices. All notices, requests and demands to or upon
the Administrative Agent, any Lender or any Guarantor to be
effective shall be in writing (including by telecopy) and, unless
otherwise expressly provided herein, shall be deemed to have been
duly given or made when delivered or deposited in the mails,
postage prepaid or in the case of telecopy notice, when received,
addressed as follows:
(a) if to the Administrative Agent, at its address or
transmission number for notices provided in subsection 9.2 of the
Credit Agreement, and
(b) if to any Guarantor, at its address or transmission
number for notices set forth under its signature below.
The Administrative Agent and each Guarantor may change its
address and transmission numbers for notices by notice in the
manner provided in this Section.
13. Counterparts. This Guarantee may be executed by one or
more of the Guarantors on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the
counterparts of this Guarantee signed by all the Guarantors shall
be lodged with the Administrative Agent.
14. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
15. Integration. This Guarantee represents the agreement
of each Guarantor with respect to the subject matter hereof and
there are no promises or representations by the Administrative
Agent or any Lender relative to the subject matter hereof not
reflected herein.
16. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Guarantee may be
waived, amended, supplemented or otherwise modified except by a
written instrument executed by each Guarantor and the
Administrative Agent, provided that any provision of this
Guarantee may be waived by the Administrative Agent and the
Lenders in a letter or agreement executed by the Administrative
Agent or by telex or facsimile transmission from the
Administrative Agent.
(b) Neither the Administrative Agent nor any Lender shall
by any act (except by a written instrument pursuant to paragraph
18(a) hereof), delay, indulgence, omission or otherwise be deemed
to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of
any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Administrative
Agent or any Lender, any other, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent
or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy
which the Administrative Agent or such Lender would otherwise
have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and arc not exclusive of
any other rights or remedies provided by law.
17. Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to
affect, the construction hereof or be taken into consideration in
the interpretation hereof.
18. Successors and Assigns. This Guarantee shall be
binding upon the successors and assigns of each Guarantor and
shall inure to the benefit of the Administrative Agent and the
Lenders and their respective permitted successors and assigns.
19. Additional Guarantors. Each Subsidiary of the Borrower
that is required to become a party to this Agreement pursuant to
Section 5.9 of the Credit Agreement shall become a Guarantor for
all purposes of this Agreement upon execution and delivery by
such Subsidiary of an Assumption Agreement in the form of Annex I
hereto.
20. Governing Law. This Guarantee shall be governed by,
and construed and interpreted in accordance with, the law of the
State of New York.
21. Term of this Guarantee. This Guarantee shall continue
in full force and effect until the Obligations and the
obligations of each Guarantor hereunder shall be paid in full and
the Commitments shall have been terminated. Upon such payment
and termination, this Guarantee shall automatically terminate and
the Guarantee hereunder released and the Administrative Agent and
the Lenders shall, upon the request of any Guarantor and at the
expense of such Guarantor, execute such documents and instruments
evidencing such termination and release.
IN WITNESS WHEREOF, each of the undersigned has caused
this Guarantee to be duly executed and delivered by its duly
authorized officer as of the day and year first above written.
[NAME OF SUBSIDIARY [NAME OF SUBSIDIARY
GUARANTOR] GUARANTOR]
By ___________________________ By ___________________________
Title _________________________ Title ________________________
Address for Notices: Address for Notices:
______________________________ ______________________________
______________________________ ______________________________
Telex: ________________________ Telex: _______________________
Fax: __________________________ Fax: ________________________
[NAME OF SUBSIDIARY [NAME OF SUBSIDIARY
GUARANTOR] GUARANTOR]
By ___________________________ By ___________________________
Title _________________________ Title _________________________
Address for Notices: Address for Notices:
______________________________ ______________________________
______________________________ ______________________________
Telex: ________________________ Telex: _______________________
Fax: __________________________ Fax: _________________________
Annex 1 to
Subsidiary Guarantee
ASSUMPTION AGREEMENT, dated as of ____________________,
199__, made by _________________________, a ________________
corporation (the "Additional Guarantor"), in favor of TORONTO-
DOMINION (TEXAS), as administrative agent (in such capacity, the
"Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement
referred to below. All capitalized terms not defined herein
shall have the meaning ascribed to them in such Credit Agreement.
WITNESSETH:
WHEREAS, Bear Island Paper Company, LLC (the "Borrower"),
the Lenders, the Arranger and the Administrative Agent have
entered into a Credit Agreement, dated as of December 1, 1997 (as
amended, supplemented or otherwise modified from time to time,
the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the
Subsidiaries of the Borrower (other than the Additional
Guarantor) have entered into the Subsidiary Guarantee, dated as
of December 1, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Subsidiary Guarantee") in favor
of the Administrative Agent for the benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional
Guarantor to become a party to the Subsidiary Guarantee; and
WHEREAS, the Additional Guarantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to
the Subsidiary Guarantee;
NOW, THEREFORE, IT IS AGREED:
1. Subsidiary Guarantee. By executing and delivering this
Assumption Agreement, the Additional Guarantor, as provided in
Section 19 of the Subsidiary Guarantee, hereby becomes a party to
the Subsidiary Guarantee as a Guarantor thereunder with the same
force and effect as if originally named therein as a Guarantor
and, without limiting the generality of the foregoing, hereby
expressly assumes all obligations and liabilities of a Guarantor
thereunder. The Additional Guarantor hereby represents and
warrants that each of the representations and warranties
contained in Section 10 of the Subsidiary Guarantee is true and
correct with respect to such Additional Guarantor on and as the
date hereof (after giving effect to this Assumption Agreement) as
if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this
Assumption Agreement to be duly executed and delivered as of the
date first above written.
[ADDITIONAL GUARANTOR]
By:_______________________
Name:
Title:
Address for Notices:
EXHIBIT B TO 10.2
EXECUTION COPY
XXXXX-XXXXX GUARANTEE
XXXXX-XXXXX GUARANTEE, dated as of December 1, 1997, made by
XXXXX-XXXXX INDUSTRIES, INC., a Delaware corporation (the
"Guarantor"), in favor of TORONTO-DOMINION (TEXAS), INC., as
Administrative Agent (in such capacity, the "Administrative Agent")
for the lenders (the "Lenders") parties to the Credit Agreement,
dated as of December 1, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Bear
Island Paper Company, LLC (the "Borrower"), the Lenders, the
Arranger named therein and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, it is a condition precedent to the obligation of
the Lenders to make their respective Loans to the Borrower under the
Credit Agreement that the Guarantor shall have executed and
delivered this Guarantee to the Administrative Agent for the ratable
benefit of the Lenders; and
WHEREAS, the Borrower is a Wholly Owned Subsidiary of the
Guarantor, and it is to the advantage of Guarantor that the Lenders
make the Loans to the Borrower.
NOW, THEREFORE, in consideration of the premises and to
induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective
Loans to the Borrower under the Credit Agreement, the Guarantor
hereby agrees with the Administrative Agent, for the ratable benefit
of the Lenders, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this
Guarantee as a whole and not to any particular provision of this
Guarantee, and section and paragraph references are to this
Guarantee unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Guarantee. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent, for the ratable
benefit of the Lenders and their respective permitted successors,
indorsees, transferees and assigns, the prompt and complete payment
and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
(b) The Guarantor further agrees to pay any and all reasonable
out-of-pocket expenses (including, without limitation, all
reasonable fees and disbursements of counsel) which may be paid or
incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing
any rights with respect to, or collecting against, the Guarantor
under this Guarantee. This Guarantee shall remain in full force and
effect until all obligations of the Guarantor under this Guarantee
have been released pursuant to Section 11.
(c) No payment or payments made by the Borrower or any other
Person or received or collected by the Administrative Agent or any
Lender from the Borrower or any other Person by virtue of any action
or proceeding or any set-off or appropriation or application, at any
time or from time to time, in reduction of or in payment of the
Obligations (other than any payment made by the Guarantor with
respect to the Obligations or any payment received or collected from
the Guarantor with respect to the Obligations) shall be deemed to
modify, reduce, release or otherwise affect the liability of the
Guarantor hereunder which shall remain obligated hereunder,
notwithstanding any such payment or payments until all obligations
of the Guarantor under this Guarantee have been released pursuant to
Section 11.
(d) The Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Administrative Agent
or any Lender on account of its liability hereunder, it will notify
the Administrative Agent and such Lender in writing that such
payment is made under this Guarantee for such purpose.
3. Right of Set-off. The Administrative Agent and each Lender is
hereby irrevocably authorized at any time and from time to time when an
Event of Default has occurred and is continuing, without notice to the
Guarantor, any such notice being expressly waived by the Guarantor, to set
off and appropriate and apply any and all deposits (general or special,
time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any
time held or owing by the Administrative Agent or such Lender to or for the
credit or the account of the Guarantor, or any part thereof in such amounts
as the Administrative Agent or such Lender may elect, against or on account
of the obligations and liabilities of the Guarantor to the Administrative
Agent or such Lender hereunder and claims of every nature and description
of the Administrative Agent or such Lender against the Guarantor, in any
currency, whether arising hereunder, under the Credit Agreement, any Note,
any other Loan Document or otherwise, as the Administrative Agent or such
Lender may elect, whether or not the Administrative Agent or such Lender
has made any demand for payment and although such obligations, liabilities
and claims may be contingent or unmatured. The Administrative Agent and
each Lender shall notify the Guarantor promptly of any such set-off and the
application made by the Administrative Agent or such Lender, as the case
may be, of the proceeds thereof; provided that the failure to give such
notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Lender under this paragraph are
in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Administrative Agent or such Lender may
have.
4. No Subrogation. Notwithstanding any payment or payments
made by the Guarantor hereunder, or any set-off or application of
funds of the Guarantor by the Administrative Agent or any Lender,
the Guarantor shall not be entitled to be subrogated to any of the
rights of the Administrative Agent or any Lender against the
Borrower or against any collateral security or guarantee or right of
offset held by the Administrative Agent or any Lender for the
payment of the Obligations, nor shall the Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower
in respect of payments made by the Guarantor hereunder, until all
amounts owing to the Administrative Agent and the Lenders by the
Borrower on account of the Obligations are paid in full and the
Commitments are terminated. If any amount shall be paid to the
Guarantor on account of such subrogation rights at any time when all
of the Obligations shall not have been paid in full, such amount
shall be held by the Guarantor in trust for the Administrative Agent
and the Lenders, segregated from other funds of the Guarantor, and
shall, forthwith upon receipt by the Guarantor, be turned over to
the Administrative Agent in the exact form received by the Guarantor
(duly indorsed by the Guarantor to the Administrative Agent, if
required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Credit Agreement shall provide.
5. Amendments, etc. with respect to the Obligations; Waiver of
Rights. The Guarantor shall remain obligated hereunder notwithstanding
that, without any reservation of rights against the Guarantor, and
without notice to or further assent by the Guarantor, any demand for
payment of any of the Obligations made by the Administrative Agent or
any Lender may be rescinded by the Administrative Agent or such
Lender, and any of the Obligations continued, and the Obligations, or
the liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Administrative Agent or any
Lender, and the Credit Agreement, any Notes, and the other Loan
Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in
whole or in part, as the Administrative Agent (or the Required
Lenders, as the case may be) may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Administrative Agent nor any Lender shall have any
obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Obligations or for this Guarantee or
any property subject thereto. When making any demand hereunder against
the Guarantor, the Administrative Agent or any Lender may, but shall
be under no obligation to, make a similar demand on the Borrower or
any other guarantor, and any failure by the Administrative Agent or
any Lender to make any such demand or to collect any payments from the
Borrower or any such other guarantor or any release of the Borrower or
such other guarantor shall not relieve the Guarantor of its
obligations or liabilities hereunder, and shall not impair or affect
the rights and remedies, express or implied, or as a matter of law, of
the Administrative Agent or any Lender against the Guarantor. For the
purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.
6. Guarantee Absolute and Unconditional. The Guarantor waives
any and all notice of the creation, renewal, extension or accrual of
any of the Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon this Guarantee or acceptance
of this Guarantee; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Borrower or the Guarantor,
on the one hand, and the Administrative Agent and the Lenders, on
the other, shall likewise be conclusively presumed to have been had
or consummated in reliance upon this Guarantee. The Guarantor waives
diligence, presentment, protest, demand for payment and notice of
default or nonpayment to or upon the Borrower or the Guarantor with
respect to the Obligations. This Guarantee shall be construed as a
continuing, absolute and unconditional guarantee of payment without
regard to (a) the validity, regularity or enforceability of the
Credit Agreement, any Note, or any other Loan Document, any of the
Obligations or any other collateral security therefor or guarantee
or right of offset with respect thereto at any time or from time to
time held by the Administrative Agent or any Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by
the Borrower against the Administrative Agent or any Lender, or (c)
any other circumstance whatsoever (with or without notice to or
knowledge of the Borrower or the Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of
the Borrower for the Obligations, or of the Guarantor under this
Guarantee, in bankruptcy or in any other instance. When pursuing its
rights and remedies hereunder against the Guarantor, the
Administrative Agent and any Lender may, but shall be under no
obligation to, pursue such rights and remedies as it may have
against the Borrower or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset
with respect thereto, and any failure by the Administrative Agent or
any Lender to pursue such other rights or remedies or to collect any
payments from the Borrower or any such other Person or to realize
upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Borrower or any such
other Person or of any such collateral security, guarantee or right
of offset, shall not relieve the Guarantor of any liability
hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against the Guarantor. This
Guarantee shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Guarantor
and its successors and assigns thereof, and shall inure to the
benefit of the Administrative Agent and the Lenders, and their
respective successors, indorsees, transferees and assigns, until all
obligations of the Guarantor under this Guarantee have been released
pursuant to Section 11, notwithstanding that from time to time
during the term of the Credit Agreement the Borrower may be free
from any Obligations.
7. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded
or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any substantial part
of its property, or otherwise, all as though such payments had not
been made.
8. Payments. The Guarantor hereby agrees that the Obligations
will be paid to the Administrative Agent without set-off or
counterclaim in U.S. Dollars at the office of the Administrative Agent
located at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
9. Representations and Warranties. The Guarantor represents
and warrants to the Administrative Agent and the Lenders that:
(a) the Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation and has the corporate power and authority and the
legal right to own and operate its property, to lease the property
it operates and to conduct the business in which it is currently
engaged;
(b) the Guarantor has the corporate power and authority and
the legal right to execute and deliver, and to perform its
obligations under, this Guarantee, and has taken all necessary
corporate action to authorize its execution, delivery and
performance of this Guarantee;
(c) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors' rights
generally, general equitable principles and an implied covenant of
good faith and fair dealing;
(d) the execution, delivery and performance of this Guarantee
will not violate any provision of any material Requirement of Law or
material Contractual Obligation of the Guarantor and will not result
in or require the creation or imposition of any Lien on any of the
properties or revenues of the Guarantor pursuant to any such
Requirement of Law or Contractual Obligation of the Guarantor;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
stockholder or creditor of the Guarantor) is required in connection
with the execution, delivery, performance, validity or
enforceability of this Guarantee except as described in Section 3.4
of the Credit Agreement; and
(f) no litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of the Guarantor, threatened by or against the Guarantor
or against any of its properties or revenues (1) with respect to this
Guarantee or any of the transactions contemplated hereby, and (2) which
could reasonably be expected to have a material adverse effect on
the business, operations, property or financial or other condition
of the Guarantor.
The Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by the Guarantor on the
date of each borrowing by the Borrower under the Credit Agreement on
and as of such date of borrowing as though made hereunder on and as of
such date.
10. Authority of Administrative Agent. The Guarantor
acknowledges that the rights and responsibilities of the
Administrative Agent under this Guarantee with respect to any action
taken by the Administrative Agent or the exercise or non-exercise by
the Administrative Agent of any option, right, request, judgment or
other right or remedy provided for herein or resulting or arising
out of this Guarantee shall, as between the Administrative Agent and
the Lenders, be governed by the Credit Agreement, but, as between
the Administrative Agent and the Guarantor, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders
with full and valid authority so to act or refrain from acting, and
the Guarantor shall not be under any obligation, or entitlement, to
make any inquiry respecting such authority.
11. Release of Guarantee. The Guarantor shall be automatically
released from its obligations under this Guarantee and this
Guarantee shall be automatically terminated on the earlier of (a)
the date on which all the Obligations are paid in full and the
Commitments are terminated, and (b) the later of (i) the date upon
which the Timberlands Loan has been repaid in full and (ii) the date
on which Total Commitment Debt is less than $145,000,000.
12. Notices. All notices, requests and demands to or upon the
Administrative Agent, or the Guarantor to be effective shall be in
writing (including by telecopy) and, unless otherwise expressly
provided herein shall be deemed to have been duly given or made when
delivered or deposited in the mail, postage prepaid or in the case
of telecopy notice, when received, addressed as follows:
(a) if to the Administrative Agent, at its address or
transmission number for notices provided in subsection 9.2 of the
Credit Agreement; and
(b) if to the Guarantor, at its address or transmission number
for notices set forth under its signature below.
The Administrative Agent, each Lender and the Guarantor may
change its address and transmission numbers for notices by notice in
the manner provided in this Section.
13. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
14. Integration. This Guarantee represents the agreement of
the Guarantor with respect to the subject matter hereof and there are
no promises or representations by the Administrative Agent or any
Lender relative to the subject matter hereof not reflected herein.
15. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Guarantee may be waived,
amended, supplemented or otherwise modified except by a written
instrument executed by the Guarantor and the Administrative Agent,
provided that any provision of this Guarantee may be waived by the
Administrative Agent and the Lenders in a letter or agreement
executed by the Administrative Agent or by telex or facsimile
transmission from the Administrative Agent.
(b) Neither the Administrative Agent nor any Lender shall by
any act (except by a written instrument pursuant to paragraph hereof),
delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or
Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the
part of the Administrative Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. A waiver by the Administrative Agent
or any Lender of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the
Administrative Agent or such Lender would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
16. Section Headings. The section headings used in this
Guarantee are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the
interpretation hereof.
17. Successors and Assigns. This Guarantee shall be binding
upon the successors and assigns of the Guarantor and shall inure to
the benefit of the Administrative Agent and the Lenders and their
permitted successors and assigns.
18. Governing Law. This Guarantee shall be governed by, and
construed and interpreted in accordance with, the law of the State of
New York.
IN WITNESS WHEREOF, the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized
officer as of the day and year first above written.
XXXXX-XXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
Address for Notices:
Xxxx Xxxxxx Xxx 0000
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
EXHIBIT C
SECURITY AND PLEDGE AGREEMENT
made by
BEAR ISLAND PAPER COMPANY, LLC
and its Subsidiaries
in favor of
TORONTO-DOMINION (TEXAS), INC.,
as Administrative Agent
Dated as of December 1, 1997
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS................................................... 2
1.1 Definitions................................................... 2
1.2 Other Definitional Provisions................................. 6
SECTION 2. GRANT OF SECURITY INTEREST...................................... 6
SECTION 3. REPRESENTATIONS AND WARRANTIES.................................. 7
3.1 Representations in Credit Agreement........................... 7
3.2 Title; No Other Liens......................................... 7
3.3 Perfected First Priority Liens................................ 8
3.4 Chief Executive Office........................................ 8
3.5 Inventory and Equipment....................................... 8
3.6 Farm Products................................................. 8
3.7 Pledged Securities............................................ 8
3.8 Receivables................................................... 9
3.9 Contracts..................................................... 9
3.10 Intellectual Property......................................... 10
3.11 Vehicles...................................................... 10
SECTION 4. COVENANTS....................................................... 10
4.1 Covenants in Credit Agreement................................. 10
4.2 Delivery of Instruments and Chattel Paper..................... 11
4.3 Maintenance of Insurance...................................... 11
4.4 Payment of Obligations........................................ 11
4.5 Maintenance of Perfected Security Interest;
Further Documentation....................................... 11
4.6 Changes in Locations, Name, etc............................... 12
4.7 Notices....................................................... 12
4.8 Pledged Securities............................................ 12
4.9 Receivables................................................... 14
4.10 Contracts..................................................... 14
4.11 Intellectual Property......................................... 14
4.12 Vehicles...................................................... 15
SECTION 5. REMEDIAL PROVISIONS............................................. 15
5.1 Certain Matters Relating to Receivables....................... 15
5.2 Communications with Obligors; Grantors Remain Liable.......... 16
5.3 Pledged Securities............................................ 17
5.4 Proceeds to be Turned Over To Administrative Agent............ 17
5.5 Application of Proceeds....................................... 18
5.6 Code and Other Remedies....................................... 18
5.7 Registration Rights........................................... 19
5.8 Waiver; Deficiency............................................ 20
SECTION 6. THE ADMINISTRATIVE AGENT........................................ 20
6.1 Administrative Agent's Appointment as Attorney-in-Fact, etc... 20
6.2 Duty of Administrative Agent.................................. 21
6.3 Execution of Financing Statements............................. 22
6.4 Authority of Administrative Agent............................. 22
SECTION 7. MISCELLANEOUS................................................... 22
7.1 Amendments in Writing......................................... 22
7.2 Notices....................................................... 22
7.3 No Waiver by Course of Conduct; Cumulative Remedies........... 22
7.4 Enforcement Expenses; Indemnification......................... 22
7.5 Successors and Assigns........................................ 23
7.6 Set-Off....................................................... 23
7.7 Counterparts.................................................. 23
7.8 Severability.................................................. 23
7.9 Section Headings.............................................. 24
7.10 Integration................................................... 24
7.11 GOVERNING LAW................................................. 24
7.12 Submission To Jurisdiction; Waivers........................... 24
7.13 Acknowledgements.............................................. 24
7.14 WAIVER OF JURY TRIAL.......................................... 25
7.15 Additional Grantors........................................... 25
7.16 Releases...................................................... 25
SECURITY AND PLEDGE AGREEMENT
SECURITY AND PLEDGE AGREEMENT, dated as of December 1,
1997, made by each of the signatories hereto (together with any other
entity that may become a party hereto as provided herein, the
"Grantors"), in favor of TORONTO-DOMINION (TEXAS), INC., as
Administrative Agent (in such capacity, the "Administrative Agent") for
the lenders (the "Lenders") parties to the Credit Agreement, dated as of
December 1, 1997 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among Bear Island Paper Company,
LLC (the "Borrower"), the Lenders, the Arranger named therein and the
Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group
of companies that includes each other Grantor;
WHEREAS, the proceeds of the Loans under the Credit
Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the other Grantors in connection with the
operation of their respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in
related businesses, and each Grantor will derive substantial direct and
indirect benefit from the making of the Loans under the Credit Agreement;
WHEREAS, it is a condition precedent to the obligation of
the Lenders to make their respective Loans to the Borrower under the
Credit Agreement that the Grantors (other than the Borrower) guarantee
payment and performance of the Borrower's Obligations under the Credit
Agreement and the other Loan Documents, and in satisfaction of such
condition, each Grantor (other than the Borrower) has entered into a
guarantee of even date herewith (as amended, supplemented or otherwise
modified from time to time, the "Subsidiary Guarantee") for the benefit
of the Administrative Agent and the Lenders; and
WHEREAS, it is a further condition precedent to the
obligation of the Lenders to make their respective Loans to the Borrower
under the Credit Agreement that the Grantors shall have executed and
delivered this Agreement to the Administrative Agent for the ratable
benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to
induce the Administrative Agent and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective Loans to the
Borrower thereunder, each Grantor hereby agrees with the Administrative
Agent, for the ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement, and the following terms which are
defined in the Uniform Commercial Code in effect in the State of New York
on the date hereof are used herein as so defined: Accounts, Chattel
Paper, Documents, Equipment, Farm Products, Instruments, Inventory and
Investment Property.
(b) The following terms shall have the following meanings:
"Agreement": this Security and Pledge Agreement, as the
same may be amended, supplemented or otherwise modified from
time to time.
"Collateral": as defined in Section 2.
"Collateral Account": any collateral account established
by the Administrative Agent as provided in Section 5.1 or 5.4.
"Contracts": the contracts and agreements listed in
Schedule 7, as the same may be amended, supplemented or otherwise
modified from time to time, including, without limitation, (i)
all rights of any Grantor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of
any Grantor to damages arising thereunder and (iii) all rights of
any Grantor to perform and to exercise all remedies thereunder.
"Copyrights": (i) all copyrights arising under the laws of
the United States, any other country or any political subdivision
thereof, whether registered or unregistered and whether published
or unpublished (including, without limitation, those listed in
Schedule 6), all registrations and recordings thereof, and all
applications in connection therewith, including, without
limitation, all registrations, recordings and applications in the
United States Copyright Office, and (ii) the right to obtain all
renewals thereof.
"Copyright Licenses": any written agreement naming any
Grantor as licensor or licensee (including, without limitation,
those listed in Schedule 6), granting any right under any
Copyright, including, without limitation, the grant of rights to
manufacture, distribute, exploit and sell materials derived from
any Copyright; in each case with respect to all of the foregoing
only to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title and
interest in such contract, agreement, instrument or indenture is
not prohibited by such contract, agreement, instrument or
indenture without the consent of any other party thereto, would
not give any other party to such contract, agreement, instrument
or indenture the right to terminate its obligations thereunder,
or is permitted with consent if all necessary consents to such
grant of a security interest have been obtained from the other
parties thereto (it being understood that the foregoing shall not
be deemed to obligate such Grantor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security
interest pursuant to this Agreement in any Receivable or any
money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
"General Intangibles": all "general intangibles" as such
term is defined in Section 9-106 of the Uniform Commercial Code
in effect in the State of New York on the date hereof and, in any
event, including, without limitation, with respect to any
Grantor, all contracts, agreements, instruments and indentures in
any form, and portions thereof, to which such Grantor is a party
or under which such Grantor has any right, title or interest or
to which such Grantor or any property of such Grantor is subject,
as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights
of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (ii) all rights of such
Grantor to damages arising thereunder and (iii) all rights of
such Grantor to perform and to exercise all remedies thereunder;
in each case with respect to all of the foregoing only to the
extent the grant by such Grantor of a security interest pursuant
to this Agreement in its right, title and interest in such
contract, agreement, instrument or indenture is not prohibited by
such contract, agreement, instrument or indenture without the
consent of any other party thereto, would not give any other
party to such contract, agreement, instrument or indenture the
right to terminate its obligations thereunder, or is permitted
with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties
thereto (it being understood that the foregoing shall not be
deemed to obligate such Grantor to obtain such consents);
provided, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security
interest pursuant to this Agreement in any Receivable or any
money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
"Guarantors": as defined in the Subsidiary Guarantee.
"Intellectual Property": the collective reference to all
rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, the
Copyrights, the Copyright Licenses, the Patents, the Patent
Licenses, the Trademarks and the Trademark Licenses, and all
rights to xxx at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds
and damages therefrom; in each case only to the extent the grant
by such Grantor of a security interest pursuant to this Agreement
in its right, title and interest in such intellectual property is
not prohibited by any agreement relating thereto without the
consent of any other party thereto, would not give any other
party to such agreement the right to terminate its obligations
thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained
from the other parties thereto (it being understood that the
foregoing shall not be deemed to obligate such Grantor to obtain
such consents); provided, that the foregoing limitation shall not
affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any Receivable or
any money or other amounts due or to become due in respect of any
such intellectual property.
"Intercompany Note": any promissory note evidencing
loans made by any Grantor to any Affiliate or any of its
Subsidiaries.
"Issuers": the collective reference to each issuer of a
Pledged Security.
"New York UCC": the Uniform Commercial Code as from time
to time in effect in the State of New York.
"Patents": (i) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues
and extensions thereof including, without limitation, any of the
foregoing referred to in Schedule 6, (ii) all applications for
letters patent of the United States or any other country and all
divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to
in Schedule 6, and (iii) all rights to obtain any reissues or
extensions of the foregoing.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered in whole or in
part by a Patent, including, without limitation, any of the
foregoing referred to in Schedule 6; in each case with respect to
all of the foregoing only to the extent the grant by such Grantor
of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or
indenture is not prohibited by such contract, agreement,
instrument or indenture without the consent of any other party
thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all
necessary consents to such grant of a security interest have been
obtained from the other parties thereto (it being understood that
the foregoing shall not be deemed to obligate such Grantor to
obtain such consents); provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such
Grantor of a security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become due
under any such contract, agreement, instrument or indenture.
"Pledged LLC Interests": in each case, whether now
existing or hereafter acquired, all of each Grantor's right,
title and interest in and to:
(a) the equity interests of any Issuer that is a limited
liability company, but not any Grantor's obligations from time to
time as a holder of interests in any such Issuer (unless the
Administrative Agent or its designee, on behalf of the
Administrative Agent and the Lenders, shall elect to become a
holder of equity interests in any such Issuer in connection with
its exercise of remedies pursuant to the terms hereof);
(b) any and all moneys due and to become due to each
Grantor now or in the future by way of a distribution made to any
Grantor in its capacity as a holder of equity interests in any
such Issuer or otherwise in respect of such Grantor's interest as
a holder of equity interests in any such Issuer;
(c) any other property of any such Issuer to which each
Grantor now or in the future may be entitled in respect of its
equity interests in any such Issuer by way of distribution,
return of capital or otherwise;
(d) any other claim or right which each Grantor now has or
may in the future acquire in respect of its equity interests in
any such Issuer;
(e) all certificates, options or rights of any nature
whatsoever that may be issued or granted by any such Issuer with
respect to the equity interests of such Issuer to each Grantor
while this Agreement is in effect; and
(f) to the extent not otherwise included, all Proceeds
of any or all of the foregoing.
"Pledged Notes": all promissory notes listed on Schedule
2, all Intercompany Notes at any time issued to any Grantor
and all other promissory notes issued to or held by any
Grantor.
"Pledged Note Collateral": all of the mortgages, deeds
of trust, security agreements, assignments of leases, UCC
financing statements, guaranties and other documents securing
or guaranteeing the indebtedness evidenced by the Pledged
Notes.
"Pledged Partnership Interests": in each case, whether
now existing or hereafter acquired, all of each Grantor's
right, title and interest in and to:
(a) the partnership interests of any Issuer that is a
partnership, but not any Grantor's obligations from time to time
as a general or limited partner, as the case may be, in any such
Issuer (unless the Administrative Agent or its designee, on
behalf of the Administrative Agent and the Lenders, shall elect
to become a general or limited partner, as the case may be, in
any such Issuer in connection with its exercise of remedies
pursuant to the terms hereof);
(b) any and all moneys due and to become due each Grantor
now or in the future by way of a distribution made to each
Grantor in its capacity as a general partner or limited partner,
as the case may be, in any such Issuer or otherwise in respect of
each such Grantor's interest as a general partner or limited
partner, as the case may be, in any such Issuer;
(c) any other property of any such Issuer to which each
Grantor's now or in the future may be entitled in respect of its
interests as a general partner or limited partner, as the case
may be, in any such Issuer by way of distribution, return of
capital or otherwise;
(d) any other claim or right which each Grantor now has
or may in the future acquire in respect of its general or limited
partnership interests in any such Issuer;
(e) the partnership agreement or other organizational
documents of any such Issuer;
(f) all certificates, options or rights of any nature
whatsoever that may be issued or granted by any such Issuer with
respect to the partnership interests of such Issuer to each
Grantor while this Agreement is in effect; and
(g) to the extent not otherwise included, all Proceeds
of any or all of the foregoing.
"Pledged Securities": the collective reference to the
Pledged Notes, the Pledged Partnership Interests, the Pledged
LLC Interests and the Pledged Stock, together with any
Proceeds thereof.
"Pledged Stock": the shares of Capital Stock listed on
Schedule 2, together with any other shares, stock certificates,
options or rights of any nature whatsoever in respect of the
Capital Stock (other than Pledged LLC Interests and Pledged
Partnership Interests) of any Person that may be issued or
granted to, or held by, any Grantor while this Agreement is in
effect other than the Capital Stock of the Finance Subsidiary.
"Proceeds": all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from
the Pledged Securities, collections thereon or distributions or
payments with respect thereto.
"Receivable": any right to payment for goods sold or
leased or for services rendered, whether or not such right is
evidenced by an Instrument or Chattel Paper and whether or not
it has been earned by performance (including, without
limitation, any Account).
"Securities Act": the Securities Act of 1933, as amended.
"Subsidiary Guarantee": as defined in the recitals hereto.
"Trademarks": (i) all trademarks, trade names, corporate
names, company names, business names, fictitious business names,
trade styles, service marks, logos and other source or business
identifiers, and all goodwill associated therewith, now existing
or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State
thereof or any other country or any political subdivision
thereof, or otherwise, and all common-law rights related thereto,
including, without limitation, any of the foregoing referred to
in Schedule 6, and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or
oral, providing for the grant by or to any Grantor of any right
to use any Trademark, including, without limitation, any of the
foregoing referred to in Schedule 6; in each case with respect to
all of the foregoing only to the extent the grant by such Grantor
of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or
indenture is not prohibited by such contract, agreement,
instrument or indenture without the consent of any other party
thereto, would not give any other party to such contract,
agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all
necessary consents to such grant of a security interest have been
obtained from the other parties thereto (it being understood that
the foregoing shall not be deemed to obligate such Grantor to
obtain such consents); provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such
Grantor of a security interest pursuant to this Agreement in any
Receivable or any money or other amounts due or to become due
under any such contract, agreement, instrument or indenture..
"Vehicles": all cars, trucks, trailers, construction and
earth moving equipment and other vehicles covered by a
certificate of title law of any state and, in any event
including, without limitation, the vehicles listed on Schedule
8 and all tires and other appurtenances to any of the
foregoing.
1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule
references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall
refer to such Grantor's Collateral or the relevant part thereof.
SECTION 2. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the
Administrative Agent, and hereby grants to the Administrative Agent, for
the ratable benefit of the Lenders, a security interest in, all of the
following property now owned or at any time hereafter acquired by such
Grantor or in which such Grantor now has or at any time in the future may
acquire any right, title or interest (collectively, the "Collateral"), as
collateral security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise)
of the Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Instruments;
(h) all Intellectual Property;
(i) all Inventory;
(j) all Pledged Securities;
(k) all Vehicles;
(l) all Investment Property;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral
security and guarantees given by any Person with respect to any
of the foregoing.
Notwithstanding the foregoing, the maximum amount of
Obligations secured by the assets of any Grantor which is a Subsidiary of
the Borrower shall not in any event exceed the maximum amount that may be
so secured under applicable federal and state laws relating to the
insolvency of debtors.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into the Credit Agreement and to induce the Lenders to make their
respective Loans to the Borrower thereunder, each Grantor hereby
represents and warrants to the Administrative Agent and each Lender that:
3.1 Representations in Credit Agreement. In the case of
each Grantor other than the Borrower, the representations and warranties
set forth in Section 3 of the Credit Agreement as they relate to such
Grantor or to the Loan Documents to which such Grantor is a party, each
of which is hereby incorporated herein by reference, are true and correct
in all material respects, and the Administrative Agent and each Lender
shall be entitled to rely on each of them as if they were fully set forth
herein, provided that each reference in each such representation and
warranty to the Borrower's knowledge shall, for the purposes of this
Section 3.1, be deemed to be a reference to such Grantor's knowledge.
3.2 Title; No Other Liens. Except for the security
interest granted to the Administrative Agent for the ratable benefit
of the Lenders pursuant to this Agreement and the other Liens
permitted to exist on the Collateral by the Credit Agreement, such
Grantor owns each item of the Collateral free and clear of any and all
Liens or claims of others. No effective financing statement or other
public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as have been filed
in favor of the Administrative Agent, for the ratable benefit of the
Lenders, pursuant to this Agreement or as are permitted by the Credit
Agreement or as set forth on Schedule 6.3 in the Credit Agreement.
3.3 Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) constitute valid perfected
security interests in all of the Collateral (other than the Vehicles and
other than Pledged Notes, Instruments or Chattel Paper not required to be
delivered hereunder) in favor of the Administrative Agent (or, with
respect to Patents, Copyrights and registered trademarks or trademark
applications, will constitute perfected security interests upon the
recordation of the Lenders' interest therein with the appropriate
intellectual property registry and upon the registration of unregistered
copyrights), for the ratable benefit of the Lenders, as collateral
security for such Grantor's Obligations, enforceable in accordance with
the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral (other than the Vehicles and other
than Pledged Notes, Instruments or Chattel Paper not required to be
delivered hereunder) from such Grantor and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for Liens
permitted by the Credit Agreement.
3.4 Chief Executive Office. On the date hereof, such
Grantor's jurisdiction of organization and the location of such Grantor's
chief executive office or sole place of business are specified on
Schedule 4.
3.5 Inventory and Equipment. On the date hereof, the
Inventory and the Equipment (other than mobile goods) are kept at the
locations listed on Schedule 5.
3.6 Farm Products. None of the Collateral constitutes,
or is the Proceeds of, Farm Products.
3.7 Pledged Securities. (a) The shares of Pledged Stock
pledged by such Grantor hereunder constitute all the issued and
outstanding shares of all classes of the Capital Stock of each Issuer
which is a Domestic Subsidiary owned by such Grantor and not more than
65% of the Capital Stock of each Issuer which is a Foreign Subsidiary
owned by such Grantor.
(b) All the shares of the Pledged Stock, Pledged
Partnership Interests and the Pledged LLC Interests pledged by such
Grantor have been duly and validly issued and, to the extent applicable,
are fully paid and nonassessable.
(c) The Pledged Partnership Interests pledged by such
Grantor constitute all the issued and outstanding partnership interests
of each Issuer that is a partnership in which such Grantor has any right,
title or interest.
(d) The Pledged LLC Interests pledged by such Grantor
constitute all the issued and outstanding equity interests of each Issuer
that is a limited liability company in which such Grantor has any right,
title or interest.
(e) As of the date hereof, to the best knowledge of such
Grantor, each of the Pledged Notes and the documents comprising the
Pledged Note Collateral constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in accordance
with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
As of the date hereof, no Grantor has sent any notice of default to the
obligor under any Pledged Note or under any Pledged Note Collateral and
to the applicable Grantor's knowledge, no state of facts exists which
constitutes, or with notice or the passage of time or both would
constitute, a default under the Pledged Notes or the Pledged Note
Collateral. As of the date hereof, no Grantor has any knowledge of any
offsets, counterclaims or defenses to the obligor's obligations under the
Pledged Notes or the documents comprising the Pledged Note Collateral.
(f) Such Grantor is the owner of, and has title to, the
Pledged Securities pledged by it hereunder, free of any and all Liens or
options in favor of, or claims of, any other Person, except the security
interest created by this Agreement and Liens permitted by the Credit
Agreement.
(g) Schedule 2 accurately reflects each Grantor's
partnership interests and interests in limited liability companies
pledged by such Grantor and held as of the date hereof.
3.8 Receivables. (a) No amount payable to such Grantor
under or in connection with any Receivable is evidenced by any Instrument
or Chattel Paper in the amount of more than $500,000 individually or
$1,000,000 in the aggregate which has not been delivered to the
Administrative Agent.
(b) None of the obligors on any Receivables is a
Governmental Authority, other than Receivables aggregating not in excess
of $500,000 unless the relevant Grantor has taken the actions requested
by the Administrative Agent which are required to cause the security
interest of the Administrative Agent therein to be perfected, including
compliance with the Assignment of Claims Act, if applicable.
(c) The amounts represented by such Grantor to the Lenders
from time to time as owing to such Grantor in respect of the Receivables
will at such times be accurate in all material respects.
3.9 Contracts. (a) No consent of any party (other than such
Grantor) to any Contract pledged hereunder is required, or purports to be
required, in connection with the execution, delivery and performance of
this Agreement.
(b) Each Contract is in full force and effect and
constitutes to the best knowledge of such Grantor with respect to parties
other than a Grantor, a valid and legally enforceable obligation of the
parties thereto, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.
(c) To the best knowledge of such Grantor with respect to
parties other than a Grantor, no consent or authorization of, filing with
or other act by or in respect of any Governmental Authority is required
in connection with the execution, delivery, performance, validity or
enforceability of any of the Contracts by any party thereto other than
those which have been duly obtained, made or performed, are in full force
and effect and do not subject the scope of any such Contract to any
material adverse limitation, either specific or general in nature.
(d) Neither such Grantor nor (to the best of such Grantor's
knowledge) any of the other parties to the Contracts is in default in the
performance or observance of any of the terms thereof in any manner that,
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(e) The right, title and interest of such Grantor in, to
and under the Contracts are not subject to any defenses, offsets,
counterclaims or claims that, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(f) Such Grantor has delivered to the Administrative Agent
a complete and correct copy of each Contract, including all amendments,
supplements and other modifications thereto.
(g) No amount payable to such Grantor under or in
connection with any Contract is evidenced by any Instrument or Chattel
Paper in excess of $500,000 individually or $1,000,000 in the aggregate
which has not been delivered to the Administrative Agent.
(h) None of the parties to any Contract under which more
than $500,000 is payable is a Governmental Authority unless the relevant
Grantor has taken the actions requested by the Administrative Agent which
are required to cause the security interest of the Administrative Agent
therein to be perfected, including compliance with the Assignment of
Claims Act, if applicable.
3.10 Intellectual Property. (a) Schedule 6 lists all
Patents and all registrations and applications for Copyrights and
Trademarks owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property
is subsisting, unexpired (except as set forth on Schedule 6) and to the
best of Grantor's knowledge enforceable, has not been abandoned and does
not, to the knowledge of any Grantor, infringe the intellectual property
rights of any other Person.
(c) Except as set forth in Schedule 6, on the date hereof,
none of the Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which such Grantor is the licensor or
franchisor.
(d) No holding, decision or judgment has been rendered by
any Governmental Authority which would limit, cancel or question the
validity of, or such Grantor's rights in, any Intellectual Property in
any respect that could reasonably be expected to have a Material Adverse
Effect.
(e) No action or proceeding is pending, or, to the
knowledge of such Grantor, threatened, on the date hereof (i) seeking to
limit, cancel or question the validity of any Intellectual Property or
such Grantor's ownership interest therein, or (ii) which, if adversely
determined, would have a material adverse effect on the value of any
Intellectual Property.
3.11 Vehicles. The book value of all Vehicles owned by all
Grantors on the date hereof does not exceed $250,000.
SECTION 4. COVENANTS
Each Grantor covenants and agrees with the Administrative
Agent and the Lenders that, from and after the date of this Agreement
until the Obligations shall have been paid in full and the Commitments
shall have terminated:
4.1 Covenants in Credit Agreement. In the case of each
Grantor other than the Borrower, such Grantor shall take, or shall
refrain from taking, as the case may be, each action that is
necessary to be taken or not taken, as the case may be, so that no
Default or Event of Default is caused by the failure to take such action
or to refrain from taking such action by such Grantor or any of its
Subsidiaries.
4.2 Delivery of Instruments and Chattel Paper. If any
amount in excess of $500,000 individually or $1,000,000 in the aggregate
payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Chattel Paper, such Instrument or
Chattel Paper shall be, promptly upon receipt thereof by such Grantor,
delivered to the Administrative Agent, duly indorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement.
4.3 Maintenance of Insurance. (a) Such Grantor will
maintain, with financially sound and reputable companies, insurance
policies (i) insuring the Inventory, Equipment and Vehicles against loss
by fire, explosion, theft and such other casualties as may be customary
in the business in which the Borrower is engaged insuring such Grantor,
the Administrative Agent and the Lenders against liability for personal
injury and property damage relating to such Inventory, Equipment and
Vehicles, such policies to be in such form and amounts and having such
coverage as may be customary in the business in which the Borrower is
engaged.
(b) All such insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof, (ii) name the
Administrative Agent as additional insured party or loss payee, (iii) if
reasonably requested by the Administrative Agent, include a breach of
warranty clause and (iv) be reasonably satisfactory in all other respects
to the Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent
and the Lenders annually a report of a reputable insurance broker with
respect to such insurance and such supplemental reports with respect
thereto as the Administrative Agent may from time to time reasonably
request.
4.4 Payment of Obligations. Such Grantor will pay and
discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all taxes, assessments and
governmental charges or levies imposed upon the Collateral or in respect
of income or profits therefrom (excluding taxes arising from the income
of the Administrative Agent or any Lender which are covered by Section
2.18 of the Credit Agreement), as well as all claims of any kind
(including, without limitation, claims for labor, materials and supplies)
against or with respect to the Collateral, except that no such charge
need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in
conformity with GAAP with respect thereto have been provided on the books
of such Grantor and such proceedings could not reasonably be expected to
result in the sale, forfeiture or loss of any material portion of the
Collateral or any interest therein.
4.5 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest
created by this Agreement as a perfected security interest having at
least the priority described in Section 3.3 and shall defend such
security interest against the claims and demands of all Persons
whomsoever except for holders of permitted Liens.
(b) Such Grantor will furnish to the Administrative Agent
and the Lenders from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of such
Grantor, such Grantor will promptly and duly execute and deliver, and
have recorded, such further instruments and documents and take such
further actions as the Administrative Agent may reasonably request for
the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements under
the Uniform Commercial Code (or other similar laws) in effect in any
jurisdiction with respect to the security interests created hereby, other
than foreign Intellectual Property filings. If any amount payable to any
Grantor under or in connection with any of the Pledged Securities with
respect to the equity interests of such Grantor in the Issuer thereof
shall be or become evidenced by any promissory note, other instrument or
chattel paper, such note, instrument or chattel paper in excess of
$500,000 individually or $1,000,000 in the aggregate shall be promptly
upon receipt thereof by such Grantor delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative
Agent, to be held as Pledged Securities pursuant to this Agreement other
than any note, instrument or chattel paper distributed as part of a
Restricted Payment permitted to be made or received pursuant to the
Credit Agreement.
(d) Concurrently with the delivery to the Administrative
Agent of each certificate representing one or more shares of Pledged
Stock to the Administrative Agent, such Grantor shall deliver an undated
stock power covering such certificate, duly executed in blank by such
Grantor.
(e) All Pledged Notes, when delivered, shall be duly
endorsed in blank. At the time of delivery of any Pledged Notes, the
applicable Grantor shall deliver the originals of the documents
comprising the Pledged Note Collateral with respect to such Pledged
Notes, together with an assignment of mortgage or deed of trust, as
applicable, in a form which is recordable in the county records where the
real property covered by such mortgage or deed of trust is located, duly
executed by such Grantor and acknowledged by a notary public.
4.6 Changes in Locations, Name, etc. Such Grantor will not,
except upon 15 days' prior written notice to the Administrative Agent and
upon delivery to the Administrative Agent of (a) all additional executed
financing statements and other documents reasonably requested by the
Administrative Agent to maintain the validity, perfection and priority of
the security interests provided for herein and (b) if applicable, a
written supplement to Schedule 5 showing any additional location at which
Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment to be kept
at a location other than those listed on Schedule 5;
(ii) change the location of its chief executive office or
sole place of business from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to
such an extent that any financing statement filed by the
Administrative Agent in connection with this Agreement would
become misleading.
4.7 Notices. Such Grantor will advise the Administrative
Agent and the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby
or Liens permitted under the Credit Agreement) on any of the Collateral
which would adversely affect the ability of the Administrative Agent to
exercise any of its remedies hereunder; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate
value of the Collateral or on the security interests created hereby.
4.8 Pledged Securities. (a) If such Grantor shall become
entitled to receive or shall receive any certificate (including, without
limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the Capital Stock of any
Issuer, whether in addition to, in substitution of, as a conversion of,
or in exchange for, any shares of the Pledged Stock, the Pledged
Partnership Interests or the Pledged LLC Interests or otherwise in
respect thereof, such Grantor shall accept the same as the agent of the
Administrative Agent and the Lenders, hold the same in trust for the
Administrative Agent and the Lenders and deliver the same forthwith to
the Administrative Agent in the exact form received, duly indorsed by
such Grantor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by
such Grantor and with, if the Administrative Agent so requests, signature
guaranteed, to be held by the Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums
paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Issuer shall be paid over to the Administrative Agent
to be held by it hereunder as additional collateral security for the
Obligations, and in case any distribution of capital shall be made on or
in respect of the Pledged Securities or any property shall be distributed
upon or with respect to the Pledged Securities, in each case pursuant to
the recapitalization or reclassification of the capital of any Issuer or
pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor
of the Administrative Agent, be delivered to the Administrative Agent to
be held by it hereunder as additional collateral security for the
Obligations. If any sums of money or property so paid or distributed in
respect of the Pledged Securities (other than distributions permitted to
be made or received pursuant to the Credit Agreement) shall be received
by such Grantor, such Grantor shall, until such money or property is paid
or delivered to the Administrative Agent, hold such money or property in
trust for the Lenders, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.
(b) Except as otherwise permitted by the Credit Agreement,
without the prior written consent of the Administrative Agent (which
consent will not be unreasonably withheld), such Grantor will not (i)
vote to enable, or take any other action to permit, any Issuer to issue
any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange
for any stock or other equity securities of any nature of any Issuer
except the issuance to Grantor of equity securities which constitute
Collateral, (ii) sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof (except pursuant to a transaction expressly permitted by
the Credit Agreement), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of
the Pledged Securities or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or (iv) enter
into any agreement or undertaking restricting the right or ability of
such Grantor to sell, assign or transfer any of the Pledged Securities or
Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such
Issuer agrees that (i) it will be bound by the terms of this Agreement
relating to the Pledged Securities issued by it and will comply with such
terms insofar as such terms are applicable to it, (ii) it will notify the
Administrative Agent promptly in writing of the occurrence of any of the
events described in Section 4.8(a) with respect to the Pledged Securities
issued by it and (iii) the terms of Sections 5.3(c) and 5.7 shall apply
to it, mutatis mutandis, with respect to all actions that may be required
of it pursuant to Section 5.3(c) or 5.7 with respect to the Pledged
Securities issued by it.
(d) With respect to the Pledged Notes, the Grantors shall
(i) not extinguish, cancel or reduce the indebtedness evidenced by the
Pledged Notes (other than the Intercompany Notes) except as a result of
payment by the obligors thereunder, (ii) not amend or permit the
amendment of such Pledged Notes or the Pledged Note Collateral, or
release any of the property encumbered by the Pledged Note Collateral and
(iii) enforce or secure the performance of each and every obligation,
term, covenant, condition and agreements relating to the Pledged Notes
and the Pledged Note Collateral and not waive or compromise any rights it
may have thereunder except, with respect to the foregoing clauses (i),
(ii) and (iii), in each case other than in the ordinary course of
business.
(e) With respect to the Pledged LLC Interests and the
Pledged Partnership Interests, (i) perform and comply in all material
respects with all terms and provisions of each limited liability company
agreement and each partnership agreement then in effect with respect
thereto and required to be performed or complied with by it and (ii)
enforce each partnership agreement and limited liability company
agreement then in effect in accordance in all material respects with its
terms.
4.9 Receivables. (a) Other than in the ordinary course of
business consistent with its past practice, such Grantor will not (i)
grant any extension of the time of payment of any Receivable, (ii)
compromise or settle any Receivable for less than the full amount
thereof, (iii) release, wholly or partially, any Person liable for the
payment of any Receivable, (iv) allow any credit or discount whatsoever
on any Receivable or (v) amend, supplement or modify any Receivable in
any manner that could reasonably be expected to adversely affect the
value thereof.
(b) Such Grantor will deliver to the Administrative Agent a
copy of each material demand, notice or document received by it that
questions or calls into doubt the validity or enforceability of more than
5% of the aggregate amount of the then outstanding Receivables.
4.10 Contracts. (a) Such Grantor will perform and comply in
all material respects with all its obligations under the Contracts.
(b) Such Grantor will not amend, modify, terminate or waive
any provision of any Contract in any manner which could reasonably be
expected to cause a Material Adverse Effect.
(c) Subject to Section 4.10(b), such Grantor will exercise
promptly and diligently each and every material right which it may have
under each Contract (other than any right of termination).
(d) Such Grantor will deliver to the Administrative Agent a
copy of each material demand, notice or document received by it relating
in any way to any material Contract that questions the validity or
enforceability of such Contract.
4.11 Intellectual Property. (a) Such Grantor (either itself
or through licensees) will (i) continue to use each material Trademark in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) use such
Trademark with the appropriate notice of registration and all other
notices and legends required by applicable material Requirements of Law,
(iv) not adopt or use any xxxx which is confusingly similar or a
colorable imitation of such Trademark unless the Administrative Agent,
for the ratable benefit of the Lenders, shall obtain a perfected security
interest in such xxxx pursuant to this Agreement, and (v) not (and not
knowingly permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such Trademark may become
invalidated or impaired in any way.
(b) Such Grantor (either itself or through licensees) will
not do any act, or omit to do any act, whereby any material Patent may
become forfeited, abandoned or dedicated to the public.
(c) Such Grantor (either itself or through licensees) (i)
will employ each material Copyright and (ii) will not (and will not
knowingly permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any material portion of the
Copyrights may become invalidated or otherwise impaired. Such Grantor
will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will
not do any act that knowingly uses any material Intellectual Property to
infringe the intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and
the Lenders promptly if it knows, or has reason to know, that any
application or registration relating to any material Intellectual
Property may become forfeited, abandoned or dedicated to the public, or
of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office, the
United States Copyright Office or any court or tribunal in any country)
regarding such Grantor's ownership of, or the validity of, any material
Intellectual Property or such Grantor's right to register the same or to
own and maintain the same.
(f) Whenever such Grantor, either by itself or through any
agent, employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision
thereof, such Grantor shall report such filing to the Administrative
Agent within five Business Days after the last day of the fiscal quarter
in which such filing occurs with respect to filings in the United States
and, with respect to filings outside the United States, within five
Business Days after the last day of the fiscal quarter in which the
Grantor is notified of such filing by its foreign agent. Upon request of
the Administrative Agent, such Grantor shall execute and deliver, and
have recorded, any and all agreements, instruments, documents, and papers
as the Administrative Agent may request to evidence the Administrative
Agent's and the Lenders' security interest in any Copyright, Patent or
Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary
steps, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each registration of
the material Intellectual Property, including, without limitation, filing
of applications for renewal, affidavits of use and affidavits of
incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor
shall (i) take such actions as such Grantor shall reasonably deem
appropriate under the circumstances to protect such Intellectual Property
and (ii) if such Intellectual Property is of material economic value,
promptly notify the Administrative Agent after it learns thereof and xxx
for infringement, misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.
4.12 Vehicles. If the aggregate book value of all
Vehicles owned by all Grantors exceeds $250,000, the Borrower shall
promptly notify the Administrative Agent thereof and the Borrower will
cause all actions to be taken as may be required by the Administrative
Agent to cause the security interest of the Administrative Agent to be
perfected on such Vehicles as requested by the Administrative Agent.
SECTION 5. REMEDIAL PROVISIONS
5.1 Certain Matters Relating to Receivables. (a) The
Administrative Agent shall have the right to make test verifications of
the Receivables in any manner and through any medium that it reasonably
considers advisable, and each Grantor shall furnish all such assistance
and information as the Administrative Agent may require in connection
with such test verifications. At any time and from time to time, upon the
Administrative Agent's reasonable request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants
or others satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables; provided, that
the Administrative Agent may not make such a request more than once per
calendar year when no Event of Default is in existence or more than four
times per calendar year when an Event of Default is in existence.
(b) The Administrative Agent hereby authorizes each Grantor
to collect such Grantor's Receivables, subject to the Administrative
Agent's direction and control, and the Administrative Agent may curtail
or terminate said authority at any time after the occurrence and during
the continuance of an Event of Default. If required by the Administrative
Agent at any time after the occurrence and during the continuance of an
Event of Default, any payments of Receivables, when collected by any
Grantor, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by such Grantor in the exact form received, duly indorsed
by such Grantor to the Administrative Agent if required, in a Collateral
Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent
for the account of the Lenders only as provided in Section 5.5, and (ii)
until so turned over, shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Grantor. Each such deposit of Proceeds of Receivables after the
occurrence and during the continuance of an Event of Default shall be
accompanied by a report identifying in reasonable detail the nature and
source of the payments included in the deposit.
(c) At the Administrative Agent's reasonable request, each
Grantor shall deliver to the Administrative Agent all original and other
documents evidencing, and relating to, the agreements and transactions
which gave rise to the Receivables, including, without limitation, all
original orders, invoices and shipping receipts; provided, that only
copies (or other than originals) of the foregoing documents shall be
required to be delivered in the absence of an Event of Default.
5.2 Communications with Obligors; Grantors Remain Liable.
(a) The Administrative Agent in its own name or in the name of others may
at any time after the occurrence and during the continuance of an Event
of Default communicate with obligors under the Receivables and parties to
the Contracts to verify with them to the Administrative Agent's
satisfaction the existence, amount and terms of any Receivables or
Contracts.
(b) Upon the request of the Administrative Agent at any
time after the occurrence and during the continuance of an Event of
Default, each Grantor shall notify obligors on the Receivables and
parties to the Contracts that a security interest in the Receivables and
the Contracts has been assigned to the Administrative Agent for the
ratable benefit of the Lenders and that payments in respect thereof shall
be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables and Contracts
to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto in the case of Receivables or such
Contract. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Receivable (or any agreement giving
rise thereto) or Contract by reason of or arising out of this Agreement
or the receipt by the Administrative Agent or any Lender of any payment
relating thereto, nor shall the Administrative Agent or any Lender be
obligated in any manner to perform any of the obligations of any Grantor
under or pursuant to any Receivable (or any agreement giving rise
thereto) or Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
5.3 Pledged Securities. (a) Unless an Event of Default
shall have occurred and be continuing and the Administrative Agent shall
have given notice to the relevant Grantor of the Administrative Agent's
intent to exercise its corresponding rights pursuant to Section 5.3(b),
each Grantor shall be permitted to receive all dividends paid in respect
of the Pledged Stock and all payments made in the ordinary course in
respect of the Pledged Notes and all distributions in respect of the
Pledge Partnership Interests and Pledged LLC Interests, to the extent
permitted in the Credit Agreement, and to exercise all voting and
corporate rights with respect to the Pledged Securities; provided,
however, that no vote shall be cast or corporate right exercised or other
action taken which, in the Administrative Agent's reasonable judgment,
would materially impair the Collateral or which would be inconsistent
with or result in any violation of any provision of the Credit Agreement,
this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing
and the Administrative Agent shall give notice of its intent to exercise
such rights to the relevant Grantor or Grantors, (i) the Administrative
Agent shall have the right to receive any and all cash dividends,
payments or other Proceeds paid in respect of the Pledged Securities and
make application thereof to the Obligations in such order as the
Administrative Agent may determine, and (ii) any or all of the Pledged
Securities shall be registered in the name of the Administrative Agent or
its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such
Pledged Securities at any meeting of shareholders of the relevant Issuer
or Issuers or otherwise and (y) any and all rights of conversion,
exchange and subscription and any other rights, privileges or options
pertaining to such Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Securities upon the merger,
consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any Issuer, or upon the exercise by
any Grantor or the Administrative Agent of any right, privilege or option
pertaining to such Pledged Securities, and in connection therewith, the
right to deposit and deliver any and all of the Pledged Securities with
any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Administrative Agent may
determine), all without liability except to account for property actually
received by it and except to the extent resulting from the gross
negligence or willful misconduct of the Administrative Agent, but the
Administrative Agent shall have no duty to any Grantor to exercise any
such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each
Issuer of any Pledged Securities pledged by such Grantor hereunder to
(i) comply with any instruction received by it from the Administrative
Agent in writing that (x) states that an Event of Default has occurred
and is continuing and (y) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from such
Grantor, and each Grantor agrees that each Issuer shall be fully
protected in so complying, and (ii) upon the occurrence and during the
continuance of an Event of Default, unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to
the Pledged Securities directly to the Administrative Agent.
5.4 Proceeds to be Turned Over To Administrative Agent. In
addition to the rights of the Administrative Agent and the Lenders
specified in Section 5.1 with respect to payments of Receivables, if an
Event of Default shall occur and be continuing, all Proceeds received by
any Grantor consisting of cash, checks and other similar items shall be
held by such Grantor in trust for the Administrative Agent and the
Lenders, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the
Administrative Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Administrative Agent, if required). All
Proceeds received by the Administrative Agent hereunder shall be held by
the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative
Agent in a Collateral Account (or by such Grantor in trust for the
Administrative Agent and the Lenders) shall continue to be held as
collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 5.5.
5.5 Application of Proceeds. At such intervals as may be
agreed upon by the Borrower and the Administrative Agent, or, if an Event
of Default shall have occurred and be continuing, the Administrative
Agent may apply all or any part of Proceeds received by it constituting
Collateral, whether or not held in any Collateral Account, in payment of
the Obligations in the following order:
First, to pay incurred and unpaid fees and expenses of
the Administrative Agent under the Loan Documents;
Second, to the Administrative Agent, for application by it
towards payment of amounts then due and owing and remaining
unpaid in respect of the Obligations, pro rata among the Lenders
according to the amounts of the Obligations then due and owing
and remaining unpaid to the Lenders;
Third, to the Administrative Agent, for application by it
towards prepayment of the Obligations, pro rata among the Lenders
according to the amounts of the Obligations then held by the
Lenders; and
Fourth, any balance of such Proceeds remaining after the
Obligations shall have been paid in full, and the Commitments
shall have terminated shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same.
5.6 Code and Other Remedies. If an Event of Default
shall occur and be continuing, the Administrative Agent, on behalf of
the Lenders, may exercise, in addition to all other rights and
remedies granted to them in this Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the New York UCC or any
other applicable law. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any
kind (except any notice required by law referred to below) to or upon
any Grantor or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Administrative
Agent or any Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit
risk. The Administrative Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption
in any Grantor, which right or equity is waived and released upon
consummation of such sale. Each Grantor further agrees, at the
Administrative Agent's request, to assemble the Collateral and make it
available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply
the net proceeds of any action taken by it pursuant to this Section
5.6, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees
and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Administrative Agent may elect and
as permitted by law, and only after such application and after the
payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section
9-504(1)(c) of the New York UCC, need the Administrative Agent account
for the surplus, if any, to any Grantor. To the extent permitted by
applicable law, each Grantor waives all claims, damages and demands it
may acquire against the Administrative Agent or any Lender arising out
of the exercise by them of any rights hereunder, except to the extent
arising out of gross negligence or willful misconduct of the Agent or
such Lender. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or
other disposition.
5.7 Registration Rights. (a) If the Administrative Agent
shall determine to exercise its right to sell any or all of the Pledged
Securities pursuant to Section 5.6, and if in the reasonable opinion of
the Administrative Agent it is necessary or advisable to have the Pledged
Securities or that portion thereof to be sold, registered under the
provisions of the Securities Act, the relevant Grantor will cause the
Issuer thereof to (i) execute and deliver, and cause the directors and
officers of such Issuer to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in
the reasonable opinion of the Administrative Agent, necessary or
advisable to register the Pledged Securities or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its
reasonable efforts to cause the registration statement relating thereto
to become effective and to remain effective for a period of one year from
the date of the first public offering of the Pledged Securities, or that
portion thereof to be sold, and (iii) make all amendments thereto and/or
to the related prospectus which, in the reasonable opinion of the
Administrative Agent, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto. Each Grantor
agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions of the United
States which the Administrative Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings
statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative
Agent may be unable to effect a public sale of any or all the Pledged
Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise, and
may be compelled to resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged to agree, among
other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof.
Each Grantor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were
a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Securities for the
period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under
applicable state securities laws of the United States, even if such
Issuer would agree to do so.
(c) Each Grantor agrees to use its reasonable efforts to do
or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Securities pursuant to
this Section 5.7 valid and binding and in compliance with any and all
other applicable Requirements of Law. Each Grantor further agrees that a
breach of any of the covenants contained in this Section 5.7 will cause
irreparable injury to the Administrative Agent and the Lenders, that the
Administrative Agent and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every
covenant contained in this Section 5.7 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred
under the Credit Agreement.
5.8 Waiver; Deficiency. Each Grantor waives and agrees not
to assert any rights or privileges which it may acquire under Section
9-112 of the New York UCC. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Obligations and the fees and
disbursements of any attorneys employed by the Administrative Agent or
any Lender to collect such deficiency.
SECTION 6. THE ADMINISTRATIVE AGENT
6.1 Administrative Agent's Appointment as Attorney-in-Fact,
etc. (a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor
and in the name of such Grantor or in its own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Grantor hereby
gives the Administrative Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of
the following, in each case, subject to the last sentence of this Section
6.1(a):
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment
of moneys due under any Receivable or Contract or with respect to
any other Collateral and file any claim or take any other action
or proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of
collecting any and all such moneys due under any Receivable or
Contract or with respect to any other Collateral whenever
payable;
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Administrative Agent may request to
evidence the Administrative Agent's and the Lenders' security
interest in such Intellectual Property and the goodwill and
General Intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all
or any part of the premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in
Section 5.6 or 5.7, any indorsements, assignments or other
instruments of conveyance or transfer with respect to the
Collateral; and
(v) (1) direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Administrative Agent or as
the Administrative Agent shall direct; (2) ask or demand for,
collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time
in respect of or arising out of any Collateral; (3) sign and
indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) commence and prosecute
any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any
portion thereof and to enforce any other right in respect of any
Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; (7) assign any
Copyright, Patent or Trademark (along with the goodwill of the
business to which any such Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such
manner, as the Administrative Agent shall in its sole discretion
determine subject, however, to licenses theretofore issued by
Grantor to the extent permitted hereunder; and (8) generally,
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely
as though the Administrative Agent were the absolute owner
thereof for all purposes, and do, at the Administrative Agent's
option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and
the Administrative Agent's and the Lenders' security interests
therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Anything in this Section 6.1(a) to the contrary notwithstanding,
the Administrative Agent agrees that it will not exercise any rights
under the power of attorney provided for in this Section 6.1(a) unless an
Event of Default shall have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of
its agreements contained herein, the Administrative Agent, at its option,
but without any obligation so to do, may perform or comply, or otherwise
cause performance or compliance, with such agreement.
(c) The reasonable out-of-pocket expenses of the
Administrative Agent incurred in connection with actions undertaken as
provided in this Section 6.1, together with interest thereon at a rate
per annum equal to the rate per annum at which interest would then be
payable on past due Term Loans that are Base Rate Loans under the Credit
Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor
to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are released in
accordance with the terms hereof.
6.2 Duty of Administrative Agent. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the New York UCC or otherwise, shall be to deal with it in the same
manner as the Administrative Agent deals with similar property for its
own account. Neither the Administrative Agent, any Lender nor any of
their respective officers, directors, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to
the Collateral or any part thereof. The powers conferred on the
Administrative Agent and the Lenders hereunder are solely to protect the
Administrative Agent's and the Lenders' interests in the Collateral and
shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall
be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for
any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
6.3 Execution of Financing Statements. Pursuant to Section
9-402 of the New York UCC and any other applicable law, each Grantor
authorizes the Administrative Agent to file or record financing
statements and other filing or recording documents or instruments with
respect to the Collateral without the signature of such Grantor in such
form and in such offices as the Administrative Agent reasonably
determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other
reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing
or recording in any jurisdiction.
6.4 Authority of Administrative Agent. Each Grantor
acknowledges that the rights and responsibilities of the Administrative
Agent under this Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the
Administrative Agent of any option, voting right, request, judgment or
other right or remedy provided for herein or resulting or arising out of
this Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement, but, as between the
Administrative Agent and the Grantors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and
valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 7. MISCELLANEOUS
7.1 Amendments in Writing. None of the terms or provisions
of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with subsection 9.1 of the Credit
Agreement.
7.2 Notices. All notices, requests and demands to or upon
the Administrative Agent or any Grantor hereunder shall be effected in
the manner provided for in subsection 9.2 of the Credit Agreement;
provided that any such notice, request or demand to or upon any Guarantor
shall be addressed to such Guarantor at its notice address set forth on
Schedule 1.
7.3 No Waiver by Course of Conduct; Cumulative Remedies.
Neither the Administrative Agent nor any Lender shall by any act (except
by a written instrument pursuant to Section 7.1), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default. No
failure to exercise, nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Administrative Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies
provided by law.
7.4 Enforcement Expenses; Indemnification. (a) Each Grantor
agrees to pay or reimburse each Lender and the Administrative Agent for
all its reasonable out-of-pocket costs and expenses incurred in
collecting against such Grantor under the Subsidiary Guarantee (other
than the Borrower) or otherwise enforcing or in the case of the
Administrative Agent only, preserving any rights under this Agreement and
the other Loan Documents to which such Grantor is a party, including,
without limitation, the reasonable fees and reasonable disbursements of
counsel (including the allocated fees and expenses of in-house counsel)
to each Lender and of counsel to the Administrative Agent.
(b) Each Grantor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes (other than taxes arising
from the income of the Administrative Agent or any Lender which are
covered by Section 2.18 of the Credit Agreement) which may be payable or
determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Agreement.
(c) Each Grantor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
with respect to the execution, delivery, enforcement, performance and
administration of this Agreement to the extent the Borrower would be
required to do so pursuant to subsection 9.5 of the Credit Agreement.
(d) The agreements in this Section 7.4 shall survive
repayment of the Obligations and all other amounts payable under the
Credit Agreement and the other Loan Documents.
7.5 Successors and Assigns. This Agreement shall be binding
upon the successors and assigns of each Grantor and shall inure to the
benefit of the Administrative Agent and the Lenders and their respective
permitted successors and assigns; provided that no Grantor may assign,
transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Administrative Agent.
7.6 Set-Off. Each Grantor hereby irrevocably authorizes
the Administrative Agent and each Lender at any time and from time to
time while an Event of Default shall have occurred and be continuing,
without notice to such Grantor or any other Grantor, any such notice
being expressly waived by each Grantor, to set-off and appropriate and
apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Administrative Agent or such Lender to or for the
credit or the account of such Grantor, or any part thereof in such
amounts as the Administrative Agent or such Lender may elect, against
and on account of the obligations and liabilities of such Grantor to
the Administrative Agent or such Lender hereunder and claims of every
nature and description of the Administrative Agent or such Lender
against such Grantor, in any currency, whether arising hereunder,
under the Credit Agreement, any other Loan Document or otherwise, as
the Administrative Agent or such Lender may elect, whether or not the
Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such
Grantor promptly of any such set-off and the application made by the
Administrative Agent or such Lender of the proceeds thereof, provided
that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Administrative Agent
and each Lender under this Section 7.6 are in addition to other rights
and remedies (including, without limitation, other rights of set-off)
which the Administrative Agent or such Lender may have.
7.7 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
7.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
7.9 Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
7.10 Integration. This Agreement and the other Loan
Documents represent the agreement of the Grantors, the Administrative
Agent and the Lenders with respect to the subject matter hereof and
thereof, and there are no promises, undertakings, representations or
warranties by the Administrative Agent or any Lender relative to subject
matter hereof and thereof not expressly set forth or referred to herein
or in the other Loan Documents.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
7.12 Submission To Jurisdiction; Waivers. Each Grantor
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to such Grantor at its address
referred to in Section 7.2 or at such other address of which the
Administrative Agent shall have been notified in the manner
described in Section 7.2;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
7.13 Acknowledgements. Each Grantor hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan
Documents to which it is a party;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or fiduciary duty to any Grantor
arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Grantors,
on the one hand, and the Administrative Agent and Lenders, on the
other hand, in connection herewith or therewith is solely that of
debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Grantors and
the Lenders.
7.14 WAIVER OF JURY TRIAL. EACH GRANTOR AND THE
ADMINISTRATIVE AGENT BY ITS ACCEPTANCE HEREOF HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
7.15 Additional Grantors. Each Subsidiary of the Borrower
that is required to become a party to this Agreement pursuant to Section
5.9 of the Credit Agreement shall become a Grantor for all purposes of
this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex 1 hereto.
7.16 Releases. (a) At such time as the Loans, and the other
Obligations shall have been paid in full and the Commitments have been
terminated, the Collateral shall automatically be released from the Liens
created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent
and each Grantor hereunder shall automatically terminate, all without
delivery of any instrument or performance of any act by any party, and
all rights to the Collateral shall revert to the Grantors. At the request
and sole expense of any Grantor following any such termination, the
Administrative Agent shall deliver to such Grantor any Collateral held by
the Administrative Agent hereunder, and execute and deliver to such
Grantor such documents as such Grantor shall reasonably request to
evidence such termination and release.
(b) If any of the Collateral shall be sold, transferred
or otherwise disposed of by any Grantor in a transaction permitted by
the Credit Agreement, then the Administrative Agent, at the request
and sole expense of such Grantor, shall execute and deliver to such
Grantor all releases or other documents reasonably necessary or
desirable for the release of the Liens created hereby on such
Collateral. At the request and sole expense of the Borrower, a Grantor
that is a Subsidiary of the Borrower shall be released from its
obligations hereunder in the event that all the Capital Stock of such
Subsidiary shall be sold, transferred or otherwise disposed of in a
transaction permitted by the Credit Agreement or such entity is no
longer a "Subsidiary" as permitted by the Credit Agreement; provided
that the Borrower shall have delivered to the Administrative Agent, at
least ten Business Days prior to the date of the proposed release, a
written request for release identifying the relevant Subsidiary and
the terms of the sale or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith,
together with a certification by the Borrower stating that such
transaction is in compliance with the Credit Agreement and the other
Loan Documents.
Notwithstanding the foregoing, no such release of any
Collateral shall be effected unless any lien on such Collateral securing
the Second Priority Notes shall also be released.
IN WITNESS WHEREOF, each of the undersigned has caused this
Security and Pledge Agreement to be duly executed and delivered as of the
date first above written.
BEAR ISLAND PAPER COMPANY, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
Security and Pledge Agreement dated as of December 1, 1997 (the
"Agreement"), made by the Grantors parties thereto for the benefit of
Toronto-Dominion (Texas), Inc., as Administrative Agent. The undersigned
agrees for the benefit of the Administrative Agent and the Lenders as
follows:
8. The undersigned will be bound by the terms of the Agreement
and will comply with such terms insofar as such terms are applicable to
the undersigned.
9. The undersigned will notify the Administrative Agent promptly
in writing of the occurrence of any of the events described in Section
4.8(a) of the Agreement.
10. The terms of Sections 5.3(a) and 5.7 of the Agreement shall
apply to it, mutatis mutandis, with respect to all actions that may be
required of it pursuant to Section 5.3(a) or 5.7 of the Agreement.
[NAME OF ISSUER]
By _____________________________
Title __________________________
Address for Notices:
_________________________________
_________________________________
Fax: ____________________________
Annex 1 to
Security and Pledge Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 199_, made by
______________________________, a ______________ corporation (the
"Additional Grantor"), in favor of Toronto-Dominion (Texas), Inc., as
administrative agent (in such capacity, the "Administrative Agent") for
the banks and other financial institutions (the "Lenders") parties to the
Credit Agreement referred to below. All capitalized terms not defined
herein shall have the meaning ascribed to them in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, The Bear Island Paper Company, LLC (the "Borrower"), the
Lenders, the Arranger and the Administrative Agent have entered into a
Credit Agreement, dated as of ____________________, 199_ (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement");
WHEREAS, in connection with the Credit Agreement, the Borrower
and certain of its Affiliates (other than the Additional Grantor) have
entered into the Security and Pledge Agreement, dated as of
________________________, 199_ (as amended, supplemented or otherwise
modified from time to time, the "Security and Pledge Agreement") in favor
of the Administrative Agent for the benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor
to become a party to the Security and Pledge Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Security and
Pledge Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Security and Pledge Agreement. By executing and delivering
this Assumption Agreement, the Additional Grantor, as provided in Section
7.15 of the Security and Pledge Agreement, hereby becomes a party to the
Security and Pledge Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Grantor thereunder. The information set
forth in Annex 1-A hereto is hereby added to the information set forth in
Schedules ____________1 to the Security and Pledge Agreement. The
Additional Grantor hereby represents and warrants that each of the
representations and warranties contained in Section 4 of the Security and
Pledge Agreement is true and correct with respect to the Additional
Grantor on and as the date hereof (after giving effect to this Assumption
Agreement and the new information on such Schedules) as if made on and as
of such date.
-----------
1 Refer to each Schedule which needs to be supplemented.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above
written.
[ADDITIONAL GRANTOR]
By:____________________________
Name:
Title:
SCHEDULE 1
NOTICE ADDRESSES OF GRANTORS
Xxxx Xxxxxx Xxx 0000
00000 Xxx Xxxxx Xxxx, Xxx. 738
Ashland, Virginia 23005
Attention: Vice President/General Manager
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SCHEDULE 2
DESCRIPTION OF PLEDGED SECURITIES
PLEDGED STOCK:
Issuer Class of Stock Stock Certificate No. No. of Shares
None
PLEDGED LLC INTERESTS:
Name of Limited Liability Company Type of Interest Percentage Interest
None
PLEDGED PARTNERSHIP INTERESTS:
Name of Partnership Type of Interest Percentage Interest
None
PLEDGED NOTES:
Issuer Payee Principal Amount
None
SCHEDULE 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS*
I. Uniform Commercial Code Filings
State Corporation Commission of Xxxxxxxx
Xxxxxxx County, Xxxxxxxx
Xxxxxxxxxx County, Virginia
Xxxxxxxx County, Xxxxxxxx
Xxxxxxxxxx County, Virginia
Gloucester County, Xxxxxxxx
Xxxxxxxxx County, Virginia
Louisa County, Virginia
Orange County, Virginia
Richmond County, Xxxxxxxx
XX. Trademark Filings
None.**
III. Patent Filings
U.S. Patent and Trademark Office
State Corporation Commission of Xxxxxxxx
Xxxxxxx County, Xxxxxxxx
Xxxxxxxxxx County, Virginia
Xxxxxxxx County, Xxxxxxxx
Xxxxxxxxxx County, Virginia
Gloucester County, Xxxxxxxx
Xxxxxxxxx County, Virginia
Louisa County, Virginia
Orange County, Virginia
Richmond County, Virginia
All foreign offices where Patents have been issued or are pending.
IV. Copyright Filings
U.S. Copyright Office
V. Actions with respect to Pledged Stock
None.
VI. Other Actions
None.
* Note that perfection of security interests in patents and
trademarks requires filings under the UCC in jurisdictions where
filings would be made for general intangibles, as well as filings
in the U.S. Copyright and the U.S. Patent and Trademark Office,
and, with respect to foreign patent and trademark registrations
and applications, filing in the appropriate offices in the
related foreign jurisdictions. Perfecting a security interest in
U.S. Copyrights and the receivables arising therefrom requires
that such copyrights be registered in the U.S. Copyright Office.
** Any Trademark registrations or applications assigned after the
date hereof will require filings in the U.S. Patent and Trademark
Office or appropriate foreign Trademark registry.
SCHEDULE 4
LOCATION OF JURISDICTION OF ORGANIZATION
AND CHIEF EXECUTIVE OFFICE
Jurisdiction of
Grantor Organization Location
Bear Island Paper Virginia Post Office Box 2119
Company, L.L.C. 00000 Xxx Xxxxx Xxxx,
Xxx. 000
Xxxxxxx, Xxxxxxxx 00000
SCHEDULE 5
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
Bear Island Paper Company, L.L.C. 00000 Xxx Xxxxx Xxxx,
Xxx. 738
Ashland, Virginia 23005
Gloucester County, Virginia
(See Item 4 attached hereto
for the legal description)
Richmond County, Virginia
(See Item 8 attached hereto
for the legal description)
Item 1
Property Location: Xxxxx Xxxxxxxx, GL-901
Gloucester County, VA
Tax Parcel Id #: 8 15B
SCHEDULE A
Legal Description
PARCEL GL-901:
ALL that certain lot, piece or parcel of land, together with all rights,
ways, improvements and appurtenances, located in Petsworth Magisterial
District, Gloucester County, Virginia, containing 14.029 acres, all as is
more fully shown on plat of survey entitled "Plat Showing Property to be
Acquired by Seashore Corporation, Petsworth Magisterial District,
Gloucester County, Virginia," prepared by A. Xxxxx Xxxxxxxx, C.L.S.,
dated July 19, 1979, a copy of which plat is attached to and made a part
of that certain deed recorded in the Clerk's Office, Circuit Court,
County of Gloucester, Virginia, in Deed Book 224, page 758, and according
to which plat the parcel is substantially bounded as follows: on the
Northeast by property (now or formerly) Xxxxxx X. & Xxxxx X. Xxxxxxx; on
the East by the line of southbound U.S. Route 17; on the Southeast by the
properties of Commonwealth of Virginia (now or formerly) Xxxxx X. Xxxx,
(now or formerly) Xxxxxx X. and Xxxxx Xxxx, and (now or formerly) Xxxxxxx
X. and Xxxxxxx Xxxxx; on the Southwest by property of (now or formerly)
Xxxxxxx X. and Xxxxxxx Xxxxx; and on the Northwest by property (now or
formerly) Xxxxxxx Land Corporation and a portion of a sand and shell road
15' - 20' wide.
TOGETHER with a non-exclusive, appurtenant easement or right-of-way for
ingress and egress, 50 feet in width (25 feet of which is included within
the property described above and 25 feet of which is located on property
of the grantor [Seashore Corporation, a Virginia corporation] to the
Northeast), extending from a pipe on the line of southbound U.S. Route
17, a corner with (now or formerly) Xxxxxx X. and Xxxxx X. Xxxxxxx, South
66 degrees 28 minutes 22 seconds East a distance of 420.00 feet, the
center-line of which easement or right-of-way being the northeast
boundary line of the real estate described above. This easement or
right-of-way is also shown on plant of survey entitled "Plat Showing
Property to be Acquired by Seashore Corporation, Petsworth Magisterial
District, Gloucester County, Virginia," prepared by A. Xxxxx Xxxxxxxx,
C.L.S., dated July 19, 1979, a copy of which plat is attached to and made
a part of that certain deed recorded in the aforesaid Clerk's Office in
Deed Book 224, page 758, for a more particular description, and from
which the above description was taken.
PARCEL GL-901 BEING the same real estate conveyed to Bear Island Paper
Company, a Virginia limited partnership, by deed form Seashore
Corporation, a Virginia corporation, dated August 14, 1979, recorded
August 31, 1979, in the Clerk's Office, Circuit Court, Gloucester County,
Virginia, in Deed Book 224, page 758.
Item 8
No Legal Description Available
SCHEDULE 6
I. Trademarks Registrations and Applications
NONE
II. Copyright Registrations and Applications
Company Title of Work Date Registered Reg. No
USA Bear Island Tracker April 9, 1990 TXU 410351
(computer program and
user's manual)
III. Patents and Patent Applications
Title of Patent No. Date Issued
Country Invention (App. No.) (filed)
Australia Sulphonating 8550277 7/10/86
Mechanical
Pulp Fibres
Australia Sulphonating 588006 9/7/89
Mechanical
Pulp Fibres
Canada System and Process For 1,250,702 3/7/89
Sulfonating Mechanical
Pulp Fibres
Finland System Och Foerfarande (8,505,119) 7/1/86
Foer Sulfonering Av
Fibrena I Mekanisk
Sellulosamassa
Norway Fremgangsmaate Og (8505245) 2/15/93
Apparat For Sufonering
Av
Fibrere I Mekanisk Pulp
Norway Fremgangsmaate Og 171997 5/26/93
Apparat for Forbedring
Av Egenskapene Til
Trefibre I Mekanisk
Xxxxx Xxx Sulfonering
I Flere Trinn
Sweden Forfarande Och System (8506079) 12/20/85
For Sulfonering Av Fibrer
I Mekanisk Massa
Sweden Forfarande Och 468818 7/22/93
Anordining Foer (lapsed 9/4/95)
Sulfonering I Tvaa Steg
Av Fibrer I
Mekanisk Massa
United States Two-State Process For 4,708,771 11/24/87
Sulphonating (lapsed 11/29/95)
Mechanical
Pulp Fibres
United States System For Sulfonating 5,089,089 11/3/89
Mechanical Pulp Fibres (lapsed 4/30/96)
IV. Copyright Licenses
None
V. Patent Licenses
None
VI. Trademark Licenses
None
SCHEDULE 7
CONTRACTS
1. Management Services Agreement, dated December 1, 1997, between
Bear Islands Paper Company, L.L.C. and Xxxxx-Xxxxx Industries,
Inc.
2. Wood Supply Agreement, dated December 1 1997, between Bear Island
Paper Company, L.L.C. and Bear Island Timberlands Company, L.L.C.
3. Marketing and Consulting Services Agreement, dated October 11,
1988 and effective as of July 12, 1988, between Bear Islands
Paper Company, L.L.C., Bear Island Timberlands Company, L.L.C.
and The Elebash Company.
SCHEDULE 8
VEHICLES
None
SCHEDULE 9
EXISTING PRIOR LIENS
NAME OF JURISDICTION/ FILE NUMBER/ TYPE OF DESCRIPTION OF
DEBTOR SECURED PARTY OFFICE DATE FILED UCC COLLATERAL DISPOSITION
------ ------------- -------- ------------ --- ---------- -----------
Bear Island Paper Republic Financial Connecticut 870136/ UCC-1 Leased Measurex UT PAID OFF
Company, L.P. Corporation 3-26-90 Process Control NO TERMINATION
System; Debtor FILED
is not authorized
to dispose of this
leased equipment
Republic Financial Connecticut 873528/ UCC-3 Assignment of
Corporation 4-18-90 Assignment #870136;
assigned to:
First National
Bank of
Louisville
First National Bank Connecticut 1578044/ UCC-3 Continuation of
of Louisville 9-26-94 Continuation #870136
Bear Island Paper Measurex Systems, Virginia 900211243/ UCC-1 Leased One Measurex PAID OFF
Company, L.P. Inc. 2-9-90 UT Process Control NO TERMINATION
Assigned to: System and all FILED
Republic Financial insurance and
Corporation proceeds thereof.
Precautionary Filing.
Republic Financial Virginia 900331442/ UCC-1 Assignment of
Corporation 3-20-90 Assignment #900211243;
assigned to:
First National
Bank of Louis-
ville
First National Bank Virginia 9501037198/ UCC-3 Continuation of
of Louisville 1-3-94 Continuation #900211243
Bear Island Paper CCA Financial, Inc. Virginia 9708297172/ UCC-1 Leased equipment
Company, L.P. 0-00-00
Xxxx Xxxxxx Xxxxx Xxxxxxxx Financial Hanover Co., 245-90/ UCC-1 Leased Measurex UT PAID OFF
Company, L.P. Corporation Virginia 3-21-90 Process Control NO TERMINATION
System; Debtor is FILED
not authorized to
dispose of this
leased equipment
Republic Financial Hanover Co., 245-90/ UCC-3 Assignment of
Corporation Virginia 4-2-90 Assignment #245-90;
assigned to:
First National
Bank of
Louisville
First National Bank Hanover Co., 245-90/ UCC-3 Continuation of
of Louisville Virginia 9-26-94 Continuation #245-90
Bear Island Paper CCA Financial, Inc. Hanover Co., 687-97/ UCC-1 Leased equipment
Company, L.P. Virginia 8-29-97
Bear Island Paper Welders Rental Hanover Co., 1149/376/ Mechanics Mechanics Lien in JUDGEMENT
Company, L.P. Company Virginia 10-18-95 Lien the amount of SATISFIED
$4,774.76
UCC = UCCs on file
F = Fixtures
STL = State Tax Liens
FTL = Federal Tax Lien
EXHIBIT (D-1)
XXXXX PLEDGE AGREEMENT
XXXXX PLEDGE AGREEMENT, dated as of December 1, 1997,
made by XXXXX-XXXXX INDUSTRIES, INC., a Delaware corporation (the
"Pledgor") in favor of (i) TORONTO-DOMINION (TEXAS), INC., as
agent (in such capacity, the "Agent") for (i) the Timberlands
Agent for the benefit of the Timberlands Lenders and (ii) the
Paper Company Agent for the benefit of the Paper Company Lenders
(as such terms are hereinafter defined).
W I T N E S S E T H :
WHEREAS, pursuant to the Paper Company Credit Agreement, the
Paper Company Lenders have severally agreed to make loans to the
Paper Company (the "Paper Company Loans") upon the terms and
subject to the conditions set forth therein and as a condition
precedent thereof, the Pledgor has guaranteed payment and
performance of the obligations of the Paper Company thereunder
pursuant to a Guarantee of even date herewith (as amended
modified and otherwise supplemented from time to time (the
"Xxxxx-Xxxxx Guarantee");
WHEREAS pursuant to the Timberlands Credit Agreement, the
Timberlands Lenders have severally agreed to make loans to the
Pledgor (the "Timberlands Loans") upon the terms and subject to
the conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of
the Paper Company Lenders to make the Paper Company Loans under
the Paper Company Credit Agreement and the Timberlands Lenders to
make the Timberlands Loans under the Timberlands Credit Agreement
that the Pledgor shall have executed and delivered this Agreement
to (i) secure payment and performance of the obligations of the
Paper Company under the Paper Company Credit Agreement and the
Pledgor under the Xxxxx-Xxxxx Guarantee and (ii) secure payment
and performance of the obligations of the Pledgor under the
Timberlands Credit Agreement.
NOW, THEREFORE, in consideration of the premises and to
induce (i) the Paper Company Administrative Agent and the Paper
Company Lenders to enter into the Paper Company Credit Agreement
and to induce the Paper Company Lenders to make the Paper Company
Loans and (ii) the Timberlands Administrative Agent and the
Timberlands Lenders to enter into the Timberlands Credit
Agreement and to induce the Timberlands Lenders to make the
Timberlands Loans, the Pledgor hereby agrees with the Agent, for
the ratable benefit of (i) the Paper Company Agent for the
benefit of the Paper Company Lenders and (ii) the Timberlands
Agent for the benefit of the Timberlands Lenders, as follows:
1. Defined Terms. (a) The following terms shall have
the following meanings:
"Agreement": this Pledge Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"Capital Stock": as defined in the Paper Company Credit
Agreement.
"Closing Date": as defined in the Paper Company Credit
Agreement.
"Code": the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral": the Pledged Stock and all Proceeds.
"Collateral Account": any account established to hold cash
Proceeds, maintained under the sole dominion and control of the
Agent, subject to withdrawal by the Agent for the account of the
Lenders only as provided in paragraph 8(a).
"Commitment": as defined in the Paper Company Credit
Agreement.
"Contractual Obligation": as defined in the Paper Company
Credit Agreement.
"Credit Agreements": the collective reference to the Paper
Company Credit Agreement and the Timberlands Credit Agreement.
"Default": any of the events specified in either Section 7
of the Paper Company Credit Agreement or Section 7 of the
Timberlands Credit Agreement , whether or not any requirement for
the giving of notice, the lapse of time, or both, has been
satisfied.
"Disposition": as defined in the Paper Company Credit
Agreement.
"Event of Default": any of the events specified in Section
7 of the Paper Company Credit Agreement or Section 7 of the
Timberlands Credit Agreement, provided that any requirement for
the giving of notice, the lapse of time, or both, has been
satisfied.
"Governmental Authority": as defined in the Paper Company
Credit Agreement.
"Guarantee Obligation": as defined in the Paper Company
Credit Agreement.
"Xxxxx-Xxxxx Guarantee": as defined in the recitals hereto.
"Issuer": the company identified on Schedule 1 attached
hereto as the issuer of the Pledged Stock.
"Lenders": the collective reference to the Paper Company
Lenders and the Timberlands Lenders.
"Lien": as defined in the Paper Company Credit Agreement.
"Loans": the collective reference to the Paper Company
Loans and the Timberlands Loans.
"Material Adverse Effect": as defined in the Timberlands
Credit Agreement.
"Paper Company": as defined in the definition of the Paper
Company Credit Agreement.
"Paper Company Agent": as defined in the definition of the
Paper Company Credit Agreement.
"Paper Company Credit Agreement": the Credit Agreement,
dated as of December 1, 1997 (as amended, supplemented or
otherwise modified from time to time) among Bear Island Paper
Company, LLC (the "Paper Company"), Toronto-Dominion (Texas),
Inc., as administrative agent (in such capacity, the "Paper
Company Agent"), the arranger party thereto and the Lenders
parties thereto (the "Paper Company Lenders").
"Paper Company Lenders": as defined in the definition of
the Paper Company Credit Agreement.
"Paper Company Loans": as defined in the recitals hereto.
"Paper Company Obligations": the "Obligations" as defined
in the Paper Company Credit Agreement.
"Person": as defined in the Paper Company Credit Agreement.
"Pledged Stock": the shares of Capital Stock listed on
Schedule 1 hereto, together with all stock certificates, options
or rights of any nature whatsoever that may be issued or granted
by the Issuer to the Pledgor while this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from
the Pledged Stock, collections thereon or distributions with
respect thereto.
"Property": as defined in the Paper Company Credit
Agreement.
"Requirement of Law": as defined in the Paper Company
Credit Agreement.
"Responsible Officer": as defined in the Paper Company
Credit Agreement.
"Secured Obligations": the collective reference to (a) the
Paper Company Obligations, (b) Timberlands Obligations and (c)
all obligations and liabilities of the Pledgor which may arise
under or in connection with this Agreement, the Xxxxx-Xxxxx
Guarantee or any other Loan Document to which the Pledgor is a
party, whether on account of fees, indemnities, costs, expenses
or otherwise that are required to be paid by the Pledgor pursuant
to the terms thereof (including, without limitation, all
reasonable fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be
paid by the Pledgor pursuant to the terms of this Agreement or
any other Loan Document to which the Pledgor is a party).
"Securities Act": the Securities Act of 1933, as amended,
together with the securities laws of any other jurisdiction in
which the Pledged Stock may be sold.
"Xxxxx Management Contract": as defined in the Paper
Company Credit Agreement.
"Subsidiary": as defined in the Paper Company Credit
Agreement.
"Timberlands Agent": as defined in the definition of the
Timberlands Credit Agreement.
"Timberlands Credit Agreement": the Credit Agreement, dated
as of December 1, 1997 (as amended, supplemented or otherwise
modified from time to time) among the Pledgor, Toronto-Dominion
(Texas), Inc., as administrative agent (in such capacity, the
"Timberlands Agent") and the Lenders parties thereto (the
"Timberlands Lenders").
"Timberlands Lenders": as defined in the definition of the
Timberlands Credit Agreement.
"Timberlands Loans": as defined in the recitals hereto.
"Timberlands Obligations": the "Obligations" as defined in
the Timberlands Credit Agreement.
"Total Committed Debt": as defined in the Paper Company
Credit Agreement.
(b) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this
Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Pledge; Grant of Security Interest. The Pledgor hereby
delivers to the Agent, for the benefit of (i) the Paper Company
Agent for the benefit of the Paper Company Lenders and (ii) the
Timberlands Agent for the benefit of the Timberlands Lenders, all
the Pledged Stock and hereby pledges in favor of and grants to
the Agent, for the benefit of the Paper Company Lenders and the
Timberlands Lenders, a first security interest in the Collateral,
as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations (for the
benefit of the Paper Company Lenders and the Timberlands Lenders
in the respective priorities established pursuant to the
Intercreditor Agreement).
3. Stock Powers. Concurrently with the delivery to the
Agent of each certificate representing one or more shares of
Pledged Stock, the Pledgor shall deliver an undated stock power
covering such certificate, duly executed in blank by the Pledgor
with, if the Agent so requests, signature guaranteed.
4. Representations and Warranties. The Pledgor represents
and warrants that:
(a) The Pledgor has the corporate power and authority and
the legal right to execute and deliver, to perform its
obligations under, and to grant the security interest in the
Collateral pursuant to, this Agreement and has taken all
necessary corporate action to authorize its execution, delivery
and performance of, and grant of the security interest in the
Collateral pursuant to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its
terms, and upon delivery to the Agent of the stock certificates
evidencing the Pledged Stock and completion of the registration
actions required under Quebec Law, the security interest created
pursuant to this Agreement will constitute a valid, perfected
first priority security interest in the Collateral in favor of
the Agent for the benefit of (i) the Paper Company Agent for the
benefit of the Paper Company Lenders and (ii) the Timberlands
Agent for the benefit of the Timberlands Lenders, respectively,
enforceable in accordance with its terms against all creditors of
the Pledgor and any Persons purporting to purchase any Collateral
from the Pledgor, except in each case as enforceability may be
affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
(c) The execution, delivery and performance of this
Agreement will not violate any provision of any material
Requirement of Law or material Contractual Obligation of the
Pledgor and will not result in the creation or imposition of any
Lien on any of the properties or revenues of the Pledgor pursuant
to any such Requirement of Law or Contractual Obligation of the
Pledgor, except the security interest created by this Agreement.
(d) No consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority
and no consent of any other Person (including, without
limitation, any stockholder or creditor of the Pledgor), is
required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement, except as described
in Section 3.4 of the Paper Company Credit Agreement.
(e) No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of the Pledgor, threatened by or against the Pledgor or
against any of its properties or revenues with respect to this
Agreement or any of the transactions contemplated hereby.
(f) The shares of Pledged Stock constitute 65% of all the
issued and outstanding shares of all classes of the capital stock
of the Issuer.
(g) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.
(h) The Pledgor is the record and beneficial owner of, and
has title to, the Pledged Stock, free of any and all Liens or
options in favor of, or claims of, any other Person, except the
security interest created by this Agreement and Liens pursuant to
the Second Priority Note Security Documents.
5. Covenants. The Pledgor covenants and agrees with the
Agent and the Lenders that, from and after the date of this
Agreement until this Agreement is terminated and the security
interests created hereby are released in accordance with the
terms hereof:
(a) If the Pledgor shall, as a result of its ownership of
the Pledged Stock, become entitled to receive or shall receive
any stock certificate (including, without limitation, any
certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any
reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any
shares of the Pledged Stock, or otherwise in respect thereof, the
Pledgor shall accept the same as the agent of the Agent and the
Lenders, hold the same in trust for the Agent and the Lenders and
deliver the same forthwith to the Agent in the exact form
received, duly indorsed by the Pledgor to the Agent, if required,
together with an undated stock power covering such certificate
duly executed in blank by the Pledgor and with, if the Agent so
requests, signature guaranteed, to be held by the Agent, subject
to the terms hereof, as additional collateral security for the
Secured Obligations. Any sums paid upon or in respect of the
Pledged Stock upon the liquidation or dissolution of any Issuer
shall be paid over to the Agent to be held by it hereunder as
additional collateral security for the Secured Obligations, and
in case any distribution of capital shall be made on or in
respect of the Pledged Stock or any property shall be distributed
upon or with respect to the Pledged Stock, in each case pursuant
to the recapitalization or reclassification of the capital of the
Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Agent to be held by it
hereunder as additional collateral security for the Secured
Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged Stock (other than
distributions permitted to be made or received pursuant to the
Credit Agreements) shall be received by the Pledgor, the Pledgor
shall, until such money or property is paid or delivered to the
Agent, hold such money or property in trust for the Lenders,
segregated from other funds of the Pledgor, as additional
collateral security for the Secured Obligations.
(b) Except as permitted by the Credit Agreements, without
the prior written consent of the Agent, the Pledgor will not (1)
vote to enable, or take any other action to permit, the Issuer to
issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right
to purchase or exchange for any stock or other equity securities
of any nature of the Issuer except issuances of equity interests
to the Pledgor which constitute Collateral hereunder, (2) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Collateral or any other shares of
Capital Stock of the Issuer owned by the Pledgor, (3) create,
incur or permit to exist any Lien or option in favor of, or any
claim of any Person with respect to, any of the Collateral or any
other shares of Capital Stock of the Issuer owned by the Pledgor,
or any interest therein, except for the security interests
created by this Agreement or (4) enter into any agreement or
undertaking restricting the right or ability of the Pledgor or
the Agent (after foreclosure) to sell, assign or transfer any of
the Collateral other than such restrictions under the Credit
Agreements, the Second Priority Notes and the Second Priority
Note Indenture (as each such term is defined in the Paper Company
Credit Agreement).
(c) The Pledgor shall maintain the security interest
created by this Agreement as a first, perfected security interest
and shall defend such security interest against claims and
demands of all Persons whomsoever except for permitted liens. At
any time and from time to time, upon the written request of the
Agent, and at the sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further instruments
and documents and take such further actions as the Agent may
reasonably request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers
herein granted. If any amount payable under or in connection
with any of the Collateral (to the extent such amounts are
otherwise required by this Agreement to be paid to the Agent)
shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel
paper in excess of $500,000 shall promptly upon receipt be
delivered to the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Agreement.
(d) The Pledgor shall pay, and save the Agent and the
Lenders harmless from, any and all liabilities with respect to,
or resulting from any delay in paying, any and all stamp, excise,
sales or other similar taxes which may be payable or determined
to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this
Agreement, other than taxes covered by Section 2.18 of the Paper
Company Credit Agreement or Section 2.15 of the Timberlands
Credit Agreement.
(e) The Pledgor shall not permit the Issuer to, directly or
indirectly, create, incur, assume or suffer to exist any
Indebtedness except as permitted by the Timberlands Credit
Agreement.
(f) The Pledgor shall not directly or indirectly, create,
incur, assume or suffer to exist any Lien on the Capital Stock of
the Issuer owned by the Pledgor except as permitted by the
Timberlands Credit Agreement.
(g) The Pledgor shall not permit the Issuer to, directly or
indirectly, declare or pay any dividend (other than dividends
payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement, or other acquisition of, any
shares of any class of Capital Stock of the Issuer or any of its
Subsidiaries or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of the
Issuer or any of its Subsidiaries, except as permitted by the
Timberlands Credit Agreement.
(h) The Pledgor shall not and shall not permit the Issuer
to, directly or indirectly, amend, supplement or otherwise modify
(pursuant to a waiver or otherwise) the terms and conditions of
the Xxxxx Management Contract except as permitted by the
Timberlands Credit Agreement; provided, however, that the Pledgor
may transfer its interest thereunder to an Affiliate of the
Pledgor.
To the extent that the provisions of this Section 5
refer to the Timberlands Credit Agreement, if the Timberlands
Credit Agreement shall terminate, such references shall be deemed
to refer to the Timberlands Credit Agreement immediately prior to
such termination.
6. Voting Rights. No vote shall be cast or corporate right
exercised or other action taken which, in the Agent's reasonable
judgment, would impair in any material respect the Collateral or
which would be inconsistent with or result in any violation of
any provision of the Credit Agreements, the notes thereunder,
this Agreement or any other Loan Document.
7. Rights of the Lenders and the Agent. (a) All money
Proceeds received by the Agent hereunder shall be held by the
Agent for the ratable benefit of the Lenders in a Collateral
Account. All Proceeds while held by the Agent in a Collateral
Account (or by the Pledgor in trust for the Agent and the
Lenders) shall continue to be held as collateral security for all
the Secured Obligations and shall not constitute payment thereof
until applied as provided in paragraph 8(a).
(b) If an Event of Default shall occur and be continuing
and the Agent shall give notice of its intent to exercise such
rights to the Pledgor, (1) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged
Stock and make applications thereof to the Secured Obligations in
such order as the Agent may determine, and (2) all shares of the
Pledged Stock shall be registered in the name of the Agent or its
nominee, and the Agent or its nominee may thereafter exercise (A)
all voting, corporate and other rights pertaining to such shares
of the Pledged Stock at any meeting of shareholders of the Issuer
or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options
pertaining to such shares of the Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all of the Pledged Stock
upon the merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of the
Issuer, or upon the exercise by the Pledgor or the Agent of any
right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as the Agent may determine), all
without liability except to account for property actually
received by it, but the Agent shall have no duty to the Pledgor
to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
8. Remedies. (a) If an Event of Default shall have
occurred and be continuing, at any time at the Agent's election,
the Agent may apply all or any part of Proceeds held in any
Collateral Account in payment of the Secured Obligations ratably
in accordance with the Intercreditor Agreement and as permitted
by law.
(b) If an Event of Default shall occur and be continuing,
the Agent, on behalf of the Lenders, may exercise, in addition to
all other rights and remedies granted in this Agreement and in
any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of
the foregoing, the Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon
the Pledgor or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-
counter market, at any exchange, broker's board or office of the
Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption
of any credit risk. The Agent or any Lender shall have the right
upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Pledgor, which right or equity is
waived or released upon the consummation of such sale. The Agent
shall apply any Proceeds from time to time held by it and the net
proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in respect
thereof or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights
of the Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements of
counsel to the Agent, to the payment in whole or in part of the
Secured Obligations ratably in accordance with the Intercreditor
Agreement and as permitted by law, and only after such
application and after the payment by the Agent of any other
amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Agent
account for the surplus, if any, to the Pledgor. To the extent
permitted by applicable law, the Pledgor waives all claims,
damages and demands it may acquire against the Agent or any
Lender arising out of the exercise by them of any rights
hereunder except to the extent arising out of gross negligence or
willful misconduct of the Agent or such Lender. If any notice of
a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other
disposition.
9. Registration Rights; Private Sales. (a) If the Agent
shall determine to exercise its right to sell any or all of the
Pledged Stock pursuant to paragraph 8(b) hereof, and if in the
reasonable opinion of the Agent it is necessary or advisable to
have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the
Pledgor will cause the Issuer thereof to (1) execute and deliver,
and cause the directors and officers of the Issuer to execute and
deliver, all such instruments and documents, and do or cause to
be done all such other acts as may be, in the reasonable opinion
of the Agent, necessary or advisable to register the Pledged
Stock, or that portion thereof to be sold, under the provisions
of the Securities Act, (2) to use its reasonable efforts to cause
the registration statement relating thereto to become effective
and to remain effective for a period of one year from the date of
the first public offering of the Pledged Stock, or that portion
thereof to be sold, and (3) to make all amendments thereto and/or
to the related prospectus which, in the reasonable opinion of the
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations
of the Securities and Exchange Commission applicable thereto.
The Pledgor agrees to cause the Issuer to comply with the
provisions of the securities or "Blue Sky" laws of any and all
jurisdictions of the United States and Canada which the Agent
shall designate and to make available to its security holders, as
soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of
the Securities Act.
(b) The Pledgor recognizes that the Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason
of certain prohibitions contained in the Securities Act and
applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or
resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less
favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially
reasonable manner. The Agent shall be under no obligation to
delay a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under
applicable state securities laws of the United States and Canada,
even if the Issuer would agree to do so.
(c) The Pledgor further agrees to use its reasonable
efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the
Pledged Stock pursuant to this Section valid and binding and in
compliance with any and all other applicable Requirements of Law.
The Pledgor further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the
Agent and the Lenders, that the Agent and the Lenders have no
adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this
Section shall be specifically enforceable against the Pledgor,
and the Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has
occurred under the Credit Agreement.
10. Irrevocable Authorization and Instruction to Issuer.
The Pledgor hereby authorizes and instructs the Issuer to comply
with any instruction received by it from the Agent in writing
that (a) states that an Event of Default has occurred and is
continuing and (b) is otherwise in accordance with the terms of
this Agreement, without any other or further instructions from
the Pledgor, and the Pledgor agrees that the Issuer shall be
fully protected in so complying.
11. Agent's Appointment as Attorney-in-Fact. (a) The
Pledgor hereby irrevocably constitutes and appoints the Agent and
any officer or agent of the Agent, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the
Pledgor and in the name of the Pledgor or in the Agent's own
name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, including, without limitation,
any financing statements, endorsements, assignments or other
instruments of transfer, which power of attorney is only
exercisable if an Event of Default shall have occurred and be
continuing.
(b) The Pledgor hereby ratifies all that said attorneys
shall lawfully do or cause to be done pursuant to the power of
attorney granted in paragraph 11(a). All powers, authorizations
and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released in
accordance with the terms hereof.
12. Duty of Agent. The Agent's sole duty with respect to
the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or
otherwise, shall be to deal with it in the same manner as the
Agent deals with similar securities and property for its own
account, except that after the occurrence and during the
continuance of an Event of Default the Agent shall have no
obligation to invest funds held in any Collateral Account and may
hold the same as demand deposits. Neither the Agent, any Lender
nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so (unless
the same shall result from the gross negligence or willful
misconduct of such Person) or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of
the Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section
9-402 of the Code, the Pledgor authorizes the Agent to file
financing statements with respect to the Collateral without the
signature of the Pledgor in such form and in such filing offices
as the Agent reasonably determines appropriate to perfect the
security interests of the Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any
jurisdiction.
14. Authority of Agent. The Pledgor acknowledges that the
rights and responsibilities of the Agent under this Agreement
with respect to any action taken by the Agent or the exercise or
non-exercise by the Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the
Agent, the Paper Company Agent and the Timberlands Agent, be
governed by the Credit Agreements and the Intercreditor
Agreement, but, as between the Agent and the Pledgor, the Agent
shall be conclusively presumed to be acting as agent for the
Paper Company Agent and the Timberlands Agent with full and valid
authority so to act or refrain from acting, and neither the
Pledgor nor the Issuer shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
15. Release of Pledge Agreement. The Pledgor shall be
automatically released from its obligations under this Agreement
and this Agreement shall automatically terminate on the earlier
of (a) the date on which all the Secured Obligations are paid in
full and all the Commitments thereunder are terminated, and (b)
the later of (i) the date upon which the Timberlands Loans have
been repaid in full and (ii) the date on which Total Committed
Debt is less than $145,000,000; and at the time of such release
the Agent shall deliver the Collateral to the Pledgor.
16. Notices. All notices, requests and demands to or upon
the Agent or the Pledgor to be effective shall be in writing
(including by telecopy) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when
delivered three Business Days after being deposited in the mails,
postage prepaid, or in the case of telecopy notice, when
received, addressed as follows:
(1) if to the Agent, at its address or transmission number
for notices provided below:
Toronto-Dominion (Texas), Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: The Toronto-Dominion Bank
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Phone: (000) 000-0000
Telecopy: (000) 000-0000
(2) if to the Pledgor, at its address or transmission
number for notices set forth under its signature below.
The Agent and the Pledgor may change their addresses and
transmission numbers for notices by notice in the manner provided
in this Section.
17. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
18. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Pledgor and the Agent,
provided that any provision of this Agreement may be waived by
the Agent and the Lenders in a letter or agreement executed by
the Agent or by telex or facsimile transmission from the Agent.
(b) Neither the Agent nor any Lender shall by any act
(except by a written instrument pursuant to paragraph 18(a)
hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced
in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any
delay in exercising, on the part of the Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
A waiver by the Agent or any Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Agent or such Lender would
otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
(d) The Pledgor agrees that it will not permit any
amendment or other modification of any of the covenants in the
Timberlands Credit Agreement that are incorporated by reference
or referred to herein unless such amendment or other modification
has been consented to in writing by the Required Lenders under
the Paper Company Credit Agreement.
19. Section Headings. The section headings used in this
Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in
the interpretation hereof.
20. Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of the Pledgor and shall
inure to the benefit of the Agent and the Lenders and their
respective permitted successors and assigns.
21. Governing Law. This Agreement shall be governed by,
and construed and interpreted in accordance with, the law of the
State of New York.
22. Notwithstanding any other provision of this Agreement,
at no time shall the Pledgor be required to pledge more than 65%
of all of the voting stock of all classes of the capital stock of
the Issuer.
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed and delivered as of the date first
above written.
XXXXX-XXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
Address for Notices:
Xxxx Xxxxxx Xxx 0000
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
Pledge Agreement dated December 1, 1997, made by Xxxxx-Xxxxx
Industries, Inc. for the benefit of Toronto-Dominion (Texas),
Inc., as Agent (the "Pledge Agreement"). The undersigned agrees
for the benefit of the Agent and the Lenders as follows:
1. The undersigned will notify the Agent promptly in
writing of the occurrence of any of the events described in
paragraph 5(a) of the Pledge Agreement.
2. The terms of paragraph 9(c) of the Pledge Agreement
shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it under or pursuant to or arising out of
Section 9 of the Pledge Agreement.
F.F. XXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
Address for Notices:
Xxxx Xxxxxx Xxx 0000
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
SCHEDULE 1
TO XXXXX PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
Stock
Class of Certificate No. of
Issuer Stock No. Shares
F.F. Xxxxx, Inc., a Common C-5 271,479
corporation organized
under the laws of
Quebec, Canada
EXECUTION COPY
PAPER COMPANY PLEDGE AGREEMENT
PAPER COMPANY PLEDGE AGREEMENT, dated as of December 1,
1997, made by XXXXX-XXXXX INDUSTRIES, INC., a Delaware
corporation (the "Pledgor") in favor of TORONTO-DOMINION (TEXAS),
INC., as Administrative Agent (in such capacity, the
"Administrative Agent") for the lenders (the "Lenders") parties
to the Credit Agreement, dated as of December 1, 1997 (as
amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among Bear Island Paper Company, LLC
(the "Borrower"), the Lenders, the Arranger named therein and the
Administrative Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Borrower upon the terms and
subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the obligation of
the Lenders to make their respective Loans to the Borrower that
the Pledgor guarantee payment and performance of the Borrower's
obligations under the Credit Agreement, the Notes and the other
Loan Documents; and
WHEREAS, in satisfaction of such condition, the Pledgor has
entered into a Guarantee of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "Xxxxx-
Xxxxx Guarantee") for the benefit of the Administrative Agent and
the Lenders; and
WHEREAS, it is a further condition precedent to the
obligation of the Lenders to make their respective Loans to the
Borrower under the Credit Agreement that the Pledgor shall have
executed and delivered this Pledge Agreement to secure payment
and performance of the Pledgor's obligations under the Xxxxx-
Xxxxx Guarantee and the Borrower's Obligations under the Credit
Agreement.
NOW, THEREFORE, in consideration of the premises and to
induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their
respective Loans to the Borrower, the Pledgor hereby agrees with
the Administrative Agent, for the ratable benefit of the Lenders,
as follows:
1. Defined Terms. (a) Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be
amended, modified or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral": the Pledged LLC Interests and all Proceeds.
"Collateral Account": any account established to hold cash
Proceeds, maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative
Agent for the account of the Lenders only as provided in
paragraph 7(a).
"Issuer": the company identified on Schedule 1 attached
hereto.
"Paper Company Management Contract": the Management
Services Agreement dated as of November 26, 1997 between the
Pledgor and the Issuer, as amended, supplemented or otherwise
modified in accordance with the terms of the Credit Agreement.
"Pledged LLC Interests": in each case, whether now existing
or hereafter acquired, all of the Pledgor's right, title and
interest in and to:
(a) equity interests of the Borrower, but not the
Pledgor's obligations from time to time as a holder of
equity interests in such Borrower, as further described on
Schedule 1 (unless the Administrative Agent or its designee,
on behalf of the Administrative Agent and the Lenders, shall
elect to become a holder of interests in the Borrower in
connection with its exercise of remedies pursuant to the
terms hereof);
(b) any and all moneys due and to become due to the
Pledgor now or in the future by way of a distribution made
to the Pledgor in its capacity as a holder of equity
interests in the Borrower or otherwise in respect of the
Pledgor's interest as a holder of equity interests in the
Borrower;
(c) any other property of the Borrower to which the
Pledgor now or in the future may be entitled in respect of
its equity interests in the Borrower by way of distribution,
return of capital or otherwise;
(d) any other claim or right which the Pledgor now has
or may in the future acquire in respect of its equity
interests in the Borrower;
(e) all certificates, options or rights of any nature
whatsoever that may be issued or granted by the Borrower
with respect to the equity interests of the Borrower to the
Pledgor while this Agreement is in effect; and
(f) to the extent not otherwise included, all Proceeds
of any or all of the foregoing.
"Proceeds": all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from
the Pledged LLC Interests, collections thereon or distributions
with respect thereto.
"Secured Obligations": the collective reference to (a) the
Obligations and (b) all obligations and liabilities of the
Pledgor which may arise under or in connection with this
Agreement, the Xxxxx-Xxxxx Guarantee, any Interest Rate
Protection Agreement or Currency Swap Agreement entered into with
any Lender or any affiliate thereof or any other Loan Document to
which the Pledgor is a party, whether on account of reimbursement
obligations, fees, indemnities, costs, expenses or otherwise that
are required to be paid by the Pledgor pursuant to the terms
thereof (including, without limitation, all reasonable fees and
disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by the Pledgor pursuant to
the terms of this Agreement or any other Loan Document to which
the Pledgor is a party).
"Securities Act": the Securities Act of 1933, as amended.
"Timberlands Credit Agreement": the credit agreement, dated
as of December 1, 1997 (as amended, supplemented or otherwise
modified from time to time) among the Pledgor, Toronto-Dominion
(Texas), Inc., as administrative agent and the lender parties
thereto.
(c) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this
Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Pledge; Grant of Security Interest. The Pledgor hereby
grants to the Administrative Agent, for the ratable benefit of
the Lenders, a first security interest in the Collateral, as
collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Secured Obligations.
3. Representations and Warranties. The Pledgor represents
and warrants that:
(a) The Pledgor has the corporate power and authority and
the legal right to execute and deliver, to perform its
obligations under, and to grant the security interest in the
Collateral pursuant to, this Agreement and has taken all
necessary corporate action to authorize its execution, delivery
and performance of, and grant of the security interest in the
Collateral pursuant to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its
terms, and upon the filing of a UCC-1 financing statement in
appropriate form in the office of the Secretary of State of
Connecticut, the security interest created pursuant to this
Agreement will constitute a valid, perfected first priority
security interest in the Collateral in favor of the
Administrative Agent for the ratable benefit of the Lenders,
enforceable in accordance with its terms against all creditors of
the Pledgor and any Persons purporting to purchase any Collateral
from the Pledgor, except in each case as enforceability may be
affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
(c) The execution, delivery and performance of this
Agreement will not violate any provision of any material
Requirement of Law or material Contractual Obligation of the
Pledgor and will not result in the creation or imposition of any
Lien on any of the properties or revenues of the Pledgor pursuant
to any such Requirement of Law or Contractual Obligation of the
Pledgor, except the security interest created by this Agreement.
(d) No consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority
and no consent of any other Person (including, without
limitation, any equity holder or creditor of the Pledgor), is
required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement except as described
in Section 3.4 of the Credit Agreement.
(e) No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or, to the
knowledge of the Pledgor, threatened by or against the Pledgor or
against any of its properties or revenues with respect to this
Agreement or any of the transactions contemplated hereby.
(f) The Pledged LLC Interests constitute all the issued and
outstanding equity interests of the Borrower.
(g) The Pledged LLC Interests have been duly and validly
issued.
(h) The Pledgor is the owner of, and has title to, the
Pledged LLC Interests, free of any and all Liens or options in
favor of, or claims of, any other Person, except the security
interest created by this Agreement and Liens pursuant to the
Second Priority Note Security Documents.
(i) Each of the representations and warranties made by the
Pledgor pursuant to Section 3 of the Timberlands Credit Agreement
shall be true and correct on and as of the date hereof and is
incorporated herein by reference.
4. Covenants. The Pledgor covenants and agrees with the
Administrative Agent and the Lenders that, from and after the
date of this Agreement until this Agreement is terminated and the
security interest created hereby is released in accordance with
the terms hereof:
(a) If the Pledgor shall, as a result of its ownership of
the Pledged LLC Interests, become entitled to receive or shall
receive any certificate or instrument (including, without
limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with
any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any
equity interests of the Pledged LLC Interests, or otherwise in
respect thereof, the Pledgor shall accept the same as the agent
of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent and the Lenders and deliver
the same forthwith to the Administrative Agent in the exact form
received, duly indorsed by the Pledgor to the Administrative
Agent, if required, together with an undated stock power covering
such certificate duly executed in blank by the Pledgor and with,
if the Administrative Agent so requests, signature guaranteed, to
be held by the Administrative Agent, subject to the terms hereof,
as additional collateral security for the Secured Obligations.
Any sums paid upon or in respect of the Pledged LLC Interests
upon the liquidation or dissolution of the Borrower shall be paid
over to the Administrative Agent to be held by it hereunder as
additional collateral security for the Secured Obligations, and
in case any distribution of capital shall be made on or in
respect of the Pledged LLC Interests or any property shall be
distributed upon or with respect to the Pledged LLC Interests, in
each case pursuant to the recapitalization or reclassification of
the capital of the Borrower or pursuant to the reorganization
thereof, the property so distributed shall be delivered to the
Administrative Agent to be held by it hereunder as additional
collateral security for the Secured Obligations. If any sums of
money or property so paid or distributed in respect of the
Pledged LLC Interests (other than distributions permitted to be
made or received pursuant to the Credit Agreement) shall be
received by the Pledgor, the Pledgor shall, until such money or
property is paid or delivered to the Administrative Agent, hold
such money or property in trust for the Lenders, segregated from
other funds of the Pledgor, as additional collateral security for
the Secured Obligations.
(b) Without the prior written consent of the Administrative
Agent, the Pledgor will not (1) vote to enable, or take any other
action to permit, the Borrower to issue any stock or other equity
securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange
for any stock or other equity securities of any nature of the
Borrower except issuances of equity interests to the Pledgor
which constitute Collateral hereunder, (2) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option
with respect to, the Collateral or any other shares of Capital
Stock of the Issuer owned by the Pledgor, (3) create, incur or
permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Collateral or any other
shares of Capital Stock of the Issuer owned by the Pledgor, or
any interest therein, except for the security interests created
by this Agreement or (4) enter into any agreement or undertaking
restricting the right or ability of the Pledgor or the
Administrative Agent (after foreclosure) to sell, assign or
transfer any of the Collateral, except for agreements permitted
by the Credit Agreement.
(c) The Pledgor shall maintain the security interest
created by this Agreement as a first, perfected security interest
and shall defend such security interest against claims and
demands of all Persons whomsoever except for permitted liens. At
any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the
Administrative Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code (or similar laws) in
effect in any jurisdiction with respect to the security interest
created hereby. If any amount payable under or in connection
with any of the Collateral (to the extent such amounts are
otherwise required by this Agreement to be paid to the
Administrative Agent) shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note,
instrument or chattel paper in excess of $500,000 shall promptly
upon receipt by Pledgor be delivered to the Administrative Agent,
duly endorsed in a manner satisfactory to the Administrative
Agent, to be held as Collateral pursuant to this Agreement.
(d) With respect to the Pledged LLC Interests, the Pledgor
shall and shall cause the Borrower to, directly or indirectly,
(i) perform and comply in all material respects with all the
terms and provisions of any limited liability company agreement
then in effect with respect thereto and required to be performed
or complied by it, and (ii) enforce any limited liability company
agreement then in effect in accordance with its terms.
(e) The Pledgor shall pay, and save the Administrative
Agent and the Lenders harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all
stamp, excise, sales or other similar taxes which may be payable
or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by
this Agreement other than taxes covered by Section 2.18 of the
Credit Agreement.
(f) The Pledgor shall, and shall cause Timberlands, and,
until the pledge of the Collateral (as defined in the Xxxxx
Pledge Agreement) is released, Xxxxx, and each of the
Subsidiaries of Timberlands and Xxxxx, as applicable, to furnish
to the Administrative Agent each of the financial statements,
certificates and other information as described in Sections 5.1
and 5.2 of the Timberlands Credit Agreement.
(g) The Pledgor shall not, directly or indirectly, amend,
supplement or otherwise modify (pursuant to a waiver or
otherwise) the terms and conditions of the Paper Company
Management Contract, except as permitted by the Timberlands
Credit Agreement; provided, however, that the Pledgor may
transfer its sole interest thereunder to an Affiliate of the
Pledgor.
(h) The Pledgor shall not suffer to exist any Lien on the
equity interests of the Pledgor without prior written notice to
the Administrative Agent.
To the extent that the provisions of this Section 4
refer to the Timberlands Credit Agreement, if the Timberlands
Credit Agreement shall terminate, such references shall be deemed
to refer to the Timberlands Credit Agreement immediately prior to
such termination.
5. Voting Rights. No vote shall be cast or corporate right
exercised or other action taken which, in the Administrative
Agent's reasonable judgment, would impair in any material respect
the Collateral or which would be inconsistent with or result in
any violation of any provision of the Credit Agreement, the
Notes, this Agreement or any other Loan Document.
6. Rights of the Lenders and the Administrative Agent. (a)
All money Proceeds received by the Administrative Agent hereunder
shall be held by the Administrative Agent for the ratable benefit
of the Lenders in a Collateral Account. All Proceeds while held
by the Administrative Agent in a Collateral Account (or by the
Pledgor in trust for the Administrative Agent and the Lenders)
shall continue to be held as collateral security for all the
Secured Obligations and shall not constitute payment thereof
until applied as provided in paragraph 7(a).
(b) If an Event of Default shall occur and be continuing
and the Administrative Agent shall give notice of its intent to
exercise such rights to the Pledgor, (1) the Administrative Agent
shall have the right to receive any and all cash dividends and
distributions paid in respect of the Pledged LLC Interests and
make application thereof to the Secured Obligations in such order
as the Credit Agreement shall provide, and (2) all equity
interests of the Pledged LLC Interests shall be registered in the
name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (A)
all voting, corporate and other rights pertaining to such shares
of the Pledged LLC Interests at any meeting of shareholders of
the Borrower or otherwise and (B) any and all rights of
conversion, exchange, subscription and any other rights,
privileges or options pertaining to such equity interests of the
Pledged LLC Interests as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its
discretion any and all of the Pledged LLC Interests upon the
merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of the Borrower, or
upon the exercise by the Pledgor or the Administrative Agent of
any right, privilege or option pertaining to such shares of the
Pledged LLC Interests, and in connection therewith, the right to
deposit and deliver any and all of the Pledged LLC Interests with
any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the
Administrative Agent may determine), all without liability except
to account for property actually received by it, but the
Administrative Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
7. Remedies. (a) If an Event of Default shall have
occurred and be continuing, at any time at the Administrative
Agent's election, the Administrative Agent may apply all or any
part of Proceeds held in any Collateral Account in payment of the
Secured Obligations in such order as the Administrative Agent may
elect and as permitted by law.
(b) If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted in this
Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and
remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Administrative Agent, without
demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required
by law referred to below) to or upon the Pledgor or any other
Person (all and each of which demands, defenses, advertisements
and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell,
assign, give option or options to purchase or otherwise dispose
of and deliver the Collateral or any part thereof (or contract to
do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any
exchange, broker's board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash
or on credit or for future delivery without assumption of any
credit risk. The Administrative Agent or any Lender shall have
the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in the Pledgor, which right or
equity is waived or released upon the consummation of such sale.
The Administrative Agent shall apply any Proceeds from time to
time held by it and the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind
incurred in respect thereof or incidental to the care or
safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of counsel to the
Administrative Agent, to the payment in whole or in part of the
Secured Obligations, in such order as the Administrative Agent
may elect and as permitted by law, and only after such
application and after the payment by the Administrative Agent of
any other amount required by any provision of law, including,
without limitation, Section 9-504(1)(c) of the Code, need the
Administrative Agent account for the surplus, if any, to the
Pledgor. To the extent permitted by applicable law, the Pledgor
waives all claims, damages and demands it may acquire against the
Administrative Agent or any Lender arising out of the exercise by
them of any rights hereunder except to the extent arising out of
gross negligence or willful misconduct of the Administrative
Agent or such Lender. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition.
8. Registration Rights; Private Sales. (a) If the
Administrative Agent shall determine to exercise its right to
sell any or all of the Pledged LLC Interests pursuant to
paragraph 7(b) hereof, and if in the reasonable opinion of the
Administrative Agent it is necessary or advisable to have the
Pledged LLC Interests, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the
Pledgor will cause the Borrower to (1) execute and deliver, and
cause the directors and officers of the Borrower to execute and
deliver, all such instruments and documents, and do or cause to
be done all such other acts as may be, in the reasonable opinion
of the Administrative Agent, necessary or advisable to register
the Pledged LLC Interests, or that portion thereof to be sold,
under the provisions of the Securities Act, (2) to use its
reasonable efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period
of one year from the date of the first public offering of the
Pledged LLC Interests, or that portion thereof to be sold, and
(3) to make all amendments thereto and/or to the related
prospectus which, in the reasonable opinion of the Administrative
Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations
of the Securities and Exchange Commission applicable thereto.
The Pledgor agrees to cause the Borrower to comply with the
provisions of the securities or "Blue Sky" laws of any and all
jurisdictions of the United States which the Administrative Agent
shall designate and to make available to its security holders, as
soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of
the Securities Act.
(b) The Pledgor recognizes that the Administrative Agent
may be unable to effect a public sale of any or all the Pledged
LLC Interests, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise,
and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other
terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged LLC Interests
for the period of time necessary to permit the Borrower thereof
to register such securities for public sale under the Securities
Act, or under applicable state securities laws of the United
States, even if the Borrower would agree to do so.
(c) The Pledgor further agrees to use its reasonable
efforts to do or cause to be done all such other acts as may be
necessary to make such sale or sales of all or any portion of the
Pledged LLC Interests pursuant to this Section valid and binding
and in compliance with any and all other applicable Requirements
of Law. The Pledgor further agrees that a breach of any of the
covenants contained in this Section will cause irreparable injury
to the Administrative Agent and the Lenders, that the
Administrative Agent and the Lenders have no adequate remedy at
law in respect of such breach and, as a consequence, that each
and every covenant contained in this Section shall be
specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit
Agreement.
9. Irrevocable Authorization and Instruction to Borrower.
The Pledgor hereby authorizes and instructs the Borrower to
comply with any instruction received by it from the
Administrative Agent in writing that (a) states that an Event of
Default has occurred and is continuing and (b) is otherwise in
accordance with the terms of this Agreement, without any other or
further instructions from the Pledgor, and the Pledgor agrees
that the Borrower shall be fully protected in so complying.
10. Administrative Agent's Appointment as Attorney-in-Fact.
(a) The Pledgor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent of the
Administrative Agent, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Pledgor and in the name
of the Pledgor or in the Administrative Agent's own name, from
time to time in the Administrative Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, including, without limitation,
any financing statements, endorsements, assignments or other
instruments of transfer, which power of attorney is only
exercisable if an Event of Default shall have occurred and be
continuing.
(b) The Pledgor hereby ratifies all that said attorneys
shall lawfully do or cause to be done pursuant to the power of
attorney granted in paragraph 10(a). All powers, authorizations
and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released in
accordance with the terms hereof.
11. Duty of Administrative Agent. The Administrative
Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it
in the same manner as the Administrative Agent deals with similar
securities and property for its own account, except that after
the occurrence and during the continuance of an Event of Default
the Administrative Agent shall have no obligation to invest funds
held in any Collateral Account and may hold the same as demand
deposits. Neither the Administrative Agent, any Lender nor any
of their respective directors, officers, employees or agents
shall be liable for failure to demand, collect or realize upon
any of the Collateral or for any delay in doing so (unless the
same shall result from the gross negligence or willful misconduct
of such Person) or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the
Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
12. Execution of Financing Statements. Pursuant to Section
9-402 of the Code, the Pledgor authorizes the Administrative
Agent to file financing statements with respect to the Collateral
without the signature of the Pledgor in such form and in such
filing offices as the Administrative Agent reasonably determines
appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any
jurisdiction.
13. Authority of Administrative Agent. The Pledgor
acknowledges that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any
action taken by the Administrative Agent or the exercise or non-
exercise by the Administrative Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit
Agreement, but, as between the Administrative Agent and the
Pledgor, the Administrative Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and neither the
Pledgor nor the Borrower shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
14. Notices. All notices, requests and demands to or upon
the Administrative Agent or the Pledgor to be effective shall be
in writing (including by telecopy) and, unless otherwise
expressly provided herein, shall be deemed to have been duly
given or made when delivered or three Business Days after
deposited in the mails, postage prepaid, or in the case of
telecopy notice, when received, addressed as follows:
(1) if to the Administrative Agent, at its address or
transmission number for notices provided in Section 9.2 of
the Credit Agreement; and
(2) if to the Pledgor, at its address or transmission
number for notices set forth under its signature below.
The Administrative Agent and the Pledgor may change their
addresses and transmission numbers for notices by notice in the
manner provided in this Section.
15. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
16. Term of this Agreement. This Agreement shall continue
in full force and effect until the Obligations and the
obligations of the Pledgor hereunder shall be paid in full and
the Commitments shall have been terminated. Upon such payment
and termination, this Agreement shall automatically terminate and
the security interests, pledges and liens hereunder released and
the Agent and the Lenders shall, upon the request of the Pledgor
and at the Pledgor's expense, execute and deliver to the Pledgor
such documents and instruments evidencing such termination and
release.
17. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Pledgor and the Administrative
Agent, provided that any provision of this Agreement may be
waived by the Administrative Agent and the Lenders in a letter or
agreement executed by the Administrative Agent or by telex or
facsimile transmission from the Administrative Agent.
(b) Neither the Administrative Agent nor any Lender shall
by any act (except by a written instrument pursuant to paragraph
17(a) hereof), delay, indulgence, omission or otherwise be deemed
to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of
any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent
or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy
which the Administrative Agent or such Lender would otherwise
have on any future occasion.
(c) The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
(d) The Pledgor agrees that it will not permit any
amendment or other modification of any of the covenants in the
Timberlands Credit Agreement that are incorporated by reference
or referred to herein unless such amendment or other modification
has been consented to in writing by the Required Lenders under
the Paper Company Credit Agreement.
18. Section Headings. The section headings used in this
Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in
the interpretation hereof.
19. Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of the Pledgor and shall
inure to the benefit of the Administrative Agent and the Lenders
and their successors and assigns.
20. Governing Law. This Agreement shall be governed by,
and construed and interpreted in accordance with, the laws of the
State of New York.
21. Submission To Jurisdiction; Waivers. The Pledgor
hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action
or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to the Pledgor, its address set forth
under its signature below or at such other address of which the
Administrative Agent shall have been notified pursuant to Section
14 hereof;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section 20 any special, exemplary,
punitive or consequential damages.
22. Acknowledgements. The Pledgor hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan
Documents to which it is a party;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Pledgor arising out of
or in connection with this Agreement or any of the other Loan
Documents to which it is a party, and the relationship between
Administrative Agent and Lenders, on one hand, and the Pledgor,
on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Pledgor and
the Lenders.
23. WAIVER OF JURY TRIAL. THE PLEDGOR AND, BY ACCEPTANCE
HEREOF, EACH OF THE ADMINISTRATIVE AGENT AND THE LENDERS, HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY AND FOR ANY COUNTERCLAIM THEREIN.
24. Limitation on Recourse. Anything herein to the
contrary notwithstanding, from and after the date on which the
Xxxxx-Xxxxx Guarantee shall have terminated in accordance with
Section 11 thereof, the Agent and the Lenders shall have recourse
in respect of the Pledgor's obligations hereunder solely to the
Collateral and not to the Pledgor personally or to other assets
of the Pledgor other than the Collateral.
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed and delivered as of the date first
above written.
XXXXX-XXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
Address for Notices:
Xxxx Xxxxxx Xxx 0000
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the
Pledge Agreement dated December 1, 1997, made by Xxxxx-Xxxxx
Industries, Inc. for the benefit of Toronto-Dominion (Texas),
Inc., as Administrative Agent (the "Pledge Agreement"). The
undersigned agrees for the benefit of the Administrative Agent
and the Lenders as follows:
1. The undersigned will be bound by the terms of the Pledge
Agreement and will comply with such terms insofar as such terms
are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent
promptly in writing of the occurrence of any of the events
described in paragraph 4(a) of the Pledge Agreement.
3. The terms of paragraph 8(c) of the Pledge Agreement
shall apply to it, mutatis mutandis, with respect to all actions
that may be required of it under or pursuant to or arising out of
Section 8 of the Pledge Agreement.
4. The undersigned agrees that it will not take any action
or fail to take any action that will permit the Pledged LLC
Interests to become "securities" within the meaning of Article 8
of the Uniform Commercial Code of the State of New York unless
(i) the Issuer shall have provided 30 days prior written notice
to the Administrative Agent and (ii) at the sole expense of the
Issuer, the Issuer shall promptly and duly execute and deliver
such further instruments and documents and take such further
actions as the Administrative Agent may reasonably request to
ensure that the Administrative Agent has "control" of such
securities within the meaning of Article 8 of the Uniform
Commercial Code of the State of New York and for the purposes of
obtaining or preserving the full benefits of the Pledge Agreement
and of the rights and powers granted therein.
BEAR ISLAND PAPER COMPANY L.L.C.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
Address for Notices:
Xxxx Xxxxxx Xxx 0000
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED LLC INTERESTS
Percentage
Issuer Type of Interest Interest
Bear Island Paper Membership 100%
Company, LLC, a Virginia Interest
limited liability
company.
EXHIBIT E
This document was prepared by, and [Virginia]
after recording, please return to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
a partnership which includes
professional corporations
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xxx Xxxxxxxx, Esq.
THIS IS A CREDIT LINE DEED OF TRUST within the meaning of Section
55-58.2 of the Code of Virginia (1950), as amended. For purposes
of and to the extent required by such Section, (i) the name of,
and the address at which communications may be mailed or
delivered to the Administrative Agent acting on behalf of the
noteholders secured by this Deed of Trust is TORONTO-DOMINION
(TEXAS), INC., as Administrative Agent, 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000, and (ii) the maximum aggregate amount of
principal to be secured hereunder at any one time is
$120,000,000.00.
DEED OF TRUST
THIS DEED OF TRUST, dated as of December 1, 1997 is
made by BEAR ISLAND PAPER COMPANY, L.L.C., a Virginia limited
liability company ("GRANTOR"), successor by merger to BEAR ISLAND
MERGERCO, L.L.C., successor by conversion to BEAR ISLAND PAPER
COMPANY, L.P., whose address is P.O. Box 2119, 00000 Xxx Xxxxx
Xx. (Xxxxx 000), Xxxxxxx, Xxxxxxxx 00000, to SOUTHERN TITLE
SERVICES CORPORATION, a Virginia corporation, ("TRUSTEE") whose
address is X.X. Xxx 000, Xxxxxxxx, Xxxxxxxx 00000-0000, for the
use and benefit of TORONTO-DOMINION (TEXAS), INC., as
Administrative Agent for the Lenders referred to below (in such
capacity, together with its successors and assigns,
"BENEFICIARY"), whose address is 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxx 00000. References to this "DEED OF TRUST" shall mean this
instrument and any and all renewals, modifications, amendments,
supplements, extensions, consolidations, substitutions, spreaders
and replacements of this instrument.
Background
A. Grantor has entered into that certain Credit
Agreement dated as of the date hereof (as the same may be
amended, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT") with the several banks and other
financial institutions or entities from time to time parties
thereto (the "LENDERS"), Beneficiary and TD Securities (USA),
Inc., as Arranger. The terms of the Credit Agreement are
incorporated by reference in this Deed of Trust as if the terms
thereof were fully set forth herein. Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto
in the Credit Agreement. References in this Deed of Trust to the
"DEFAULT RATE" shall mean the rate of interest per annum
equivalent to the Base Rate plus 2%.
B. Grantor is the owner of the parcel(s) of real
property described on Schedule A attached (such real property,
together with all of the buildings, improvements, structures and
fixtures now or subsequently located thereon (the
"IMPROVEMENTS"), being collectively referred to as the "REAL
ESTATE").
C. Pursuant to the terms and conditions of the Credit
Agreement, (i) the Term Loan Lenders have agreed to make certain
Term Loans to Grantor in the aggregate principal amount of
$70,000,000 and (ii) the Revolving Credit Lenders have agreed to
make certain Revolving Credit Loans to Grantor in the maximum
aggregate principal amount of $50,000,000.
D. It is a condition precedent, among others, to the
obligations of the Lenders to make the Loans that Grantor execute
and deliver this Deed of Trust.
Granting Clauses
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor agrees that
to secure:
(a) repayment of the principal of and payment of
interest (including, without limitation, interest
accruing after the maturity of the Loans made by
each Lender and interest accruing after the filing
of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like
proceeding, relating to Grantor, whether or not a
claim for post-filing or post-petition interest is
allowed in such proceeding) on the Loans made by
each Lender to, and the Notes held by each Lender
of, Grantor;
(b) payment of all obligations of Grantor under any
Interest Rate Protection Agreement and Currency
Swap Agreement;
(c) payment of all other obligations and liabilities
of Grantor to Beneficiary and the Lenders, whether
direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter
incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Notes,
the Interest Rate Protection Agreements, Currency
Swap Agreements, this Deed of Trust, the other
Loan Documents or any other document made,
delivered or given in connection herewith or
therewith, in each case whether on account of
principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise
(including, without limitation, all reasonable
fees and disbursements of counsel to Beneficiary
or to the Lenders that are required to be paid by
Grantor pursuant to the terms of the Credit
Agreement, this Deed of Trust or any other Loan
Documents) (the items set forth in clauses (a)
through (c) being referred to herein collectively
as the "INDEBTEDNESS"); and
(d) the performance and observance of each obligation,
term, covenant and condition to be performed or
observed by Grantor (the "OBLIGATIONS") under, in
connection with or pursuant to the provisions of
the Credit Agreement, the Notes, the Interest Rate
Protection Agreements, Currency Swap Agreements,
this Deed of Trust and any of the other Security
Documents or any of the other Loan Documents;
GRANTOR HEREBY CONVEYS TO TRUSTEE AND HEREBY GRANTS, ASSIGNS,
TRANSFERS AND SETS OVER TO TRUSTEE, IN TRUST FOREVER, WITH
GENERAL WARRANTY AND ENGLISH COVENANTS OF TITLE AND WITH POWER OF
SALE AND RIGHT OF ENTRY AND POSSESSION, AND GRANTS BENEFICIARY
AND TRUSTEE A SECURITY INTEREST IN:
(A) the Real Estate; all (i) trees and timber,
including, without limitation, standing timber and crops,
now located on or hereafter planted or growing in the soil
of, or otherwise attributable to, any of the Premises (as
hereinafter defined), or any part or parcel thereof, and all
additions, substitutions and replacements thereof and (ii)
any and all trees and timber which have been severed, cut or
harvested from the Premises or any part or parcel thereof
("HARVESTED TIMBER"; all of the foregoing in clauses (i) and
(ii) of this paragraph (A) being referred to as "TIMBER");
(B) all the estate, right, title, claim or demand
whatsoever of Grantor, in possession or expectancy, in and
to the Real Estate or any part thereof;
(C) all right, title and interest of Grantor in, to
and under all easements, rights of way, gores of land,
streets, ways, alleys, passages, sewer rights, waters, water
courses, water and riparian rights, development rights, air
rights, mineral rights and all estates, rights, titles,
interests, privileges, licenses, tenements, hereditaments
and appurtenances belonging, relating or appertaining to the
Real Estate, and any reversions, remainders, rents, issues,
profits and revenue thereof and all land lying in the bed of
any street, road or avenue, in front of or adjoining the
Real Estate to the center line thereof;
(D) all right, title and interest of Grantor in, to
and under all of the fixtures, chattels, business machines,
machinery, apparatus, equipment, furnishings, fittings and
articles of personal property of every kind and nature
whatsoever, and all appurtenances and additions thereto and
substitutions or replacements thereof (together with, in
each case, attachments, components, parts and accessories)
currently owned or subsequently acquired by Grantor and now
or subsequently attached to, or contained in or used or
usable in any way in connection with any operation or
letting of the Real Estate, including but without limiting
the generality of the foregoing, all screens, awnings,
shades, blinds, curtains, draperies, artwork, carpets, rugs,
storm doors and windows, furniture and furnishings, heating,
electrical, and mechanical equipment, lighting,
switchboards, plumbing, ventilating, air conditioning and
air-cooling apparatus, refrigerating, and incinerating
equipment, escalators, elevators, loading and unloading
equipment and systems, stoves, ranges, laundry equipment,
cleaning systems (including window cleaning apparatus),
telephones, communication systems (including satellite
dishes and antennae), televisions, computers, sprinkler
systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines,
machinery, pipes, pumps, tanks, conduits, appliances, data
processing equipment, fittings and fixtures of every kind
and description (all of the foregoing in this paragraph
(D) being referred to as the "EQUIPMENT");
(E) all right, title and interest of Grantor in and to
all substitutes and replacements of, and all additions and
improvements to, the Real Estate and the Equipment,
subsequently acquired by or released to Grantor or
constructed, assembled or placed by Grantor on the Real
Estate, immediately upon such acquisition, release,
construction, assembling or placement, including, without
limitation, any and all building materials whether stored at
the Real Estate or offsite, and, in each such case, without
any further mortgage, conveyance, assignment or other act by
Grantor;
(F) all right, title and interest of Grantor in, to
and under all leases, subleases, underlettings, concession
agreements, management agreements, licenses and other
agreements relating to the use or occupancy of the Real
Estate or the Equipment or any part thereof, now existing or
subsequently entered into by Grantor and whether written or
oral and all guarantees of any of the foregoing
(collectively, as any of the foregoing may be amended,
restated, extended, renewed or modified from time to time,
the "LEASES"), and all rights of Grantor in respect of cash
and securities deposited thereunder and the right to receive
and collect the revenues, income, rents, issues and profits
thereof, together with all other rents, royalties, issues,
profits, revenue, income and other benefits arising from the
use and enjoyment of the Trust Property (as defined below)
(collectively, the "RENTS");
(G) all unearned premiums under insurance policies now
or subsequently obtained by Grantor relating to the Real
Estate or Equipment and Grantor's interest in and to all
such insurance policies and all proceeds of any such
insurance policies (including title insurance policies)
including the right to collect and receive such proceeds,
subject to the provisions relating to insurance generally
set forth below; and all awards and other compensation,
including the interest payable thereon and the right to
collect and receive the same, made to the present or any
subsequent owner of the Real Estate or Equipment for the
taking by eminent domain, condemnation or otherwise, of all
or any part of the Real Estate or any easement or other
right therein;
(H) all right, title and interest of Grantor in and to
(i) all contracts from time to time executed by Grantor or
any manager or agent on its behalf relating to the
ownership, construction, maintenance, repair, operation,
occupancy, sale or financing of the Real Estate or Equipment
or any part thereof and all agreements relating to the
purchase or lease of any portion of the Real Estate or any
property which is adjacent or peripheral to the Real Estate,
together with the right to exercise such options and all
leases of Equipment (collectively, the "CONTRACTS"), (ii)
all consents, licenses, building permits, documents,
certificates of occupancy and other governmental approvals
relating to (a) the construction, completion, occupancy, use
or operation of the Real Estate or any part thereof and (b)
the harvesting, cutting, severing, transportation, storage,
processing or handling of the Timber (collectively, the
"PERMITS") and (iii) all drawings, plans, engineering
reports, specifications, land planning, maps, surveys and
information and any other reports and similar or related
items relating to the Real Estate (collectively, the
"PLANS");
(I) any and all monies now or subsequently on deposit
for the payment of real estate taxes or special assessments
against the Real Estate or for the payment of premiums on
insurance policies covering the foregoing property or
otherwise on deposit with or held by Beneficiary as provided
in this Deed of Trust;
(J) all proceeds, both cash and noncash, of the
foregoing;
Provided, however, that in each case with respect to
all of the foregoing such grant is made only to the extent
the grant by such Grantor of a security interest pursuant to
this Deed of Trust in its right, title and interest in such
contract, agreement, instrument, indenture or other general
intangible is not prohibited by such contract, agreement,
instrument, indenture or other general intangible without
the consent of any party thereto, would not give any other
party to such contract, agreement, instrument, indenture or
other general intangible the right to terminate its
obligations thereunder, or is permitted with consent if all
necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being
understood that the foregoing shall not be deemed to
obligate such Grantor to obtain such consents); provided,
that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security
interest pursuant to this Deed of Trust in any amounts due
or become due under any such contract, agreement,
instrument, indenture, or other general intangible.
(All of the foregoing property and rights and interests
now owned or held or subsequently acquired by Grantor and
described in the foregoing clauses (A) through (E) are
collectively referred to as the "PREMISES", and those described
in the foregoing clauses (A) through (J) are collectively
referred to as the "TRUST PROPERTY").
TO HAVE AND TO HOLD the Trust Property and the rights
and privileges hereby granted unto Trustee, its successors and
assigns IN TRUST FOREVER for the uses and purposes set forth,
until the Indebtedness is fully paid and the Obligations fully
performed.
Terms and Conditions
Grantor further represents, warrants, covenants and
agrees with Trustee and Beneficiary as follows:
1. Warranty of Title. GRANTOR WARRANTS ITS TITLE TO
THE TRUST PROPERTY GENERALLY AND WITH ENGLISH COVENANTS OF TITLE,
subject only to (i) the matters that are set forth in Schedule B
of the title insurance policy or policies being issued to
Beneficiary to insure the lien of this Deed of Trust, (ii) the
security interest granted by Grantor to Beneficiary pursuant to
the Security and Pledge Agreement, and (iii) liens permitted by
the Credit Agreement (the "PERMITTED EXCEPTIONS").
2. Payment of Indebtedness. Grantor shall pay the
Indebtedness at the times and places and in the manner specified
in the Notes, the Credit Agreement, any Interest Rate Protection
Agreement and in any other Loan Document and shall perform all
the Obligations.
3. Requirements. (a) Grantor shall promptly comply
with, or cause to be complied with, and conform to all present
and future laws, statutes, codes, ordinances, orders, judgments,
decrees, rules, regulations and requirements, and irrespective of
the nature of the work to be done, of each of the United States
of America, any State and any municipality, local government or
other political subdivision thereof and any agency, department,
bureau, board, commission or other instrumentality of any of
them, now existing or subsequently created (collectively,
"GOVERNMENTAL AUTHORITY") which has jurisdiction over the Trust
Property or relates to the harvesting, cutting, severance,
handling or transporting of Timber, and all covenants,
restrictions and conditions now or later of record which may be
applicable to any of the Trust Property, or to the use, manner of
use, occupancy, possession, operation, maintenance, alteration,
repair or reconstruction of any of the Trust Property, except to
the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect. All present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, rules, regulations and
requirements of every Governmental Authority applicable to
Grantor or to any of the Trust Property and all covenants,
restrictions, and conditions which now or later may be applicable
to any of the Trust Property are collectively referred to as the
"LEGAL REQUIREMENTS".
(b) From and after the date of this Deed of Trust,
Grantor shall not by act or omission permit any building or other
improvement on any premises not subject to the lien created by
this Deed of Trust to rely on the Premises or any part thereof or
any interest therein to fulfill any Legal Requirement, and
Grantor hereby assigns to Beneficiary any and all rights to give
consent for all or any portion of the Premises or any interest
therein to be so used. Grantor shall not by act or omission
impair the integrity of any of the Real Estate so as to
constitute an illegal subdivision or to prohibit separately
described parcels of the Premises and Improvements from being
conveyed as separate zoning or tax lots. Grantor represents that
the Premises are not part of a larger tract of land owned by
Grantor or its affiliates or otherwise considered as part of one
zoning or tax lot, or, if they are that any authorization or
variance required for the subdivision of such larger tract which
a sale of the Premises would entail has been obtained from all
appropriate Governmental Authorities so that the Premises and
Improvements constitute one zoning or tax lot capable of being
conveyed as such. Any act or omission by Grantor which would
result in a violation of any of the provisions of this subsection
shall be void.
4. Payment of Taxes and Other Impositions. (a)
Promptly when due, Grantor shall pay and discharge all taxes of
every kind and nature (including, without limitation, all real
and personal property, income, franchise, withholding, transfer,
gains, profits and gross receipts taxes), all charges for any
easement or agreement maintained for the benefit of any of the
Trust Property, all general and special assessments, levies,
permits, inspection and license fees, all water and sewer rents
and charges, vault taxes and all other public charges even if
unforeseen or extraordinary, imposed upon or assessed against or
which may become a lien on any of the Trust Property, or arising
in respect of the occupancy, use or possession thereof, together
with any penalties or interest on any of the foregoing (all of
the foregoing are collectively referred to as the "IMPOSITIONS").
Grantor shall within 30 days after each due date deliver to
Beneficiary (i) original or copies of receipted bills and
cancelled checks evidencing payment of such Imposition if it is a
real estate tax or other public charge and (ii) evidence
acceptable to Beneficiary showing the payment of any other such
Imposition. If by law any Imposition, at Grantor's option, may
be paid in installments (whether or not interest shall accrue on
the unpaid balance of such Imposition), Grantor may elect to pay
such Imposition in such installments and shall be responsible for
the payment of such installments with interest, if any.
(b) Nothing herein shall affect any right or remedy of
Trustee or Beneficiary under this Deed of Trust or otherwise,
without notice or demand to Grantor, to pay any Imposition after
the date such Imposition shall have become due. Any sums paid by
Trustee or Beneficiary in discharge of any Impositions shall be
payable on demand by Grantor to Trustee or Beneficiary, as the
case may be, together with interest at the Default Rate as set
forth above.
(c) Grantor shall have the right before any
delinquency occurs to contest or object in good faith to the
amount or validity of any Imposition by appropriate legal
proceedings, but such right shall not be deemed or construed in
any way as relieving, modifying, or extending Grantor's covenant
to pay any such Imposition at the time and in the manner provided
in this Section unless (i) Grantor has given prior written notice
to Beneficiary of Grantor's intent so to contest or object to an
Imposition, (ii) Grantor shall demonstrate to Beneficiary's
satisfaction that the legal proceedings shall operate
conclusively to prevent the sale of the Trust Property, or any
part thereof, to satisfy such Imposition prior to final
determination of such proceedings and (iii) Grantor shall furnish
a good and sufficient bond or surety as requested by and
reasonably satisfactory to Beneficiary in the amount of the
Impositions which are being contested plus any interest and
penalty which may be imposed thereon and which could become a
charge against the Real Estate or any part of the Trust Property.
5. Insurance. (a) Grantor shall maintain or cause to
be maintained on all of the Premises:
(i) property insurance against loss or damage by fire,
lightning, windstorm, tornado, water damage, flood,
earthquake and by such other further risks and hazards as
now are or subsequently may be covered by an "all risk"
policy or a fire policy covering "special" causes of loss,
and the policy limits shall be automatically reinstated
after each loss (provided that Grantor shall not be
obligated to maintain the insurance coverage required by
this subparagraph (i) with respect to any portion of the
Premises that consists of a separate tract or parcel
containing 75 or more acres on which (and only for so long
as) the average capitalized cost of the Improvements is less
than $50.00 (Fifty Dollars) per acre net of depreciation
(collectively, "UNIMPROVED LANDS"));
(ii) commercial general liability insurance under a
policy including the "broad form CGL endorsement" (or which
incorporates the language of such endorsement), covering all
claims for personal injury, bodily injury or death, or
property damage occurring on, in or about the Premises in an
amount not less than $10,000,000 or such other amount as may
be approved by Beneficiary (such $10,000,000 coverage may be
satisfied by a combination of primary and excess limit or
umbrella coverage totalling not less than $10,000,000)
combined single limit with respect to injury and property
damage relating to any one occurrence plus such excess
limits as Beneficiary shall request from time to time;
(iii) insurance against rent loss, extra expense or
business interruption in amounts satisfactory to
Beneficiary, but not less than one year's gross rent or
gross income (provided that Grantor shall not be obligated
to maintain the insurance coverage required by this
subparagraph (iii) with respect to any Unimproved Lands);
(iv) if any portion of the Premises upon which any
Improvements are located are in an area identified as a
special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, flood
insurance in an amount satisfactory to Beneficiary, but in
no event less than the maximum limit of coverage available
under the National Flood Insurance Act of 1968, as amended;
and
(v) such other insurance in such amounts as
Beneficiary may reasonably request from time to time against
loss or damage by any other risk commonly insured against by
persons occupying or using like properties in the locality
or localities in which the Real Estate is situated.
(b) Each insurance policy (other than flood insurance)
shall (i) provide that it shall not be cancelled without 30-days'
prior written notice to Beneficiary, and (ii) with respect to all
property insurance, provide for deductibles in an amount
reasonably satisfactory to Beneficiary, contain a "Replacement
Cost Endorsement" (or attaching an agreed amount endorsement
satisfactory to Beneficiary), with loss payable solely to
Beneficiary as its interest may appear, without contribution,
under a "standard" or "New York" mortgagee clause acceptable to
Beneficiary. Each policy shall expressly provide that any
proceeds which are payable to Beneficiary shall be paid by check
payable to the order of Beneficiary only and requiring the
endorsement of Beneficiary. In lieu thereof, the Grantor may
satisfy the foregoing by delivering an irrevocable power of
attorney to Beneficiary authorizing Beneficiary to endorse any
check payable under such policy which is made out to Grantor.
(c) Grantor shall deliver to Beneficiary an original
of each insurance policy required to be maintained, or a
certificate of such insurance acceptable to Beneficiary, together
with a copy of the declaration page for each such policy.
Grantor shall (i) pay as they become due all premiums for such
insurance and (ii) not later than 15 days prior to the expiration
of each policy to be furnished pursuant to the provisions of this
Section, deliver a renewed policy or policies, or duplicate
original or originals thereof, marked "premium paid," or
accompanied by such other evidence of payment satisfactory to
Beneficiary.
(d) If Grantor is in default of its obligations to
insure or deliver any such prepaid policy or policies, then
Beneficiary, at its option and without notice, may effect such
insurance from year to year, and pay the premium or premiums
therefor, and Grantor shall pay to Beneficiary on demand such
premium or premiums so paid by Beneficiary with interest from the
time of payment at the Default Rate.
(e) Grantor promptly shall comply with and conform to
(i) all provisions of each such insurance policy, and (ii) all
requirements of the insurers applicable to Grantor or to any of
the Trust Property or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration or repair of any
of the Trust Property. Grantor shall not use or permit the use
of the Trust Property in any manner which would permit any
insurer to cancel any insurance policy or void coverage required
to be maintained by this Deed of Trust. Grantor shall give
Beneficiary 30-days prior notice of any non-renewal or material
amendment of each insurance policy (other than flood insurance)
required under this Section 5 of this Deed of Trust.
(f) If the Trust Property, or any part thereof, shall
be destroyed or damaged, Grantor shall give immediate notice
thereof to Beneficiary. All insurance proceeds shall be paid to
Beneficiary to be held by Beneficiary as collateral to secure the
payment and performance of the Indebtedness and the Obligations.
Notwithstanding the preceding sentence, provided that no Event of
Default shall have occurred and be continuing, Grantor shall have
the right to adjust such loss, and the insurance proceeds
relating to such loss shall be paid over promptly to Grantor;
provided that, if any such insurance proceeds are received, then
Grantor shall either (i) apply such proceeds promptly after any
such damage to repair all such damage regardless of whether such
proceeds are sufficient to pay for the costs of repair, or (ii)
apply such proceeds in any other manner that complies with
Section 2.10 of the Credit Agreement.
(g) In the event of foreclosure of this Deed of Trust
or other transfer of title to the Trust Property, all right,
title and interest of Grantor in and to any insurance policies
then in force shall pass to the purchaser or grantee.
(h) Grantor may maintain insurance required under this
Deed of Trust by means of one or more blanket insurance policies
maintained by Grantor; provided, however, that (i) any such
policy shall specify, or Grantor shall furnish to Beneficiary a
written statement from the insurer so specifying, the maximum
amount of the total insurance afforded by such blanket policy
that is allocated to the Premises and the other Trust Property
and any sublimits in such blanket policy applicable to the
Premises and the other Trust Property, (ii) each such blanket
policy shall include an endorsement providing that, in the event
of a loss resulting from an insured peril, insurance proceeds
shall be allocated to the Trust Property in an amount equal to
the coverages required to be maintained by Grantor as provided
above and (iii) the protection afforded under any such blanket
policy shall be no less than that which would have been afforded
under a separate policy or policies relating only to the Trust
Property.
(i) Notwithstanding anything to the contrary in this
section, Beneficiary agrees that the types, terms, and amounts of
insurance that Grantor maintains as of the date of this Deed of
Trust satisfies the requirements of this Section 5 of this Deed
of Trust.
6. Restrictions on Liens and Encumbrances. Except for
the lien of this Deed of Trust and the Permitted Exceptions, and
except as expressly permitted under the Credit Agreement, Grantor
shall not further mortgage, nor otherwise encumber the Trust
Property nor create or suffer to exist any lien, charge or
encumbrance on the Trust Property, or any part thereof, whether
superior or subordinate to the lien created by this Deed of Trust
and whether recourse or non-recourse.
7. Due on Sale and Other Transfer Restrictions.
Except as expressly permitted under the Credit Agreement, Grantor
shall not sell, transfer, convey or assign all or any portion of,
or any interest in, the Trust Property.
8. Maintenance; No Alteration; Inspection; Utilities.
(a) Grantor shall maintain or cause to be maintained all the
Improvements in good condition and repair (ordinary wear and tear
excepted) and shall not commit or suffer any waste of the
Improvements. Notwithstanding any other provision of this Deed
of Trust, with respect to Unimproved Lands, the harvesting of
Timber and forest management practices may be carried out in
accordance with Best Management Practices prevailing in the
Commonwealth of Virginia with respect to similarly situated land,
which Best Management Practices are more particularly set forth
in the Loggers Guide published by the Virginia Department of
Forestry (December 1988), as the same may be revised from time to
time. Grantor shall repair, restore, replace or rebuild promptly
any part of the Premises which may be damaged or destroyed by any
casualty whatsoever if as a result of which casualty, no
insurance or condemnation proceeds are received. The
Improvements shall not be demolished or materially altered, nor
any material additions built, without the prior written consent
of Beneficiary.
(b) Beneficiary and any persons authorized by
Beneficiary shall have the right upon reasonable notice and at
any reasonable time to enter and inspect the Premises and all
work done, labor performed and materials furnished in and about
the Improvements and to inspect and make copies of all books,
contracts and records of Grantor relating to the Trust Property.
(c) Grantor shall pay or cause to be paid when due all
utility charges which are incurred for gas, electricity, water or
sewer services furnished to the Premises and all other
assessments or charges of a similar nature, whether public or
private, affecting the Premises or any portion thereof, whether
or not such assessments or charges are liens thereon.
9. Condemnation/Eminent Domain. Immediately upon
obtaining knowledge of the institution of any proceedings for the
condemnation of the Trust Property, or any portion thereof,
Grantor will notify Beneficiary of the pendency of such
proceedings. Beneficiary is hereby authorized and empowered by
Grantor to settle or compromise any claim in connection with such
condemnation and to receive all awards and proceeds thereof to be
held by Beneficiary as collateral to secure the payment and
performance of the Indebtedness and the Obligations.
Notwithstanding the preceding sentence, provided no Event of
Default shall have occurred and be continuing, Grantor shall, at
its expense, diligently prosecute any proceeding relating to such
condemnation, settle or compromise any claims in connection
therewith and receive any awards or proceeds thereof, provided
that, if any such awards or proceeds thereof are received, then
Grantor shall either (i) apply such proceeds promptly to repair
and restore the Trust Property to its condition prior to such
condemnation, regardless of whether such award is sufficient to
pay for the costs of such repair and restoration, or (ii) apply
such proceeds in any other manner that complies with Section 2.10
of the Credit Agreement.
10. Restoration. Grantor shall use all insurance
proceeds and all condemnation proceeds and awards received by the
Grantor to either (i) promptly restore the Trust Property to its
condition prior to such casualty or condemnation, (giving effect
to the remaining configuration of the Premises after such
condemnation) and in compliance with all Legal Requirements, or
(ii) in any other manner which complies with the Credit
Agreement.
11. Leases. (a) Grantor shall not (i) execute an
assignment or pledge of any Lease relating to all or any portion
of the Trust Property other than in favor of Beneficiary, or (ii)
except as expressly permitted under the Credit Agreement,
without the prior written consent of Beneficiary, execute or
permit to exist any Lease of any of the Trust Property, provided
that Grantor may enter into leases having an aggregate term of
less than twelve months (including all extension or renewal
terms) which are primarily for agricultural or recreational
hunting purposes without the prior written consent of
Beneficiary.
(b) As to any Lease consented to by Beneficiary,
Grantor shall:
(i) promptly perform all of the provisions of the
Lease on the part of the lessor thereunder to be performed;
(ii) promptly enforce all of the provisions of the
Lease on the part of the lessee thereunder to be performed;
(iii) appear in and defend any action or proceeding
arising under or in any manner connected with the Lease or
the obligations of Grantor as lessor or of the lessee
thereunder;
(iv) exercise, within 5 business days after a request
by Beneficiary, any right to request from the lessee a
certificate with respect to the status thereof;
(v) simultaneously deliver to Beneficiary copies of
any notices of default which Grantor may at any time forward
to or receive from the lessee;
(vi) promptly deliver to Beneficiary a fully executed
counterpart of the Lease; and
(vii) promptly deliver to Beneficiary, upon
Beneficiary's request, an assignment of the Grantor's
interest under such Lease.
(c) Grantor shall deliver to Beneficiary, within 10
days after a request by Beneficiary, a written statement,
certified by Grantor as being true, correct and complete,
containing the names of all lessees and other occupants of the
Trust Property, the terms of all Leases and the spaces occupied
and rentals payable thereunder, and a list of all Leases which
are then in default, including the nature and magnitude of the
default; such statement shall be accompanied by credit
information with respect to the lessees and such other
information as Beneficiary may request.
(d) All Leases entered into by Grantor after the date
hereof, if any, and all rights of any lessees thereunder shall be
subject and subordinate in all respects to the lien and
provisions of this Deed of Trust unless Beneficiary shall
otherwise elect in writing.
(e) As to any Lease now in existence or subsequently
consented to by Beneficiary, except as expressly permitted under
the Credit Agreement, Grantor shall not accept a surrender or
terminate, cancel, rescind, supplement, alter, revise, modify or
amend such Lease or permit any such action to be taken nor shall
Grantor accept the payment of rent more than thirty (30) days in
advance of its due date.
12. Further Assurances. To further assure
Beneficiary's and Trustee's rights under this Deed of Trust,
Grantor agrees upon demand of Beneficiary or Trustee to do any
act or execute any additional documents (including, but not
limited to, security agreements on any personalty included or to
be included in the Trust Property and a separate assignment of
each Lease in recordable form) as may be required by Beneficiary
or Trustee to confirm the lien of this Deed of Trust and all
other rights or benefits conferred on Beneficiary or Trustee by
this Deed of Trust.
13. Beneficiary's Right to Perform. If Grantor fails
to perform any of the covenants or agreements of Grantor,
Beneficiary or Trustee, without waiving or releasing Grantor from
any obligation or default under this Deed of Trust, may, at any
time (but shall be under no obligation to) pay or perform the
same, and the amount or cost thereof, with interest at the
Default Rate, shall immediately be due from Grantor to
Beneficiary or Trustee (as the case may be) and the same shall be
secured by this Deed of Trust and shall be an encumbrance on the
Trust Property prior to any right, title to, interest in or claim
upon the Trust Property attaching subsequent to the date of this
Deed of Trust. No payment or advance of money by Beneficiary or
Trustee under this Section shall be deemed or construed to cure
Grantor's default or waive any right or remedy of Beneficiary or
Trustee.
14. Hazardous Material. (a) In the event Grantor
fails to comply with Sections 5.8(a) or 5.8(b) of the Credit
Agreement, after notice to Grantor and the expiration of the
earlier of (i) any applicable cure period under the Credit
Agreement, or (ii) the cure period permitted under the applicable
Legal Requirement, Beneficiary may declare such failure an Event
of Default or arrange to have compliance with Section 5.8(a) or
5.8(b), as the case may be, implemented, and the cost of such
implementation with interest at the Default Rate shall
immediately be due from Grantor to Beneficiary. Beneficiary
shall have the right to conduct an environmental assessment of
the Premises at Grantor's sole cost and expense, if any Event of
Default has occurred or any event has occurred that, if it
continues would constitute an Event of Default (such Event of
Default, or event, a "Default"), or at any other time at
Beneficiary's sole cost and expense, provided: (i) Beneficiary
provides Grantor with at least five business days notice of its
intent to conduct said environmental assessment, which notice
shall include Beneficiary's proposed scope of work for the
environmental assessment; (ii) Beneficiary allows Grantor to have
Grantor's personnel and outside representatives, including
attorneys or environmental professionals, be present during any
inspection of the Trust Property that may be a part of the
environmental assessment; (iii) with respect to any environmental
sampling to be performed: (A) it is recommended and supervised by
a reputable independent environmental consultant selected by the
Beneficiary, subject to the approval of the Grantor (such
approval not to be unreasonably withheld or delayed), (B)
Beneficiary provides Grantor with the opportunity to collect
split samples, and (C) at Grantor's reasonable request
Beneficiary restores the Premises in all material respects to its
presampling condition, the cost of such restoration with interest
at the Default Rate immediately due from Grantor to the
Beneficiary if there has been a Default; and (iv) Beneficiary
provides to Grantor copies of all final reports prepared in
connection with any environmental assessment conducted hereunder.
Grantor shall cooperate with Beneficiary with respect to the
conduct of said environmental audits consistent with the terms of
this Section.
15. Events of Default. The occurrence of an Event of
Default under the Credit Agreement shall constitute an Event of
Default hereunder.
16. Remedies. (a) Upon the occurrence of any Event
of Default, in addition to any other rights and remedies
Beneficiary may have pursuant to the Loan Documents, or as
provided by law, and without limitation, (1) if such event is an
Event of Default specified in clause (i) or (ii) of Section 7(f)
of the Credit Agreement with respect to Grantor, automatically
the Commitments shall immediately terminate and the Loans (with
accrued interest thereon) and all other amounts owing under the
Credit Agreement and the other Loan Documents shall immediately
become due and payable, and (2) if such event is any other Event
of Default, either or both of the following actions may be taken:
(i) with the consent of the Required Revolving Credit Lenders,
Beneficiary may, or upon the request of the Required Revolving
Credit Lenders, Beneficiary shall, by notice to Grantor declare
the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately
terminate; and (ii) with the consent of the Required Lenders,
Beneficiary may, or upon the request of the Required Lenders,
Beneficiary shall, by notice to Grantor, declare the Loans (with
accrued interest thereon) and all other amounts owing under the
Credit Agreement and the other Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become
due and payable. Except as expressly provided above in this
Section, presentment, demand, protest and all other notices of
any kind are hereby expressly waived. In addition, upon the
occurrence and during the continuance of any Event of Default,
Beneficiary may immediately take such action, without notice or
demand (except to the extent required by applicable law), as it
deems advisable to protect and enforce its rights against Grantor
and in and to the Trust Property, including, but not limited to,
the following actions, each of which may be pursued concurrently
or otherwise, at such time and in such manner as Beneficiary may
determine, in its sole discretion, without impairing or otherwise
affecting the other rights and remedies of Beneficiary:
(i) Beneficiary may elect to cause the Trust Property
or any part thereof to be sold as follows:
(A) Beneficiary may proceed as if all of the
Trust Property were real property in accordance with
subparagraph (C) below, or Beneficiary may elect to
treat any of the Trust Property which consists of a
right in action or which is property that can be
severed from the Real Estate without causing structural
damage thereto as if the same were personal property,
and dispose of the same in accordance with the
provisions of this Deed of Trust which relate to the
exercise of remedies with respect to that portion of
the Trust Property which is personal property, separate
and apart from the sale of real property.
(B) Beneficiary may direct the Trustee to cause
any such sale or other disposition to be conducted
immediately following the expiration of any grace
period, if any, herein provided, and any advertisement
required by law or herein and the notice required by
Section 55-59.1 of the Code of Virginia (1950) (1995
Replacement Volume), as the same may be amended from
time to time (hereinafter, "CODE OF VIRGINIA"), or
Beneficiary and Trustee may delay any such sale or
other disposition for such period of time as Trustee or
Beneficiary deems to be appropriate. Should
Beneficiary desire that more than one (1) such sale or
other disposition be conducted, Beneficiary may, at its
option, cause the same to be conducted simultaneously,
or successively, on the same day, or at such different
days or times and in such order as Beneficiary and
Trustee may deem to be appropriate.
(C) Should Beneficiary elect to direct the
Trustee to sell the Trust Property or any part thereof
which is real property or which Beneficiary has elected
to treat as real property, upon such election, the
Trustee shall give such notice of default and election
to sell as may then be required by law. Thereafter,
upon the expiration of such time and the giving of the
notice of sale required by Section 55-59.1 of the Code
of Virginia, and after having advertised the sale once
a week for four weeks in a newspaper having general
circulation in the jurisdiction wherein the Real Estate
lies, and without the necessity of any demand on
Grantor, Trustee, at the time and place specified in
the notice of sale, shall sell the Trust Property or
any portion thereof specified by Beneficiary, at public
auction to the highest bidder for cash in lawful money
of the United States. Trustee may, and upon request of
Beneficiary shall, from time to time, postpone the sale
by public announcement thereof at the time and place
noticed therefor. If the Trust Property consists of
several lots or parcels, Trustee may designate the
order in which such lots or parcels shall be offered
for sale or sold. Any person, including Grantor or
Beneficiary, may purchase at the sale. Upon any sale,
Trustee shall execute and deliver to the purchaser or
purchasers a deed or deeds conveying the property so
sold, but without any covenant or warranty whatsoever,
express or implied, whereupon such purchaser or
purchasers shall be let into immediate possession.
(D) In the event of a sale or other disposition
of the Trust Property, or any part thereof, and the
execution of a deed or other conveyance pursuant
thereto, the recitals therein of facts, such as
default, the giving of notice of default and notice of
sale, demand that such sale should be made,
postponement of sale, terms of sale, sale, purchase,
payment of purchase money and other facts affecting the
regularity or validity of such sale or disposition,
shall be conclusive proof of the truth of such facts;
any such deed or conveyance shall be conclusive against
all persons as to such facts recited therein.
(E) The acknowledgment of the receipt of the
purchase money, contained in any deed or conveyance
executed as aforesaid, shall be sufficient discharge to
the grantee thereof from all obligations to see to the
proper application of the consideration therefor as
hereinafter provided.
(ii) Beneficiary may, to the extent permitted by
applicable law, (A) institute and maintain an action of
judicial foreclosure against all or any part of the Trust
Property, (B) institute and maintain an action on the
Indebtedness, or (C) take such other action at law or in
equity for the enforcement of this Deed of Trust or any of
the Loan Documents as the law may allow. Beneficiary may
proceed in any such action to final judgment and execution
thereon for all sums due hereunder, together with interest
thereon at the Default Rate and all costs of suit,
including, without limitation, reasonable attorneys' fees
and disbursements. Interest at the Default Rate shall be
due on any judgment obtained by Beneficiary from the date of
judgment until actual payment is made of the full amount of
the judgment.
(iii) Upon the completion of any sale or sales made by
Trustee or Beneficiary, as the case may be, under or by
virtue of this subsection (a), Trustee or any officer of any
court empowered to do so, shall execute and deliver as
aforesaid, to the accepted purchaser or purchasers a good
and sufficient instrument, or good and sufficient
instruments, conveying, assigning and transferring all
estate, right, title and interest in and to the property and
rights sold. Trustee is hereby appointed irrevocably the
true and lawful attorney of Grantor in its name and stead to
make all necessary conveyances, assignments, transfers and
deliveries of the Trust Property or any part thereof and the
rights so sold and for that purpose, Trustee may execute all
necessary instruments of conveyance, assignment and
transfer, Grantor hereby ratifying and confirming all that
its attorney shall lawfully do by virtue hereof.
Nevertheless, Grantor, if so requested by Trustee or
Beneficiary, shall ratify and confirm any such sale or sales
by executing and delivering to Trustee or to such purchaser
or purchasers all such instruments as may be advisable, in
the judgment of Trustee or Beneficiary, for the purpose as
may be designated in such request. Any such sale or sales
made under or by virtue of this subsection (a), whether made
under the power of sale herein granted or under or by virtue
of judicial proceedings or of a judgment or decree of
foreclosure and sale or under or by virtue of SECTIONS 55-59
and 55-59.1 through 55-59.4 of the Code of Virginia, shall
operate to divest all of the estate, right, title, interest,
claim and demand whatsoever, whether at law or in equity, of
Grantor in and to the properties and rights so sold, and
shall be a perpetual bar, both at law and in equity against
Grantor and any and all persons claiming or who may claim
the same, or any part thereof, from, through or under
Grantor.
(iv) Grantor hereby expressly waives any right which
it may have to direct the order in which any of the Trust
Property shall be sold in the event of any sale or sales
pursuant hereto.
(v) The purchase money proceeds or avails of any sale
made pursuant to SECTIONS 55-59 and 55-59.1 through SECTION
55-59.4 of the Code of Virginia and under or by virtue of this
subsection (a), together with all other sums which then may
be held by Trustee or Beneficiary under this Deed of Trust,
whether under the provisions of this subsection (a), or
otherwise, shall be distributed pursuant to applicable law
as set forth in SECTION 55-59.4 of the Code of Virginia.
(vi) Beneficiary may personally, or by its agents,
attorneys and employees and without regard to the adequacy
or inadequacy of the Trust Property or any other collateral
as security for the Indebtedness and Obligations enter into
and upon the Trust Property and each and every part thereof
and exclude Grantor and its agents and employees therefrom
without liability for trespass, damage or otherwise (Grantor
hereby agreeing to surrender possession of the Trust
Property to Beneficiary upon demand at any such time) and
use, operate, manage, maintain and control the Trust
Property and every part thereof. Following such entry and
taking of possession, Beneficiary shall be entitled, without
limitation, (x) to lease all or any part or parts of the
Trust Property for such periods of time and upon such
conditions as Beneficiary may, in its discretion, deem
proper, (y) to enforce, cancel or modify any Lease and (z)
generally to execute, do and perform any other act, deed,
matter or thing concerning the Trust Property as Beneficiary
shall deem appropriate as fully as Grantor might do.
(b) Beneficiary, in any action to foreclose this Deed
of Trust in a judicial procedure or in connection with the
exercise of any non-judicial power of sale by Trustee, shall be
entitled to the appointment of a receiver. In case of a
trustee's sale or foreclosure sale, the Real Estate may be sold,
at Beneficiary's election, in one parcel or in more than one
parcel and Beneficiary is specifically empowered (without being
required to do so, and in its sole and absolute discretion) to
cause successive sales of portions of the Trust Property to be
held.
(c) In the event of any breach of any of the
covenants, agreements, terms or conditions contained in this Deed
of Trust which is not cured after the giving of any applicable
notice and the expiration of any applicable cure period,
Beneficiary or Trustee shall be entitled to enjoin such breach
and obtain specific performance of any covenant, agreement, term
or condition and Beneficiary and Trustee shall have the right to
invoke any equitable right or remedy as though other remedies
were not provided for in this Deed of Trust.
17. Right of Beneficiary to Credit Sale. Upon the
occurrence of any sale made under this Deed of Trust, whether
made under the power of sale or by virtue of judicial proceedings
or of a judgment or decree of foreclosure and sale or under or by
virtue of SECTIONS 55-59 and 55-59.1 through 55-59.4 of the Code of
Virginia, Beneficiary may bid for and acquire the Trust Property
or any part thereof. In lieu of paying cash therefor,
Beneficiary may make settlement for the purchase price by
crediting upon the Indebtedness or other sums secured by this
Deed of Trust the net sales price after deducting therefrom the
expenses of sale and the cost of the action and any other sums
which Beneficiary is authorized to deduct under this Deed of
Trust. In such event, this Deed of Trust, the Credit Agreement,
the Notes, the other Loan Documents and any documents evidencing
expenditures secured hereby may be presented to the person or
persons conducting the sale in order that the amount so used or
applied may be credited upon the Indebtedness as having been
paid.
18. Appointment of Receiver. If an Event of Default
shall have occurred and be continuing, Beneficiary as a matter of
right and without notice to Grantor, unless otherwise required by
applicable law, and without regard to the adequacy or inadequacy
of the Trust Property or any other collateral as security for the
Indebtedness and Obligations or the interest of Grantor therein,
shall have the right to apply to any court having jurisdiction to
appoint a receiver or receivers or other manager of the Trust
Property, and Grantor hereby irrevocably consents to such
appointment and waives notice of any application therefor (except
as may be required by law). Any such receiver or receivers shall
have all the usual powers and duties of receivers in like or
similar cases and all the powers and duties of Beneficiary in
case of entry as provided in this Deed of Trust, including,
without limitation and to the extent permitted by law, the right
to enter into leases of all or any part of the Trust Property,
and shall continue as such and exercise all such powers until the
date of confirmation of sale of the Trust Property unless such
receivership is sooner terminated.
19. Extension, Release, etc. (a) Without affecting
the lien or charge of this Deed of Trust upon any portion of the
Trust Property not then or theretofore released as security for
the full amount of the Indebtedness, Beneficiary may, from time
to time and without notice, agree to (i) release any person
liable for the Indebtedness, (ii) extend the maturity or alter
any of the terms of the Indebtedness or any guaranty thereof,
(iii) grant other indulgences, (iv) release or reconvey, or cause
to be released or reconveyed at any time at Beneficiary's option
any parcel, portion or all of the Trust Property, (v) take or
release any other or additional security for any obligation
herein mentioned, or (vi) make compositions or other arrangements
with debtors in relation thereto. If at any time this Deed of
Trust shall secure less than all of the principal amount of the
Indebtedness, it is expressly agreed that any repayments of the
principal amount of the Indebtedness shall not reduce the amount
of the lien created by this Deed of Trust until the lien amount
shall equal the principal amount of the Indebtedness outstanding.
(b) No recovery of any judgment by Beneficiary and no
levy of an execution under any judgment upon the Trust Property
or upon any other property of Grantor shall affect the lien
created by this Deed of Trust or any liens, rights, powers or
remedies of Beneficiary or Trustee hereunder, and such liens,
rights, powers and remedies shall continue unimpaired.
(c) If Beneficiary shall have the right to foreclose
this Deed of Trust or to direct the Trustee to exercise its power
of sale, Grantor authorizes Beneficiary at its option to
foreclose the lien of this Deed of Trust (or direct the Trustee
to sell the Trust Property, as the case may be) subject to the
rights of any tenants of the Trust Property. The failure to make
any such tenants parties defendant to any such foreclosure
proceeding and to foreclose their rights, or to provide notice to
such tenants as required in any statutory procedure governing a
sale of the Trust Property by Trustee, or to terminate such
tenant's rights in such sale will not be asserted by Grantor as a
defense to any proceeding instituted by Beneficiary to collect
the Indebtedness or to foreclose the lien created by this Deed of
Trust.
(d) Unless expressly provided otherwise, in the event
that Beneficiary's interest in this Deed of Trust and title to
the Trust Property or any estate therein shall become vested in
the same person or entity, this Deed of Trust shall not merge in
such title but shall continue as a valid lien on the Trust
Property for the amount secured hereby.
20. Security Agreement under Uniform Commercial Code.
(a) It is the intention of the parties hereto that this Deed of
Trust shall constitute a Security Agreement within the meaning of
the Uniform Commercial Code of the Commonwealth of Virginia (the
"CODE"). If an Event of Default shall occur and be continuing
under this Deed of Trust, then in addition to having any other
right or remedy available at law or in equity, Beneficiary shall
have the option of either (i) proceeding under the Code and
exercising such rights and remedies as may be provided to a
secured party by the Code with respect to all or any portion of
the Trust Property which is personal property (including, without
limitation, taking possession of and selling such property) or
(ii) treating such property as real property and proceeding with
respect to both the real and personal property constituting the
Trust Property in accordance with Beneficiary's rights, powers
and remedies with respect to the real property (in which event
the default provisions of the Code shall not apply). If
Beneficiary shall elect to proceed under the Code, then ten days'
notice of sale of the personal property shall be deemed
reasonable notice and the reasonable expenses of retaking,
holding, preparing for sale, selling and the like incurred by
Beneficiary shall include, but not be limited to, reasonable
attorneys' fees and legal expenses. At Beneficiary's request,
Grantor shall assemble the personal property and make it
available to Beneficiary at a place designated by Beneficiary
which is reasonably convenient to both parties.
(b) Grantor and Beneficiary agree, to the extent
permitted by law, that: (i) all of the goods described within the
definition of the word "Equipment" and all Timber to be cut are
or are to become fixtures on the Real Estate; (ii) this Deed of
Trust upon recording or registration in the real estate records
of the proper office shall constitute a financing statement filed
as a "fixture filing" within the meaning of Sections 8.9-313 and
8.9-402 of the Code; (iii) Grantor is the record owner of the
Real Estate; and (iv) the addresses of Grantor and Beneficiary
are as set forth on the first page of this Deed of Trust. This
Deed of Trust covers Timber to be cut and Harvested Timber, as
well as accounts resulting from the sale thereof, and this Deed
of Trust upon being recorded in the real estate records shall
operate also as a financing statement upon such of the Trust
Property as constitute or may constitute Timber to be cut and
Harvested Timber, as well as accounts resulting from the sale
thereof, in accordance with Sections 8.9-402 and 8.9-403 of the
Code. Grantor has an interest of record in the land upon which
the Timber is being grown and was grown, which land is more
particularly described in Schedule A to this Deed of Trust.
(c) Grantor, upon request by Beneficiary from time to
time, shall execute, acknowledge and deliver to Beneficiary one
or more separate security agreements, in form reasonably
satisfactory to Beneficiary, covering all or any part of the
Trust Property and will further execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, any
financing statement, affidavit, continuation statement or
certificate or other document as Beneficiary may request in order
to perfect, preserve, maintain, continue or extend the security
interest under and the priority of this Deed of Trust and such
security instrument. Grantor further agrees to pay to
Beneficiary on demand all costs and expenses incurred by
Beneficiary in connection with the preparation, execution,
recording, filing and re-filing of any such document and all
reasonable costs and expenses of any record searches for
financing statements Beneficiary shall reasonably require.
Grantor shall from time to time, on request of Beneficiary,
deliver to Beneficiary an inventory in reasonable detail of any
of the Trust Property which constitutes personal property. If
Grantor shall fail to furnish any financing or continuation
statement within 10 days after request by Beneficiary, then
pursuant to the provisions of the Code, Grantor hereby authorizes
Beneficiary, without the signature of Grantor, to execute and
file any such financing and continuation statements. The filing
of any financing or continuation statements in the records
relating to personal property or chattels shall not be construed
as in any way impairing the right of Beneficiary to proceed
against any personal property encumbered by this Deed of Trust as
real property, as set forth above.
21. Assignment of Rents. Grantor hereby assigns to
Trustee, for the benefit of Beneficiary, the Rents as further
security for the payment of the Indebtedness and performance of
the Obligations, and Grantor grants to Trustee and Beneficiary
the right to enter the Trust Property for the purpose of
collecting the same and to let the Trust Property or any part
thereof, and to apply the Rents on account of the Indebtedness.
The foregoing assignment and grant is present and absolute and
shall continue in effect until the Indebtedness is paid in full,
but Beneficiary and Trustee hereby waive the right to enter the
Trust Property for the purpose of collecting the Rents and
Grantor shall be entitled to collect, receive, use and retain the
Rents until the occurrence and continuance of an Event of Default
under this Deed of Trust; such right of Grantor to collect,
receive, use and retain the Rents may be revoked by Beneficiary
upon the occurrence and continuance of any Event of Default under
this Deed of Trust by giving not less than five days' written
notice of such revocation to Grantor; in the event such notice is
given, Grantor shall pay over to Beneficiary, or to any receiver
appointed to collect the Rents, any lease security deposits.
Grantor shall not accept prepayments of installments of Rent to
become due for a period of more than one month in advance (except
for security deposits and estimated payments of percentage rent,
if any).
22. Trust Funds. All lease security deposits of the
Real Estate shall be treated as trust funds not to be commingled
with any other funds of Grantor. Within 10 days after request by
Beneficiary, Grantor shall furnish Beneficiary satisfactory
evidence of compliance with this subsection, together with a
statement of all lease security deposits by lessees and copies of
all Leases not previously delivered to Beneficiary, which
statement shall be certified by Grantor.
23. Additional Rights. The holder of any subordinate
lien or subordinate deed of trust on the Trust Property shall
have no right to terminate any Lease whether or not such Lease is
subordinate to this Deed of Trust nor shall any holder of any
subordinate lien or subordinate deed of trust join any tenant
under any Lease in any trustee's sale or action to foreclose the
lien or modify, interfere with, disturb or terminate the rights
of any tenant under any Lease. By recordation of this Deed of
Trust all subordinate lienholders and the trustees and
beneficiaries under subordinate deeds of trust are subject to and
notified of this provision, and any action taken by any such
lienholder or trustee or beneficiary contrary to this provision
shall be null and void. Upon the occurrence and continuance of
any Event of Default, Beneficiary may, in its sole discretion and
without regard to the adequacy of its security under this Deed of
Trust, apply all or any part of any amounts on deposit with
Beneficiary under this Deed of Trust against all or any part of
the Indebtedness. Any such application shall not be construed to
cure or waive any default or Event of Default or invalidate any
act taken by Beneficiary on account of such default or Event of
Default.
24. All notices, requests, demands and other
communications hereunder shall be given in accordance with the
provisions of the Credit Agreement regarding the giving of
notices, addressed if to Grantor, Beneficiary or Trustee, as the
case may be, at their respective addresses given on the first
page of this Deed of Trust.
25. No Oral Modification. This Deed of Trust may not
be amended, supplemented or otherwise modified except in
accordance with the provisions of subsection 9.1 of the Credit
Agreement. Any agreement made by Grantor and Beneficiary after
the date of this Deed of Trust relating to this Deed of Trust
shall be superior to the rights of the holder of any intervening
or subordinate deed of trust, lien or encumbrance. Trustee's
execution of any written agreement between Grantor and
Beneficiary shall not be required for the effectiveness thereof
as between Grantor and Beneficiary.
26. Partial Invalidity. In the event any one or more
of the provisions contained in this Deed of Trust shall for any
reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision hereof, but each shall be
construed as if such invalid, illegal or unenforceable provision
had never been included. Notwithstanding to the contrary
anything contained in this Deed of Trust or in any provisions of
the Indebtedness or Loan Documents, the obligations of Grantor
and of any other obligor under the Indebtedness or Loan Documents
shall be subject to the limitation that Beneficiary shall not
charge, take or receive, nor shall Grantor or any other obligor
be obligated to pay to Beneficiary, any amounts constituting
interest in excess of the maximum rate permitted by law to be
charged by Beneficiary.
27. Grantor's Waiver of Rights. To the fullest extent
permitted by law, Grantor waives the benefit of all laws now
existing or that may subsequently be enacted providing for (i)
any appraisement before sale of any portion of the Trust
Property, (ii) any extension of the time for the enforcement of
the collection of the Indebtedness or the creation or extension
of a period of redemption from any sale made in collecting such
debt and (iii) exemption of the Trust Property from attachment,
levy or sale under execution or exemption from civil process. To
the full extent Grantor may do so, Grantor agrees that Grantor
will not at any time insist upon, plead, claim or take the
benefit or advantage of any law now or hereafter in force
providing for any appraisement, valuation, stay, exemption,
extension or redemption, or requiring foreclosure of this Deed of
Trust before exercising any other remedy granted hereunder and
Grantor, for Grantor and its successors and assigns, and for any
and all persons ever claiming any interest in the Trust Property,
to the extent permitted by law, hereby waives and releases all
rights of redemption, valuation, appraisement, stay of execution,
notice of election to mature or declare due the whole of the
secured indebtedness and marshalling in the event of exercise by
Trustee or Beneficiary of the power of sale or other rights
hereby created.
28. Remedies Not Exclusive. Beneficiary and Trustee
shall be entitled to enforce payment of the Indebtedness and
performance of the Obligations and to exercise all rights and
powers under this Deed of Trust or under any of the other Loan
Documents or other agreement or any laws now or hereafter in
force, notwithstanding some or all of the Indebtedness and
Obligations may now or hereafter be otherwise secured, whether by
deed of trust, mortgage, security agreement, pledge, lien,
assignment or otherwise. Neither the acceptance of this Deed of
Trust nor its enforcement, shall prejudice or in any manner
affect Beneficiary's or Trustee's right to realize upon or
enforce any other security now or hereafter held by Beneficiary
or Trustee, it being agreed that Beneficiary and Trustee shall be
entitled to enforce this Deed of Trust and any other security now
or hereafter held by Beneficiary or Trustee in such order and
manner as Beneficiary may determine in its absolute discretion.
No remedy herein conferred upon or reserved to Trustee or
Beneficiary is intended to be exclusive of any other remedy
herein or by law provided or permitted, but each shall be
cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by
statute. Every power or remedy given by any of the Loan
Documents to Beneficiary or Trustee or to which either may
otherwise be entitled, may be exercised, concurrently or
independently, from time to time and as often as may be deemed
expedient by Beneficiary or Trustee, as the case may be. In no
event shall Beneficiary or Trustee, in the exercise of the
remedies provided in this Deed of Trust (including, without
limitation, in connection with the assignment of Rents, or the
appointment of a receiver and the entry of such receiver on to
all or any part of the Trust Property), be deemed a "mortgagee in
possession," and neither Beneficiary nor Trustee shall in any way
be made liable for any act, either of commission or omission, in
connection with the exercise of such remedies.
29. Multiple Security. If (a) the Premises shall
consist of one or more parcels, whether or not contiguous and
whether or not located in the same county, or (b) in addition to
this Deed of Trust, Beneficiary shall now or hereafter hold or be
the beneficiary of one or more additional mortgages, liens, deeds
of trust or other security (directly or indirectly) for the
Indebtedness upon other property in the State in which the
Premises are located (whether or not such property is owned by
Grantor or by others) or (c) both the circumstances described in
clauses (a) and (b) shall be true, then to the fullest extent
permitted by law, Beneficiary may, at its election, commence or
consolidate in a single trustee's sale or foreclosure action all
trustee's sale or foreclosure proceedings against all such
collateral securing the Indebtedness (including the Trust
Property), which action may be brought or consolidated in the
courts of, or sale conducted in, any city or county in which any
of such collateral is located. Grantor acknowledges that the
right to maintain a consolidated trustee's sale or foreclosure
action is a specific inducement to Beneficiary to extend the
Indebtedness, and Grantor expressly and irrevocably waives any
objections to the commencement or consolidation of the
foreclosure proceedings in a single action and any objections to
the laying of venue or based on the grounds of forum non
conveniens which it may now or hereafter have. Grantor further
agrees that if Trustee or Beneficiary shall be prosecuting one or
more foreclosure or other proceedings against a portion of the
Trust Property or against any collateral other than the Trust
Property, which collateral directly or indirectly secures the
Indebtedness, or if Beneficiary shall have obtained a judgment of
foreclosure and sale or similar judgment against such collateral
(or, in the case of a trustee's sale, shall have met the
statutory requirements therefor with respect to such collateral),
then, whether or not such proceedings are being maintained or
judgments were obtained in or outside the State in which the
Premises are located, Beneficiary may commence or continue any
trustee's sale or foreclosure proceedings and exercise its other
remedies granted in this Deed of Trust against all or any part of
the Trust Property and Grantor waives any objections to the
commencement or continuation of a foreclosure of this Deed of
Trust or exercise of any other remedies hereunder based on such
other proceedings or judgments, and waives any right to seek to
dismiss, stay, remove, transfer or consolidate either any action
under this Deed of Trust or such other proceedings on such basis.
The commencement or continuation of proceedings to sell the Trust
Property in a trustee's sale, to foreclose this Deed of Trust or
the exercise of any other rights hereunder or the recovery of any
judgment by Beneficiary or the occurrence of any sale by the
Trustee in any such proceedings shall not prejudice, limit or
preclude Beneficiary's right to commence or continue one or more
trustee's sales, foreclosure or other proceedings or obtain a
judgment against (or, in the case of a trustee's sale, to meet
the statutory requirements for, any such sale of) any other
collateral (either in or outside the State in which the Real
Estate is located) which directly or indirectly secures the
Indebtedness, and Grantor expressly waives any objections to the
commencement of, continuation of, or entry of a judgment in such
other sales or proceedings or exercise of any remedies in such
sales or proceedings based upon any action or judgment connected
to this Deed of Trust, and Grantor also waives any right to seek
to dismiss, stay, remove, transfer or consolidate either such
other sales or proceedings or any sale or action under this Deed
of Trust on such basis. It is expressly understood and agreed
that to the fullest extent permitted by law, Beneficiary may, at
its election, cause the sale of all collateral which is the
subject of a single trustee's sale or foreclosure action at
either a single sale or at multiple sales conducted
simultaneously and take such other measures as are appropriate in
order to effect the agreement of the parties to dispose of and
administer all collateral securing the Indebtedness (directly or
indirectly) in the most economical and least time-consuming
manner.
30. Successors and Assigns. All covenants of Grantor
contained in this Deed of Trust are imposed solely and
exclusively for the benefit of Beneficiary and Trustee and their
respective successors and assigns, and no other person or entity
shall have standing to require compliance with such covenants or
be deemed, under any circumstances, to be a beneficiary of such
covenants, any or all of which may be freely waived in whole or
in part by Beneficiary or Trustee at any time if in the sole
discretion of either of them such waiver is deemed advisable.
All such covenants of Grantor shall run with the land and bind
Grantor, the successors and assigns of Grantor (and each of them)
and all subsequent owners, encumbrancers and tenants of the Trust
Property, and shall inure to the benefit of Beneficiary, Trustee
and their respective successors and assigns. Without limiting
the generality of the foregoing, any successor to Trustee
appointed by Beneficiary shall succeed to all rights of Trustee
as if such successor had been originally named as Trustee
hereunder. The word "Grantor" shall be construed as if it read
"Grantors" whenever the sense of this Deed of Trust so requires
and if there shall be more than one Grantor, the obligations of
the Grantors shall be joint and several.
31. No Waivers, etc. Any failure by Beneficiary to
insist upon the strict performance by Grantor of any of the terms
and provisions of this Deed of Trust shall not be deemed to be a
waiver of any of the terms and provisions hereof, and Beneficiary
or Trustee, notwithstanding any such failure, shall have the
right thereafter to insist upon the strict performance by Grantor
of any and all of the terms and provisions of this Deed of Trust
to be performed by Grantor. Beneficiary may release, regardless
of consideration and without the necessity for any notice to or
consent by the beneficiary of any subordinate deed of trust or
the holder of any subordinate lien on the Trust Property, any
part of the security held for the obligations secured by this
Deed of Trust without, as to the remainder of the security, in
any way impairing or affecting this Deed of Trust or the priority
of this Deed of Trust over any subordinate lien or deed of trust.
32. Governing Law, etc. This Deed of Trust shall be
governed by and construed in accordance with the laws of the
Commonwealth of Virginia, except that Grantor expressly
acknowledges that by its terms the Note shall be governed and
construed in accordance with the laws of the State of New York,
without regard to principles of conflict of law, and for purposes
of consistency, Grantor agrees that in any in personam proceeding
related to the Deed of Trust the rights of the parties to this
Deed of Trust shall also be governed by and construed in
accordance with the laws of the State of New York governing
contracts made and to be performed in that State, without regard
to principles of conflict of law.
33. Waiver of Trial by Jury. GRANTOR, TRUSTEE AND
BENEFICIARY EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY ACTION, CLAIM, SUIT OR PROCEEDING RELATING
TO THIS DEED OF TRUST AND FOR ANY COUNTERCLAIM BROUGHT HEREIN.
Grantor hereby waives all rights to interpose any counterclaim in
any suit brought by Beneficiary or Trustee hereunder and all
rights to have any such suit consolidated with any separate suit,
action or proceeding.
34. Incorporation by Reference. Grantor agrees that
in addition to all other remedies and rights provided for in this
Deed of Trust, this Deed of Trust shall be construed to impose
and confer upon the parties hereto, and the Beneficiary
hereunder, all duties, rights and obligations prescribed in
Section 55-59 and 55-59.1 through 55-59.4 of the Code of
Virginia, as amended and in effect as of the date of the
acknowledgement hereof, and further to incorporate herein the
following provisions, by the short-term references below, of
Sections 55-59 and 55-60 of the Code of Virginia:
(a) EXEMPTIONS WAIVED
(b) RENEWAL OR EXTENSIONS PERMITTED
(c) REINSTATEMENT PERMITTED
(d) SUBJECT TO ALL UPON DEFAULT
35. Certain Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Deed of Trust shall be used
interchangeably in singular or plural form and the word "Grantor"
shall mean "each Grantor or any subsequent owner or owners of the
Trust Property or any part thereof or interest therein," the word
"Beneficiary" shall mean "Beneficiary or any successor agent for
the Lenders," the word "Trustee" shall mean "Trustee and any
successor trustee hereunder," the word "Notes" shall mean "the
Notes, the Credit Agreement or any other evidence of indebtedness
secured by this Deed of Trust," the word "person" shall include
any individual, corporation, partnership, trust, unincorporated
association, government, governmental authority, or other entity,
and the words "Trust Property" shall include any portion of the
Trust Property or interest therein. Whenever the context may
require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa. The
captions in this Deed of Trust are for convenience or reference
only and in no way limit or amplify the provisions hereof.
36. Reconveyance by Trustee. Upon written request of
Beneficiary stating that all sums secured hereby have been paid,
and upon payment by Grantor of a Trustee's fees, Trustee shall
reconvey to Grantor, or the person or persons legally entitled
thereto, without warranty, any portion of the Trust Property then
held hereunder. The recitals in such reconveyance of any matters
or facts shall be conclusive proof of the truthfulness thereof.
The grantee in any reconveyance may be described as "the person
or persons legally entitled thereto."
37. To the extent that (i) this Deed of Trust creates
a lien on, or contains covenants with respect to, Equipment
(other than fixtures), or Leases, Rents or Contracts in respect
of such Equipment, and (ii) the Security and Pledge Agreement
creates a security interest, which is perfected, in such
Equipment, Leases, Rents or Contracts, the provisions of the
Security and Pledge Agreement will control with respect to such
Equipment, Leases, Rents or Contracts.
This Deed of Trust has been duly executed by Grantor on
December 1, 1997 and is intended to be effective as of December
1, 1997.
BEAR ISLAND PAPER COMPANY, L.L.C.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of
Finance
STATE OF CONNECTICUT )
: ss.:
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me
this 1st day of December, 1997, by ,
[the][a] of BEAR ISLAND PAPER COMPANY, L.L.C.,
a Virginia limited liability company.
Notary Public
[Notarial Stamp]
My Commission expires:
Schedule A
Description of the Premises
[Attach Legal Description of all parcels]
[Virginia]
DEED OF TRUST
from
BEAR ISLAND PAPER COMPANY, L.L.C., Grantor,
successor by merger to
BEAR ISLAND MERGERCO, L.L.C.,
successor by conversion to
BEAR ISLAND PAPER COMPANY, L.P.
to
SOUTHERN TITLE SERVICES CORPORATION, Trustee
for the use and
benefit of
TORONTO-DOMINION (TEXAS), INC.,
As Administrative Agent, Beneficiary
DATED AS OF DECEMBER 1, 1997
This document was prepared by, and
after recording, please return to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
a partnership which includes
professional corporations
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xxx Xxxxxxxx, Esq.
EXHIBIT F
EXECUTION COPY
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT, dated as of December 1, 1997,
among CRESTAR BANK (the "Trustee"), under the Indenture dated
December 1, 1997 made by Bear Island Paper Company, LLC ("BIPCO")
and Bear Island Finance Company ("XxxXx") in favor of the Trustee
(the "Indenture"); TORONTO-DOMINION (TEXAS), INC., as
Administrative Agent under the BIPCO Credit Agreement
(capitalized terms having the definitions set forth in Section 1
below; in such capacity, the "BIPCO Agent"); TORONTO-DOMINION
(TEXAS), INC., in its capacity as Administrative Agent under the
BAI Credit Agreement (in such capacity, the "BAI Agent"); and
BEAR ISLAND PAPER COMPANY, LLC ("BIPCO") and XXXXX-XXXXX
INDUSTRIES, INC. ("BAI"; together with BIPCO, the "Borrowers").
W I T N E S S E T H :
WHEREAS, BIPCO, a wholly owned subsidiary of BAI,
intends to make secured borrowings under the BIPCO Credit
Agreement;
WHEREAS, BAI intends to make secured borrowings under
the BAI Credit Agreement;
WHEREAS, BIPCO and its wholly owned subsidiary XxxXx
intend to issue secured notes under the Indenture;
WHEREAS, BAI and its affiliates have pledged certain
collateral ("Collateral") to secure their obligations under more
than one of the foregoing agreements;
WHEREAS, the parties hereto desire to set forth their
relative rights in respect of such shared collateral and the
security interests granted therein;
NOW, THEREFORE, in consideration of the premises, the
parties hereto hereby agree as follows:
1. Definitions. (a) Unless otherwise defined herein,
terms defined in the Credit Agreements and the Loan Documents
have the meanings given to them in such documents.
(b) The following terms shall have the following meanings:
"Agreement": this Intercreditor Agreement, as the same
may be amended, supplemented or otherwise modified from time
to time.
"BAI Credit Agreement": the Credit Agreement, dated as
of the date hereof, among the BAI Agent, the BAI Lenders and
BAI, as amended, supplemented or otherwise modified from
time to time; for the purposes hereof, "BAI Credit
Agreement" shall also be deemed to refer to any credit
agreement or similar document entered into by BAI and any
lenders to replace the BAI Credit Agreement in whole or in
part.
"BAI Lenders": the lenders parties from time to time
to the BAI Credit Agreement in their capacity as lenders
thereunder, and their respective successors and assigns.
"BAI Lender Priority Collateral": any and all Lender
Priority Collateral pledged to secure the BAI Obligations.
"BAI Loan Documents": the collective reference to the
BAI Credit Agreement, each "Loan Document" as defined
therein and all other documents that from time to time
evidence the BAI Obligations or secure or support payment or
performance thereof or of any guarantee thereof.
"BAI Loan Parties": BAI and each other Loan Party
under (and as defined in) the BAI Loan Documents, and each
successor and assign of the foregoing.
"BAI Obligations": the Lender Obligations in respect
of the BAI Loan Documents.
"BIPCO Credit Agreement": the Credit Agreement, dated
as of the date hereof, among the BIPCO Agent, the BIPCO
Lenders and BIPCO, as amended, supplemented or otherwise
modified from time to time; for the purposes hereof, "BIPCO
Credit Agreement" shall also be deemed to refer to any
credit agreement or similar document entered into by BIPCO
and any lenders to replace the BIPCO Credit Agreement in
whole or in part.
"BIPCO Lenders": the lenders parties from time to time
to the BIPCO Credit Agreement in their capacity as lenders
thereunder, and their respective successors and assigns.
"BIPCO Lender Priority Collateral": any and all Lender
Priority Collateral pledged to secure the BIPCO Obligations.
"BIPCO Loan Documents": the collective reference to
the BIPCO Credit Agreement, each "Loan Document" as defined
therein and all other documents that from time to time
evidence the BIPCO Obligations or secure or support payment
or performance thereof or of any guarantee thereof.
"BIPCO Loan Parties": BIPCO and each other Loan Party
under (and as defined in) the BIPCO Loan Documents, and each
successor and assign of the foregoing.
"BIPCO Obligations": the Lender Obligations in respect
of the BIPCO Loan Documents.
"BITCO": Bear Island Timberlands Company, LLC, a
Virginia limited liability company.
"BITCO Collateral": the membership interests of BITCO
identified on Schedule 1 of the Timberlands Pledge
Agreement.
"Credit Agreements": the BAI Credit Agreement and the
BIPCO Credit Agreement.
"Lender Obligations": the collective reference to the
unpaid principal of and interest owing under the Credit
Agreements and all other obligations and liabilities of the
Borrowers thereunder, including, without limitation,
interest accruing at the applicable rate provided in the
Credit Agreements after the filing of any petition in
bankruptcy or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower
or any other party specified therein, whether or not a claim
for post-filing or post-petition interest is allowed in such
proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreements (including, without
limitation, any obligations under any Interest Rate
Protection Agreement referred to in a Credit Agreement),
this Agreement, the BAI Loan Documents, the BIPCO Loan
Documents or any other document made, delivered or given in
connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise, including,
without limitation, all fees and disbursements of counsel
that are required to be paid by the Borrowers pursuant to
the terms of the Credit Agreements, this Agreement or, the
BAI Loan Documents or the BIPCO Loan Documents.
"Lender Priority Collateral": the collective reference
to any and all property from time to time subject to a
security interest to secure payment or performance of the
Lender Obligations or the Trustee Obligations.
"Loan Documents": the BAI Loan Documents and the BIPCO
Loan Documents.
"Loan Parties": the BAI Loan Parties and the BIPCO
Loan Parties.
"Senior Secured Lender": each of the BAI Agent, the
BIPCO Agent, each BAI Lender and each BIPCO Lender.
"Xxxxx Collateral": the "Pledged Stock" as defined in
the Xxxxx Pledge Agreement.
"Xxxxx Pledge Agreement": the Xxxxx Pledge Agreement
dated as of the date hereof, made by BAI in favor of the
BIPCO Agent and the BAI Agent and, for the purposes of this
Agreement, the notarial deed of hypothec granted on the
Collateral (as defined in the Xxxxx Pledge Agreement)
pursuant to the laws of the province of Quebec (Canada).
"Subordinated Security Documents": the collective
reference to any and all documents providing for collateral
security, guarantees or negative pledges in connection with
the notes issued under the Indenture as the same may be
amended, supplemented or otherwise modified from time to
time in accordance with Section 6.9 of the BIPCO Credit
Agreement.
"Timberlands Pledge Agreement": the meaning ascribed
in the BAI Credit Agreement.
"Trustee Documents": the collective reference to the
Indenture, the notes issued thereunder and the Subordinated
Security Documents.
"Trustee Obligations": the collective reference to the
unpaid principal of and interest owing under the Indenture
and the notes issued thereunder and all other obligations
and liabilities of BIPCO and XxxXx thereunder (including,
without limitation, interest accruing at the then applicable
rate provided in the Indenture and the notes issued
thereunder after the maturity of the principal obligations
owing thereunder and interest accruing at the then
applicable rate provided in the Indenture and the notes
issued thereunder after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to BIPCO or
XxxXx, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding), whether
direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Indenture, the
notes issued thereunder, this Agreement, or any other
Subordinated Security Document, in each case whether on
account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to
the Trustee that are required to be paid by the Borrower or
XxxXx pursuant to the terms of the Indenture or this
Agreement or any other Subordinated Security Document).
(c) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this
Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Acknowledgements The Trustee (a) acknowledges that the
Borrowers and the other Loan Parties have granted senior priority
security interests in the Lender Priority Collateral to secure
the Lender Obligations and that such security interests are prior
in all respects to the junior security interests in the Lender
Priority Collateral granted to the Trustee, (b) agrees that the
Trustee shall not have any claim to or in respect of the BAI
Lender Priority Collateral, or any proceeds of or realization on
such BAI Lender Priority Collateral, on a parity with or prior to
the claim of the BAI Obligations, nor any claim to or in respect
of the BIPCO Lender Priority Collateral, or any proceeds of or
realization on such BIPCO Lender Priority Collateral, on a parity
with or prior to the claim of the BIPCO Obligations, and (c)
agrees that, notwithstanding such junior security interests and
any rights of the Trustee in respect thereof, (i) so long as the
BAI Obligations have not been paid in full or the commitments
under the BAI Credit Agreement have not been terminated, the
Trustee shall not have any right or claim in respect of the
exercise of rights and remedies of the Senior Secured Lenders in
respect of the BAI Lender Priority Collateral nor shall any
Senior Secured Lender have any obligation regarding any such
exercise or any other obligation or duty in respect of the
interests of the Trustee except as set forth in paragraph 3(d)
hereof, and that the Trustee shall not assert any such claim or
right in any such bankruptcy proceeding or otherwise, and (ii) so
long as the BIPCO Obligations have not been paid in full or the
commitments under the BIPCO Credit Agreement have not been
terminated, the Trustee shall not have any right or claim in
respect of the exercise of rights and remedies of the Senior
Secured Lenders in respect of the BIPCO Lender Priority
Collateral nor shall any Senior Secured Lender have any
obligation regarding any such exercise or any other obligation or
duty in respect of the interests of the Trustee except as set
forth in paragraph 3(d) hereof, and that the Trustee shall not
assert any such claim or right in any such bankruptcy proceeding
or otherwise.
3. Rights in Lender Priority Collateral (a) Notwithstanding
anything to the contrary contained in any filing or agreement to
which the Trustee, the Senior Secured Lenders or the Borrowers
now or hereafter may be a party and irrespective of the time,
order or method of attachment or perfection of the security
interests created by the Loan Documents or the Subordinated
Security Documents, the rules for determining priority under the
Uniform Commercial Code or any other law governing the relative
priorities of secured creditors, (i) any security interest in any
BAI Lender Priority Collateral in favor of or for the benefit of
the Senior Secured Lenders pursuant to the BAI Loan Documents has
and shall have priority, to the extent of any unpaid BAI Loan
Obligations, over any security interest in such BAI Lender
Priority Collateral in favor of or for the benefit of the Trustee
pursuant to the Subordinated Security Documents; and (ii) any
security interest in any BIPCO Lender Priority Collateral in
favor of or for the benefit of the Senior Secured Lenders
pursuant to the BIPCO Loan Documents has and shall have priority,
to the extent of any unpaid BIPCO Loan Obligations, over any
security interest in such BIPCO Lender Priority Collateral in
favor of or for the benefit of the Trustee pursuant to the
Subordinated Security Documents.
(b) (i) So long as the BAI Obligations have not been paid
in full or the commitments under the BAI Credit Agreement have
not been terminated, whether or not any bankruptcy proceeding or
similar event or proceeding has been commenced by or against BAI
or any other BAI Loan Party, (i) the Trustee will not (A)
exercise or seek to exercise any rights or exercise any remedies
with respect to any BAI Lender Priority Collateral, (B) institute
any action or proceeding with respect to such rights or remedies,
including without limitation, any action of foreclosure, (C)
contest, protest or object to any foreclosure proceeding or
action brought by the BAI Agent or any BAI Lender, or any other
exercise by any such party, of any rights and remedies relating
to the BAI Lender Priority Collateral under the Subordinated
Security Documents or otherwise, or any release of any or all of
the BAI Lender Priority Collateral for any purpose, or (D) object
to the forbearance by the BAI Lenders from bringing or pursuing
any foreclosure proceeding or action or any other exercise of any
rights or remedies relating to the BAI Lender Priority
Collateral, and (ii) the BAI Lenders shall have the exclusive
right to enforce rights, exercise remedies and make
determinations regarding release, disposition, or restrictions
with respect to the Lender Priority Collateral; provided, that in
any bankruptcy proceeding or similar event or proceeding
commenced by or against BAI or any other BAI Loan Party, the
Trustee may file a claim or statement of interest with respect to
the Trustee Obligations.
(ii) So long as the BIPCO Obligations have not been paid in full
or the commitments under the BIPCO Credit Agreement have not been
terminated, whether or not any bankruptcy proceeding or similar
event or proceeding has been commenced by or against BIPCO or any
other BIPCO Loan Party, (i) the Trustee will not (A) exercise or
seek to exercise any rights or exercise any remedies with respect
to any BIPCO Lender Priority Collateral, (B) institute any action
or proceeding with respect to such rights or remedies, including
without limitation, any action of foreclosure, (C) contest,
protest or object to any foreclosure proceeding or action brought
by the BIPCO Agent or any BIPCO Lender, or any other exercise by
any such party, of any rights and remedies relating to the BIPCO
Lender Priority Collateral under the Subordinated Security
Documents or otherwise, or any release of any or all of the BIPCO
Lender Priority Collateral for any purpose, or (D) object to the
forbearance by the BIPCO Lenders from bringing or pursuing any
foreclosure proceeding or action or any other exercise of any
rights or remedies relating to the BIPCO Lender Priority
Collateral, and (ii) the BIPCO Lenders shall have the exclusive
right to enforce rights, exercise remedies and make
determinations regarding release, disposition, or restrictions
with respect to the Lender Priority Collateral; provided, that in
any bankruptcy proceeding or similar event or proceeding
commenced by or against BIPCO or any other BIPCO Loan Party, the
Trustee may file a claim or statement of interest with respect to
the Trustee Obligations.
(c) (i) In exercising rights and remedies with respect to
the BAI Lender Priority Collateral, the BAI Lenders may enforce
the provisions of the BAI Loan Documents and exercise remedies
thereunder, all in such order and in such manner as they may
determine in the exercise of their sole discretion. Such
exercise and enforcement shall include, without limitation, the
rights of an agent appointed by them to sell or otherwise dispose
of BAI Lender Priority Collateral upon foreclosure, to incur
expenses in connection with such sale or disposition, and to
exercise all the rights and remedies of a secured lender under
the Uniform Commercial Code of any applicable jurisdiction and of
a secured creditor under bankruptcy or similar laws of any
applicable jurisdiction.
(ii) In exercising rights and remedies with respect to the BIPCO
Lender Priority Collateral, the BIPCO Lenders may enforce the
provisions of the BIPCO Loan Documents and exercise remedies
thereunder, all in such order and in such manner as they may
determine in the exercise of their sole discretion. Such
exercise and enforcement shall include, without limitation, the
rights of an agent appointed by them to sell or otherwise dispose
of BIPCO Lender Priority Collateral upon foreclosure, to incur
expenses in connection with such sale or disposition, and to
exercise all the rights and remedies of a secured lender under
the Uniform Commercial Code of any applicable jurisdiction and of
a secured creditor under bankruptcy or similar laws of any
applicable jurisdiction.
(d) (i) BIPCO Lender Priority Collateral. Subject to the
provisions of paragraph 6 hereof, any money, property, securities
or other direct or indirect distributions of any nature
whatsoever received from the sale, disposition or other
realization upon a forclosure or other exercise of remedies upon
the occurrence and continuance of an Event of Default (as defined
in the Credit Agreements or the Indenture) by any Senior Secured
Party or the Trustee of all or any part of the BIPCO Lender
Priority Collateral (other than the BITCO Collateral and the
Xxxxx Collateral which constitute a part of the BIPCO Lender
Priority Collateral), regardless of whether such money, property,
securities or other distributions are received directly or
indirectly during the pendency of or in connection with any
bankruptcy, insolvency or other like proceeding or otherwise,
shall be delivered to the BIPCO Agent in the form received, duly
indorsed to such party, if required, and applied by the BIPCO
Agent in the following order:
First, to the payment in full of all costs and expenses
(including, without limitation, attorneys' fees and
disbursements) paid or incurred by the Senior Secured
Lenders in connection with such realization on the BIPCO
Lender Priority Collateral or the protection of any of their
rights and interests therein;
Second, to the payment in full of all BIPCO Obligations
in the order prescribed by Section 2.16 of the BIPCO Credit
Agreement;
Third, to the Trustee for application to the Trustee
Obligations to the full extent thereof at such time; and
Fourth, to pay the appropriate Loan Party or designee
thereof or as a court of competent jurisdiction may direct,
any surplus then remaining.
(ii) BITCO Collateral. Subject to the provisions of paragraph 6
hereof, any money, property, securities or other direct or
indirect distributions of any nature whatsoever received from the
sale, disposition or other realization upon a forclosure or other
exercise of remedies upon the occurrence and continuance of an
Event of Default (as defined in the Credit Agreements or the
Indenture) by any Senior Secured Party or the Trustee of all or
any part of the BITCO Collateral, regardless of whether such
money, property, securities or other distributions are received
directly or indirectly during the pendency of or in connection
with any bankruptcy, insolvency or other like proceeding or
otherwise, shall be delivered to the BAI Agent in the form
received, duly indorsed to such party, if required, and applied
by the BAI Agent in the following order:
First, to the payment in full of all costs and expenses
(including, without limitation, attorneys' fees and
disbursements) paid or incurred by the Senior Secured
Lenders in connection with such realization on the BITCO
Collateral or the protection of any of their rights and
interests therein;
Second, to the payment in full of all BAI Obligations
in the order prescribed by Section 2.13 of the BAI Credit
Agreement;
Third, to the payment in full of all BIPCO Obligations
in the order prescribed by Section 2.16 of the BIPCO Credit
Agreement shall provide;
Fourth, to the Trustee for application to the Trustee
Obligations to the full extent thereof at such time; and
Fifth, to pay to the appropriate Loan Party or designee
thereof or as a court of competent jurisdiction may direct,
any surplus then remaining.
(iii) Xxxxx Collateral. Subject to the provisions of paragraph
6 hereof, any money, property, securities or other direct or
indirect distributions of any nature whatsoever received from the
sale, disposition or other realization upon a forclosure or other
exercise of remedies upon the occurrence and continuance of an
Event of Default (as defined in the Credit Agreements or the
Indenture) by any Senior Secured Party or the Trustee of all or
any part of the Xxxxx Collateral, regardless of whether such
money, property, securities or other distributions are received
directly or indirectly during the pendency of or in connection
with any bankruptcy, insolvency or other like proceeding or
otherwise, shall be delivered to the BIPCO Agent or the BAI Agent
in the form received, duly indorsed to such party, if required,
and applied by the BIPCO Agent or the BAI Agent in the following
order:
First, to the payment in full of all costs and expenses
(including, without limitation, attorneys' fees and
disbursements) paid or incurred by the Senior Secured
Lenders in connection with such realization on the Xxxxx
Collateral or the protection of any of their rights and
interests therein;
Second, pro rata to the payment in full of all BAI
Obligations and BIPCO Obligations, in such order as each of
Section 2.13 of the BAI Credit Agreement and Section 2.16 of
the BIPCO Credit Agreement, respectively, shall provide;
Third, to the Trustee for application to the Trustee
Obligations to the full extent thereof at such time; and
Fourth, to pay to the appropriate Loan Party or
designee thereof or as a court of competent jurisdiction may
direct, any surplus then remaining.
(e) The BAI Lenders' rights with respect to the BAI Lender
Priority Collateral and the BIPCO Lenders' rights with respect to
the BIPCO Lender Priority Collateral shall include, without
limitation, the exclusive right to release at any time any or all
of such collateral from the liens under the Loan Documents and
the Subordinated Security Documents without the consent of the
Trustee and without any duty, obligation or liability arising
from any such action, provided, that such release is in
connection with the exercise of remedies in respect of the items
of Lender Priority Collateral so released. Upon any such sale,
release or other disposition of any Lender Priority Collateral,
the lien and security interest created for the benefit of the
Trustee pursuant to the Subordinated Security Documents in such
Lender Priority Collateral shall be automatically released, and
the Trustee shall execute or cause to be executed such release
documents and instruments and shall take such further actions as
the Senior Secured Lenders shall request.
(f) (A) Subject to the provisions of paragraph 6 hereof,
in the event that:
(i) the BAI Lenders, in exercise of their foreclosure or
similar remedies, have disposed of or otherwise realized
upon the BAI Lender Priority Collateral, or have been repaid
pursuant to a bankruptcy or similar proceeding at the
commencement of which the security interest securing the BAI
Obligations is in effect,
(ii) all of the BAI Obligations have been paid in full and
the commitments under the BAI Credit Agreement have been
terminated,
(iii) after giving effect thereto any BAI Lender Priority
Collateral remains that:
(x) never constituted BIPCO Lender Priority Collateral,
or has been released from the security interests
created by the BIPCO Loan Documents, and
(y) remains pledged pursuant to the Subordinated
Security Documents, and
(iv) at such time there are Trustee Obligations outstanding,
then the Trustee shall have the right to enforce the
provisions of the Subordinated Security Documents in respect
of BAI Lender Priority Collateral.
(B) Subject to the provisions of paragraph 6 hereof, in the
event that:
(i) the BIPCO Lenders, in exercise of their foreclosure or
similar remedies, have disposed of or otherwise realized
upon the BIPCO Lender Priority Collateral, or have been
repaid pursuant to a bankruptcy or similar proceeding at the
commencement of which the security interest securing the
BIPCO Obligations is in effect,
(ii) all of the BIPCO Obligations have been paid in full and
the commitments under the BIPCO Credit Agreement have been
terminated,
(iii) after giving effect thereto any BIPCO Lender Priority
Collateral remains that:
(x) never constituted BAI Lender Priority Collateral
or has been released from the security interests
created by the BAI Loan Documents, and
(y) remains pledged pursuant to the Subordinated
Security Documents, and
(iv) at such time there are Trustee Obligations outstanding,
then the Trustee shall have the right to enforce the
provisions of the Subordinated Security Documents in respect
of the BIPCO Lender Priority Collateral.
4. Obligations Unconditional. All rights, interests,
agreements and obligations of the Senior Secured Lenders and the
Trustee, respectively, hereunder shall remain in full force and
effect irrespective of:
(a) any lack of validity or enforceability of the Loan
Documents or any Trustee Documents;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Lender Obligations or
Trustee Obligations, or any amendment or waiver or other
modification, including any increase in the amount thereof,
whether by course of conduct or otherwise, of the terms of either
Credit Agreement or any other Loan Document or of the terms of
the Trustee Documents;
(c) any exchange, release or nonperfection of any security
interest in any Lender Priority Collateral or any other
collateral, or any release, amendment, waiver or other
modification, whether in writing or by course of conduct or
otherwise, of all or any of the Lender Obligations or Trustee
Obligations or any guarantee thereof;
(d) the commencement of any bankruptcy or similar
proceeding in respect of either of the Borrowers or any other
Loan Party; or
(e) any other circumstances which otherwise might
constitute a defense available to, or a discharge of, any Loan
Party in respect of the Lender Obligations or of the Trustee in
respect of this Agreement.
5. Waiver of Claims; Waivers of Jury Trial. (a) To the
maximum extent permitted by law, the Trustee waives any claim it
might have against any Senior Secured Lender with respect to, or
arising out of, any action or failure to act or any error of
judgment or negligence on the part of any Senior Secured Lender
or its respective directors, officers, employees or agents with
respect to any exercise of rights or remedies in respect of the
Lender Priority Collateral or any transaction relating to the
Lender Priority Collateral. Neither the BAI Agent, the BIPCO
Agent, any Senior Secured Lender nor any of their respective
directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of
any Loan Party, the Trustee or any other Person or to take any
other action whatsoever with regard to the Collateral or any part
thereof.
(b) THE BORROWERS, THE BAI AGENT (ON ITS OWN BEHALF AND ON
BEHALF OF THE BAI LENDERS), THE BIPCO AGENT (ON ITS OWN BEHALF
AND ON BEHALF OF THE BIPCO LENDERS) AND THE TRUSTEE HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR
COUNTERCLAIM THEREIN.
6. Provisions Define Relative Rights. This Agreement is
intended solely for the purpose of defining the relative rights
of the BAI Lenders, the BAI Agent, the BIPCO Lenders, the BIPCO
Agent and the Trustee, and no other Person shall have any right,
benefit or other interest under this Agreement. Notwithstanding
anything to the contrary contained herein, this Agreement shall
not modify or amend the rights and obligations of the Borrowers
or any other Loan Party under any Loan Document.
7. Shared Lender Priority Collateral. The BIPCO Agent and
the BAI Agent acknowledge that the Timberlands Pledge Agreement
and the Xxxxx Pledge Agreement create, in favor of Toronto-
Dominion (Texas), Inc., as secured party thereunder (in such
capacity, the "Agent"), security interests in Collateral to
secure both the BAI Obligations and the BIPCO Obligations. The
BIPCO Agent, on behalf of the BIPCO Lenders, and the BAI Agent,
on behalf of the BAI Lenders, hereby (i) confirm that the Agent
has been appointed as agent of such parties to be the secured
party under the Timberlands Pledge Agreement and the Xxxxx Pledge
Agreement, (ii) agree with the Agent that in taking and
refraining from actions under the Timberlands Pledge Agreement
(including amendments and waivers with respect thereto), the
Agent shall follow the directions of the Required Lenders under
the BAI Credit Agreement so long as the BAI Credit Agreement
remains outstanding, and thereafter shall follow the directions
of the Required Lenders under the BIPCO Credit Agreement and
(iii) agree with the Agent that in taking and refraining from
actions under the Xxxxx Pledge Agreement (including amendments
and waivers with respect thereto), the Agent shall follow the
directions of the Required Lenders under the BAI Credit Agreement
and the Required Lenders under the BIPCO Credit Agreement.
8. Payments in Ordinary Course. Notwithstanding any
provision of this Agreement limiting the rights of the holders of
the Trustee Obligations in the Collateral, nothing in this
Agreement shall prohibit BIPCO and XxxXx from making payments in
respect of the Trustee Obligations in the ordinary course of
business, whether or not the cash with which such payments are
made constitutes proceeds of Collateral.
9. Termination of Agreement; Acknowledgements. (a) The
rights of the Senior Secured Lenders under this Agreement in
respect of the Collateral securing only the BIPCO Obligations
shall terminate when the BIPCO Obligations have been paid in full
in cash and all commitments to extend credit under the BIPCO
Credit Agreement have terminated. The BIPCO Agent agrees that,
within 30 days after payment in cash of all principal, interest
and other amounts then outstanding under the BIPCO Obligations
and termination of all commitments to extend credit under the
BIPCO Credit Agreement, it will, upon the request of the Trustee,
provide a written acknowledgement of such payment to the Trustee,
which acknowledgement shall also acknowledge that the Senior
Secured Lenders have no further rights under this Agreement in
respect of the Collateral securing only the BIPCO Obligations.
Concurrently with such acknowledgement, the BIPCO Agent will
deliver to the Trustee if any of the Trustee Obligations shall be
outstanding, any items of such Collateral held in the possession
of the BIPCO Agent, provided that if no Trustee Obligations shall
be outstanding, the BIPCO Agent will deliver any such items of
Collateral to the appropriate Loan Party. The BIPCO Agent
acknowledges that prior to such delivery it holds such items of
Collateral for the Trustee in accordance with the terms of this
Agreement, for purposes of perfecting the Trustee's security
interest therein.
(b) The rights of the Senior Secured Lenders under this
Agreement in respect of the Collateral securing only the BAI
Obligations shall terminate when the BAI Obligations have been
paid in full in cash and all commitments to extend credit under
the BAI Credit Agreement have terminated. The BAI Agent agrees
that, within 30 days after payment of all principal, interest and
other amounts then outstanding under the BAI Obligations and
termination of all commitments to extend credit under the BAI
Credit Agreement, it will, upon the request of the Trustee,
provide a written acknowledgement of such payment to the Trustee,
which acknowledgement shall also acknowledge that the Senior
Secured Lenders have no further rights under this Agreement in
respect of the Collateral securing only the BAI Obligations.
Concurrently with such acknowledgement, the BAI Agent will
deliver to the Trustee if any Trustee Obligations shall be
outstanding any items of such Collateral held in the possession
of the BAI Agent, provided that if no Trustee Obligations are
outstanding, the BAI Agent will deliver any such items of
Collateral to the appropriate Loan Party. The BAI Agent
acknowledges that prior to such delivery it holds such items of
Collateral for the Trustee in accordance with the terms of this
Agreement for purposes of perfecting the Trustee's security
interest therein.
(c) The rights of the Senior Secured Lenders under this
Agreement in respect of all Collateral (to the extent not
previously terminated pursuant to paragraphs (a) and (b) above)
shall in any event terminate when all Lender Obligations have
been paid in full in cash and all commitments to extend credit
under the Loan Documents have terminated.
10. Powers Coupled With An Interest. All powers,
authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until the Lender
Obligations are paid in full and the commitments under the Credit
Agreements are terminated.
11. Notices. All notices, requests and demands to or upon
the parties to be effective shall be in writing (or by telex, fax
or similar electronic transfer confirmed in writing) and shall be
deemed to have been duly given or made (i) when delivered by hand
or (ii) if given by mail, when deposited in the mails by
certified mail, return receipt requested, or (iii) if by telex,
fax or similar electronic transfer, when sent and receipt has
been confirmed, addressed as follows:
If to the BAI Agent or
the BIPCO Agent: TORONTO-DOMINION (TEXAS), INC.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
If to the Trustee: CRESTAR BANK
Attention: Corporate Trust Department
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The parties hereto may change their addresses and transmission
numbers for notices by notice in the manner provided in this
Section.
12. Counterparts. This Agreement may be executed by one or
more of the parties on any number of separate counterparts, and
all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the
counterparts of this Agreement signed by all the parties shall be
lodged with the BAI Agent, the BIPCO Agent and the Trustee.
13. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
14. Integration. This Agreement represents the entire
agreement of the Senior Secured Lenders and the Trustee with
respect to the subject matter hereof and there are no promises or
representations by any of them relative to the subject matter
hereof not reflected herein.
15. Amendments in Writing. None of the terms or provisions
of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the
BAI Agent, the BIPCO Agent, the Borrowers and the Trustee.
16. Successors and Assigns. (a) This Agreement shall be
binding upon and inure to the benefit of each of the Senior
Secured Lenders and the Trustee and their successors and assigns.
(b) Upon a successor administrative agent becoming the
Administrative Agent under the BAI Credit Agreement or the BIPCO
Credit Agreement, such successor Administrative Agent
automatically shall become the BAI Agent or the BIPCO Agent, as
the case may be, hereunder with all the rights and powers of such
party hereunder, and bound by the provisions hereof, without the
need for any further action on the part of any party hereto.
(c) Upon a successor trustee becoming the Trustee under the
Indenture, such successor Trustee automatically shall become the
Trustee hereunder with all the rights and powers of the Trustee
hereunder, and bound by the provisions hereof, without the need
for any further action on the part of any party hereto.
17. Governing Law; Jurisdiction. This Agreement shall be
governed by, and construed and interpreted in accordance with,
the law of the State of New York, excluding (to the greatest
extent permissible by law) any rule of law that would cause the
application of the laws of any jurisdiction other than the State
of New York. Each party hereto agrees that all judicial
proceedings brought against it arising out of or relating to this
Agreement or its obligations hereunder may be brought in any
federal court of competent jurisdiction in the State, County and
City of New York, and accepts generally and unconditionally the
nonexclusive jurisdiction and venue of such courts.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and
year first above written.
TORONTO-DOMINION (TEXAS), INC., as
BAI Agent and as BIPCO Agent, and
as Agent for the BAI Agent and the
BIPCO Agent
By: /s/ Xxxx Xxxx
Title: Vice President
CRESTAR BANK, as Trustee
By: /s/ Xxxxx X. XxXxxxx
Title: Vice President
Consented:
XXXXX-XXXXX INDUSTRIES, INC., as Borrower
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
BEAR ISLAND PAPER COMPANY, as Borrower
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
BEAR ISLAND FINANCE COMPANY II
By: /s/ Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
EXHIBIT 10.2(G)
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered to you pursuant to
Section 5.2(b) of the Credit Agreement, dated as of _______________, as
amended, supplemented or modified from time to time, (the "Credit
Agreement"), among Bear Island Paper Company, LLC (the "Borrower"), the
financial institutions or other entities from time to time party thereto as
lenders (the "Lenders"), TD Securities (USA) Inc., as advisor and arranger
(in such capacity, the "Arranger") and Toronto-Dominion (Texas), Inc., as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent"). Terms defined in the Credit Agreement and not otherwise defined
herein are used herein with the meanings so defined.
1. I am the duly elected, qualified and acting Chief
Financial Officer of the Borrower.
2. I have reviewed and am familiar with the contents of
this Certificate.
3. I have reviewed the terms of the Credit Agreement and
the Loan Documents and have made or caused to be made under my supervision,
a review in reasonable detail of the transactions and condition of the
Borrower during the accounting period covered by the financial statements
attached hereto as Attachment 1 (the "Financial Statements"). Such review
did not disclose the existence during or at the end of the accounting
period covered by the Financial Statements, and I have no knowledge of the
existence, as of the date of this Certificate, of any condition or event
which constitutes a Default or Event of Default [, except as set forth
below].
4. Attached hereto as Attachment 2 are the computations
showing compliance with the covenants set forth in Sections 6.1,
6.2(c),(g),(i),(j),(l) and (m), 6.3(j),(k), 6.5(f), 6.6(c), 6.7, and
6.8(g),(h) and (i) of the Credit Agreement.
5. Attached hereto as Attachment 3 is a list of all counties
and states within the United States where any Loan Party keeps material
inventory or material equipment (other than motor vehicles) and any
Intellectual Property, as the case may be, acquired by any Loan Party since
the date of the most recent list delivered pursuant to Section
5.2(b)(ii)(y) of the Credit Agreement.
IN WITNESS WHEREOF, I execute this Certificate this _____ day
of _________, ____.
BEAR ISLAND PAPER COMPANY, LLC
By:
Title: Chief Financial Officer
Attachment 2
to Exhibit G
The information described herein is as of __________, ____, and
pertains to the period from __________, ___ to _________ __, ____.
[Set forth Covenant Calculations]
EXHIBIT 10.2(H)
FORM OF CLOSING CERTIFICATE
This Closing Certificate is delivered pursuant to
subsections 4.1(m) and 4.1(n) of the Credit Agreement dated as of
_______________ (the "Credit Agreement"; terms defined therein being used
herein as therein defined), among Bear Island Paper Company, LLC (the
"Borrower"), the financial institutions or other entities from time to time
party thereto as lenders (the "Lenders"), TD Securities (USA) Inc., as
advisor and arranger (in such capacity, the "Arranger") and
Toronto-Dominion (Texas), Inc., as administrative agent for the Lenders (in
such capacity, the "Administrative Agent").
The undersigned __________ of ___________ (the "Company")
certifies as of the date hereof, on behalf of the Company and solely with
respect to paragraphs 1 through 7 hereof, as follows:
1. The representations and warranties of the Company set
forth in each of the Loan Documents to which it is a party are true and
correct in all material respects on and as of the date hereof with the same
effect as if made on the date hereof, except for representations and
warranties expressly stated to relate to a specific earlier date, in which
case such representations and warranties were true and correct in all
material respects as of such earlier date.
2. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other
Person that has not been obtained is required in connection with the
Transaction and the borrowings under the Credit Agreement or with the
execution, delivery, performance, validity or enforceability under the
Credit Agreement or any of the Loan Documents to which the Company is a
party, except (i) consents, authorizations, filings and notices described
in Schedule 3.4 to the Credit Agreement and (ii) the filings referred to in
Section 3.19 of the Credit Agreement.
3. No Default or Event of Default has occurred and is
continuing as of the date hereof or after giving effect to the Loans to be
made on the date hereof. [Borrower only]
4. The Transaction has been consummated for a net cash
purchase price, paid to the Retiring Partners on the Closing Date, not
exceeding an aggregate total of $150,000,000 subject to post-closing
adjustments as described in the Credit Agreement.
5. The Borrower has received at least $100,000,000 in gross
proceeds from the issuance of the Second Priority Notes [Borrower only].
6. ___________________ is the duly elected and qualified
Corporate Secretary of the Company and the signature set forth for such
officer below is such officer's true and genuine signature.
7. There are no liquidation or dissolution proceedings
pending or to my knowledge threatened against the Company, nor has any
other event occurred materially adversely affecting or threatening the
continued corporate existence of
the Company.
The undersigned Corporate Secretary of the Company
certifies, as of the date hereof, on behalf of the Company and solely with
respect to paragraphs 8 through 13 hereof, as follows:
8. The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.
9. Attached hereto as Exhibit II is a true and complete copy
of resolutions duly adopted by the Board of Directors of the Company on
_________________ authorizing the execution, delivery and performance of
the Loan Documents to which the Company is a party; such resolutions have
not in any way been amended, modified, revoked or rescinded since the date
of their adoption, have been in full force and effect since their adoption
to and including the date hereof and are now in full force and effect and
are the only corporate proceedings of the Company now in force relating to
or affecting the matters referred to therein.
10. Attached hereto as Exhibit III is a true and complete
copy of the By-Laws of the Company (or similar document) as in effect on
the date hereof.
11. Attached hereto as Exhibit IV is a true and complete
copy of the Certificate of Incorporation or Articles of Organization of the
Company as in effect on the date hereof, and such certificate or articles
have not been amended, repealed, modified or restated.
12. Attached hereto as Exhibit V is a true and correct copy
of each of the following documents: (i) the Acquisition Agreement; (ii) the
Second Priority Note Indenture; (iii) the Xxxx Xxxxxxx Credit Agreement and
(iv) the Timberlands Loan Agreement. [Borrower only]
13. The following persons are now duly elected, qualified
and acting officers of the Company holding the offices indicated next to
their respective names below, and the signatures appearing opposite their
respective names below are the true and genuine signatures of such
officers, and each of such officers is duly authorized to execute and
deliver on behalf of the Company each of the Loan Documents to which it is
a party and any certificate or other document to be delivered by the
Company pursuant to the Loan Documents to which it is a party:
Name Office Signature
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
------------------------ ----------------------- ------------------------
IN WITNESS WHEREOF, the undersigned have hereunto set our
names as of the date set forth below.
[INSERT NAME OF COMPANY]
____________________________ ____________________________
Name: Name:
Title: Title:
Date: _______________, 1997
EXHIBIT 10.2 (I)
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of _______,
199_ (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Bear Island Paper Company, LLC (the "Borrower"),
the financial institutions or other entities from time to time party thereto
as lenders (the "Lenders"), TD Securities (USA) Inc.,as advisor and
arranger (in such capacity, the "Arranger") and Toronto-Dominion (Texas),
Inc., as administrative agent for the Lenders (in such capacity, the
"Administrative Agent"). Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.
The Assignor identified on Schedule 1 hereto (the "Assignor")
and the Assignee identified on Schedule l hereto (the "Assignee") agree
as follows, as of the Effective Date (as defined below):
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby
irrevocably purchases and assumes from the Assignor without recourse to
the Assignor, as of the Effective Date, the interest described in
Schedule 1 hereto (the "Assigned Interest") in and to the Assignor's
rights and obligations under the Credit Agreement with respect to those
credit facilities contained in the Credit Agreement as are set forth on
Schedule 1 hereto (individually, an "Assigned Facility"; collectively,
the "Assigned Facilities"), in a principal amount for each Assigned
Facility as set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or
with respect to the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, any other Loan
Document or any other instrument or document furnished pursuant thereto,
other than that the Assignor has not created any adverse claim upon the
Assigned Interest and that such Assigned Interest is free and clear of
any such adverse claim; (b) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower, any of its Subsidiaries or any other obligor or the performance
or observance by the Borrower, any of its Subsidiaries or any other
obligor of any of their respective obligations under the Credit Agreement
or any other Loan Document or any other instrument or document furnished
pursuant hereto or thereto[; and (c) attaches any Notes held by it
evidencing the Assigned Facilities marked "cancelled" and (i) requests
that the Administrative Agent, upon request by the Assignee, exchange the
attached Notes marked "cancelled" for a new Note or Notes payable to the
Assignee in the principal amount for each Assigned Interest and (ii) if
the Assignor has retained any interest in the Assigned Facility, requests
that the Administrative Agent exchange the attached Notes for a new Note
or Notes payable to the Assignor, in each case in amounts which reflect
the Assignor's interest in the Assigned Facility after giving effect to
the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).]
3. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (b)
confirms that it has received a copy of the Credit Agreement, together
with copies of the financial statements referred to in subsection 3.1
thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (c) agrees that it will, independently
and without reliance upon the Assignor, the Agents or any 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 the Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Agents to take such action as the agents on
its behalf and to exercise such powers and discretion under the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Agents by
the terms thereof, together with such powers as are incidental thereto;
and (e) agrees that it will be bound by the provisions of the Credit
Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender including, if it is organized under the laws
of a jurisdiction outside the United States, its obligation pursuant to
subsection 2.18(d) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall
be the Effective Date of Assignment described in Schedule 1 hereto (the
"Effective Date"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Administrative Agent for
acceptance by it and recording by the Administrative Agent pursuant to
the Credit Agreement, effective as of the Effective Date (which shall
not, unless otherwise agreed to by the Administrative Agent, be earlier
than five Business Days after the date of such acceptance and recording
by the Administrative Agent).
5. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) [to the Assignor for amounts which have
accrued to the Effective Date and to the Assignee for amounts which have
accrued subsequent to the Effective Date] [to the Assignee whether such
amounts have accrued prior to the Effective Date or accrue subsequent to
the Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods prior to the
Effective Date or with respect to the making of this assignment directly
between themselves.]
6. From and after the Effective Date, (a) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in
this Assignment and Acceptance, relinquish its rights and be released
from its obligations under the Credit Agreement.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above
written by their respective duly authorized officers.
[Name of Assignee]
By: ___________________________________
Title:
[Name of Assignor]
By: ___________________________________
Title:
Schedule 1
to Assignment and Acceptance
Name of Assignor: _________________________________
Name of Assignee: _________________________________
Effective Date of Assignment: _____________________
Credit Principal Commitment Percentage
Facility Assigned Amount Assigned Assigned (1)
----------------- --------------- ----------------------
$_______ __._______%
__________________
(1) Calculate the assigned Commitment Percentage to at least 15 decimal
places and show as a percentage of the aggregate commitments
of all Lenders.
Accepted:
Consented To:
TORONTO-DOMINION (TEXAS), INC.,
as Administrative Agent [Name of Borrower](2)
By:______________________________
By:_________________________________
Title:
Title:
TD SECURITIES (USA) INC., as Arranger
By: _________________________________
Title:
(2) The Borrower's consent is not required with respect to any
assignment to a Lender.
December 1, 1997
To: Toronto-Dominion (Texas), Inc., as Administrative Agent,
TD Securities (USA) Inc., as Arranger and
The Lenders listed on Schedule 1 hereto
Re: Xxxxx-Xxxxx Industries, Inc. and Bear Island Paper Company, LLC
Ladies and Gentlemen:
We have acted as special counsel to Xxxxx-Xxxxx Industries,
Inc., a Delaware corporation ("Xxxxx-Xxxxx") and Bear Island Paper
Company, LLC, a limited liability company organized under the laws of the
Commonwealth of Virginia ("Paper Company", and together with Xxxxx-Xxxxx,
the "Opinion Parties" and each an "Opinion Party"), in connection with
the preparation, execution and delivery of the Credit Agreement (the
"Paper Company Credit Agreement"), dated as of December 1, 1997, among
Paper Company, the several lenders parties thereto (the "Paper Company
Lenders"), TD Securities (USA) Inc., as arranger, and Toronto Dominion
(Texas), Inc., as administrative agent for the Paper Company Lenders (in
such capacity, the "Paper Company Agent"). This opinion is being
delivered pursuant to Section 4.1(o)(i) of the Paper Company Credit
Agreement. Capitalized terms used herein and not otherwise defined herein
shall have the respective mean ings assigned thereto in the Paper Company
Credit Agreement.
In rendering the opinions set forth herein, we have examined
and relied on originals or copies, certified or otherwise identified to
our satisfaction of the following:
(a) the Paper Company Credit Agreement;
(b) each of the Revolving Credit Notes, dated the date
hereof, executed by Paper Company and listed on Schedule 2 hereto (the
"Paper Company Revolving Notes");
(c) each of the term notes, dated the date hereof,
executed by Paper Company and listed on Schedule 2 hereto (the "Paper
Company Term Notes");
(d) the Security and Pledge Agreement;
(e) the Paper Company Pledge Agreement;
(f) the Timberlands Pledge Agreement;
(g) the Xxxxx Pledge Agreement, dated as of December 1,
1997, executed by Xxxxx-Xxxxx in favor of Toronto-Dominion (Texas), Inc.,
as Agent (as defined therein) (the "Xxxxx Pledge Agreement");
(h) the Xxxxx-Xxxxx Guarantee;
(i) a certificate executed by an officer of the Opinion
Parties in connection with this opinion (the "Opinion Certificate"), a
copy of which is at tached hereto as Exhibit A; and
(j) such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth below.
The documents listed in items (d) through (h) above are collectively
referred to herein as the "Security Documents" and the documents listed
in items (a) through (h) above are collectively referred to herein as the
"Opinion Documents."
In our examination we have assumed the genuineness of all
signatures including endorsements, the legal capacity of natural persons,
the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as
facsimile, conformed, certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to
this opinion (and in the case of public officials, legal conclusions as
well) which we did not independently establish or verify, we have relied
upon certificates, statements and representations of each of the Opinion
Parties and their respective officers and other representatives and of
public officials, including the facts set forth in the Opinion
Certificates.
Unless otherwise indicated, the following terms shall have
the following respective meanings when used herein:
"Applicable Laws" means those laws, rules and regulations of
the State of New York and the United States of America which, in our
experience, are normally applicable to transactions of the type
contemplated by the Opinion Documents and are not the subject of a
specific opinion herein referring expressly to a particular law or laws.
"Governmental Approval" means any consent, approval, license,
authorization or validation of, or filing, recording or registration
with, any Govern mental Authority pursuant to Applicable Laws.
"Governmental Authority" means any legislative, judicial,
administra tive or regulatory body of the State of New York or the United
States of America.
"Indenture" means that certain Indenture, dated as of
December 1, 1997, by and among Xxxxx-Xxxxx, Paper Company, Bear Island
Timberlands Company, L.L.C., Bear Island Finance Company II and Crestar
Bank, as trustee.
"New York UCC" means the Uniform Commercial Code as in effect
on the date hereof in the State of New York.
"Noteholder" means any holder of a Note (as defined in the
Indenture) issued under or pursuant to the Indenture.
"Trustee" means Crestar Bank, in its capacity as trustee under the
Indenture.
We express no opinion as to the laws of any jurisdiction
other than the laws of the State of New York and the federal laws of the
United States of America to the extent specifically referred to herein.
Our opinions set forth below are subject to the following
assumptions and qualifications:
(a) each of the Opinion Documents constitutes the
legal, valid and binding obligation of each party to such Opinion
Document (other than the Opinion Parties) enforceable against such party
in accordance with its terms;
(b) we express no opinion as to the effect on the
opinions ex pressed herein of (i) the compliance or non-compliance of any
party (other than the Opinion Parties) to the Opinion Documents with any
state, federal or other laws or regulations applicable to it or (ii) the
legal or regulatory status or the nature of the business of any such
party;
(c) enforcement of the Opinion Documents may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, whether statutory or decisional, affecting creditors'
rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or at law);
(d) we express no opinion as to the enforceability of
any rights to contribution or indemnification provided for in the Opinion
Documents which violate the public policy underlying any law, rule or
regulation (including, without limitation, any federal or state
securities law, rule or regulation);
(e) we express no opinion as to the enforceability of
any section of any Opinion Document to the extent that any recovery of
attorneys' fees is not limited to reasonable attorneys' fees;
(f) certain of the remedial provisions, including
waivers, with respect to the exercise of remedies against the collateral
contained in the Security Documents may be unenforceable in whole or in
part, but the inclusion of such provisions does not affect the validity
of the Security Documents, each taken as a whole, and each of the
Security Documents, taken as a whole, together with applica ble law,
contain adequate provisions for the practical realization of the benefits
of the security created thereby;
(g) we call to your attention that enforcement of the
Security and Pledge Agreement with respect to collateral consisting of
any Opinion Party's interest in instruments, leases, contracts and other
agreements between such Opinion Party and the other parties to such
agreements may be subject to the terms of such agreements, the rights of
the other parties thereto and any claims or defenses of such other
parties against such Opinion Party arising under or outside such
agreements;
(h) our security interest opinions are limited to
Articles 8 and 9 of the New York UCC with respect to our opinions in
paragraphs 6, 7 and 8 and, Article 9 of the New York UCC with respect to
our opinion in paragraph 5 and, therefore, such opinions do not address
(i) laws of any state other than the State of New York, and the laws of
the State of New York except for Article 8 and Article 9 of the New York
UCC, as applicable, (ii) collateral of a type not subject to Article 8 or
Article 9 of the New York UCC, as applicable, and (iii) what law governs
perfec tion of the security interests granted in the collateral covered
by this opinion;
(i) we express no opinion as to the enforceability of
any provision of any Opinion Document to the extent that it purports to
establish evidentiary standards;
(j) we express no opinion as to the applicability or
effect of any fraudulent conveyance or similar laws on the Opinion
Documents or any transactions contemplated thereby or on the opinions
herein stated; and
(k) we express no opinion as to the enforceability of any
provision of the Paper Company Credit Agreement to the extent that it
authorizes or permits any party to any Opinion Document or any purchaser
of a participation interest from any such party to set-off or apply any
deposit, property or indebtedness with respect to any participation
interest.
Based upon the foregoing and subject to the limitations,
qualifica tions, exceptions and assumptions set forth herein, we are of
the opinion that, as of the date hereof:
1. Each Opinion Document constitutes the valid and binding
obligation of the Opinion Party that is a party thereto, enforceable
against such Opinion Party in accordance with its terms.
2. The execution and delivery by each Opinion Party of each
Opinion Document to which it is a party and the performance by such
Opinion Party of its obligations thereunder, in accordance with its
terms, do not violate any provision of any Applicable Law.
3. Based on our review of Applicable Laws, no Governmental
Approval that has not been obtained is required to authorize, or is
required in con nection with, the execution and delivery by any Opinion
Party of the Opinion Documents to which it is a party and the performance
by such Opinion Party of its obligations thereunder (except for the
filings with the U.S. Patent and Trademark Office and the U.S. Copyright
Office with respect to the United States registrations and applications
set forth on the schedules to the Security and Pledge Agreement and with
respect to any after-acquired United States trademark, patent and
copyright registrations and applications and the registration of
unregistered United States copyrights in the U.S. Copyright Office and
other similar filings required under the Security and Pledge Agreement).
4. Neither of the Opinion Parties is, after giving effect to
the transactions contemplated by the Opinion Documents and the
application of the net proceeds from the making of the Loans under the
Paper Company Credit Agreement (i) an "investment company" required to
register as such under the Investment Company Act of 1940, as amended, or
(ii) a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5. The provisions of the Security and Pledge Agreement are
effec tive to create, in favor of the Paper Company Agent, a valid
security interest in Paper Company's rights in that portion of the
Collateral (as defined in the Security and Pledge Agreement) described
therein which is subject to Article 9 of the New York UCC (the "Article 9
Collateral") which security interest will secure the Obligations (as
defined in the Security and Pledge Agreement).
6. The provisions of the Paper Company Pledge Agreement are
effective to create in favor of the Paper Company Agent a valid security
interest in Xxxxx-Xxxxx'x rights in the Pledged LLC Interests (as defined
in the Paper Company Pledge Agreement) (the "Paper Company Pledged
Securities") to secure the Secured Obligations (as defined in the Paper
Company Pledge Agreement).
7. The provisions of the Timberlands Pledge Agreement are
effec tive to create in favor of the Agent (as defined in the Timberlands
Pledge Agreement), a valid security interest in Xxxxx-Xxxxx'x rights in
the Pledged LLC Interests (as defined in the Timberlands Pledge
Agreement) (the "Timberlands Pledged Securities") to secure the Secured
Obligations (as defined in the Timberlands Pledge Agreement).
8. The provisions of the Xxxxx Pledge Agreement are
effective to create in favor of the Agent (as defined in the Xxxxx Pledge
Agreement) a valid secu rity interest in Xxxxx-Xxxxx'x rights in the
certificate identified on Schedule 3 hereto (the "Xxxxx Pledged
Securities," and together with the Paper Company Pledged Securities and
the Timberlands Pledged Securities, the "Pledged Collateral") to secure
the Secured Obligations (as defined in the Xxxxx Pledge Agreement). The
delivery of the Xxxxx Pledged Securities to the Agent in the State of New
York will perfect the security interest of the Agent in the Xxxxx Pledged
Securities. Upon such delivery, no other security interest of any other
creditor of Xxxxx-Xxxxx will be equal or prior to the security interest
of the Agent in the Xxxxx Pledged Securities.
Our opinions set forth in paragraphs 5 through 8 are subject
to the following qualifications:
(a) we have assumed that the Article 9 Collateral and
the Pledged Collateral exists and that each of the Opinion Parties has
sufficient rights in the Article 9 Collateral and the Pledged Collateral
pledged by it for the security inter ests to attach, and we express no
opinion as to the nature or extent of any Opinion Party's rights in, or
title to, any of the Article 9 Collateral or any of the Pledged
Collateral;
(b) we call to your attention that under the New York
UCC, events occurring subsequent to the date hereof may affect any
security interest subject to the New York UCC including, but not limited
to, factors of the type iden tified in Section 9-306 with respect to
proceeds; Section 9-402 with respect to changes in name, structure and
corporate identity of the debtor; Section 9-103 with respect to changes
in the location of the collateral and the location of the debtor; Section
9-316 with respect to subordination agreements; Section 9-403 with
respect to continuation statements; and Sections 9-307, 9-308 and 9-309
with respect to subsequent purchasers of the collateral. In addition,
actions taken by a secured party (e.g., releasing or assigning the
security interest, delivering possession of the collateral to the debtor
or another person and voluntarily subordinating a security interest) may
affect a security interest; and
(c) except as set forth in opinion paragraph 8,we
express no opinion with respect to the perfection or priority of the
security interest of the Paper Company Agent in any of the Article 9
Collateral or the Pledged Collateral or of the Agent (as defined in the
Timberlands Pledge Agreement) in any of the Pledged Collateral.
Our opinion set forth in paragraph 5 is also subject to the
following qualifications:
(a) in the case of instruments, chattel paper, accounts
or general intangibles, we call to your attention that the security
interests may be sub ject to the rights of account debtors, claims and
defenses of account debtors and the terms of agreements with account
debtors and we express no opinion with respect to such types of
collateral which contain any prohibition, restriction, or condition to
the assignment thereof;
(b) in the case of goods, we express no opinion in any
goods which are (i) an accession to, or commingled or processed with,
other goods to the extent that the security interests of the Paper
Company Agent are limited by Section 9-314 or 9-315 of the New York UCC
or (ii) subject to a certificate of title or a docu ment of title;
(c) we express no opinion regarding any items which are
sub ject to a statute, regulation or treaty of the United States of
America which provides for a national or international registration or a
national or international certificate of title for the perfection of a
security interest therein or which specifies a place of filing different
from the place specified in the New York UCC for filing to perfect such
security interest;
(d) we express no opinion regarding any of the Article
9 Coll ateral consisting of claims against any government or governmental
agency (includ ing, without limitation, the United States of America or
any state thereof or any agency or department of the United States of
America or any state thereof);
(e) in the case of any Article 9 Collateral consisting
of an instrument, account, chattel paper or general intangible which is
itself secured by other property, we express no opinion with respect to
the Paper Company Agent's rights in or to such underlying property;
(f) we express no opinion regarding the security
interest of the Paper Company Agent in any copyrights, patents,
trademarks, or other intellectual property, the proceeds thereof, or any
rights (including accounts or general intan gibles) with respect to the
lease, license or use thereof, except to the extent Article 9 of the New
York UCC may be applicable thereto;
(g) we call to your attention that, under Section 10 of
the United States Trademark Act (the "Xxxxxx Act") (15 U.S.C. 1060), no
United States application to register a xxxx based on intent to use shall
be assignable prior to the filing of a verified statement of use with the
United States Patent and Trademark Office pursuant to Section 1(d) of the
Xxxxxx Act, except to a successor to the business of the applicant, or
portion thereof, to which the xxxx pertains, if that business is ongoing
and existing;
(h) we call to your attention that, under United States
trade xxxx law, it is generally held that transfers of trademark rights
are invalid unless accompanied by the related goodwill and unless the
trademarks are used on substantially the same goods as those previously
represented by the trademarks. We express no opinion as to the assets or
goodwill that would have to accompany the transfer of any trademarks to
ensure the continued validity of such trademarks in the event of
foreclosure and ultimate disposition of the trademarks as a result of
default;
(i) we call to your attention that exercise of remedies
with respect to certain types of intellectual property may require
filings with the United States Patent and Trademark Office or filings and
registrations with the United States Copyright Office;
(j) we express no opinion with respect to the validity or
enforceability of any item of intellectual property; and
(k) we advise you that with respect to that portion of
the Article 9 Collateral in which the Paper Company Agent has been
granted a security interest by more than one agreement, a court may limit
the Paper Company Agent's right to choose among the remedies otherwise
given to it by such agreements with respect to such Article 9 Collateral.
Our opinions set forth in paragraphs 6 through 8 are also
subject to the following qualifications:
(a) we have assumed that none of the Agent, the
Timberlands Agent, the Lenders (each of the foregoing as defined in the
Xxxxx Pledge Agreement), the Paper Company Agent, the Trustee or the
Noteholders had notice prior to or on the date of delivery of the Xxxxx
Pledged Securities to the Agent of an adverse claim with respect to such
Xxxxx Pledged Securities;
(b) we express no opinion with respect to the priority
of any security interest in the Xxxxx Pledged Securities against a lien
creditor (as such term is defined in Section 9-301(3) of the New York
UCC) with respect to future advances to the extent set forth in Section
9-301(4) of the New York UCC;
(c) we call to your attention that the issuer of the
Xxxxx Pledged Securities is organized under the laws of Canada, and we
express no opinion as to the effect of the laws of Canada on the opinions
herein stated. Our opinion with respect to the security interest of the
Agent in the Xxxxx Pledged Securities is limited to the New York UCC and
the laws of the jurisdiction of the issuer of the securities may affect,
among other things, whether the security is characterized as a
certificated security, the exercise of remedies with respect to such
security and the exercise of voting or other rights with respect to such
security; and
(d) we advise you that with respect to that portion of
the Pledged Collateral in which the Agent has been granted a security
interest by more than one agreement, a court may limit the Agent's right
to choose among the remedies otherwise given to it by such agreements
with respect to such Pledged Collateral.
In rendering the foregoing opinions, we have also assumed,
without independent investigation and, with your consent, that:
(a) each of the Opinion Parties has been duly
incorporated or organized, as applicable, and is validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, as applicable;
(b) each of the Opinion Parties has the requisite power
and authority, corporate or otherwise, to execute and deliver all of the
Opinion Documents to which it is a party and to perform all of its
obligations thereunder, and the execution and delivery of such Opinion
Documents and the consummation by such Opinion Party of the transactions
contemplated thereby have been duly authorized by all requisite action,
corporate or otherwise, on the part of such Opinion Party;
(c) each of the Opinion Parties has duly executed and
delivered each Opinion Document to which it is a party;
(d) the execution and delivery by each of the Opinion
Parties of each of the Opinion Documents to which it is a party and the
performance of its obligations thereunder do not and will not conflict
with, contravene, violate or con stitute a default under: (i) the
Certificate of Incorporation, By-Laws or other organization documents of
such Opinion Party, (ii) any indenture, instrument or other agreement to
which such Opinion Party or its property is subject, (iii) any law, rule
or regulation to which such Opinion Party is subject (other than
Applicable Laws, as to which we express our opinion in paragraph 2
hereof), (iv) any judicial or administrative order or decree of any
governmental authority or (v) any consent, approval, license,
authorization or validation of, or filing, recording or registration
with, or notice to, any governmental authority; and
(e) no authorization, consent or other approval of, or
notice to or filing, recording or registration with, any court,
governmental authority or xxxxxx xxxx body that has not been obtained or
taken and is not in full force and effect is re quired to authorize, or
is required in connection with the execution, delivery and performance by
any Opinion Party of any Opinion Document or the transactions
contemplated thereby (other than Governmental Approvals as to which we
express our opinion in paragraph 3 hereof).
We understand that you are separately receiving an opinion
with respect to certain of the foregoing matters from Xxxx & Valentine
L.L.P., Virginia local counsel to the Opinion Parties (such opinion, the
"Local Counsel Opinion"). We are advised that the Local Counsel Opinion
contains certain qualifications. Our opinions herein stated are based
upon the assumptions set forth herein, and we express no opinion as to
the effect on the opinions herein stated of the qualifications stated in
the Local Counsel Opinion.
This opinion is being furnished only to you and is solely for
your benefit and is not to be used, circulated, quoted, relied upon or
otherwise referred to by any other Person or for any other purpose
without our prior written consent, except that any Person who becomes a
Paper Company Lender party to the Paper Company Credit Agreement pursuant
to Section 9.6(c) of the Paper Company Credit Agreement may rely on this
opinion as though it had been addressed to such Person and delivered to
such Person on the date hereof.
Very truly yours,
/s/ Skadden, Arps, Slate,
Xxxxxxx & Xxxx
_____________________________
SCHEDULE 0
Xxxxxxx
Xxxxxxx-Xxxxxxxx (Xxxxx), Inc.
Christiania Bank OG Kreditkass Asa
Keyport Life Insurance Company
Prime Income Trust
Deeprock & Company
Xxxxxxx Xxxxx Senior Floating Rate Fund, Inc.
Xxx Xxxxxx American Capital Prime Rate Income Trust
SCHEDULE 2
Notes
I. Paper Company Term Notes
1. Term Note, dated as of December 1, 1997, by Bear Island Paper
Company, L.L.C. in favor of the Administrative Agent (as
defined therein) for the benefit of Toronto-Dominion (Texas),
Inc. in the maximum principal amount of $39,000,000.
2. Term Note, dated as of December 1, 1997, by Bear Island Paper
Company, L.L.C. in favor of the Administrative Agent (as
defined therein) for the benefit of Keyport Life Insurance
Company in the maximum principal amount of $5,000,000.
3. Term Note, dated as of December 1, 1997, by Bear Island Paper
Company, L.L.C. in favor of the Administrative Agent (as
defined therein) for the benefit of Prime Income Trust in the
maximum principal amount of $10,000,000.
4. Term Note, dated as of December 1, 1997, by Bear Island Paper
Company, L.L.C. in favor of the Administrative Agent (as
defined therein) for the benefit of Deeprock & Company in the
maximum principal amount of $1,000,000.
5. Term Note, dated as of December 1, 1997, by Bear Island Paper
Company, L.L.C. in favor of the Administrative Agent (as
defined therein) for the benefit of Xxxxxxx Xxxxx Senior
Floating Rate Fund, Inc. in the maximum principal amount of
$5,000,000.
6. Term Note, dated as of December 1, 1997, by Bear Island Paper
Company, L.L.C. in favor of the Administrative Agent (as
defined therein) for the benefit of Xxx Xxxxxx American
Capital Prime Income Trust in the maximum principal amount of
$10,000,000.
II. Paper Company Revolving Notes
1. Revolving Credit Note, dated as of December 1, 1997, by Bear
Island Paper Company, L.L.C. in favor of the Administrative
Agent (as defined therein) for the benefit of
Toronto-Dominion (Texas), Inc. in the maximum principal
amount of $35,000,000.
2. Revolving Credit Note, dated as of December 1, 1997, by Bear
Island Paper Company, L.L.C. in favor of the Administrative
Agent (as defined therein) for the benefit of Christiania
Bank OG Kreditkasse ASA in the maximum principal amount of
$15,000,000.
SCHEDULE 3
Xxxxx Pledged Securities
------------------------------------------------------------------------
Pledged Security Certificate Type of Shares Number of Shares
Number Issued
------------------------------------------------------------------------
F.F. Xxxxx, Inc. C-5 Common Shares 271,479
--------------------- -------------- ----------------- -----------------
Exhibit A
CERTIFICATE OF
XXXXX-XXXXX INDUSTRIES, INC.
AND
BEAR ISLAND PAPER COMPANY, LLC
I, Xxxxxx X. Xxxxxxxx, am the Vice President of Finance of
each of Xxxxx-Xxxxx Industries, Inc. ("Xxxxx-Xxxxx") and Bear Island
Paper Company, LLC ("Paper Company" and, together with Xxxxx-Xxxxx, the
"Opinion Parties"). I under stand that pursuant to Section 4.1(o)(i) of
that certain Credit Agreement, dated as of December 1, 1997, among Paper
Company, the several lenders parties thereto (the "Paper Company
Lenders"), TD Securities (USA) Inc., as arranger, and Toronto- Dominion
(Texas), Inc., as administrative agent for the Paper Company Lenders (the
"Paper Company Agent"), Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP is
rendering an opinion dated the date hereof, (the "Opinion") to the Paper
Company Lenders and the Paper Company Agent. Capitalized terms used
herein but not otherwise defined shall have the meanings set forth in the
Paper Company Credit Agreement. I further understand that Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP is relying on this officer's certificate and
the statements made herein in rendering such Opinion.
With regard to the foregoing, on behalf of each of the
Opinion Parties I certify, that:
1. I am familiar with the business of each of the Opinion
Parties and their respective direct and indirect subsidiaries.
2. Less than 25 percent of the assets of each Opinion Party
on a consolidated basis and on an unconsolidated basis consists of margin
stock (as such term is defined in Regulation G or Regulation U of the
Board of Governors of the Federal Reserve System).
3. Each Opinion Party (a) is primarily engaged, directly or
indirectly through a wholly-owned subsidiary or subsidiaries, in a
business or businesses other than that of investing, reinvesting, owning,
holding or trading in Securities (as hereinafter defined), (b) is not and
does not hold itself out as being engaged primarily, nor does it propose
to engage, primarily, in the business of investing, reinvesting or
trading in Securities, (c) has not and is not engaged in, and does not
propose to engage in, the business of issuing Face-Amount Certificates of
the Install ment Type (as hereinafter defined), and has no such
certificate outstanding, and (d) is not engaged and does not propose to
engage in the business of investing, reinvesting, owning, holding or
trading in Securities, whether or not as its primary activity, and does
not own or propose to acquire Investment Securities (as hereinafter
defined) having a Value (as hereinafter defined) exceeding forty percent
(40%) of the Value of such Opinion Party's total assets (exclusive of
Government Securities (as hereinafter defined)) on an unconsolidated
basis.
4. Neither Opinion Party nor any subsidiary or Affiliate of
an Opinion Party owns or operates facilities used for the generation,
transmission or distribution of electric energy for sale ("Electric
Utility Facilities").
5. Neither Opinion Party nor any subsidiary or Affiliate of
an Opinion Party owns or operates facilities used for the distribution at
retail of natural or manufactured gas for heat, light or power ("Gas
Utility Facilities").
6. Neither Opinion Party nor any subsidiary or Affiliate of
an Opinion Party , directly or indirectly, or through one or more
intermediary companies, owns, controls or holds with power to vote (a)
five percent (5%) or more of the outstanding securities, such as notes,
drafts, stock, treasury stock, bonds, debentures, certificates of
interest or participations in any profit-sharing agreements or in oil,
gas, other mineral royalties or leases, collateral-trust certificates,
preorgani zation certificates or subscriptions, transferable shares,
investment contracts, voting-trust certificates, certificates of deposit
for a security, receiver's or trustee's certificates or any other
instruments commonly known as a "security" (including certificates of
interest or participation in, temporary or interim certificates for,
receipt for, guaranty of, assumption of liability on or warrants or
rights to subscribe to or purchase any of the foregoing) presently
entitling it to vote in the direction or management of, or any such
instrument issued under or pursuant to any trust, agreement or
arrangement whereby a trustee or trustees or agent or agents for the
owner or holder of such instrument is presently entitled to vote in the
direction or management of, any corporation, partnership, association,
joint-stock company, joint venture, trust, or organized group of persons
or any receiver, trustee or other liquidating agent of any of the
foregoing in his capacity as such that, directly or indirectly or through
one or more intermediary companies, owns or operates any Electric Utility
Facilities or Gas Utility Facilities or (b) any other interest, directly
or indirectly, or through one or more intermediary entities, in any
corporation, partner ship, association, joint-stock company, joint
venture, trust, or organized group of persons or any receiver, trustee or
other liquidating agent of any of the foregoing in his capacity as such
that owns or operates any Electric Utility Facilities or Gas Utility
Facilities.
7. Neither Opinion Party nor any subsidiary or Affiliate of
an Opinion Party has received notice that the Securities and Exchange
Commission has determined, or may determine, that such Person, directly
or indirectly, exercises, either alone or pursuant to an arrangement or
understanding with one or more persons, a controlling influence over the
management or policies of any corporation, partnership, association,
joint-stock company, joint-venture, trust, or organized group of persons,
or any receiver, trustee, or other liquidating agent of any of the
foregoing in his capacity or such that, directly or indirectly or through
one or more intermediaries, owns or operates any Electric Utility
Facilities or Gas Utility Facility as to make it necessary or appropriate
or in the public interest or for the protection of investors or consumers
that any Opinion Party or any subsidiary or Affiliate of an Opinion Party
be subject to the obligations, duties and liabilities imposed upon
holding companies by the Public Utility Holding Company Act of 1935, as
amended.
8. To the best of my knowledge, after due inquiry, there are
no ac tions, suits or proceedings pending or threatened against either
Opinion Party in any court or governmental department, commission, board,
bureau, agency or instru mentality, in the United States of America,
which relates to or places or may place in question the validity or
enforceability of any of the Opinion Documents.
9. As used in paragraph 3 of this Certificate, the following
terms shall have the following meanings:
"Affiliate" of a specified company means (A) any person that
directly or indirectly owns, controls or holds with power to vote, 5 per
centum or more of the outstanding voting securities of such specified
company; (B) any company 5 per centum or more of whose outstanding voting
securities are owned, controlled or held with power to vote, directly or
indirectly, by such specified company; (C) any individual who is an
officer or director of such specified company or of any company which is
an affiliate thereof under clause (A) of this paragraph; and (D) any
person or class of persons that the Commission (as defined in the Public
Utility Holding Company Act of 1935, as amended (the "Act") determines
after appropriate notice and opportunity for hearing, to stand in such
relation to such specified company that there is liable to be such an
absence of arm's-length bargaining in transactions between them as to
make it necessary or appropriate in the public interest or for the
protection of investors or consumers that such person be subject to the
obligations, duties and liabilities imposed by the Act upon affiliates of
a company.
"Control" means the power to exercise a controlling influence
over the management or policies of a company, unless such power is solely
the result of an official position with such company; any person who owns
beneficially, either directly or through one or more controlled
companies, more than 25 percent of the Voting Securities of a company is
presumed to Control such company;
"Face-Amount Certificate of the Installment Type" means any
certifi cate, investment contract, or other Security that represents an
obligation on the part of its issuer to pay a stated or determinable sum
or sums at a fixed or determinable date or dates more than 24 months
after the date of issuance, in consideration of the payment of periodic
installments of a stated or determinable amount;
"Government Securities" means all Securities issued or
guaranteed as to principal or interest by the United States, or by a
person controlled or supervised by and acting as an instrumentality of
the government of the United States pursuant to authority granted by the
Congress of the United States; or any certificate of deposit for any of
the foregoing;
"Investment Securities" includes all Securities except (A)
Government Securities, (B) Securities issued by employees' securities
companies, and (C) Securi ties issued by Majority-Owned Subsidiaries of
any Opinion Party which are not engaged and do not propose to be engaged
in activities within the scope of clause (b), (c) or (d) of paragraph 3
of this Certificate;
"Majority-Owned Subsidiary" of a person means a company 50%
or more of the outstanding Voting Securities of which are owned by such
person, or by a company which, within the meaning of this paragraph, is a
Majority-Owned Subsidiary of such person. Notwithstanding the foregoing,
a company shall not be considered a Majority-Owned Subsidiary of a person
if Control of such company rests with someone other than such person;
"Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or
participation in any profit-sharing agreement, collateral-trust
certificate, preorganization certificate or subscription, transferrable
share, investment contract, voting-trust certificate, certificate of
deposit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege on
any security (including a certificate of deposit) or on any group or
index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered into
on a national securities exchange relating to foreign currency, or, in
general, any interest or instrument commonly known as a "security," or
any certificate of interest or participation in, temporary or interim
certificate for, receipt for, guarantee of, or warrant or right to
subscribe to or purchase, any of the foregoing;
"Value" means (i) with respect to Securities owned at the end
of the last preceding fiscal quarter for which market quotations are
readily available, the market value at the end of such quarter; (ii) with
respect to other Securities and assets owned at the end of the last
preceding fiscal quarter, fair value at the end of such quarter, as
determined in good faith by or under the direction of the board of
directors; and (iii) with respect to securities and other assets acquired
after the end of the last preceding fiscal quarter, the cost thereof; and
"Voting Security" means any security presently entitling the
owner or holder thereof to vote for the election of directors of a
company.
IN WITNESS WHEREOF I have executed this certificate this
1st day of December, 1997.
By: /s/ Xxxxxx X. Xxxxxxxx
_________________________________
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President of Finance
EXHIBIT 10.2 (K-1)
FORM OF TERM NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS
REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$____________ New York, New York
________ __, 199__
FOR VALUE RECEIVED, the undersigned, BEAR ISLAND PAPER
COMPANY, LLC, a Virginia limited liability company (the "Borrower"),
hereby unconditionally promises to pay to the Administrative Agent for
the benefit of (the "Lender") or its registered assigns at the Payment
Office specified in the Credit Agreement (as hereinafter defined) in
lawful money of the United States and in immediately available funds, the
principal amount of (a) DOLLARS ($ ), or, if less, (b) the unpaid
principal amount of the Term Loan made by the Lender pursuant to Section
2.1 of the Credit Agreement. The principal amount of the Term Loan made
by the Lender outstanding under this Note shall be paid in the amounts
and on the dates specified in Section 2.3 of the Credit Agreement. The
Borrower further agrees to pay interest in like money at such office on
the unpaid principal amount hereof from time to time outstanding at the
rates and on the dates specified in Section 2.13 of the Credit Agreement.
The holder of this Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a continuation
thereof which shall be attached hereto and made a part hereof the date,
Type and amount of the Term Loan evidenced hereby and the date and amount
of each payment or prepayment of principal with respect thereto, each
conversion of all or a portion thereof to another Type, each continuation
of all or a portion thereof as the same Type and, in the case of
Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute, absent manifest error,
prima facie evidence of the accuracy of the information endorsed. The
failure to make any such endorsement or any error in any such endorsement
shall not affect the obligations of the Borrower in respect of the Term
Loans.
This Note (a) is one of the Term Notes referred to in the
Credit Agreement dated as of December 1, 1997 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among
the Borrower, the Lender, the other banks and financial institutions or
entities from time to time parties thereto, Toronto-Dominion (Texas),
Inc., as Administrative Agent, and TD Securities (USA) Inc., as Arranger,
(b) is subject to the provisions of the Credit Agreement and (c) is
subject to optional and mandatory prepayment in whole or in part as
provided in the Credit Agreement. This Note is secured and guaranteed as
provided in the Loan Documents. Reference is hereby made to the Loan Docu
ments for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests
and each guarantee were granted and the rights of the holder of this Note
in respect thereof.
Upon the occurrence of any one or more of the Events of
Default, all principal and all accrued interest then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and
payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise,
hereby waive presentment, demand, protest and all other notices of any
kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR
IN THE CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED BY THE LENDER
EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER
PROVISIONS OF SECTION 9.6 OF THE CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
BEAR ISLAND PAPER COMPANY, LLC
By: _______________________________
Name:
Title:
Schedule A
to Term Note
------------
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
-----------------------------------------------------------------------------------------------------------------------------
Amount Amount of Principal Amount of Base Rate Unpaid Principal
Amount of Base Rate Converted to of Base Rate Loans Converted to Balance of Base Notation
Date Loans Base Rate Loans Loans Repaid Eurodollar Loans Rate Loans Made By
-----------------------------------------------------------------------------------------------------------------------------
Schedule B
to Term Note
------------
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
----------------------------------------------------------------------------------------------------------------------------------
Interest Period Amount of Amount of Unpaid Principal
and Eurodollar Principal of Eurodolar Loans Balance of
Amount of Euro- Amount Converted Rate with Eurodollar Loans Converted to Base Eurodollar Notation
Date dollar Loans to Eurodollar Loans Respect Thereto Repaid Rate Loans Loans Made By
----------------------------------------------------------------------------------------------------------------------------------
EXHIBIT K-2
FORM OF REVOLVING CREDIT NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT
REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED
HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE
AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$____________ New York, New York
_________ __, 199__
FOR VALUE RECEIVED, the undersigned, BEAR ISLAND PAPER
COMPANY, LLC, a Virginia limited liability company (the "Borrower"), hereby
unconditionally promises to pay to the Administrative Agent for the benefit
of ____________________ (the "Lender") or its registered assigns at the
Payment Office specified in the Credit Agreement (as hereinafter defined)
in lawful money of the United States and in immediately available funds, on
the Revolving Credit Termination Date the principal amount of (a) DOLLARS
($ ), or, if less, (b) the aggregate unpaid principal amount of all
Revolving Credit Loans made by the Lender to the Borrower pursuant to
Section 2.4 of the Credit Agree ment. The Borrower further agrees to pay
interest in like money at such Payment Office on the unpaid principal
amount hereof from time to time outstanding at the rates and on the dates
specified in Section 2.13 of the Credit Agreement.
The holder of this Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a continuation
thereof which shall be attached hereto and made a part hereof the date,
Type and amount of each Revolving Credit Loan made pursuant to the Credit
Agreement and the date and amount of each payment or prepayment of
principal thereof, each continuation thereof, each conversion of all or a
portion thereof to another Type and, in the case of Eurodollar Loans, the
length of each Interest Period with respect thereto. Each such endorsement
shall constitute, absent manifest error, prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorse-
ment or any error in any such endorsement shall not affect the obligations
of the Borrower in respect of any Revolving Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred
to in the Credit Agreement dated as of December 1, 1997 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the Lender, the other banks and financial
institutions or entities from time to time parties thereto,
Toronto-Dominion (Texas), Inc. , as Administrative Agent, and TD Securities
(USA) Inc., as Arranger, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole
or in part as provided in the Credit Agreement. This Note is secured and
guaranteed as provided in the Loan Documents. Reference is hereby made to
the Loan Documents for a description of the properties and assets in which
a security interest has been granted, the nature and extent of the security
and the guarantees, the terms and conditions upon which the security
interests and each guarantee were granted and the rights of the holder of
this Note in respect thereof.
Upon the occurrence of any one or more of the Events of
Default, all principal and all accrued interest then remaining unpaid on
this Note shall become, or may be declared to be, immediately due and
payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise,
hereby waive presentment, demand, protest and all other notices of any
kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR
IN THE CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED BY THE LENDER
EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER
PROVISIONS OF SECTION 9.6 OF THE CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
BEAR ISLAND PAPER COMPANY, LLC
By: _______________________________
Name:
Title:
Schedule A
to Revolving Credit Note
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
Amount Amount of Unpaid
Amount of Principal Base Rate Principal
Amount of Converted of Base Loans Converted Balance
Base Rate to Base Rate Loans to Euro- of Base Notation
Date Loans Rate Loans Repaid dollar Loans Rate Loans Made By
Schedule B
to Revolving Credit Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
Interest Period and Amount of Amount of Unpaid Principal
Amount of Amount Converted Eurodollar Rate Principal of Eurodollar Loans Balance of
Eurodollar to Eurodollar with Eurodollar Converted to Eurodollar Notation
Date Loans Loans Respect Thereto Loans Repaid Base Rate Loans Loans Made By
EXHIBIT L
FORM OF
PREPAYMENT OPTION NOTICE
Attention of [ ]
Telecopy No. [ ]
[Date]
Ladies and Gentlemen:
The undersigned, Toronto-Dominion (Texas), Inc., as
administrative agent (in such capacity, the "Administrative Agent") for
the Lenders, refers to the Credit Agreement, dated as of ________, 199__
(as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Bear Island Paper Company, LLC, the Lenders
from time to time parties thereto, the Administrative Agent, and TD
Securities (USA) Inc., as Arranger. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The Administrative Agent hereby gives notice of
an offer of prepayment made by the Borrower pursuant to subsec tion
2.16(d) of the Credit Agreement of the Prepayment Amount. Amounts applied
to prepay the Term Loans shall be applied pro rata to the Term Loan held
by you. The portion of the prepayment amount to be allocated to the Term
Loan held by you and the date on which such prepayment will be made to
you (should you elect to receive such prepayment) are set forth below:
(A) Total Term Loan Prepayment Amount ______________
(B) Portion of Term Loan Prepayment Amount to
be received by you ______________
(C) Prepayment Date (3 Business Days after the date
of this Prepayment Option Notice) ______________
IF YOU DO NOT WISH TO RECEIVE ALL OF THE TERM LOAN
PREPAYMENT AMOUNT TO BE ALLOCATED TO YOU ON THE PREPAYMENT DATE INDICATED
IN PARAGRAPH (C) ABOVE, please sign this notice in the space provided
below and indicate the percentage of the Term Loan Prepayment Amount
otherwise payable which you do not wish to receive. Please return this
notice as so completed via telecopy to the attention of
[___________________] at Toronto-Dominion (Texas), Inc., no later than
[10:00] a.m., New York City time, on the Prepayment Date, at Telecopy No.
[________________]. IF YOU DO NOT RETURN THIS NOTICE, YOU WILL RECEIVE
100% OF THE TERM LOAN PREPAYMENT ALLO CATED TO YOU ON THE PREPAYMENT
DATE.
TORONTO-DOMINION (TEXAS), INC.,
as Administrative Agent
By:__________________________________
Name:
Title:
[Lender]
By:_________________________________
Name:
Title:
Percentage of Prepayment
Amount Declined: ______%
EXHIBIT M
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Credit Agreement, dated as of
___________________ (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement") among Bear Island Paper Company,
LLC, a Virginia limited liability company (the "Borrower"), the several
banks and other financial institutions from time to time parties thereto
(the "Lenders"), Toronto-Dominion (Texas), Inc., as administrative agent
for the Lenders thereunder (in such capacity, the "Administrative Agent")
and TD Securities (USA) Inc., as Arranger. 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 subsection 2.18(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: ____________________
EXHIBIT N
EXECUTIVE SUMMARY
This report summarizes the findings of a Phase I Environmental
Site Assessment (ESA) conducted by AWARE Environmental Inc.
(AEI) on the Bear Island Paper Company, L.P. (BIPCO) mill located
in Ashland, Virginia. The BIPCO facility produces newsprint
using a combination of Thermo-Mechanical Pulping (TMP) and
recycled paper pulping. This ESA was conducted on behalf of
Toronto Dominion Bank. The ESA included a site walk-through and
perimeter review of the subject site on October 7 and 8, 1997.
An evaluation of available maps, commercially available
environmental databases, select Virginia Department of
Environmental Quality (VDEQ) files, owner representative
interviews, an area reconnaissance, and a site walk-through
identified five (5) potential areas of environmental concern at
the subject property. These potential environmental concerns are
summarized below .
1. On September 29, 1994, the US EPA, Region III issued a
Notice of Violation (NOV) to BIPCO which stated that the
facility was operating in violation of applicable federally
enforceable air pollution control requirements. BIPCO
responded to the NOV by providing information that
demonstrated that the activities stated in the NOV had
either not occurred as specified in the NOV or had been
approved by the VDEQ. At the time of this Phase I ESA, this
NOV had not been resolved.
2. Based on the most recent groundwater data from the
wastewater treatment area, total organic carbon, total
organic halides, ammonia, chromium, cadmium, surface and
zinc were detected in downgradient monitoring xxxxx at
levels exceeding the Virginia groundwater standards. The
VDEQ has not taken action regarding the groundwater
monitoring data at this time.
3. Following the confirmation of a statistically measured
significant increase in specific conductance in one (1)
monitoring well used to monitor groundwater quality
downgradient from the industrial landfill, BIPCO implemented
a Phase II monitoring program. The first round of samples
were collected in July 1997. A confirmatory sample was
collected in September 1997. Based on the analytical data
which indicated that no target organic constituents were in
the groundwater, BIPCO petitioned for a variance from the
Phase II sampling requirements by requesting that the
monitoring parameters be limited to inorganic compounds
only. The VDEQ had not provided a response at the time of
the site visit.
4. BIPCO is currently clarifying whether the existing 1977 air
permit allows BIPCO to burn WWTP sludge in the B&W boiler.
BIPCO is working with the VDEQ to clarify previous VDEQ
correspondence which indicate the 1977 air permit allows
burning of the WWTP sludge in the B&W boiler and/or modify
the 1977 permit as necessary to reflect sludge burning as an
acceptable fuel.
5. A 5,000-gallon unleaded gasoline UST was removed in 1990.
According to site personnel, the tank closure was clean.
However, no closure documentation was available for review.
AEI recommends that BIPCO develop and place in their files
documentation of the underground storage tank as required by
the VDEQ.
Based on AEI's review of the current known environmental
conditions at the BIPCO facility and given the complexity
and variety of operations, the mill is well operated and
maintained.
TABLE OF CONTENTS
Section Description
Page
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . i
TABLE OF CONTENTS . . . . . . . . . . . . . . iii
LIST OF FIGURES . . . . . . . . . . . . . . . . v
LIST OF TABLES . . . . . . . . . . . . . . . . v
LIST OF APPENDICES . . . . . . . . . . . . . . . v
1.0 INTRODUCTION . . . . . . . . . . . . . . . . . . 1
1.1 Purpose . . . . . . . . . . . . . . . . . . 3
1.2 Limitations And Exceptions of Assessment . 3
2.0 SITE DESCRIPTION . . . . . . . . . . . . . . . . 5
2.1 Location And Legal Description . . . . . . 5
2.2 Site And Vicinity Characteristics . . . . . 5
2.3 Site Improvements . . . . . . . . . . . . . 6
2.4 Current Use Of Property . . . . . . . . . . 6
2.5 Past Use Of Property . . . . . . . . . . . 8
2.6 Current And Past Use Of Nearby Properties . 8
2.7 Public Water Supply Well Locations . . . . 9
3.0 RECORDS REVIEW . . . . . . . . . . . . . . . . 10
3.1 Physical Setting Sources . . . . . . . . 10
3.1.1 Current USGS Topographic Map . 10
3.1.2 Soil Survey . . . . . . . . . . 10
3.1.3 Bear Island Paper Company, L.P.
Master Site Plan . . . . . . 10
3.2 Historical Use Information . . . . . . . 11
3.2.1 Historical Topographic Maps . . 11
3.2.2 Aerial Photographs . . . . . . 11
3.2.3 Subject Site Deeds . . . . . . 11
3.3 Standard Environmental Federal And State
Record Sources . . . . . . . . . . . . 11
3.4 Subject Site . . . . . . . . . . . . . . 13
3.5 Virginia Department of Environmental
Quality . . . . . . . . . . . . . . . . 13
3.6 Potential Impact From Neighboring Sites . 14
4.0 SITE RECONNAISSANCE . . . . . . . . . . . . . 15
4.1 Hazardous Substances/Wastes Associated
With The Property . . . . . . . . . . 15
4.2 Solid Waste . . . . . . . . . . . . . . . 16
4.3 Current And Past Use Of Storage Tanks . . 16
4.4 Stormwater Discharges . . . . . . . . . . 18
4.5 Wastewater Treatment System . . . . . . . 18
4.6 Air Emissions Control System . . . . . . 21
4.6.1 Notice of Violation . . . . . . 23
4.7 Landfill Areas . . . . . . . . . . . . . 24
4.7.1 Former Xxxxxx Landfill . . . . 24
4.7.2 Ash Landfill . . . . . . . . . 25
4.7.3 Industrial Landfill . . . . . . 26
4.8 Polychlorinated Biphenyls . . . . . . . . 26
4.9 Asbestos . . . . . . . . . . . . . . . . 26
4.10 Miscellaneous . . . . . . . . . . . . . . 27
5.0 SUMMARY AND CONCLUSIONS . . . . . . . . . . . 28
6.0 SIGNATURE PAGE . . . . . . . . . . . . . . . . 30
LIST OF FIGURES
Figure Description
1 Site Location Map
2 Site Plan of the Developed Portion of the Facility
3 Drainage Map of the Developed Portion of the
Facility
LIST OF TABLES
Table Description
1 Non-Petroleum Product Storage
2 Petroleum Product Storage
LIST OF APPENDICES
Appendix Description
A Photographs
B Environmental Database Review
C Subject Site Deeds
D Master Site Plan and Maps of the Outlying Parcels
of Land Owned by BIPCO
E Doswell Combined Cycle Facility Spill Incident
Documentation
F Chemical Inventory List, XXXX Title III Reporting,
RCRA Status and Manifests for the Safety Kleen
Part Cleaning Sinks
G Underground Storage Tank Documentation
H VPDES Stormwater Permit; Stormwater Pollution
Prevention Plan; and the 1996 and 1997 Annual
Inspection Reports
I Doswell Treatment Plant Discharge Permit and 1996
NOVs
J September 1997 WWTP Groundwater Monitoring
Results and Wastewater Treatment Inspection Report
for October 2, 1996
K Air Emissions Documentation
L Ash Landfill Documentation
M Industrial Landfill Documentation
N Beneficial Use of Ash
SECTION 1.0
INTRODUCTION
This report summarizes the findings of a Phase I Environmental
Site Assessment (ESA) conducted by AWARE Environmental Inc.
(AEI) on the Bear Island Paper Company, L.P. (BIPCO) mill located
in Ashland, Virginia. This ESA was conducted on behalf of
Toronto Dominion Bank. The ESA included a site walk-through and
perimeter review of the subject site on October 7 and 8, 1997.
Photographs considered important to the explanations contained in
this report are included in Appendix A.
This ESA was conducted in general conformance with ASTM E 1527-
97, Standard Practices for Environmental Site Assessments: Phase
I Environmental Site Assessment Process, third edition.
The following information was reviewed and/or obtained in
conducting this ESA.
ENVIRONMENTAL ASSESSMENT MATERIAL
* 1980 Bear Island Paper Co. Site Plan, Associated Engineers &
Surveyors Ltd., Project No. 80-059, last revised 10/26/94
* 1980 Bear Island Paper Co. Master Site Plan, Resource
International, LTD, Project No. 85003.18, last revised
11125/96
* Doswell, Virginia 15 Minute Topographic Quadrangle. dated
1918 (U.S. Geological Survey)
* Ashland, Virginia 7.5 Minute Topographic Quadrangle, dated
1951 (U.S. Geological Survey)
* Ashland, Virginia 7.5 Minute Topographic Quadrangle, dated
1969 and photorevised 1974 (U.S. Geological Survey)
* Ashland, Virginia 7.5 Minute Topographic Quadrangle, dated
1969 and photorevised 1985 (U.S. Geological Survey)
* Hanover County, Virginia, Soil Survey, 1974 (U.S. Department
of Agriculture, Soil Conservation Service)
Information from the following offices, agencies, or databases
was also reviewed and/or obtained as part of this ESA. The
database search and historical topographic quadrangle review were
performed by Environmental Data Resources, Inc. (EnR) (Appendix
B).
FILE RECORDS SEARCHED AND/OR REVIEWED
* Comprehensive Environmental Response, Compensation and
Liability Information System (CERCLIS) database (04/30/97).
* Emergency Response Notification System (ERNS) database
(03/01/97).
* National Priority List (NPL) database (04/01/97).
* Resource Conservation and Recovery Information System
(RCRIS) database (04/01/97).
* Corrective Action Report (CORRACTS) database (12/01/96).
* Biennial Reporting System (BRS) database ((12/31/93).
* Superfund (CERCLA) Consent Decrees (CONSENT) database
(varies).
* Facility Index System (FINDS) database (09/30/95).
* Hazardous Materials Information Reporting System (HMIRS)
database (12/31/95).
* Material Licensing Tracking System (MLTS) database
(01/15/97).
* Federal Superfund Liens (NPL LIENS) database (10/15/91).
* PCB Activity Database System (PADS) database (01/27/97).
* RCRA Administrative Action Tracking System (RAATS) database
(04/17/95).
* Records of Decision (ROD) database (03/31/95).
* Toxic Chemical Release Inventory System (TRIS) database
(12/31/92).
* Toxic Substances Control Act (TSCA) database (01/31/95).
* State Hazardous Waste Sites (SHWS) database (04/30/97).
* Solid Waste Management Facilities (SWF/LF) database
(05/01/97).
* Underground Storage Tank Data Notification Information (UST)
database (04/22/97).
* Voluntary Remediation Program (VRP) database (07/26/96).
* CEDS (CEDS) database (07/01/97).
* Virginia Aboveground Storage Tank Database (AST) database
(02/11/97).
* Virginia Pollution Complaint Database (SPILLS) database
(06/01/96).
* Virginia Department of Environmental Quality (DEQ) Piedmont
Regional Office
LUST Records (LUST Region 2) database (8/6/97).
* Former Manufactured Gas (Coal Gas) Sites database.
* Delisted NPL sites database.
* No Further Remedial Action Planned (NFRAP) database.
* Federal Reporting Data System (FRDS).
* National Radon Database.
* Oil/Gas Pipelines/Electrical Transmission Lines.
* Sensitive Receptors.
* USGS Water Xxxxx.
* Flood Zone Data.
* Epicenter.
* Water Dams.
* Virginia Public Water Supplies
* Virginia Department of Environmental Quality (DEQ) Piedmont
Regional Office Records Review Section
* Hanover County Public Records.
1.1 PURPOSE
The purpose of this ESA was to gather information by inquiries,
reconnaissance and research that would aid in the identification
and evaluation of potential conditions of environmental concern.
This report is a collective record of facts and findings
discovered in the process of performing the ESA.
1.2 LIMITATIONS AND EXCEPTIONS OF ASSESSMENT
The limitations of this Phase I ESA are as follows:
* No asbestos, sediment, soil, air, water, groundwater,
radon or other media samples were collected and/or
analyzed;
* No evaluation of critical habitats for threatened or
endangered flora or fauna was conducted;
* No private properties were accessed during the
reconnaissance of the surrounding area; and
* The findings presented in this report are professional
opinions based on AEI's interpretation of information
currently available for evaluation.
A potential always remains for the presence of unknown,
unidentified, unexpected or unforeseen surface or subsurface
contamination. Further evidence to identify such potential site
contamination would require additional site investigation
activities including subsurface sampling, laboratory analyses and
interpretation.
No warranty, expressed or implied, is made. Use of this report
is strictly limited to Toronto Dominion Bank and its authorized
representatives. Any use of this report by other parties is
Toronto Dominion Bank's or its representatives' sole
responsibility.
SECTION 2.0
SITE DESCRIPTION
2.1 LOCATION AND LEGAL DESCRIPTION
The subject site is located on Old Ridge Road near the town of
Ashland, within Hanover County, Virginia (Figure 1). BIPCO owns
approximately 1500 acres of land that comprises the subject site.
The mill facility and its ancillary operations occupy a land
parcel consisting of approximately 500 acres. Approximately 250
acres of the subject site located east of the CSX Railroad are
undeveloped (Figure 2 and Photograph A). BIPCO also owns a large
tract of land northeast and east of the mill and across the North
Xxxx River that is referred to as the Xxxxxxx property which is
used to store water for mill operations. BIPCO recently
purchased tracts of land referred to as the North Xxxx Landfill
and North Fork Properties, previously referred to as the Xxxxxx
Property. The outlying parcels are discussed further in Section
2.4. A legal description of the land parcels which constitute
the developed portions of the subject property is included in
Appendix C.
2.2 SITE AND VICINITY CHARACTERISTICS
The developed portion of the subject property is located between
the Little River and Route 738 (Old Ridge Road), east of
Interstate 95 in Hanover County (Figure 1). The site varies in
elevation from approximately 100 feet to 50 feet above mean sea
level. The land surface in the developed area is fairly flat
with most of the relief occurring near the Little River. Surface
water drainage across the developed portion of the property is to
the north toward the Little River. Surface water drainage across
the adjoining eastern, undeveloped portion of the property is to
the north and east toward the North Xxxx River. The adjoining
developed and undeveloped site areas are physically separated by
the north-south trending CSX Railroad.
According to the Hanover County Soil Survey (1973), the sediments
occurring in the nearsurface in the general area of the subject
site are comprised of various types of fine xxxxx loams, xxxxx
loams and loams. Surficial sediments at the site are likely to
include construction fill and river deposits given the close
proximity to the Little and North Xxxx Xxxxxx.
Groundwater beneath the developed portion of the site is expected
to flow generally northward toward the Little River located along
the northern boundary of the site. Groundwater beneath the
undeveloped portion of the site is expected to flow generally
eastward toward the North Xxxx River. Based on water level
measurements taken in on-site monitoring xxxxx located near the
on-site wastewater treatment plant, the depth to groundwater is
approximately 5 to 15 feet below grade.
2.3 SITE IMPROVEMENTS
Development in the actively utilized portion of the subject site
includes the thermo-mechanical pulping (TMP) mill, recycle mill,
paper machine, office facilities, warehouse, xxxxxxxx, outdoor
chemical tank farm, fueling area and oil storage shed,
powerhouse, wastewater treatment plant (WWTP) facilities, ash
landfill and industrial landfill (Figure 2 and Photograph A).
Electricity is provided to the facility by Rappahannock Electric
Cooperative. Natural gas is provided to the site by Virginia
Natural Gas. Potable water is purchased from the County of
Hanover for both domestic and process use. BIPCO withdraws water
from the North Xxxx River to supplement its process water supply.
Site process wastewater is treated in the on-site wastewater
treatment plant and treated effluent is discharged to the Doswell
Wastewater Treatment System under NPDES #VA0029521. Domestic
sewage is treated by the Doswell Wastewater Treatment Plant.
2.4 CURRENT USE OF PROPERTY
BIPCO operates a TMP and recycled newsprint mill at the subject
site. The mill started production using the TNO process in late
December 1979. In the TMP process, the pulp is produced by
grinding wood chips into fiber through a mechanical grinding
process. Steam and energy supplied to the grinding process
provide heat to aid in the generation of cellulose fibers that
are ultimately used to manufacture paper. Due to the demand for
recycled newsprint, BIPCO expanded its facility to incorporate
the production of recycled newsprint. The recycling process,
which involves wetting old newspaper and magazines and separating
the fibers from the ink, contaminants and clays, was initiated in
April 1994. The pulp from both processes is dewatered and then
made into sheet form by pressing and drying operations performed
at the paper mill. The newsprint is wound into rolls and shipped
to customers.
Supporting plant operations are undertaken in the following
areas: xxxxxxxx; powerhouse; sludge dryer and wastewater
treatment system; and other miscellaneous operations. The
xxxxxxxx operations include the processing of logs into woodchips
that can be used to make pulp. Additional woodchips are
purchased from other outside sources and used to make pulp.
Facility process steam is generated in the powerhouse by burning
coal, natural gas, WWTP sludge, woodwaste, and propane. The WWTP
treats wastewater utilizing an activated sludge process. The
miscellaneous areas of the mill are comprised of maintenance
activities and other supporting operations including; air
conditioning, ventilation, chiller systems, parts washing, core
cutting, and process water cooling towers. The percentage of
site uses for the adjoining developed and undeveloped land
parcels (from Master Site Plan) includes building structures 4 %
- roads - 4 %, water bodies/ storage/ treatment basins - 7 %,
landfills - 6 %, storage areas (logs, coal, etc.) - 3 %, wetlands
- 42 %, and open/wooded - 34%.
BIPCO also owns a large tract of land northeast and east of the
mill and across the North Xxxx River that is referred to as the
Xxxxxxx property. BIPCO maintains two (2) large natural ponds on
this tract which are used to supplement the process water
purchased from the County of Hanover. Water at this location is
withdrawn from the North Xxxx River and stored in the natural
ponds prior to use by BIPCO. Portions of the Xxxxxxx property
are leased for farming. Appendix D contains a map of the Xxxxxxx
property.
BIPCO recently purchased tracts of land referred to as the North
Xxxx Landfill and North Fork Properties. These tracts were
previously referred to as the Xxxxxx Property. As discussed
further in Section 4.7, BIPCO has proposed to the Virginia
Department of Environmental Quality (VDEQ) to close the North
Xxxx Landfill in place as is and perform groundwater monitoring
as required by the VDEQ. The VDEQ has not responded to this
proposal as of yet. The Appendix D contains a map of the former
Xxxxxx Property.
2.5 PAST USE OF PROPERTY
BIPCO has operated the subject mill facility in the western,
developed portion of the subject site since late December 1979.
Based on information provided by a BIPCO representative, the
subject property was used for residential and agricultural
purposes through the 1900's prior to development by BIPCO.
A review of the USGS Ashland, VA 7.5 Minute Topographic
Quadrangle Maps dated 1918, 1951, 1969, 1969 (photorevised 1974),
1969 (photorevised 1981) and 1969 (photorevised 1985) indicate
the subject site was rural in nature. The topographic maps show
the subject site to be covered by densely forested areas and by
cleared areas used for farming prior to its development by BIPCO.
The CSX Railroad is visible and runs north/south across the
subject site on all the reviewed historic topographic maps.
Several small residential and/or farm related structures are
evident on the 1918, 1951, 1969 and 1969 (photorevised 1974)
maps. BIPCO's facility appears on the 1969 (photorevised 1981)
and 1969 (photorevised 1985) historic topographic maps.
A review of a 1957 aerial photograph provided by the Hanover
County Office of Revenue confirms the agricultural/residential
nature of the subject site property prior to 1957.
2.6 CURRENT AND PAST USE OF NEARBY PROPERTIES
Current land uses in the area are primarily agricultural and
residential. The developed portion of the subject property is
bordered to the north by the Little River, to the north and east
by the North Xxxx River, to the south by State Route 783 and to
the west by the Doswell Combined Cycle Facility. The County of
Hanover Wastewater Treatment Plant is located across the Little
River and north of the subject site. Past use of nearby
properties appears to have been primarily agricultural.
2.7 PUBLIC WATER SUPPLY WELL LOCATIONS
According to the Public Water Supply System Information database
provided by EDR, public water supply well PSW ID: VA6033613
operated by Frog Level Market is located greater than 2 miles
north of the site. This active well has been operational since
January, 1978 and serves less than 101 persons. Reportedly, the
well currently has or has in the past had major violation(s), but
additional information on the violation(s) was not available.
The EDR database search identified two (2) public water supply
xxxxx on the Virginia State Database at a distance of greater
than two (2) miles from the site. Water well FRDS No. 6059270,
operated by Fairfax Public Schools, is located in the eastern
quadrant of the search radius. Well FRDS No. 4085343. operated
by Hanover Academy, is located in the southern quadrant of the
search radius, reportedly serves a population of 70.
The EDR database search identified one (1) water well on the
Federal Database at a distance of between one (1) mile and two
(2) miles from the site. Water well ID: 37503007726901 is
located in the northern quadrant of the search radius at a
distance of 1.0 to 2.0 miles north of the site. This well was
constructed in 1974 and is reportedly currently unused.
SECTION 3.0
RECORDS REVIEW
3.1 PHYSICAL SETTING SOURCES
3.1.1 CURRENT USGS TOPOGRAPHIC MAP
The current USGS topographic map covering the subject site and
surrounding area is the Ashland, Virginia quadrangle dated 1969
and photorevised in 1985 (Figure 1). Based on this map, the site
varies in elevation from approximately 100 feet to 50 feet above
mean sea level. The developed portion of the site and the former
Xxxxxx Property are fairly flat with most of the relief occurring
near the Little River. The outlying, undeveloped parcels of land
are generally low lying with elevations less than 50 feet above
sea level and with minimal relief.
3.1.2 SOIL SURVEY
The 1974 Hanover County Soil Survey Map of the subject site and
surrounding area was reviewed and is referenced in Section 1.0.
According to the Hanover County Soil Survey (1974), the sediments
occurring in the near-surface in the general area of the subject
site are comprised of various types of fine xxxxx loams, xxxxx
loams and loams.
3.1.3 BEAR ISLAND PAPER COMPANY, L.P. MASTER SITE PLAN
The BIPCO Master Site Plan indicates that approximately 42% of
the main parcel of property located east and west of the CSX
Railroad is wetlands (Appendix D). Portions of the land parcel
referred to as the Xxxxxxx property may potentially be considered
wetlands based on its relative topography and close proximity to
the North Xxxx River.
3.2 HISTORICAL USE INFORMATION
3.2.1 HISTORICAL TOPOGRAPHIC MAPS
AEI reviewed historical USGS Ashland, VA 7.5 Minute
Topographic Quadrangle
Maps dated 1951, 1969, 1969 (photorevised 1974), 1969
(photorevised 1981) and 1969 (photorevised 1985), and a USGS
Doswell, VA 15 Minute Topographic Quadrangle Map dated 1918
as referenced in Section 1.0. Review comments are discussed
in Sections 2.5 and 2.6.
3.2.2 AERIAL PHOTOGRAPHS
AEI reviewed a 1957 aerial photograph provided by the
Hanover County Office of
Revenue. Review continents are discussed in Section 2.5 and
2.6.
3.2.3 SUBJECT SITE DEEDS
A review of the subject property deeds was conducted for the
subject site on October 8, 1997 at the Hanover County
Courthouse. Select copies of deeds and a summary of the
limited chain-of-title search for the subject site are
included in Appendix C.
3.3 STANDARD ENVIRONMENTAL FEDERAL AND STATE RECORD SOURCES
Copies of the most recently available updated Federal and State
environmental databases have been compiled by EDR. Federal and
State environmental database listings provided by EDR for the
area within the ASTM-defined minimum search distance were
obtained for review (Appendix B).
The searched Federal databases include the following:
1. Comprehensive Environmental Response,
Compensation, and Liability Information System
(CERCLIS) (04/30/97);
2. Emergency Response Notification System (ERNS)
(03/01/97);
3. National Priority List (NPL) (04/01/97);
4. EPA Resource Conservation and Recovery Information
System (RCRIS)
(04/01/97);
5. Corrective Action Report (CORRACTS) (12/01/96);
6. Biennial Reporting System (BRS) (12/31/93);
7. Superfund (CERCLA) Consent Decrees (CONSENT)
database (varies);
8. Facility Index System (FINDS) (09/30/95);
9. Hazardous Materials Information Reporting System
(HMIRS) (12/31/95);
10. Material Licensing Tracking System (MLTS)
(01/15/97);
11. Federal Superfund Liens (NPL LIENS) (10/ 1 5/9 1);
12. PCB Activity Database System (PADS) (01/27/97);
13. RCRA Administration Action Tracking System (RAATS)
(04/17/95);
14. Records of Decision (ROD) (03/31/95);
15. Toxic Chemical Release Inventory System (TRIS)
(12/31/92); and
16. Toxic Substances Control Act (TSCA) (01/31/95).
A search of the Commonwealth of Virginia databases included the
following:
1. State Hazardous Waste Sites (SHWS) database
(04/30/97);
2. Solid Waste Management Facilities (SWF/LF)
database (05/01/97);
3. Underground Storage Tank Data Notification
Information (UST) database (04/22197);
4. Voluntary Remediation Program (VRP) database
(07/26/96);
5. CEDS (CEDS) database (07/01/97);
6. Virginia Aboveground Storage Tank Database (AST)
database (02/11/97);
7. Pollution Complaint Database (SPILLS) database
(06/01/96);
Miscellaneous federal, state and private agency databases include
the following:
1. Department of Environmental Quality (DEQ) LUST
Records (LUST Region 2, Piedmont Regional Office)
database (8/6/97);
2. Former Manufactured Gas (Coal Gas) Sites database;
3. Delisted NPL Sites (DELISTED NPL);
4. No Further Remedial Action Planned (NFRAP);
5. Federal Reporting Data System (FRDS);
6. National Radon Database;
7. United States Geological Survey (USGS) Oil/Gas
Pipelines/Electrical Transmission Lines;
8 Sensitive Receptors;
9. USGS Water Xxxxx;
10. Federal Emergency Management Agency (FEMA) Flood
Zone Data;
11. Department of Commerce, National Oceanic and
Atmospheric Administration - Epicenters;
12. National Inventory of Dams - Water Dams;
13. Virginia Public Water Supplies.
A total of one (1) facility or site which had multiple listings
was identified in the aforementioned databases within the ASTM-
specified radii of the subject site (Appendix B).
Doswell Combined Cycle Facility located at 00000 Xxx Xxxxx Xxxx
was listed in the UST, CEDS, and LUST databases. This facility
is situated west-northwest of the subject property, and is estimated
in the EDR report to be situated higher in elevation than the subject
property. Based on the available information, the facility has a
Virginia Pollution Abatement Permit #VPA00525 which became
effective 6/29/90. This permit expires 6/29/2000. No other
information, other than the pollution complaint number of 96-
4012, is given in the databases regarding the leaking underground
storage tank (LUST).
ORPHAN SITES
Eighteen (18) orphan sites were identified by EDR during the
Federal and State database searches. These orphan sites are
facilities whose location could not be determined accurately
during the database search by EDR, due to poor or limited
geographic information. The orphan sites listed appear on the
CERCLIS, FINDS, RCRIS-SQG, CERC-NFRAP. SWF/LF, UST, LUST, RCRIS-
LQG databases. Based on the limited address information
provided, all the orphan sites are located at least 1.5 miles
away from the subject site. None of the orphan sites listed were
observed during the area reconnaissance. Based on the
information provided in the EDR report and the information
gathered during the area reconnaissance, none of the facilities
listed on the orphan summary are expected to have a significant
adverse environmental impact on the subject property.
3.4 SUBJECT SITE
The subject site was listed in two (2) databases searched by EDR:
the ERNS and the SWF/LF databases. Based on the SWF/LF database,
the subject site has a permitted industrial landfill. A
facility I.D. # 573 has been assigned to the landfill and the
permit approval date is given as 5/5/95. A second industrial
landfill (the ash landfill) at the subject facility permitted in
10/21/88.
3.5 VIRGINIA DEPARTMENT OF ENVIRONMENTAL QUALITY
AEI personnel visited the VDEQ, Piedmont Regional Office to
review information regarding
1) the subject site and 2) surrounding properties for potential
environmental concerns identified in the EDR database search.
The regional office maintains several files concerning the subject
site. Pertinent information from these files is discussed in the
applicable subsections of Section 4.0.
File information regarding the orphan sites listed in the EDR
database search indicated that all of the orphan sites are
located at a distance greater than 1.5 miles from the subject
site. The aforementioned orphan sites are not expected to have a
significant environmental impact on the subject site due to their
separation distance.
Based on the files maintained by the VDEQ on the Doswell Combined
Cycle facility, the assigned LUST pollution complaint number 96-
4012 was for a July 5, 1995 release of approximately 800 gallons
of #2 fuel oil from the overflow vent due to temperature-related
expansion of the fuel. Cleanup efforts were documented in a
September 7, 1995 report by IMS Environmental. The VDEQ issued a
closure letter based on the cleanup documentation provided by IMS
(Appendix E). Based on the available information, this release
is not expected to have an impact on the BIPCO facility.
3.6 POTENTIAL IMPACT FROM NEIGHBORING SITES
Based on a review of available information on adjacent
properties, the potential for environmental impact to the subject
site from neighboring properties is low. No impacts to the
subject site from neighboring sites are known to exist nor were
identified as a result of this ESA.
SECTION 4.0
SITE RECONNAISSANCE
A site visit to the subject property was conducted on September
8, 1997. During the site visit, AEI personnel conducted
interviews with the following BIPCO personnel: Xx. Xxxxxx Xxxxx,
Manager of Engineering and Governmental Affairs and Xx. Xxxx
Xxxxx, Project Engineer. A reconnaissance of the subject
property was conducted by viewing the perimeter boundaries of the
site by truck and physically traversing portions of the perimeter
that were accessible. A walk-through of the interior of the
facility was conducted following the perimeter reconnaissance.
4.1 HAZARDOUS SUBSTANCES/WASTES ASSOCIATED WITH THE PROPERTY
BIPCO stores chemicals in above ground storage vessels or
containers. An inventory of chemicals currently used by BIPCO is
included in Appendix F. As discussed in Section 2.8, outdoor
storage tanks are maintained within curbed concrete containment
areas to contain stormwater runoff. A list of indoor and outdoor
storage tanks is included in Tables 1 and 2. BIPCO maintains a
Spill Control Plan for all hazardous materials stored at the
facility. As part of the Spill Control Plan, a Spill Prevention,
Control and Countermeasure Plan (SPCC) and a Oil Discharge
Contingency Plan have been prepared specifically for the
petroleum products stored and handled at the site. Table 2
summarizes the petroleum product storage at the site. BIPCO
currently reports ammonia, phosphoric acid, sulfuric acid and
hydrochloric acid under XXXX Title III, Section 313 reporting
requirements (Appendix F).
BIPCO is a small quantity generator, generating less than 750
pounds of hazardous waste per month. The EPA ID number for the
facility is VAD049582919.
BIPCO uses five (5) Safety-Kleen, Inc. parts cleaning sinks on
site (Photo B). They are located in the following locations:
maintenance area (2); TNP area; xxxxxxxx area; and recycle area.
These sinks contain either petroleum naphtha or monoethanolamine
and are maintained by Safety-Kleen on a regular basis . Copies of
the 1997 manifests are included in Appendix F.
4.2 SOLID WASTE
Solid wastes generated at the subject site include general office
trash, cardboard, and wooden pallets. These solid wastes are
temporarily stored in an on-site dumpster and disposed of by
Xxxxxxxx-Xxxxxx Industries (BFI) (Photo C).
Other wastes generated at the site that are recycled include
waste oil and scrap metal. Waste oil generated at the site is
picked up and recycled by Eastern Oil located in Rockville,
Virginia and scrap metal is recycled by CC Cullet located in
Ashland, Virginia.
4.3 CURRENT AND PAST USE OF STORAGE TANKS
AEI identified fourteen (14) above ground storage tanks (ASTs)
used for non-petroleum storage (Photo D) and eleven (11) ASTs
used for petroleum product storage (Photo E) located outdoors at
the BIPCO facility (Tables 1 and 2). Outdoor ASTs are located in
the chemical tank farm area, WWTP area, recycle mill area,
xxxxxxxx area, fueling area, warehouse area, powerhouse, paper
manufacturing area, at the fiber lift station and maintenance
area (Figure 2).
There are twenty (20) ASTs used for non-petroleum product storage
and nine (9) ASTs used for petroleum product storage located
inside roofed structures (Tables 1 and 2). Indoor tanks are
located in the paper manufacturing area, pulp manufacturing area,
WWTP, and the recycle mill (Figure 2).
Outdoor storage tanks are typically situated in curbed concrete
containment areas to contain stormwater runoff. The tank
containment areas are sized to provide adequate spill containment
in the event of a tank rupture. Most of the containment areas
drain to the WWTP. The containment areas of the oil tanks in the
xxxxxxxx are visually checked for floating oil prior to being
discharged to stormwater drainage ditch system connected to
Outfall 001 (Figure 3).
Each release of stormwater from this containment area is
documented using a Stormwater Release Form (Appendix G). The
diesel tank containment area located in the warehouse is
discharged to a stormwater drainage ditch system connected to
Outfall 002. An oil/water separator has been placed in the main
drain pipe to Outfall 002.
According to BIPCO personnel, all underground storage tanks have
been removed. In the past, BIPCO operated two (2) USTS; a
10,000-gallon diesel fuel tank and a 5,000-gallon unleaded
gasoline tank.
There are no septic tanks associated with the BIPCO facility.
There may have been septic tanks associated with the former
houses located at the site.
On June 14, 1994, Landscaping and Paving Company, under contract
with BIPCO, removed one (1) 10,000-gallon #2 diesel UST. Soil
samples collected from beneath the UST indicated the presence of
total petroleum hydrocarbons (TPH) ranging in concentration from
1,600 mg/kg to 8,300 mg/kg. In September 1994, four (4)
groundwater monitoring xxxxx were installed around the former UST
area. On November 23, 1994, approximately 0.33 feet of free
product thickness was measured in one of the monitoring xxxxx.
Approximately twenty-two (22) gallons of free product were
removed from the well using a total fluid recovery method
approximately three (3) times a week for approximately two (2)
years. Product thickness in the target monitoring well was
reduced to one-eighth of an inch. Based on this information and
the low risk for human exposure, the VDEQ Piedmont Regional
Office issued a "No Further Action Required" letter for this
incident (Appendix G).
The 5,000-gallon unleaded gasoline UST was removed in 1990.
According to site personnel, the tank closure was clean. AEI
recommends that BIPCO develop and place in their files closure
documentation for the gasoline UST on file at the facility.
4.4 STORMWATER DISCHARGES
The BIPCO facility was issued a Virginia Pollution Discharge
Elimination System (VPDES) Stormwater Permit No. VA0077763 in
1988 for the discharge of stormwater runoff from the xxxxxxxx area
(Outfall 001). This permit was renewed in 1994 and was modified to
include stormwater runoff from the entire facility in compliance
with the November 1990 EPA regulations. A copy of the reissued permit
is included in Appendix H. BIPCO maintains a Stormwater Pollution
Prevention Plan as required under the permit (Appendix H). The purpose
of this plan is to identify potential sources of impacted surface water
runoff and provide a means to be used to reduce or eliminate these
potential impacts.
Three (3) stormwater outfalls exist at the facility; Outfall 001,
Outfall 002 and Outfall 003. Surface water runoff from the
xxxxxxxx is collected in a retention basin prior to being
discharged to Outfall 001. Surface water runoff from buildings
and paved areas is passed through an oil/water separator (Photo
F) and collected in a natural pond prior to being
discharged to Outfall 002. Surface water runoff from the
landfill area discharges to Outfall 003 (Photo H). The
comprehensive site stormwater permit requires BIPCO to collect
and analyze stormwater samples monthly from Outfall 001, twice
per year from Outfall 002, and to collect one composite sample
from Outfall 003 within a year from the date that the permit was
renewed. The permit also requires BIPCO to perform annual
inspections. The 1996 and 1997 Annual Inspection Reports are
included in Appendix H. No violations for the stormwater system
were reported.
4.5 WASTEWATER TREATMENT SYSTEM
BIPCO treats its wastewaters in an on-site biological WWTP. The
treated effluent is discharged to the North Xxxx River using a
common outfall line with the Doswell Wastewater Treatment Plant
(Hanover County). The combined discharges from BIPCO and the
Doswell Waste Treatment Plant are regulated under VPDES Permit
No. VA0029521 issued by the Commonwealth of Virginia to Hanover
County.
Currently, low solid waste streams from the TMP and recycle mill
are pumped to one of the two on-site clarifiers where solids are
removed. The wastewater subsequently travels through two (2)
lined equalization basins (Photo I), the "Unox" activated sludge
area, and through three (3) secondary clarifiers before being
discharged to the North Xxxx River. An on-site lined emergency
holding pond is available to store wastewater. if needed, during
the treatment process. In addition, an on-site effluent storage
basin is available to store a portion of the wastewater, as
needed, during low flow conditions in the river. The sludges
from the clarifiers are transferred to the sludge holding tank
and dewatering facilities. The dewatered solids are burned as
fuel in the on-site B&W boiler, with the resulting ash going to
the landfill, or the dewatered sludge may be disposed directly in
the on-site landfill. The resulting wastewater from the
dewatering process is sent back to one of the primary clarifiers.
The high solid content waste streams from the TMP process,
recycling process and paper machine are pumped directly to the
dewatering equipment which includes a gravity table thickener
followed by two screw presses. Wastewater from the dewatering
process is sent to one of the primary clarifiers and treated with
the low solids wastewaters. Solids from the dewatering process
are either burned as fuel in the on-site B&W boiler or disposed
of in the on-site approved landfill.
There is a monitoring station on the BIPCO wastewater treatment
line located prior to the connection with the Doswell Treatment
Plant. The treated wastewater effluent from the BIPCO WWTP is
monitored by Hanover County at this point as required under their
permit (Appendix 1). If the treated effluent would cause the
Hanover County Doswell Treatment Plant to exceed their permit
limitations, then the effluent can be diverted to the lined on-
site effluent holding pond at BIPCO.
The Hanover County Doswell Treatment Plant was cited by the VDEQ
for the following violations to their permit in 1996 and 1997
(Appendix 1): 1) the instantaneous chlorine regulatory level was
exceeded once in May 1996, and 2) the biochemical oxygen demand
(BOD) regulatory level was exceeded twice and the total suspended
solids (TSS) regulatory level was exceeded twice in August 1996.
These violations were for Outfall 101, the discharge for the
Hanover County Doswell Treatment Plant only, prior to the
combination with the BIPCO discharge. No enforcement
recommendation was included with the Notice of Violation
(Appendix 1). According to plant personnel, BIPCO effluent has
not been diverted by Doswell Treatment Plant operators for any
reason.
In 1988, the BIPCO WWTP was upgraded in anticipation of a
proposed BIPCO mill expansion. This upgrade included the
addition of a 1.5 million gallon (MG) aeration basin, a 65-foot
diameter final clarifier and additional sludge handling
facilities. As a result of the proposed mill expansion, the
Doswell Wastewater Treatment Permit was modified and a quarterly
groundwater monitoring program for the existing BIPCO WWTP was
initiated. BIPCO initiated a groundwater monitoring program for
the existing wastewater holding ponds as specified under the 1988
VPDES permit modification. One (1) upgradient well, MW-2, and two (2)
downgradient xxxxx, XX-15 and MW-25, are monitored quarterly.
Well MW-2 is located upgradient of the WWTP basins near the Bam
offices. Well MW-15 is situated downgradient of the 15 MG
capacity emergency holding basin. Well MW-25 is located
downgradient the 25 million gallon capacity effluent holding
basin. These xxxxx are monitored for pH, conductivity, total
organic carbon (TOC), total organic halides (TOX), chemical
oxygen demand (COD), ammonia as nitrogen, total Kjeldahl nitrogen
(TKN), sulfate, lead, cadmium, chromium and zinc. The Virginia
groundwater standards for these constituents are as follows: pH
(5.5-8.5); TOC (10 mg/1); TOX (100 mg/1); COD (natural quality);
ammonia (0.025 mg/1); TKN (natural quality); sulfate (25 mg/1);
lead (0.05 mg/1); cadmium (0.0004 mg/1); and zinc (0.05 mg/1).
Conductivity is considered a indicator parameter only. The
latest groundwater monitoring event was conducted in September
1997 (Appendix J). The following parameters exceeded the
Virginia groundwater standards: in well MW-2, pH (5. 1) and
sulfate (86 mg/1); in well MW-5, TOC (47 mg/1), TOX (173 mg/1),
anunonia (0.68 mg/1), chromium (0.065mg/1), and zinc (0.084
mg/1); and in well MW-15, ammonia (0.14 mg/1), cadmium 0.002
mg/1) and sulfate (33 mg/1). BIPCO has not been cited by VDEQ
for parameters which exceed the Virginia groundwater standards.
The most recent VDEQ Piedmont Regional Office WWTP inspection was
conducted on July 25, 1996 (Appendix J). The inspection report
concluded that the BIPCO WWTP "was very well operated and
maintained."
4.6 AIR EMISSIONS CONTROL SYSTEM
The air emissions generated by BIPCO are regulated under both
State and Federal regulations. State air pollution regulations
are found in a Virginia Administration Code (VAC) 5. The Federal
regulations are found in the Code of Federal Regulations (CFR)
under 00 XXX 00 xxx 00 XXX 00. BIPCO first received a
construction and operating air permit for the TMP mill to
manufacture newsprint paper on June 7, 1977. BIPCO was permitted
to construct and operate a Xxxxxxx & Xxxxxx (B&W) boiler, a
Nebraska boiler in September 1984 and a Sludge Dryer/EPI
Atmospheric fluidized bed combustor in April 1991. The Nebraska
boiler was removed from service May 4, 1994 and was subsequently
replaced by a package boiler which began operation January 9,
1996. The Package Boiler was originally permitted by the
Prevention of Significant Air Quality Deterioration (PSD) permit
issued on October 30, 1992. The PSD Permit was issued for a
proposed mill expansion and amended several times with the most
recent amendment dated July 25, 1997 (Appendix K).
A review of the current air permits and the on-going Title V
permitting process at BIPCO identified the following
operations/equipment which are currently permitted and/or being
permitted under Title V of Clean Air Act Amendment (CAAA). Air
pollution control devices are listed where applicable. These
operations/equipment include:
* Xxxxxxxx operations;
* B&W boiler with a multicyclone and electrostatic
precipitator;
* Package boiler;
* Thermomechanical pulping mill (TMP) with four (4)
TMP lines and two (2) heat exchange systems for
heat recovery and VOC control;
* Sludge dryer and EPI Atmospheric fluidized bed
combustor with selective noncatalytic NOx
reduction, cyclone, venturi scrubber, and packed
bed scrubber;
* Wastewater treatment plant;
* Recycle mill;
* Paper machine; and
* Storage tanks.
In addition, according to the amended October 30, 1992 air permit,
the following emission units are permitted. but are not yet built:
* Two (2) additional TMP lines;
* One (1) gas turbine;
* One (1) heat recovery steam generator;
* One (1) circulating fluidized combustion boiler;
One (1) additional newsprint paper machine;
* One (1) additional ammonia storage tank; and
* One (1) turpentine storage tank.
In accordance with 9 VAC 5-80-10 and 9 VA 5-80-20, if
construction of the above emission units is not commenced within
eighteen (18) months of the date listed in the phased
construction schedule and/or construction is discontinued for a
period of eighteen (18) months, the permit will become invalid.
Based on continued phased construction and the issuing date of
the last amendment of the PSD permit, the 1992 PSD permit is
currently valid until January 25, 1999.
BIPCO is located in the Richmond, Virginia area which is
presently designated as an "Attainment" area for ozone. This
area was formerly designated as a "Non-Attainment" area that did
not meet the National Ambient Air Quality Standard (NAAQS) for
ozone. Since volatile organic compounds (VOC) and nitrous oxides
(NOx) are a precursor of ozone, these pollutants were regulated
in lieu of ozone. Reasonable Available Control Technology (RACT)
is required for major VOC emission sources (which emit more than
100 tons per year of VOC) in ozone non-attainment areas. On July
24, 1996, BIPCO signed a RACT consent agreement which required
certain VOC emission controls to meet RACT established by the
VDEQ (Appendix K). This RACT consent agreement remains in effect
even though the Richmond non-attainment area was redesignated as
an attainment area for ozone.
The 1990 Clean Air Act Amendment requires that a major source
facility obtain a Title V permit. A major source facility is
defined as a facility having a potential-to-emit 100 tons per
year (TPY) or more of any regulated air pollutant including
particulate matter with aerodynamic diameter of 10 m or less
(PM10), VOC, NOx, sulfur dioxide (SO2), or carbon monoxide (CO),
or 10 TPYor more of any single hazardous air pollutant (HAP); or
25 TPY or more of any combination of HAPS. Potential emissions
are calculated by assuming process equipment operates
continuously for 8760 hours a year at maximum capacity without
pollution control devices. HAPs are defined and regulated under
Title III of the CAAA.
BIPCO is a major source facility; therefore, a Title V permit is
required. BIPCO is required by the DEQ to file a permit application
by May 1998. A Title V permit application is being prepared
and it is anticipated that it will be submitted to the
VDEQ by end of 1997.
4.6.1 NOTICE OF VIOLATION
On September 29, 1994, the US EPA, Region III issued a
Notice of Violation (NOV) to BIPCO which stated that the
facility was operating in violation of applicable federally
enforceable air pollution control requirements (Appendix K).
This NOV charged: 1) that the sulfur content of the coal
burned in the Xxxxxxx and Xxxxxx (B&W) boiler exceeded the
1.2% limit specified in the air permit and 2) that a
continuous monitoring system for measuring and recording
sulfur dioxide emissions from the B&W boiler required by the
1977 air permit was not in place.
BIPCO responded to the NOV by providing information that
demonstrated that the activities stated in the NOV had
either not occurred as specified in the NOV or had been
approved by the VDEQ. At the time of this Phase I ESA, this
NOV had not been resolved. Available documentation is
summarized below.
With regard to the first issue presented in the NOV, BIPCO
notified the VDEQ Department of Air Pollution Control that
they had received some inferior coal over the last several
months that did not meet the 1.2 % sulfur content specified
in the air permit for the boiler. BIPCO also indicated that
they had immediately placed an order for high quality coal
with a sulfur content of 0.55 % to 0.65 % which they blended
with the off-spec coal to obtain a blend of less than 1.2 %
sulfur. In addition, BIPCO indicated that they mix wood
waste with the coal in the boiler at a ratio of 50:50 which
would also lower the overall sulfur emissions. BIPCO
requested a fuel variance for the offspec coal on-site and
permission to blend the new high quality coal with the off-
spec coal. The VDEQ responded by letter on April 22, 1994
that BIPCO could burn the off-spec coal if it was mixed with
the high quality coal at a ratio of 3 part high quality coal
to 1 part off-spec coal .
With regard to the second issue presented in the NOV, in a
letter to the VDEQ dated October 20, 1988, BIPCO had
requested exemption from the 1977 requirement of monitoring
sulfur dioxide. The VDEQ subsequently agreed with BIPCO's
request to use laboratory coal analysis in place of the
sulfur dioxide continuous emissions monitoring. When the
permit was reissued on October 30, 1992, the requirement for
sulfur dioxide emissions monitoring was removed and replaced
with a requirement to maintain records of all purchased coal
shipments indicating sulfur and ash content per shipment.
4.7 LANDFILL AREAS
BIPCO is permitted to operate an ash landfill covered by VDEQ
Permit Number 528 and an industrial landfill covered by VDEQ
Permit Number 573. The ash landfill has a clay liner and is
permitted for placement of inorganic flyash material. The
industrial landfill is lined with a 60 mil HDPE liner. Materials
permitted to be disposed of in the industrial landfill include
stabilized sludges containing no free liquids; ash; papermaking
fabrics; office wastes; pallets and other wood products;
packaging materials; metals; and discarded process equipment.
BIPCO has elected to dispose of only ash, a small volume of
stabilized sludges from the WWTP, and construction debris such as
concrete in the industrial landfill.
4.7.1 FORMER XXXXXX LANDFILL
Prior to 1988, BIPCO disposed of ash at the Xxxxxxxx Xxxxxx
landfill located south of the BIPCO facility (Appendix L).
Recently, BIPCO purchased the Xxxxxx property (Photo J).
According to site personnel, BIPCO has proposed to the VDEQ
to close the landfill as is in place and perform groundwater
monitoring as required by the VDEQ. The VDEQ had not
responded to this proposal at the time of this Phase I ESA.
4.7.2 ASH LANDFILL
The on-site ash landfill has been operated since 1989.
Based on E.P. Toxicity tests for RCRA metals and reactivity
test performed on the ash (pressed wood fiber sludge), the
material is classified as non-hazardous (Appendix L).
Initial ash landfill permit requirements included the
quarterly sampling of groundwater monitoring xxxxx. The
groundwater samples were analyzed for specific conductance,
pH, TOC, TOX, lead, cadmium, and chromium.
In September 1994, the VDEQ notified BIPCO that they were
required to implement a Phase II groundwater monitoring
program due to statistically significant changes in pH.
Subsequently, BIPCO met with the VDEQ and it was agreed that
Phase II monitoring was not warranted since the ash is
alkaline in pH and would not be likely to attribute to a
downgradient decrease in pH (Appendix L).
Following the confirmation of a statistically significant
measured specific conductance for well MN-R2, BIPCO proposed
to implement a Phase II monitoring program (Appendix L).
The first round of well samples were collected in July 1997.
Samples were analyzed for TPH by modified EPA Method 8015,
VOCs by EPA Method 8260, SVOCs by EPA Method 8270,
pesticides by EPA Method 8080, herbicides by EPA Method
8150, and total metals plus cyanide by various SW-846
Methods (Appendix L).
Following the confirmation of a statistically significant
measured specific conductance for well MN-R2, BIPCO proposed
to implement a Phase II monitoring program (Appendix L).
The first round of well samples were collected in July 1997.
Samples were analyzed for TPH by modified EPA Method 8015,
VOCs by EPA Method 8260, SVOCs by EPA Method 8270,
pesticides by EPA Method 8080, herbicides by EPA Method
8150, and total metals plus cyanide by various SW-846
Methods (Appendix L). No organic constituents were detected
with the exception of TPH SVOCs detected in well MW-9 at 0.6
mg/l. The TPH SVOCs in well MW-9 were not confirmed by the
SVOC analysis, therefore, a second sample from well MW-9 was
collected and analyzed for TPH SVOCs. No TPH SVOCs were
detected in this second confirmatory sample. Based on this
analytical data, on September 18, 1997, BIPCO petitioned for
a variance from the Phase II sampling requirements by
requesting that the monitoring requirements be limited to
inorganic compounds only. The VDEQ had not responded to
this petition at the time of the site visit.
4.7.3 INDUSTRIAL LANDFILL
The on-site industrial landfill is located to the east of
the BIPCO plant (Appendix X). The industrial landfill was
initially permitted by the VDEQ in 1995 and the original
permit was amended in June 1997 to allow for the
construction of a 60 mil HDPE liner and leachate collection
system. As part of the amended industrial landfill Permit #
573, Permit #528 for the ash landfill was revoked and
activities for closure and post closure care of the ash
landfill were incorporated into an amended comprehensive
landfill Permit #573 (Appendix L). The industrial landfill
consists of approximately 35 acres of which approximately 23
acres will be used for waste disposal purposes. No
violations were reported for this landfill.
In April 1997, BIPCO began to send the flyash from their
boiler to other companies for use with other material as a
potting soil. This beneficial use of the wood/wood sludge
ash is considered a major waste reduction success by the
VDEQ (Appendix L).
4.8 POLYCHLORINATED BIPHENYLS
According to site personnel, the on-site transformers do not
contain polychlorinated biphenyls (PCBs) at concentrations
requiring special management.
4.9 ASBESTOS
An asbestos survey was not included as part of this ESA.
According to site personnel, there are no asbestos containing
materials (ACMs) on the subject site.
In the mid-1970's, several major kinds of ACMs, such as spray-
applied insulation, fireproofing, and acoustical surfacing
material, were banned by the US EPA. Therefore, given the age of
facility (1979), these materials are not likely to be present at
the BIPCO facility.
4.10 MISCELLANEOUS
During the site reconnaissance, AEI personnel observed the
following additional items at the subject property:
* a large coal storage pile is located north of the
railway spur that services the BIPCO powerhouse
facility (Figure 2 and Photo K);
* gas pipeline traverses the western portion of the
subject site (Photo L);
* refuse, consisting of mainly metal objects and
demolition debris, were disposed of in undeveloped
fields located north of the developed portion of the
site (Photo M); and
* a partially full drum and an empty drum of RoundUp
were located outside of a storage shed near the old
farmhouse on the undeveloped portion of the site (Photo
N and 0). BIPCO personnel subsequently indicated after
AEI's site visit that the liquid in the partially full
drum was water and that both drums have since been
properly placarded.
These items are not expected to be of major environmental concern
to the property. BIPCO personnel indicated that an effort was
made to reduce the demolition debris. Some of this material has
been scrapped and some has been disposed.
SECTION 5.0
SUMMARY AND CONCLUSIONS
AEI conducted an ESA on the BIPCO facility located on of Old
Ridge Road in Ashland, Virginia in general conformance with ASTM
E 1527-97. Standard Practices for Environmental Site
Assessments: Phase I Environmental Site Assessment Process, third
edition. This assessment identified the following potential
environmental concerns.
1. On September 29, 1994, the US EPA, Region III issued a
Notice of Violation (NOV) to BIPCO which stated that the
facility was operating 'in violation of applicable federally
enforceable air pollution control requirements. BIPCO
responded to the NOV by providing information that
demonstrated that the activities stated in the NOV had
either not occurred as specified in the NOV or had been
approved by the VDEQ. At the time of this Phase I ESA, this
NOV had not been resolved.
2. Based on the most recent groundwater data from the
wastewater treatment area, total organic carbon. total
organic halides, ammonia, chromium, cadmium, surface and
zinc were detected in downgradient monitoring xxxxx at
levels exceeding the Virginia Groundwater standards. The
VDEQ has not taken action regarding the groundwater
monitoring data at this time.
3. Following the confirmation of a statistically measured
significant increased in specific conductance in one (1)
monitoring well used to monitor groundwater quality
downgradient from the industrial landfill, BIPCO implemented
a Phase H monitoring program. The first round of samples
were collected in July 1997. A confirmatory sample was
collected in September 1997. Based on the analytical data
which indicated that no target organic constituents were in
the groundwater, BIPCO petitioned for a variance from the
Phase II sampling requirements by requesting that the
monitoring parameters be limited to inorganic compounds
only. The VDEQ had not provided a response at the time of
the site visit.
4) BIPCO is currently clarifying whether the existing 1977 air
permit allows BIPCO to burn WWTP sludge in the B&W boiler.
BIPCO is working with the VDEQ to clarify previous VDEQ
correspondence which indicate the 1977 air permit allows
burning of the WWTP sludge in the B&W boiler and/or modify
the 1977 permit as necessary to reflect sludge burning as an
acceptable fuel.
5) A 5,000-gallon unleaded gasoline UST was removed in 1990.
According to site personnel, the tank closure was clean.
However, no closure documentation was available for review.
AEI recommends that BIPCO develop and place in their files
documentation of the underground storage tank as required by
the VDEQ.
Based on AEI's review of the current known environmental
conditions at the BIPCO facility and given the complexity and
variety of operations, the mill is well operated and maintained.
SECTION 6.0
SIGNATURE PAGE
This Phase I Environmental Site Assessment was conducted on the
BIPCO facility located on Old Ridge Road in Ashland. Virginia in
general conformance with ASTM E 1527-97, Standard Practices for
Environmental Site Assessments: Phase I Environmental Site
Assessment Process, third edition by AEI for Toronto Dominion
Bank.
AWARE ENVIRONMENTAL INC.@
__________________________ ____________________
Xxxxx Xxxxx Date
Project Engineer
__________________________ ____________________
Xxxx Xxxxxxxx Date
Senior Geologist
__________________________ ____________________
Xxxxxx X. Xxxxxxxx Date
Associate
__________________________ ____________________
Xxxxxxx X. Xxxxx Date
Manager, Resource Management Group
