Exhibit 10.34
SECOND SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
January 10, 2005, among Xxxxxxxxx Engineered Canada Limited Partnership (the
"Guaranteeing Subsidiary"), a subsidiary of Ainsworth Lumber Co. Ltd., a
corporation incorporated under the laws of the Province of British Columbia (the
"Company"), the Company, Xxxxxxxxx Engineered Corp. and Xxxxxxxxx Engineered
(USA), LLC, each a subsidiary of the Company (together, the "Prior Guarantors")
and The Bank of New York, as Trustee under the Indenture referred to below (the
"Trustee").
WITNESSETH
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture, dated as of September 22, 2004 among the Company, Xxxxxxxxx
Engineered Corp. and the Trustee (the "Indenture") providing for the issuance of
an unlimited aggregate principal amount of 7 1/4% Senior Notes due 2012 and
Senior Floating Rate Notes due 2010 (collectively, the "Notes"), as supplemented
by the First Supplemental Indenture, dated as of September 22, 2004 among the
Company, the Prior Guarantors and the Trustee (as supplemented, the
"Indenture");
WHEREAS, the Indenture provides that under certain circumstances a
Subsidiary providing a Subsidiary Guarantee shall execute and deliver to the
Trustee a supplemental indenture pursuant to which such Subsidiary shall
unconditionally guarantee all of the Company's Obligations under the Notes and
the Indenture on the terms and conditions set forth herein (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
mutually covenant and agree for the equal and ratable benefit of the Holders of
the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees as
follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally unconditionally guarantee to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and
assigns, irrespective of the validity and enforceability of the Indenture,
the Notes or the obligations of the Company hereunder or thereunder, that:
(i) the principal of and interest, premium and Special Interest,
if any, on the Notes will be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the
Notes, if any, if lawful, and all other obligations of the
Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance
with the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due
of any amount so guaranteed or any performance so guaranteed for
whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The obligations of the Guaranteeing Subsidiary under this
Subsidiary Guarantee are independent of the obligations guaranteed by the
Guaranteeing Subsidiary hereunder, and a separate action or actions may be
brought and prosecuted by the Trustee on behalf of, or by, the Holders,
subject to the terms and conditions set forth in the Indenture, against the
Guaranteeing Subsidiary to enforce this Subsidiary Guarantee, irrespective
of whether any action is brought against the Company or whether the Company
is joined in any such action or actions.
(d) In the event of a default in payment of principal (or premium and
Special Interest, if any) or interest on a Note, whether at its stated
maturity, by acceleration, purchase or otherwise, legal proceedings may be
instituted by the Trustee on behalf of, or by, the Holder of such Note,
subject to the terms and conditions set forth in the Indenture, directly
against the Guaranteeing Subsidiary to enforce the Subsidiary Guarantee
without first proceeding against the Company or any other Guarantor. If,
after the occurrence and during the continuance of an Event of Default, the
Trustee or any of the Holders are prevented by applicable law from
exercising their respective rights to accelerate the maturity of the Notes,
to collect interest on the Notes, or to enforce or exercise any other right
or remedy with respect to the Notes, the Guaranteeing Subsidiary shall pay
to the Trustee for the account of the Holder, upon demand therefor, the
amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Trustee or any of the
Holders.
(e) The following is hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency or
bankruptcy of
-2-
the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever.
(f) This Subsidiary Guarantee shall not be discharged except by
complete performance of the obligations contained in the Notes, the
Indenture and this Supplemental Indenture, and the Guaranteeing Subsidiary
accepts all obligations of a Guarantor under the Indenture.
(g) If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantors (including the Guaranteeing
Subsidiary), or any custodian, trustee, liquidator or other similar
official acting in relation to either the Company or the Guarantors, any
amount paid either to the Trustee or such Holder, this Subsidiary
Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect.
(h) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed
hereby.
(i) As between the Guaranteeing Subsidiary, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
of the Indenture for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as
provided in Article 6 of the Indenture, such obligations (whether or not
due and payable) shall forthwith become due and payable by the Guaranteeing
Subsidiary for the purpose of this Subsidiary Guarantee.
(j) The Guaranteeing Subsidiary shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under this Subsidiary
Guarantee.
(k) Pursuant to Section 10.02 of the Indenture, after giving effect to
all other contingent and fixed liabilities that are relevant under any
applicable Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Article 10 of the Indenture, this
new Subsidiary Guarantee shall be limited to the maximum amount permissible
such that the obligations of such Guaranteeing Subsidiary under this
Subsidiary Guarantee will not constitute a fraudulent transfer or
conveyance.
(l) This Subsidiary Guarantee shall remain in full force and effect
and continue to be effective should any petition be filed by or against the
Company for liquidation, reorganization, should the Company become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Company's assets, and shall, to the fullest
-3-
extent permitted by law, continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Notes are,
pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee on the Notes and
Subsidiary Guarantee, whether as a "voidable preference", "fraudulent
transfer" or otherwise, all as though such payment or performance had not
been made. In the event that any payment or any part thereof, is rescinded,
reduced, restored or returned, the Note shall, to the fullest extent
permitted by law, be reinstated and deemed reduced only by such amount paid
and not so rescinded, reduced, restored or returned.
(m) In case any provision of this Subsidiary Guarantee shall be
invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
(n) This Subsidiary Guarantee shall be a general unsecured obligation
of such Guaranteeing Subsidiary, ranking pari passu with any other future
senior Indebtedness of the Guaranteeing Subsidiary, if any.
(o) Each payment to be made by the Guaranteeing Subsidiary in respect
of this Subsidiary Guarantee shall be made without set-off, counterclaim,
reduction or diminution of any kind or nature.
3. EXECUTION AND DELIVERY. The Guaranteeing Subsidiary agrees that the
Subsidiary Guarantee shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of this Subsidiary Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) Except as otherwise provided in Section 10.05 of the Indenture,
the Guaranteeing Subsidiary may not sell or otherwise dispose of all or
substantially all of its assets to, or consolidate, amalgamate with or
merge with or into (whether or not such Guaranteeing Subsidiary is the
surviving Person) another Person other than the Company or another
Guarantor unless:
(b) immediately after giving effect to that transaction, no Default or
Event of Default exists; and
(c) either:
(1) the Guaranteeing Subsidiary is the surviving Person, or the
Person acquiring the property in any such sale or disposition or the
Person formed by or surviving any such consolidation, amalgamation or
merger assumes all the obligations of the Guaranteeing Subsidiary
under the Indenture, this Subsidiary Guarantee and the Registration
Rights Agreement pursuant to a supplemental indenture satisfactory to
the Trustee and completes all other required documentation; or
(2) the Net Proceeds of such sale or other disposition are
applied in accordance with the provisions of Section 4.10 of the
Indenture;
-4-
(d) In case of any such consolidation, amalgamation, merger, sale or
conveyance and upon the assumption by the successor Person (where
applicable), by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of this Subsidiary
Guarantee endorsed upon the Notes and the due and punctual performance of
all of the covenants and conditions of the Indenture to be performed by the
Guaranteeing Subsidiary, such successor Person shall succeed to and be
substituted for the Guaranteeing Subsidiary with the same effect as if it
had been named herein as a Guaranteeing Subsidiary. Such successor Person
thereupon may cause to be signed the Subsidiary Guarantee to be endorsed
upon all of the Notes issuable hereunder which theretofore shall not have
been signed by the Company and delivered to the Trustee. The Subsidiary
Guarantee so issued shall in all respects have the same legal rank and
benefit under the Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture as though
all of such Subsidiary Guarantees had been issued at the date of the
execution hereof.
(e) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in the
Indenture or in any of the Notes shall prevent any consolidation,
amalgamation or merger of a Guaranteeing Subsidiary with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of
the property of the Guaranteeing Subsidiary as an entirety or substantially
as an entirety to the Company or another Guarantor.
5. RELEASES.
(a) In the event of a sale (including by way of merger, amalgamation
or consolidation in compliance with Section 5.01 of the Indenture) of all
the capital stock of the Guaranteeing Subsidiary to a Person that is not
(either before or after giving effect to such transaction) the Company or a
Restricted Subsidiary then the Guaranteeing Subsidiary (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of
all of the capital stock of such Guaranteeing Subsidiary) will be released
and relieved of any obligations under this Subsidiary Guarantee; provided,
that the sale complies with Section 4.10 of the Indenture. Further, if the
Company redesignates any Restricted Subsidiary that is a Guarantor as an
Unrestricted Subsidiary in accordance with Section 4.17 of the Indenture
then the Guaranteeing Subsidiary will be released and relieved of any
obligations under this Subsidiary Guarantee. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale or other disposition was made by the Company in
accordance with the provisions of the Indenture, including without
limitation Section 4.10 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release of the
Guaranteeing Subsidiary from its obligations under this Subsidiary
Guarantee.
(b) The Guaranteeing Subsidiary not released from its obligations
under this Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Notes and for the other obligations of the
Guaranteeing Subsidiary under the Indenture as provided in Article 10
thereof.
-5-
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Subsidiary under the Notes, any Subsidiary Guarantees, the Indenture or
this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of the Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes. Such waiver may not
be effective to waive liabilities under the federal securities laws and it is
the view of the Commission that such a waiver is against public policy.
7. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE
THIS SUPPLEMENTAL INDENTURE, THE INDENTURE, THE NOTES AND THE SUBSIDIARY
GUARANTEES.
8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
11. SUBROGATION. The Guaranteeing Subsidiary shall be subrogated to all
rights of Holders of Notes against the Company in respect of any amounts paid by
the Guaranteeing Subsidiary pursuant to the provisions of Section 2 hereof;
provided, however, that, if an Event of Default has occurred and is continuing,
the Guaranteeing Subsidiary shall not be entitled to enforce or receive any
payments arising out of, or based upon, such right of subrogation until all
amounts then due and payable by the Company under the Indenture or the Notes
shall have been paid in full.
12. BENEFITS ACKNOWLEDGED. The Guaranteeing Subsidiary acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by the Indenture and this Supplemental Indenture and that the
guarantee and waivers made by it pursuant to this Subsidiary Guarantee are
knowingly made in contemplation of such benefits.
13. SUCCESSORS. All agreements of the Guaranteeing Subsidiary in this
Supplemental Indenture shall bind its Successors, except as otherwise provided
in Section 2(k) hereof or elsewhere in this Supplemental Indenture. All
agreements of the Trustee in this Supplemental Indenture shall bind its
successors.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the date first above written.
Xxxxxxxxx Lumber Co. Ltd.
By:
------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Chief Operating Officer
By:
------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Executive Vice-President
Xxxxxxxxx Engineered Corp.
By:
------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Secretary
Xxxxxxxxx Engineered (USA), LLC
By:
------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Secretary
Xxxxxxxxx Engineered Canada Limited
Partnership
By:
------------------------------------
Xxxxxxxxx Lumber Co. Ltd., as
General Partner
Name:
----------------------------------
Title:
---------------------------------
The Bank of New York, as Trustee
By:
------------------------------------
Authorized Signatory
-7-
